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Newsom refuses to comment after judge says his law ‘left out’ PG&E fire victims

Asked what plan he has to fix the $2.5 billion shortfall to PG&E fire victims, Newsom walked off. His office says “I’m not sure what value we gain from responding."
Credit: Morgan Rynor/ABC10
Gov. Gavin Newsom dons his mask while ignoring questions from ABC10 investigative reporter Brandon Rittiman (right.) Rittiman asked the governor to comment on a $2.5 billion shortage in payment to PG&E's 70,000 wildfire victims. The victims' trustee said the shortfall happened because a law advance by Newsom, AB 1054, "left out" their ability to be fully compensated.

SACRAMENTO, Calif. — Gov. Gavin Newsom kept walking Friday when asked whether he has anything to say to the 70,000 victims of PG&E wildfires who face a $2.5 billion shortfall in a settlement which the governor helped to broker.

The shortfall exists because a law created by the governor’s office and signed by Newsom “left out” the victims’ ability to recover full damages, according to the retired judge serving as the victims’ trustee.

“It seems unfair that some victims of PG&E-caused fires will be fully compensated while others will not," retired judge John Trotter wrote in a Sept. 1 letter to PG&E’s nearly 70,000 victims. "They left out those already harmed."

‘MORE THAN A BAILOUT’: Documents reveal how Gov. Gavin Newsom protected PG&E and helped the power company avoid accountability.

RELATED: Investment bankers charged California taxpayers $180,000 in travel while crafting PG&E bailout | Fire - Power - Money

ABC10 attempted to ask Newsom about the letter in Sacramento on Friday morning as the governor spoke with reporters after casting his ballot in the gubernatorial recall election.

Trotter’s letter refers to an inequity created by AB 1054, the state law designed to stabilize the finances of PG&E and California’s other legal for-profit power monopolies after PG&E criminally sparked California’s deadliest and most destructive wildfire. AB 1054 awarded the power companies with safety certificates that provide access to a $21 billion state wildfire fund to cover the damage from future wildfires they spark.

PG&E pleaded guilty to 84 felony counts of involuntary manslaughter and a felony for sparking the Camp Fire that killed the victims.

A recent three-part series from ABC10’s FIRE - POWER MONEY investigative reporting project revealed that private attorneys working for Gov. Newsom’s office drafted the legislative language for AB 1054 before it was introduced in the state legislature.

Newsom’s office called the reporting “false” despite the fact that ABC10 obtained draft versions of AB 1054 attached to an email from the governor’s private lawyers at the New York office of law firm O’Melveny and Myers. The email contained instructions “to indicate who is responsible for drafting the legislative language.”

The new state wildfire fund does not apply to PG&E’s previous wildfire victims. Instead, Newsom helped broker a bankruptcy plan that was supposed to pay half of the past victims’ $13.5 billion settlement in the form of PG&E stock shares to be sold and converted to cash. The value of the shares plummeted this summer because of PG&E’s suspected involvement in sparking the Dixie Fire in July, which mushroomed into the biggest single wildfire in state history.

Even before that, the PG&E stock shares had never been worth the amount victims were told, as ABC10 recently detailed in the three-part investigation FIRE - POWER - MONEY: How Governor Gavin Newsom Protected PG&E.

While Trotter applauded AB 1054 for providing money to cover the full settlements of future fire victims, he said the law "omits the Trust’s Fire Victims” who’ve already lost their homes, livelihoods, and loved ones in PG&E-caused fires.

By contrast, PG&E benefited from exiting bankruptcy last July and the company's other unsecured creditors, some of which were represented by a close friend of Newsom's, were paid cash in full plus interest.

'THE FRENCH LAUNDRY CONNECTION':  Gov. Newsom brokered a bankruptcy plan that prioritized PG&E, French Laundry friend’s clients over PG&E fire victims. 

The letter runs counter to repeated claims by Newsom’s office that the governor “forced” PG&E to “fairly compensate” the victims of 24 wildfires sparked by the company from 2015-2018.

Newsom’s office did not answer when asked in a July 27 email whether he has a plan to make the past PG&E victims whole for their settlement. His office did not answer the same question again this week.

“I’m not sure what value we gain from responding to your latest set of questions,” Newsom’s communications director Erin Mellon wrote in an email Wednesday, Sept. 8.

Mellon’s message went on to falsely accuse ABC10 of refusing to include responses from the governor’s office in stories. ABC10’s three-part series made numerous references to the response Newsom’s office provided to our finding. The statement was also published in its entirety here.

RELATED: ABC10 sues to release messages between Newsom staff and PG&E regulators

Trotter’s letter went on to tell victims that he had asked the Newsom administration and state lawmakers to “join with me in a working group to address what, if anything, can be done” to address the shortfall.

A spokesperson for the Fire Victim Trust told ABC10 that as of Friday, Sept. 10, the trust had not received a response from either branch of government.

The trusts’ operations, which include a hired team of “over 400 claims processors, evaluators and technical personnel” are all being paid for out of the cash portion of PG&E’s settlement.

PG&E exited bankruptcy on July 1, 2020, and the trust’s representatives say they had to start from scratch to estimate what the 70,000 victims’ claims were worth. More than after the bankruptcy ended, the trust reported paying out about five percent of the total settlement to victims, amounting to roughly $740 million.

Nearly six out of every seven victims had yet to be notified of the amount their claims will be worth.

WATCH ABC10's 3-part investigation:

FIRE - POWER - MONEY: How Gov. Gavin Newsom Protected PG&E