California Gov. Newsom and lawmakers strike last-minute deal on wildfire liability reforms
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Governor Gavin Newsom and state leaders reached an urgent agreement to modify wildfire liability rules, aiming to curb utility costs and limit insurance subrogation, though the pact falls short of the governor’s original proposal.
California Governor Gavin Newsom and legislative leaders announced an eleventh-hour agreement to amend rules governing wildfire liability, a move intended to lower electricity rates and speed payments to fire survivors. The deal, crafted after months of closed-door talks, would bar hedge funds from extracting large settlements from utilities after a blaze and prevent utility executives from receiving bonuses when their equipment causes a fire.
State Senator Josh Becker, the bill’s author, said the legislation is "one of the most consequential pieces of legislation for victims and survivors of wildfires that we’ve ever done," adding that it aims to ensure fair, prompt compensation and limit Wall Street profits from fire-related claims.
The proposal, Senate Bill 492, also creates a program to accelerate claim payments for wildfire victims. However, it does not fully block insurers from suing utilities to recover payouts, a measure Newsom had originally sought. Instead, the agreement seeks to restrict insurers from selling those subrogation rights to private-equity firms, which can purchase claims at a discount and drive up litigation costs.
"This is all real progress for future fire survivors," Newsom said in a statement, while noting that the reforms represent only a partial step toward broader structural change.
The urgency clause will allow a two-thirds vote in both the Assembly and Senate as early as Tuesday, after the legislative session’s scheduled close. California law currently holds utilities such as PG&E and Southern California Edison liable for fire damage caused by their equipment, even without a finding of negligence, a factor that contributed to PG&E’s 2019 bankruptcy after the 2018 Camp Fire.
Utility-related wildfire charges now add roughly $41 per month to the average PG&E bill and $27 to SoCal Edison bills, according to a recent state report. UC Berkeley Energy Institute faculty director Meredith Fowlie warned that the reforms do not eliminate fire risk for residents near power infrastructure, noting that homeowners can lower insurance premiums by fire-proofing their properties and creating defensible space.
The state’s insurance market is also strained, with many carriers pulling out of high-risk areas and leaving residents to rely on the FAIR Plan, the state’s insurer of last resort. Survivor groups and trial attorneys expressed mixed reactions; Every Fire Survivor’s Network executive director Joy Chen said the deal reflected survivor input after “extraordinary pressure from some of the most powerful interests in our state.”
The agreement also imposes a 30-day pause on unsolicited lawyer contacts to survivors after a fire and caps attorney fees in subrogation cases at 10 percent of the settlement. Former insurance commissioner Dave Jones warned that shifting more liability to insurers could increase financial strain on survivors and taxpayers.
Republican leader-elect Senator Roger Niello questioned whether the three-day window before the vote provides sufficient time for public review, emphasizing the need for “financially sound solutions” and stronger wildfire mitigation.
The legislation will be voted on before the session ends on Monday, marking the final legislative action of Newsom’s term as the state heads into its peak wildfire season.