Warning that the measure will only worsen California’s affordability crisis, business groups and others are intensifying efforts to persuade state lawmakers to once again reject a push by environmentalists, trial lawyers and other progressive activists to grant the state explicit authority to blitz energy companies with lawsuits to make them pay for wildfires and other weather-related harms they claim are linked to climate change.
This spring, lawmakers in Sacramento are continuing to consider controversial legislation that critics have likened to an attempt by the state to extract many billions of dollars from oil and gas companies to help the state paper over an insurance crisis they say are caused by the state’s own decades-long poor policy choices.
And the critics warn the legislation will only result in higher fuel costs, higher energy costs, higher insurance premiums, and yet more uncertainty for those who live and work in the Golden State.
Known as Senate Bill 982 (SB982), the new legislation was introduced in February by State Sen. Scott Wiener, D-San Francisco, with the backing of the environmental activist group, EnviroVoters. The legislation would explicitly authorize the California Attorney General’s office to sue oil and gas producing companies any time there is a weather-related disaster in the state.
The legislation relies on the premise that the burning of gasoline, diesel and natural gas, among other carbon-based fuels, exacerbates climate change and makes costly weather disasters more frequent.
The legislation would create an explicit cause of action allowing the Attorney General to sue to ostensibly to recover money the state can use to offset insurance losses from wildfires, floods or other extreme weather events, allegedly worsened by climate change.
Supporters of the legislation, including environmental activist groups and other progressive interests and organizations, say the legislation is needed to allegedly make the energy companies pay for the harm they allegedly create or worsen. They specifically have said it is needed to help stabilize California’s insurance markets, and particularly the so-called FAIR Plan, the state’s insurer of last resort.
The legislation, however, has generated intensifying levels of both support and opposition.
The legislation most recently was discussed by a long list of supporters and opponents before an overflow crowd at the California Senate’s Judiciary Committee on April 15.
While supporters say the legislation is needed to “make polluters pay,” opponents say the bill will only worsen California’s affordability crisis.
In a report issued in April, California’s Business Roundtable policy analysis organization warned SB982 would carry a raft of unintended consequences and costs for California’s troubled insurance markets, for consumers, for businesses and more.
The Business Roundtable particularly warned about the legislation’s new “low threshold for causation,” essentially allowing the state to sue any time destructive weather may strike California and could be at all blamed on climate change.
The report said this provision particularly would create an “expansive and unpredictable liability exposure” which would “operate in practice as a broad, litigation-driven cost increase that would be passed through to consumers, businesses, and households across the state.”
“SB 982 would introduce a significant new cost driver into California’s economy at a time when affordability is already a major concern,” Business Roundtable said in its report. “By increasing energy prices, amplifying pressures on the insurance market, and raising costs for businesses and households, the proposal would make it more expensive to live and work in the state.
“These impacts would not be isolated or temporary. They would be ongoing, broad-based, and compounded by existing policies, affecting household budgets, economic growth, and the availability of essential services like insurance.
“In this context, SB 982 risks accelerating existing challenges rather than addressing them— placing additional strain on consumers, weakening economic competitiveness, and further destabilizing critical systems such as the state’s insurance market.”
Those concerns were echoed by others, including the California Citizens Against Lawsuit Abuse.
The CALA group warned SB 982 would “open the door to expansive, speculative litigation untethered from traditional standards of proof.” And those lawsuits, they warned, would be used only to use the threat of big payouts to continue to advance California’s preferred emissions policies, while inflicting significant economic harm on those who live and work in California.
“… The notion that these costs would simply be absorbed by energy companies ignores basic economic reality,” CALA wrote. “Large-scale liability ultimately gets passed through—to consumers, to investors, or through reduced economic activity.
“In practical terms, that could translate into higher energy prices for all Californians, reduced in-state investment, and further strain on California’s already challenged energy infrastructure.
“In other words, a bill intended to ease financial pressure could have produced the opposite effect.”
“The premise was straightforward: recover funds from fossil fuel producers and use those proceeds to offset insurance losses and stabilize premiums,” said California CALA executive director Victor Gomez. “It may have sounded like a solution. In reality, it is a significant departure from sound legal and economic policy.”
SB982 failed to win approval on April 15. It will be reconsidered by the Senate Judiciary Committee in a hearing on April 21.
