By Bob Christie
Capitol Media Services
PHOENIX – The state's largest electricity provider and other utilities will get a second chance Monday to see the Arizona House consider legislation shielding them from much of the liability they currently face if their equipment starts a catastrophic wildfire.
The measure backed by Arizona Public Service Co. and other electric providers failed by a 32-28 vote last week over concerns about the new liability shield. It’s opposed by insurance companies and trial lawyers because it strips homeowners and insurers of much of their current ability to recover damages from utilities responsible for starting a blaze.
Changes to the liability limits will be needed to win over lawmakers who voted against the bill last week. But just how much they are pared back won’t be known until amendments are made public before Monday's action.
APS and other backers tout the proposal's provisions requiring utilities and public power co-ops to create wildfire mitigation plans and file them with regulators. Power companies must identity and manage wildfire risks and consult with state and federal land or fire officials before submitting the plan.
Critics note that there’s nothing in HB 2201 requiring any standard for those plans. And once filed, a mitigation plan would be considered approved and if the utility substantially follows it, allow them to say they met the standards of care.
The move comes as utilities in California and Oregon have faced massive lawsuits after wildfires started by their power lines destroyed entire communities. Power companies across the Western U.S. fear the same will happen to them.
The problems for opponents come from provisions that give utilities major new cover from liability for causing a fire.
The proposal rejected by the House last week bars fire victims from banding together to file class-action lawsuits, raises the standard of proof needed to hold a power company liable and prevents businesses and homeowners from recovering extra compensation for things like lost income or expenses incurred as a result of a fire. And it rejects any punitive damage awards -- even if the utility ignored its own plans and failed to shut off power during a major wind event.
Rep. Walt Blackman, R-Snowflake, voted against the measure because of the lawsuit limits in the bill sponsored by Rep. Gail Griffin, R-Hereford. But he then made a motion for it to be brought back for a second vote later.
"I am having problems with the fact of the limited liability on this,'' Blackman said while explaining his 'no' vote. "As you know, we have suffered a lot of wildfires in my neighborhood, in my community, and a lot of those folks, when they file for claims, they're being turned away.''
Other conservative Republicans also voted against the measure, which received bipartisan support and opposition.
Rep. Alex Kolodin, R-Scottsdale, said the measure runs afoul of a state constitution provision that bars laws that limit the right to sue. The attorney who reviews proposed House laws for constitutionality reached a similar conclusion.
"The Arizona Constitution protects us from measures such as this that seek to use the power of big business to force this body to abrogate the rights that Arizonans have enjoyed since statehood to bring positive action under the common law,'' Kolodin, a lawyer, told fellow lawmakers during the vote. "It's worked for 400 years, and there is great wisdom in what our framers did for us. Let's stand strong and not be the reason why, if God forbid, one of our districts burns, our constituents blame us.''
Rep. David Livingston, R-Peoria, also opposed the measure, although for a different reason.
"Are we transferring risks to insurance companies that we have to pass through that risk to the owners of the homes and insurance policies to protect the house for fire?'' he said. "Or will the insurance companies decide it is too risky to do business in Arizona and not even issue new policies when the existing policy premiums expire.''
Blackman told Capitol Media Services on Friday that Griffin needs to make major changes to the liability provisions to get his support, but that he's confident that she will succeed.
"We've got to make sure that people have that safety net, and that's the liability,'' he said.
"We've all got to meet somewhere in the middle and I'm hoping that we can do that,'' he continued, saying Griffin and Kolodin should be able to come up with something "so we can protect people, particularly people up in my neck of the woods.''
APS lobbyist Michael Vargas said during a House committee hearing early this month that his company is in "enthusiastic support'' of the bill. He said opponents' arguments about liability are incorrect.
"All this legislation does is clarify how liability is prescribed up against the filed and approved wildfire management plan,'' Vargas said. "At the end of the day, if we're at fault, we're at fault, and we're going to be liable and we're going to take full responsibility for anything that may have occurred.''
Tucson Electric Power, Salt River Project and several power co-ops across the state support the measure. Also backing the measure are unions and some city and county officials in rural Arizona.
But Barry Aarons, a lobbyist for the Arizona Trial Lawyers Association, disagreed that the bill only clarified rules for suing power companies. And he answered a question a backer of the bill, Rep. Teresa Martinez, R-Casa Grande, asked of insurance lobbyist Laura Curtis: whether insurers wanted to be able to sue utilities.
Yes, Aarons said.
"The Seventh Amendment, the United States Constitution, guarantees right to trial by jury. You have a right to access to the courts,'' he said. "The provisions of this bill will deny you that access, period. That's true. That's an incontrovertible fact.''
Asked if the company had written the legislation now being considered, APS spokesman Mike Philipsen said in a statement that it "routinely work(s) with elected representatives to advocate for legislation that impacts APS, our customers or our rates.''
"APS supports HB 2201, which protects Arizona communities from the threat of fire by setting clear statutory standards for wildfire mitigation, holding utilities accountable, and protecting customers from bearing unreasonable costs from lawsuits,'' said Philipsen. "The measure is supported by firefighters and fire districts, a broad coalition of business and community leaders, and labor unions.''
But insurance company representatives told the House committee hearing the bill that the changes would shift liability from utilities to insurers and ordinary homeowners or business owners.
Marc Osborn, a lobbyist who represents insurers Farmers, Geico, Nationwide and Allstate, called Griffin’s legislation "one of the most aggressive liability prevention bills that we've seen in any of the states.''
"There's been about six or seven major utility caused fires across the U.S.,'' Osborn said. "And insurance companies, individuals in cities and towns generally, if the utility causes a fire, will attempt to recover their lost costs.''
If Griffin's bill becomes law, he said recovering those damages from utilities will be nearly impossible.
The measure gives the power companies sole responsibility for deciding whether to turn off their power transmission lines during high winds which can cause wires to shower nearby vegetation with sparks and trigger a fire.
"What that means is, if they keep their power on during a high wind event and it causes a fire, they are no longer liable for that decision,'' Osborn said.
Laura Curtis, testifying on behalf of the American Property and Casualty Insurance Association, said the insurers are very supportive of fire mitigation efforts but that "this bill is not a simple mitigation piece of legislation.''
She noted that it makes it harder for a property owners to recover damages from a utility by raising the legal standard for evidence of negligence to "clear and convincing.'' That’s a super-high legal standard that’s rarely used in civil lawsuits.
Combining several major changes to how people can sue utilities essentially provides them near-blanket immunity, she said.
"What we don't want is for them to be able to circumvent any and all liability, which is what this bill does,” Curtis said, calling it the "most aggressive'' bill of its kind the insurance industry has seen nationally.
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