A sweeping measure passed by the Arizona House giving utilities like Arizona Public Service and Tucson Electric Power major protections from lawsuits for wildfires sparked by their equipment will be stripped of the most contentious provisions in a state Senate committee hearing on Monday, the panel’s chairman said.

Finance Committee chairman Sen. J.D. Mesnard, R-Chandler, told Capitol Media Services on Friday that the amendment he crafted will remove provisions sought by the utilities requiring people or companies who sue over wildfire damages to prove by “clear and convincing” evidence that the utilities were at fault. That’s a much higher level of proof than what is normally required in lawsuits.

Also gone is a prohibition on recovering “consequential damages,” said Mesnard. Those include things like lost business income or compensation for renting a car if a person’s vehicle is destroyed by a fire and the owner awaits a replacement from the utility at fault.

Mesnard said that’s only fair.

Multiple drafts of the amendment, posted late Friday and still subject to change, also restore the ability to win punitive damages from a company whose negligence sparks a wildfire.

What utilities will still get in the legislation are hefty new protections from lawsuits if they follow new “wildfire mitigation plans” they will be required to create if HB2201 is enacted.

But Mesnard plans some changes there as well, one of which being the removal of a provision giving utilities a lawsuit shield if they only “substantially comply” with those plans. Also gone will be sections allowing the boards of public utilities like the Salt River Project to approve their own plans. 

Mesnard said that having a public utility approve its own plan that grants it lawsuit protections was problematic. Those company’s plans will instead have to be reviewed by the state Department of Forestry and Fire Protection. 

“That resonated with me, the idea of having your own board approve your plan, and that allowing for you to then have immunity or some degree of protection,” Mesnard said. “That did not make sense to me. I needed there to be some other authority.”

That “substantial compliance” provision that Mesnard found troubling could have awarded liability protections for utilities even if they didn’t follow parts of their plans, like failing to trim back vegetation along parts of their power lines’ route. Under the House-passed measure, someone who lost a home still had to prove by “clear and convincing” evidence the utility was at fault even if they didn’t follow their plans to the letter. 

“So it’s sort of like if we reach a lower bar it protects us to a higher bar, and I had a hard time going along with that,” he said.

The version that reached the Senate had legal issues as well, according to House lawyers who reviewed the proposal.

Most notably, they said it likely ran afoul of a provision in the state constitution that bars laws that limit the right of people to sue for compensation. The changes Mesnard is pushing should address those concerns.

Mesnard said he met with APS lobbyists and with opponents of the bill, most prominently lobbyists for the insurance industry and trial lawyers, to hammer out changes he would need before agreeing to put the measure on his committee’s agenda. Committee chairs can kill legislation by refusing to hear a bill, and Mesnard said he was prepared to do that if his concerns weren’t addressed.

An APS spokesman said the company, the largest power provider in the state, supports the measure and Mesnard’s proposed amendment. An SRP spokeswoman said her company still needs to review the final proposed changes but appreciated Mesnard’s attention and expects to be able to support the bill.

TEP spokesman Joe Barrios said his company welcomes the clear guidance it will give utilities for submitting wildfire mitigation plans that include procedures for things like cutting off power during high wind events to avoid triggering a fire and for cutting back trees and brush near power lines. 

“It will also provide protection for customers because wildfire liability costs and higher insurance costs are passed (on) through higher rates,” Barrios said in a written statement. 

“We have an obligation to continue serving customers, even in areas that may be risk-prone for wildfires,” he wrote. “The bill would reduce exposure to unfair financial risks only if we satisfy standards in our wildfire mitigation plans, thereby reducing real and potential costs for our customers.”

Opponents of the Arizona liability protection measure said Mesnard’s proposed changes will make the bill more palatable. Insurance companies and trial lawyers have strongly opposed the original measure because it stripped homeowners and insurers of much of their ability to recover damages from utilities responsible for starting a blaze.

“It is a lot, a lot better,” said Marc Osborn, a lobbyist who represents Farmers, Geico, Nationwide and Allstate at the Capitol.

Having the ability to hold a utility responsible is important, he said. PG&E, for example, is now burying its power lines to avoid sparking a wildfire – something that only happened after the company faced two multibillion dollar lawsuits. He called the bill much more reasonable with Mesnard’s changes. 

“Would we prefer no bill? Yes,” Osborn said. “But I think Mr. Mesnard did a pretty good job of grinding off the rough edges on it.”

If the changes are adopted in Mesnard’s committee, the measure will go to the full Senate for approval and then back to the House for them to sign off on the changes. 

Gov. Katie Hobbs will then have the final say.