PG&E Must Face Claims in Wine Country Wildfires

SAN FRANCISCO (CN) – Pacific Gas and Electric must face claims that its power lines sparked at least some of the Wine Country wildfires that killed 44 people and caused billions of dollars in damage last fall, a California judge ruled Monday.

San Francisco Superior Court Judge Curtis Karnow overruled PG&E's demurrers, or objections to claims alleged in dozens of lawsuits filed by individuals, insurance companies and three California counties.

PG&E argued the plaintiffs could not use a legal concept called inverse condemnation to hold it liable for property damage. Under that state law concept, a public entity such as a utility company can be held liable if its equipment is found to be a substantial cause of property damage, regardless of whether the entity acted negligently.

Because there is no guarantee PG&E can pass on fire damage costs to ratepayers, the utility argued it cannot be considered a public entity and therefore is not subject to inverse condemnation.

Karnow rejected that argument, finding the state's public utility regulator could still let PG&E pass fire damage costs on to ratepayers if PG&E was found to be a "prudent manager" and not at fault or negligent in maintaining its power lines.

Accepting PG&E's argument would mean that a private utility company could never be subject to inverse condemnation, Karnow said. That claim is directly contradicted by the 2012 California appellate ruling Pacific Bell Telephone Co. v. Southern California Edison Co., in which a power company was held liable for electrical damage to telephone lines, the judge concluded.

Karnow also dismissed PG&E's arguments that applying inverse condemnation in this case would violate PG&E's due process rights and go against the Takings Clause of the U.S. Constitution.

"It is not arbitrary or irrational to require a privately owned public utility, which has been granted monopoly or quasi-monopoly status by the state and which is authorized to pass on its costs to ratepayers upon satisfying a prudent manager standard, to pay property owners for damages caused by its instrumentalities," Karnow wrote in his 10-page ruling.

Karnow also denied PG&E's request to immediately appeal his ruling, finding the case must still proceed on other claims that involve the same evidence

"whether inverse condemnation is involved or not."

PG&E said in an emailed statement that it continues to believe that inverse condemnation, as applied to a privately owned utility, is a "flawed legal doctrine that is bad for Californians."

The California wildfires raged for 23 days in October 2017 and destroyed more than 21,000 homes and 2,800 businesses. They caused at least $9.4 billion in damage, according to the state's Department of Insurance.

The North Bay fires scorched about 245,000 acres across several counties in Northern California.

Cal Fire has yet to determine a cause for the approximately 250 wildfires that broke out last October, but Santa Rosa city investigators found PG&E power lines ignited at least two small fires on Oct. 8.

PG&E announced in March that it will turn off electricity in wildfire-prone areas when wind and other factors make the rapid spread of flames more likely.

PG&E spokesman Air Vanrenen said the company remains committed to public safety and supporting recovery efforts in the North Bay.

"The safety of our customers, their families and the communities we serve is our most important job," Vanrenen said in an email. "The loss of life, homes and businesses in these extraordinary wildfires is simply heartbreaking, and we remain focused on helping the North Bay communities recover and rebuild."

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