What You Should Know About Inverse Condemnation

Inverse condemnation is a legal doctrine that holds utility companies financially responsible for wildfires caused by their equipment, even if they were not negligent in maintaining their infrastructure. Under California law, utilities like Southern California Edison (SCE) can be held strictly liable if their power lines, transformers, or other equipment are found to have started a wildfire.

This doctrine has played a significant role in lawsuits against SCE and other California utilities, particularly as the state experiences increasingly destructive wildfires.

Inverse condemnation is based on the Takings Clause of the California Constitution (Article I, Section 19), which states that private property cannot be taken for public use without just compensation.

• If a utility company's infrastructure sparks a wildfire, property owners can claim that their land was “taken” or damaged for a public purpose (i.e., providing electricity).
• The utility is then liable for compensation, even if it followed all safety regulations.
• The key difference from negligence-based claims is that no proof of misconduct is required—only proof that the company’s equipment caused the fire.

• The Eaton Fire, which started on January 7, 2025, burned through Los Angeles County, destroying homes and businesses.
• Plaintiffs allege that SCE’s power lines may have ignited dry vegetation, leading to the wildfire.
• Lawsuits have been filed under inverse condemnation, arguing that SCE is liable for damages regardless of negligence.

• The Woolsey Fire burned nearly 97,000 acres, destroyed 1,600 structures, and led to three deaths.
• Investigators determined that SCE’s equipment caused the fire.
• SCE settled lawsuits with Los Angeles County for $63 million, but faced additional lawsuits from homeowners, businesses, and insurance companies.

• SCE was found responsible for the Thomas Fire, which, combined with heavy rains, led to deadly mudslides in Montecito.
• Lawsuits alleged that SCE’s electrical equipment sparked the fire.
• The settlement amounts remain undisclosed, but the case reinforced inverse condemnation claims against SCE.

SCE and other utilities have strongly opposed inverse condemnation, arguing that:

• It makes them liable for damages they cannot control (e.g., extreme weather conditions).
• They cannot pass wildfire costs to ratepayers unless regulators approve it.
• It discourages investment in wildfire prevention, as utilities fear unlimited liability.

Despite these arguments, California courts have consistently upheld inverse condemnation, ruling that utilities must compensate victims when their equipment causes fires.

• More lawsuits against SCE and other utilities as fires continue to increase in severity.
• Pressure on utilities to bury power lines or take more extreme wildfire prevention measures.
• Higher electricity costs for consumers, as companies try to recover financial losses from legal settlements.
• Possible legislative reforms, as utility companies lobby for changes in liability laws.

If you were affected by a wildfire caused by SCE’s equipment, you may be eligible for compensation. Victims can:
✅ File an inverse condemnation claim to recover property losses.
✅ Join a class-action lawsuit against SCE.
✅ Seek legal counsel to explore insurance and liability claims.

For legal assistance and wildfire recovery resources, NEONEED, a 501(c)(3) non-profit, provides free information, referrals, and advocacy.

Contact NEONEED today to learn more about your rights and legal options.