California panel begins deliberations over utilities’ wildfire liability

SACRAMENTO - With eight major wildfires burning across the state Wednesday, a special legislative committee held its first public hearing in response to last year’s fiery North Bay disaster, including the contentious political and economic issue of how much liability PG&E should bear for damages estimated at $10 billion.

The bipartisan committee, co-chaired by state Sen Bill Dodd, D-Napa, and including Assemblyman Jim Wood, D-Santa Rosa, heard from a panel of witnesses and dozens of people in a standing-room-only crowd at the State Capitol.

Formed by Gov. Jerry Brown and top legislative leaders, the committee has until Aug. 31 to come up with legislation dealing with wildfire preparedness and prevention, as well as possible reform of the state’s longstanding policy of inverse condemnation, which requires utilities found responsible for causing fires to pay for damage to private property even when they are not deemed negligent.

Underscoring the need for action, Thom Porter, a Cal Fire region chief, told lawmakers there have already been more fires and more acres scorched this year than in 2017, citing climate change as the cause.

“The new normal is no longer new,” he said. “It’s normal.”

Porter, who has 30 years’ experience as a forester, said he had “never seen such volatile conditions across the state.”

In the midst of the hearing, state Sen. Jeff Stone, a Riverside County Republican, announced the Idyllwild area had been evacuated in the face of a fast-growing brush fire.

A suspected arsonist was detained in Hemet in connection with the fast-growing Cranston fire after Cal Fire officials reported the man’s vehicle to local authorities, Hemet police officials said.

Another press for action came Tuesday from Brown, who sent the committee chairmen a proposal that would soften the liability standard for utilities, allowing judges to determine “whether the utility acted reasonably” in awarding damages in cases in which electrical equipment is a “substantial cause of the fire.”

Last week, a PG&E spokeswoman said the utility giant wants to see the policy include a “reasonableness standard,” relieving the company of liability for fire damages if it has acted reasonably.

Cal Fire has determined the utility’s equipment was responsible for causing 16 major fires across Northern California in October. In 11 of those blazes, the utility allegedly violated state code by failing to keep tree limbs clear from its equipment, according to Cal Fire, which forwarded its findings to local district attorneys for potential prosecution.

PG&E has said it has about $840 million in insurance coverage and expects to be held liable for at least $2.5 billion in fire damages and possibly much more. Total damages have been estimated at $10 billion.

“Frankly, PG&E violated our trust and must be held accountable,” Dodd said in his opening remarks.

The senator, who represents thousands of survivors from last year’s fires, said he believes the legislation ultimately drafted will make California “a safer place.”

Wood, who called the governor’s proposal a “starting point,” said his concern ever since the fires is that survivors “should be made whole.”

The governor and lawmakers have asserted that any new laws would apply only to fires since Jan. 1.

Wood also suggested that Wednesday’s hearing “may be premature” because Cal Fire has not issued a finding on the cause of the Tubbs fire, the most destructive of the October blazes.

In response to Wood’s question about when the report would be completed, Porter said there were more than 27 fires in October and reports on all but two have been completed.

“The Tubbs is a different situation,” he said, calling the process of “nailing down the exact cause” a “very tedious” matter.

“We’re going through the evidence methodically,” Porter said, and sending some of it out for review by a third party. He declined to give a date for completion of the Tubbs report.

Wood also injected a note of emotion in the hearing in response to California Public Utilities Commission president Michael Pickler’s admission that the utility regulation process is intentionally slow and unwieldy.

“We were designed to slow things down,” he told Wood. “Want to change it?”

“Yeah, I do, because people are dying,” Wood replied. The assemblyman noted that 44 people had perished from the Northern California fires.

Michael Wara, a lawyer and Stanford University scholar focused on climate and energy policy, endorsed the governor’s proposal for a “reasonable standard” that would hold utilities liable for fire damages when they are negligent.

Barring reform of the inverse condemnation standard, Wara warned that property insurance companies may depart from California.

He also injected a new element into the debate, noting that insurance companies are not allowed to “re-insure” their risk in California, a step that would help insurers “spread out the risk.”

But given the complexity of the matter, Wara said it might be “a stretch goal to resolve the liability issue” within the next month.

Wara asserted that “narrowly tailored” changes to inverse condemnation policy would pass judicial review.

John Fiske, an attorney representing Santa Rosa, Sonoma County and other local governments in litigation against PG&E, disputed Wara’s assessment during the public comment portion of the hearing.

Fiske said it would be “constitutionally untenable” to alter the inverse condemnation doctrine, which is embodied in the state Constitution.

Groups representing California counties, displaced residents and trial lawyers, and homeowners’ insurance companies faulted the governor’s proposal as soon as it was released Tuesday.

Napa County Supervisor Diane Dillon and Mendocino Supervisor Carre Brown, representing the California State Association of Counties, urged the lawmakers not to alter liability laws.

“We strongly believe that our current laws level the playing field” and bring multi-million-dollar companies to the table to negotiate settlements, Brown said.

Patrick McCallum, head of a coalition called Up from the Ashes, said in a press release the hearing was “a good first step” in a long journey that must offer “fair and carefully crafted solutions” that protect the rights of survivors “to recover their losses from utility-caused fires.”

McCallum is a Sacramento lobbyist whose Santa Rosa home was destroyed by the Tubbs fire.

You can reach Staff Writer Guy Kovner at 707-521-5457 or guy.kovner@pressdemocrat.com. On Twitter @guykovner.