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By Samuel López | USA Herald

SACRAMENTO — It was supposed to be the deal that finally brought order to California's wildfire liability mess. Instead, it became the deal that collapsed in real time, on the Capitol floor, in front of the very lawmakers who had spent weeks negotiating it.

Democratic legislators on Tuesday killed a scaled-back version of Gov. Gavin Newsom's wildfire liability proposal, effectively punting one of the state's thorniest legal and financial questions to a later — and still undefined — date. The decision came during a special extension of the legislative session, originally set to close Monday night, that lawmakers had hoped would give them just enough runway to push the resulting legislation, Senate Bill 492, across the finish line.

It wasn't enough. Less than three hours after the extended session convened, Assembly Speaker Robert Rivas, D-Hollister, told reporters the Assembly would not take up the bill at all — a move that caught several senators off guard. Rivas didn't mince words about why.

"Unfortunately in such an expedited timeframe, it's very difficult to land something as challenging as this. This is something with real structural problems," Rivas said, describing the final product as a set of "half-measures."

Newsom's original vision was ambitious — and politically combustible. It aimed to shield utility companies from the soaring liability costs tied to wildfires sparked by their power lines and equipment, in part by barring insurance companies from suing utilities to recover claim payouts, a practice known as subrogation. It also sought to cap noneconomic damages for some survivors and limit how much local governments could recoup for destroyed infrastructure.

Wildfire survivor advocates saw it differently, branding the plan a bailout dressed up as reform. Under that pressure, and after weeks of counterproposals from Democratic lawmakers, the bill's core provisions were stripped out one by one. By the time SB 492 reached its final form over the weekend, there was no liability cap for utilities, no end to subrogation, and no limit on local government claims.

What remained was narrower: a fast-track claims process through the state's existing Wildfire Fund, a ban on selling subrogation rights to private equity firms and hedge funds, new fee limits for attorneys representing survivors, a data-sharing platform for wildfire prevention, mandated preparedness reporting, and a prohibition on utility executives collecting bonuses in the immediate aftermath of a utility-caused fire.

For Newsom, the diluted bill wasn't worth passing. "The reforms in this bill, while important, did not address the underlying structural problems driving this crisis, as the initial market reaction this week demonstrates," he said in a statement after the bill failed. "Simply put, this measure did not meet the gravity of this moment. The only solution is to return to fix the entire problem, not part of it."

The financial stakes were on full display before the bill even hit the floor. Shares of PG&E and Southern California Edison plunged to year-to-date lows Friday night once SB 492's contents became public — PG&E dropping roughly 20% and Edison about 23%. Both stocks clawed back some ground Tuesday afternoon once the deal officially collapsed.

Not every Democrat wanted it dead. Sen. Renée Pérez, D-Pasadena, who represents communities scarred by last year's Eaton Fire, said she was ready to vote yes when she arrived at the Capitol Tuesday morning.

"It is disappointing to see us not move forward on being able to pass a bill that took hours and hours of work and negotiation and thoughtful discussion," Pérez said, adding that lawmakers broadly understood the bill was never meant to be the final word on the issue.

Assembly members who blocked the bill framed their decision as a matter of ambition, not indifference. "We will see, it's to be determined," Assembly Member Diane Papan, D-San Mateo, said when pressed on a timeline for revisiting the legislation. "At this moment, we decided, 'Let's do this in a comprehensive way, rather than this smaller, incremental advancement.'"

What Comes Next

Newsom, speaking to reporters Monday night, made clear he sees the fight as unfinished business — and pointed a finger at the forces that shaped the compromise. "This thing is not going to get better on its own. It gets better through leadership and taking responsibility and going up against all the special interests," he said. "And it's hard. I have a sell-by date, I get it, so I'm not going to be here to solve all this, but it needs to be solved."

Whether that means a special session before Newsom leaves office in January remains an open question. His office did not immediately respond to inquiries about next steps. For now, California's wildfire liability crisis — and the billions of ratepayer dollars already tied up in it — remains exactly where it started: unresolved.

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