FEMA finalizes rules for paying nearly $4 billion to Hermits Peak-Calf Canyon Fire victims 

Finalized rules governing how victims of the Hermits Peak-Calf Canyon fire can file claims for damages went into effect Tuesday, providing a roadmap for how compensation will be paid to victims of a wildfire started by the United States Forest Service last spring.

One of the biggest questions the new regulations answer is how victims will be fully compensated for their lost trees. Those affected by the 530-square-mile wildfire had been asking for major changes to how burned trees are covered as early as last fall.

Under the interim rules published in November, the Hermits Peak/Calf Canyon Claims Office restricted the amount paid for “trees and other landscaping to 25% of the pre-fire value of the structure and lot” on which they stood. 

The cap for those payments was eliminated in the final rules published this week. The agency announced it would instead pay between $4,500 and $9,000 per acre of lost trees, depending on the severity of the damage.

The final approval for the rules came from the White House Office of Management and Budget, which had to review the proposal FEMA submitted on Aug. 7.

Angela Gladwell, the claims office director, told reporters on Monday that the finalized rules and the way FEMA intends to implement them will mean long-awaited payouts from the office will now increase “substantially.”

Congress late last year allocated nearly $4 billion to pay out victims of the fire, which started due to two botched prescribed burns on federal land that merged in April 2022. More than half of the acres burned were on private land, including thousands of acres of trees.

 “If we look at our valuation methodology across all the tree loss in the impacted area, we’re talking about upwards of $1 billion or more in losses,” she said.

The 25% cap was included as the Claims Office scrambled to meet a 45-day deadline to publish interim guidelines for how it would make payments to compensate victims of the Forest Service’s mistakes.

That language was copied from the Cerro Grande Fire Assistance Act, which refers to wildfire in 2000 in and around Los Alamos, N.M. That fire was also started as an escaped prescribed burn on federal land.

“In order for us to be able to move forward with getting an interim final rule in place within 45 days and starting the process in the program, we took a large amount of the language and the rule from that,” she said. “In a lot of cases, it’s very hard to compare between that disaster and this one, and that was the case for trees and tree losses, as well.”

The Cerro Grande Fire affected a very different community, one where many victims were wealthy, federal employees living in insured homes. Trees were most often used as landscaping, not for subsistence or income as they are in the burn scar of the Hermits Peak-Calf Canyon Fire.

The cap on trees was one of several changes to the way the Hermits Peak-Calf Canyon Fire Claims Office will pay out going forward. The fund is expected to pay for a wide variety of losses and fully compensate victims for lost homes, increased mental health costs, damaged acequias and ongoing damage to property and livelihoods from post-fire flooding and debris flows. Flooding due to damage from the fire is expected to occur for at least several more years.

The new rules expand payments for mental health services, for example, to include conditions the fire made worse — not just those the fire caused. And the new rules will compensate people for outside assessments of damage or recovery costs. The previous rules would only pay fire victims for those expert opinions if FEMA requested them.

The final rules also lengthen deadlines for filing various types of claims or reopening claims, citing the “ongoing nature of recovery and rebuilding,” according to a news release.

The Claims Office has been under pressure for months to publish the rules, a step that victims, lawyers and elected officials have said would reduce confusion and hasten recovery. FEMA received nearly 300 public comments from people with suggestions on how to improve the final rules, and the agency was required to respond to those comments as part of the rulemaking process.

FEMA sent its proposed rules to the Office of Management and Budget on Aug. 7, according to the OMB. It can often take more than 90 days for the OMB to review proposed rules, and then another 30 days after they’re published before they go into effect, according to the agency’s standard process that it published online.

But, for this program, the OMB completed its review in about two weeks, and the rules went into effect Tuesday.

U.S. Sen. Ben Ray Luján handed President Joe Biden a letter on Aug. 11 when the president landed in New Mexico for a visit. The letter, in part, urged Biden to pressure his agencies to get the rules out faster, saying the slow pace had resulted in only a fraction of money being paid out to victims eight months after the Claims Office published its interim rules.

Luján told Source New Mexico on Tuesday he was pleased to see the rules finally being published, and that they eliminated caps on payments for trees.

“What I appreciate about this final rule being announced today, is that when I look at the public comments that were being put forth by the victims of this fire, the families, the claimants, individuals from the community, just about everything was addressed,” Luján said. 

Gladwell said FEMA could have paid people in full for their lost trees before the final rules, but the office was waiting on input from the public and experts to calculate how tree losses could be paid for.

Despite the final rule being published, the $4 billion awarded by Congress is still far from being spent. As of Monday, the Claims Office had paid out $37 million. Until a recent flurry of payments, the Claims Office had paid out just $300,000 to individuals by mid-July — more than a year after the fire began, officials acknowledged at the time.

FEMA officials announced recently they expect to pay at least $50 million by the end of September, $100 million by Jan. 1, 2024, and $1 billion by Jan. 1, 2025.