SACRAMENTO — Oil and gas companies would be liable for damages caused by climate change-related disasters in California under legislation introduced Monday by two Democratic lawmakers.

The proposal claims that the oil industry intentionally deceived the public about the risks of fossil fuels on climate change that now have intensified storms and late and caused billions of dollars in damage in California. Such disasters have also driven the state insurance market to a crisis where companies are raising rates, limiting coverage or pulling out completely from regions susceptible to wildfires and other natural disasters, supporters of the bill said.

Liability for Climate-Related Damages

Under state law, utility companies are liable for damages if their equipment starts a wildfire. The same idea should apply to oil and gas companies, said Robert Herrell, executive director of the Consumer Federation of California, “for their massive contribution to these fires driven by climate change.”

The bill aims to alleviate the financial burdens on victims of such disasters and insurance companies by allowing them to sue the oil industry to recoup their losses. It would also allow the Fair Access to Insurance Requirements Plan, created by the state as a last resort for homeowners who couldn’t find insurance, to do the same so it doesn’t become insolvent.

If approved, California would be the first state in the U.S. to allow for such lawsuits, according to the bill’s author, state Sen. Scott Wiener.

“We are all paying for these disasters, but there is one stakeholder that is not paying: the fossil fuel industry, which makes the product that is fueling the climate change,” Wiener said at a Monday news conference.

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Industry Opposition and Support

The new measure is bound to face major backlash from oil and gas companies, who have faced a string of defeats in California in recent years as the country’s most populous state started to shift policy priorities to address climate change.

The Western States Petroleum Association, representing oil and gas companies in five states, already signaled it will fight the bill. President and CEO Catherine Reheis-Boyd said state lawmakers are using the LA fires to “scapegoat” the industry.

“We need real solutions to help victims in the wake of this tragedy, not theatrics,” Reheis-Boyd said in a statement. “Voters are tired of this approach.”

Supporters said the measure will also help stabilize the state’s insurance market by allowing insurers to recover some of the costs after a natural disaster from oil companies, which will prevent increased rates from being passed onto policyholders. The bill is supported by several environmental and consumer protection groups.

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Recent Disasters and Legal Actions

The legislation comes as California begins the long recovery process from multiple deadly fires that ripped through sections of Los Angeles and burned more than 12,000 structures earlier this month. The fires were named the most destructive in the modern history of the city of Los Angeles and estimated to be the costliest natural disasters in U.S. history. Lawmakers last week voted to spend $2.5 billion to help the area rebuild.

Dozens of U.S. municipalities as well as eight states and Washington, D.C., have sued oil and gas companies in recent years over their role in climate change, according to the Center for Climate Integrity. Those suits are still making their way through the courts, including one filed by California more than a year ago against some of the world’s largest oil and gas companies, claiming they deceived the public about the risks of fossil fuels.

Scientists overwhelmingly agree the world needs to drastically cut the burning of coal, oil and gas to limit global warming. That’s because when fossil fuels are burned, carbon dioxide forms and is released, which accounts for over three quarters of all human-caused greenhouse gases.

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Insurance Market Challenges

California is also working to persuade insurers to continue doing business in the state by giving them more latitude to raise premiums in exchange for more issuing policies in high-risk areas. Citing ballooning risks of climate-driven natural disasters, seven of the top 12 insurance companies doing business in California in 2023 either paused or restricted new business in the state. The state now allows insurers to consider climate change when setting their prices and will soon also allow them pass on the costs of reinsurance to California consumers.