Water utilities being held liable for wildfires


Cal Water urges cities to support legislation protecting water systems from lawsuits if wildfires damage pipes to hydrants, fire suppression systems
By Reggie Ellis @Reggie_SGN
VISALIA – The people in charge of pressurizing hydrants to fight fires are now being held liable for the damage the fires cause.
At its Aug. 5 meeting, the Visalia City Council unanimously approved a letter of support for California Water Service’s effort to eliminate water suppliers’ liability due to wildfires. California Water Service, which operates Visalia and 22 other municipal water systems throughout the state, says the threat of legal action against water suppliers is “arcane” legal reasoning and could actually put water users at risk.
California’s wildfire seasons grow longer and more deadly every year. In just the last four years, California has experienced 10 of its most destructive wildfires, and the deadliest and most destructive wildfires in the state’s history took place in 2018. Chief among them was the Camp Fire which burned an entire city to the ground in November. Utility companies earned the ire of residents, businesses and municipalities after investigators determined the Camp Fire was sparked by PG&E powerlines. The lawsuits led to the private investment utility declaring bankruptcy and settling a lawsuit with cities for $1 billion this summer. Electric utilities and now water utility providers are being sued under the legal concept inverse condemnation. The idea is essentially the opposite of eminent domain. It allows property owners to just compensation if their property is damaged by a public use, primarily in the case of wildfires, regardless of whether or not the agency was at fault. The rule also allows investor-owned utilities, such as Southern California Edison and California Water Service, to increase rates to recover those costs from ratepayers. 
“California Water Service, other community water systems, firefighters, and labor unions throughout the state have called upon the State Legislature and Governor Newsom to implement common-sense reforms that will help protect communities from future wildfires and ensure the safety of California’s drinking water systems – the lifeblood of every community and an essential first line of defense for firefighters,” wrote Tammy Wilson, Visalia District Manager for Cal Water.
The letter of support is in response to the Yorba Linda Water District in Orange County being sued for millions when its water lines were damaged during the 2008 Freeway Complex Fire. The fire was started by a car, was in no way connected to the water district, their facilities were damaged and they could not pump water to one neighborhood to fight the fire. The district ended up paying $69 million in damages. 
Wilson wrote that similar lawsuits are now being filed against other public drinking water suppliers, and additional lawsuits may be forthcoming as additional wildfires are encountered.
“In light of the growing threat posed by wildfires in California, we are very concerned about the consequences that could befall our communities if the state’s drinking water suppliers continue to be potentially held liable for fires they have no role in starting,” Visalia stated in its letter of support. “Ironically, holding drinking water suppliers financially responsible for these wildfires could, inadvertently, increase the risks our communities face from more traditional urban fires.”
In a recent report issued by the Governor’s Office of Planning and Research, utility bankruptcy ends up being more costly to victims of wildfires because it moves cases from civil court to bankruptcy court and ends up creating a financial burden on rater payers. In the case of water utilities, inverse condemnation could result in companies like Cal Water being unable to provide clean drinking water to communities. The report from the Commission on Catastrophic Wildfire Cost and Recovery recommended inverse condemnation only be applied if there is fault on the part of the utility, creating a Wildfire Victims Fund regardless of insurance, shifting high insurance premiums to those who live in “high-risk communities” for wildland fires to incentive homebuilding and buying outside of these areas.
“On behalf of the 143,000 customers we serve in and around Visalia, please join us in calling on the Governor and Legislature to implement common-sense reforms making it clear that community water systems should not be held responsible for the damage from fires they and their facilities do not start,” Wilson wrote in her letter to the council. 
The Legislature has continued to hold informational hearings on the issue and we hope to see action from them soon. To learn more, visit www.firesafecalifornia.org.