The Federal Emergency Management Agency (FEMA) is seeking nearly $4 billion from Pacific Gas and Electric Company (PG&E) to pay for California fires, but if that doesn’t happen, victims may wind up having to cover those costs.

PG&E has acknowledged its equipment may have contributed to the fires, and a federal bankruptcy judge, Dennis Montali, has approved a $13.5 billion settlement with fire victims in the face of opposition from California Gov. Gavin Newsom.

FEMA has filed its own claim against that settlement in order to recover its costs. If that fails, however, the agency has threatened to pursue collection from individuals who have already lost virtually everything.

Victims Could Lose Either Way

As things stand under PG&E’s present bankruptcy plan, any monies FEMA seeks to recover would come out of the $13.5 billion settlement fund – reducing compensation for victims by nearly 30 percent.

In a statement to the San Francisco Chronicle, FEMA administrator Bob Fenton said the agency is required to seek compensation from PG&E. If it cannot, victims of California fires who receive settlement money duplicating anything paid by FEMA would be required to repay it.

Fenton said that FEMA is not interested in taking settlement funds from fire victims, but rather “…holding PG&E responsible for the billions of dollars taxpayers provided to assist individuals and communities affected.”

FEMA filed its claim against the settlement in October.

State and Federal Legislators Outraged

California Sen. Scott Wiener, speaking to Mother Jones, called FEMA’s proposed action “just disgusting,” pointing out that “these victims have had their lives turned upside down…we’re going to try to nickel and dime these survivors by saying the FEMA money might be a little bit duplicative?”

In Washington D.C., 40 members of the House of Representatives, including two from California, expressed their own dismay. In a letter dated Jan. 8, the legislators accused FEMA of putting victims’ recovery at risk and calling the agency out on breaking its promises that fire victims “would not face additional costs when accepting federal offers of debris removal.”

“FEMA’s reputation as an honest and fair partner will be diminished,” the letter says.

Roadblocks Remain

In addition to the recently-approved $13.5 billion settlement with victims, PG&E’s plan to exit bankruptcy includes an earlier $11 billion deal with insurance companies and an additional $1 billion with a number of municipalities impacted by California fires. Gov. Newsom is not convinced, however. Days before Judge Montali tentatively approved the deal, he strongly criticized the settlement for failing to meet requirements under Assembly Bill 1054, a law passed last summer with the governor’s backing.

What’s Next for Victims of California Fires?

It has been nearly a year since PG&E entered bankruptcy proceedings. The utility plans to emerge from bankruptcy in June, but unless Gov. Newsom signs off, it may not happen. At the same time, Sen. Wiener, San Jose Mayor Sam Liccardo and others are pushing for what amounts to a corporate death sentence: taking PG&E from investors and turning it into a public utility run by the state.

As for FEMA’s claim against the proposed settlement, it is believed that Judge Montali will address that issue in a hearing scheduled for February.

This article is not legal advice. It is presented
for informational purposes only.