United States: The Growing Threat Of Wildfire To The Energy Sector: Recent State And Federal Activity

The unfortunate trend of increased wildfires across the western landscape continued in 2018, both as to the number of fires and the acreage burned. Most disturbing is the growing severity and impacts of these fires in terms of human lives and lost property. California is at the epicenter of this trend, and experienced both its largest and deadliest fires in the state's history within the span of a couple of months near the end of last year.1 The legal and public policy implications of more destructive wildfires continue to reverberate throughout the West and nationally. And while many sectors of the economy are at risk from the increasing impacts and potential liability posed by wildfire, most of the recent attention in this area has been focused on the energy sector, primarily electric utilities.

As a result, companies impacted by the growing threat of wildfire across the West, including electric utilities, should continue to monitor state and federal regulatory changes designed to address this risk. Key recent developments in California and other states, as well as noteworthy activity on this issue at the national level, are described in more detail below.

Recent State Activity

The most recent visible impact of wildfire on the utility sector is Pacific Gas and Electric's (PG&E) decision to file for bankruptcy in the face of billions of dollars of potential liability resulting from a link between its transmission infrastructure and the ignition of wildfires in California during the past two years.2 With respect to liability, California is unique in that its courts have long imposed strict liability on utilities for wildfire damages.3 The theory behind strict liability is that the risk for public improvements (e.g., transmission infrastructure) should be spread across the public and therefore recoverable through rate adjustments. However, that theory was undermined in November 2017 when the California Public Utility Commission (CPUC) determined that San Diego Gas & Electric was not permitted to recover $379 million in wildfire-related liability costs because it had not acted reasonably in maintaining and operating its transmission system to minimize wildfire risks.4

In the aftermath of the destructive 2017 fire season, California enacted far-reaching legislation addressing the implications of wildfire risk.5 Included in this legislation were provisions to address the CPUC's 2017 decision and create new standards to assess whether the recovery of wildfire-related costs is "just and reasonable." There were other provisions to fund and accelerate projects to improve forest health and reduce fuel loads; to create a Commission on Catastrophic Wildfire Cost & Recovery with the responsibility to report on issues related to socializing wildfire costs by July 1, 2019; and to require utilities to comply with new operation and maintenance standards and file new Wildfire Mitigation Plans with the CPUC starting in February 2019. And cognizant of the threat to PG&E's financial stability, the legislation limited the impact of liability from the 2017 fires through the use of new liability rules, a financial stress test applied to the utilities and new financial tools (e.g., rate recovery bonds). Despite this, the 2018 fire season resulted in new potential liabilities for PG&E, which led to the company's bankruptcy filing.

The implications of the filing are widespread, raising significant concerns about its possible impact on (1) the cost of electric service to ratepayers, (2) long-term power purchase agreements that could affect renewable energy projects and climate-related goals, and (3) the ability of the victims of wildfire to recover damages for wildfire-related losses. As the bankruptcy moves forward, policy-makers will be paying close attention to how these issues are addressed in the proceedings.

While other states have not been as active as California in developing new legal and regulatory standards in response to the threat of wildfire, that is likely to change given the increasing risk overall and elevated focus on climate change in many states. Of note, there has already been activity at both the public utility commission level and the legislature in several states. In 2013, the Colorado General Assembly established a Wildfire Matters Review Committee, which has been active in recent years. In New Mexico, the Public Regulation Commission convened a wildfire task force in June 2013 in response to a utility-caused wildfire. One of its goals is to examine best practices for wildfire prevention and address issues such as utility easements, fuel clearing and vegetation management plans. And last year, Utah considered legislation to impose liability for firefighting costs under certain circumstances.6 Finally, while it does not appear that the courts in other states have yet adopted a strict liability standard for damages associated with utility infrastructure, there are (not surprisingly) examples of plaintiffs asserting such claims.7 Moreover, there are cases in Colorado and elsewhere holding that utilities are subject to a higher standard of care in negligence suits because the transmission of electricity is an inherently dangerous activity.8

Recent Federal Activity

Activity in this area has not been limited to the state level. The federal government has been increasingly responsive to the wildfire threat, and several of its actions can and should be of interest to the electric utility sector.9 In late 2018, the president issued an Executive Order to increase federal activity and investment on actions to reduce the fire risk associated with federally managed forests and rangelands.10 In addition to directing specific actions to reduce hazardous fuel loads and high-risk conditions on federal lands, the order calls for the creation of a strategy to support the development of projects and partnerships that protect habitat and communities and reduce risks to physical infrastructure. The order also directs collaborative efforts with the private sector.

The momentum to address the growing risk of wildfire at the federal level has continued into early 2019. On January 2, 2019, then-Secretary Zinke signed Secretarial Order 3372, Reducing Wildfire Risks on Department of the Interior Land Through Active Management, directing the Department of the Interior to take several steps to implement the Executive Order and "ensure that the American people receive the maximum benefits from new and existing regulatory mechanisms designed to reduce the impacts of catastrophic wildfires."11 The order directs the agency to take steps to address wildfire issues, including ensuring that all land management plans include fire management best practices; collaborating with the US Department of Agriculture on several actions designed to maximize wildfire management efforts among the agencies; and utilizing active land and vegetation management techniques to reduce fuel loads such as thinning, cutting and controlled burns.

Additionally, on February 15, 2019, the Bureau of Land Management issued a Finding of No Significant Impact and Record of Decision for a programmatic environmental assessment (pEA) on hazardous tree removal and vegetation management activities across approximately 551,000 acres of BLM-managed land in central and northern California.12 The decision would allow treatments within 200 feet of critical infrastructure on forest and woodlands managed by the BLM, though the scope of the treatments cannot exceed 20 percent of BLM-managed public land within a single watershed over a 10-year period. The decision does not authorize site-specific hazardous tree removal or vegetation management treatments; instead, each project will require a separate Decision Record and Finding of No Significant Impact to authorize treatments consistent with the pEA.

On the regulatory side, the North American Electric Reliability Corporation (NERC) has been active in promulgating and revising its mandatory and enforceable reliability standard related to transmission vegetation management.13 While NERC's standards are focused specifically on reliability issues and not on wildfire risk, there is no doubt that vegetation management issues have been a factor in both wildfires and increased risk to the reliability of the bulk power system. More focus in this area is likely; NERC recently noted an increase in reported outages from non-compliance with its vegetation management standards and announced it would be "considering what additional efforts to undertake to address the increase in these types of cases."14 In addition to regulation and enforcement, it is important to note that the federal government has been aggressive in recent years in asserting broad damage claims associated with wildfires caused by companies with operations on or adjacent to federal lands. The courts have upheld these claims, which in several instances have resulted in settlements in excess of $100 million for losses associated with firefighting costs, lost timber, loss of access to public lands and post-fire restoration work.15

Finally, on Capitol Hill, the new Democratic majority in the House of Representatives has already held several hearings on climate change. With increasing risk and a heightened recognition of the implications of wildfires in the aftermath of PG&E's bankruptcy, it is very likely that wildfires will be the focus of several committees, including Natural Resources, Energy and Commerce, and the new Select Committee on the Climate Crisis.


Undeniably, the implications of wildfire are increasing the array of issues facing the electric utility industry. First, the increased risk of wildfire due to climate change and other factors poses a corresponding increased risk of liability for those operating transmission infrastructure. Second, and closely related, is simply the increased number of claims being filed against utilities associated with damages from wildfire, even where causation has yet to be determined. Third, there is a more active regulatory environment with new mandatory requirements, compliance monitoring and the need for new investments to protect and harden infrastructure. Fourth, given the financial implications associated with liability and increased operating costs, there is a greater need for public policy debates associated with liability standards and how to appropriately spread the costs associated with destructive wildfires; for local codes related to development in the wildland-urban interface; for actions to reduce the risk associated with poorly managed state and federal lands; and for an increase in public-private partnerships to reduce high-risk conditions leading to wildfire activity and to develop and deploy new technologies to improve situational awareness and better combat and suppress wildfires.

WilmerHale's diverse practice groups, including our Energy, Environment and Natural Resources; Litigation; and Public Policy and Legislative Affairs teams, work closely together to serve the broad set of needs of our clients. We have significant experience and expertise with the issues facing electric utilities and can assist the industry in addressing emerging needs related to wildfire. Please contact us for more information.


  1. The Mendocino Complex Fire in July 2018 impacted more than 459,000 acres, and the Camp Fire in November 2018 impacted more than 150,000 acres, led to 85 deaths and destroyed more than 18,800 structures. Cal Fire, Top 20 Largest California Wildfires (February 19, 2019).
  2. Ivan Penn et al., PG&E Bankruptcy Tests Who Will Pay for California Wildfires, N.Y. Times, Jan. 14, 2019.
  3. Barham et al. v. S. Cal. Edison Co., 88 Cal. Rptr. 2d 424 (Cal. Ct. App 1999); Pacific Bell Tel. Co. v. S. Cal. Edison Co., 146 Cal. Rptr. 3d 568 (Cal. Ct. App. 2012).
  4. San Diego Gas & Elec. (2017) Cal. P.U.C. Dec. No. 17-11-033.
  5. See Sen. Bill No. 901 (Cal. 2018); Sen. Bill No. 1260 (Cal. 2018).
  6. House Bill No. 466, 2018 General Session (Utah 2018). However, the legislative session ended without the bill being introduced in the state Senate, so it ultimately did not become law.
  7. See e.g., State Farm Fire & Cas. Co. v. Jemez Mountain Elec. Coop., No. D-1329-CV-2012-01665 (N.M. Cty. Ct. August 3, 2012).
  8. Fed. Ins. Co. v. Pub. Serv. Co., 570 P.2d 239 (Colo. 1997).
  9. See Rachel Jacobson, Michael Hazel, Sarah Judkins & Benjamin Hanna, Infrastructure Risks and Opportunities, WilmerHale Client Alert Series (February 14, 2019).
  10. Exec. Order No. 11,609, Promoting Active Management of America's Forests Rangelands & Other Federal Lands to Improve Conditions & Reduce Wildfire Risk (December 21, 2018).
  11. US Dep't of the Interior, Secretarial Order No. 3372, Reducing Wildfire Risks on Department of the Interior Land Through Active Management (January 2, 2019).
  12. BLM, Environmental Assessment DOI-BLM-CA-9000-2018-0002-EA, Finding of No Significant Impact & Decision Record: Hazard Removal & Vegetation Management Project Programmatic Environmental Assessment (February 2019).
  13. See Fed. Energy Regulatory Comm'n, Elec. Reliability Standard FAC-003-4.
  14. NERC, 2017 ERO Enterprise Compliance Monitoring & Enforcement Program Annual Report 7 (February 7, 2018).
  15. See United States v. Sierra Pac. Indus., No. 2:09–02445 (E.D. Cal. 2009); Press Release, US Dep't of Justice, Eastern District of California, Largest Settlement Ever in a Forest Fire Case (July 22, 2008).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions