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Environment & Energy Report

The California Rule That Doomed PG&E: Inverse Condemnation

Jan. 15, 2019, 7:30 PM

As PG&E Corp. hurtles toward bankruptcy, a once-obscure legal doctrine with an awkward name certainly bears a portion of the blame.

Known as inverse condemnation, it holds California utilities responsible for wildfire damage caused by their equipment—whether the companies acted negligently or not. The utilities spent most of last year pushing state legislators to change it, to no avail.

Downed power lines lie on the ground during the Camp Fire in Paradise, California, on Nov. 13, 2018.
Photographer: David Paul Morris/Bloomberg

The concept isn’t unique to California, but the way the state applies it is. Inverse condemnation usually applies to government agencies that damage private property while providing a public service. But courts in the Golden State have ruled that the...

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