FEMA Told Victims of New Mexico’s Largest Wildfire It Can’t Pay for Emotional Harm. A Judge Will Likely Rule It Must.

by Patrick Lohmann, Source New Mexico

This article was produced in partnership with Source New Mexico, which was a member of ProPublica’s Local Reporting Network in 2023. Sign up for Dispatches to get stories like this one as soon as they are published.

Victims of New Mexico’s biggest wildfire could receive hundreds of millions of dollars from the federal government for the hardship they endured when the blaze roared across their land in 2022 after the U.S. Forest Service accidentally ignited it.

U.S. District Judge James Browning said at the end of a hearing in Albuquerque, New Mexico, on Tuesday that he was “leaning” toward ruling for fire victims who sued the Federal Emergency Management Agency last year for limiting the types of damages it would pay for. Browning said he would issue a ruling as soon as possible, but likely not until next month.

The lawsuit centers on FEMA’s determination that a federal law allows it to pay victims for economic losses but not emotional harm, which Source New Mexico and ProPublica reported on in January. Lawyers for fire victims said some people who owned little of value would not get enough money to rebuild unless FEMA paid for emotional harm.

If Browning does side with victims, FEMA could be required to compensate them for the stress of fleeing the fire, the distress they felt as it burned their trees and the toll of losing their home and possessions — what victims’ lawyers describe in legal filings as “annoyance, discomfort and inconvenience.”

A few could get sizable payments for pain and suffering resulting from injuries, in addition to payments for the injuries themselves. So far, the only recourse for people who were injured or for the families of those who died in the fire or ensuing floods has been to sue the federal government — a long, uncertain process. One suit filed on behalf of three people who died in post-fire flooding is pending.

Gerald Singleton, whose San Diego-based firm is representing about 1,000 victims of the fire, said in an interview after the hearing that emotional harm losses could amount to about $400 million. Such payments could result in a more equitable distribution of funds than the current system, he said, because renters and people with little to their name would receive money beyond the dollar value of their possessions.

If victims win, it’s not clear how quickly they could be paid. Lawyers representing FEMA said the agency would have to go through the formal rulemaking process to allow for payments for emotional damages. That could take months.

The money would come out of a nearly $4 billion fund Congress established in September 2022 to, as President Joe Biden put it, “fully compensate” victims of the Hermits Peak-Calf Canyon Fire. It was triggered by two controlled burns that escaped to scorch a 534-square-mile area and destroy several hundred homes.

As of Friday, FEMA’s Hermits Peak-Calf Canyon Claims Office has paid $1.5 billion to households, nonprofits, businesses and local and tribal governments.

Jay Mitchell, director of the claims office, watched the hearing Tuesday. In a brief interview afterward, Mitchell suggested it could be challenging and costly to dole out payments for emotional distress.

He said the ruling could open the door to a flood of claims seeking damages for “nuisance” or “trespass” from people whose properties were touched by wildfire smoke. “Smoke goes where it goes,” he said as he walked into a meeting with lawyers representing FEMA.

FEMA declined to comment further, citing the pending lawsuit, and encouraged anyone affected by the fire to file a claim by Dec. 20.

The crux of the legal fight is FEMA’s interpretation of the Hermits Peak-Calf Calf Canyon Fire Assistance Act, written and sponsored by U.S. Rep. Teresa Leger Fernandez and U.S. Sen. Ben Ray Luján, Democrats from New Mexico. Plaintiffs argue that the agency improperly denied what are called “noneconomic damages” when it finalized the rules for how the $4 billion fund would be paid out. Those rules limited compensation to economic damages, those that come with a price tag: things like cars, homes, business expenses and cattle.

For months, lawyers for FEMA and four firms representing victims have exchanged briefs over what federal lawmakers intended when they wrote the bill. In Tuesday’s hearing, Browning questioned lawyers for both sides about that language.

For example, the law says payments “shall be limited to actual compensatory damages.” Victims’ lawyers argued, with numerous citations in New Mexico law and elsewhere, that “actual compensatory damages” historically means both economic and noneconomic damages. Lawyers representing FEMA interpreted the clause to mean that Congress was imposing a limitation: Only economic damages were allowed. Browning said he agreed with lawyers for the victims. “Plaintiffs have a better reading,” he said.

The dispute over intangible losses from the wildfire centers on the wording of a federal law. Officials with the Federal Emergency Management Agency have pointed to language saying payments must be “limited to actual compensatory damages” (yellow highlighting). Victims’ lawyers and New Mexico officials point to language saying New Mexico law should apply and note that the law doesn’t exclude intangible losses (red highlighting). (Obtained by Source New Mexico and ProPublica. Highlighted by ProPublica.)

At the beginning of Tuesday’s hearing, Browning said he’d already made up his mind on one issue: He agreed that New Mexico law does allow noneconomic damages to be paid to victims in a scenario like the fire. That’s important because the federal law requires damages to be calculated in accordance with state law.

He cited an opinion issued this year from the New Mexico attorney general that concluded emotional hardship payments are allowed for victims of “nuisance and trespass.” Two state lawmakers requested that opinion shortly after Source and ProPublica reported on the issue.

Browning said he would try to rule quickly, citing previous delays in getting money to victims. “I don’t live under a rock,” he said. “I know that there has been a lot of criticism of how slow the process was.”

This content originally appeared on ProPublica and was authored by by Patrick Lohmann, Source New Mexico.