Like other states, California allows wildfire lawsuits against utilities based on negligence. When a plaintiff can prove that the utility was negligent – in other words, failed to exercise reasonable care – plaintiffs can recover for environmental damage, reforestation costs, and loss of profits. But California also allows recovery even when a utility did nothing wrong, under a theory called inverse condemnation. The PG&E bankruptcy made it clear that no-fault utility liability could threaten the financial health of the power system. The legislature created a new fund to deal with the problem.