Many state laws providing for the recovery of damages caused by escaped wildfire were enacted at the time when such fires were quickly extinguished and mostly occurred away from populated areas. In recent years, however, declining public budgets have resulted in decreased funding for firefighting costs, and more Americans have chosen to live in and around forested areas, many of which have become dryer and more flammable. Symptomatic of some of these changes is the United States Department of Justice’s increasingly aggressive use of state law to recover damages when fire escapes from private lands to damage federal property. As members of the Forest Landowners Association will likely recall, July of last summer witnessed the culmination of a high-profile case brought by the Department of Justice against California’s largest private landholder, Sierra Pacific Industries, Inc. (SPI). In that case, the federal government sought to recover damages reportedly approaching $1 billion resulting from the Moonlight Fire that burned 46,000 acres of timber lands in two National Forests. The fire allegedly started on and then escaped from private land (albeit not land owned by SPI) while being harvested by a logger under contract to SPI. SPI and the other defendants settled the case in July of 2012 for $122.5 million, comprised of $55 million in cash (of which SPI is to pay $49 million), plus SPI agreed to transfer to the federal government 22,500 acres of forest land worth an estimated $67.5 million.
SPI’s decision to settle the case on the eve of trial was almost certainly influenced by a ruling that had been issued by the Ninth Circuit Court of Appeals just weeks earlier. In that decision, the court affirmed the verdict of a California jury awarding the federal government $7.6 million in traditional damages, such as fire suppression, emergency mitigation, and resource protection costs, plus $28.8 million in “intangible environmental damages.” The suit involved a private contractor who was performing welding work within a National Forest when a spark from the worksite ignited a wildfire that escaped and eventually burned 18,000 acres of National Forest land. In affirming the jury’s verdict in its entirety on the issue of damages for intangible environmental harm, the court noted that under California law damaged landowners (in this case the federal government) may recover damages for all harm, including environmental injuries with “no restrictions on the type of property damage that is compensable.”1
I. Several States React To Better Define Citizen’s Liability For Wildfire
Shortly after the lawsuit against SPI was settled, California enacted a law limiting the ability of “public agencies” (including the federal government) to recover non-economic damages in escaped wildfire cases. Although the new law continues to provide for the recovery of a variety of “ecological and environmental damages,” it also requires that such damages be both reasonable and quantifiable in relation to the pre-fire, fair market value of the damaged property. Moreover, such damages may not be “enhanced” under California laws providing for the tripling of damages in certain egregious circumstances.
Already this year at least two other states have followed California’s lead by passing legislation that limits or entirely prohibits the recovery of intangible environmental damages. For example, on March 12, 2013, Idaho enacted a law expressly limiting the damages that are recoverable when a person negligently allows a fire to escape from his land. Allowable damages include reasonable suppression costs, economic damages and either: (1) the diminution of the fair market value of the property; or (2) the actual costs for restoration of the property, but not intangible environmental damages. To further dispel any doubt about the availability of intangible environmental damages under Idaho law, a statement of legislative intent included with the new statute further provides that “intangible environmental damages are clearly speculative in nature and should not be recoverable.”
On June 4, 2013, Oregon enacted a law clarifying the liability rules for escaped wildfire in that state. Much as had been the case before the new law was enacted in California, previous Oregon law simply allowed for the recovery “of the amount of damages suffered.” In cases where the damages had been the result of willful, malicious or even negligent conduct, Oregon law has also provided for double the recovery of these unspecified damages. Moreover, the responsible individual could also be liable for firefighting costs.
Oregon’s new law more clearly defines liability for damages caused by an escaped wildfire. That is, the new law provides for the recovery of “economic and property damage,” which is defined as the: (1) Lesser of the difference in the fair market value of the property immediately before and immediately after a fire; or (2) Cost of restoring property to the condition the property was in immediately before a fire; plus (3) Any other objectively verifiable monetary losses. The new Oregon law clarifies that only cases of willful, malicious or grossly negligent violations of state law qualify for double damages, while simply negligent conduct will result in liability only for the actual amount of economic and property damages. Unreimbursed firefighting costs, however, can also be recovered regardless of whether the fire was caused negligently or willfully.
II. The Liability Of State And Federal Government For Citizen’s Damages Caused By Wildfire
In April of 2013, Colorado increased the cap for damages that individuals can recover from the state for injuries caused by state employees. The new law raises the cap from $150,000 to $350,000 where injuries to one person result from a single occurrence and increases from $600,000 to $990,000 for injuries caused by state employees to two or more persons in a single occurrence, provided that no single individual recovers more than $350,000. The law was enacted in response to the Lower North Fire, a prescribed burn set by state employees that escaped government control, killing three people and destroying 23 homes. Although the increase in the damage cap is significant, it still would not come close to compensating individuals who were damaged by the North Fork Fire in an amount approaching $11 million. The extent to which a state may be held liable at all for the wildfire damages it causes to its citizens and whether are not a state’s liability is capped for such damages are matters that differ considerably from state to state.
In this regard, damages for a wildfire that escapes from federal lands due to the alleged negligence of federal employees and harms private citizens and/or their property is governed by the Federal Tort Claim Act, 28 U.S.C. §§ 1346 (b) and 2671, et seq. (FTCA). Notably, unlike Colorado, the FTCA places no cap on damages; however, because the law provides a limited waiver of the federal government’s traditional “sovereign immunity” from suit, the FTCA does contain a number of substantive and procedural hurdles to jurisdiction. Thus, absent considerable experience with the FTCA and the dozens of fire-related decisions that have interpreted the statue since its enactment in 1948, these hurdles may well prove insurmountable, in which case a federal court will dismiss the case without having ever reached the central issue of whether the negligence of federal employees caused the citizen’s damages.
State laws governing liability for damages caused by escaped wildfire may have been enacted at a time when large wildfires were less of a concern and/or fail to clearly define the types of damages that may be recovered as a result of such fires. Accordingly, federal authorities, particularly in the western United States, have sought to recover large damage awards under such laws from private parties for fires that escape from private lands and damage federal property. Of course, there is no reason that a private party sustaining damages due to an escaped fire could not also have recourse to these laws. 2
In an effort to clarify the situation, at least three states in the past 12 months have amended their laws pertaining to liability for damages resulting from escaped wildfire in a variety of ways, including by eliminating or reducing the recovery of non-economic (e.g., “ecological”) damages and better defining the specific types of economic damages that are available. Forest landowners will be well-served to understand the laws and regulations that govern liability in their own states and consider whether those laws continue to operate fairly and clearly define liability for damages caused by escaped wildlife.