FEMA Ordered to Pay Emotional Damages to Northern NM Fire Victims by Federal Judge

A federal judge ruled on Tuesday that victims of the Hermits Peak-Calf Canyon Fire can receive compensation for emotional distress, striking down a federal regulation that limited payments to economic damages only. The ruling opens the door for potentially hundreds of millions of dollars in compensation for emotional suffering caused by the 2022 wildfire.

In late August 2023, the Federal Emergency Management Agency (FEMA) issued regulations stating that the nearly $4 billion Congress allocated for fire victims would cover only tangible losses such as destroyed homes, lost businesses, and damaged property. FEMA’s decision excluded so-called “noneconomic damages,” such as emotional distress, angering many fire victims and prompting several law firms to sue.

In October, attorneys representing thousands of fire victims filed a lawsuit, claiming that FEMA’s interpretation of the compensation program violated both state law and the law passed by Congress. They argued that New Mexico law allows for compensation of emotional distress in cases of nuisance and trespass, which the fire victims believed applied to this situation.

Judge James O. Browning’s 99-page ruling backed the plaintiffs’ argument. He found that FEMA’s regulation limiting compensation was unlawful and ordered the agency to pay victims for noneconomic damages. Browning further declared that FEMA had “unlawfully withheld” funds owed to the victims, emphasizing that the compensation program was designed to cover both financial and emotional losses.

While the ruling wasn’t unexpected—Browning had previously expressed skepticism about FEMA’s reasoning—it was more forceful than some had anticipated. Antonia Roybal-Mack, one of the attorneys representing the fire victims, described the ruling as “surprising” but said it highlighted the inefficiency of FEMA’s response to the crisis. “It really shows that the federal court was aware that FEMA has been stalling and is not as efficient as it needs to be,” she said.

Gerald Singleton, another attorney representing the victims, had estimated that the emotional distress and other non-financial losses amounted to $400 million. Law firms have been submitting detailed accounts of the inconvenience and trauma experienced by clients, adding weight to the plaintiffs’ case.

What happens next remains unclear. FEMA and the United States Attorney’s Office may choose to appeal the ruling to the 10th Circuit Court of Appeals or comply with the decision. A spokesperson for FEMA said the agency was reviewing the ruling and would discuss next steps with the Department of Justice. The U.S. Attorney’s Office also issued a similar statement, indicating that they are considering their options.

The ruling comes just days before the deadline for fire victims to file notices of loss. The deadline for submitting claims is this Friday. Furthermore, Congress is considering an additional $1.5 billion in funding for fire victims, which would bring the total compensation amount to $5.45 billion. However, FEMA has so far distributed just over $1.6 billion in payments.

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