Gov. Jerry Brown proposes changes in utilities’ wildfire liability

Warning that climate change will make wildfires more destructive and costly, Gov. Jerry Brown on Tuesday proposed softening the standard that makes PG&E and other electric utilities financially liable when their equipment causes wildfires.

Brown sent draft legislation to top legislative leaders and the co-chairmen of a bipartisan conference committee - state Sen. Bill Dodd, D-Napa, and Assemblyman Chris Holden, D-Pasadena - charged with crafting a response to the deadly October wildfires.

A key point of contention on the issue is the current state policy, called inverse condemnation, that holds utilities liable for wildfire damages even when they are not deemed negligent.

The governor’s proposal, which applies to fires sparked after Jan. 1, 2018, would allow judges to determine “whether the utility acted reasonably” in awarding damages in cases in which electrical equipment is a “substantial cause of the fire.”

An award of damages “shall reflect the utility’s proportionate fault” and whether it complied with safety regulations, Brown’s proposal said.

The measure will likely be discussed today at the 10-member committee’s first public hearing at the Capitol, said Paul Payne, a spokesman for Dodd.

“The governor has put forward his proposal,” Dodd said in a statement. “It’s the Legislature’s job to now determine what’s best for Californians.”

Dodd’s office did not immediately respond to a request for a more detailed comment from the senator, who represents thousands of survivors from last year’s fires.

Assemblyman Jim Wood, D-Santa Rosa, is member of the committee and did not immediately respond to a request for comment.

The governor’s measure prompted criticism from three separate groups representing California counties, displaced residents and trial lawyers, and homeowners’ insurance companies.

The stakes in the legislative outcome are high for PG&E following Cal Fire’s determination that 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.

Brown and top lawmakers announced formation of the conference committee in July and Dodd’s bill, SB 901, was intended to be the vehicle for legislation on both wildfire prevention and liability.

In his letter to lawmakers Tuesday, the governor said: “If we do not take action today to prepare for and anticipate the extreme weather events of tomorrow, we will all pay dearly for it.”

Lynsey Paulo, a PG&E spokeswoman, said in an email the company “look(s) forward to reviewing the governor’s statement and the upcoming work of the joint conference committee.”

“As we have stated previously, we believe comprehensive public policy reforms are urgently needed to address the challenges brought about by more frequent and more intense wildfires,” she said.

Specifically, PG&E seeks changes “that would make wildfire victims whole, reduce the impacts on customers’ bills and continue to support investment in wildfire prevention, resilient infrastructure and safe and clean energy,” Paulo said. “The status quo is not sustainable.”

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

The California State Association of Counties firmly supports inverse condemnation, and an official said Tuesday the organization opposes the governor’s proposal, saying the revised liability rules put counties at a “huge disadvantage.”

The current policy “brings utilities to the table to settle claims,” said Darby Kernan, CSAC’s deputy executive director.

“If we have to prove negligence going forward, the utilities will be able to delay and cost counties millions of dollars in litigation instead of reinvesting those dollars in our communities,” she said.

Inverse condemnation has been an “established legal standard” for 30 years, Kernan said.

CSAC also opposes the rush to pass legislation before the current session ends Aug. 31.

Patrick McCallum, a Sacramento lobbyist whose Santa Rosa home was destroyed in the Tubbs fire, also faulted Brown’s proposal.

“For victims, the governor’s plan is a non-starter,” he said in a press release, speaking as head of a coalition of displaced residents and trial attorneys called “Up from the Ashes.”

“It sacrifices the rights of property owners to protect the utilities from any responsibility for future damages they may cause and removes any real incentives for them to take safety and fire prevention seriously,” McCallum said.

Stop the Utility Bailout, a coalition of homeowners’ insurance companies, said in a press release Brown’s plan would shift the financial liability of utilities “onto the backs of wildfire survivors, homeowners, communities and businesses.”

Protecting utility shareholders over fire survivors “leaves the very individuals and communities whose lives were upended on the hook,” the group said.

In addition to the wildfire liability changes, Brown’s proposal would increase the maximum fine utilities can face if they do violate state law or rules from $50,000 to $100,000 per offense. It would also require utilities to develop more robust wildfire plans and better state oversight of those plans.

It also would require equipment inspections, maintenance and temporary power shut-offs during extreme weather.

The Associated Press contributed to this report. You can reach Staff Writer Guy Kovner at 707-521-5457 or guy.kovner@pressdemocrat.com.