Lawmakers Urge FEMA to Drop $4 Billion Bid for PG&E Settlement Money

SAN FRANCISCO (CN) – Nearly 40 federal lawmakers from California urged the Federal Emergency Management Agency to abandon its quest to extract $4 billion from Pacific Gas and Electric’s limited $13.5 settlement fund for wildfire victims.

“This claim by FEMA in the federal bankruptcy court puts at risk the possibility that the thousands of families still struggling to rebuild their lives will not receive the restitution they deserve,” 38 members of the U.S. House of Representatives wrote in a letter to acting FEMA administrator Peter Gaynor on Friday.

Read the letter to FEMA and see the full list of lawmakers who signed it

FEMA seeks $3.9 billion from PG&E as reimbursement for debris removal and other assistance provided in the wake of the 2017 North Bay Fires and 2018 Camp Fire, both suspected of being caused by PG&E equipment. The fires killed more than 100 people and burned over 400,000 acres.

Homes leveled by the Camp Fire line the Ridgewood Mobile Home Park retirement community in Paradise, Calif, are pictured here on Dec. 3, 2018. (AP Photo/Noah Berger,File)

The money sought by FEMA would come from a $13.5 billion settlement fund for all uninsured wildfire claims, which could lower the amount available for fire victims who lost loved ones and property.

The lawmakers – 36 Democrats and two Republicans – argued FEMA’s position betrays promises made to fire victims, who were told they would not incur additional costs by accepting federal offers to help with debris removal.

FEMA’s decision could undermine its reputation as an “honest and fair partner,” the letter said. The lawmakers requested a meeting be scheduled immediately to discuss the reasons behind FEMA’s decision.

“Time is of the essence,” they wrote, due to an approaching Feb. 11 court hearing on objections to claims filed by FEMA and the state of California.

The letter comes one day after fire victims’ lawyers filed a brief in bankruptcy court arguing that FEMA should recover its costs from state agencies and local governments that received aid from the agency, not from the limited fund for fire victims.

“Because FEMA can recover its losses from other sources, FEMA should be required to exhaust those sources before seeking to take money away from the victims,” the 6-page brief stated.

The lawyers also cited a letter from woman who lost two homes in the Tubbs Fire, arguing that FEMA contracting management blunders led to unnecessary and inflated costs.

Sharon Zimmerman reported a FEMA debris removal contractor damaged her driveway and retaining walls, over-excavated her property, and buried a large section of concrete wall underground instead of taking it away. Fixing problems caused by the contractor is expected to cost nearly $200,000, Zimmerman complained.

The Tubbs Fire survivor blamed the contracting missteps on poor management, including FEMA’s decision to initially pay contractors by the ton for debris removal, which incentivized them to over-excavate. FEMA later altered the contract to pay over $250,000 per lot, “which in most cases was far in excess of what private debris removal estimates were for the same work,” Zimmerman wrote.

Another Tubbs Fire victim, Jerry Gladstone of Santa Rosa, sent a letter to the bankruptcy court last month arguing a FEMA contractor removed an excessive amount of material from his property, damaged his driveway and left a “2 1/2 foot deep lake in the middle of our property.” The invoice for the project was $266,888. Similarly situated neighbors who hired private debris removal contractors paid less than $100,000, Gladstone said.

Lawyers for fire victims argue that FEMA “failed to exercise an appropriate level of care in providing services” and that investigation into those issues will prove the FEMA claims “should be disallowed and/or substantially reduced to reflect the damage it and its contractors caused.”

Reached by email, a FEMA spokeswoman said the agency received the letter from lawmakers and is still reviewing it.

According to FEMA, the Stafford Disaster Relief and Emergency Assistance Act of 1988 requires it to pursue claims against “responsible third parties who cause a condition creating the need for disaster assistance,” including aid to individuals, public entities and related administrative costs.

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

The committee representing fire victims also objects to $2.3 billion sought by the California Governor’s Office of Emergency Services (Cal OES). In a brief filed Thursday, the fire survivors argued that like FEMA, the state agency should first recover funds from public entities and local governments that received aid before it can seize money from the limited $13.5 billion settlement fund.

Noting that PG&E previously agreed to a $1 billion settlement with 18 public entities this past June, the committee argued that those public entities “are liable to Cal OES for some portion of this money.”

In December, U.S. Bankruptcy Judge Dennis Montali approved two settlements worth $24.5 billion, including an $11 billion deal with insurers who covered wildfire losses and a $13.5 billion settlement for all other wildfire claims.

Cal OES did not immediately return an email requesting comment Friday.

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