Oroville Dam crisis sparked $1.2 billion in claims. State hasn’t paid a dime

The near-disaster at Oroville Dam last February brought damage claims flooding into the state by the hundreds – shops and restaurants that lost business, farms that got overwhelmed by surges in water, cities and counties buried in evacuation expenses.

Most claims argue that the state is responsible for the emergency because it ignored warning signs about the condition of the dam’s spillway.

So far the state hasn’t paid a single claim.

Residents, farmers and municipal governments filed 490 claims with the state in the months following the Oroville crisis, which forced the evacuation of 188,000 downstream residents. The claims totaled more than $1.2 billion, although that included a single $1 billion claim filed on behalf of “all affected parties” whose riverfront land was damaged by abrupt water releases from Lake Oroville.

Submitting a claim is a necessary first step in filing a lawsuit against the state, although there’s no need for litigation if the state Department of General Services simply agrees to pay.

To this point, however, DGS hasn’t accepted any claims. The agency has rejected 347 of the claims outright, most because they were deemed “more complex than the standard administrative claims ... the department normally receives,” said DGS deputy director Monica Hassan. Some were denied because the claimants missed the Aug. 11 deadline, they failed to pay the filing fee or they didn’t supply enough information for the claim to be evaluated.

Another 143 claims are still pending.

Claimants said they expected the DGS rejections and are prepared to take their cases to court.

“Not at all surprised,” said Niall McCarthy, lawyer for a pair of Oroville walnut farms seeking $15 million in damages. “That’s typical.”

State officials insisted they aren’t rejecting claims out of hand. “DGS decides every government claim on an individual basis,” Hassan said in an email.

McCarthy’s clients, JEM Farms and Chandon Ranch, claimed their walnut orchards were damaged by torrents of water released from the reservoir when state officials scrambled to prevent the emergency from causing massive flooding.

“The water rushed along the Feather River, wreaking havoc and destruction,” JEM and Chandon said in their written claim to DGS.

McCarthy said JEM and Chandon expect to file suit in mid-January against the state. Similarly, James Nolan, a Woodland lawyer who filed the $1 billion claim for a collection of riverfront landowners, said he plans to file class-action suits in January.

The Oroville crisis was caused by a giant fracture in the dam’s main flood-control spillway during a heavy rainstorm Feb. 7, causing water in the reservoir to rise to unprecedented levels and flow out of the adjacent emergency spillway for the first time since the dam opened in 1968. Amid fears that a portion of the emergency spillway was going to fail, unleashing an uncontrolled release of water, officials ordered the evacuation.

Forensic investigators have blamed the emergency on design flaws and other problems with the main spillway, including maintenance issues, although the investigators have yet to release their final report.

The damage claims are separate from the money the state is spending to handle the emergency and rebuild the two spillways – a tab that is expected to exceed $600 million by the time the reconstruction work is completed in 2018. State officials say they believe the Federal Emergency Management Agency will reimburse California for up to 75 percent of those costs. The rest would be covered by the regional water districts up and down California that store water behind the dam.

Scores of claims were filed by businesses large and small that lost revenue during the two-day evacuation. Roplast Industries Inc., an Oroville manufacturer of shopping bags, had its claim for $598,000 rejected.

“It’s lost production time, which equated to lost sales revenue,” said Roxanne Vaughan, the company’s executive vice president. She said Roplast hasn’t yet decided whether to sue the state.

Also among the claimants: Pacific Gas and Electric Co., which sought $9 million for relocating transmission lines and towers at the dam. That claim was rejected. PG&E is “considering appropriate next steps,” said utility spokesman Paul Moreno.

Legal experts say lawsuits over lost revenue are generally harder to prove in court than lawsuits over property damage.

The state also has rejected claims from local government agencies for their evacuation-related expenses, including a $25,000 claim by the city of Oroville. The city attorney, Scott Huber, said Oroville plans to sue the state.

Dale Kasler: 916-321-1066, @dakasler