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XAVIER BECERRA, SBN 118517 

Attorney General of California 

MARGARITA PADILLA, SBN 99966 

Supervising Deputy Attorney General 

JAMES POTTER, SBN 166992 

Deputy Attorney General 

1515 Clay Street, 20th Floor 

P.O. Box 70550 

Oakland, CA 94612-0550 

Telephone: (510) 879-0815 

Fax: (510) 622-2270 

Margarita.Padilla@doj.ca.gov 

James.Potter@doj.ca.gov 

STEVEN H. FELDERSTEIN, SBN 059678 

PAUL J. PASCUZZI, SBN 148810 

FELDERSTEIN FITZGERALD 

WILLOUGHBY PASCUZZI & RIOS LLP 

500 Capitol Mall, Suite 2250 

Sacramento, CA 95814 

Telephone: (916) 329-7400 

Fax: (916) 329-7435 

sfelderstein@ffwplaw.com 

ppascuzzi@ffwplaw.com 

Attorneys for California Department of Forestry 

and Fire Protection, et al. 

XAVIER BECERRA, SBN 118517 

Attorney General of California 

DANETTE VALDEZ, SBN 141780 

ANNADEL ALMENDRAS, SBN 

192064 

Supervising Deputy Attorneys General 

455 Golden Gate Avenue, Suite 11000 

San Francisco, CA 94102-7004 

Telephone: (415) 510-3367 

Fax: (415) 703-5480 

Danette.Valdez@doj.ca.gov 

Annadel.Almendras@doj.ca.gov 

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

In re: 

PG&E CORPORATION 

- and – 

PACIFIC GAS AND ELECTRIC 

COMPANY, 

Debtors.

Bankruptcy Case

No. 19-30088 (DM) 

Chapter 11 

(Lead Case) 

(Jointly Administered) 

 Affects PG&E Corporation 

 Affects Pacific Gas and 

Electric Company 

 Affects both Debtors 

Date: December 17, 2019 

Time: 10:00 a.m. 

Ctrm: 17 

Judge: Dennis Montali 

STATEMENT OF THE CALIFORNIA STATE AGENCIES IN

RESPONSE TO THE COURT’S MEMORANDUM REGARDING

CONFIRMATION ISSUES [DOCKET NO. 4760]

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The California Department of Forestry and Fire Protection, California Department of 

Toxic Substances Control, California Governor’s Office of Emergency Services, California 

Department of Veterans Affairs, California State University, California Coastal Commission, 

California Department of Parks and Recreation, California Department of Fish and Wildlife, 

California Department of Transportation, California Department of Developmental Services, 

California Department of Conservation, Division of Oil, Gas and Geothermal Resources, 

California Regional Water Quality Control Boards, California State Water Resources Control 

Board, California Air Resources Board and California Department of Water Resources 

(collectively, the “California State Agencies”) hereby file this response to the Court’s 

Memorandum Regarding Confirmation Issues (“Memorandum”) [Docket No. 4760] as follows: 

1. Among other things, the Memorandum requested principal counsel for the 

Debtors, the two official committees and the Ad Hoc Noteholders Committee, and the Ad Hoc 

Subrogation Claim Holders meet and confer as to whether the Court “should fix an early deadline 

for confirmation objections based on the requirements of 11 U.S.C. § 1129(a)(1), (2), (3), (4), (5) 

and (13)” and identify any other confirmation related issues that the Court could address through 

briefing and argument prior to final approval of a disclosure statement. Memorandum at 3-4. 

2. While not included in the named principal counsel, the California State Agencies 

file this statement to address their issues of concern with the Court. The California State 

Agencies assert approximately $3.3 billion in wildfire-related claims, as well as many other nonwildfire-related claims that must be properly dealt with under any chapter 11 plan. 

3. The California State Agencies are generally not opposed to the Court setting an 

early deadline for confirmation objections based on 11 U.S.C. § 1129(a)(4), (5) and (13), so long 

as the identifications and disclosures required by 11 U.S.C. § 1129(a)(5) are contained in the 

solicitation materials. To the extent such information is not provided at the time of solicitation, 

an early deadline for confirmation objections is not appropriate. 

4. The California State Agencies are aware that the Debtors have filed their Motion 

Pursuant to 11 U.S.C. §§ 363(b) and 105(a) and Fed. R. Bankr. P. 6004 and 9019 for Entry of an 

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Order (I) Authorizing the Debtors and TCC to Enter into Restructuring Support Agreement with 

the TCC, Consenting Fire Claimant Professionals, and Shareholder Proponents, and (II) Granting 

Related Relief (Dkt. No. 5038) (the “Tort Claimants RSA Motion”), in which they seek approval 

of a restructuring support agreement (the “RSA”) between them and, among others, the Official 

Committee of Tort Claimants (“TCC”). The Debtors also filed their Debtors’ and Shareholder 

Proponents’ Joint Chapter 11 Plan of Reorganization Dated December 12, 2019 (Dkt. No. 5101) 

(“Amended Plan”). The California State Agencies reserve all rights with respect to the Tort 

Claimants RSA Motion and confirmation of the Amended Plan contemplated by the RSA (or any 

other chapter 11 plan). As of the filing of this statement, however, the California State Agencies 

have not thoroughly reviewed the Amended Plan. 

5. With respect to 11 U.S.C. § 1129(a)(1), (2) and (3), any early deadline for 

confirmation objections should not be imposed so long as critical elements required for a 

determination of those subsections are missing. For example: 

a. Potential Unequal Treatment of Claims. The proposed Joint Chapter 11 

Plan of Reorganization of Official Committee of Tort Claimants and Ad Hoc Committee of Senior 

Unsecured Noteholders [Dkt. No. 4257] (“Noteholders/TCC Plan”) and the proposed Debtors’ 

and Shareholder Proponents’ Amended Plan do not adequately explain whether there will be one 

wildfire trust or multiple trusts “to administer, process, settle, resolve, liquidate, satisfy, and pay” 

wildfire claims. See Noteholders/TCC Plan, Art. 1, § 1.79; RSA Term Sheet page 3; Amended 

Plan Art. 1, § 1.78. The possibility of more than one trust raises the possibility of wildfire trusts 

funded in different amounts with different wildfire claims channeled to unequally funded trusts 

with different claims resolution procedures. This potential difference in the treatment of wildfire 

claims implicates several subsections of section 1129, including possibly (a)(1), (2) and (3). The 

plan proponents must clarify whether their respective plans will create one or more wildfire trusts 

before the Court sets an early deadline with respect to plan confirmation as suggested in its 

Memorandum. 

b. Trust Governance and Operation. Neither plan attaches or provides any 

meaningful description of the trust agreements or the claims resolution procedures that will 

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govern the resolution, liquidation, and payment of claims from their respective wildfire trusts. 

See Noteholders/TCC Plan, Art. 1, §§ 1.78, 1.79, and 1.80; Amended Plan, Art. 1, §§ 1.76, 1.78 

and 1.81. Nor does either plan provide the identities of the trustee(s) for the wildfire trust or the 

members of the committee or board to oversee the trusts. See Noteholders/TCC Plan, Art 1, §§ 

1.81 and 1.82; Amended Plan, Art. 1, §§ 1.80 and 1.81. Under the two plans, the plan proponents 

will provide this critical information just fourteen days before the confirmation objection deadline 

(when they file their respective Plan Supplements). See Noteholders/TCC Plan, Art 1, § 1.154; 

Amended Plan, Art. 1, 1.142. 

Such short notice may be justified where a supplement includes only schedules of 

rejected contracts, debtor-retained causes of action, new organizational documents, and the 

identity of new officers. Here, however, that document will contain detailed information 

regarding the treatment of wildfire creditors’ claims, including (i) how creditors may assert 

wildfire claims against the trust(s), (ii) procedures for resolving those claims, (iii) who will decide 

how claims are resolved, and (iv) what is the form of consideration for satisfaction of those 

claims. Fourteen days is clearly insufficient for wildfire creditors, like the California State 

Agencies, to review a likely lengthy and detailed trust agreement and claims resolution 

procedures to assess the treatment of its claims and decide whether to object to that treatment. In 

particular, given the size of the California State Agencies’ claims, they are entitled to ensure that 

the trust is governed fairly by a neutral and experienced trustee(s). 

Accordingly, the Court should not impose a plan confirmation objection deadline in the 

absence of such necessary information. If the Court is nevertheless inclined to set an early 

objection deadline for those Code subsections, then the Court should also require the plan 

proponents to file the trust agreements, claim resolution procedures, and the identities of the 

trustee(s) and members of the oversight committee at least thirty (30) days before that early 

objection deadline. 

6. In addition to the foregoing, the California State Agencies have preliminarily 

identified a few issues of concern that are not addressed fully in either of the proposed plans. The 

California State Agencies intend to meet and confer with the plan proponents to address these and 

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any other subsequently identified deficiencies, and reserve all rights to identify other issues and 

make other objections at the appropriate time. The California State Agencies are not suggesting 

that these are issues that need to be briefed in advance of confirmation. Three of these areas of 

concern are the following: 

a. Specification of Treatment of Unimpaired Environmental Claims. The 

utility Debtor (“Utility”) has significant environmental obligations and liabilities to multiple state 

agencies under various state and federal environmental laws. These include pre- and post-petition 

“Claims,” statutory, regulatory and injunctive obligations, and obligations under permits, orders 

and agreements. The Utility has environmental obligations and liabilities at many sites, including 

its fossil fuel-fired and nuclear power-plants, its compressor stations (Hinkley and Topock), 

scores of old manufactured gas plants (also known as town gas sites), miscellaneous service 

locations and six large closed commercial hazardous waste landfills. In its 2018 Annual 

Hazardous Substance Mechanism (“HSM”) Report to the California Public Utilities Commission 

(“CPUC”), the Utility reported that it had recorded $105,808,224 in total HSM costs in 

connection with environmental remediation at numerous sites for 2018 alone. 

Neither plan sets forth in specific detail the treatment for California State 

Agencies’ respective environmental Claims as well as the Utility’s injunctive, permit, order and 

agreement obligations. The only specific reference to environmental liability is in Section 10.13 

of each plan and only provides that the discharge does not affect “any environmental liability to a 

Governmental Unit that the Debtors, the Reorganized Debtors, any successors thereto, or any 

other Person or Entity may have as an owner or operator of real property after the Effective 

Date[.]” See Noteholders/TCC Plan, Art. 10, § 10.13; Amended Plan, Art. 10, § 10.13. 

The California State Agencies request that any proposed plan specify that the 

California State Agencies’ respective environmental Claims, as well as the Utility’s injunctive, 

permit, order and agreement obligations, pass through unimpaired as if no bankruptcy had been 

filed, and that the determination, adjudication, payment, compliance and resolution of any 

disputes regarding these matters shall occur in the appropriate non-bankruptcy forum as if no 

bankruptcy had been filed. This was the treatment accorded to such claims in the 2001 

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bankruptcy case of the Utility. Since most of the Utility’s regulatory and environmental 

obligations are paid for through rates, this treatment should not be a significant additional 

financial commitment for the Reorganized Debtor. However, if there is not a pass-through 

provision, the estate will incur substantial expenses resolving (through settlement or litigation) 

and then paying its environmental Claims. 

b. Unfulfilled Obligations under First PG&E Chapter 11 Plan. The confirmed 

chapter 11 plan in the Utility’s first bankruptcy case obligated PG&E to transfer certain 

watershed lands. These transactions were still in process at the time these bankruptcy cases were 

filed and the watershed lands were carved out from the DIP loan collateral. Neither plan sets 

forth in specific detail what is to happen with these transfers. The California State Agencies 

request that any current chapter 11 plan specifically provide that these transfers proceed to 

completion. 

c. Department of Water Resources/CERS Issues. The Department of Water 

Resources (“DWR”) filed protective claims arising out of the Utility’s ongoing regulatory 

obligations that relate to the delivery of water and other services critical to management of the 

State’s water supply for the benefit of the public and to protect fish and wildlife habitat. In 

addition, DWR is entitled to refunds in the Utility’s transmission rate cases pending before FERC 

for 2018 and 2019. Neither plan sets forth in specific detail what is to happen with the Utility’s 

ongoing regulatory obligations owed to the DWR or FERC refunds for 2018 and 2019. DWR 

requests that any chapter 11 plan specifically preserves these rights. 

In addition, DWR, by and through its California Energy Resources Scheduling 

Division (“CERS”), filed a protective claim regarding the Utility’s obligation to bill and collect 

charges from its customers that pay for the $11.5 billion in bonds that CERS issued to purchase 

power on behalf of the investor-owned utilities, including the Utility, during the California energy 

crisis. The funds that the Utility collects are held in trust for the benefit of CERS. 

Since 2000, the Utility and dozens of other parties, including CERS, have engaged 

in complex regulatory proceedings and appellate litigation arising out of the 2000-2001 California 

energy crisis. Over the years, funds have been set aside in various qualified settlement funds and 

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in one or more accounts held by the California Power Exchange pursuant to the terms of over 60 

settlement agreements approved by the CPUC and the Federal Energy Regulatory Commission. 

These settlement funds were carved out of the DIP collateral. DWR requests that the resolution 

of such funds should continue through these proceedings as if no bankruptcy had been filed, as 

currently provided for in section 4.21 of the Amended Plan. Any chapter 11 plan should 

specifically so provide. 

RESERVATION OF RIGHTS 

Neither this statement nor any subsequent appearance, pleading, proof of claim, claim or 

suit is intended or shall be deemed or construed as: 

a. a consent by the California State Agencies to the jurisdiction of this Court 

or any other court with respect to proceedings, if any, commenced in any case against or 

otherwise involving the California State Agencies; 

b. a waiver of any right of the California State Agencies to (i) have an 

Article III judge adjudicate in the first instance any case, proceeding, matter or controversy as to 

which a Bankruptcy Judge may not enter a final order or judgment consistent with Article III of 

the United States Constitution, (ii) have final orders in non-core matters entered only after de 

novo review by a District Court Judge, (iii) trial by jury in any proceeding so triable in the 

Chapter 11 Cases or in any case, controversy, or proceeding related to the Chapter 11 Cases, 

(iv) have the United States District Court withdraw the reference in any matter subject to 

mandatory or discretionary withdrawal, or (v) any and all rights, claims, actions, defenses, setoffs, 

recoupments or remedies to which the California State Agencies are or may be entitled under 

agreements, in law or in equity, all of which rights, claims, actions, defenses, setoffs and 

recoupments are expressly reserved hereby; or 

c. a waiver of any objections or defenses that the State of California, the 

California State Agencies or any other agency, unit or entity of the State of California may have 

to this Court’s jurisdiction over the State of California, the California State Agencies or such 

other agency, unit or entity based upon the Eleventh Amendment to the United States 

/// 

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Constitution or related principles of sovereign immunity or otherwise, all of which objections and 

defenses are hereby reserved. 

Dated: December 13, 2019 Respectfully submitted, 

XAVIER BECERRA 

Attorney General of California 

MARGARITA PADILLA 

Supervising Deputy Attorney General 

By: /s/ Paul J. Pascuzzi____________________________ STEVEN H. FELDERSTEIN 

PAUL J. PASCUZZI 

FELDERSTEIN FITZGERALD 

WILLOUGHBY PASCUZZI & RIOS LLP 

Attorneys for California Department of Forestry and 

Fire Protection, California Regional Water Quality 

Control Boards, California Department of Toxic 

Substances Control, California Governor’s Office of 

Emergency Services, California Department of Veterans 

Affairs, California State University, California State 

Water Resources Control Board, California Air 

Resources Board, California Coastal Commission, 

California Department of Fish and Wildlife, California 

Department of Parks and Recreation, California 

Department of Transportation, California Department of 

Developmental Services, California Department of 

Conservation, Division of Oil, Gas and Geothermal 

Resources and California Department of Water 

Resources 

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PROOF OF SERVICE 

I, Sabrina M. Cisneros, declare: 

I am a resident of the State of California and over the age of eighteen years, and not a 

party to the within action; my business address is 500 Capitol Mall, Suite 2250, Sacramento, CA 

95814. On December 13, 2019, I served the within documents: 

STATEMENT OF THE CALIFORNIA STATE AGENCIES IN

RESPONSE TO THE COURT’S MEMORANDUM REGARDING

CONFIRMATION ISSUES [DOCKET NO. 4760] 

By Electronic Service only via CM/ECF.

/s/ Sabrina M. Cisneros

Sabrina M. Cisneros 

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