SANTA FE, N.M. (CN) — New Mexico is entitled to fine business owners who fail to comply with Covid-19 public health orders to close businesses during the pandemic, the state’s highest court ruled from the bench Tuesday.
The dispute stems from a lawsuit filed in May, in which owners of businesses including restaurants, a gym, a car dealership and others claimed the state exceeded its authority by threatening to levy civil penalties of up to $5,000 per violation for businesses that opened in defiance of Covid-19 emergency public health orders.
In the original complaint, the business owners argued that the state’s Public Health Emergency Response Act (PHERA) authorizes fines of $100 or less and petty misdemeanor charges for violations of public health orders. The lawsuit argues that if emergency public health orders and later amendments issued by the state are issued under PHERA, the larger civil fines are barred.
Further, the plaintiffs claimed if the public health orders which closed down businesses across the state are not done under PHERA, the closures constitute a legal ‘taking’, and the state is required to compensate business owners for lost revenue and expenses as would be calculated under eminent domain laws.
In response to the lawsuit, the state filed a petition for superintending control and a stay in proceedings. The state asked the court to clarify the right of the state to levy civil penalties under PHERA and argued business closures for the sake of public health are not a legal taking and therefore aren’t compensable. The petition points out that Section 12-10A-19(A) specifically permits the state’s secretaries of health and public safety to enforce PHERA with “a civil administrative penalty of up to five thousand dollars ($5,000) for each violation.”
The law does include a provision which requires the state to “pay just compensation to the owner of health care supplies, a health facility or any other property that is lawfully taken or appropriated…for temporary or permanent use during a public health emergency.” But the state argued that ‘taking’ is confined to instances in which the state might take direct or physical control of the property for public use and does not apply to closures due to a public health emergency.
In the hearing held Tuesday, Chief Justice Michael E. Vigil, Senior Justice Barbara J. Vigil, Justice Judtih K. Nakamura, Justice C. Shannon Bacon, and Justice David K. Thompson heard arguments from Matthew Garcia, representing Governor Michelle Lujan Grisham and the other defendants and Carter B. Harrison IV of Harrison & Hart in Albuquerque, representing the group of Curry County business owners who filed the lawsuit.
Garcia argued nothing in the public health orders is not specifically permitted under PHERA. He also argued that the $5,000 fine is the maximum allowed and that the state is using a graduated system of penalties. As of now, Garcia said, the maximum $5,000 fine has only been levied against 16 businesses for the most egregious defiance of the public health orders.
In his response, Harrison argued it’s the Legislature’s job to make policy, not the governor’s. He said Lujan Grisham had the authority to issue the public health orders, but decisions about which businesses are shut down and the circumstances of the closures should ultimately be decided by the Legislature.
Justice Bacon pressed Harrison on the subject of regulatory takings. “If this court decides that the character of the government action and the need for the steps that have been taken outweigh the economic impact and the impact on investment…doesn’t that mean that this court can rule on the issue without sending it back down to the district court for, as you call it, a fact-intensity inquiry?” she asked.
Harrison said Bacon was applying the principles of the Penn Central test for regulatory taking and suggested instead applying the Lucas test — a complete deprivation of all economic value for property.
After a brief response by Garcia, who pointed out PHERA is a broadly worded statute which reflects that public health officials need broad authority to address health crises and should be afforded the flexibility to respond to those emergencies, the court recessed for just over an hour. When the justices returned, Chief Justice Vigil read the court’s decision: the New Mexico Legislature has clearly given the governor the authority to levy civil penalties, including those at issue in this case.
The court declined to issue a writ in the matter of defining public health business shutdowns as ‘takings,’ but will put out an opinion soon.