A new lawsuit filed in the U.S. District Court for the Northern District of California is challenging state Assembly Bill (AB) 1054, a bill that would create a California wildfire fund to pay for damages from future blazes

Plaintiffs Alex C. and Gene N., both Pacific Gas & Electric customers, claim the newly passed wildfire law violates the state and U.S. constitutions, according to the California Globe.

AB 1054 establishes the means for starting a California wildfire fund amounting to $21 billion. While only half of that money is able to be siphoned from the utility customer bills, the lawsuit is seeking an injunction to stop the law from going into effect.

One of the alleged complaints is that the statement charges amount to illegal “takings” of property or a version of corporate taxation without representation.

What’s The Rush?

In an opinion piece posted on July 10, 2019 by the Los Angeles Times, it was noted by the writer that the Golden State’s Governor, Gavin Newsom, pushed lawmakers to quickly adopt the AB 1054 even though it only arrived on the scene in late June. Purportedly, Newsom was eager to get the California wildfire law passed prior to a month-long summer legislative recess slated to start July 12 and the start of peak California wildfire season.

According to this opinion piece, the rush was also in part a rapid response to a threat from Wall Street to downgrade California’s investor-owned utilities if this deadline wasn’t meant.

A stock downgrade, according to the Motley Fool, involves market analysts expressing a view that the stock will likely underperform and could spur investors to sell by reducing their confidence. This selling off might not happen overnight, but consideration toward alternative stock is often given following a downgrade.

Federal Lawsuit Allegations And Requests

As indicated by the California Globe report, the bill was signed into law on July 12 as hoped. Once it takes effect, it will alter the way utility customers—some of which will be fire victims–and other groups can hold the investor-owned companies accountable for fires sparked by poorly managed equipment.

Purportedly, rather than having to prove their innocence in terms of who caused the wildfire as before, the new law requires fire victims to bear the burden of proving their case against utility companies. Even if customers are successful in providing the evidence necessary to prosecute one of the private utility companies, the $10.5 billion extracted from patrons for the fund still ultimately is fronting the cost.

Utility Causation History

According to ABC 10 on July 19, 2019, PG&E has been on probation for causing and attempting to cover up the San Bruno gas pipeline explosion which claimed the lives of eight. Additionally, PG&E allegedly caused 2017 and 2018 wildfires which claimed the lives of over 100.

Critics of AB 1054 allege the law is a thinly-veiled attempt to bail out PG&E and other major utility companies.

This article is not legal advice. It is presented
for informational purposes only.