State Court Docket Watch: Grisham v. Romero

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On February 15, 2021, the New Mexico Supreme Court rejected a challenge to an executive order that closed indoor dining at restaurants and breweries in response to COVID-19.[1]

The order, issued in July by the New Mexico Department of Health pursuant to a directive by the governor, sets up a tiered system based on infection statistics within counties. It forbids restaurants and breweries in “Red Level” counties from having indoor dining and requires them to limit outdoor dining to 25% capacity.[2]

A number of restaurants and the New Mexico Restaurant Association sued, arguing that the governor and secretary of the Department of Health lacked the power to impose the closures and that, regardless, the closures were arbitrary and capricious.[3]

A lower court granted a temporary restraining order in the plaintiffs’ favor pending a hearing on an application for a preliminary injunction. The state supreme court, however, immediately stayed that order and took up the case pursuant to a writ of superintending control.[4]

Declaring that the court had no need for an evidentiary hearing, Justice Judith Nakamura, writing for a unanimous court, concluded that the defendants had the power to impose the closure and that the closure was not arbitrary or capricious.

On the first question—whether the governor and secretary had the power to order the closure—the plaintiffs argued that the order was unlawful because it was not issued in compliance with the State Rules Act (a state analogue to the Administrative Procedure Act).[5]

This argument had two parts. First, the plaintiffs argued that the Public Health Act[6] was not self-executing, and therefore the state legislature required the Department of Health to promulgate formal rules to implement it. The Department had not issued formal rules, and so, the plaintiffs argued, the closure was unlawful.

The court rejected this argument, concluding that although the act “does not expressly supply the means by which public places should be closed . . . . [t]he authorizing language implies execution through an order that may be deployed when necessary to protect public health.”[7]

Second, plaintiffs argued that the State Rules Act’s procedural requirements (public hearing and notice and comment) applied to the order because it satisfied the definition of a “rule.” Because the order was a rule, and because the government did not follow rulemaking procedures, the plaintiffs argued that the order was unenforceable.

The court initially conceded that the order “arguably meets the criteria” for a rule, which is defined as “a statement asserting a standard of conduct which has the force of law [and] affects the rights or obligations of those who fall within its ambit.”[8] It concluded, however, that the legislature had exempted orders from the rulemaking requirements because the Department of Health Act lists, among the Department’s powers, “administrative action” separately from “mak[ing] and adopt[ing] . . . reasonable procedural rules.”[9] Put differently, the court drew a bright line between administrative actions that are “orders and instructions” and “procedural rules,” holding that the State Rules Act applies to the latter but not to the former.[10]

This represents a substantial change in New Mexico administrative law, and it arguably implicitly overrules precedent that the court relied on in this opinion.

For example, in reaching this conclusion, the court cited Livingston v. Ewing[11] for the proposition that a resolution “limiting the space inside the Santa Fe Plaza’s portal to Native American artisans was ‘a rule for purposes of its promulgation.’”[12] That resolution, like the COVID-19 order at issue, was not a procedural rule, and yet it was subject to the State Rules Act, whereas the COVID-19 order is not. The court did not address this tension.

Several amici argued that the order was beyond the governor and secretary’s powers because it amounted to a usurpation of legislative authority.[13] The court framed the question as “whether the July Order disrupts the proper balance between the executive and legislative branches and infringes on the legislative branch by, for instance, imposing through executive order substantive policy changes in an area reserved to the Legislature.”[14] The court concluded that the order did not disrupt the balance of powers because “New Mexico has not entered a ‘new normal,’” and because temporary emergency orders are not “long-term policy decisions.”[15]

Having concluded that the governor and secretary had the authority to issue the order, the court turned next to whether the order was arbitrary and capricious and held that it was not.

Relying in part on Chief Justice John Roberts’s solo opinion in South Bay Pentecostal Church v. Newsom,[16] for the proposition that the decision to lift pandemic-related restrictions “is a dynamic and fact-intensive matter,” the court declined to remand the case for an evidentiary hearing. It held instead that the government’s decision was entitled to the highest possible deference. In fact, the court held that even if the plaintiffs could show that “the closure measure had not been a success,” the order still would not have been arbitrary and capricious because all the government needed to show was a “relation” between the order and the goal of suppressing COVID-19.[17] The government satisfied that burden here by supplying the affidavit of a doctor at the New Mexico Human Services Department stating that indoor dining presents a risk of COVID-19 transmission.

Oddly, the court derived this standard of deference from a case related to public health regulations, even though the court, at the same time, acknowledged that it had just held the order exempt from the State Rules Act, which applies to regulations.[18] Public hearings and notice and comment provide a basis for subsequent judicial deference, but the court did not explain why similar deference was warranted when those procedural requirements were absent.[19]

Justice David Thomson concurred to note that the court should be wary of extending such high deference to the executive when emergencies persist for a long period of time.[20] In his view, New Mexico had entered a “new normal.” As such, “broad and vague statutes that grant emergency powers . . . may pose potential long-term consequences to our system of checks and balances.”[21] Accordingly, the courts should employ “robust judicial review.”[22] Still, he concluded, the facts of this case warranted deference.[23]

There are several lessons to draw from Grisham. The first is that the New Mexico courts seem to be highly skeptical of challenges to the state’s COVID-19 orders. With deference set so high and the supreme court unwilling to remand for an evidentiary hearing,[24] it is difficult to conceive of a case that would see a COVID-19 order overturned by a state court.

The second lesson is that the court has, perhaps inadvertently, potentially initiated a dramatic shift in state administrative law by exempting agency orders from the State Rules Act. Relatedly, because the court did not explicitly overrule Livingston—and even cited it favorably—state law on this issue is now unclear.

And finally, the last lesson to draw is that Justice Thomson’s admonition that the courts ought to be vigilant against executive overreach can be seen as hollow. The majority opinion leaves little room for the judicial vigilance that he prescribes.