‘Outrageous.’ Officials furious that FEMA seeks money from California wildfire victims

Camp Fire survivor Danielle Patrich was livid to hear the federal government may try to carve out money from the PG&E Corp. bankruptcy — money that would otherwise go to victims like her.

Patrich said she had to go to FEMA’s Chico office 12 times after she and her husband lost their home and livelihoods after the November 2018 disaster, and they still haven’t seen a dime of a federal loan that was approved so they could rebuild.

“Even if we had gotten money from FEMA, it would still upset me because, you know, you do pay taxes and you kind of hope at your lowest point of low, after something like this that your government can come step up and help you,” she said Monday. “It’s been more of a headache than the fire, honestly.”

The Federal Emergency Management Agency is demanding $3.9 billion in reimbursement for California expenses from fires ignited by PG&E’s equipment as far back as 2015.

However, the agency was adamant Monday that only a relatively small portion of that — around $200 million — could come from fire victims, and then only from those who’ve been cut a check from the federal government and had been overpaid.

Robert Fenton, FEMA’s district director for California, said any money FEMA would seek from fire survivors would be for “duplication of benefits” — those cases in which FEMA paid money to a victim who had already been covered for those losses through some other source.

“We’re not going to go after individuals for money if there’s no duplication,” Fenton said.

FEMA’s efforts to collect from PG&E — and possibly the fire victims — had generated considerable blowback from Democratic and Republican members of Congress as well as lawyers for wildfire victims. The state of California is seeking money as well.

“It is outrageous that State and Federal government may take settlement funds from wildfire victims,” U.S. Rep. Doug LaMalfa, a Republican from Richvale who represents Camp Fire victims, said in a Facebook post early Monday. “It is the governments’ job to set aside funds for disasters. While the government should seek reasonable reimbursement for costs from PG&E, victims shouldn’t get caught in the middle of their disputes.”

Robert Julian, a Los Angeles lawyer representing fire victims in PG&E’s bankruptcy, told The Sacramento Bee on Monday: “FEMA cannot collect anything under the law.” A hearing is set for Feb. 11 in U.S. Bankruptcy Court.

FEMA says it has an obligation to protect taxpayers’ dollars. The problem, Fenton said, is that PG&E, which filed for bankruptcy last January, negotiated a settlement with wildfire victims’ attorneys without the federal government at the table.

“We are not making the rules here,” Fenton said. “They are making the rules between the two of them. We are unfortunately a bystander in this.”

At issue is the $13.5 billion PG&E has agreed to pay wildfire victims as part of its plan to exit Chapter 11 bankruptcy. The pot of money would also go to pay claims to federal and state agencies. FEMA has filed a claim for $3.9 billion as reimbursement for the help it gave fire victims, the state and others following the 2018 Camp Fire, the 2017 wine country fires and the 2015 Butte Fire in Amador and Calaveras counties.

California state agencies also are seeking billions from PG&E, although they’ve acknowledged that they were already reimbursed for most of their expenditures by FEMA.

Wildfire victims have already filed objections in bankruptcy court to the government agencies’ claims.

“The government claims compete with and have the potential to diminish the funds available to pay individual fire victims and businesses,” victims’ lawyers said in court papers last month.

‘Disruptive to survivors’

Last week a bipartisan group of California members of Congress urged Peter Gaynor, the acting head of FEMA, to withdraw its claim in the bankruptcy court. “This claim by FEMA ... puts at risk the possibility that the thousands of families still struggling to rebuild their lives will not receive the restitution they deserve,” they wrote.

The controversy intensified over the weekend when Fenton told the San Francisco Chronicle that his agency might seek reimbursement from victims themselves if PG&E doesn’t pay what it owes.

FEMA spokesman Robert Barker said the agency has never attempted such a recovery before, would be extremely reluctant to take such a step and doesn’t know what form it would take.

“We really haven’t played out a scenario like this before, we can’t say exactly what we’re going to do,” Barker said. “Yes, it will be complicated and yes, it will be difficult and, yes, it will be disruptive for wildfire survivors.”

FEMA is basing its claim against PG&E on federal law, the Stafford Act, which says the agency can demand reimbursement from someone who deliberately causes a big disaster.

But fire victims’ lawyers said in court papers that, while PG&E has been blamed by state investigators for causing the wildfires, there have been no allegations that the utility deliberately lit the fires.

“Negligence is not the same as intentionally causing a fire or committing arson,” the lawyers wrote.

Fenton, speaking to reporters Monday, said: “I want to assure you we have no interest in reducing the funds PG&E owes to survivors. But we are interested in holding PG&E responsible for the billions of dollars provided to assist individuals and communities impacted by wildfires for which they accepted responsibility.”

This story was originally published January 13, 2020 at 10:41 AM with the headline "‘Outrageous.’ Officials furious that FEMA seeks money from California wildfire victims."