The Commission on Catastrophic Wildfire Cost and Recovery Releases New Draft Report

Wed Jul 3rd, On Environmental Law, by

In response to the number of catastrophic wildfires occurring in the State of California, Governor Brown signed Senate Bill 901 (SB 901) into law on September 21, 2018. With the objective to mitigate wildfire risk and increase the rate of recovery, the Bill outlines a number of revisions to current law while establishing new requirements, such as the formation of the Commission on Catastrophic Wildfire Cost and Recovery. This Commission will have the obligation to report to the Legislature and Governor after assessing issues regarding catastrophic wildfires. Recommendations and changes to the law are to be provided by July 1, 2019 in order to “ensure equitable distribution of costs among affected parties.”

On May 30, 2019, the Commission released a draft report to present several ideas, which were discussed at the June 7, 2019 meeting in Sacramento, California. The draft report included an executive summary by the Commission and other workgroups to analyze utility wildfire liability, funding mechanisms, and mitigation techniques.

Under the doctrine of inverse condemnation for electric and water utilities, the strict liability standard is currently used, which holds the idea that property owners must compensate for damaged property. The Commission has made the recommendation to replace this current liability standard with the fault-based negligence standard, holding those at fault responsible for the damages. Ultimately, the legislators have shown resistance towards this idea as the draft report does not specify how this transition would be accomplished. In addition to this suggestion, the Prudent Manager Standard was another topic discussed as a method to alleviate the cost of wildfire damages. The Commission urged: “(1) shifting the burden of proof for showing prudent management, (2) refining and shifting the weighting of existing factors for cost recovery, or (3) creating a limitation on shareholder liability if shareholders make an upfront contribution to a Wildfire Victims Fund.”

In searching for effective funding mechanisms, the Commission has purposed a Wildfire Victims Fund and Insurance. It has been noted that the Wildfire Victims Fund would be a broadly sourced fund dedicated to mitigating wildfire costs and maintaining the state’s utilities. The insurance would then include “preservation of the state’s risk-based approach to pricing insurance, improve the FAIR plan (an insurance association that offers coverage to homeowners struggling to obtain coverage from other insurers), and to increase the claims cap for California Insurance Guarantee Association.”

While considering mitigation and prevention efforts, the draft report sets forth the Wildfire Mitigation Program and Electric Utility Wildfire Board. The mitigation program would authorize a Wildfire Vulnerability Risk and Reduction Coordinator to work within the Governor’s Office of Planning and Research. Further, the program aims to increase the state’s investment in wildfire prevention, make private property maintenance laws more consistent, and to create a development fee for construction occurring within the wildland-urban interface. Finally, the Electric Utility Wildfire Board will be held responsible for bringing all utility catastrophic wildfire prevention and mitigation into a single entity. This entity would create and enforce new safety standards.

The California Environmental Attorneys at Bick Law LLP will continue to monitor litigation created to address the catastrophic wildfire issue in California.

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