Utility wildfire mitigation bill could raise bar of proof for landowners in lawsuits

One bill aims to set a higher bar to overcome for landowners who take electric utility companies to court for wildfire damages.

Utility companies that establish a wildfire mitigation plan are protected under the bill.

The bill advanced out of the Senate Commerce and Energy Committee and now awaits the Senate floor.

Senate Bill 36 authorizes electric utility companies and cooperatives to establish wildfire mitigation plans, have the plans approved and then published publicly. Along with it, the same entities would need to submit an annual report proving compliance of the plan. The wildfire mitigation plan must be updated once every five years.

The wildfire mitigation plan must include:

1. A description of areas within the service territory or facility locations of the qualified utility, which may be subject to a heightened risk of wildfire;
2. A description of the procedures or strategies, standards, and time frames that the qualified utility will use to inspect and operate its infrastructure;
3. A description of the procedures or strategies, and standards that the qualified utility will use to perform vegetation management;
4. A description of the procedures or strategies for modifications or upgrades to electric facilities and preventative programs to reduce the risk of its electric facilities initiating a wildfire;
5. A description of considerations or strategies for de-energizing power lines or modifying electric facility operations to mitigate potential wildfires, taking into consideration:
   
   1. The ability of the qualified utility to reasonably access the proposed powerline to be de-energized;
   2. The balance of the risk of wildfire with the need for continued supply of electricity to a community; and
   3. Any potential impact to public safety and first responders, as applicable;
6. A description of the procedures or strategies the qualified utility intends to use to restore its electrical system in the event of a wildfire;
7. A description of the estimated incremental costs, if any, for the implementation of the plan, including system improvements and upgrades;
8. A description of community outreach and public awareness efforts before and during a wildfire season; and
9. A description of coordination with applicable state or local wildfire agencies.

While testifiers at the committee hearing Tuesday morning didn’t take issue with those aspects of the bill, some argued against the bill’s liability components. It would eliminate the use of “strict liability in any cause of action” that blame utility companies for wildfire-related damages. Strict liability holds a party liable for damages without needing to improve intent of that party.

Dick Tieszen identified himself as an attorney with State Farm. He called the bill a “clever shift” in legal burdens.

“It transfers the large risk to the public, to the people who are right behind by those fires. I think we should leave strict liability in place. Leave the risk of loss with the party that is best able to prevent the loss in the first place. They knew the risk when they engaged in this business,” Tieszen said. “They accepted it, but today, they come to you and they ask you to change the rules. I suggest that what will really happen here is that’s going to land squarely land in your lap, in my lap and the property owners of places in the Black Hills, whether it’s homes or businesses.”

Tieszen said strict liability applies to “hazardous” and “dangerous” companies and likened that to the electric utility companies.

However, proponents of the bill disagreed and acknowledged the widespread use of electricity today. Steve Willard, the Executive Director of South Dakota Industrial Electric Utility Companies, called that “incorrect.” He also pointed to the utility companies being required to service people in their territories.

“[That] puts a unique obligation on us to get service to those people that might be in some remote locations. So, in a case where we’re building where you’ve got wildfire and urban interface, sometimes the conditions are a little challenging,” Willard said. “And so, it’s not dangerous if you do it well, and the companies do it well. It made sense to us to extend some protections to those companies that are obligated to serve that individual.”

Under the bill, a plaintiff could recover damages from utility companies if they prove the utility failed to “substantially” comply with elements of the wildfire mitigation plan or if they can prove the utility acted with malice or criminal intent that resulted in the actual damage caused.

Plaintiffs could only recover punitive damages if they can prove damages “by clear and convincing evidence that the qualified utility acted with malice or criminal intent and the qualified utility's malicious action or criminal intent was the actual and proximate cause of damages to the plaintiff.”

Along with that, recoverable damages to personal property would be the minimal cost to restore the property to its condition prior to the wildfire…or the difference of the pre- and post-fire fair market value of the property. It would also bar recovering noneconomic losses unless the plaintiff dies or has quote “visible bodily injury in the form of a burn from a wildfire.”

Steve Siegel, a lobbyist for the Trial Lawyers Association, said that presents an issue for fire victims.

“What? No smoke inhalation, burned lungs? I’d like to know, what is the definition of visible bodily injury?” Siegel asked. “Is that with the naked eye? Is that including an MRI Scan or a CAT scan? There’s no definition of visible bodily injury.”

Sen. Steve Kolbeck is the bill’s prime sponsor, and the director of business affairs for Xcel Energy. He responded to a question on if the bill would make the affected individuals whole.

“Say three cows die, it’s going to be a lot more than that because we’re talking about a wildfire, but we’re going to pay for those cows, that grass, those haybales, that vehicle. That’s it,” Kolbeck said. “When you go beyond that, when you talk about, I have migraines because I witnessed the fire, when you go beyond that and then the money becomes more and more and more, that’s what we’re talking about. In my humble opinion, we want to make people whole, we just don’t want to make them rich.”

However, opponents said it undercuts the victims.

“Many times, in these fire cases, the victims will lose everything: their homes, their cars, photographs, clothes, family heirlooms, pets,” Siegel said. “And under this bill they simply would not be made whole. Is that fair when the electrical utility started the fire and the homeowner did not contribute to the cause and origin of the fire in any way? I don’t think it is fair.”

Siegel argued that the punitive damages “are a good inducement and a good hammer for these for these utilities to keep them in line: It makes them do what they need to do to prevent fires.”

Some insurance companies also spoke in opposition of the bill, saying it would shift costs from utility payers to insurance payers. They said that could result in an increase in certain insurance premiums.

The bill advanced out of committee in a six to three vote.