The same legal regime that has threatened the financial standing of California’s major electric and gas providers threatens the very existence of the state’s public drinking water suppliers and their ability to provide safe, dependable drinking water to customers.

This article focuses on inverse condemnation with respect to public water systems and discusses legal mechanics, available protections, and liability. It also examines containment strategies like insurance placement and corporate structure as means to effectively manage the risks from inverse condemnation actions.

Inverse condemnation is a complex legal theory presenting unique, opaque and expansive liability to public water systems. Its gravity is analogous to the Greek mythological Titan Atlas, who was condemned by Zeus to stand at the western edge of earth and hold up the sky on his shoulders. Public water systems face a similar fate, except their strain arises from the weight of a legal theory that is noble in concept yet predacious in practice.

Climate change is disrupting property and liability insurance in catastrophe-prone areas. This disruption is attributed to an influx of climate-influenced losses which are endangering the insurance industry’s sustainability. To counter the displacement, water utilities must invest in climate change mitigation measures.