The Energy 202: Why FEMA is fighting for money set aside for California fire victims

The Federal Emergency Management Agency is supposed to step in to provide aid to Americans whose lives and livelihoods are upended by disaster.

So why is FEMA itself instead asking for money from victims after historic wildfires torched California?

Those who fled the fires are at a standoff with the agency that provided them relief over how to divide a pool of money set aside by the power utility that went bankrupt after the blazes.

And if FEMA can’t get the money from that bankruptcy fund, the agency suggested it may have to bill fire victims themselves.

The financial tug-of-war may be just a prelude to the coming challenge that corporations, government agencies and everyday Americans will face when trying to pay for the escalating costs of climate change. 

FEMA says Pacific Gas & Electric owes the federal government $3.9 billion for its response to a string of devastating fire seasons in California since 2015. Climate change is fueling more intense wildfires in California as the state sees stronger winds, less rainfall and drier conditions. The state had its worst fire season on record in 2018, when wildfires scorched more than 1.8 million acres there — an area larger than the size of Delaware. 

But the families of those trying to rebuild their lives after the blazes say the federal government is trying to raid a $13.5 billion victims' fund approved by a bankruptcy judge last month. The money was set aside by PG&E to compensate the victims of fires that the utility’s aging power poles, wires and other equipment helped spark.

“The fire victims in California have been through hell, and they finally have a settlement that provides a measure of compensation to them,” said Rep. Jared Huffman (D), whose Northern California district was ravaged by the Mendocino Complex fire, California's largest on record, in 2018. 

“I hate to see that compromise even further diluted, if not blown up, by FEMA parachuting into the mix and trying to take the money,” added Huffman, who led a group of more than three dozen California House members in writing a letter to FEMA chief Peter T. Gaynor in opposition to the decision.

FEMA insists it is legally obligated on behalf of taxpayers to pursue the money from PG&E. The agency said the federal government was excluded from negotiations between California residents and PG&E leading to the $13.5 billion settlement reached last month.

Perhaps most notably, Bob Fenton, FEMA's regional administrator for California, warned the agency would ask fire victims to return money if they receive a "duplication of benefits" — that is, get paid out by both FEMA and PG&E.

“If a survivor receives a settlement from PG&E for the same disaster losses or expenses that were previously met through disaster assistance, that would be a duplication of benefits," he said. "In that case, the survivor would be asked to return the disaster assistance to FEMA,"

Michael Carlson, a California wine executive and member of a panel appointed to represent fire victims filing claims in the PG&E bankruptcy, says the threat is only causing “more pain to those who are already in an awful situation.”

The decision ultimately lies with U.S. Bankruptcy Judge Dennis Montali, though Huffman also hopes to persuade FEMA to drop the issue.

“I don't fault FEMA for seeking reimbursement,” Huffman said. “It's really their targeting of this victims fund that is outrageous.” 

He added that “if FEMA somehow succeeds in blowing up this victim settlement fund,” Congress would have to look at passing a law to fix the problem.

PG&E's Chapter 11 filing has been called the nation's “first climate change bankruptcy," as The Post's Steven Mufson reported in his profile on the power utility.

But it may not be the last among electric utilities. As wildfires become more destructive, power companies are “increasingly exposed to threats stemming from hurricanes, rising sea levels, and other climate-related events,” according to a report by Columbia University’s Center on Global Energy Policy.

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