Electric utilities are the only organization pushing for a change in the State’s inverse condemnation rule following an unprecedented number of wildfires over the last few years.

According to a May 29, 2019 article posted in The Oklahoman, water systems—both government and privately-owned– are seeking relief from the application of this rule in the courts. The utility companies claim they are being held economically responsible for many California fires they didn’t start but were impotent in helping to extinguish.

Lawsuits Concerning California Fires

As indicated in the report, a plethora of lawsuits have been filed and largely focused on electric utility companies. This targeting has been because of poorly maintained equipment or downed power lines allowed to remain so that were found to be the major cause of the rampant 2017 wildfire season.

A few more recent efforts to litigate have widened their scope to include water delivery utilities because of various failed attempts to get water to firefighters necessary to fight the blazes.

A group known as the Coalition for Fire Protection and Accountability (CFPA) wants to work with lawmakers in Sacramento to change laws governing utility liability. This comes on the heels of the Pacific Gas and Electric Corp.’s (PG&E) filing for bankruptcy in January 2019.

CFPA points out two lawsuits as “cases in point” whereby water utilities were held liable for wildfires in situations truly beyond their control. In 2008, according to the Oklahoman, 275 structures were destroyed in fire caused by a car’s exhaust system when traveling on a freeway.

A pump station in the Yorba Linda Water District failed due to fire damage from this blaze and ceased to be able to provide water to battle it.

A second situation occurred in Ventura, California in 2017 when pumping stations were unable to provide needed water pressure to fight wildfire through use of available hydrants. The stations lost power and the water districts were lacking backup power-generating systems. Homeowners sued the water district, holding them responsible.

What is Inverse Condemnation?

According to a Jan. 15, 2019 article posted on Bloomberg, the concept known as inverse condemnation is at least partly to blame for the ability to litigate in this situation.

The State of California is purportedly very strict in the way it applies this rule, although it is not a new concept. Inverse condemnation—in most cases—applies to government agencies that cause damage to private property while providing some kind of public service.

State courts have stipulated that the rule can be used against utility companies—whether they are public or privately owned—because they are authorized by the government to provide a needed service to the people.

As revealed by a January 2019 Insurance Journal article, this rule was applied repeatedly in litigation against PG&E for the company’s role in causing 2017 and 2018 fires through equipment failure.

Having filed bankruptcy, PG&E has the most incentive to work to change this rule. They need to limit future wildfires liabilities and not remain in the “limbo” of Chapter 11 indefinitely. Although less the target, water districts hope to avoid this fate entirely.

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