‘Compromise’ state wildfire bill pleases victims but falls short of full structural reform

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A “compromise” has been reached over major state legislation aimed at reducing wildfire risk, supporting future fire survivors and making power companies more accountable for fire risks, Gov. Gavin Newsom’s office said Saturday, Aug. 29. Wildfire survivors applauded the deal, while acknowledging that it was not yet final.

Newsom touted the deal as “real progress for future fire survivors,” but admitted that it appears to fall short of full structural reform, even by the governor’s own account, prompting him to urge broader change next year — when he will no longer be governor.

The long-awaited deal, in the form of SB 492 by state Senator Josh Becker and Orange County Assemblymember Cottie Petrie-Norris, comes after weeks of lobbying by Eaton fire survivors wary of proposed legislation that would “bail out” the giant utilities and insurance companies at the expense of survivors.

It now must go to the full Legislature for a vote by the new deadline of Tuesday, Sept. 1, because the bill must be published in print and online for at least 72 hours before either House can vote on it.

Emergency language in the bill allows a vote beyond the Monday, Aug. 31 legislative deadline.

Petrie-Norris, chair of the Assembly Utilities and Energy Committee, framed the agreement as a win for wildfire survivors.

“This solution puts them first — helping communities recover more quickly, while eliminating the Wall Street profiteering that has no place in their recovery,” she said in a statement Saturday. “We held the line to protect the people who needed it most, and I remain committed to doing the hard work ahead — mitigating fires, empowering survivors, and holding those who start them accountable — for every Californian, now and in the years ahead.”

Down-to-the-wire negotiations had lawmakers working through the night to hammer out the agreement.

“We reached a compromise that blocks hedge funds from profiteering off wildfire survivors, bars utility executives from taking bonuses when their company ignites a fire, and gets money into survivors’ hands faster,” according to a Saturday statement from Newsom announcing the deal hashed out among lawmakers, the governor’s office and stakeholders. “It also establishes a Statewide Community Wildfire Strategy to better coordinate prevention and preparedness efforts across the state.”

As it is, the bill tightens statewide wildfire risk management provisions, enacts a so-called Fast Pay Program for wildfire survivors who file claims, curbs bonuses for executives from utilities that cause major wildfires and bolsters bond provisions for the state’s Wildfire Fund, a multi-billion dollar account to keep investor-owned power companies from going bankrupt if they start a wildfire. It is funded by utility shareholders and ratepayers.

Under the new California Wildfire Relief Fast Pay provision, for instance, an administrator would establish and approve procedures “for the review, approval, and timely payment of claims by individual claimants for damages as a result of an activating wildfire.”

The bill would require settlements with utilities through the fast-pay program to count as settlements of eligible claims and to be paid from an account administered by the state. Survivors participating in the program could still proceed with litigation, according to the group, Consumer Watchdog.

Alexander Robertson, one of the attorneys representing dozens of Eaton and Pacific Palisades fire survivors, said the details still need to be hammered out.

“We’ll have to wait and see what the terms of the program are,” Robertson said, “they haven’t been written yet and the devil is always in the details.”

The bill also would ban private equity groups from buying insurance claims against utilities that start major wildfires.

The proposed legislation is generating much attention, however, for what it doesn’t include.

Before Saturday’s release of the bill, there were rumors the proposal would include a cap on attorney fees, a ban on suing for inverse condemnation and a provision to keep certain survivors from claiming smoke and soot damage. There were also concerns it would limit local governments’ ability to recover their losses from utilities as well as insurance companies, which would have translated to higher rates for policy holders.

Sen. Sasha Renee Perez, D-Pasadena, said she was awake until 3 a.m. Saturday waiting for updates. She said among the key wins for fire survivors: having the Fast Pay option  remain voluntary and the exclusion of a limit to what fire survivors can claim as non-economic damage.

Perez said the most significant win is the prohibition preventing utility CEOs from receiving bonuses if their company sparks a wildfire resulting in more than $1 billion in damage.

“This legislation now fills that gap and ensures we have a very clear and strong ban on bonuses to utility CEOs following major fires that they caused,” Perez said.

Southern California Edison did not immediately respond to a request for comment.

One hard line item that Perez said she held firm on: That the bill would not create obstacles for Eaton and Palisades fire survivors.

“The survivors I represent have already been going through the recovery process the last year and a half, and to suddenly change roles on them would have created additional stress and chaos in a time period that’s already been stressful and chaotic,” she said.

Joy Chen, executive director of the Every Fire Survivor’s Network, which has more than 10,000 members, had criticized the governor’s proposal as an “11th-hour secret utility bailout.”

Chen and the grassroots group of Eaton and Palisades fire survivors, consumer advocates and community leaders spent weeks pushing back on the bill’s harmful provisions they said favored the monopoly of Pacific Gas & Electric, Southern California Edison, and Sempra, which owns San Diego Gas & Electric.

“This is democracy at work,” Chen said in a statement, counting among the legislative wins: allowing smoke-damage survivors recovery help outside an artificial fire-perimeter line; not limiting local governments and private businesses’ ability to recover losses from utilities that cause fire; and no limits to the contingency fees of attorneys representing individual fire survivors.

“Our legislators showed Californians what representative democracy can look like when elected leaders listen to the people they serve,” Chen said. “This is an enormous victory for every Californian who could become the victim of the next utility-cased fire.”

Chen foreshadowed Newsom’s own statement Saturday morning that full structural reform should be taken up next year, saying on Friday that lawmakers should instead “solve the real problem: investigate why these three companies keep causing catastrophic fires and what it will take to make Californians safer.”

Indeed, Newsom conceded the point Saturday morning in announcing the plan, which now goes to the full Legislature this weekend to meet an extended Tuesday deadline, and ultimately to Newsom’s desk to sign.

“Nonetheless, this system needs full structural reform — not a partial one,’ Newsom said. “I urge the Legislature to build on this progress next year and finish the work we started to secure the Wildfire Fund’s long-term durability, stabilize electricity rates, and ensure fire victims are never again turned into unsecured creditors in a bankruptcy proceeding.”

Edison, which for months has acknowledged that its equipment might have ignited the disastrous blaze, faces thousands of survivor claims. But the Rosemead-based utility has also said that it acted “prudently” related to managing risk.

A showing of prudence is key under a 2019 law that Newsom introduced that protects the utilities from bankruptcies.

Still, the official cause came amid a battle in Sacramento that centered on a key tension: How to divide up the costs among utilities pressing to limit ever growing wildfires liability, ratepayers, insurers, taxpayers and survivors.

Officials at the governor’s office have dismissed the notion of any secret bailout, stating that the Newsom administration has been working on this issue for more than a year, since it became clear that an existing account, the California Wildfire Fund, to compensate wildfire survivors would be depleted following the 2025 Southern California wildfires. The fund has $21 billion, with another $18 billion in funding recently approved.

Fire survivor advocates celebrated one win earlier this week, when Bloomberg reported on Aug. 25 that a plan backed by Democrats in the state Senate would not have limited insurers from suing utility companies to recoup payouts to policyholders.

Lawmakers rejected the governor’s plan to cap the damages wildfire victims can recover, and limiting how much insurance companies can get paid back. It could have cost policyholders hundreds of dollars per year and homeowners in high-risk areas thousands of dollars annually, critics said.

Legislators “have rejected nearly all of the Governor’s original bailout terms, including his attacks on survivors’ rights to recover economic and noneconomic damages and his devastating proposal to deny recovery to smoke-damage survivors outside an artificial fire-perimeter line,” Chen said. “Preserving these rights is an enormous victory for all Californians.”

The wait for the bill was animated in recent weeks by frequent caravans and post-card campaigns pressed by Eaton and Palisades survivors. Such lobbying and rallying included civil rights and consumer advocates, faith leaders, community organizations.

Nic Arnzen, chair of the Altadena Town Council, said the possible passage of SB 492 is only one of other legislative concerns on fire survivors’ minds. He spoke with Rep. Laura Friedman on Friday to push for LA Fire Recovery Funds to be included in the next federal appropriations bill, when the Legislature is back in session.

It is part of the political education Altadenans are earning in the 19 months since the Eaton fire killed 19 and destroyed more than 9,000 structures, causing an estimated $7.8 billion in damage.

Arnzen, who remains displaced as he, his husband and their children rebuild their Altadena home, is working first in keeping his town connected with each other, and also lobbying for what many residents call “good” bills in the pipeline.

State Sen. Perez, who authored SB 1090, is headed to the Senate floor. The bill would give Altadena the same protection as Pacific Palisades from state laws that allow developers to split lots.

“If it passes, it’s a huge win for us,” Arnzen said. “It’s a real David vs. Goliath situation: big, greedy, deep-pocket developers and the YIMBY (Yes In My Backyard) movement, with all their money, are up against vulnerable, beaten-down, broke Altadenans coming together to stand up for what is right.”

Another bill, AB 1642, authored by Pasadena Assemblymember John Harabedian, would create insurance standards for toxicity in homes and buildings after a wildfire. That proposal is awaiting votes in the Senate.

At least through the weekend, Eaton and Palisades fire survivors were giving thanks to their elected lawmakers.

“They listened,” Chen said. “And in the face of extraordinary pressure from some of the most powerful interests in our state, they centered survivors and California families.”

This is a developing story. Check back for updates.

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