Should State Pay Businesses Shuttered by Covid Orders? New Mexico Justices to Decide

Businesses like restaurants and hair salons say New Mexico’s shutdown orders amount to a “taking” under the U.S. Constitution — one they should be reimbursed for.

(AP Photo/Matt Dunham)

SANTA FE, N.M. (CN) — The New Mexico Supreme Court heard arguments Wednesday on whether businesses which lost income due to Covid-19 shutdowns can seek compensation from the state under rules governing regulatory takings.

The high court took up a petition for writ of superintending control and emergency request for stay brought by the state involving plaintiffs in 20 lawsuits brought across the state. The plaintiffs claim business closures and restrictions brought under public health emergency orders constituted regulatory takings and thus the businesses are entitled to compensation under New Mexico’s Public Health Emergency Response Act.

At the heart of the dispute is the concept of a legal “taking.” Under the U.S. Constitution, a regulatory taking occurs when a government regulation limits the uses of private property to such a degree that the owners are deprived of the use or value of their property. 

Chief Justice Michael Vigil Sr., Justices Barbara Vigil, Shannon Bacon, David Thomson, and retired Court of Appeals Judge Michael Bustamante heard initial statements by attorney Nicholas Sydow, representing the state, Governor Michelle Lujan Grisham and state Secretary of Health Kathyleen Kunkel. 

The state argued closures mandated by public health orders do not constitute takings because they are by nature temporary and because property cannot be used in a manner that endangers public health and safety. “It’s not taking away property rights,” Sydow argued, “it’s ensuring that the property will not be used in a way that endangers the public health and safety.”

Further, Sydow said the very nature of the adaptive health orders, which expire in a matter of weeks and which in New Mexico have changed to reflect the best information about the spread and treatment of Covid-19, mean they are not arbitrary or capricious. He said the rules governing the operation of restaurants, close-contact businesses such as salons and others have altered as scientific understanding of how and when people are likely to spread Covid-19 has evolved.

When questioned by the justices, Sydow asserted if there is compensation to be offered to business owners, it should be determined by the Legislature, not by the courts, and offered to all businesses affected by the pandemic.

The plaintiffs’ attorney A. Blair Dunn of Western Agriculture, Resource and Business Advocates argued the closures did constitute a taking because the right to have property — and not have it taken by the government — is a fundamental liberty under the Bill of Rights. To interfere in the operation of private businesses without offering compensation, he argued, violates that liberty.

Asked by Senior Justice Barbara Vigil whether the closures might be covered under the police powers exception to regulatory takings — which says takings prompted by a danger to public health or safety aren’t entitled to compensation — Dunn argued that should be decided on a case-by-case basis in state courts rather than decided broadly in a single hearing. Different business models, he argued, might or might not offer different risks to the public.

“There isn’t some blanket, blank-check limitless exception to the use of police powers,” Dunn argued, “that removes this action by the government from any sort of analysis at the district court level.”

On rebuttal, Sydow brought the focus back to the matter of state law. “This court isn’t being asked to entertain a collective motion for summary judgment [against the individual lawsuits], but to determine as a matter of law that the public health orders cannot support takings claims.”

The justices will issue a ruling soon.

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