U.S. Department of Justice Sues Utility Company Over California Wildfires

Federal authorities have launched a sweeping lawsuit against Southern California Edison (SCE), one of California’s largest utility companies, accusing it of negligence that led to two catastrophic wildfires: the Eaton Fire in January 2025 and the Fairview Fire in September 2022. The Department of Justice (DOJ) claims that SCE’s failure to properly maintain its electrical infrastructure directly contributed to the ignition and devastation of these blazes, which collectively killed 19 people and destroyed more than 10,000 buildings.

Allegations of Negligence and Regulatory Context

According to DOJ statements, SCE’s power lines in the Eaton Canyon area were identified as the likely ignition source for the Eaton Fire, which swept through northeastern Los Angeles County and Altadena, burning over 32 square kilometers. Plaintiffs allege SCE ignored red flag warnings from the National Weather Service and kept power lines energized despite high winds and dry conditions, factors known to exacerbate wildfire risk. Monitoring systems and video evidence reportedly captured unusual electrical activity at the time and place of the fire’s origin.

The Fairview Fire, which scorched 14,000 acres in the San Bernardino National Forest, is similarly blamed on SCE’s sagging wires and communication cables. The DOJ’s lawsuit seeks more than $77 million in damages for costs incurred by the U.S. Forest Service, including restoration of lost facilities and environmental rehabilitation. Private lawsuits have also mounted, with insurance companies and thousands of individuals seeking over $10 billion in subrogation claims.

Legal Fallout and Industry Implications

SCE has denied responsibility, citing its own inspections and maintenance records and suggesting other causes such as human activity or unrelated natural events. The utility maintains that some power lines were de-energized prior to the blaze and has begun reviewing the lawsuit’s allegations. SCE’s legal team is reportedly considering cross-claims against public agencies, including Los Angeles County, arguing that their negligence may have contributed to the fires’ spread.

This federal lawsuit marks a significant escalation in regulatory pressure on utilities operating in wildfire-prone regions. California’s inverse condemnation laws, which hold utilities strictly liable for fires caused by their infrastructure, are now being leveraged at the federal level. The DOJ’s action signals a pivot toward proactive accountability, with utilities facing mounting operational costs for compliance, grid modernization, and wildfire prevention. SCE’s annual wildfire mitigation budget has exceeded $1 billion, and its self-insurance fund is expected to be depleted by 2026, raising concerns about the sustainability of such financial safeguards.

Wider Impact and Ongoing Litigation

The fallout from these wildfires extends beyond SCE. Plaintiffs’ attorneys represent thousands of victims, and the litigation is expected to set precedents for future cases involving utilities and climate-driven disasters. The case also highlights systemic risks for the utility sector as climate change increases the frequency and severity of wildfires, forcing companies to balance infrastructure investments with rising liability exposure and public scrutiny. Other utilities, such as Pacific Gas & Electric, have previously filed for bankruptcy after similar disasters, underscoring the existential threats facing the industry.

As legal proceedings unfold, SCE and other utilities will be under intense scrutiny to demonstrate improved risk management and climate resilience. The DOJ’s lawsuit may pave the way for nationwide regulatory harmonization, further increasing compliance costs and reshaping the energy sector’s approach to wildfire prevention and accountability.