FEMA seeks billions of dollars in PG&E settlement with wildfire victims

The federal government wants a nearly $ 4 billion cut from a multibillion-dollar deal that PG&E agreed to pay wildfire victims to settle their claims in the utility bankruptcy case.

The Federal Emergency Management Agency is seeking payment from PG&E for its work in cleaning up debris from burnt properties and other services it provided to local governments and individuals after the 2017 wildfires in North Bay and the 2018 Campfire in Butte County.

The FEMA payment would come from the $ 13.5 billion pool of funds that PG&E has put in place to settle any remaining claims regarding the wildfires.

Lawyers representing wildfire survivors oppose FEMA claims in U.S. bankruptcy court, arguing that the federal agency’s efforts to seek compensation undermine FEMA’s very mission to help victims of disasters.

“The government claims to compete and have the potential to decrease the funds available to pay fire victims and businesses,” according to the December 2 objection.

They are also preparing a formal request to have FEMA leadership drop the agency’s claim, said Santa Rosa lawyer Roy Miller, whose law firm represents thousands of wildfire victims. with material losses.

FEMA’s claims are a drag on what is otherwise a good deal for wildfire victims, especially as they are in a race against time to meet a state-set deadline, according to Miller, who lost his Wikiup home in the Tubbs fire.

“People are almost all underinsured by a huge amount and are in tremendous pain and trying to recover as much as possible without destroying the business (PG&E),” Miller said. “FEMA piling up an extra $ 4 billion claim is not fair.”

Cal Fire investigators concluded that PG&E electrical equipment started all of the fires in 2017 and 2018 except one: the Tubbs Blaze, which destroyed more than 5,300 homes in Sonoma County. Lawyers for Tubbs victims disputed the finding and, during settlement negotiations, persuaded PG&E to treat Sonoma County’s claims on an equal footing with those filed by victims of other fires, Miller said.

The $ 13.5 billion deal is on the desk of Governor Gavin Newsom, who is reviewing it to ensure the plan complies with new state law to pay for damage from the wildfires. caused by utilities in the future. This increases the chances of PG&E coming out of bankruptcy in time to meet a critical deadline to access a forest fire insurance fund established to help utilities pay claims for victims of future fires caused by their equipment. electric.

The proposed settlement covers claims from more than 72,500 individuals and businesses as well as three government agencies: FEMA, Cal Fire and the state emergency services office. Claims by state agencies total approximately $ 650 million.

In its request, FEMA said the law authorizing federal disaster assistance, known as the Stafford Act, requires the agency to offset the taxpayer costs of entities responsible for a major disaster.

Agency officials did not respond to specific questions from press Democrats at press time. A FEMA spokesperson sent out a statement stressing the agency’s obligation “to pursue claims against responsible third parties that cause a condition creating the need for assistance.”

“Stewardship is one of FEMA’s guiding principles, and it is important that responsible parties are held accountable for the spending of taxpayer dollars,” the statement said.

Former FEMA director James Lee Witt, who ran the agency from 1993 to 2001, said he was shocked when a reporter told him about the $ 4 billion sought by his former agency, calling him this decision of “unusual” and “inappropriate”.

Witt said the agency did not request this type of reimbursement during his tenure.

“You take money away from rebuilding and people when your job is to help people – not take money away from them,” Witt said.

Witt came to Sonoma County in the aftermath of the October 2017 fires to help start a nonprofit originally formed to help with the recovery, but Witt said he had not been involved in the local recovery efforts since.

FEMA filed its claims on Oct. 18 in U.S. bankruptcy court, when negotiations were well underway.

By then, the wildfire victims had already reached a tentative deal with a group of bondholders offering more money to the victims in an attempt to wrest control of the company from its majority shareholders – a competing plan that helped wildfire victims negotiate a better deal with PG&E than the utility’s initial $ 8.4 billion offer.

As early as June, local and state agencies, including the Sonoma County and Santa Rosa governments, reached a $ 1 billion deal with PG&E.

The public service then settled in September with insurers a sum of 11 billion dollars. The two deals are separate from the $ 13.5 billion deal offered by PG&E to resolve all remaining wildfire claims.