Victims of New Mexico’s largest wildfire, which occurred in 2022 after being accidentally ignited by the U.S. Forest Service, may receive substantial compensation from the federal government for the suffering they endured. This potential compensation could amount to hundreds of millions of dollars.
U.S. District Judge James Browning indicated during a hearing in Albuquerque, New Mexico, that he is inclined to rule in favor of the victims who filed a lawsuit against the Federal Emergency Management Agency (FEMA). The lawsuit, initiated last year, challenges FEMA’s restrictions on the types of damages eligible for compensation. Browning mentioned that while he hopes to deliver a ruling promptly, it may not be issued until the following month.
The central issue in the lawsuit is FEMA’s decision, based on federal law, to deny compensation for emotional harm to victims, which Source New Mexico and ProPublica highlighted earlier this year. Lawyers for the victims contend that individuals with minimal material possessions may not receive adequate funds to rebuild unless FEMA covers emotional harm as well.
Should the ruling favor the victims, FEMA may be compelled to compensate individuals for the distress caused by evacuating from the fire and the emotional loss incurred as their homes and possessions were destroyed. This includes “annoyance, discomfort, and inconvenience” as described by the victims’ legal representatives. Some victims could potentially receive larger payments for pain and suffering related to physical injuries, in addition to compensation for the injuries themselves. Currently, the only means for injured individuals or families of deceased victims in the fire or subsequent floods to pursue compensation is through a lengthy and uncertain lawsuit against the federal government. A lawsuit on behalf of three individuals who died in post-fire flooding is still pending.
Gerald Singleton, an attorney from San Diego representing approximately 1,000 fire victims, estimated in a post-hearing interview that compensation for emotional harm could total around $400 million. Singleton suggested that such payments might result in a more equitable distribution of funds, benefiting renters and those with fewer material assets beyond the monetary value of their destroyed possessions.
If the victims are successful, the timeline for payment remains unclear. According to FEMA’s legal counsel, the agency would need to engage in a formal rulemaking process to authorize payments for emotional damages, a process that could span several months.
The source of the funding would be a nearly $4 billion fund established by Congress in September 2022. President Joe Biden emphasized its purpose to “fully compensate” victims of the Hermits Peak-Calf Canyon Fire, which resulted from two escaped controlled burns that ultimately affected a 534-square-mile region and destroyed several hundred homes. As of the report, FEMA’s Hermits Peak-Calf Canyon Claims Office had distributed $1.5 billion to various groups, including households, nonprofits, businesses, and local and tribal governments.
Jay Mitchell, director of the claims office, observed the hearing and later remarked on the potential difficulties and costs associated with handling payments for emotional distress claims. He noted that this ruling could lead to numerous claims for damages related to “nuisance” or “trespass” from individuals whose properties were affected by wildfire smoke.
FEMA declined to provide further comments on the pending lawsuit but encouraged those affected by the fire to submit claims by December 20.
At the core of the legal dispute is FEMA’s interpretation of the Hermits Peak-Calf Canyon Fire Assistance Act, co-authored by U.S. Rep. Teresa Leger Fernandez and U.S. Sen. Ben Ray Luján, both New Mexico Democrats. Plaintiffs assert that the agency wrongfully excluded “noneconomic damages” in its guidelines for distributing the $4 billion fund, allowing only for economic damages related to tangible loss like homes, vehicles, and business expenses.
For several months, legal teams from FEMA and four law firms representing victims engaged in discussions over the legislative intent. During Tuesday’s hearing, Judge Browning questioned both parties regarding the wording. The law specifies that payments should be “limited to actual compensatory damages.” Victims’ attorneys argued that this historically encompasses both economic and noneconomic damages under New Mexico law, whereas FEMA’s representatives interpreted it as a restriction to economic damages only. Judge Browning expressed agreement with the victims’ legal interpretation, stating, “Plaintiffs have a better reading.”
Judge Browning also conveyed his agreement with the assertion that New Mexico law permits compensation for noneconomic damages in cases like the fire. This consideration is essential because the federal law bases its damage calculations on state law standards. He cited a New Mexico Attorney General’s opinion confirming that emotional hardship payments are permissible for victims experiencing “nuisance and trespass.” This opinion was requested by two state lawmakers shortly after Source New Mexico and ProPublica publicized the issue.
Judge Browning aims to expedite the ruling process, acknowledging previous delays in disbursing funds to victims and emphasizing that he understands public criticism regarding the slow pace of assistance.
