Fire Victim Trust administrator resigns after two years overseeing Northern California claims

Fire Victim Trust administrator John Trotter announced Tuesday he will resign June 30 after a two-year period in which he oversaw the start of an effort to pay billions of dollars in damages to victims of catastrophic 2017 and 2018 wildfires on behalf of Pacific Gas and Electric Co.

Though Trotter’s announcement, which came in a letter posted online to the trust’s website, comes at a time of renewed scrutiny on the fund’s administrative spending and transparency, the former federal appellate judge said he had always intended to hold the post for only two years.

Trotter wrote that he had informed the trust’s oversight committee of his intentions March 29, before recent dust-ups that included a public dispute with Butte County supervisors and a controversial lobbying contract with Patrick McCallum, the estranged husband of outgoing Sonoma State University President Judy Sakaki.

Claims administrator Cathy Yanni, the trust’s second in command, will take the trust’s reins July 1.

“Claims processing will proceed without interruption and fire victims and their counsel can count on the transition being seamless,” Trotter wrote in his letter.

Trotter built an administrative body from scratch to process and award victims’ claims, but he faced frequent public criticism for the cost of doing so. The fund’s expenditures on legal fees, administrative expenses and other costs surpassed $132 million by the end of last year.

Trotter was appointed by U.S. Bankruptcy Court Judge Dennis Montali, who presided over the bankruptcy case. Trotter earned a $125,000 a month salary for his work.

Meanwhile, the underfunded Fire Victim Trust only began paying victims’ claims in March 2021, and many of the 70,000 victims whose lives and livelihoods were upended by the fires remain unpaid.

The trust is for victims of the 2017 North Bay firestorm and the 2018 Camp Fire, among other blazes sparked by PG&E equipment.

In its first year, as trust administrators worked to get the trust running, it spent $51 million on lawyers’ fees, claims administrators and financial professionals, while only paying out $7 million in claims, according to a May 2021 report by Bay Area NPR-affiliate KQED. Those numbers prompted widespread outrage among victims, lawmakers and others.

Most recently, Trotter sparred publicly with the Butte County supervisors, who called for more transparency from the fund and expressed outrage that victims of the Camp Fire, the deadliest wildfire in California history, remained unpaid.

PG&E established the fund as part of its exit from a January 2019 bankruptcy filing. In a raw deal for fire survivors, the utility put $6.75 billion in cash toward the fund, which was supposed to have a value of $13.5 billion. The rest of the damages were to be paid out of PG&E stock.

But the company’s low stock price at its exit from bankruptcy meant the trust has always been short on cash.

The trust is only paying 45% of a claim’s value in an effort to preserve funds until it can sell PG&E stock to cover the difference. “Sooner or later, we're going to run out of cash,” Trotter told The Press Democrat in an interview earlier this month.

The poor half-cash, half-stock deal for victims came at the same time PG&E made an $11 billion cash payment to satisfy the claims insurance companies made on the utility in the fires’ wake.

Trotter has made no secret of the challenge the deal created for the Fire Victim Trust, which has sold 100 million shares for $1.2 billion to date, but still owns 377 million shares of PG&E stock, according to Trotter’s letter. That stock’s continued low price drove Trotter to hire McCallum, a 2017 Tubbs Fire victim, to lobby in Sacramento.

McCallum told The Press Democrat the trust was seeking a loan of as much as $1.5 billion from the state’s $100 billion surplus. Such a loan would allow the trust to continue paying victims while waiting for PG&E stock prices to improve.

If the stock value reached a level where the trust could sell its shares for a profit, the fund could then reimburse the state for the loan — taking the burden of the controversial bankruptcy deal off victims’ shoulders.

The trust cut ties with McCallum a day after two prominent North Bay lawmakers told The Press Democrat he should not be a voice for wildfire victims amid allegations of sexual harassment made against him by several female employees of Sonoma State.

The trust’s new liaison with state lawmakers is Darby Kernan, who previously lobbied for the California State Association of Counties.

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