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Request for $4 Billion of PG&E’s Settlement Has FEMA on Defense

FEMA is asking for $4 billion to cover what it spent after the 2015, 2017 and 2018 fires for debris clearing from burned properties, road and infrastructure repair, temporary housing assistance and other services.

by Julie Johnson, The Press Democrat, Santa Rosa, Calif. / December 20, 2019
In this Thursday, Nov. 15, 2018 file photo smoke hangs over the scorched remains of Old Town Plaza following the wildfire in Paradise, Calif. Most homes are gone, as are hundreds of shops and other buildings. AP

(TNS) — Federal Emergency Management Agency officials defended the disaster agency’s unprecedented claim for more than a quarter of the $13.5 billion PG&E has agreed to pay to wildfire victims in its bankruptcy case, saying the government assistance must be paid for by the utility that caused the disasters.

FEMA is asking for $4 billion to cover what it spent after the 2017 Northern California firestorm, the 2018 Camp fire and a 2015 fire in Butte County for debris clearing from burned properties, road and infrastructure repair, temporary housing assistance and other services given to residents and local governments.

Federal law prohibits FEMA from providing services that people and local governments can get elsewhere, and it requires the agency to seek repayment if money for the services can be paid by another source — such as payouts from the PG&E bankruptcy case, said Robert Fenton, the agency’s regional administrator.

“The last thing we want to do is have to ask any of these people impacted by these events to return funds they’ve already received from FEMA,” Fenton said.

FEMA’s request is controversial because the money would come out of a negotiated $13.5 billion trust the utility set aside primarily to settle claims from about 72,000 individual wildfire victims, including businesses, people who lost property and others whose relatives were killed in one of the fires started by PG&E power equipment.

U.S. Bankruptcy Judge Dennis Montali last week approved the broad strokes of PG&E’s $13.5 billion settlement, a hard-fought negotiation with wildfire victims. But the details of how the money will be divided among than 70,000 individual claimants, plus FEMA and two state agencies aren’t yet settled. PG&E already has agreed to pay $1 billion to local governments hit by fires and $11 billion to insurance companies under separate agreements.

Wildfire victims have formally objected to FEMA’s claims, and Montali is scheduled to hear the arguments in court on Feb. 11.

Rep. Jared Huffman, a San Rafael Democrat, called the notion of paying FEMA out of a fund for wildfire victims “disturbing.”

Huffman, whose district stretches along the coast from the Golden Gate to the Oregon border, said that while it may be appropriate for PG&E to compensate the federal government for disaster relief it provided, “It can’t come at the expense of victims; that should be a nonstarter.”

“I for one would be very open to pushing back on FEMA and urging them to pursue whatever compensation they think they’re owed through a different channel,” Huffman said.

FEMA’s request to recoup billions of dollars shocked some fire survivors who thought the federal-led debris cleanup created significant and costly problems. Many residents, especially those in Santa Rosa’s hilly Fountaingrove neighborhood, reported debris workers scraped too much of their properties, ruined driveways and septic systems, leaving property owners on the hook to make costly repairs.

Some wildfire victims have written letters to Judge Montali, asking him to reconsider terms of the deal with PG&E, including FEMA’s cut.

Santa Rosa resident Sharon Zimmerman wrote a Dec. 17 letter to the bankruptcy judge detailing her family’s problems with the FEMA-led cleanup of her Fountaingrove property, writing that allocating to FEMA billions of dollars PG&E agreed to pay wildfire victims “will serve to victimize them yet again.”


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