California state lawmakers are ending efforts to reduce PG&E’s legal liability for wildfires, rejecting Gov. Jerry Brown’s request to create a new court standard for determining fault after utility equipment sparks blazes.
After weeks of tense hearings and criticism from lawmakers in both political parties, Sen. Bill Dodd, D-Napa, said the Legislature is shifting focus to proposals that would improve forest health and address actions utilities must take to prevent fires.
“I can officially say inverse condemnation is off the table,” said Dodd, the co-chair of a legislative committee convened to examine wildfire laws this year. “We felt we could still accomplish all our goals without it.”
The controversial idea dominated discussions about wildfires in the Legislature long before Brown began disseminating his plan last month.
Top PG&E executives repeatedly called California’s “strict liability” standard an outlier among other states and said it threatens the San Francisco-based utility giant’s financial health. The company spent $1.7 million lobbying lawmakers to change the law from April through June, surpassing the total amount it dished out to influence legislators during all of 2017.
The law says a utility is automatically responsible for property damages if its equipment causes a fire, regardless of whether investigators prove the company behaved negligently.
Brown’s plan would have altered wildfire liability laws with a new set of directives instructing the court to determine whether the utility acted reasonably and in compliance with fire mitigation plans, such as trimming trees and branches around power lines, among other factors in civil liability cases
Opponents of the plan quickly labeled it a bailout for PG&E, which experts say could ultimately face as much as $15 billion in liability damages from multiple fires in 2017 that devastated Santa Rosa and other parts of Northern California’s Wine Country.
The California Department of Forestry and Fire Protection has linked PG&E’s equipment to 15 of the wildfires that scorched Northern California last year. The results of Cal Fire’s investigation into the Tubbs Fire in Santa Rosa, the most deadly and damaging of the October blazes, have not been announced.
Brown’s plan did not address liability for the 2017 blazes, but would have been retroactive to the beginning of 2018. Another proposal, Assembly Bill 33, would allow the state to issue bonds paid off by ratepayers to cover wildfire property damage claims from last year.
Changes to the existing liability law could have shifted the financial burden for blazes onto homeowners’ insurance companies, potentially driving up premiums across California.
A coalition of insurance trade groups, which includes the Personal Insurance Federation of California and the Property Casualty Insurers Association of America, applauded the Legislature’s decision.
“The Conference Committee’s prioritization on preventing fires that would destroy our homes, businesses and forests will help California for decades,” the trade associations said in a statement.
Republicans and Democrats openly denounced the proposed changes to liability law during a series of legislative hearings that stretched on for weeks. Senate Republican Leader Patricia Bates called for the Legislature last week to continue the discussions at a later time, signaling her caucus would not approve the plan.
PG&E met with legislative leaders Friday and called off their request to alter the strict liability standard this year after it became clear that the proposal lacked the necessary votes. Discussions continue over potential changes to regulatory frameworks to determine when utilities can recoup costs from ratepayers, must place the burden on shareholders, or use other options to pay off damages. Dodd said other parts of Brown’s legislative proposal also remain under consideration.
“We have to have strong financially stable utilities or their bond rating goes down, their interest rates go up and that all gets passed to ratepayers,” Dodd said.