As we discussed in our last post, the California constitution gives property owners the right to hold utility companies financially responsible for losses caused by their equipment, even if the utility followed state safety rules. Property owners can bring inverse condemnation claims against the utility for the losses they incurred.
Inverse condemnation is part of eminent domain law. In California, governments and utilities can take private property for the public good, but they must pay just compensation. In a traditional eminent domain case, the government or utility proposes to take a piece of real estate and then makes an offer of compensation, which the property owner can negotiate.
In an inverse condemnation claim, the government or utility simply takes the property and the owner then files the compensation claim. In some cases involving utilities, the real estate is not taken outright but is damaged by the utility’s equipment.
If last year’s record-breaking wildfires were caused by utility equipment, the companies involved could be on the hook for all the real property damage that occurred. So far, the cause of the wildfires has not been determined.
Pacific Gas and Electric Co. has been fighting to limit its exposure to wildfire-related inverse condemnation claims. The utility contends that the law needs to change because times have changed. Not only has climate change extended the wildfire season, but also developers have been building more often in previously rural areas with higher fire risks.
The company says the increased burden on utilities should at least be offset by allowing them to pass on these costs to consumers. Otherwise, it argues, the industry may no longer be financially viable. It should be noted that PG&E made $1.66 billion in profits last year.
PG&E been fighting in court and also lobbying for changes in the law. For example, a recent wildfire safety bill was filed which might have immunized the utilities from liability for fire damage as long as they followed their own internal safety plans. However, after testimony at a recent Senate utilities committee hearing, the bill’s author agreed to remove that language.
One of the people testifying at that hearing was a spokesperson from Up From the Ashes, a coalition of Northern California fire victims and attorneys who oppose PG&E’s efforts. The group argues that PG&E is a long-term bad actor and needs an incentive to improve its safety standards.
“If you give them a ‘get out of jail free’ card, they have no incentive to get it right — none,” said the spokesperson.
If you suffered losses from the wildfires, don’t worry about possible changes in the law. Contact an attorney right away about filing an inverse condemnation claim.