PHOENIX — The Arizona House on Tuesday approved a slightly watered-down measure backed by power companies that will give them major new protections from lawsuits they face for wildfires their their equipment sparks.
The 35-25 vote approving the bill came a day after opponents of the sweeping liability shield sought by power providers who are worried that homeowners would be left holding the bag amended it to restore the ability of homeowners and others to band together to file class-action lawsuits if they suffer losses.
But the House refused major changes to the sweeping liability shield being sought by electricity providers like Arizona Public Service and Tucson Electric Power. That leaves in place significant limits the utilities want on fire victims’ ability to sue utilities for damages they suffer after power lines spark forest fires.
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And that leaves the question of whether the legislation is constitutional.
The revised proposal also tweaks rules for newly required wildfire mitigation plans that public and private electricity suppliers would have to file by eliminating what they got Rep. Gail Griffin to put in her original bill: an automatic approval process. Now, utilities would get that approval 120 days after they file their plans unless changes are requested by state regulators or the public utility’s board.
Potentially more significant, the amendment offered by Rep. Neal Carter removed a provision giving utilities sole discretion for deciding when to turn off power lines during dangerous wind events and that, more to the point, would have prevented them from being held at fault for not de-energizing their lines. Carter is a San Tan Valley Republican.
But the House narrowly rejected a second amendment from Rep. Alex Kolodin, R-Scottsdale, that would have restored the current rules for lawsuits. He and others argue that the major lawsuit limits that remain in the bill run afoul of the state constitution’s ban on laws removing the right to sue or limiting damages.
The changes became necessary to get the votes for approval.
What’s behind the bill is concerns by APS, TEP, UniSource and other utilities that they could suffer the same fate as major power suppliers in California and Oregon, which faced huge financial hits from lawsuits after entire communities were wiped out by fires started by their equipment.
Although the revised proposal again allows class-action lawsuits, it still provides huge new liability protections for utilities.
It requires anyone seeking to hold a power company liable for damages to provide “clear and convincing evidence’’ that the utility was at fault.
That is far greater — and harder to prove — than the standard for deciding most civil cases. Under the current standard for almost all lawsuits, jurors weigh the “preponderance of the evidence,’’ essentially whether it is more likely than not that the person did the act.
It also prevents businesses and homeowners from recovering extra compensation for things like lost income or expenses incurred as a result of a fire. And it rejects any punitive damage awards — awards made to punish and deter intentional behavior — even if the utility ignores its own plans and fails to shut off power during a major wind event.
Kolodin said that’s unconstitutional, and worse, will leave injured homeowners on the hook for losses caused by utilities.
“I appreciate the work that (Rep. Carter) tried to do with the amendment,’’ Kolodin said during Tuesday’s vote.
But he said it is little more than “rearranging the deck chairs on the Titanic’’ because the outcome for Arizonans would be the same.
“The functional result of the bill even as amended is that even if utilities cause fires that harm our state’s children, God forbid, kill some of our state’s children, those families will not be able to receive compensation,’’ Kolodin said. “And because the utility companies will know that, they have less incentive to stop those tragedies from occurring in the first place.’’
He said that’s why those who crafted Arizona’s constitution put in it provisions barring laws that prevent negligence lawsuits and limits on recovery.
Carter, like Kolodin an attorney, said he believes the measure is constitutional. And he said there’s plenty of good reasons to back the new limits on lawsuits, which he said still allow people to sue power companies if they have strong proof they are responsible.
“What it does do is it changes the evidentiary standard from negligence to what we lawyers call clear and convincing evidence,’’ Carter said. “Effectively, it means that you have to provide evidence that the power company was at fault.’’
And he said losses from lawsuits will drive up rates for all Arizonans.
Other Republicans who voted against the measure included Rep. Rachel Keshel of Tucson, who said that while Carter’s changes made the bill better, “I am a staunch constitutionalist, and there are still issues that could have been fixed regarding the constitutionality of this.”
Griffin again noted that her bill had broad support from elected officials across Arizona and read a long list of them who back it.
“This is a good bill for fire prevention, and it does cover if the utility is liable, is at fault, they are liable,’’ Griffin had said Monday.
It now heads to the Senate for consideration.
Insurance companies and trial lawyers oppose the measure, which they say will not only limit the ability of homeowners, businesses and cities and towns to recover their losses from utilities but could also force insurers to either greatly raise rates — or stop issuing policies altogether in fire-prone areas.