Lawmakers introduced the legislation over the weekend after they rejected an ambitious proposal by Newsom that would have limited electric companies’ financial liability for fires sparked by their equipment.

After deciding not to vote Tuesday, Assembly Speaker Robert Rivas said lawmakers would revisit the issue this fall.

“The proposal before us does not yet deliver the relief, accountability or meaningful reform that Californians deserve,” the Democrat said in a statement. “So, we are going back to work — and we will not stop until we have done everything in our power to deliver real results.”

Newsom’s plan would have reduced the amount utilities had to pay some victims and barred insurance companies from suing electrical companies to get reimbursed for damages paid out to homeowners.

The governor said the last-minute compromise he made with lawmakers would have had some benefits for wildfire victims, such as getting paid faster, but that it failed to make necessary, sweeping reforms to tackle the question of who covers the cost of fires ignited by utility equipment.

Newsom acknowledged that the bill would have made some progress toward addressing the contentious, high-stakes issue.

“I could have easily walked away from it,” he told reporters Monday. “And that would have been a disservice to you and the people of this state.”

Monique Limón, the president pro tempore of the state Senate, said she was disappointed that the deal wasn’t passed Tuesday.

“Thousands of survivors made their voices clear — they needed reform to ensure the next wildfire does not continue to cause the mental and financial stress that recent disasters have placed on Californians,” the Democrat said in a statement.

Who pays for wildfires is a contentious issue

Newsom’s failure to get his full plan passed by the end of the session marked a rare loss for the governor, who has often found support for his policy wishes in the Democratic-led Legislature. It comes as he wraps his final session before leaving office in January.

Fire victims heavily criticized his proposal, even protesting outside the governor’s mansion in Sacramento last week. They argued Newsom’s plan would have placed the needs of utilities over those of victims, while insurance companies said shifting more of the cost of damage onto them would have required them to raise rates for policyholders.

Joy Chen, executive director of Every Fire Survivor’s Network, a group of victims of the 2025 Los Angeles-area fires, said the deal was a win for them.

“Survivors from across California came to Sacramento and asked our elected representatives to stand with the people whose homes, communities and lives have been devastated,” she said in a statement. “They listened.”

Newsom hoped his plan would help stabilize the state’s notoriously high electricity rates by protecting utilities from the full financial impacts of wildfires. Utilities have raised rates to pay for wildfire prevention and recovery as climate change has made the blazes more intense and frequent. Under California law, utilities have to pay damages for fires ignited by their equipment, even if a judge doesn’t find them negligent.

The question of who should cover the cost of utility-sparked fires has persisted throughout Newsom’s tenure, which began after the most destructive wildfire in state history. He signed a law in 2019 — his first year in office — that created a $21 billion fund, paid for by utility shareholders and ratepayers, to help utilities pay for wildfire damages if they take certain safety measures. He and lawmakers agreed last year to supplement the pot of money with another $18 billion fund.

Newsom unveiled his latest proposal as Southern California Edison faces claims from the state’s second-most destructive blaze, a 2025 fire that killed 19 people outside of Los Angeles.

Compromise aims to pay victims faster

The bill lawmakers were slated to vote on would have created a program to ensure that fire victims get paid more quickly, banned hedge funds from profiting from wildfire claims and barred utility executives from receiving bonuses if their company’s equipment sparked a blaze that ends up damaging or destroying more than 500 buildings.

The California Catastrophe Response Council, which oversees the wildfire fund, would have to appoint an administrator to create a process to resolve victim claims more quickly.

Utilities and some lawmakers criticize the bill

Pacific Gas & Electric, which filed for bankruptcy in 2019 after it faced claims from a devastating Northern California blaze started by the utility’s equipment, and Edison International, Southern California Edison’s parent company, were disappointed with the deal. They said in a letter to lawmakers that the bill would fail to stabilize rates for Californians and wouldn’t provide “durable, long-term solutions” for compensating victims, sustaining the state’s wildfire fund, or managing utilities’ financial risk.

Assemblymember Rick Zbur, a Democrat, called it a “disaster” that lawmakers couldn’t agree on making more sweeping reforms.

“We’re nibbling around the edges, and we’re not dealing with the structural issues,” he said at a hearing on the bill.

Katelyn Roedner Sutter, of the Environmental Defense Fund, was also underwhelmed with the proposal, saying it wouldn’t go far enough to lower the risk of fires and stabilize electricity and insurance rates.

“The best I can say about this bill is it’s fine,” she said after the hearing.

Legislature passes the nation’s first smoke contamination testing standards

Lawmakers also passed a bill Monday that would create the nation’s first standards for testing and cleaning up lead, asbestos and other toxic contaminants inside homes after a wildfire.

Assemblymember John Harabedian, a Democrat who wrote the bill, said it was borne out of the deadly 2025 Eaton Fire that swept through Altadena, which he represents. He said it’s important for lawmakers to “figure out very quickly how to protect wildfire survivors and rebuild communities,” and the bill is one way to do that.

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Associated Press reporter Dorany Pineda in Los Angeles contributed to this report.