Federal judge orders more transparency from Fire Victim Trust on spending, lobbyist hires

A federal bankruptcy court judge in San Francisco has ordered the Fire Victim Trust, a large fund established to pay out victims of four years of California wildfires started mostly by electrical utility PG&E, to be more transparent about spending, hiring and other practices.

The Wednesday order from Judge Dennis Montali comes amid continued questions from frustrated wildfire victims and some elected officials who represent them over the slow pace of claims payouts, and the trust’s hefty administrative expenses.

Those twin factors “understandably led to questions regarding the management (of the trust),” Montali wrote.

The judge issued the order in response to a motion filed by 2017 Tubbs Fire victim and utility-reform advocate Will Abrams, who called for a more detailed financial disclosure than the trust provided in a seven-line budget breakdown in its annual report.

Both sides said they were pleased with decision.

“This is a positive step forward to advance transparency and more importantly accountability,” Abrams said in an interview.

“We are pleased with Judge Montali’s decision,” trust officials said in a statement through a public relations firm. “The Judge took a pragmatic view and limited additional disclosures to a narrow set of questions”

Montali ordered the trust to respond to a series of questions in three areas — its hiring of law firms, its lobbying activities and the costs and benefits of lawsuits the trust is bringing against vegetation management companies, former PG&E executives and other entities potentially liable for wildfire damages.

Pacific Gas & Electric Co. entered bankruptcy in January 2019 amid skyrocketing liabilities from its role in sparking catastrophic wildfires. It emerged from bankruptcy in July 2020 through a complex series of deals that included the creation of the Fire Victim Trust, which remains under Montali’s jurisdiction.

Abrams’ motion generated support from other fire victims who remain unpaid and earned letters of support from the Sonoma County Board of Supervisors and supervisors in Butte County, where the 2018 Camp Fire devastated the town of Paradise and killed 85 people.

The trust is for victims of the 2017 North Bay firestorm and the Camp Fire, among other blazes sparked by PG&E equipment dating to 2015. Formed in July 2020, it did not begin taking claims until March 2021.

The trust’s expenses which include legal fees, a public relations firm and most recently a lobbyist for a statehouse push for a $1.5 billion loan to plug its funding gap — had topped $132 million by the end of last year.

Among the costs is a court-mandated $125,000-a-month salary for the trust administrator. That job changed hands just over a month ago, when retired judge John Trotter resigned after leading the trust through its first two years. Cathy Yanni, Trotter’s former second in command, took over as administrator July 1.

Trotter, the former trust administrator, had hired Patrick McCallum, a high-profile Tubbs Fire survivor, higher education lobbyist and the now-separated husband of former Sonoma State University president Judy Sakaki, as the trust’s lobbyist in March.

McCallum aimed to lobby lawmakers and Gov. Gavin Newsom for the $1.5 billion loan, meant to supply cash until the trust can sell its PG&E stock to fully meet claim payouts. McCallum was hired just weeks before becoming the center of allegations of sexual misconduct, part of a high-profile scandal at Sonoma State that led to Sakaki’s resignation last month.

The trust ended its contract with McCallum a day after The Press Democrat reported on his $25,000 a month salary for the lobbying work, and after two North Bay lawmakers, state Sens. Mike McGuire, D-Healdsburg and Bill Dodd, D-Napa, called for his removal.

After the trust separated from McCallum, the lobbying work went to Darby Kernan, who previously worked for the California State Association of Counties.

Montali gave the trust until Sept. 6 to answer questions about how its hired lobbyists and whether the process included a competitive and public request for proposals.

Amid his call for more transparency, Montali also took time to defend the trust’s work in his order as well. “The progress has been impressive,” he wrote.

He also noted that fire victims voted to accept the bankruptcy deal — a move urged by disaster tort attorneys and some advocacy groups as the best route forward to making people whole from fire losses amid PG&E’s bankruptcy.

“The fire victims overwhelmingly voted to accept the Plan and all of what followed, viz., an independent trust charged with administering the fund for its Beneficial Owners, with very little interference or oversight from others, including this court,“ Montali wrote.

But Abrams said wildfire victims did not buy in to a trust with little guaranteed oversight.

"They never spelled out that with all of these contracts and other matters they have been engaged in that they wouldn’t be providing any insight to victims,“ he said. ”They never told us that this was going to be a not transparent process."

You can reach Staff Writer Andrew Graham at 707-526-8667 or andrew.graham@pressdemocrat.com. On Twitter @AndrewGraham88