PG&E Blasted for Trying to Use Fire Victim Trust to Pay Criminal Fine

SAN FRANCISCO (CN) – Despite objections from fire victims and a district attorney, Pacific Gas and Electric wants to deduct $4 million from a compensation fund for fire victims to pay its criminal fine for 84 counts of manslaughter arising from the deadly Camp Fire.

Homes are seen in 2018, leveled by the Camp Fire in Paradise, Calif. (AP Photo/Noah Berger,File)

Speaking at a telephonic bankruptcy hearing Wednesday, PG&E lawyer Stephen Karotkin said the company would alter its required disclosure statement to inform stakeholders of a dispute over how the fine should be paid.

On Monday, PG&E announced it would plead guilty to 84 counts of manslaughter and one count of unlawfully starting the Camp Fire, which burned 153,000 acres over 17 days in November 2018. The company will pay the maximum $3.5 million fine and reimburse the Butte County District Attorney’s Office $500,000 for investigation costs.

The company says the $4 million should come out of a $13.5 billion trust for compensating fire victims. After objections were raised, PG&E agreed to include in its disclosure statement that the Tort Claimants Committee, which represents fire victims, believes the company is not entitled to use settlement funds to pay the fine.

Reached by phone Wednesday, Butte County DA Michael Ramsey said he strongly disagrees with PG&E’s position, but he also has no power to dictate how the company pays its fine.

“Really one of our overriding concerns is that the $13.5 billion set aside for the civilian victims would remain whole,” Ramsey said. “That was our understanding.”

PG&E spokeswoman Ari Vanrenen confirmed the $4 million fine will be “administered as part of the Fire Victim Trust.” However, he also emphasized that PG&E will pay over $500 million to Butte County in a separate $1 billion settlement with local government agencies. Under the terms of that deal, the town of Paradise, which was destroyed in the Camp Fire, will get $270 million. Butte County will get $253 million, and the Paradise Parks and Recreation Department will receive $47.5 million.

“We cannot replace all that the fire destroyed, but our hope is that this plea agreement, along with our significant and ongoing rebuilding efforts, will help the community move forward from this tragic incident,” Vanrenen said.

Last week, Ramsey held a Facebook Live briefing with family members of those killed in the 2018 Camp Fire to tell them about the plea deal before it was made public in filings to the bankruptcy court and U.S. Securities and Exchange Commission.

Ramsey said the victims thanked his office for obtaining the guilty plea, but many also questioned why no one was going to jail for 84 counts of manslaughter.

“We explained a corporation can’t go to jail,” Ramsey said.

The DA said it was not “from lack of trying” that no PG&E executives were individually prosecuted. The evidence showed a culture at PG&E that went well beyond any one individual or group of people, he said.

“Under California law, you have to show that individuals in the corporation made an intentional decision, knowing the outcome would be a death at the time they made that decision,” he said. “We could not show that because our evidence was going back decades.”

In addition to the $4 million fine, PG&E also agreed to pay up to $15 million over five years to restore the Miocene Canal as part of its plea deal. Ramsey said many residents rely on that canal for their wells. The canal also helps support wildlife and important ecological areas in the county, he added.

When asked if this outcome represents justice, Ramsey, who has served as Butte County’s DA for over 32 years answered: “It’s the best that we can do within our criminal justice system. It would be nice to put a corporation in jail, but that’s not what our law allows or what practically can be done.”

A separate issue related to the fire victims’ trust also came up at the bankruptcy hearing Wednesday. Fire victims’ lawyer Robert Julian argued his clients have a right to know when the trust administrator will be allowed to liquidate PG&E stock. The $13.5 billion trust will be half funded by $6.75 billion in stock in a reorganized PG&E. Restrictions will be placed on when that stock can be sold, but the details are still being negotiated.

Julian argued that PG&E should be required to include those details in a disclosure statement to be sent to some 80,000 fire victims by the end of March. The disclosure statement is required to inform victims about PG&E’s bankruptcy plan so they can decide whether to reject or approve it.

U.S. Bankruptcy Judge Dennis Montali refused to slow down the disclosure process by waiting for those negotiations. A supplemental notice can be sent to fire victims once an agreement is reached, he said.

“If at some point in the future there’s a need to interrupt that process for further disclosure, that’s the next problem we’ll all be dealing with, but it’s not a today problem,” Montali said.

Will Abrams, a Tubbs Fire victim and Santa Rosa resident heavily involved in the bankruptcy case, said in a phone interview after the hearing that he is encouraging fire victims to wait until close to the May 15 deadline before voting on the plan so they can have as much information as possible. PG&E also has not yet finalized a resolution trust agreement that will specify precisely how the $13.5 billion trust will be administered.

“My feeling is victims need to hold their vote until close to the last day,” Abrams said.

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