NGOs, U.S. lawmakers support California wildfire liability reform
Non-governmental organizations and federal lawmakers have called for an update to a California wildfire liability standard that would improve the environment by helping protect the state’s electric utilities.
Experts with the Environmental Defense Fund (EDF), the Natural Resources Defense Council (NRDC), and the nonprofit Building Resilient Infrastructure for Tomorrow’s Economy (BRITE) California specifically have asked state legislators to update what’s known as “inverse condemnation,” a rule under which a utility company may be held liable for costs if its equipment was determined to be the cause of a wildfire.
The state legislature should develop “actionable solutions to improve California’s vegetation management programs to reduce the risk of catastrophic wildfire” and invest in climate pollution solutions via related laws, policies and systems, two EDF experts wrote in an Aug. 22 letter to California Gov. Jerry Brown and state lawmakers.
The EDF experts cited the importance of the state’s electric power sector in helping California meet its climate goals. State legislators should “come to terms with the significant economic risk our state’s utilities face given that utility infrastructure can cause or contribute to wildfire,” they wrote.
“Over the last several decades, no economic sector in California has cut more climate pollution than the electric power sector,” wrote Timothy O’Connor, senior director of EDF’s energy program, and Pablo Garza, California political director of Ecosystems for EDF. “Going into the future, the state’s utilities will be a key player in meeting ambitious decarbonization goals and they should move even further toward a cleaner energy mix with even more comprehensive carbon reduction programs.”
Gov. Brown, one of the state’s leaders in championing the wildfire liability rule change, in July released a draft plan to give judges new options on how to assess such liability. But as wildfires have continued to ravage the state this summer, the controversial inverse condemnation provision was doused by members of the legislature’s Wildfire Preparedness and Response Conference Committee.
The committee members plan to try and develop what’s left in the governor’s plan by focusing on vegetation management before adjourning on Aug. 31 for the year.
But the EDF leaders say vegetation management and clean climate issues can’t be solved without considering the companies that impact them.
They urged Gov. Brown, California State Senate President pro Tempore Toni Atkins and State Assembly Speaker Anthony Rendon to also consider retaining incentives in the final plan to help utilities “do everything they can to prevent fires in the first place,” according to their letter.
Similarly, Ralph Cavanagh, senior attorney and co-director of the NRDC’s energy program, said California’s electric utilities face “potentially ruinous financial liabilities” following disasters like last fall’s wildfires and mudslides, which he said were worsened by climate change.
“Once again, the clean energy programs that utilities administer to help their customers save energy – and reduce the emissions driving that climate change – are at great risk,” Cavanagh wrote in an NRDC May 7 blog.
“Energy efficiency, transportation electrification, demand response, electricity storage, large-scale renewable power development and distributed energy resources are all threatened, if the state legislature doesn’t reform our wildfire liability doctrines,” he wrote.
Cavanagh also pointed out that “substantial doubt” exists about whether the California Public Utility Commission (CPUC) will approve a passthrough of the 2017 wildfire costs, possibly setting up “another insolvency trap” for the utilities.
“To my knowledge no other state holds utilities liable for all wildfire damages regardless of the standard of care they followed in installing and maintaining the facilities involved,” he added.
And while all Californians sympathize with the wildfire victims, Cavanagh said their interests “won’t be served by pushing utilities into bankruptcy.” The victims, he warned, essentially would become “one more class of frustrated creditors pursuing inadequate funds.”
Cavanagh also joined several notable stakeholders in signing a May 7 letter sent to Gov. Brown and members of the legislature requesting that they reexamine and reform the state’s unworkable wildfire liability standard.
“Financially healthy public and investor-owned utilities are playing an essential partnership role in advancing renewable development, deploying smart and efficient grid technologies, facilitating the adoption of electric transportation, and more,” wrote Cavanagh, along with Peter Bradford, former chairman for both the New York and Maine Public Service Commissions and a former commissioner for the U.S. Nuclear Regulatory Commission; David Hayes, executive director of the Energy and Environmental Impact Center at New York University’s School of Law and previously the deputy secretary of the U.S. Department of the Interior; Mindy Lubber, CEO and president of Ceres; Susan Tierney, former assistant policy secretary at the U.S. Department of Energy; and Jay Ziegler, director of policy and external affairs at The Nature Conservancy.
“If utilities are held to an unworkable, strict liability standard of responsibility for damages caused by severe weather events — events that ironically are exacerbated by the same climate change forces that the state is relying on utilities to combat — they may fail,” the stakeholders wrote.
Likewise, a member of the BRITE California coalition, a growing group of more than 1,300 organizations and individuals, said utilities should be held accountable when they are found to be negligent in causing wildfires.
“However, we can’t make one industry responsible for changing weather, and we can’t make one industry responsible for fires,” said BRITE’s Rob Fong, a former Sacramento City (CA) Council member. “This problem is bigger than that, and it will require solutions that are bigger than just our utilities.”
Fong said that to ensure the state has a safe, reliable and well-managed grid, “we need the legislature to reform the strict liability standard for inverse condemnation.”
Feds chime in
Federal lawmakers also reached out to California state legislators serving on the wildfire conference committee in an Aug. 15 letter that echoed the concerns of the NGOs.
The 15-member contingent of U.S. House members from California requested that state lawmakers specifically consider updating the current “outdated” construction of inverse condemnation “to provide utilities, ratepayers, and insurers greater certainty with respect to rate recovery for non-negligent wildfire-related costs.”
“The viability of California’s public and investor-owned utilities is threatened by the assignment of limitless liability in the absence of negligence,” wrote the members of Congress, who included U.S. Reps. Ken Calvert (R-CA), Jeff Denham (R-CA), and David Valadao (R-CA).
They also warned that the utilities’ subsequent “loss of capital investment, lowered credit ratings, and higher borrowing costs may be borne by all Californians.”
The U.S. representatives suggested that the state’s utilities be authorized to ask the CPUC for permission to issue recovery bonds for the 2017 wildfire costs that ran above their insurance coverage.
This would ensure “victims receive prompt compensation and preserve the ability of California’s electric utilities to invest in the infrastructure necessary to meet the state’s wildfire mitigation and clean energy plans,” the federal lawmakers wrote.
