Other industries could end up facing wild fire-climate change litigation like PG&E, business expert predicts

By John Breslin | Jan 29, 2019

SAN FRANCISCO - Natural gas pipeline operators, auto manufacturers and construction firms could all end up paying for wild fires blamed on climate change, according to a leading expert on business and energy policy.

But electricity companies will remain the most obvious targets of lawsuits, predicts professor Severin Borenstein, of the University of California-Berkeley.

California electricity giant PG&E filed for bankruptcy early on Tuesday in the face of crippling claims relating to wildfires dating back to 2017. The company says it faces 750 lawsuits on behalf of 5,600 claimants with potential liability of $30 billion. It claims debt of $50 billion. 

Even as an official report published Thursday revealed the company's power lines were not the source of the deadly Tubbs Fire in the Sonoma and Napa Valleys in October 2017, PG&E said it "still faces extensive litigation, significant potential liabilities and a deteriorating financial situation."

Cal Fire, the state forestry and fire protection agency, identified the home of an elderly woman who had been out of town at the time as the likely ignition point of the fire.

However, a federal judge, in a criminal court case against the company, noted that fire investigators found that the utility caused 18 wild fires, 12 of which could lead to criminal prosecution.

And, plaintiff lawyers are arguing that the utility company, knowing of the projected high winds and a prolonged period of parched earth, should have cut the power off in the entire area.

San Francisco attorney Mike Kelly, who represents some 250 plaintiffs, said that a plan should have been in place to cut power when high winds are blowing and the landscape is dry.

Kelly told SFGate news service that PG&E is “required to use reasonable care in the operation of their utility” or face liability for damages caused by negligence.

Borenstein, faculty director of the Energy Institute at Haas Business School, told the Northern California Record attributed wild fires to climate change and said "the whole area" should be "de-energized."

"I am not sure it is the first but I think it is a pretty dramatic bankruptcy of the climate change era," Borenstein said, adding that the company is accused of negligence of a type that would not have caused as near as much damage 30 years ago.

Borenstein said PG&E is insured for less than $1 billion, a fraction of its potential liabilities and "catastrophic losses" of the last two years.

"But regulators never told the company it was under insured...(I was) not aware of any discussion," said Borenstein. "It is a level of insurance not envisioned until 2017."

If increasingly destructive fires are becoming the new normal, then the electricity industry could face "much more deeply invasive regulation," the business professor predicted, citing rules and regulations governing industries such as airlines and nuclear energy facilities.

Changes to safety procedures, including area power shut downs, vastly improved maintenance, and other planning may be what happens in the future, said Borenstein, in contrast to now where regulators have relied on tree trimming for fire prevention.

Borenstein noted that there was another major factor in the mix, population growth and the spread of building into areas prone to more fierce wildfires. Barring construction in certain areas could be introduced in the climate change era, he said.

Looking to the future, and other industries that may face claims of liability, Borenstein said the key is whether a specific company can be blamed for the ignition of a fire.

Other natural phenomena that appear to becoming more frequent and destructive due to climate change, such as hurricanes and tornadoes, according to Borenstein, cannot be linked to any specific company or industry.

But construction, cars, natural gas pipelines that, in the future, could be linked to the start of a fire may lead to specific companies being blamed and sued, Borenstein said, because they are all potential igniters.

Meanwhile, PG& has argued that proposals by U.S. District Judge Willliam Alsup to mitigate fires and prevent other safety risks could cost as much as $150 billion and interfere with federal and state regulators, according to the Associated Press.

In a filing Wednesday, the utility wrote that the criminal case linked to a deadly 2010 gas pipeline explosion was not the right place to make such comprehensive orders.

 Alsup has proposed ordering PG&E to remove or trim all trees that could fall onto its power lines, cut off power during certain wind conditions, and reinspect the entire grid. Prosecutors have pushed back against the proposals, asking the judge, who is looking at wildfire and other risks as part of the probation process, to work with a court-appointed monitor.

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