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PG&E Argues Brown’s ‘Reasonableness’ Rule Change Is Insufficient

  • On behalf of: Peterson Law Group
  • Published: August 6, 2018

PG&E was responsible for sparking at least some of the 2017 wildfires in Northern California, according to preliminary results from the California Department of Forestry and Fire Protection (Cal Fire). If the fires can be tied to the utility’s actions, inaction or equipment, PG&E could be held liable for billions in property damage under a legal theory called “inverse condemnation.” Under current law, claimants need not show that a utility was negligent.

The idea behind this strict liability rule is to place the burden on the party most likely to have been responsible and which is in the best position to cover the losses — the utilities. Unfortunately, PG&E was apparently underinsured for the 2017 wildfires and claims it cannot withstand the probable losses, which are estimated at over $17 billion.

Recently, Governor Jerry Brown proposed changing the liability rule for utilities. Instead of strict liability, where negligence is not at issue, he proposed that courts examine whether the utility had acted reasonably in maintaining its equipment and trimming back the forest. The court would then balance the public benefits of the fire’s cause against the harm caused to private property.

As we pointed out last week, however, the rule change might not reduce PG&E’s liability because Cal Fire found evidence of state law violations at 11 or more of the fires.

PG&E seems to agree, calling Brown’s proposal “insufficient.” Instead, PG&E wants to change the law so that its liability would be limited as long as it followed a California Public Utilities Commission-approved safety plan. A spokesperson for PG&E called last year’s wildfires “climate driven.”

“The reforms we seek would not absolve investor-owned utilities from responsibility,” said the spokesperson. “Negligence claims against PG&E can still be pursued.”

Governor Brown’s office declined to comment.

PG&E’s market value is down by about 36 percent since mid-October. Cal Fire his still working on a report on the utility’s role in last year’s Tubbs Fire, the deadliest fire last year. It is unknown whether PG&E is responsible for any wildfires in 2018.

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