SACRAMENTO, Calif. — During a recent legislative session, two Democratic lawmakers unveiled a proposal that would hold oil and gas companies accountable for damages arising from disasters linked to climate change in California.
The legislation asserts that the oil sector has deliberately misled the public regarding the dangers of fossil fuels, leading to intensified storms and wildfires that have inflicted billions of dollars in damages across the state. Proponents of the bill argue that these environmental disasters have contributed to a crisis within California’s insurance market, compelling insurers to raise rates, limit coverage, or withdraw entirely from areas vulnerable to fires and natural calamities.
Under existing laws, utility companies face liability for damages if their equipment is found responsible for igniting a wildfire. Robert Herrell, executive director of the Consumer Federation of California, posits that a similar accountability structure should extend to oil and gas companies due to their significant role in exacerbating these climate-driven fires.
The proposed legislation aims to relieve the financial strain on victims of climate-related disasters and insurance firms by enabling lawsuits against the oil industry to recover losses. Moreover, it would empower the Fair Access to Insurance Requirements Plan—a state initiative designed to assist homeowners unable to secure insurance—to take similar legal action, which is crucial for its financial sustainability.
If enacted, California would set a precedent as the first state in the nation to permit such lawsuits, as stated by state Senator Scott Wiener, the bill’s author. At a news conference, Wiener emphasized that while everyone bears the cost of these calamities, the fossil fuel sector remains unscathed despite its role in driving climate change.
The legislation is likely to meet strong opposition from oil and gas companies, which have encountered numerous challenges in California as the state shifts its policy focus toward addressing climate concerns. The Western States Petroleum Association, representing oil and gas interests across five states, has already indicated its plans to contest the bill. Catherine Reheis-Boyd, the association’s president and CEO, accused lawmakers of using the recent wildfires in Los Angeles as a means to blame the industry unfairly.
Reheis-Boyd stated, “We require genuine solutions to assist victims following this tragedy, not mere theatrics. Voters are weary of this tactic.” Conversely, supporters argue that this legislation could stabilize the insurance market by allowing insurers to recover some costs from oil companies following natural disasters, thus preventing the burden of increased rates from falling on policyholders. Numerous environmental and consumer advocacy organizations back the bill.
This legislative push comes as California embarks on the lengthy recovery journey from recent devastating fires that ravaged parts of Los Angeles, resulting in the destruction of over 12,000 structures. These fires have been categorized as the most destructive in the city’s recent history and are projected to be among the costliest natural disasters in the United States. In response, lawmakers recently authorized a $2.5 billion allocation to support rebuilding efforts in the affected areas.
In recent years, several U.S. cities, along with eight states and Washington, D.C., have initiated legal actions against oil and gas firms regarding their contribution to climate change, as reported by the Center for Climate Integrity. These cases are ongoing in the courts, including a notable lawsuit filed by California over a year ago against major oil companies, alleging misinformation about the dangers of fossil fuels.
Experts widely concur that urgent action is required to significantly reduce the reliance on coal, oil, and gas to curb global warming. The combustion of fossil fuels generates carbon dioxide, which is responsible for over 75% of human-induced greenhouse gas emissions.
Additionally, California is working towards incentivizing insurers to remain operational within the state by granting them greater latitude to raise premiums in return for offering more policies in high-risk locales. Due to escalating risks associated with climate-induced disasters, seven of the 12 largest insurance providers in California have either paused or limited new business activities in the state this year. The state now allows insurance companies to factor climate change into their pricing models and will soon enable them to pass reinsurance costs onto California consumers.
