Fire Survivors, Insurers Could Sue Big Oil for Climate Disasters Under California Bill

As climate disasters grow more frequent and costlier, a bill introduced Monday by two California state senators in the wake of the devastating Los Angeles fires seeks to make the industry driving climate change start to pay for it.

Senate Bill 222, by Sens. Scott Wiener (D–San Francisco) and Sasha Renée Pérez (D–Pasadena), would allow people who’ve suffered losses in climate disasters to seek damages in court from fossil fuel companies that have done business in California and accuses them of suppressing climate science for decades. It would also allow insurance companies to seek damages from oil and gas companies.

The aim, Wiener said, is to allow insurers to recoup losses from climate disasters without having to rely solely on raising rates. “So that those increased costs that insurance companies are facing aren’t only passed along to policyholders,” Wiener said, “but that the fossil fuel companies are also helping.”

Consumers and governments generally bear the expense of climate disasters. Fossil fuel giants such as ExxonMobil, meanwhile, have been accused of casting doubt on the effects of human-caused climate change despite having internal research that showed otherwise.

“This is an industry that has known that its product was fueling climate change and was going to lead to these disasters,” Wiener said at a Monday press conference. “They sat on that science, they suppressed it. And then the fossil fuel industry for decades has played a huge role in incapacitating government policymakers from taking the steps that need to be taken to transition away from fossil fuels and towards a clean energy economy.”

The third aspect of the bill is that it opens the possibility that the California FAIR plan, the state’s insurer of last resort, could also sue for damages. The bill calls for an evaluation of whether it makes financial sense for the FAIR plan to do so. If it does, the state’s insurer of last resort will be required to.

The FAIR plan, which will be especially strained by its financial exposure in the area of the Palisades Fire, is in danger of running out of money. If it does, California policyholders will be chipping in to replenish it.

“The oil industry should be part of that solution as well,” Wiener said.

There are a number of lawsuits against the fossil fuel industry currently in courts, but they have been so far typically brought by state officials, including officials from Hawaii suing over increased fire risk. Allowing citizens and businesses to seek damages would be a new step.

“This gives consumers a fair shot at getting true accountability for these crises. To improve insurance affordability and availability, we must make fossil fuel companies pay their fair share,” said Consumer Federation of California executive director Robert Herrell, who supports the bill. “This will help level the playing field between consumers and the raw exercise of corporate power that they’re facing.”

While insurance companies are accustomed to being able to sue utility companies whose equipment causes wildfires, such as the more than $10 billion PG&E paid to settle claims from the Camp Fire that destroyed Paradise, they have yet to go after fossil fuel companies.

Insurance companies, including State Farm, have many billions of dollars invested in fossil fuels (collectively, an estimated half a trillion).

The fossil fuel industry is slamming the proposed bill.

“It is a shame that Sen. Scott Wiener and Sen. Sasha Renée Pérez see the Los Angeles fires as nothing more than a political opportunity. We need real solutions to help victims in the wake of this tragedy, not theatrics,” Western States Petroleum Association CEO Catherine Reheis-Boyd said in a statement.

“Every day, consumers, including Sen. Wiener, rely on and choose to use gasoline-powered cars and purchase products made from fossil fuels. Our economy depends on oil and gas even as California looks to reduce its carbon footprint,” Reheis-Boyd said. “The vulnerabilities in the existing oil and gas infrastructure must be addressed. Otherwise, technical realities will get in the way of aspirational goals if left ignored.”

Last week, in an opinion piece in The New York Times, former California Insurance Commissioner Dave Jones said big oil companies should foot the bill for these disasters.

“As the former insurance commissioner of California, I can confirm that private insurance companies cannot continue to provide coverage at anything approaching affordable rates in the face of increasing climate-driven disasters,” Jones wrote. “States, cities and regulators urgently need to hold the oil and gas industry accountable for the devastation that fossil fuels cause.”