By Sophia Bollag, Megan Fan Munce, Kathryn Palmer, Staff Writers, SAN FRANCISCO CHRONICLE
SACRAMENTO — As his time as governor comes to a close, Gavin Newsom is wading back into the same thorny political thicket he found himself in when he was first elected: wildfire liability.
The Camp Fire in Paradise broke out days after Newsom was elected governor in 2018, quickly becoming the deadliest wildfire in California history. A week after he was sworn in, the state’s largest electrical utility, Pacific Gas & Electric, announced it would file for bankruptcy (opens in new tab) after it became clear its equipment likely ignited the fire.
Newsom spent months excoriating the utility (opens in new tab) for failing to properly maintain its equipment and harming Californians, even as he was forced to coordinate with the company, which an estimated 16 million Californians rely on for electricity and gas services. That year, he worked to create (opens in new tab) the California Wildfire Fund, a $21 billion reserve utilities could use to pay claims if they’re found to have caused a wildfire. Critics derided it as a bailout for the utilities.
Now, in the final days of his last California legislative session, Newsom is again trying to broker a deal to shield utility companies from soaring costs from wildfires caused by their electrical equipment. The issue will be one of the last major policies he tackles as governor, and could help define his legacy — if he can get it through the Legislature, where he is already facing pushback.
“The last-minute nature of this is causing huge friction — and that’s not just for me — that’s among many members of the Legislature,” Sen. Sasha Renée Pérez, D-Pasadena, said. “These are massive, massive policy proposals.”
Unlike in 2019, PG&E and the state’s other major utilities are not facing bankruptcy, and in fact have made significant profits in recent years. But Newsom says the fund he and lawmakers established in 2019 is dwindling in the wake of the massive 2025 wildfires in Los Angeles. And the state’s insurance crisis has left many homeowners in wildfire-prone areas uninsured or underinsured (opens in new tab), meaning the financial toll of another massive fire could be catastrophic.
Lawmakers must introduce legislation by Friday if they want to pass something before the end of the legislative session, which concludes Aug. 31. Legislation generally must be available for public review for at least three days before lawmakers can send it to Newsom’s desk for final approval.
Newsom could call a special session to deal with the issue in the fall, but he dismissed that possibility on Wednesday, saying this is a problem lawmakers have had years to tackle. He noted that it’s been a live issue for his entire tenure as governor, which has been marked by several destructive wildfires sparked by electrical equipment, including the 2025 Eaton Fire in Los Angeles County.
Newsom says he’s trying to implement reforms called for in an April report (opens in new tab), which he and lawmakers commissioned last year. The report aimed to address several interconnected crises: climate change and overgrown vegetation fueling increasingly destructive wildfires, insurers rolling back coverage in high-fire-risk areas and utilities facing ballooning liability costs. It recommends increasing fire mitigation work like home hardening and brush clearing in and around communities, accelerating payments to families whose homes burn down and providing more financial relief for utilities.
That final piece is the most controversial. Newsom argues it’s also imperative.
“I feel very strongly that we need to move on this,” he told reporters Wednesday. “For me, this is an eight-year journey, and I’m not gonna walk away and hand a real mess to the next governor.”
As of Friday, no bill language has been introduced or released publicly. But in briefings to legislators and stakeholders, and in memos, Newsom’s office has proposed several ideas. They include preventing insurance companies from suing utilities to recoup the cost of claims, a process known as subrogation; limiting non-economic damages for some wildfire survivors; and limiting local governments’ ability to recoup the full replacement cost of damaged infrastructure.
His proposal would also mandate bill credits to utility ratepayers, force utility CEOs to forfeit their yearly bonuses if they’re found to have caused a catastrophic wildfire and increase shareholder penalties when utilities violate safety rules, according to a fact sheet Newsom’s office shared with the Chronicle. Newsom says his plan aims to ensure wildfires survivors are compensated before other groups, like insurance companies, lawyers and utility shareholders. In the fact sheet, Newsom cited PG&E’s $11 billion settlement (opens in new tab) with insurance companies after the Camp Fire, which came before many survivors got their individual claims against the utility paid.
Utilities have coalesced behind a campaign called Wildfire Victims First to support the proposal, drawing the ire of several wildfire survivor groups that once again see Newsom’s actions as a bailout for utilities.
Limiting insurers’ ability to subrogate against utilities, and capping what damages survivors can claim would also reduce the amount of money the Wildfire Fund could be on the hook for. Less strain would lessen the likelihood of a utility going bankrupt and increase investors’ confidence — giving utilities better access to money to maintain or underground their power lines and prevent future fires.
But the proposal has made unlikely bedfellows of the consumer advocacy groups, wildfire survivors and the insurance industry, who all say it would dramatically raise insurance rates and hurt survivors.
“This would strip away our rights and be the biggest takeaway of survivor rights ever in our country,” said Joy Chen, executive director of Every Fire Survivors Network, an advocacy group she founded after surviving the Eaton Fire. “This is a very dangerous move.”
Denni Ritter, vice president of state government relations for the American Property Casualty Insurance Association, criticized the narrative that insurers cut in front of their policyholders. Ritter pointed out insurers’ losses come from paying residents’ and local business’ claims.
If insurers lost the right to reclaim those losses from utilities, the industry would likely respond by raising rates or cutting back their presence in wildfire-prone areas, Ritter said. An APCIA estimate, based on analysis shared by the governor’s office, found the proposal could cause insurance rates to spike 10-20% statewide, with even higher hikes in high-risk areas, she said.
“This proposal does not feel remotely fair,” Ritter said. “We really question the policy rationale for shifting billions of dollars of wildfire liability from utility shareholders onto the communities and people that they’re harming.”
Newsom said he expects his initial proposal to change significantly as negotiations proceed. The fact sheet his office provided did not include specifics about how utilities might receive more financial relief. It instead focused on the importance of wildfire victims being paid quickly, though it did not detail how the state would guarantee that. A memo obtained by Politico provides more detail on the governor’s plans, including a proposal to limit non-economic damages for people forced to evacuate during a fire.
Christian Grose, a political science professor at the University of Southern California, said taking on the issue of wildfire liability could be politically risky for Newsom. Utilities are not popular, and critics say Newsom’s proposal is too favorable to them. But if he can pull it off and secure a compromise that staves off utility bankruptcies during the next major fire, Grose said it could bolster Newsom’s legacy.
“This is one of the last things he can try to get done,” Grose said. “There’s definitely risk, and he could be blamed too. So it’s not an easy win.”
As wildfires become more destructive, a policy victory in this area could also be a major selling point for Newsom if he seeks the Democratic nomination for president in 2028, said Kim Nalder, a political science professor at Sacramento State.
“Natural disasters are getting worse with climate change and that will become more and more prominent as time goes on,” she said. “If he has future political ambitions to run for president, being seen as somebody who has delved into these complex issues and maybe solves some of the problems that are associated with it would be helpful.”
Newsom has said he is considering a run for president. He’s spent years building a nationwide political fundraising effort and recently traveled to the presidential swing states of Michigan (opens in new tab) and Nevada (opens in new tab) to campaign for other Democrats there.
“He’d rather not be running for president and have utilities going bankrupt back in his state,” said Rob Stutzman, a Republican political consultant who worked as a top aide to former Gov. Arnold Schwarzenegger. “But I think, more than that, this is about a larger fundamental issue.”
As wildfire costs rise, so will liability costs for utilities. The money, Stutzman noted, has to come from somewhere. The question now being debated in Sacramento is where.
Newsom, a Democrat, generally has a cordial relationship with the overwhelmingly Democratic state Legislature, where there’s broad ideological agreement on many key issues. But the last-minute negotiations over the wildfire liability proposal are angering some lawmakers.
It’s not the first time Newsom has done this. Last year, he pushed through a major overhaul of the state’s carbon markets program (opens in new tab), which essentially forces companies to pay to emit climate-warming greenhouse gases, in the final days of the legislative session.
To become law, all bills must be considered by both houses of the Legislature and passed by a majority of lawmakers. But introducing something in the final week means there’s less time for public scrutiny of a major, complicated new policy.
“It’s valid to criticize this process for being behind closed doors,” Stutzman said. “Having been in a governor’s office, I understand this approach. But at the end of the day it is basically rolling the legislative process.”
Lawmakers are scrambling to develop a counterproposal.
Pérez, whose district was ravaged by the deadly Eaton Fire less than six weeks after she was sworn in to the Senate, said the timing of a proposal that could dramatically limit utility company liability is especially painful for her and her community. Earlier this month, a long-awaited report from the Los Angeles County Fire Department concluded a decommissioned Southern California Edison powerline sparked the fire, which killed 19 people and destroyed or damaged over 9,000 structures.
Pérez said Newsom’s eleventh-hour proposal provides little time to present it to her constituents.
“I really want to avoid a situation where we are making rushed decisions that are going to have unintended consequences,” she said. “Especially at a moment when I feel it is so critical for us to show that we can hold investor-owned utility companies accountable for the devastating events that they’ve caused.”
Assembly Member Chris Rogers, D-Healdsburg, expressed similar discomfort with the limited time to discuss the proposal with his constituents, who have experienced several devastating wildfires over the past decade. Rogers was mayor of Santa Rosa during the deadly 2017 Tubbs Fire, which resulted in a bankruptcy settlement from PG&E, though the utility was not found to have caused the fire. Two years later, while serving as the city’s vice mayor, the massive Kincade Fire ripped through Sonoma County, sparked by PG&E equipment.
“I think every town hall I’ve done over the last couple of months has included a question that touches on this,” Rogers said. “There’s a public perception, not saying if it’s right or wrong, that for a long time PG&E cut corners, the executives got bonuses and were paid out. The idea that we now would shift liability off of PG&E and onto the people who already don’t have the infrastructure that they need to be successful? It’s a really tough sell.”
Chen, the wildfire survivor advocate, and Consumer Watchdog, a consumer advocacy group, have questioned the need for urgency. Last week, they issued a press release (opens in new tab) citing statistical modeling that estimates the funds lawmakers created would still have $23 billion to $28 billion in claims-paying capacity even after all of the Eaton Fire claims against Edison are settled. As of late Friday, Chen said the governor’s office had yet to respond to their claims. Newsom’s office did not respond to a request for documentation for his claim that the funds are nearly depleted.
The Legislature initially set up the Wildfire Fund in 2019 with $21 billion, which utilities could tap into after paying the first $1 billion in claims for utility-sparked wildfires. Last year, lawmakers passed SB 254, which created a new account under the fund to add $18 billion for future fires.
In August, the Wildfire Fund released its annual report (opens in new tab) noting it was possible that claims from the Eaton Fire could exhaust the original $21 billion, but that due to the new money authorized under SB 254, the fund was “not within its final three years of viability.”
“The emperor has no clothes here. There is no financial emergency,” Chen said. “They refuse to show any numbers, any back-up, any financial analysis proving the emergency they cite.”
