The judge overseeing PG&E Corp.’s bankruptcy opened the door to reducing government agency claims against the troubled utility to $290 million, a fraction of the billions federal authorities say they are owed, the Wall Street Journal reported. The Federal Emergency Management Agency and the California Governor’s Office of Emergency Services are seeking $3.9 billion and $2.4 billion, respectively, from San Francisco-based PG&E for services provided in the aftermath of three deadly wildfires linked to the utility’s equipment. The agencies’ claims are an obstacle to PG&E’s bankruptcy exit proposal, which includes $47 billion worth of settlements with bondholders, insurers, municipalities and fire victims. PG&E lumped government agency claims together with people and businesses affected by the fires, asking them to share in a $13.5 billion compensation trust. The agencies aren’t happy being categorized in the same group as fire victims. The utility has said that the agencies are trying to take money away from fire victims, who want the agencies’ claims expunged. At a hearing in the U.S. Bankruptcy Court in San Francisco, Michael Tye, a Justice Department lawyer, argued that FEMA must be compensated for its rebuilding, housing and repair work after the wildfires because PG&E was negligent in its upkeep of the transmission lines that sparked the wildfires. He said that PG&E has benefited from FEMA payments to fire victims and should cover those costs. Matt Hine, a lawyer representing the California agency, acknowledged that its claim and FEMA’s overlap with each other. Most of the agency’s claims are for money it owes to FEMA for repair, rebuilding and other services. Hine said all but $290 million of California’s claim is really owed to FEMA. In response, Judge Dennis Montali repeatedly raised the possibility of disallowing FEMA’s claims and only compensating the state for the portion of its claim that doesn’t overlap with FEMA’s claim. He didn’t make a final decision on the matter at the hearing.
