Pay Now and Pay Later PG&E may still face $30 billion in additional lawsuits stemming from the North Bay and Butte County fires.

There were so many headlines around the country about PG&E’s $1billion settlement with cities and counties last week, a casual observer might be moved to conclude that the utility’s wildfire-related lawsuits were now behind it.

Not so. In fact, there’s no guarantee that Santa Rosa or Sonoma County will ever see any of the $414 million that’s part of the Sonoma Fire Complex piece of the settlement. And if they do, it won’t be until 2020. Plus, the embattled utility is reported to be facing down some $30 billion in additional lawsuits brought by businesses, individuals and homeowners affected by the fires.

As the news broke officials in Sonoma County expressed cautious relief at the county’s proposed but unspecified piece of the settlement. The $414 million figure for the North Bay was arrived at through mediation and will be divvied up between nine Sonoma and Napa counties and cities affected by the fires. The remainder is being directed at suits filed by Paradise and Butte County after last year’s firestorms to the north.

The bottom line is that nobody knows who’s getting what—that’s yet to be determined—except that the lawyers will be paid 18 percent of the net from whatever winds up in Sonoma’s coffers, according to the county’s contract with the law firms.

Despite the uncertainty surrounding it, the settlement announcement came at a salient moment where recovery efforts locally are faced with dwindling federal and state resources: Sonoma County had just been through a bruising budget season as it adopted a $1.78 billion budget for fiscal year 2019-20 that slashed jobs and fretted over its property-tax shortfall that’s an ongoing legacy from the 2017 wildfires.

Some 92 county positions were on the chopping block (the county managed to restore all but 40 of the proposed cuts) during this year’s round of budget talks, and in a press release, the county noted that it was continuing to pursue state money to “backfill property losses after experiencing a loss of over $200 million from the disasters experienced over the last two years.”

After footing the bill for cash-strapped counties and cities for two years, continued property tax backfill from the state is not part of the state’s final 2019-2020 budget, and if any final settlement is arrived at, it won’t be until mid-2020 that any regional city or county can use their share of the PG&E settlement to shore up local budgets or address the ongoing hole in their property-tax collections.

In the meantime, Sonoma County Supervisor David Rabbitt pledged to look for grants and seek reimbursement for the lost property tax income from the state and federal government, “but we must plan as if we are not going to receive any assistance,” he stressed in a statement that attended the county’s budget release two weeks ago.

Meanwhile, the timing of the mediated settlement announcement was a portent of good news for cities and counties with big holes to fill in their wildfire-related budget shortfalls, but was it telling? Sonoma County is not alone as cities around the region just now releasing their budgets and fiscal projections for next year and their annual financial reports from last year. Santa Rosa’s 2018 City Annual Financial Report (CAFR) signals its concern over the potential for lost property-tax backfill starting in 2019.

The proposed-but-by-no-means-finalized $1 billion settlement made headlines far and wide, but the national-headline-machines did not crank up in similar fashion at news late last week that a proposed emergency fund to help utilities in California deal with future wildfires, to be funded by PG&E and its shareholders, would include some contributions from PG&E ratepayers, under Gov. Gavin Newsom’s draft wildfire recovery outline released last Friday.

Sen. Bill Dodd, one of the lawmakers who worked to sketch out the parameters of the proposed emergency fund, issued a statement late Friday that warned against putting too much burden on ratepayers to pay for wildfire damage in his wildfire recovery plan.

“The legislature has been working diligently on addressing wildfire risks, and I appreciate the time and thought Gov. Newsom has taken on this critical issue,” says Dodd in a statement. “We look forward to carefully vetting the details of his draft and engaging in a collaborative process to develop a solution. My ultimate focus remains on protecting ratepayers from undue costs, ensuring victims are compensated and on improving safety for all Californians.”

When it comes to the lingering property-tax conundrum, Dodd’s office says the senator has been advocating for a continuation of the property tax backfill for Sonoma and Napa counties, which wasn’t included in the state’s 2019-20 budget. “We’re continuing to push for additional support,” says Dodd via email.

The Napa-based senator says the settlement reached last week was good news for cities and counties struggling to rebuild and provide services, but adds that “all victims of the wildfire caused by PG&E deserve to be compensated for their losses, and I hope PG&E will do the right thing and settle with the individuals who lost their homes as well.”

According to a fire victims lawyer interviewed in the Wall Street Journal last week as the mediated settlement was reached, PG&E may be facing up to $30 billion in additional lawsuits, and not just from homeowners but potentially faces class-action suits related to negative health impacts from the deadly wildfires that scorched the North Bay and, for a few horrible days last summer, gave the Bay Area the unenviable position of having the worst air quality in the world.

To settle its suit with PG&E, the county leaned on a national law firm with a long history of litigation over asbestos and diseases that are said to be caused by the substance, including mesothelioma.

In February 2018, Sonoma County signed a contract with the law firm, Baron & Budd and two other fire-focused law firms, to represent the county and its agencies in litigation arising from the Sonoma complex Fires of October 2017. According to the contract, the litigation was “intended to insure that taxpayers and Sonoma County ratepayers do not bear the burden of the many millions of dollars of damages caused by the Sonoma Complex Fires.” But the settlement last week only partially unburdens Sonoma County taxpayers. The contract stipulates that the law firms would be paid for their services if the suit was settled favorably for the county.

As part of the agreement with outside counsel, the county also hired two lawyers to deal with fire litigation and said it would expect that “a reasonable amount of County Counsel fees will be incurred to support the lawsuit against PG&E,” and said it would be able to recoup up to $450,000 of county counsel expenditures “as party of any settlement.”

The county budgeted $120,000 to pay for the additional lawyers brought on board to work the lawsuit and another $68,000 for work that had already been undertaken by the counsel’s office. The contract with Blum and other law firms set a contingency fee based on 18 percent of any net settlement or recovery that the firm obtained for the county. That means the law firm will get nearly one-fifth of any settlement that comes Sonoma County’s way.

The settlement is not settled yet. Santa Rosa and Sonoma County, along with seven other counties and cities, have only agreed to accept mediator Judge Jay Gandhi’s proposed settlement. In a joint statement last week, officials from Santa Rosa and Sonoma County noted that the allocation of the $415 million had not been determined. Before any monies wind up in county or city coffers, the mediated agreement will be incorporated into a PG&E’s Chapter 11 bankruptcy case. The settlement is contingent on the Bankruptcy Court confirming PG&E’s reorganization plan.

Requests for comment from the Sonoma County counsel’s office were directed to lawsuit point-person John Fiske at Baron & Budd. “It is in the best interest of the wildfire victim communities for PG&E to emerge from bankruptcy as soon as possible,” Fiske says via email. “Communities cannot receive compensation unless and until PG&E is out. We hope all parties and lawyers can resolve disputes as efficiently as possible.”

Local officials were meanwhile cautiously optimistic and relieved that help may be on the way to plug their fire-related budget holes, but nobody’s counting their chickens just yet.

In a statement, Santa Rosa mayor Tom Schwedhelm gave an indication of where Santa Rosa’s piece of the settlement might be deployed: “This agreement, if approved, will not only help support Santa Rosa’s recovery, but also to aid in our ability to invest in resiliency measure that may better protect our community from future disasters.”

The sentiment was echoed by Rabbitt, who said the county’s piece of the settlement would be dedicated to fire-damaged roads, infrastructure and watersheds, “while protecting taxpayers.’

Work used to be simple for the California Department of Transportation: widen highways, fill potholes, build new freeways.

Alas, those quaint days
are gone.

To get an idea of what planners must prepare for, state officials recently hosted a demonstration of a drone air taxi that will require devising a “highway above the ground,” said Reza Navai, a Caltrans transportation planner. “If you think transportation on the ground is complex….”

Such sci-fi-like transit is one of many high-tech changes coming as California implements its planned electrification of transportation to radically reduce greenhouse-gas emissions. The path to “zero,” as in zero-emission vehicles, extends well beyond flying taxis and the 5 million electric cars the state hopes will drive its roads by 2030. Everything—everything—will be replaced with an electric analog: from boats, planes and trains to delivery vans to farm tractors and even forklifts. The to-do list stretches as long as California’s seemingly endless blacktop, with freight as a major challenge.

The state’s transportation gurus envision technology that pings driverless vehicles with an automated message when they stray from their lanes, “smart” roads that charge electric cars and trucks as they pass and an electrified Interstate 5, the West Coast’s main freight corridor. California has already widened its painted lane stripes to six inches from four so self-driving vehicles can better “see” the road. Ultimately, the highways themselves will be redesigned and constructed with different materials.

California’s transportation agency, which updates its master plan every five years, is currently preparing a look at 2050. While officials cannot predict each new technological wrinkle, Navai said, “we must be able to consider all possibilities.”

To achieve a carbon-free transportation future, California will need to cover a lot more ground in a short time frame.

“If California’s trying to be a leader, we have to go as fast as possible,” said Lew Fulton, who studies sustainable transportation at UC Davis’ Institute of Transportation Studies. “Policies are critical to try to speed this up and try to push the envelope, and get all the manufacturers scared enough that they start producing what we need. Carrots and sticks. Carrots being pricing and incentives, sticks being regulatory.”

The state has spent more than $1 billion in the last five years to encourage research, subsidize the exchange of internal combustion vehicles for zero-emission options, formulate cleaner fuels and expand vital charging infrastructure.

It’s working with technology firms to clean up heavily polluting marine fuels belching from container ships at California ports, and state funds are helping Central Valley farmers, who are on a waiting list to replace their aging farm equipment with fuel-efficient models and to receive rebates.

Such projects may get a boost from California’s Tesla-owner governor, Gavin Newsom, as budget negotiations wrap up this month. His proposed spending plan includes nearly $24 billion for all aspects of transportation, a 6 percent increase.

Few transportation modes have clean-engine options as advanced as those for passenger cars. Buses are the exception. The Chinese company BYD, manufacturing electric buses in Lancaster, is the largest in North America and has produced more than 300 buses, including nearly half of the Antelope Valley Transit Authority’s pool.

The city of Los Angeles has pledged to convert its bus fleet—second-largest in the country—to electric by 2030, though mechanical and performance problems plagued the rollout of its BYD vehicles. Many other transit districts have similar goals that include school buses. The financial burden of those commitments is softened by state vouchers for up to $200,000 toward the purchase of each zero-emission bus.

The availability of some electric all-terrain recreational vehicles, farm machinery and specialty equipment such as cherry-pickers and front-end loaders has produced niche markets. Generally, though, the readily available transportation technology stops where the road ends: Electrification of trains, planes and ships is less advanced.

A state analysis found that ocean-going vessels still depend on heavily-polluting marine fuels and, aside from nuclear-powered engines for military use, zero- and near-zero technologies are not currently available. Among smaller vessels, San Francisco Bay’s famed Red and White fleet added a new hybrid-electric ferry this week.

Ships docking in California’s ports frequently forgo using diesel generators to operate and instead plug into shore-side electric power. But even when stationary, big vessels have a massive appetite: A nine-cylinder ship engine—five-stories tall and weighing 1,500 tons—can produce enough power to run 30,000 homes for a year.

But trucking is the major freight challenge for California. More than 97 percent of the state’s big rigs operate on diesel fuel, which is highly polluting and a significant contributor to detrimental health effects on those residing near transit corridors. Currently only a handful of electric or hybrid heavy-duty truck options exists, mostly prototypes.

“I see 100 percent electrification as being far off; there just aren’t any of those trucks on the road,” said Brandon Taylor, director of transportation for GSC Logistics, a freight company operating at the
Port of Oakland.

Freight represents a transportation problem somewhat of our own making: We desire—and order online—more and more products, for delivery right now. With each mouse click, delivery vans and trucks flood the state’s highways and neighborhood streets, dispatched to cover what supply-chain planners call “the last mile” of residential delivery.

About 20 percent of trips in the United States are, in fact, less than a mile. But it’s too late to shut off the merchandise-delivery tap, and freight accounts for about a third of the California Gross Domestic Product.

The influx of these trucks and vans runs counter to one of California’s bottom-line goals: to reduce not just the number of vehicles on roads but also, and more critically, the miles they travel. The mid-sized delivery vans taking the package handoff from heavy-duty trucks are turning over odometers at a dizzying rate; in Southern California, an estimated 85 percent of truck traffic is dedicated to local deliveries and short hops.

The future is likely to include on-demand trucking. Predictably, there’s an app for that, Uber Freight, which launched in California in 2017. It’s one of a handful of load-matching apps that connect shippers with smaller, more nimble trucks plying local routes. The system is intended to increase efficiency and decrease total miles driven. Additionally, electric trucks can return to a home base at night to be recharged.

Big rigs in California aren’tt subject to the smog inspections that have applied to cars since 1982, partly due to early pushback from trucking companies and insurmountable complexities involved in regulating out-of-state vehicles. But that could change: A bill advancing in the Legislature would create smog checks for big diesel trucks.

The state will need to retrofit highways to allow charging of electric freight trucks, which some experts say may still be a decade away. Planners are examining exactly what an electric-truck stop would require: Big trucks need big batteries and very large charging infrastructure.

Utility companies in California, Oregon and Washington are underwriting a study that will examine how to provide electric charging and hydrogen fueling along the entirety of Interstate 5, with bays for next-generation semi-trucks running on batteries or hydrogen gas.

State regulators recognize that innovation doesn’t always align with government goals and deadlines and are planning for clean technology where feasible. Like everything else, it’s not going to be cheap.

The cost of an electric semi-tractor trailer, $300,000 or more, is more than twice that of a traditional diesel truck. That can be a burden on mom and pop companies, 90 percent of whose fleets contain six or fewer trucks and who operate on relatively tight margins.

“It’s going to be tough,” even with state subsidies, said Chris Shimoda, lobbyist for the California Trucking Association.

Shimoda said his members don’t care what type of fuel the state requires. “Everybody knows this is the direction California is going,” he said. “It’s easy to say we have a goal of eliminating fossil fuels, but as I think everyone would admit, the details of how to get there are important.”

At the Port of Oakland, with freight-train horns blaring in the background, Taylor said by phone that it’s eerie to see—but not hear—his company’s electric big-rig pull into one of the loading bays. “It kind of sneaks up on you,” he said.

The company’s been testing the truck for more than a year, underwritten partly by a state grant, and expects delivery of two more in the fall. Taylor uses the truck to move containers around the port but has yet to put it on the road, echoing the “range anxiety” associated with electric cars. His truck’s battery runs out and needs recharging after 120 miles.

“I guess it can only get better with electrics,” he said. “I’m not sure how it’s all going to work, but it’s happening.”