Gov. Brown Proposal Would Make It Harder to Sue Utilities for Fire Damages

It would be harder, but not impossible, for private property owners to collect damages from utility companies that unintentionally cause fires in California, under a long-awaited proposal unveiled by Gov. Jerry Brown Tuesday.

Brown's proposal comes on the eve of the inaugural meeting of a joint legislative committee tasked with coming up with a plan to make California more resilient when dealing with wildfires, which have become increasingly destructive in recent years.

It also comes after months of lobbying by utility companies as they seek to protect themselves from potentially huge financial liabilities from recent wildfires.

Brown's proposal doesn't go as far as utilities had asked. It doesn't entirely eliminate a California law known as inverse condemnation, which lets courts hold utilities financially liable for damage their equipment causes, even if they followed state safety and maintenance rules.

But Brown does want to give courts more flexibility in deciding whether to hold a utility financially liable for damage -- a change that could make it harder for fire victims to collect money in cases where a utility's equipment caused a fire but the company didn't act negligently.

In a nod to critics of the utilities, Brown's proposal would also increase potential fines for violating state safety laws and prohibit utilities from passing on to ratepayers the costs of those imposed fines.

In a letter to the committee of lawmakers that will be examining the issue, Brown noted that last year was the most destructive wildfire season in state history and that firefighting costs have nearly doubled over the past five years.

"Just as our firefighting techniques and forest management must adapt to this growing threat, so must California laws," Brown wrote. "The law must establish powerful incentives for utilities to deliver power safely and must hold those who are at fault responsible for the damage they cause."

The proposed legislation requires courts, in civil cases, to "balance the public benefit of the electrical infrastructure with the harm caused to privacy property and determine whether the utility acted reasonably."

The legislation directs the courts to consider factors including the utility's conduct, the extent of harm to the private property, and how well the utility complied with state laws and regulations around mitigating fire risk.

"Now more than ever, Californians depend on reliable electrical power to heat and cool homes, run hospitals and fire stations and so much more," Brown wrote. "Yet the increasingly destructive and costly wildfires and natural disasters have the potential to undermine this system, leaving our energy sector in a state of weakness at a time when it should be making even greater investments in safety."

Brown's proposed legislation would also increase potential maximum penalties for utilities that violate state laws and regulations from $50,000 to $100,000, and prohibit companies from passing on the cost of fines to ratepayers. It would also force utilities to create more robust wildfire mitigation plans. And it would require companies to have those plans -- as well as their overall safety culture -- reviewed by independent evaluators.

The legislation would impact only fires that started on or after Jan. 1 of this year -- meaning last year’s North Bay fire victims would not be affected.