Old Wood, LLC v. Federal Emergency Management Agency et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
OLD WOOD, LLC
Plaintiff,
vs. 	No. CIV 24-1142 JB/JFR
FEDERAL 	EMERGENCY 	MANAGEMENT
AGENCY, 	DEANNE 	CRISWELL, 	and 	JAY
MITCHELL,
Defendants.
MEMORANDUM OPINION AND ORDER
THIS MATTER comes before the Court on: (i) the Plaintiff Old Wood LLC’s Opening
Brief, filed July 31, 2025 (Doc. 38)(“Opening Brief”); and (ii) the Defendants’ Motion to Lodge a
Supplement to the Administrative Record, filed November 12, 2025 (Doc. 67)(“Motion to
Supplement”). The Court holds a hearing on December 18, 2025. See Clerk’s Minutes at 1, filed
on December 18, 2025 (Doc. 78). 	The primary issues are: (i) whether the Court must set aside,
under 5 U.S.C. §§ 706(2)(A)(C), as arbitrary and capricious, an abuse of discretion, or otherwise
not in accordance with law, Defendant Federal Emergency Management Agency’s (“FEMA”)
regulations and policies relating to arbitration under the Hermit’s Peak Fire Assistance Act, Pub.
L. No. 117-180, § 104, 136 Stat. 2114, 2168 (2022)(“Hermit’s Peak Act”) that (a) require a
claimant to exhaust an administrative appeal before proceeding to arbitration on a disputed claim,
(b) restrict arbitration to a review of the record of and issues raised and decided on administrative
appeal, and (c) limit arbitration to a search for substantial evidence supporting FEMA’s decision on
administrative appeal; (ii) whether Plaintiff Old Wood’s challenge to FEMA’s requirement that a
claimant exhaust an administrative appeal before proceeding to arbitration on a disputed claim is
moot, because Old Wood already has exhausted its administrative appeal and may proceed to
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arbitration; and (iii) whether the Court should grant FEMA leave to lodge supplemental documents
to the Administrative Record despite the fact that the deadline for FEMA to lodge any additional
documents to the Administrative Record -- April 14, 2025 -- has passed, because these additional
documents relate to justiciability. The Court concludes that: (i) the Court does set aside under 5
U.S.C. §§ 706(2)(A)(C) regulations and policies relating to arbitration under the Hermit’s Peak Act
that: (a) restrict arbitration to a review of the record of and issues raised and decided on
administrative appeal, and (b) limit arbitration to a search for substantial evidence supporting
FEMA’s decision on administrative appeal; (ii) the Court denies as moot Old Wood’s challenge to
FEMA’s requirement that a claimant exhaust an administrative appeal before proceeding to
arbitration on a disputed claim, because Old Wood already has exhausted its administrative appeal
and may proceed to arbitration; and (iii) the Court grants FEMA leave to lodge supplemental
documents to the court record for the sole purpose of establishing justiciability, because these
additional documents relate to justiciability. In the interest of completeness, the Court also allows
Old Wood to supplement the court record with the remainder of the Appeals Record documents for
the sole purpose of establishing justiciability.
FACTUAL BACKGROUND
First, the Court describes the Hermit’s Peak/Calf Canyon Fire and the creation of the
Hermit’s Peak Act. 	Second, the Court discusses the Judicial Review provision of the Hermit’s
Peak Act, HPA § 104(i). 	Third, the Court quotes the relevant Hermit’s Peak Act section, the
Arbitration provision, HPA § 104(h)(3). Then, the Court quotes the relevant portions of FEMA’s
Rules and Regulations and Policy Guide. Finally, the Court describes the Plaintiff.
1. 	Overview of the Hermit’s Peak/Calf Canyon Fire and the Hermit’s Peak Act.
The Hermit’s Peak/Calf Canyon Fire began in northeastern New Mexico on April, 2022,
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when the United States Forest Service (“Forest Service”) initiated a prescribed burn in the Santa
Fe National Forest in San Miguel County that quickly spread beyond federal land and turned into
a wildfire. See Dolan v. FEMA, 760 F. Supp. 3d 1200, 1208-09 (D.N.M. 2024)(Browning, J.)(
citing Hermit’s Peak Act § 102(a) Findings and Purposes, 136 Stat. 2144, 2168 (“Hermit’s Peak
Act § 102(a)”)). 	A second wildfire also began nearby on April 19, 2022, when a dormant pile
burn1 from the prior winter reemerged. 	See Dolan v. FEMA, 760 F. Supp. 3d at 1209 (citing
Hermit’s Peak Act § 102(a)). 	The two wildfires merged and scorched 340,000 acres of land in
northeastern New Mexico, destroying over 900 structures and forcing over 15,000 households to
evacuate. See Dolan v. FEMA, 760 F. Supp. 3d at 1208 (citing Hermit’s Peak Act § 102(a)). In
September, 2022, Congress establishes a dedicated relief fund to compensate Hermit’s Peak/Calf
Canyon Fire victims by enacting the Hermit’s Peak Act, § 102(b), 136 Stat. at 2169 (“§ 102(b)”).
The Hermit’s Peak Act provides funding to compensate persons whom the fire injures, and
establishes within FEMA an Office of Hermit’s Peak/Calf Canyon Fire Claims, which Congress
vests with the authority to “receive, process, and pay claims in accordance with this Act.” §
104(a)(2)(A), (B). 	The Hermit’s Peak Act requires FEMA’s Administrator to publish in the
Federal Register interim final regulations for the processing and payment of claims within forty-
five days of the date of enactment of the Hermit Peak’s Act. See §§ 103(1)(A), 104(f)(1).
2. 	The Judicial Review Provision, § 104(i).
Section 104 of the Hermit’s Peak Act is entitled “Compensation for Victims of Hermit’s
Peak/Calf Canyon Fire.” This section provides for the establishment of a Claims Office, which is
1 A pile burn “is a type of prescribed fire where firefighters pile and burn forest debris to
reduce 	an 	area’s 	wildfire 	risk.” 	Pile 	Burning, 	United 	States 	Forest 	Service,
https://www.fs.usda.gov/detail/arp/landmanagement/resourcemanagement/?cid=fsm91_058291
(last accessed Dec. 6, 2024).
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responsible for receiving, processing, and paying claims in accordance with the Hermit’s Peak
Act. See § 104(a)(2). Section 104 requires claimants to submit claims to the Claims Office and
investigation of the claims by the Administrator of the Claims Office, who is required to determine
and fix the amount of compensation within 180 days of the date a claim is first submitted. See §
104(b), (c), (d)(1)(A)(i); Gallegos et al. v. Federal Emergency Management Agency, 2025 WL
961665, at * 33 (D.N.M. 2025)(Browning, J.). 	If a claimant is dissatisfied with FEMA’s
determination of the amount of a claim, section 104 permits a claimant to seek judicial review
within sixty days. See § 104(i).
The complete text of § 104(i) states:
(i) 	Judicial Review. --
(1) 	IN GENERAL. -- Any claimant aggrieved by a final decision of the
Administrator under this Act may, not later than 60 days after the
date on which the decision is issued, bring a civil action in the
United States District Court for the District of New Mexico, to
modify or set aside the decision, in whole or in part.
(2) 	RECORD. -- The court shall hear a civil action under paragraph (1)
on the record made before the Administrator.
(3) 	STANDARD. -- The decision of the Administrator incorporating
the findings of the Administrator shall be upheld if the decision is
supported by substantial evidence on the record considered as a
whole.
HPA § 104(i). The Court hereinafter refers to HPA § 104(i) as the “Judicial Review Provision.”
3. 	The Arbitration Provision, § 104(h)(3).
As an alternative to judicial review, a claimant may elect to proceed to binding arbitration
to “settle the claim through arbitration,” which precludes a claimant from seeking judicial review.
§ 104(h)(3)(B), (C).
The complete text of § 104(h)(3) states:
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(3) ARBITRATION. --
(A) 	IN GENERAL. -- Not later than 45 days after the date of
enactment 	of 	this 	Act, 	the 	Administration 	shall 	establish 	by
regulation procedures under which a dispute regarding a claim
submitted under the Act may be settled by arbitration.
(B) 	ARBITRATION AS REMEDY. -- On establishment of
arbitration procedures under subparagraph (A), an injured person
that submits a disputed claim under this Act may elect to settle the
claim through arbitration.
(C) 	BINDING EFFECT. -- An election by an injured person to
settle a claim through arbitration under this paragraph shall --
(i) 	be binding; and
(ii) 	preclude any exercise by the injured person of the
right to judicial review of a claim described in
subsection (i).
HPA § 104(h)(3). The Court hereinafter refers to HPA § 104(h)(3) as the “Arbitration provision.”
4. 	FEMA Regulations and Policies Regarding the Arbitration Procedures Under
the Hermit’s Peak Act.
On November 14, 2022, FEMA publishes Interim Final Rules and Regulations in the
Federal Register. 	See 87 Fed. Reg. No. 218 p. 68085 et seq. 	After interested parties lodge
comments about the interim regulations, FEMA publishes Final Rules and Regulations for the
processing of claims for compensation under the Hermit’s Peak Act on August 29, 2023. See 44
C.F.R. § 296.1-296.43; 88 Fed. Reg. No. 166 p. 59777 et seq.
Section 296.42 of FEMA’s Final Rules and Regulations establishes arbitration procedures.
See 44 C.F.R. § 296.42. To initiate arbitration, a claimant must submit “a written request to the
Arbitration Administrator . . . . no later than 60 days after the date that appears on the Administrative
Appeal decision.” 	44 C.F.R. § 296.42(a). 	Along with subsection (a), subsection (b) states that
claimants may not arbitrate “an issue unless it was raised and decided in the Administrative
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Appeal.” 	44 C.F.R. § 296.42(b). 	It further provides that arbitration “will be conducted on the
evidence in the Administrative Record” and that “evidence not previously entered into the
Administrative Record will not be considered.” 44 C.F.R. § 296.42(b).
After the publication of the claims-processing and arbitration procedures in the Federal
Register, FEMA also publishes on its website the Hermit’s Peak/Calf Canyon Program and Policy
Guide, which outlines FEMA’s policy and provides guidance regarding the claims process under
the Hermit’s Peak Act. 	Hermit’s Peak/Calf Canyon Claims Program and Policy Guide, Version
2.0, 	Effective 	August 	8, 	2025, 	FEMA, 	https://www.fema.gov/sites/default/files/documents/
fema_hpcc-hermits-peak-calf-canyon_program-and-policy-guide.pdf. (“Policy Guide”). 	FEMA
issues the Policy Guide “to articulate the agency’s intent and direction when implementing statutory
and regulatory authority.” 	Policy Guide, § 1.4 at 7. 	The Policy Guide’s description of how to
conduct arbitrations closely mirrors that of the Rules and Regulations, and it reiterates the
requirements in 44 C.F.R. § 296.42(a) and (b) that a claimant must exhaust an administrative appeal
before requesting arbitration. 	See Policy Guide, § 12.2, at 97. 	In addition, however, the Policy
Guide imposes a substantial evidence standard of review on arbitration, limiting arbitration to a
search for substantial evidence supporting FEMA’s decision. See Policy Guide, § 12.2, at 97 (“The
arbitrators will review the record for substantial evidence supporting the decision and will uphold
the claim decision if it is supported by substantial evidence on the record considered as a whole.”).
5. 	Old Wood.
Old Wood is a family-owned-and-operated New Mexico limited liability company. 	See
Opening Brief at 10. The company’s manager is its founder, David J. Old, who works with his son
Shiloh and daughter Mika. See Opening Brief at 10. D. Old starts the company as a sawmill and
lumber business, and in the late 1990s, D.Old expands the business to include fine wood flooring,
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which Old Wood sells internationally. 	See Opening Brief at 10. 	Old Wood operates a 10,000
square foot factory in Las Vegas, New Mexico, making wood flooring. See Opening Brief at 10.
Old Wood later expands into the packaged firewood business, and sells packaged firewood to chain
stores nationwide. See Opening Brief at 10. The company builds a 28,000 square foot facility on
the outskirts of Las Vegas to package the firewood and ship it to customers. See Opening Brief at
10. Old Wood employs twenty-eight full-time employees before the Hermit’s Peak Fire, but must
decrease this number after the fire. See Opening Brief at 10. The Hermit’s Peak Fire destroys Old
Wood’s supply of firewood and wood flooring, which is located at a large private ranch within the
fire’s burn scar. See Opening Brief at 11. Old Wood is unable to replace its local wood supply,
and what wood it can get comes from afar, which imposes increased transportation costs and
decreases profits. See Opening Brief at 11. Old Wood alleges that the fire causes “Old Wood LLC
to suffer a substantial loss of net business income, past and future.” Opening Brief at 11.
PROCEDURAL BACKGROUND
The Court discusses the briefing on both motions in chronological order. The Court first
discusses Old Wood’s Opening Brief and FEMA’s Response to Old Wood’s Opening Brief. Next,
the Court summarizes FEMA’s Motion to Supplement and Old Wood’s Response to the Motion to
Supplement. 	Then, the Court discusses the Old Wood’s Reply to the Opening Brief before
discussing FEMA’s Surreply to the Opening Brief. Finally, the Court summarizes FEMA’s Reply
to the Motion to Supplement.
1. 	Old Wood’s Opening Brief.
Old Wood’s Opening Brief challenges the arbitration process that FEMA establishes for
claims that claimants bring under the Hermit’s Peak Act. See Opening Brief at 2-3. Old Wood
argues that the Court must set aside under the APA, 5 U.S.C. § 706(2)(A), as arbitrary and
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capricious, an abuse of discretion, or otherwise not in accordance with law, specific FEMA
regulations and policies controlling arbitration under the Hermit’s Peak Act: (i) requiring a claimant
to exhaust an administrative appeal before proceeding to arbitration on a disputed claim; (ii)
restricting arbitration to a review of the issues raised and decided on administrative appeal, relying
only on the record from the administrative appeal; and (iii) limiting arbitration to a search for
substantial evidence supporting FEMA’s decision on administrative appeal. See Opening Brief at
2-3. Old Wood contends that the arbitration provision of the Hermit’s Peak Act allows a claimant
to elect to bypass administrative appeal and submit a claim to de novo arbitration once FEMA
disputes its claim in a final letter of determination. See Opening Brief at 15. Old Wood concludes,
therefore, that FEMA impermissibly rewrites the Hermit’s Peak Act to insert administrative appeal
into the arbitration process. 	See Opening Brief at 16. 	Old Wood argues additionally that the
limitation of arbitration to a substantial evidence standard of review is invalid because the Policy
Guide, a guidance document, and not a regulation, establishes the standard of review. See Opening
Brief at 31. Old Wood maintains that this procedure is therefore invalid, because the Hermit’s Peak
Act requires FEMA to establish arbitration procedures by regulation. 	See Opening Brief at 31.
2. 	FEMA’s Response to the Opening Brief.
In response to Old Wood’s Opening Brief, FEMA argues that Congress tasks FEMA under
the Hermit’s Peak Act with establishing procedures for both the processing of claims and for
arbitration, and that these delegations of authority are broad, offering little direction on how
claimants 	can 	proceed 	to 	arbitration 	or 	how 	that 	arbitration 	is 	to 	be 	conducted. 	See
Defendants/Respondents’ Response Brief at 1, filed November 12, 2025 (Doc. 68)(“Response”).
FEMA contends that it follows the structure of the Hermit’s Peak Act by creating “a parallel process
wherein a claim that is disputed after FEMA’s final decision may be resolved either in binding
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arbitration or by judicial review,” and that the challenged arbitration procedures apply equally to
judicial review. Response at 1. FEMA further argues that the application of identical standards
and procedures for arbitration and judicial review is compatible with the Hermit’s Peak Act,
preventing forum shopping and inconsistent outcomes, and therefore is not arbitrary or capricious
such that the Court should invalidate the procedures under the APA. 	See Response at 1.
Additionally, FEMA argues that Old Wood’s challenge to the requirement that a claimant must
exhaust an administrative appeal before beginning the arbitration process is moot, because Old
Wood has completed the administrative appeal process. See Response at 14. FEMA contends that,
in fact, Old Wood’s claim is pending arbitration, which is stayed at Old Wood’s request. 	See
Response at 14.
3. 	FEMA’s Motion to Supplement.
On the same day that FEMA files its Response, FEMA also files its Motion to Supplement.
FEMA moves to lodge a supplement to the Administrative Record regarding Old Wood’s claims
for compensation under the Hermit’s Peak Act; specifically, FEMA wants to add documents that
demonstrate the current status of Old Wood’s administrative appeal and arbitration. See Motion to
Supplement at 1-2. FEMA asserts that the documents are not “properly part of the Administrative
Record for [Old Wood’s] challenge to FEMA’s rulemaking and Policy Guide,” but instead relate
to Old Wood’s standing to bring its challenge to FEMA’s arbitration procedures under the Hermit’s
Peak Act. Motion to Supplement at 1. The deadline for FEMA to lodge any additional documents
to the Administrative Record is April 14, 2025. See Motion to Supplement at 4. FEMA argues,
however, that the Court should permit FEMA to supplement the record, because the documents it
seeks to add relate to standing, and the Tenth Circuit allows standing supplementation at any time
during the briefing stage. See Motion to Supplement at 7-8.
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4. 	Old Wood’s Response to the Motion to Supplement/Conditional Cross Motion
to Supplement.
In response to the Motion to Supplement, Old Wood contends, first, that the motion is
untimely, and that FEMA’s delay in filing the motion prejudices Old Wood, because Old Wood is
“unable to address the appeal decision in its Opening Brief,” and because “it is unclear what its
counsel can and cannot argue in Reply as the Administrative Record is not settled.” 	Old Wood
LLC’s Response to FEMA’s Motion to Supplement Record/Conditional Cross Motion to
Supplement Administrative Record at 1, 4-5, filed December 9, 2025 (Doc. 72)(“Response to
Motion to Supplement”). Second, Old Wood argues that the Motion to Supplement is procedurally
defective, because the Motion to Supplement seeks to supplement the record with selected
documents rather than the whole of the Appeal Section’s records, and that these selected documents
present an “incomplete and biased view of the proceedings.” Response to Motion to Supplement
at 1. In the event that the Court grants FEMA’s motion, Old Wood moves to supplement the record
with the entire Appeal Section’s Old Wood files. See Response to Motion to Supplement at 2.
5. 	Old Wood’s Reply for the Opening Brief.
In reply to the Response to the Opening Brief, Old Wood reiterates its statutory
interpretation arguments and contends that the Court does not owe any deference to FEMA’s
interpretation of the Hermit’s Peak Act. 	See Old Wood LLC’s Reply on the Merits at 6, filed
December 9, 2025 (Doc. 74)(“Reply”). 	Old Wood also contends that its challenge to FEMA’s
appeal requirement is not moot. See Reply at 11. First, Old Wood references FEMA’s Motion to
Supplement, discussed above, and states that, if the Court denies the Motion to Supplement, then
there is no factual basis in the Administrative Record to support the mootness argument. See Reply
at 11. 	Old Wood maintains that, even if the Court grants FEMA’s Motion to Supplement, its
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challenge is not moot, because Old Wood suffers procedural injuries and continues to suffer injuries
stemming from the denial of Old Wood’s procedural 	right 	under 	Hermit’s 	Peak 	Act 	§
104(d)(1)(A)(i) “to receive a judicially reviewable decision within 180 days of its filing of a Notice
of Loss.” See Reply at 11. Old Wood also argues that it is likely to suffer future procedural and
financial injury from the appeal requirement, because it is “the cornerstone of the challenged
arbitration rules, which depend on the existence of an appeal record and decision and heavily bias
the arbitral process in FEMA’s favor,” making it likely that an arbitral award will be less than it
would be in the absence of such restrictions. Reply at 11. Old Wood contends that the fact that it
suffers a procedural injury results in a higher burden on FEMA to establish mootness, because a
litigant can assert a violation of procedural rights “without meeting all the normal standards for
redressability and immediacy.” 	Reply at 11. 	Old Wood also alludes to a voluntary cessation
argument, stating that FEMA bears a particularly heavy burden of establishing mootness given that
“the basis for mootness is FEMA’s own voluntary conduct of forging ahead with an appeal decision
in the face of the pendency of this action . . . .” Reply at 13.
6. 	FEMA’s Surreply for the Opening Brief.
In surreply to the Opening Brief, FEMA argues that Old Wood does not refute that its
challenge to the appeal requirement is moot, and reiterates its arguments that the challenged rules
are valid exercises of FEMA’s authority to establish claims-processing and arbitration procedures.
See Defendants/Respondents’ Surreply Brief at 1, filed December 15, 2025 (Doc. 76)(“Surreply”).
FEMA also responds to Old Wood’s voluntary cessation argument, stating that the voluntary
cessation argument does not apply, because there is no showing that “FEMA might -- or could --
reimpose the appeal requirement on Old Wood in the future.” Surreply at 9. 	FEMA argues that
FEMA cannot renew the Appeal Requirement on Old Wood in the future, because Old Wood’s
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appeal is complete, and its claim is awaiting arbitration. See Surreply at 9.
7. 	FEMA’s Reply for the Motion to Supplement.
In reply to the Response to the Motion to Supplement, FEMA reiterates that, although the
supplemental documents are not properly part of the Administrative Record for Old Wood’s
challenge to FEMA’s rulemaking, FEMA submits this evidence to the Court under an exception for
documents related to standing. 	See Respondents’ Reply in Support of Motion to Lodge a
Supplement to the Administrative Record and Response to Petitioner’s Conditional Cross-Motion
to Supplement Administrative Record at 1, filed December 23, 2025 (Doc. 80)(“Reply to Motion
to Supplement”). FEMA clarifies that it “submits a supplement to the Administrative Record, with
that supplement being outside of the Administrative Record and only offered for the limited purpose
of evaluating standing.” Reply to Motion to Supplement at 1-2 (emphasis in original). FEMA also
argues that the Tenth Circuit does not limit the parties’ ability to submit evidence relating to
mootness to before the Administrative Record closes or before the briefing’s commencement in the
District Court. 	See Reply to Motion to Supplement at 2. 	FEMA states that FEMA does not
prejudice Old Wood simply by filing the Motion to Supplement after Old Wood files its Opening
Brief, “because the documents are not offered as part of the underlying Administrative Record for
evaluating FEMA’s rulemaking, but rather for the limited purpose of assessing whether Petitioner
has standing.” 	Reply to Motion to Supplement at 2. 	Finally, FEMA contends that Old Wood’s
conditional Cross-Motion to Supplement the record with the entire Appeals Record does not fit
within the Tenth Circuit’s exception that allows parties to submit documents outside of the
Administrative Record for the purpose of evaluating standing and, therefore, the Cross-Motion to
Supplement should be “rejected as an attempt to expand the current Administrative Record and as
improper use of non-Administrative Record documents for arguing its case.” Reply to Motion to
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Supplement at 2-3. FEMA states, however, that it does not oppose admitting Old Wood’s lodged
documents filed in the Notice of Lodging of Documents in Support of Conditional Cross-Motion
to Supplement the Record, filed December 9, 2025 (Doc. 73), “for the sole and limited purpose of
helping the Court determine whether [Old Wood] has standing or whether the case is moot.” Reply
to Motion to Supplement at 3.
LAW REGARDING MOTIONS TO SUPPLEMENT THE ADMINISTRATIVE RECORD
“Judicial review of agency action is normally restricted to the administrative record.”
Citizens for Alternatives to Radioactive Dumping v. U.S. Dep’t of Energy, 485 F.3d 1091, 1096
(10th Cir. 2007). 	“‘The complete administrative record consists of all documents and materials
directly or indirectly considered by the agency.’” Rocky Mountain Peace & Just. Ctr. v. United
States Fish & Wildlife Serv., 40 F.4th 1133, 1160 (10th Cir. 2022)(quoting Bar MK Ranches v.
Yuetter, 994 F.2d 735, 739 (10th Cir. 1993)). “‘[T]he designation of the Administrative Record,
like any established administrative procedure, is entitled to a presumption of administrative
regularity.’” Rocky Mountain Peace & Just. Ctr., 40 F.4th at 1160 (quoting Bar MK Ranches, 994
F.2d at 740). Courts therefore must “‘assume the agency properly designated the Administrative
Record absent clear evidence to the contrary.’” Rocky Mountain Peace & Just. Ctr., 40 F.4th at
1160 (quoting Bar MK Ranches, 994 F.2d at 740). “In ‘extremely limited’ circumstances, a court
may supplement the administrative record or consider extra-record evidence.” 	Rocky Mountain
Peace & Just. Ctr., 40 F.4th at 1160 (quoting Am. Mining Cong. v. Thomas, 772 F.2d 617, 626
(10th Cir. 1985)). 	Referred to as the American Mining Congress exceptions, a court may
supplement the administrative record when: (i) “‘the record is deficient because the agency ignored
relevant factors it should have considered;’” (ii) “‘the agency considered factors that were left out
of the formal record;’” or (iii) “‘evidence coming into existence after the agency acted demonstrates
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that the actions were right or wrong.’” 	Rocky Mountain Peace & Just. Ctr., 40 F.4th at 1160
(quoting Am. Mining Cong., 772 F.2d at 626).
The United States Court of Appeals for the Tenth Circuit also allows parties to supplement
the administrative record with materials necessary to address the issue of standing. 	See U.S.
Magnesium, LLC v. U.S. E.P.A., 690 F.3d 1157, 1164-65 (10th Cir. 2012)(“U.S. Magnesium”). In
U.S. Magnesium, the Tenth Circuit explains that:
Generally, parties petitioning for review of agency decisions may only rely on
evidence in the administrative record, but, as we have recognized, ‘[b]ecause Article
III’s standing requirement does not apply to agency proceedings, [the petitioner] had
no reason to include facts sufficient to establish standing as part of the administrative
record.’
U.S. Magnesium, 690 F.3d at 1164 (quoting Quest Commc’ns Int’l v. FCC 886, 892 (10th Cir.
2001)). Thus, in instances where the case originates in a court or agency not subject to Article III’s
requirements, the parties should “‘take pains to supplement the record in any manner necessary to
enable [the Court] to address with as much precision as possible any question of standing that may
be raised.’” U.S. Magnesium, 690 F.3d at 1165 (quoting Pennell v. City of San Jose, 485 U.S. 1, 8
(1988)). 	Accordingly, in U.S. Magnesium, the Tenth Circuit determines that it is appropriate to
consider supplemental documents to the administrative record for the purpose of establishing
standing, but limits the use of these documents only for this purpose. See U.S. Magnesium, 690
F.3d at 1165 (“[W]e accept the Bird Declaration for the sole purpose of determining whether U.S.
Magnesium has standing to bring this challenge.”).
Several other Courts of Appeals apply this same standard. 	In Northwest Environmental
Defense Center v. Bonneville Power Admin., 117 F.3d 1520 (9th Cir. 1997), the United States
Court of Appeals for the Ninth Circuit concludes that:
Because Article III’s standing requirement does not apply to agency proceedings,
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petitioners had no reason to include facts sufficient to establish standing as part of
the administrative record. 	We therefore consider the affidavits not in order to
supplement the administrative record on the merits, but rather to determine whether
petitioners can satisfy a prerequisite to this court’s jurisdiction.
Northwest Environmental Defense Center v. Bonneville Power Admin., 117 F.3d at 1527-28.
Similarly, in Prometheus Radio Project v. FCC, 939 F.3d 567 (3d Cir. 2019), rev’d on other
grounds, 592 U.S. 414 (2021), the United States Court of Appeals for the Third Circuit states: “It
is well established that petitioners challenging agency action may supplement the administrative
record for the purpose of establishing Article III standing, even though judicial review of agency
action is usually limited to the administrative record.” 939 F.3d at 578.
LAW REGARDING MOOTNESS
Article III, Section 2 of the Constitution of the United States limits the federal courts'
jurisdiction to actual cases and controversies. See U.S. CONST. art. III § 2. “Federal courts are
without authority to decide questions that cannot affect the rights of litigants in the case before
them.” 	Ford v. Sully, 773 F. Supp. 1457, 1464 (D. Kan. 1991)(O'Connor, C.J.)(citing North
Carolina v. Rice, 404 U.S. 244, 246 (1971)). “To qualify as a case fit for federal-court adjudication,
an actual controversy must be extant at all stages of review, not merely at the time the complaint is
filed.” Arizonians for Official English v. Arizona, 520 U.S. 43, 67 (1997).
The Tenth Circuit recognizes a distinction between mootness and standing in Lucero v.
Bureau of Collection Recovery, Inc:
Like Article III standing, mootness is oft-cited as a constitutional limitation
on federal court jurisdiction. E.g., Building & Constr. Dep't v. Rockwell Int'l Corp.,
7 F.3d 1487, 1491 (10th Cir. 1993)(“Constitutional mootness doctrine is grounded
in the Article III requirement that federal courts only decide actual, ongoing cases
or 	controversies.”); see Matthew 	I. 	Hall, The 	Partially 	Prudential 	Doctrine
of Mootness, 77 GEO. W ASH. L. REV. 562, 571 (2009)(citing footnote 3 in Liner v.
Jafco, Inc., 375 U.S. 301, 306 (1964), as the first occasion in which the Supreme
Court expressly derived its lack of jurisdiction to review moot cases from Article
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III). But although issues of mootness often bear resemblance to issues of standing,
their conceptual boundaries are not coterminous. See Friends of the Earth, Inc. v.
Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 189-92 (2000).
Lucero v. Bureau of Collection Recovery, Inc., 639 F.3d 1239, 1242-43 (10th Cir. 2011).
Nevertheless, the doctrines are closely related. As the Supreme Court explains, “[a]t all stages of
litigation, a plaintiff must maintain a personal interest in the dispute,” and “[t]he doctrine of standing
generally assesses whether that interest exists at the outset, while the doctrine of mootness considers
whether it exists throughout the proceedings.” Uzuegbunam v. Preczewski, 592 U.S. 279, 282
(2021)(Thomas, J.). See Henry P. Monaghan, Constitutional Adjudication: The Who and When,
82 YALE L.J. 1363, 1384 (1973)(“Mootness is . . . the doctrine of standing set in a time frame: The
requisite personal interest that must exist at the commencement of the litigation (standing) must
continue throughout its existence (mootness).”).
Accordingly, if a case is moot, or becomes moot during any stage of the case, the court
does not have jurisdiction to hear the case. A case becomes moot “when the issues presented are
no longer ‘live’ or the parties lack a legally cognizable interest in the outcome.” County of Los
Angeles v. Davis, 440 U.S. 625, 631 (1979)(citing Powell v. McCormack, 395 U.S. 486, 496
(1969)). 	The burden of establishing mootness is a heavy one. See Cnty. of Los Angeles v. Davis,
440 U.S. at 631. 	Courts are permitted to take into account the relative likelihood of the events
which a party asserts keep the dispute from becoming moot. See Golden v. Zwickler, 394 U.S. 103,
109 (1969). A case can become moot based on intervening events, such as settling the case, see
U.S. Bancorp Mortgage Co. v. Bonner Mall P’ship, 513 U.S. 18, 25 (1994), or becoming a resident
of the State whose residency laws one is challenging, see Sosna v. Iowa, 419 U.S. 393, 399 (1975).
The Supreme Court historically recognizes two “exceptions” to the general rule against
consideration of moot cases. Voter Reference Found., LLC v. Torrez, No. CIV 22-0222 JB/KK,
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2024 WL 4008163, at * 24 (D.N.M. Aug. 30, 2024)(Browning, J.). First, “a case or controversy is
not moot if the dispute is ‘capable of repetition, yet evading review.’” N.M. Health Connections v.
United States HHS, 956 F.3d 1138, 1159 (10th Cir. 2019)(quoting Brown v. Buhman, 822 F.3d
1151, 1166 (10th Cir. 2016)). 	“This exception ‘applies where (1) the challenged action is in its
duration too short to be fully litigated prior to cessation or expiration, and (2) there is a reasonable
expectation that the same complaining party will be subject to the same action again.’” N.M. Health
Connections v. United States HHS, 956 F.3d at 1159 (quoting Brown v. Buhman, 822 F.3d at 1166).
“Second, ‘voluntary cessation of challenged conduct does not ordinarily render a case moot because
a dismissal for mootness would permit a resumption of the challenged conduct as soon as the case
is dismissed.’” N.M. Health Connections v. United States HHS, 956 F.3d at 1159 (quoting Brown
v. Buhman, 822 F.3d at 1166). 	The Tenth Circuit explains that “[t]his exception is designed to
counteract gamesmanship, such as ‘a defendant ceasing illegal action long enough to render a
lawsuit moot’ before ‘resuming the illegal conduct.’” N.M. Health Connections v. United States
HHS, 956 F.3d at 1159 (quoting Ind v. Colo. Dep’t of Corr., 801 F.3d 1209, 1214 (10th Cir. 2015)).
This exception does not apply, however, if it is “‘absolutely clear the allegedly wrongful behavior
could not reasonably be expected to recur.’” N.M. Health Connections v. United States HHS, 956
F.3d at 1159 (quoting Brown v. Buhman, 822 F.3d at 1166). 	“Government ‘self-correction . . .
provides a secure foundation for mootness so long as it seems genuine.’” N.M. Health Connections
v. United States HHS, 956 F.3d at 1159 (quoting 13C C HARLES ALAN WRIGHT, ARTHUR R. MILLER,
& EDWARD H. COOPER, FED. PRAC. & PROC. JURIS. § 3533.7 (3rd ed. 2008)).
LAW REGARDING THE APA’S JUDICIAL REVIEW PROVISIONS
The Court reviews agency action under the APA, 5 U.S.C. §§ 701-706. The APA describes
the exclusive mechanism -- unless another statute provides an alternative or supplemental
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mechanism -- by which the federal district courts may review the actions of federal administrative
agencies. See Webster v. Doe, 486 U.S. 592, 607 (1988)(Scalia, J., dissenting). “The [APA] makes
final agency action for which there is no adequate remedy in a court subject to judicial review.”
Utahns for Better Transp. v. United States Dep’t of Transp., 305 F.3d 1152, 1164 (10th Cir. 2002).
Because the Hermit’s Peak Act does not provide a private right of action, courts review final agency
action under the APA.
1. 	The APA Does Not Impart Subject-Matter Jurisdiction, but It Waives
Sovereign Immunity.
The APA does not, through § 702, create an independent basis of subject-matter jurisdiction.
See Eagle-Picher Indus., Inc. v. United States, 901 F.2d 1530, 1531 (10th Cir. 1990). The APA
allows for judicial review of final agency action only if there is also an independent basis for
subject-matter jurisdiction. See Colo. Dep’t of Soc. Servs. v. Dep’t of Health & Human Servs., 558
F. Supp. 337, 339 (D. Colo. 1983)(Matsch, J.). Notably, before a court may review a party’s
grievance, the party must demonstrate that statutes do not preclude judicial review and that the law
does not commit the action to agency discretion. See Heckler v. Chaney, 470 U.S. 821, 828 (1985).
Section 702 waives sovereign immunity, and makes clear that suits under the APA are for equitable
relief only and not for damages. See 5 U.S.C. § 702.
Through 5 U.S.C. § 702, Congress provides “a general waiver of the government’s
sovereign immunity from injunctive relief.” United States v. Murdock Mach. & Eng’g Co. of Utah,
81 F.3d 922, 930 n.8 (10th Cir.1996). “This waiver is not limited to suits under the Administrative
Procedure Act.” Simmat v. U.S. Bureau of Prisons, 413 F.3d 1225, 1233 (10th Cir. 2005).
Whether plaintiffs’ claims arise under the APA or common law is also
immaterial with respect to the sovereign immunity analysis. Under 5 U.S.C. § 702,
the United States waives sovereign immunity as to actions in a court of the United
States seeking relief other than money damages and stating a claim that an agency
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or an officer or employee thereof acted or failed to act in an official capacity or under
color of legal authority.
Gilmore v. Weatherford, 694 F.3d 1160, 1166 n.1 (10th Cir. 2012)(internal citations and quotation
marks omitted). See Trudeau v. Fed. Trade Comm’n, 456 F.3d 178, 186 (D.C. Cir. 2006)(holding
that “the APA’s waiver of sovereign immunity applies to any suit whether under the APA or not”);
Chamber of Commerce v. Reich, 74 F.3d 1322, 1328 (D.C. Cir. 1996)(holding the same).
2. 	Cases Arising From Agency Actions as Appeals.
Pursuant to Olenhouse v. Commodity Credit Corp., 42 F.3d 1560 (10th Cir. 1994),
“[r]eviews of agency action in the district courts [under the APA] must be processed as appeals. In
such circumstances the district court should govern itself by referring to the Federal Rules of
Appellate Procedure.” 42 F.3d at 1580. See Wyoming v. United States Dep’t of Interior, 587 F.3d
1245, 1251 n.2 (10th Cir. 2009) (quoting Olenhouse v. Commodity Credit Corp., 42 F.3d at 1580).
District courts may not entertain motions for summary judgment or any other procedural devices
that shift the appellant’s substantial burden -- arbitrary-or-capricious review for questions of fact -
- onto the agency. See Olenhouse v. Commodity Credit Corp., 42 F.3d at 1579-80.
3. 	“Substantial Evidence” Review.
Under the APA, a reviewing court must accept an agency’s factual determinations in
informal proceedings unless they are “arbitrary [or] capricious” and, in appeals from formal
proceedings, unless they are “unsupported by substantial evidence.” 	5 U.S.C. § 706(2)(A), (E).
Although these standards appear different, the modern view is that they are the same, and that a
decision is arbitrary and capricious if substantial evidence does not support it. See Pennaco Energy,
Inc. v. U.S. Dep't of Interior, 377 F.3d 1147, 1156 (10th Cir. 2004)(“Thus, agency action, whether
it is classified as ‘formal’ or ‘informal,’ will be set aside as arbitrary unless it is supported by
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‘substantial evidence’ in the administrative record.”); Ass’n of Data Processing Serv. Orgs., Inc. v.
Bd. of Govs. of the Fed. Reserve Sys., 745 F.2d 677, 683-84 (D.C. Cir. 1984). 	In reviewing a
decision under the arbitrary-or-capricious standard, the court reviews the entire administrative
record -- or at least those portions of the record that the parties provide -- but it may not consider
materials outside of the administrative record.2 See 5 U.S.C. § 706. Section 706(2)(F) of the APA
provides that “[t]he reviewing court shall . . . hold unlawful and set aside agency action, findings,
and conclusions found to be . . . unwarranted by the facts to the extent that the facts are subject to
trial de novo by the reviewing court.” 5 U.S.C. § 706(2)(F).
In cases where Congress has provided for judicial review without setting forth the
standards to be used or procedures to be followed in conducting that review, the
Supreme Court has advised such review shall be confined to the administrative
record and, in most cases, no de novo proceedings may be had.
Franklin Sav. Ass’n v. Dir., Office of Thrift Supervision, 934 F.2d 1127, 1137 (10th Cir.1991). See
Fed. R. App. P. 16 (“The record on review or enforcement of an agency order consists of . . . the
order involved; . . . any findings or report on which it is based; and . . . the pleadings, evidence, and
other parts of the proceedings before the agency.” (emphasis added)). The court does not pass
judgment on the wisdom or merits of the agency’s decision. See Colo. Envtl. Coal. v. Dombeck,
185 F.3d 1162, 1172 (10th Cir. 1999). To fulfill its function under the arbitrary-or-capricious
standard of review, however, a reviewing court engages in a “thorough, probing, in-depth review”
of the administrative record. Wyoming v. United States, 279 F.3d 1214, 1238 (10th Cir.
2002)(citation omitted). The Tenth Circuit explains the relevant standard of review:
In determining whether the agency acted in an arbitrary and capricious manner, we
must ensure that the agency decision was based on a consideration of the relevant
2 Section 706(2)(F) of the APA provides that “[t]he reviewing court shall . . . hold unlawful
and set aside agency action, findings, and conclusions found to be . . . unwarranted by the facts to
the extent that the facts are subject to trial de novo by the reviewing court.” 5 U.S.C. § 706(2)(F).
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factors and examine whether there has been a clear error of judgment. We consider
an agency decision arbitrary and capricious if the agency . . . relied on factors which
Congress had not intended it to consider, entirely failed to consider an important
aspect of the problem, offered an explanation for its decision that runs counter to the
evidence before the agency, or is so implausible that it could not be ascribed to a
difference in view or the product of agency expertise.
Colo. Envtl. Coal. v. Dombeck, 185 F.3d at 1167 (omission in original)(citations omitted)(quoting
Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983))(internal
quotation marks omitted). The standard of review requires the district court “to engage in a
substantive review of the record to determine if the agency considered relevant factors and
articulated a reasoned basis for its conclusions.” Olenhouse v. Commodity Credit Corp., 42 F.3d
at 1580. While the court may not invent a reasoned basis for the agency’s action that the agency
did not give, the court should “uphold a decision of less than ideal clarity if the agency’s path may
reasonably be discerned.” Bowman Transp., Inc. v. Ark.-Best Freight Sys., Inc., 419 U.S. 281, 286
(1974)(citations omitted). The agency must articulate the same rationale for its findings and
conclusions on appeal upon which it relies in its internal proceedings. See Sec. Exchange Comm’n
v. Chenery Corp., 318 U.S. 80, 94 (1943).
4. 	Review of Legal Issues in APA Cases.
In promulgating and enforcing regulations, agencies must interpret the content of the
Constitution, statutes, and their own previously enacted regulations. 	Courts used to afford
“considerable deference to agencies’ interpretations of their own organic statutes -- the statutes
Congress has tasked an agency with enforcing, from which it derives its authority to act” under a
deference known as Chevron deference, named after the first case adopting the approach, Chevron,
U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). 	New Mexico v.
McAleenan, 450 F. Supp. 3d 1130, 1168 (D.N.M. 2020)(Browning, J.). 	Chevron deference
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involves a two-step process, first asking whether the statutory provision in question is clear and
then, if the statutory provision is ambiguous, asking whether the agency’s interpretation of the
unclear statute is a reasonable one. See New Mexico v. McAleenan, 450 F. Supp. 3d at 1168. The
Supreme Court overrules Chevron deference, however, in Loper Bright Enterprises v. Raimondo,
603 U.S. 369 (2024)(“Loper Bright”). 	In lieu of Chevron’s presumption, the Supreme Court
observes that “[t]he better presumption is . . . that Congress expects courts to do their ordinary job
of interpreting statutes, with due respect for the views of the Executive Branch.” Loper Bright, 603
U.S. at 403. 	What takes the place of Chevron deference is: ordinary judicial interpretation of
statutes, with courts free to review and reject statutory interpretations that federal agencies offer.
See Loper Bright, 603 U.S. at 403.
ANALYSIS
The Court first addresses the Motion to Supplement and determines that FEMA may
supplement the court record with records pertaining to mootness for the exclusive purpose of
determining justiciability. 	In the interest of completeness, the Court also allows Old Wood to
supplement the court record with the entirety of the Appeals Section’s records, also for the limited
purpose of determining justiciability. Next, the Court discusses whether FEMA’s completion of
Old Wood’s administrative appeal moots Old Wood’s challenge to FEMA’s regulation requiring a
claimant to exhaust an administrative appeal before proceeding to arbitration on a disputed claim
(“Appeal Requirement”), and the Court determines that it does. 	Finally, the Court considers
whether the Court should set aside as arbitrary and capricious, and abuse of discretion, or otherwise
not in accordance with law under the APA the remaining FEMA regulations and policies which
Old Wood challenges: (i) regulations that restrict arbitration to a review of the record of the
administrative appeal and to issues that the parties raise in the administrative appeal and FEMA
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decides on administrative appeal (“Record Requirement”), and (ii) limiting arbitration to a search
for substantial evidence supporting FEMA’s decision on administrative appeal (“Standard of
Review Requirement”). 	The Court concludes that both of the above-described rules are not in
accordance with law under the APA, and, accordingly, the Court sets aside these regulations and
policies.
I. 	THE COURT ALLOWS BOTH OLD WOOD AND FEMA TO SUPPLEMENT THE
COURT 	RECORD 	FOR 	THE 	EXCLUSIVE 	PURPOSE 	OF 	DETERMINING
JUSTICIABILITY.
“When a court evaluates whether an agency has complied with the APA, its review ‘is
generally based on the full administrative record that was before all decision makers.’” 	Rocky
Mountain Peace & Justice Ctr., 40 F.4th at 1160 (quoting Bar MK Ranches, 994 F.2d at 739).
Documents that post-date the challenged agency action are generally not part of the administrative
record, as “[t]he complete administrative record consists of all documents and materials directly or
indirectly considered by the agency.” 	Rocky Mountain Peace & Justice Ctr., 40 F.4th at 1160
(quoting Bar MK Ranches, 994 F.2d at 739). There are limited circumstances where the Court may
supplement the administrative record or consider extra-record evidence: “(1) the record is deficient
because the agency ignored relevant factors it should have considered, (2) the agency considered
factors that were left out of the formal record, and (3) evidence coming into existence after the
agency acted demonstrates that the actions were right or wrong.” Rocky Mountain Peace & Justice
Ctr., 40 F.4th at 1160 (internal citation and quotations omitted).
For an Article III court to properly hear a case, there must be a live case or controversy. See
Hydro Res., Inc. v. United States EPA, 608 F.3d 1131, 1144 (10th Cir. 2020)(“Under Article III,
federal courts have jurisdiction only to decide ‘Cases’ and ‘Controversies.’”). A requirement for
an Article III court, a live case or controversy, is not, however, a requirement for APA proceedings.
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See US Magnesium, 690 F.3d at 1164. As a result, parties have “no reason to include facts sufficient
to establish standing as a part of the administrative record.” 	US Magnesium, 690 F.3d at 1164.
Accordingly, to ensure that a court has jurisdiction in APA actions where standing may not be
apparent from the administrative record, the Tenth Circuit states that parties should “‘take pains to
supplement the record in any manner necessary to enable [the court] to address with as much
precision as possible any question of standing that may be raised.’” US Magnesium, 690 F.3d at
1165 (quoting Pennell v. City of San Jose, 485 U.S. at 8).
FEMA argues that the Court should be allow FEMA to lodge specific documents which
“show the status of Petitioner’s administrative appeal of HPCC Act claims and subsequent request
for arbitration of FEMA’s administrative appeal decision,” because these documents relate to
mootness. 	Motion to Supplement at 6. 	Specifically, FEMA argues that evidence whether Old
Wood has “completed the administrative appeal for its claim is relevant to its claimed injury that
FEMA’s regulation requiring the exhaustion of an administrative appeal before seeking arbitration
has ‘unlawfully restricted the right of a claimant to settle his or her disputed claim.’” Motion to
Supplement at 7 (quoting Complaint ¶ 1, at 1, filed November 7, 2024 (Doc. 1)). FEMA asserts
that a good reason for the omission of these documents from the Administrative Record is that the
status of Old Wood’s claims change after the deadline for submitting an Administrative Record
passes. See Motion to Supplement at 8. Finally, FEMA clarifies that it does not seek to have the
Court admit these documents for the purpose of evaluating FEMA’s challenged regulations and
policies, but instead for the sole purpose of evaluating justiciability. 	See Reply to Motion to
Supplement at 9. The Court agrees with FEMA’s argument, and allows FEMA to supplement the
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court record with these additional documents.3
The Tenth Circuit has made clear that, for APA challenges in federal court, the plaintiff may
provide the court with documents necessary to establish standing after the administrative record has
been finalized. In US Magnesium, the Tenth Circuit accepts a declaration as evidence of standing
after the administrative record is finalized for “the sole purpose of determining whether U.S.
Magnesium has standing to bring this challenge.” 690 F.3d at 1165. See Nw. Env't Def. Ctr. v.
Bonneville Power Admin., 117 F.3d at 1528 (“Because standing was not at issue in earlier
proceedings, . . . petitioners in this case were entitled to establish standing anytime during the
briefing phase. We consider the affidavits solely to determine whether petitioners have standing to
bring this action.”). The Court considers US Magnesium to be on point with FEMA’s request to
present evidence to the Court for the sole purpose of demonstrating justiciability, and accordingly
the Court allows FEMA to supplement the court record with the documents relevant to its mootness
argument, for the sole purpose of determining the justiciability of Old Wood’s claims.4
3 	FEMA’s Motion to Supplement asks the Court to allow FEMA to supplement the
Administrative Record. See Motion to Supplement at 1. FEMA makes clear, however, that FEMA
is not asking the Court to supplement the Administrative Record with these documents for the
purpose of evaluating Old Wood’s substantive challenge to FEMA’s arbitration regulations and
policies, but instead that the documents are only to be used to establish the justiciability of Old
Wood’s challenge to the Appeal Requirement. 	See Reply to Motion to Supplement at 9-10.
Because FEMA does not seek to have the Court use the supplemental documents for the
substantive APA review, however, the Court determines that it will not supplement the
Administrative Record with these documents. 	Rocky Mountain Peace & Just. Ctr., 40 F.4th at
1160 (quoting Bar MK Ranches, 994 F.2d at 739)(explaining that a court’s APA review is
generally limited to “‘the full administrative record that was before all decision makers.’”).
Instead, the Court will supplement the court record with these supplemental documents, and
consider them as extra-record evidence. See Rocky Mountain Peace & Just. Ctr., 40 F.4th at 1160
(quoting Am. Min. Cong. v. Thomas, 772 F.2d at 626)(“In ‘extremely limited’ circumstances, a
court may supplement the administrative record or consider extra-record evidence.”).
4 Mootness, the doctrine for which FEMA seeks to admit these documents, is not a
Constitutional standing requirement; the Tenth Circuit addresses standing in US Magnesium. See
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Old 	Wood 	argues 	that 	the 	motion 	is 	procedurally 	defective, 	because 	establishing
justiciability is not one of the limited circumstances when a court may supplement the
administrative record or consider extra-record evidence. See Response to Motion to Supplement at
6 (citing Rocky Mountain Peace & Justice Ctr., 40 F.4th at 1160). Further, Old Wood maintains
that neither the Ninth Circuit nor the Tenth Circuit actually supplement the administrative record
when they consider extra-record evidence for establishing standing. 	See Response to Motion to
Supplement at 6-7 (citing U.S. Magnesium, 690 F.3d at 1165; Nw. Env't Def. Ctr., 117 F.3d at
1527-28). While Old Wood is correct that neither the Ninth Circuit nor the Tenth Circuit technically
supplement the record, the Court does not agree that a motion to supplement is an incorrect vehicle
to present this evidence; it does not appear as if there is a required method that parties must follow
when it comes to evidence relating to justiciability. The Supreme Court in Pennell states that parties
litigating under circumstances in which the case originates in a court not subject to Article III of the
Constitution “take pains to supplement the record in any manner necessary to enable us to address
with as much precision as possible any question of standing that may be raised.” 	485 U.S. at 8
(emphasis added). 	The Tenth Circuit, having addressed this issue twice, does not establish any
Protocols, LLC v. Leavitt, 549 F.3d 1294, 1298 (10th Cir. 2008). 	Mootness is, however, a
jurisdictional doctrine similarly based on Article III of the Constitution, which goes to the court’s
power to hear the case. 	See McClendon v. City of Albuquerque, 100 F.3d 863, 867 (10th Cir.
1996)(“Mootness is a threshold issue because the existence of a live case or controversy is a
constitutional prerequisite to federal court jurisdiction.”). Similar to standing, parties and the court
may raise mootness at any stage of the proceedings. See Kennedy v. Lubar, 273 F.3d 1293, 1301-
02 (10th Cir. 2001). 	The Article III “live case or controversy” requirement does not extend to
proceedings not in federal court. See US Magnesium, 690 F.3d at 1164. As a result, parties do not
always provide evidence relating to a live case or controversy in proceedings outside of a federal
court, necessitating the court to consider evidence outside of the established record; this
justification applies equally to mootness as it does to standing. Accordingly, the Court concludes
that the Court should extend the Tenth Circuit’s approach to considering evidence outside of the
Administrative Record for standing purposes to evidence relating to mootness.
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procedure which a party must follow when seeking to present additional evidence to the court for
standing purposes. See U.S. Magnesium, 690 F.3d at 1165 (accepting a declaration attached to a
reply brief); Qwest Commc'ns Int'l, Inc. v. F.C.C., 240 F.3d 886, 893 (10th Cir. 2001)(discussing a
party’s failure to provide evidence to establish standing and stating: “Qwest certainly could have
obtained leave to adduce evidence regarding standing had it made such a request”). Accordingly,
the Court determines that the Motion to Supplement is an appropriate vehicle to present these
documents to the Court, and the Court considers these documents only for justiciability purposes.
Old Wood also maintains that the motion is procedurally defective, because it does not
present the whole of the Appeals Section’s records, but instead only selected documents. 	See
Response to Motion to Supplement at 7. 	Old Wood maintains that the selection which FEMA
presents is biased and prejudices Old Wood, and therefore submits a conditional cross-motion to
supplement the Administrative Record with the entirety of the Appeals Section’s records, “which
will balance the picture and further support Old Wood’s argument the appeal requirement violates
the Act.” 	Response to Motion to Supplement at 7-8. 	The Court does not agree that FEMA’s
selection of documents prejudices Old Wood, because the Court cabins the supplementation to
justiciability purposes only. In the interest of completeness, however, the Court allows Old Wood
to supplement the court record with the remaining documents from the Appeals Section’s records,
although the Court similarly considers these documents only for justiciability purposes. See Reply
to Motion to Supplement at 19 (“FEMA does not object to the lodgment of Petitioner’s proposed
documents for the sole purpose of helping the Court to better evaluate questions of standing and
mootness.”).
Finally, Old Wood argues that FEMA’s motion is untimely, and this untimeliness prejudices
Old Wood, because “(1) it was unable to address the appeal decision in its Opening Brief, and (2)
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it is unclear what its counsel can and cannot argue in Reply as the Administrative Record is not
settled.” Response to Motion to Supplement at 4-5. The supplementation of the court record with
these documents does not prejudice Old Wood, because the Court cabins their use to justiciability;
the Court will evaluate Old Wood’s substantive arguments regarding FEMA’s challenged rules and
regulations only on the Administrative Record as the United States lodged by the required deadline.
Accordingly, the Court does not determine that there is prejudice to Old Wood sufficient to prevent
the Court from allowing FEMA to supplement the court record for the sole purpose of evaluating
mootness and justiciability. 	Both Old Wood and FEMA may supplement the court record with
documents that the Court will be evaluate solely for standing and mootness purposes.
II. 	FEMA’S 	COMPLETION 	OF 	OLD 	WOOD’S 	ADMINISTRATIVE 	APPEAL
MOOTS OLD WOOD’S CHALLENGE TO FEMA’S APPEAL REQUIREMENT.
Article III of the Constitution places a Constitutional limitation on the federal courts’
jurisdiction to hear and determine “cases and controversies,” and thus provides the mootness
doctrine. U.S. Const. art. III, § 2, cl. 1. “Mootness is a threshold issue because the existence of a
live case or controversy is a constitutional prerequisite to federal court jurisdiction.” McClendon
v. City of Albuquerque, 100 F.3d at 867. 	Moreover, “[t]his requirement exists at all stages of
federal judicial proceedings, and it is therefore not enough that the dispute was alive when the suit
was filed; the parties must continue to have a personal stake in the outcome.” McClendon v. City
of Albuquerque, 100 F.3d at 867. 	“In deciding whether a case is moot, the crucial question is
whether granting a present determination of the issues offered will have some effect in the real
world. When it becomes impossible for a court to grant effective relief, a live controversy ceases
to exist, and the case becomes moot.” Abdulhaseeb v. Calbone, 600 F.3d 1301, 1311 (10th Cir.
2010)(citation and quotation marks omitted). 	A case becomes moot “when a plaintiff no longer
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suffers ‘actual injury that can be redressed by a favorable judicial decision.’” Rhodes v. Judiscak,
676 F.3d 931, 933 (10th Cir. 2012)(quoting Iron Arrow Honor Soc’y v. Heckler, 464 U.S. 67, 70
(1983)). The court does not dismiss a case as moot if: “(1) secondary or ‘collateral’ injuries survive
after resolution of the primary injury; (2) the issue is deemed a wrong capable of repetition yet
evading review; (3) the defendant voluntarily ceases an alleged illegal practice but is free to resume
it at any time . . . .” Riley v. INS, 310 F.3d 1253, 1257 (10th Cir. 2022)(quoting Chong v. Dist.
Dir., INS, 264 F.3d 378, 384 (3d Cir. 2001)).
FEMA argues that Old Wood’s challenge to the Appeal Requirement, which requires that
claimants first complete FEMA’s administrative appeal process before initiating arbitration, is
moot, because Old Wood already has completed FEMA’s administrative appeal process and
received a decision on its appeal from the Director of the Claims Office. See Response at 14-15.
FEMA argues, accordingly, “[b]ecause setting the challenged Appeal Requirement aside would
have no bearing on Old Wood’s ability to engage in arbitration, the challenge is moot and should
be dismissed.” Response at 15.
In response, Old Wood offers several arguments in support of its contention that its Appeal
Requirement is not moot. First, Old Wood argues that it suffers procedural injuries, which continue
to have “real world consequences,” both because the Appeal Requirement “violated Old Wood’s
procedural right under § 104(d)(1)(A)(i) to receive a judicially reviewable decision within 180 days
of its filing of a Notice of Loss,” and because the Appeal Requirement “violated the Act’s command
in § 102(b)(2) that Old Wood’s claim for compensation be expeditiously considered and settled.”
Reply at 11-12. 	Old Wood also argues that it likely is to suffer future procedural and financial
injury, “because the appeal requirement is the cornerstone of the challenged arbitration rules, which
depend on the existence of an appeal record and decision and heavily bias the arbitral process in
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FEMA’s favor.” Reply at 12. Old Wood argues that the burden to establish mootness is particularly
high when a case involves agency violation of procedural rights, and that an “order setting aside the
appeal requirement will provide effective relief by governing FEMA’s conduct relating to
arbitration and prohibiting it from continuing to violate the law.” 	Reply at 14-15. 	Finally, Old
Wood appears to make a voluntary cessation argument, arguing that “the basis for mootness is
FEMA’s own voluntary conduct of forging ahead with an appeal decision in the face of the
pendency of this action . . . .” Reply at 13.
FEMA has completed the administrative appeals process for Old Wood. See Administrative
Appeal Decision at 1 (dated July 11 2025) (Old Wood, LLC SR-0003). As a result, there is nothing
preventing Old Wood from proceeding to arbitration, other than Old Wood’s own request to stay
arbitration pending this APA review. 	See Stay Extension at 1 (Old Wood, LLC SR-0001)(“In
response to [Old Wood’s] request, [FEMA] informs [Old Wood] that the stay extension has been
granted . . . .”); Email from Old Wood to FEMA Re: Stay Request at 1 (dated May 21, 2025) (Old
Wood, LLC SR-0014)(“Request is made by Old Wood LLC to stay further processing of Old
Wood’s administrative appeal until the District Court issues a final ruling on its case seeking to
invalidate the appeal process, among other things.”). 	The Court concludes, therefore, that Old
Wood’s challenge to the Appeal Requirement is moot unless Old Wood can demonstrate a present
injury -- the Appeal Requirement barring access to the arbitration process is no longer a present
injury -- or a doctrine such as capable of repetition yet evading review or voluntary cessation
prevent a finding of mootness. Old Wood asserts that it faces a future injury because of the Appeal
Requirement, because FEMA limits arbitration to the record and decision from the administrative
appeal, which heavily biases the arbitral process in FEMA’s favor. See Reply at 12. The Court
disagrees, however, that the future injury which Old Wood suffers stems from the Appeal
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Requirement, which requires only that Old Wood complete FEMA’s administrative appeal process
before entering into arbitration. Instead, the injury which Old Wood alleges stems from the other
challenged FEMA regulations/policies -- the Record Requirement, which restricts arbitration to a
review of the record of and issues raised and decided on administrative appeal, and the Standard of
Review Requirement, which limits arbitration to a search for substantial evidence supporting
FEMA’s decision on administrative appeal. 	The injury stemming from these other challenged
requirements does not translate into a future injury for the Appeal Requirement, however, because
the Appeal Requirement requires only that the appeal occur before arbitration begins. The contours
of the arbitration process are defined by other regulations and policies which Old Wood is not
prevented, because of mootness, from challenging. Accordingly, the future harms which Old Wood
alleges from the arbitration process are not attributable to the Appeal Requirement, and do not save
Old Wood’s challenge to the Appeal Requirement from being mooted.
Old Wood also argues that it has suffered a procedural injury and thus faces a more lenient
standing inquiry. See Reply at 12-14. This argument does not excuse Old Wood, however, from
the basic requirement that its claims must still relate to a present or future injury. In both Lujan v.
Defenders of Wildlife and Massachusetts v. E.P.A., which Old Wood cites in support of its position,
the Supreme Court still requires that there still be some meaningful relief that the court can provide.
See Massachusetts v. E.P.A., 549 U.S. 497, 518 (2007)(“When a litigant is vested with a procedural
right, that litigant has standing if there is some possibility that the requested relief will prompt the
injury-causing party to reconsider the decision that allegedly harmed the litigant.”). See Lujan v.
Defenders of Wildlife, 504 U.S. 555, 572 n.7 (explaining that procedural injuries have a lowered
requirement for redressability and immediacy, but tying this statement to an example of a potential
future injury, thus demonstrating that there must still be some possibility, even if remote, of present
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or future harm for procedural injury: “Thus, under our case law, one living adjacent to the site for
proposed construction of a federally licensed dam has standing to challenge the licensing agency’s
failure to prepare an environmental impact statement, even though he cannot establish with any
certainty that the statement will cause the license to be withheld or altered, and even though the
dam will not be completed for many years”).
The Court has “no power to give opinions upon moot questions or declare principles of law
which cannot affect the matter in issue in the case before it.” S. Utah Wilderness All. v. Smith, 110
F.3d 724, 727 (10th Cir. 1997)(“Southern Utah Wilderness Alliance”)(citing Church of Scientology
of California v. United States, 506 U.S. 9, 12 (1992)). 	FEMA has completed Old Wood’s
administrative appeal, and, accordingly, any ruling from the Court on the legality of FEMA’s
Appeal Requirement will not provide any meaningful relief for Old Wood. Because this case does
not involve a continuing violation or practice, any ruling that the Court makes on this issue
constitutes an impermissible advisory opinion. See Southern Utah Wilderness Alliance, 110 F.3d
at 730. Accordingly, the changed circumstances of this particular case -- FEMA’s completion of
the administrative appeal -- no longer present an opportunity for meaningful relief. The cases that
Old Wood cites do not counsel the opposite conclusion. See Texas Med. Ass'n v. United States
Dep't of Health & Hum. Servs., 110 F.4th 762, 772-73 (5th Cir. 2024)(concluding that Plaintiffs
subject to unlawful arbitration procedures do have a procedural injury sufficient to establish
standing, but failing to address mootness, including a situation such as here, where Old Wood has
already completed the challenged procedure); Forest Guardians v. Johanns, 450 F.3d 455, 462-63
(9th Cir. 2006)(concluding that a declaratory judgment action regarding agency action is not moot,
because the case “does involve a continuing practice,” and would, accordingly, “‘resolve a dispute
with present and future consequences’”)(quoting Nw. Env't Def. Ctr. v. Gordon, 849 F.2d 1241,
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1245 (9th Cir. 1988)).
Finally, Old Wood makes a voluntary cessation argument. See Reply at 13 (“FEMA bears
the burden of establishing mootness, which is particularly heavy where, as here, the basis for
mootness is FEMA’s own voluntary conduct of forging ahead with an appeal decision in the face
of the pendency of this action . . . .”). Voluntary cessation is an exception to a claim of mootness,
which exists to “‘counteract the possibility of a defendant ceasing illegal action long enough to
render a lawsuit moot and then resuming the illegal conduct.’” 	Rio Grande Silvery Minnow v.
Bureau of Reclamation, 601 F.3d 1096, 1115 (10th Cir. 2010)(quoting Chihuahuan Grasslands
Alliance v. Kempthorne, 545 F.3d 884, 892 (10th Cir. 2008)). 	“Voluntary actions may,
nevertheless, moot litigation if two conditions are satisfied: ‘(1) it can be said with assurance that
there is no reasonable expectation that the alleged violation will recur, and (2) interim relief or
events have completely and irrevocably eradicated the effects of the alleged violation.’” 	Rio
Grande Silvery Minnow v. Bureau of Reclamation, 601 F.3d at 1115 (quoting County of Los
Angeles v. Davis, 440 U.S. 625, 631 (1979)). 	The Court determines that FEMA’s action in
completing the administrative appeal during the pendency of this lawsuit does not satisfy the
voluntary cessation exception to mootness. Old Wood’s appeal is complete; there is no possibility
that FEMA restarts the alleged illegal activity, because Old Wood has already entered into the
arbitration process, and arbitration has been stayed only at Old Wood’s request. See Stay Extension
at 1 (Old Wood, LLC SR-0001)(“In response to [Old Wood’s] request, [FEMA] informs [Old
Wood] that the stay extension has been granted, and your case will not be referred for an arbitration
hearing until the term expires on January 31, 2026”); Email from Old Wood to FEMA Re: Stay
Request at 1 (dated May 21, 2025) (Old Wood, LLC SR-0014)(“Request is made by Old Wood
LLC to stay further processing of Old Wood’s administrative appeal until the District Court issues
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a final ruling on its case seeking to invalidate the appeal process, among other things.”).
Accordingly, there is no reasonable expectation that the alleged violation will recur, and the
completion of the appeal eradicates the alleged violation’s effects; Old Wood may proceed to
arbitration. The voluntary cessation exception, therefore, does not apply. 	In the absence of the
application of this exception, and because the Court cannot give meaningful relief to Old Wood
with regards to the Appeal Requirement, the Court denies as moot Old Wood’s challenge to
FEMA’s Appeal Requirement.
III. 	THE 	COURT 	INVALIDATES 	FEMA’S 	RECORD 	REQUIREMENT 	AND
STANDARD OF REVIEW REQUIREMENT AS ARBITRARY, CAPRICIOUS, AN
ABUSE OF DISCRETION, OR OTHERWISE NOT IN ACCORDANCE WITH
LAW.
Old Wood challenges FEMA’s Record Requirement and Standard of Review Requirement
under § 706(2)(A) of the APA, which states that the court shall “hold unlawful and set aside agency
action” found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with law.” 	5 U.S.C. § 706(2)(A). 	See Opening Brief at 17. 	Old Wood also invokes APA §
706(2)(C), which permits the court to set aside agency actions “in excess of statutory jurisdiction,
authority, or limitations, or short of statutory right.” 5 U.S.C. § 706(2)(C). See Opening Brief at
17.
When reviewing final agency action under the APA, the reviewing court must “decide all
relevant questions of law, interpret constitutional and statutory provisions, and determine the
meaning or applicability of the terms of an agency action.” 5 U.S.C. § 706. The essential function
of judicial review under the APA is a determination of (i) whether the agency acted within the scope
of its authority; (ii) whether the agency complied with prescribed procedures; and (iii) whether the
action is otherwise arbitrary, capricious, or an abuse of discretion. See Olenhouse v. Commodity
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Credit Corporation, 42 F.3d at 1574. 	The APA requires the Court to exercise its independent
judgment in deciding whether an agency acts within its statutory authority. 	See Loper Bright
Enterprises v. Raimundo, 603 U.S. 369, 412 (2024)(“Loper Bright”). 	In some cases involving
agencies, however, a “statute’s meaning may well be that the agency is authorized to exercise a
degree of discretion.” Loper Bright, 603 U.S. at 394. One example of an agency that Congress
authorizes to exercise a degree of discretion is an agency that Congress empowers to “‘fill up the
details’” of a statutory scheme. Loper Bright, 603 U.S. at 395 (quoting Wayman v. Southard, 10
Wheat. 1, 43 (1825)). “When the best reading of a statute is that it delegates discretionary authority
to an agency,” the reviewing court fulfills its role “by recognizing constitutional delegations, fixing
the boundaries of the delegated authority, and ensuring the agency has engaged in reasoned
decision-making within those boundaries.” Loper Bright, 603 U.S. at 395.
Section 104 of the Hermit’s Peak Act is entitled “Compensation for Victims of Hermit’s
Peak/Calf Canyon Fire.” 	HPA § 104. 	This section provides for the establishment of a Claims
Office, which is responsible for receiving, processing, and paying claims in accordance with the
Act. See HPA § 104(a)(2). Section 104 requires the claimants’ submission of claims to the Claims
Office and investigation of the claims by the Administrator of the Claims Office, who must
determine and fix the amount of compensation. See HPA § 104(b), (c), (d)(1)(A)(i). If a claimant
is dissatisfied with FEMA’s determination of the amount of a claim, § 104 permits a claimant to
seek either judicial review, or, as an alternative, elect to proceed to binding arbitration. See HPA §
104(i), (h)(3). The complete text of HPA § 104(h)(3) states:
(3) 	ARBITRATION. --
(A) 	IN GENERAL. -- Not later than 45 days after the date of enactment
of 	this 	Act, 	the 	Administrator 	shall 	establish 	by 	regulation
procedures under which a dispute regarding a claim submitted under
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the Act may be settled by arbitration.
(B) 	ARBITRATION AS REMEDY. -- On establishment of arbitration
procedures under subparagraph (A), an injured person that submits a
disputed claim under this Act may elect to settle the claim through
arbitration.
(C) 	BINDING EFFECT. -- An election by an injured person to settle a
claim through arbitration under this paragraph shall --
(i) 	be binding; and
(ii) 	preclude any exercise by the injured person of the
right to judicial review of a claim described in
subsection (i).
§ 104(h)(3).
The Court begins by looking at the statute’s plain language to determine whether FEMA’s
rules are a proper exercise of FEMA’s authority to establish arbitration procedures. 	With the
Hermit’s Peak Act, Congress authorizes FEMA to establish “regulation procedures under which a
dispute regarding a claim submitted under the Act may be settled by arbitration.” § 104(h)(3)(A).
FEMA does not, however, have discretion to entirely redefine the meaning of arbitration with these
procedures. Black’s Law Dictionary defines arbitration as a “dispute-resolution process in which
the disputing parties choose one or more neutral third parties to make a final and binding decision
resolving the dispute.” Arbitration, BLACK’S LAW DICTIONARY (12th ed. 2024). Arbitration is not
typically a procedure for limited appellate review of an administrative decision, but instead is an
informal, alternative process to judicial proceedings. See Stolt-Nielsen S.A. v. AnimalFeeds Int'l
Corp., 559 U.S. 662, 685 (2010)(“In bilateral arbitration, parties forgo the procedural rigor and
appellate review of the courts in order to realize the benefits of private dispute resolution: lower
costs, greater efficiency and speed, and the ability to choose expert adjudicators to resolve
specialized disputes.”). 	FEMA’s regulations attempt to turn arbitration into an appellate review
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court proceeding of an administrative process, and deny parties the ability to side-step FEMA’s
time-consuming appellate administrative process with an independent review of FEMA’s disputed
claim offers to reach a resolution of a claimant’s claims.
Looking at the statute’s structure, the Court determines that the arbitration which the Hermit
Peak’s Act contemplates is an alternative method of dispute resolution in which a neutral arbitrator
uses his or her independent judgment to make a binding decision valuing a disputed claim following
presentation of evidence, examination of witnesses, and argument, without any limitation to the
four corners of an administrative appeal. 	The Hermit’s Peak Act sets out two mutually exclusive
methods for a party to seek review of FEMA’s compensation award: judicial review and arbitration.
See HPA § 104(h)(3)(C)(“An election by an injured person to settle a claim through arbitration
under this paragraph shall . . . preclude any exercise by the injured person of the right to judicial
review of a claim described by subsection (i).”); id. § 104(i). Unlike the arbitration provision, the
judicial review provision states explicitly that the judicial review proceeding is limited to “the
record made before the Administrator” and that the standard of review for the proceeding is that
“the findings of the Administrator shall be upheld if the decision is supported by substantial
evidence on the record considered as a whole.” HPA § 104(i). FEMA, therefore, in establishing
the procedures for arbitration under the Hermit’s Peak Act, intentionally mirrors the procedures that
Congress establishes for the judicial review proceedings. See 44 C.F.R. § 296.42(b) (establishing
the Record Requirement that “[e]vidence not previously entered into the Administrative Record
will not be considered”); Policy Guide, Section 10.2, at 85 (establishing the Standard of Review
Requirement, stating that “[t]he arbitrators will review the record for substantial evidence
supporting the decision and will uphold the claim decision if it is supported by substantial evidence
on the record considered as a whole”). 	FEMA even acknowledges that it purposefully applies
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“identical standards and procedures for arbitration and judicial review,” because these procedures
“prevent forum shopping and inconsistent outcomes depending on the method by which a claimant
resolves their disputed claim.” Response at 1. FEMA’s desire for consistency is inconsistent with
Congress’ express allowance of forum shopping and Congress’ tolerance for inconsistent outcomes
that different arbitrators may produce. FEMA’s desire for order cannot override Congress’ mandate
of arbitration.
Further, FEMA’s promulgated arbitration procedures render superfluous the arbitration
provision. 	See Feliciano v. Dep't of Transportation, 605 U.S. 38, 65 (2025)(Thomas, J.
dissenting)(“Because we interpret statutes, where possible, to avoid superfluity, we strive to avoid
interpretations that ‘would in practical effect render [statutory language] entirely superfluous in all
but the most unusual circumstances.’”)(quoting TRW Inc. v. Andrews, 534 U.S. 19, 29 (2001)). A
claimant loses all benefits of choosing an arbitration proceeding if the claimant must comply with
a proceeding that mirrors the judicial review proceeding. While FEMA’s arbitration regulations
may prevent forum shopping, these regulations eliminate the claimant’s choice between judicial
review and arbitration. 	FEMA, through these regulations, establishes essentially two judicial
review proceedings, with a judge determining claims in one proceeding, and an arbitrator
determining claims in another. That choice is no choice at all.
The Court concludes that Congress does not write two mutually exclusive options for
dispute resolution of claims under the Hermit’s Peak Act if it intends to allow FEMA to promulgate
regulations which erase the distinctions between judicial review and arbitration. FEMA argues that
the Hermit’s Peak Act establishes two parallel review proceedings and that arbitration is similarly
intended to be merely a review of FEMA’s final claim determinations, equivalent to judicial review:
HPCC Act arbitration occurs once FEMA’s determination is disputed and
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replaces a judicial review that is limited to a review of claim materials submitted to
the Agency . . . . The best reading of the HPCC Act is that the arbitrator settles
disputed claims by reviewing any disputes remaining after completion of FEMA’s
administrative process and, as arbitration replaces judicial review, decides if
FEMA’s determinations were supported by substantial evidence.
Response at 32. FEMA reads an assumption into the statute, however; nothing in the arbitration
provision of the Hermit’s Peak Act indicates that arbitration is a reviewing function of FEMA’s
actions. 	The judicial review provision of the Hermit’s Peak Act, § 104(i), is titled “Judicial
Review,” and states that a claimant may “bring a civil action . . . to modify or set aside the decision
[by the Administrator],” which makes clear that the court conducting the judicial review proceeding
will be acting in a reviewing capacity. HPA § 104(i). By contrast, the arbitration provision of the
Hermit’s Peak Act states that “an injured person that submits a disputed claim under this Act may
elect to settle the claim through arbitration.” 	HPA § 104(h)(3). 	To “settle” a claim means, in
ordinary terms, to reach a final resolution on a claim, not to review a finalized claim. See Settle,
BLACK’S LAW DICTIONARY (12th ed. 2023)(“To end or resolve (an argument or disagreement, etc.);
to bring to a conclusion (what has been disputed or uncertain) <they settled their dispute>”). To
resolve a dispute usually requires that the arbitrator be able to review all the claims and the evidence
in the case, and reach an independent conclusion, instead of receiving a limited record and searching
for evidence supporting a decision that someone else makes outside of arbitration, as FEMA insists
arbitration here works. 	Settling a claim, therefore, is contrary to review of an already finalized
claim, wherein it is reasonable to require that the court look only to the evidence and result reached
in the prior proceeding, because the court is not reaching an independent judgment. Further, that
Congress explicitly restricts judicial review to the Administrative Record and describes the standard
of review to a search for substantial evidence supporting the Administrator’s decision makes clear
that Congress knows how to write these requirements, but chooses not to include them in the
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arbitration provision. The requirements for judicial review in the Hermit’s Peak Act further support
the conclusion that Congress intends arbitration to mean de novo arbitration and not to track the
judicial review requirements.
In support of the Record Requirement, FEMA argues that allowing the use of extra-record
evidence during arbitration, in contravention of the Record Requirement, “violates the Act’s
reservation of authority to FEMA to make claim determinations.” 	Response at 31-32. 	FEMA
maintains that the use of extra-record evidence during arbitration is a problem, because, “if an
individual who does not possess the authority of FEMA’s Administrator can receive additional
evidence not before FEMA and make determinations de novo, then an unauthorized entity is making
claim determinations and investigatory findings in dispersing federal monies.” 	Response at 32.
FEMA also asserts that the “arbitrator’s authority is limited to resolving a disputed claim -- not to
making a claim determination in the first instance” and that to allow the arbitrator to consider extra-
record evidence is to “let the arbitrator make an initial claim determination before FEMA has had
a chance to assess the evidentiary support for that claim.” Surreply at 17.
The Court does not agree that Congress did not mean for arbitrators to act like arbitrators.
FEMA’s arguments center around the assumption that arbitration is another review mechanism;
when reviewing FEMA’s claim determinations, such as a court does under judicial review, it is
logical to confine that review to the agency’s record below. 	Arbitration, however, is different.
Once a claimant disputes a claim determination by FEMA and elects arbitration under the Hermit’s
Peak Act, the arbitrator is free to make a finding on the claim independent from FEMA’s initial
determination; nothing in the Hermit’s Peak Act cabins arbitration to “review.” In jettisoning this
idea of “review” from arbitration, it is reasonable to allow the arbitrator to consider evidence outside
of the Administrative Record, because the arbitrator is acting independently from FEMA’s
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determination process.
Finally, the Court disagrees with FEMA’s assertion that only FEMA is entitled to make a
claim determination and “investigatory findings in dispersing federal monies.” 	Response at 32.
The Hermit’s Peak Act authorizes the arbitrator to “settle a claim,” HPA § 104(h)(3), which
necessarily requires a final determination on a claim and the award of federal monies. Accordingly,
the Court determines that nothing in the Hermit’s Peak Act indicates that de novo arbitration,
including allowing the consideration of extra-record evidence, is contradictory to the Hermit’s Peak
Act’s purpose. The case that FEMA cites does not require the opposite conclusion. FEMA cites
United States v. Carlo Bianchi & Co., 373 U.S. 709 (1963)(“Carlo Bianchi”), in support of the
contention that Congress confines arbitration to the administrative record. See Response at 32, 33.
FEMA quotes a portion of the opinion: “‘[I]n cases where Congress has simply provided for review,
without setting forth the standards to be used or the procedures to be followed, this Court has held
that consideration is to be confined to the administrative record and that no de novo proceeding
may be held.’” Response at 33 (quoting Carlo Bianchi, 373 U.S. at 715). FEMA omits, however,
the portion of the quotation which makes clear that the Supreme Court is talking in reference to
judicial review when it makes this statement; indeed, the Supreme Court does not mention
arbitration in the opinion. The full quote reads:
With respect to the language used, we note that the statute is designated as
an Act ‘To permit review’ and that the reviewing function is one ordinarily limited
to consideration of the decision of the agency or court below and of the evidence on
which it was based. 	Indeed, in cases where Congress has simply provided for
review, without setting forth the standards to be used or the procedures to be
followed, 	this 	Court 	has 	held 	that 	consideration 	is 	to 	be 	confined 	to 	the
administrative record and that no de novo proceeding may be held. Tagg Bros. &
Moorhead v. United States, 280 U.S. 420 (1930); National Broadcasting Co. v.
United States, 319 U.S. 190 (1943). And of course, as shown by the Tagg Bros. and
NBC cases themselves, the function of reviewing an administrative decision can be
and frequently is performed by a court of original jurisdiction as well as by an
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appellate tribunal.
Carlo Bianchi, 373 U.S. at 714-715. The Court agrees that it must confine its judicial review to the
record of the agency or court below, and in fact the Hermit’s Peak Act puts this limitation into the
statute. See HPA § 104(i). Stating that the Court must limit judicial review to the administrative
record, however, does not lead to the conclusion that an arbitrator must also limit arbitration to
review, especially, because, as the Court determines above, arbitration is not normally a reviewing
process.
In support of the Standard of Review Requirement, FEMA argues that the arbitration
provision, “as an alternative to judicial review, is best interpreted as employing the substantive rules
of judicial review, including the substantial evidence standard of review.” Response at 39. The
Court disagrees with FEMA’s allegedly “best” interpretation. As explained above, that arbitration
is an alternative to judicial review counsels the conclusion that Congress does not intend arbitration
to mirror the judicial review procedures in the Hermit’s Peak Act. 	Because arbitration is an
alternative to judicial review, the Court concludes that FEMA should not impose the procedures of
judicial review upon arbitration and that de novo arbitration is the method of arbitration under the
Hermit’s Peak Act. The case that FEMA cites in support, Cornelius v. Nutt, 472 U.S. 648
(1985)(“Cornelius”), for the proposition that the standard of review for arbitration under the
Hermit’s Peak Act should be a substantial evidence review, does not apply here. In Cornelius, the
Supreme Court determines that arbitration under the Civil Service Reform Act of 1978, 5 U.S.C. §
1101 et seq., must apply the same harmful-error standard of review that the Merit Systems
Protection Board must use in review of the agency’s decision upon appeal of the agency’s decision.
See 472 U.S. at 650, 660. The Supreme Court’s decision rests upon the fact that the statute makes
explicit that the harmful-error standard applies to the arbitration provision: 	“Section 7701(c)(1)
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incorporates by reference the provisions of subsection (c)(2), including the harmful-error rule.
Thus, the statutory scheme mandates that the harmful-error rule is to apply whether the employee
challenges the agency action through the Board or through binding arbitration.” 	Cornelius, 472
U.S. at 652. The Hermit’s Peak Act, by contrast, contains no language indicating that the standard
of review in the judicial review provision of the statute cross-applies to the arbitration provision.
See HPA §§ 104(h)(3), 104(i). 	Accordingly, Cornelius does not counsel the conclusion that the
arbitration provision in the Hermit’s Peak Act must apply the same standard of review as the judicial
review provision.
FEMA also attempts to contrast the Hermit’s Peak Act’s arbitration provision with
arbitrations under the Randolph-Shepard Act, 20 U.S.C. § 107 et seq., and Stafford Act, 42 U.S.C.
§ 5121 et seq., wherein arbitrations under the Randolph-Sheppard Act and the Stafford Act
“represent a final agency action,” and therefore the arbitrators must find facts and interpret the law
independently on behalf of the Executive Branch. 	Response at 37-38 (citing Wisconsin v. U.S.
Dep’t of Education, 980 F.3d 558, 567 (7th Cir. 2020); Metro Gov’t of Nashville v. FEMA, 2024
U.S. Dist. LEXIS 56260, at * 58 (M.D. Tenn. March 28, 2024)). FEMA argues that, because the
Hermit’s Peak Act arbitration does not represent FEMA’s final decision, and the arbitration is not
acting on the agency’s behalf, the arbitration necessarily must be like the arbitration under the Civil
Service Reform Act in Cornelius, wherein “the standard of review mirror[s] that as is used in
judicial review . . . .” Response at 38. The Court disagrees, however, that, just because arbitration
does not represent FEMA’s final decision arbitration necessarily must be the standard of review
that the Court uses in judicial review under the Hermit’s Peak Act. Arbitration is not a reviewal
process; instead, the process allows claimants to remove their claims from FEMA’s process and
have a neutral arbitrator settle them. 	In making such an independent decision, it is logical that
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whatever conclusions FEMA has already reached not bind the arbitrator under the substantial
evidence standard of review. Accordingly, the cases which FEMA cites do not run counter to the
conclusion that Congress intends arbitration under the Hermit’s Peak Act to mean de novo
arbitration and not to track the judicial review requirements.
Finally, Old Wood also argues that, because the Standard of Review Requirement is in
FEMA’s Policy Guide, instead of a regulation, it runs counter to the Hermit’s Peak Act requirement
that FEMA establish arbitration procedures by “regulation.” Opening Brief at 31 (quoting HPA §
104(h)(3)(A)). FEMA responds that it merely interprets the Hermit’s Peak Act and, accordingly,
that “it is not required to be published under formal rulemaking procedures.” Response at 39. In
accordance with the discussion above, the Court concludes that the Standard of Review
Requirement is not in the Hermit’s Peak Act, and, further, that the Standard of Review Requirement
is not in accordance with law; the Court invalidates the Standard of Review Requirement under the
APA, regardless whether FEMA enacts it properly. To the extent that FEMA wishes to promulgate
further arbitration procedures, the Court agrees with Old Wood that FEMA must establish these
procedures by “regulation” as the Hermit’s Peak Act requires. HPA § 104(h)(3)(A).
FEMA maintains that the Court’s review of its regulations and procedures should be a
deferential review for reasonableness, because “once an agency is within the scope of its delegated
authority the Agency’s rulemaking is reviewed for reasonableness.” 	Surreply at 5 (citing Loper
Bright, 603 U.S. at 395 (“[T]he reviewing court fulfills its role ‘by . . . fixing the boundaries of the
delegated authority, and ensuring the agency has engaged in reasoned decisionmaking within those
boundaries.’”)). 	The Court does not disagree, but highlights that the Court -- not FEMA -- still
must interpret the meaning of the Hermit’s Peak Act to fix the outer boundaries of the delegated
statutory authority; if FEMA acts outside that authority, then the Court must invalidate the
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regulations. See Restaurant Law Center v. United States Dep’t of Labor, 120 F.4th 163, 174-76
(5th Cir. 2024)(setting aside an administrative rule as arbitrary and capricious, because the rule is
“contrary to the statutory scheme enacted by Congress”). In fixing the outer boundaries of FEMA’s
delegated authority, the Court is guided by the “core administrative-law principle that an agency
may not rewrite clear statutory terms to suit its own sense of how the statute should operate.” Util.
Air Regul. Grp. v. EPA, 573 U.S. 302, 328 (2014). Congress authorizes FEMA under the Hermit’s
Peak Act to “establish by regulation procedures under which a dispute regarding a claim submitted
under this Act may be settled by arbitration.” HPA § 104(h)(3)(A). Congress does not authorize,
however, FEMA to re-write arbitration into a proceeding identical to judicial review; Congress
intends to provide claimants with two alternative processes to resolving their claims with FEMA,
and FEMA denies claimants this choice by erasing the distinction between arbitration and judicial
review. 	The Court determines that FEMA’s regulations are beyond the outer boundaries of
FEMA’s delegated authority; FEMA has the authority to promulgate procedures for arbitration, but
creating an arbitration process is not what FEMA does here. Accordingly, the Court invalidates
FEMA’s Record Requirement and Standard of Review Requirement under the APA as not in
accordance with law, because they are contrary to the statutory scheme that Congress enacts.
Although the Court determines that the issue of the validity of the Appeal Requirement is
moot, the Court notes that, having invalidated the Record Requirement and the Standard of Review
Requirement, and determined that the Hermit’s Peak Act requires de novo arbitration, it is
incongruous to continue to require claimants to comply with the Appeal Requirement and complete
FEMA’s administrative appeal process before proceeding to arbitration. 	FEMA insists that the
Appeal Requirement is the best reading of the Hermit’s Peak Act, because a claimant must have a
“disputed” claim before they can access the arbitration provision of the Hermit’s Peak Act, and
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FEMA argues that it is impossible to know whether you have a “disputed” claim until the
Administrator has made a final decision on a claim. 	Response at 16. 	FEMA defines the
Administrator’s final decision on a claim “as the decision made following an administrative
appeal.” Response at 16 (citing 44 C.F.R. § 29641(h)). As a result, FEMA argues that a claimant
cannot have a disputed claim until a claimant completes FEMA’s administrative appeal process.
See Response at 16. In response, Old Wood argues that “a claim is disputed when FEMA issues a
final letter of determination of the claim which a claimant rejects.” Opening Brief at 20. The Court
agrees with Old Wood’s position. Nothing in the Hermit’s Peak Act requires the conclusion that a
claimant must complete FEMA’s administrative appeal process before proceeding to arbitration.
The Hermit’s Peak Act requires only that “a dispute regarding a claim submitted under this
Act” exist before a claimant may elect to settle the claim through arbitration. HPA § 104(h)(3). A
dispute is “[a] conflict or controversy, esp. one that has given rise to a particular lawsuit.” Dispute,
BLACK’S LAW DICTIONARY (12th ed. 2024). Nothing in this definition requires a “final decision”
as FEMA reads into the statute. This omission is especially important given that Congress uses the
words “final decision” in the judicial review provision of the Hermit’s Peak Act, but chooses not to
use this term in the arbitration provision. 	HPA § 104(i) (“Any claimant aggrieved by a final
decision of the Administrator under this Act may . . . bring a civil action in the United States District
Court for the District of New Mexico, to modify or set aside the decision, in whole or in part.”).
Congress knows how to use the term “final decision;” if Congress intends that requirement to be in
the arbitration provision, it could state so explicitly. Instead, Congress deliberately chooses to use
the word “dispute” in the arbitration provision. “When a document uses a term in one place and a
materially different term in another, ‘the presumption is that the different term denotes a different
idea.’” Stanley v. City of Sanford, Florida, 606 U.S. 46, 53 (2025)(quoting Southwest Airlines Co.
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v. Saxon, 596 U.S. 450, 458 (2022)). The Court accordingly agrees with Old Wood that a dispute
under the arbitration provision does not require a final decision, but instead exists the moment that
a “conflict or controversy” arises concerning FEMA’s offer on a claimant’s claims, such as when
FEMA issues a final determination letter which the claimant rejects. At that point, the claimant is
free to choose not to engage with FEMA’s claims determination process any longer, and instead
choose to have a neutral third-party settle their claims.
FEMA argues that allowing arbitration to go forward without a “final decision,” which
FEMA interprets as requiring completion of the administrative appeals process, will “permit
arbitration to be initiated on any intermediary, partial disagreement.” Response at 20. As example,
FEMA states that:
a claimant may receive a partial Letter of Determination containing a
determination on a subset of the claimant’s requests for relief that the claimant
disputes. A claimant could also dispute FEMA’s requests for information, whether
a site visit is necessary, whether noneconomic damages are available, whether a
particular claim has already been submitted elsewhere, property ownership, or the
nature and extent of an injury.
Response at 20. 	FEMA’s argument does not fully account, however, for the requirement of the
Hermit’s Peak Act that requires the claimant to submit a “disputed claim” for arbitration. HPA §
104(h)(3). 	The dispute, accordingly, must be regarding a claim, and not “whether a site visit is
necessary,” “property ownership,” or other non-claim related disputes that FEMA suggests.
Secondarily, the dispute must be such that the claim can be settled through arbitration. See HPA §
104(h)(3) (“An election by an injured person to settle a claim through arbitration . . .”).
Accordingly, the language of the Hermit’s Peak Act absolves FEMA’s concerns with an
interpretation of “dispute” that allows arbitration to occur without the Appeal Requirement, because
the arbitration provision ensures that only disputes regarding claims capable of settling claims may
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go forward to arbitration.
FEMA also argues that the Appeal Requirement is a valid exercise of FEMA’s authority to
establish claim processing and arbitration rules under the Hermit’s Peak Act, because it is not
unreasonable. 	See Response at 16-17. 	FEMA argues that the Appeal Requirement is the best
reading of the Hermit’s Peak Act, explaining once again that “FEMA’s regulations describe
arbitration and judicial review as sister dispute-resolution mechanisms available when FEMA and
a claimant reach impasse on a claim.” Response at 19. The Court explains above and reiterates
that FEMA’s interpretation of the arbitration provision as a replica of the judicial review provision
is unreasonable, and the Court therefore invalidates FEMA’s regulations and policies under the
APA.
Congress tells FEMA to give claimants “arbitration,” but FEMA has not given claimants
“arbitration.” 	If Congress says that FEMA must give claimants a duck, FEMA cannot give
claimants a chicken, because FEMA thinks chicken is better and cheaper. By creating its arbitration
scheme, FEMA is trying to maintain maximum control over arbitrations. FEMA fears that it cannot
control arbitrations and that they may award more than FEMA would award. But this freedom is
exactly what Congress wants. Congress does not want FEMA to control and micro-manage awards.
Congress wants arbitrators -- not FEMA -- to decide awards. 	Congress has made a conscious
decision to trust arbitrators -- not FEMA -- to decide what claimants should get. While the Court
should be reluctant to set aside FEMA’s regulations and procedures about arbitration if FEMA’s
arbitration procedures are reasonable, FEMA’s conception of arbitration is so far away from what
everyone in the legal profession thinks is arbitration that FEMA’s arbitration is arbitrary and
capricious, and obviously not in accordance with law. Accordingly, the Court concludes that all of
FEMA’s challenged regulations and procedures -- the Record Requirement, the Standard of Review
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Requirement, and the Appeal Requirement – are invalid under the APA.
IT IS ORDERED that: (i) the requests in Plaintiff Old Wood LLC’s Opening Brief, filed
July 31, 2025 (Doc. 38), are granted in part and denied in part; (ii) the Court grants Old Wood’s
APA challenge to FEMA’s Record Requirement -- restricting arbitration to a review of the record
of and issues raised and decided on administrative appeal -- and Standard of Review Requirement
-- limiting arbitration to a search for substantial evidence supporting FEMA’s decision -- and
invalidates these requirements; (ii) the Court denies Old Wood’s APA challenge to the Appeal
Requirement -- requiring that a claimant complete FEMA’s administrative appeal process before
entering into arbitration -- as moot; (iv) the Defendants’ Motion to Lodge a Supplement to the
Administrative Record, filed November 12, 2025 (Doc. 67), is granted for the limited purpose of
establishing standing and mootness; and (v) Old Wood LLC’s Response to FEMA’s Motion to
Supplement Record/Conditional Cross Motion to Supplement Administrative Record, filed
December 9, 2025 (Doc. 72) is granted for the limited purpose of establishing standing and
mootness.
________________________________
UNITED STATES DISTRICT JUDGE
Counsel:
Hope A. Bauman
Mark Dow
Maureen S. Moore
Bauman & Dow Law Offices, P.C.
Albuquerque, New Mexico
--and--
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Thomas L. Tosdal, I
Tosdal Law Firm
Solana Beach, California
Attorneys for the Plaintiff
Todd Blanche
Acting United States Attorney General
Ryan Ellison
First Assistant United States Attorney
Nicholas Sydow
Rafael Go
Carrie Yang
Assistant United States Attorneys
United States Attorney’s Office, United States Department of Justice
Albuquerque, New Mexico
Attorneys for the Defendants
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