Newsom blames ‘outside groups’ for his defeat on wildfires

The California governor said he decided to take a “last at bat” on the toughest issue he could.

SACRAMENTO, California — Gavin Newsom blamed “Big Insurance,” hedge funds and trial attorneys on Monday for blocking a major wildfire liability overhaul in California, warning that compromise legislation had already dealt a blow to the state’s utilities.

“You got to deal with reality,” Newsom told reporters at the state Capitol. “Capital markets are capital markets, and the markets responded today as we absolutely knew they would, and the impact of that is real, and it’s outsized.”

Newsom, a likely presidential contender, acknowledged the unpopularity of helping investor-owned utilities, who would have benefitted the most from his proposal, which focused largely on limiting their costs after wildfires.

“You may hate them,” he said. “I mean, they’re a four-letter word. I get it. They’ve been a bane of my existence.”

But news of the narrowed deal sent Pacific Gas & Electric and Southern California Edison stocks plummeting 20 and 23 percent, respectively, on Monday. Newsom blamed “outside groups” for spending “millions and millions of dollars” against his proposal, calling them “powerful.” “That’s why big insurance is big insurance,” he said. Lashing out against the hedge funds and trial attorneys who also opposed the measure, he said, “These guys get theirs. They’re first to the trough, and they use victims.”

Newsom’s remarks came after a rare rebuke from Democratic lawmakers in his home state, who in recent days gutted the most consequential parts of his wildfire liability proposal.

The final deal, reached Saturday morning, included measures to block hedge funds from profiting from wildfires, to prevent utility CEOs from receiving bonuses after their company ignites a blaze and to get money to fire survivors faster. But it did not include the most ambitious and politically fraught aspects of Newsom’s initial plan, including barring insurers from suing utilities to recoup some of the money they paid out in claims after a wildfire sparked by their equipment — and preventing cities and counties from recovering infrastructure replacement costs from the power companies.

“I decided to take a last at bat on the toughest issue that I could,” Newsom said. “I could have easily walked away from it, and that would have been a disservice to you and the people of the state. And the good news is, we made progress.”

Of his relationship with lawmakers, he said, “I feel we’ve never had a stronger working relationship, stronger trust.”

Newsom said the issue would likely continue to be a problem for the next governor. Democrat Xavier Becerra is widely expected to defeat Republican former Fox News host Steve Hilton in the November general election.

“It’s a baton that will be passed,” Newsom said. “I hope beyond tonight and the next few months, we can continue the conversations. Those conversations, I assure you, will be front and center with the next administration in this state because the issues aren’t going away.”

Noah Baustin contributed to this report.