Arizona Senate Committee Set to Tweak Utility Liability Bill
The Arizona House passed a significant bill to protect utilities like Arizona Public Service and Tucson Electric Power from lawsuits related to wildfires ignited by their equipment. However, key elements of this legislation are likely to be revised in a Senate committee hearing, according to Sen. J.D. Mesnard, the chairman of the Finance Committee.
Mesnard has indicated that he will propose amendments to remove certain controversial parts of the bill. Notably, he plans to eliminate a requirement for plaintiffs to demonstrate “clear and convincing” evidence of utility fault—a standard higher than typical civil cases. Additionally, Mesnard aims to strike out restrictions on claiming “consequential damages,” such as loss of business income or costs incurred while awaiting a replacement vehicle.
“The analogy that resonates with me is, I get in an accident (and) the person’s at fault, but my car is totaled, and I still need to get to work,” Mesnard explained. “Well, I need a rental car to make that happen, and that’s a consequential damages thing.”
Amendments will also reinstate the possibility of punitive damage awards against companies whose negligence leads to wildfires. The legislation, as it stands, offers utilities significant legal protection if they adhere to newly required “wildfire mitigation plans.”
However, Mesnard aims to refine these protections by removing a clause that would grant immunity to utilities that only “substantially comply” with these plans. This change addresses concerns that utilities might receive liability protection even when failing to fulfill essential plan components, such as vegetation management along power line routes.
Further modifications involve shifting the review of public utilities’ mitigation plans to the state Department of Forestry and Fire Protection, rather than allowing utilities like the Salt River Project to approve their own plans. Mesnard remarked, “That resonated with me, the idea of having your own board approve your plan, and that allowing for you to then have immunity or some degree of protection. That did not make sense to me. I needed there to be some other authority.”
The proposed House bill, with its “substantial compliance” provision, raised legal concerns due to a potential conflict with the state constitution, which protects individuals’ rights to seek compensation. Mesnard’s amendments are designed to mitigate these issues.
To reach a compromise, Mesnard engaged with APS lobbyists and opponents, including insurance industry representatives and trial lawyers. An APS spokesperson expressed support for the bill and Mesnard’s proposed changes, while an SRP representative indicated a need to review the final amendments. TEP spokesman Joe Barrios welcomed the guidance, stating that it would protect customers from higher rates caused by wildfire liabilities.
Past incidents in states like California, Oregon, and Colorado, where utility equipment was linked to devastating wildfires, highlight the stakes involved. For example, Pacific Gas & Electric Co. faced bankruptcy after a 2018 fire in Northern California, prompting the company to invest billions in victim compensation and stock offerings.
While Mesnard’s revisions have garnered some support, concerns remain. Marc Osborn, representing major insurers, acknowledged that while utilities gain substantial protections, the amendments present more opportunities for compensation. “It is a lot, a lot better,” Osborn commented. Barry Aarons, representing trial lawyers, noted that the bill still poses significant challenges for individuals seeking damages.
If the Senate committee adopts Mesnard’s amendments, the bill will proceed to the full Senate and then return to the House for approval. Ultimately, Governor Katie Hobbs will have the final say on its enactment.
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