Overview of Steven Greenhut’s Congressional Testimony on “California Wildfires and the Consequences of Overregulation”
Last week, the House Judiciary Committee’s Subcommittee on the Administrative State, Regulatory Reform, and Antitrust held a hearing on the California wildfires and state regulations. Among the four invited witnesses was R Street’s Steven Greenhut, a resident senior fellow and Western Region Director, who provided expert testimony on the issue.
Greenhut’s written and oral testimony focused on three main points:
- Burdensome environmental regulations, such as permitting requirements for brush clearance and the California Environmental Quality Act (CEQA), have worsened wildfire mitigation and rebuilding prospects.
- Regulatory constraints, including Proposition 103 and burdensome approval processes for rate adjustments, have created an insurance market crisis.
- Overall, the state has mismanaged policy priorities, choosing climate projects and performative legislative sessions over infrastructure improvements.
The hearing opened with Chairman Scott Fitzgerald (R-Wis.) acknowledging the devastating wildfires in Southern California that destroyed thousands of structures and claimed multiple lives. He continued by criticizing California’s environmental regulations—such as CEQA—for delaying critical prevention, before addressing the insurance market crisis caused by insurance caps. Ranking Member Jerrold Nadler (D-N.Y.) criticized Republicans for using this disaster to make a political point and emphasized the role of climate change in the increasing frequency and intensity of wildfires.
Greenhut showcased his expertise in California regulatory policies, as well as his ties to the state and desire to see it prosper. His written testimony notes that it was not just one thing that caused or exacerbated these fires:
But the Los Angeles wildfires – likely to be one of the costliest natural disasters in U.S. history – have exposed festering regulatory hurdles that have exacerbated the crisis. Many are years in the making, maddeningly complex and not given to quick solutions. It’s a confluence of bad policy involving brush clearance, water, insurance, firefighting, housing and climate change.
Environmental Regulations and Wildfire Mitigation
During the hearing, Republicans argued that Democrats use climate change as a pretext to resist alternative approaches that deviate from existing environmental regulations. Conversely, Democrats emphasized climate change as a primary driver of California’s increasing wildfire frequency.
Greenhut discussed laws that require environmental impact reports for brush clearance as well as multiple approvals for prescribed burns, hampering not only prevention but also rebuilding after a fire. When asked by Rep. Mark Harris (R-N.C.) about these barriers, Greenhut noted that CEQA was responsible for posing hurdles during the 2018 wildfires in Paradise, California, causing a two-year delay in getting brush clearance for the area. He went on to explain that about half of CEQA lawsuits are public projects, many intending to be good for the environment.
Rep. Kevin Kiley (R-Calif.) used his time to highlight recent actions that the Governor of California has taken, such as phasing out gas car sales or prohibiting the sale of gas-powered lawn tools, instead of mitigating fires by ensuring more strategic tree removal or prescribed burns. In the final question of the hearing, the Congressman asked Greenhut about a University of Chicago study cited in his testimony, which found that the 2020 California wildfires emitted around double the emissions reductions the state had saved in over 16 years. Greenhut closed by saying that the state is undermining any gains it makes with each wildfire.
Insurance Market Crisis
When it comes to insurance markets, Greenhut pointed out that the current wildfire crisis in Southern California has emphasized the state’s “counterproductive” insurance regulations. His written testimony dug deeper into the elongated process insurers must go through, including hearings, rate reviews, and other regulatory obstacles that California law has laid in front of insurers in the market.
The role intervenors, mostly consumer attorneys, also create a bottleneck, which Greenhut highlighted during a round of questioning with Rep. Ben Cline (R-Va.). Rep. Cline asked in summary if it is reasonable for insurance companies to pay off their challengers even when they win in court. In response, Greenhut gave a background of process and pointed out that these intervenors are paid a fee for their litigation against insurers when they want to increase rates. The court proceedings can take several years, and even then, if the insurer wins their court battle, they still need to pay the intervenor their fees. He then mentioned that Prop 103 allows the state government to look more closely into the actions of these intervenors and perform some enforcement under that initiative.
Lastly, when it comes to insurance regulations, Greenhut stated in his testimony that “[b]ecause of the regulation-driven contraction of our insurance market, many homeowners in the L.A. area didn’t have coverage or were reliant on the state-created insurer of last resort, the FAIR Plan.” Further, he warned that the “bare-bones” state system could become insolvent in the near future. State lawmakers in Sacramento have chosen to prioritize performative hearings surrounding issues like oil industry price gouging that seem to have had more bark than bite. If these lawmakers want to get serious about fixing the broken insurance industry in their state, they must examine how the regulations they have put in place hinder and obstruct growth in this key market and instigate reform.
Overall, the hearing was a dynamic discussion that underscored concerns about burdensome regulations. Greenhut highlighted the devastating impact of California’s administrative state and emphasized the need for practical policy solutions. Throughout the hearing, he repeatedly returned to his primary recommendation: reforming CEQA. As he succinctly put it in response to an early question, “It’s an impediment to everything.”
Watch Greenhut’s testimony below:
Watch the full hearing below: