New California wildfire law prompts another lawsuit from San Diego attorney

San Diego Union-Tribune (CA)

Aug. 1--San Diego attorney Michael Aguirre's law firm has already filed a lawsuit in federal court trying to block the implementation of a sweeping wildfire liability bill that creates a $21 billion fund California's big power companies can access if their equipment ignites a fire that leads to significant financial damages.

Now, Aguirre has filed another lawsuit -- this one in state court -- arguing the California Department of Finance "stonewalled" the release of a fiscal impact report of the bill until after Gov. Gavin Newsom signed it into into law and improperly withheld documents about internal discussions leading up to its passage.

The Department of Finance directed questions about the lawsuit to the governor's press office. By the close of the business on Thursday, the press office did not respond to an email and a voicemail message from the Union-Tribune seeking comment.

Aimed at shoring up the long-term financial health of California's investor-owned utilities and speeding up the process of getting money into the hands of victims of wildfires that have ripped through the state in recent years, Assembly Bill 1054 was put on the fast-track at the State Capitol in early July.

In the space of five days, a drastically revamped version of AB 1054 passed through both houses of the Legislature and landed on Newsom's desk.

According to the suit filed in Superior Court in Sacramento, Aguirre requested that the Department of Finance release its fiscal impact report, as well as other related documents, just before the first committee hearings on the new version of the bill were conducted. Aguirre followed up with two other requests and, according to the suit, was told July 9 the report was not yet ready for the public.

On July 12, just hours after Newsom signed AB 1054 into law, the suit says the Department of Finance told Aguirre the fiscal impact report had already been posted on its website.

On July 29, the Department of Finance delivered some documents but excluded others, saying deliberations between the department and the governor's office regarding AB 1054 were privileged under the Government Code "because the public interest served by not disclosing these documents clearly outweighs the public interest served by their disclosure."

Another section of the code was cited for withholding correspondence within the governor's office. According to the filing, the Department of Finance said it hoped to provide Aguirre with a third set of documents on Friday.

The lawsuit asks the Superior Court to compel the Department of Finance to "disclose all records withheld and/or redacted," declare the "public interest in disclosure clearly outweighs the public interest in concealment," and attorney's fees.

The documents that were released include a string of emails largely centered on the progress of AB 1054 and its financing.

Just before the new version of AB 1054 was heard in committee, Paul Rosenstiel, a board member of the California State Teachers' Retirement System and a special advisor to Newsom at the Department of Finance, received an email from Holly Vocal, a San Francisco-based director from Bank of America Merrill Lynch.

"Overall, we thought that the legislation looked good from a security/credit perspective," Vocal wrote.

The email also included a PowerPoint analysis of the bill done by Bank of America that looked favorably on the way AB 1054 would be funded.

The newly created $21 billion wildfire fund will be split 50-50 between utilities and ratepayers. The $10.5 billion from ratepayers will come by extending a bond issued through the state's Department of Water Resources. The bond was about to expire but under AB 1054, a monthly surcharge of about $2.50 to ratepayers across the state will remain in effect.

"From a credit and marketing standpoint, AB 1054 presents an attractive security structure for the funding (of) a portion of the Wildfire Victim Fund with a securitization of the (investor-owned utility) ratepayer contributions," the presentation declared on its first page.

In a phone interview, Aguirre said, "It's all being done behind closed doors, and the public was never told that the goal was to make the whole wildfire funding problem into a very attractive investment for the investors community."

The lawsuit is the second filed by Aguirre in less than two weeks. On July 19, Aguirre and law firm partner Maria Severson filed a suit in Northern California federal court arguing that AB 1054 should be be declared invalid and blocked from going into effect. Among the arguments, the suit says the $2.50 monthly surcharge amounts to an illegal taking from ratepayers that violates the U.S. and California constitutions.

Aguirre and Severson are looking to have their lawsuit brought before William Alsup, a U.S. district court judge overseeing Pacific Gas & Electric's probation following a natural gas explosion in San Bruno in 2010 that killed eight people. Alsup has been blunt in his many of his dealings with PG&E.

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