USA – CALIFORNIA Trends and Developments Contributed by: Nora Sheriff and Samir Hafez, Buchalter
Congress, indicating that the waivers should be considered rules eligible for repeal by Congress. However, these efforts were recently thwarted by a March 2025 determination by the Government Accountability Office that the prior approval of California’s plan to phase out gasoline-only vehi - cle sales by 2035 is categorised as an order, making it non-reviewable by Congress under the Congressional Review Act. This decision supports California’s regulatory authority, but the issue continues to be a point of contention between federal and state governments. Deficient, Aging Infrastructure and the Need to Rebuild Los Angeles Wildfire Challenges Governor Newsom’s October 2024 Executive Order noted that ratepayers subsidise critical utility wildfire mitigation efforts that have accel - erated due to the climate crisis, and these costs are a major driver behind the increase in electric - ity rates. Less than two months later, in Janu - ary 2025, the destructive wildfires that ravaged Southern California demonstrated that, despite its investments, the state remains woefully underequipped in its war on wildfires. Coverage of the January 2025 wildfires high - lighted stories of firefighters encountering water- supply failures and storage tanks and pumping systems proving unable to meet demand. South - ern California Edison is currently facing signifi - cant criticism and numerous lawsuits following reports that its equipment may have triggered the Eaton Fire. The determination of Eaton Fire liability could have significant financial implications for the util - ity, its ratepayers, and the viability of California’s Wildfire Fund. Under the doctrine of inverse con - demnation, which holds utilities responsible for damage caused by their equipment, the finan -
cial consequences could severely strain utility resources and limit the ability to fund operational costs and investments. If Southern California Edison is found liable for the fire, it will likely rely heavily on both ratepay - er-funded cost recovery mechanisms and claims from the state’s Wildfire Fund, both of which are already under financial strain. The wildfires have put California’s aging infra - structure under the spotlight nationally, but this problem has been apparent to most Californians for a long time. Despite the massive amounts of ratepayer funding dedicated to infrastructure rehabilitation in recent years, considerable work remains. With ratepayers facing record-high costs and the state grappling with ongoing and emerg - ing crises, California lacks the infrastructure to accomplish its ambitious 2045 targets, and remains behind schedule on its plans to build out that infrastructure. Timely Energisation Issues One major challenge is the state’s outdated energy grid, which requires substantial upgrades to handle the influx of renewable energy needed to meet future demand and enable achievement of emissions goals. California has made signifi - cant investments in solar and wind power, but much of this energy is curtailed due to insuf - ficient transmission to deliver it from the remote areas where it is generated to the urban centres where it is needed. Additionally, as the state transitions toward elec - trified transportation and decarbonised build - ings and industry, the utilities must expand and modernise local distribution networks to support these new loads. However, delays in permitting,
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