Other Parties' Positions
Coral contends that CEQA applies when a "project," which may have a significant physical impact on the environment, is proposed to be carried out or approved by a public agency. Coral asserts that RACE failed to explain how the issues addressed in D.04-09-022 constitute a "project" that is subject to CEQA. Coral asserts that this rulemaking is addressing policy matters, and D.04-09-022 did not endorse or approve any specific LNG project or specific pipeline project. D.04-09-022 was only addressing what needs to be in place for potential sources of LNG supply to connect to the gas transmission and distribution systems of the California gas utilities.13 Coral asserts that RACE's argument that D.04-09-022 will have an impact on the environment is speculative because D.04-09-022 did not address, approve, or implement any specific project that will have a physical impact on the environment.
Coral asserts that when a public agency issues a policy decision, as was done in D.04-09-022, the California courts have concluded that an environmental impact report is not necessary. (See Pala Band of Mission Indians v. County of San Diego (1998) 68 Cal.App.4th 556, 567-568;14 Sherwin-Williams v. South Coast Air Quality Management District (2001) 86 Cal.App.4th 1258, 1286.) D.04-09-022 merely set forth a procedure for the review of utility contracts for pipeline capacity, set forth the terms of access at new and existing receipt points, and established a policy of equal treatment for all gas supplies. D.04-09-022 did not approve a specific project or cause a project to be undertaken. Since no specific project was considered or approved in D.04-09-022, Coral asserts that CEQA is not applicable to the rulemaking or to D.04-09-022.
Coral also points out that in addressing the applications for rehearing of D.04-09-022, the Commission stated that the rulemaking was instituted "to establish policies and rules to ensure reliable, long-term supplies of gas to California," and that the policies adopted in D.04-09-022 were part of "California's overall effort to implement and fulfill the Energy Action Plan's (EAP) goal." (D.05-10-045, p. 3.) Coral asserts that throughout the rulemaking process, the Commission emphasized that it was addressing only policy matters, and it has not approved any new supply projects and has not expanded natural gas usage in California.
The three utilities contend that the provisions of CEQA do not apply to this rulemaking nor to D.04-09-022 because neither is a "project" within the meaning of CEQA. Since the rulemaking and D.04-09-022 address only policies and procedures, the utilities assert that the rulemaking and the decision are exempt from CEQA's definition of a project because they do not cause a direct or reasonably foreseeable indirect change in the environment.
The utilities contend that the City of Livermore case, which RACE cited, is distinguishable because in that case revisions were being made to the "sphere-of-influence guidelines" that would directly affect land use in Alameda County. Due to the potential impact of the revisions to the guidelines, the Court of Appeal concluded that the revisions should be considered a project under CEQA. The utilities contend that the City of Livermore case is distinguishable because none of the actions proposed in the rulemaking will cause either a direct physical change in the environment or a reasonably indirect physical change in the environment, which is required to constitute a project under CEQA. The utilities assert that nothing in the rulemaking or in D.04-09-022 compels any specific, direct changes to the environment, and that RACE concedes at page 4 of its petition that there is no "specific project," and that there is a "lack of immediate adverse impacts."
The utilities point out that RACE appears to contend that the rulemaking and D.04-09-022 will set into motion activities that will eventually result in physical changes to the environment, specifically, the construction of one or more LNG terminals, and the construction of new utility receipt point facilities. The utilities assert that in order for CEQA to apply, the project must constitute an "essential step in a chain of actions" that will culminate in a reasonably foreseeable physical change in the environment. The utilities assert that nothing in the rulemaking or D.04-09-022 contemplates any needed approvals that amount to an "essential step."
As for the statement in D.04-09-022 that SDG&E and SoCalGas may establish new receipt points as they become needed to accommodate regasified LNG, the utilities contend that this interconnection policy is merely a continuation of past Commission decisions which require utility interconnection with new pipelines as a matter of policy, and such decisions do not trigger a CEQA review. (See D.91-11-025 [41 CPUC2d 668, 686].)
The utilities also assert that neither the rulemaking nor D.04-09-022 contains or contemplates any approvals needed to construct additional backbone transmission facilities. Without such approvals, the "essential step" needed to construct new backbone transmission facilities is missing.
The utilities argue that the factual circumstances regarding the rulemaking and D.04-09-022 are similar to the facts in Kaufman & Broad-South Bay, Inc. v. Morgan Hill Unified School District (1992) 9 Cal.App.4th 464,15 in which the Court of Appeal held that the formation of a Mello-Roos facilities district lacked the causal link with the alleged environmental impact of new schools being constructed. The Court of Appeal concluded that the formation of the facilities district would not create a need for new schools, and the construction of new schools was not entirely dependent on the formation of the facilities district. The utilities assert that the causal link between the rulemaking and D.04-09-022, and any future LNG facility or pipeline construction, is missing here as well. In addition, the interconnections with LNG facilities and construction of other new receipt points do not depend on the rulemaking or D.04-09-022. The utilities contend that it is completely unknown whether any particular California LNG projects will materialize and whether any actual utility facilities will be constructed to accept and redeliver regasified LNG. Since the policies adopted in the rulemaking and D.04-09-022 are not essential steps that will result in any physical changes to the environment, neither is a project under CEQA.
The utilities also argue that the rulemaking and D.04-09-022 do not meet the "foreseeability" requirement that is needed in order to be a "project" subject to CEQA. The only foreseeable impact from the rulemaking and D.04-09-022 is that a number of new sources of supply might or might not materialize, and the utilities will need to respond accordingly. At this point, however, the utilities contend that the Commission cannot determine which facilities might or might not be constructed, and therefore the potential environmental effects cannot be reasonably foreseen.
In their reply to RACE's supplemental response, the utilities assert that the County Sanitation District and Plastic Pipe & Fittings cases, which RACE cited, do not support RACE's position that CEQA should apply to this proceeding. The utilities assert that the agency actions under review in those two cases could have caused a reasonably foreseeable direct or indirect physical change in the environment. However, in this proceeding, the Commission "did not take any action that would cause the development of liquefied natural gas terminals or the construction of utility transmission or interconnection facilities and therefore the `causal link' between the Commission's actions and a physical change in the environment is missing...." (SDG&E, SoCalGas, PG&E Reply to Supplemental Response, p. 3.)
The utilities assert that the County Sanitation District and Plastic Pipe & Fittings cases merely stand for the proposition that a CEQA review is necessary when an agency seeks to adopt an ordinance or regulation that will potentially cause environmental effects. Since neither the rulemaking nor D.04-09-022 will cause any direct or indirect physical change in the environment, they are not projects within the meaning of CEQA, and CEQA review was not needed before D.04-09-022 was issued.
13 Coral notes that the September 3, 2004 ACR stated that in order for CEQA to apply, the agency action must involve a "project." Since no specific project was to be approved in the Phase I decision, the ACR ruled that CEQA did not apply at that point. The ACR also noted that the environmental issues that RACE raised regarding the proposed LNG projects were being addressed in other forums.
14 Referred to herein as Pala Band of Mission Indians.
15 This case is referred herein as Kaufman & Broad.
