ÃÛèÖÖ±²¥

Finance Committee chairman Sen. J.D. Mesnard told Capitol Media Services on Friday that the amendment he has crafted will remove provisions sought by the utilities requiring people or companies who sue over wildfire damages to prove by “clear and convincing’’ evidence that the utilities were at fault. That’s a much higher level of proof than what is normally required in civil lawsuits.

Also gone is a prohibition on recovering “consequential damages,’’ said Mesnard, R-Chandler. Those include things like lost business income or compensation for renting a car if a person’s vehicle is destroyed by a fire and the owner awaits a replacement from the utility at fault.

Mesnard said that’s only fair.

“The analogy that resonates with me is, I get in an accident (and) the person’s at fault, but my car is totaled, and I still need to get to work,’’ he said.

“Well, I need a rental car to make that happen, and that’s a consequential damages thing,’’ Mesnard explained. “So you know, the other side is going to pay for my car or a new car eventually, but in the meantime, I’m kind of stuck.’’

Multiple drafts of the amendment posted late Friday and still subject to change also restore the ability to win punitive damages from a company whose negligence sparks a wildfire.

What utilities will still get in the legislation they’ve been pushing are hefty new protections from lawsuits if they follow new “wildfire mitigation plans’’ they will be required to create if House Bill 2201 is enacted.

But Mesnard plans some changes there as well, removing a provision giving utilities the lawsuit shield if they only “substantially comply’’ with those plans. Also gone will be sections allowing the boards of public utilities like the Salt River Project to approve their own plans.

Mesnard said that having a public utility approve its own plan that grants it lawsuit protections was problematic. Those company’s plans will instead have to be reviewed by the state Department of Forestry and Fire Protection.

“That resonated with me, the idea of having your own board approve your plan, and that allowing for you to then have immunity or some degree of protection,’’ Mesnard said. “That did not make sense to me. I needed there to be some other authority.’’

The ÃÛèÖÖ±²¥ Corporation Commission is charged with reviewing plans from regulated utilities like APS, TEP and UniSource Energy Services under the House-approved version, although Mesnard said he’s considering having all reviews done by the Forestry Department.

That “substantial compliance’’ provision that Mesnard found troubling could have awarded liability protections for utilities even if they didn’t follow parts of their plans, like failing to trim back vegetation along parts of their power lines’ route. Under the House-passed measure, someone who lost a home still had to prove by “clear and convincing’’ evidence the utility was at fault even if they didn’t follow their plans to the letter.

“So it’s sort of like if we reach a lower bar it protects us to a higher bar, and I had a hard time going along with that,’’ he said.

The version that reached the Senate had legal issues as well, according to House lawyers who reviewed the proposal.

Most notably, they said it likely ran afoul of a provision in the state constitution that bars laws that limit the right of people to sue for compensation. The changes Mesnard is pushing should address those concerns.

Mesnard said he met with APS lobbyists and with opponents of the bill, most prominently lobbyists for the insurance industry and trial lawyers, to hammer out changes he would need before agreeing to put the measure on his committee’s agenda. Committee chairs can kill legislation by refusing to hear a bill, and Mesnard said he was prepared to do that if his concerns weren’t addressed.

An APS spokesman said the company, the largest power provider in the state, supports the measure and Mesnard’s proposed amendment. An SRP spokeswoman said her company still needs to review the final proposed changes but appreciated Mesnard’s attention and expects to be able to support the bill.

TEP spokesman Joe Barrios said his company welcomes the clear guidance it will give utilities for submitting wildfire mitigation plans that include procedures for things like cutting off power during high wind events to avoid triggering a fire and for cutting back trees and brush near power lines.

“It will also provide protection for customers because wildfire liability costs and higher insurance costs are passed (on) through higher rates,’’ Barrios said in a written statement.

“We have an obligation to continue serving customers, even in areas that may be risk-prone for wildfires,’’ he wrote. “The bill would reduce exposure to unfair financial risks only if we satisfy standards in our wildfire mitigation plans, thereby reducing real and potential costs for our customers.’’

Utilities in California, Oregon and Colorado have faced huge lawsuits after their equipment was found or suspected to be the cause of forest fires that in some cases consumed whole communities.

Pacific Gas & Electric Co. in California was forced to seek bankruptcy protection a year after its poorly maintained equipment sparked a 2018 fire that destroyed the Northern California mountain community of Paradise, killing 85 people. PG&E emerged from bankruptcy in 2020 after paying $4.5 billion into a fund to compensate victims and handing them more than 20% of the company’s stock.

In January, two big wildfires in Los Angeles destroyed thousands of homes, and Southern California Edison power lines are suspected of sparking one of them.

Opponents of the ÃÛèÖÖ±²¥ liability protection measure said Mesnard’s proposed changes will make the bill more palatable. Insurance companies and trial lawyers have strongly opposed the original measure because it striped homeowners and insurers of much of their current ability to recover damages from utilities responsible for starting a blaze.

“It is a lot, a lot better,’’ said Marc Osborn, a lobbyist who represents Farmers, Geico, Nationwide and Allstate at the Capitol.

He said on Friday night that he still needed to review final details of the amendments after a furious week of meetings. Osborn said the utilities are still getting major protections, but insurers and homeowners have more opportunity to be compensated with the changes.

“That’s important because homeowners’ insurance policies often have large deductibles and if the insurance company is able to recover damages from a company that caused a fire they can get that money back,’’ Osborn said. The same is true of a destroyed auto.

Having the ability to hold a utility responsible is important, he said. PG&E, for example, is now burying its power lines to avoid sparking a wildfire — something that only happened after the company faced two multi-billion dollar lawsuits. He called the bill much more reasonable with Mesnard’s changes.

“Would we prefer no bill? Yes,’’ Osborn said. “But I think Mr. Mesnard did a pretty good job of grinding off the rough edges on it.’’

Barry Aarons, a lobbyist for the ÃÛèÖÖ±²¥ Trial Lawyers Association, said that although Mesnard’s changes greatly improve the bill, it still puts in place a new system of protections for utilities and makes it much more difficult for people who have lost homes and businesses to recover damages.

“They’re getting this new system of having a standard ? and creating some really high bars that you’ve got to overcome in order for a jury to find in our favor,’’ Aarons said.

A homeowner would have to prove that the utility caused the fire, that they didn’t follow their wildfire mitigation plan, and that they were in some way negligent, he said.

“Those are three pretty significant hoops to jump through, because usually you don’t have all three as part of court litigation,’’ Aarons said.

If the changes are adopted in Mesnard’s committee, the measure will go to the full Senate for approval and then back to the House for them to sign off on the changes.

Gov. Katie Hobbs will have the final say.

“We’re at the point now where the Legislature has to determine whether this type of litigation paradigm, this type of tort system, where you’ve got a plan, where you’ve got a three-level hoops to jump through, and so on and so forth, is something that they feel is in the best interest of the state,’’ Aarons said. “And that’s up to them in their own conscience.

“If they like it, they’ll vote for it,’’ he continued. “If they don’t like it, they’ll vote against it. But it is certainly better than where we started.’’