Is climate change responsible for the severity of California's recent spate of devastating wildfires? Several big utility companies are being sued or threatened with inverse condemnation for their roles, if any, in the damage. A story today in Climate Liability News ("California Utilities, Climate Change and Wildfires: A Liability Quagmire") details the response by the utilities, which includes pointing the finger at climate change, petitioning the California PUC for rate hikes, and asking the California legislature for changes to the state's inverse condemnation law:
The bill is a reaction to a debate over whether San Diego Gas & Electric could pass on the $379 million from the 2007 fires that it couldn’t cover through insurance. The commission denied the utility’s request last November because it said the company caused the fire with improper maintenance of power lines. The commission also said it wouldn’t automatically deny rate increases in future cases in which the utilities were at fault.We contributed to the story to point out that inverse condemnation liability is built on the concept that the burden of public benefits (utility services) should not rest on individual victims of the fire, and the point of this form of liability is to spread it among the public which benefited:San Diego Gas & Electric is appealing the decision, arguing that it wasn’t at fault. The company said the fires were caused by “hurricane-force winds,” high heat and low humidity. Its two fellow utilities are lobbying the commission to change its mind as well.
The central issue in the appeal, however, is all about inverse condemnation, which is based on the California and U.S. Constitution and says government should compensate property owners for the damage it caused. California courts have applied that doctrine to private utilities as well since the same liability exists for government-owned electric service providers.
Inverse doctrine holds that utilities could be liable even if they weren’t negligent. That means power companies could be required to compensate property owners even though they followed safety rules.
“The theory behind it is to create an incentive for utilities to take even stronger actions to make sure it doesn’t happen again,” Hecht said.
The courts have applied inverse condemnation with the understanding that the cost of the damage would be shared by many, said Robert H. Thomas, an attorney who chairs the state and local government law section at the American Bar Association.
Two thoughts.
First, as a theory of liability based on the constitution, is inverse condemnation subject to legislative limitation? Or is California like North Carolina where there's also a statutory cause of action? Second, if the utilities were actual public entities, would there be any question that taxpayers would have to shoulder the burden of any just compensation and damage judgments? If that's so, why can't utilities do the same?
