Ash, destruction, and recovery out West
When we were asked to develop this article, the largest Los Angeles fires in terms of damage were raging on. The Palisades Fire was 31% contained and the Eaton Fire was 65% contained. Both fires were 100% contained as we finished writing. The Palisades Fire burned over 23,448 acres and damaged or destroyed nearly 8,000 structures, and the Eaton Fire burned over 14,000 acres and damaged or destroyed over 10,000 structures. Estimates of damage and economic loss are fluid and could exceed $200 billion. The origin and causes are being investigated and lawsuits have already been filed for both fires.
Presently, the causes of the fires are disputed, being investigated, and already have resulted in litigation. We aim focus on how the city, county, region, state, and country are going to rebuild in the most efficient manner. We evaluate this through a lens of rebuilding efforts after other notable disasters (particularly with an eye on other wildfires and comparable disasters), as well as expected notable considerations and difficulties. Insurers, economists, experts, and politicians are forecasting this could be among the costliest disasters in U.S. history.
Cleanup Efforts and Immediate Aftermath
“This is your Hurricane Katrina…and for Los Angeles, this will become one of the defining moments of the community, the city, and the county’s history.” – Craig Fugate, former administrator of FEMA
What will the immediate aftermath of this disaster look like? One of the first considerations in Los Angeles is the debris cleanup efforts. While California has experience with prior cleanup efforts in the aftermath of wildfires, one of the unique and material characteristics here is that the fires burned through such densely populated areas in America’s second largest city.
The fire left in its wake what can only be categorized as large swaths of hazardous waste cleanup sites. Top California officials have warned about the dangers of residents returning to plots where their homes used to stand. Fire debris, ash, and other hazardous substances that burned can create toxic and environmental threats to residents, exposure to which can occur through inhalation and/or skin contact.
Perhaps most concerning is the fact that some estimates have placed a period of years, not months, on potential cleanup efforts. The LA Times reports that, at a community meeting, Col. Eric Swenson of the U.S. Army Corps of Engineers stated that the process could take up to 18 months to complete, much to the chagrin of community members in attendance. Debates over the timeline also led to a contentious moment at a roundtable when President Donald Trump pressed Los Angeles Mayor Karen Bass to allow people to rebuild sooner.
Logistical processes that the state and region must undergo for the cleanup of debris add to the complications. For such a wide area of cleanup, the response will need to occur in phases. Landowner permission will be necessary as the crews tackle street-by-street and neighborhood-by-neighborhood cleanup. Agencies must coordinate on-the-ground efforts that must include considerations of manpower, traffic, timing, and other safety issues. In traditional cleanup efforts, this often entails coordination between the public and private sectors, as private contractors will likely be brought in by the state, not to mention the fact that many landowners will likely contract privately with cleanup crews. Generally, cleanup efforts are punctuated by a period of certification of non-toxicity by government agencies like the EPA, but open questions persist on how or if this will occur, given recent government mandates seeking to clear and waive numerous bureaucratic hurdles and avoid “red tape.”
Concerns have been raised about the threat of follow-up disasters like mudslides, floods, and more fires. Experts say that with burn-scarred landscapes, the risk of flooding is high because water essentially just runs more easily over the top of landscapes without impediment, as well as concerns about toxic debris being carried with that water. Such issues occurred in the aftermath of the Thomas Fire in Santa Barbara County, where mudslides in the aftermath of the fires claimed 23 lives and caused extensive damage.
Big questions remain about the direct aftermath and cleanup efforts that are the first step toward the rebuild, however, hope remains. The Army COE has exuded optimism about the efforts because “the state of California has the resources and the historical knowledge to perform this [cleanup] safely and effectively,” as noted in a New York Times article. Still, the financing of these efforts raises economic and political issues.
Insurance Considerations
The Los Angeles fires will have a far-reaching impact on the insurance industry as well. A major topic of conversation in the direct aftermath was how insurance—or lack thereof—will play a role in the coming rebuilding efforts in Los Angeles. This section briefly discusses a few key topics.
Damage Costs and Potential Insurance Liability
The scope of the damage in the Los Angeles fires is not fully known, but some estimates thus far are staggering. Some conservative estimates indicate this disaster could top $30 billion in insured losses, with uninsured losses accounting for at least $10 billion more.
Ongoing Insurance Crisis in California and Los Angeles
An important discussion point is the fact that insurers in high-risk areas of California, like Los Angeles, in many instances have either raised premiums or issued non-renewals to thousands, as noted in the LA Times. This wave of non-renewals led the California insurance commissioner to recently adopt changes sought by insurers, such as, according to media reports, the ability of insurers to pass along the cost of reinsurance and use models to determine their catastrophe load.
Another important consideration is that many homes affected by the tragedy were either uninsured or underinsured. Some estimates have approximated that 10% of Los Angeles homes have no insurance at all. However, even for people who were insured, there are rising concerns that their policies will not cover the entire costs associated with this disaster. This could force many homeowners in the area to decide whether to attempt to cover additional costs themselves, or to move on and relocate in the aftermath.
Governing Considerations and Enactments
Meanwhile, officials at the local, state, and federal levels of government will attempt to restore what has been lost. As noted in a Washington Post headline, the situation to date might be categorized best as a fight on two fronts: against nature and politics. How will the government balance public concerns about cleanup and rebuilding efforts against current environmental and building restrictions, and political in-fighting, to facilitate the efficient and swift rebuilding of Los Angeles?
Each level of government is under intense pressure and scrutiny with respect to containment efforts, determining why the fires were not brought under control more effectively, and post-containment activities. This could be a consideration in terms of how heavy government entities come out with orders to try to clear hurdles for rebuilding, but it could also have longer-term implications for environmental protection and consumer protection—all while needing to rely on federal funds to supplement cleanup and rebuilding efforts. The city has appointed a chief recovery officer, but the coordination between committees, commissions, and decision-makers will be key. The state has likewise organized an initiative led by high-profile officials to support fire recovery and rebuilding.
Gov. Gavin Newsom and Bass have issued a number of executive orders related to the rebuilding efforts, with more to come. Newsom issued his first major order in early January to attempt to speed up rebuilding efforts. Newsom’s office characterized this as the first step towards what he is calling a “Marshall Plan” for rebuilding the region. The order includes the suspension of permitting and review requirements under the California Environmental Quality Act and the California Coastal Act, which should help victims rebuild homes and businesses faster. This order has since been supplemented to include more mandates to “cut red tape,” such as going further to suspend California Coastal Commission requirements for rebuilding.
These orders, among other stated objectives, seek to:
Newsom likewise issued orders aimed at debris removal efforts, which:
The mayor’s office has issued similar orders. The first major set of rebuilding executive orders issued from the mayor’s office takes aim at permitting and zoning requirements, coordinating debris removal, and establishing immediate relief in the form of resources and housing in the short term. Importantly, the order attempts to “clear the way” by ordering Los Angeles to swiftly issue permits in impacted areas, ordering departments to “expedite all building permit review/inspections, [bypass] state CEQA discretionary review, [allow] rebuilding ‘like for like’ and [waive] city discretionary review processes.”
While the emergency orders already take aim at clearing hurdles to expedite the cleanup and rebuild, questions will persist about implementation, quality control, and environmental impacts with the loosening of permitting and inspection requirements. All of this is also important to consider with the continued role the federal government will play, particularly when it comes to funding.
Labor and Supply Considerations
The rebuilding efforts in Los Angeles will take one of the largest efforts in U.S. history. In short, demand for skilled labor and construction materials will be important. The California government is already extending orders attempting to restrict price gouging practices “on building materials, storage services, construction, and other essential goods and services.” A major question for the rebuilding efforts is how the state will ensure that enough manpower is deployed, of officially licensed contractors, to rebuild properly while also protecting consumers. Demands for materials and labor will spike dramatically, and this is of particular concern as permitting and inspection restrictions are loosened.
Rebuilding Considerations
An important point of discussion concerns what Los Angeles will look like after this rebuild. How can (or should) Los Angeles rebuild? How can communities be built with increased fire-safety measures to help protect communities in the future without such efforts becoming so cost-prohibitive that they are abandoned?
At a base level, this can look like improving evacuation measures, building with fire-resistant materials and methods, and building up communities that could be more “fire wise” for the future. The contractors undertaking the rebuilds will be on the front lines, with government and landowners working together to make sure designs and implementations can integrate new fire safety measures in the most efficient manner. This might even include supplementing existing structures in Los Angeles to improve fire avoidance.
As with prior considerations, how could the loosening of permitting, zoning, inspection, and environmental standards cause issues on this front? California must keep the goal of building future fire-resilient communities front-of-mind, particularly with increased concerns about the intensity of future disasters as a result of the climate crisis. The shortcomings of the response this time, and with prior fire disasters like the Camp Fire, can be instructive for the future.
The effects of these fires have been highly evident and publicized in public discourse. The immediate and long-term effects of the fires will be felt, but for rebuilding efforts to be successful, there will need to be cooperation and coordination between multiple arms of government and commissions. Ultimately, this will be a process of years, not months, but at the forefront should be the people and communities impacted by this disaster.
About the Authors:
Richard Glucksman, partner; and Hugo Myron, associate, are with Chapman Glucksman, PC. rglucksman@cgdrlaw.com; hmyron@cgdrlaw.com
Photo by David McNew/Getty Images
Richard Glucksman is a partner at Chapman Glucksman.rglucksman@cgdrlaw.com
Hugo Myron is an associate at Chapman Glucksman. hmyron@cgdrlaw.com
CLM’s Property Committee provides education relevant topics, practical skills, and innovative strategies for handling property claims and litigation related to coverage and insurance claims for CLM’s members and fellows.
