Breaking News
More () »

Federal lawsuit aims to strike down new California 'Wildfire Fund' law signed by Governor Newsom

California recently passed a law meant to protect its three large electric monopolies, but a federal lawsuit seeks to block it from taking effect.

SACRAMENTO, Calif. — A lawsuit filed Friday in a San Francisco federal court aims to strike down California’s new law meant to help power companies cover the cost of wildfire damage caused by their equipment.

Attorney Mike Aguirre argues that Assembly Bill 1054, which would establish a $21 billion Wildfire Fund to help utilities pay claims from the victims of future wildfires, is unconstitutional because it takes money from power customers without due process.

The lawsuit could end up being handled by Federal Judge William Alsup, the same federal judge who’s currently supervising PG&E's probation. The utilities monopoly is serving a sentence of five years of probation for six federal felonies, crimes that it committed in connection with causing — and covering up the cause of — the 2010 San Bruno gas pipeline explosion, which killed eight people.

PG&E is also blamed for sparking wildfires that killed 107 people in 2017 and 2018, including the Camp Fire, California’s deadliest wildfire.

Aguirre is filing a motion asking Alsup to take the case, due to the judge’s experience and expertise with the issue in PG&E’s criminal case.

Critics, like Aguirre, argue that AB 1054 amounts to a new “bailout” for power companies because it established a $21 billion Wildfire Fund to help utilities pay claims from the victims of future wildfires. The initial money for that fund would come from ratepayers and utility companies.

The lawsuit comes amid controversy over PG&E’s proposal to increase utility rates by $1 billion next year, justifying more than half of the proposed rate hike on the need to spend more on wildfire safety. The company and state regulators heard hours of angry comments this week about the rate hike in Butte County this week, where the Camp Fire destroyed the town of Paradise.


'They’ve gotten too big, too powerful' | Camp Fire survivors meet with utilities commission about PG&E proposed rate increase

Customers slam PG&E's proposed rate hikes at utility commission hearing

Utilities Commission to hold public hearings on PG&E rate hikes

The bill allows power companies to earn safety certificates from the state, which would shift the burden onto customers to prove that power companies were unreasonable in starting wildfires in order to avoid having to pay for fire damage on their monthly power bills.

Aguirre, a former city attorney for San Diego and a former federal prosecutor, says the law is unconstitutional in part because the legislature rushed the bill through without giving proper input to customers. He says that denies due process rights and is an unconstitutional “taking.”

The suit claims AB 1054 would force “unjust and unreasonable rates” upon customers and the bill was “improperly designated as an urgency measure” by the legislature, which changed an unrelated bill and inserted the new wildfire liability language in its place in order to allow the bill to pass without following the ordinary rules for advance notice of hearings.

Supporters of the bill argued it was urgently needed to prevent further credit downgrades of California utility companies, which would make it more expensive for the power companies to borrow money.

Aguirre says the bill is a bailout that makes it much easier for power companies to make customers pay for wildfire damages. With AB 1054, Aguirre says customers can now be made responsible for paying back potentially limitless liabilities connected to future wildfires.

The lawsuit also argues that lawmakers and the governor were improperly influenced by campaign donations from power companies, pointing to an ABC10 Originals investigation that found Governor Newsom and 98 lawmakers took campaign money from PG&E.

ABC10’s investigated state campaign finance data as part of its recently-released documentary series FIRE – POWER – MONEY: California’s burning crisis and how it’s going to cost us all. The investigation revealed PG&E donated $4.4 million to political campaigns during the 2018 election cycle. Politicians accepted the money despite the fact that PG&E began serving its sentence of five years of probation in January 2017. 

It's also perfectly legal for a convicted felon — whether person or corporation — to donate campaign money. And perfectly legal for a politician to accept the money.

“We’re not saying [the political donations are] bribery, but I can see how someone could make that argument,” Aguirre said.

Gov. Newsom refused to answer questions from ABC10 about whether it was right for his campaign and his PAC to accept $208,400 from PG&E during the election. Two of the 98 lawmakers who accepted the funds decided to donate that money they received from PG&E after ABC10 asked why it was right to accept campaign money from a felon on probation.

Aguirre’s lawsuit, filed on behalf of two PG&E customers, lists PG&E’s donations to members who voted yes on AB1054. The list spans four pages.

Judge Alsup blasted the company for paying billions in profits to investors in recent years instead of spending more to improve the safety of its equipment.

“We need to have a change in management of utilities, a change in priorities. The focus needs to be providing safe electricity not just saying that but actually requiring utilities to strictly follow safety rules they haven’t been following and which they have been systematically violating,” Aguirre said.

Aguirre compares the bill and campaign contributions by PG&E to the behavior of organized crime, arguing that power companies should focus on making their systems safer instead of relaxing the laws meant to hold them accountable for safety. He told ABC10 that he'd like to see the FBI investigate PG&E.

“I think it would be helpful. The victims of this are not just the people who have lost their homes, their lives, many of whom can’t rebuild their homes but there’s an expanding group and now they are taking the hardworking families of California and putting the burden on them with ever high rates and making them pay for electricity,” Aguirre said.

Aguirre wants a judge to block AB 1054 while his lawsuit is pending and awaits a jury. ABC10 reached out to California Attorney General Xavier Becerra’s office for comment on this pending litigation against the state, but it has not yet responded.

Becerra’s office also has not responded to ABC10's questions about campaign money he received indirectly from PG&E. A group called “Building and Protecting a Strong California,” which was partly funded by PG&E, spent $197,264 on television ads to campaign on Becerra’s behalf in the 2018 election.

The attorney general’s office has partnered with the Butte County District Attorney to investigate possible criminal charges from the 2018 Camp Fire, which killed 85 people in and around the town of Paradise. Butte County District Attorney Mike Ramsey said he’s contemplating filing charges as serious as 85 counts of manslaughter and 14,000 counts of reckless arson against PG&E, and possibly some of its officials and employees, for the lives and homes lost in the Camp Fire.

The Camp Fire was started by a high-tension power line owned by PG&E, which the company does not dispute. The power line has been permanently disabled. 

Before You Leave, Check This Out