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FEMA agrees to let wildfire victims get paid first in PG&E bankruptcy

Wildfire victims will get paid before the Federal Emergency Management Agency receives any compensation from PG&E for its federal disaster assistance provided in the wake of recent Northern California fire disasters, according to a lawyer representing victims in U.S. Bankruptcy Court.

FEMA has also agreed to reduce its claim from $4 billion to $1 billion, diminishing its potential take from the $13.5 billion PG&E is setting aside to settle remaining claims in its bankruptcy case, mostly from individual wildfire victims, according to attorney Eric Goodman.

“Until the fire victims are all paid in full, FEMA will get nothing,” Goodman said.

The deal was announced Tuesday by PG&E lawyers as the utility is presenting its plan to exit bankruptcy and settle debts before U.S. Bankruptcy Court Judge Dennis Montali.

FEMA officials also agreed to release the California Office of Emergency Services from federal rules requiring states seek all reasonable avenues to compensate the federal government for its disaster aid. As a result, Cal OES withdrew its claims against PG&E that included about $2.4 billion the state was requesting on behalf of the federal government to fulfill this requirement.

FEMA’s $4 billion claim was controversial among wildfire victims, advocates and federal lawmakers because of concerns it took away from compensation that could help people and businesses recover from the 2017 Northern California firestorm and the 2018 Camp fire.

FEMA said it was obligated to seek compensation from PG&E and would be forced to take back some of its aid from wildfire victims if the utility didn’t fulfill the federal government’s claim.

That prompted federal lawmakers to propose legislation limiting the agency’s ability to demand a return of aid given to disaster victims.

Check back for updates.

You can reach Staff Writer Julie Johnson at 707-521-5220 or julie.johnson@pressdemocrat.com. On Twitter @jjpressdem.

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