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contain deviations from the formal authenticated opinion. 1 IN THE SUPREME COURT OF THE STATE OF NEW MEXICO 2 Opinion Number: 3 Filing Date: October 12, 2023 4 NO. S-1-SC-38996 5 STATE ex rel. JACOB R. CANDELARIA, in 6 his capacity as STATE SENATOR, and 7 GREGORY BACA, in his capacity as STATE 8 SENATOR, 9 Petitioners, 10 and 11 K. JOSEPH CERVANTES, in his capacity as 12 STATE SENATOR, DANIEL IVEY-SOTO, in 13 his capacity as STATE SENATOR, GEORGE 14 K. MUÑOZ, in his capacity as STATE 15 SENATOR, and GERALD ORTIZ Y PINO, in 16 his capacity as STATE SENATOR, 17 Intervenors-Petitioners, 18 v. 19 MICHELLE LUJAN GRISHAM, in her 20 capacity as GOVERNOR, 21 Respondent, 22 and 23 TIM EICHENBERG, in his capacity as STATE 24 TREASURER, 25 Real Party in Interest. 1 ORIGINAL PROCEEDING 2 Candelaria Law 3 Jacob R. Candelaria 4 Albuquerque, NM 5 Baca Law Offices 6 Gregory Baca 7 Las Lunas, NM 8 for Petitioners 9 K. Joseph Cervantes 10 Las Cruces, NM 11 Daniel A. Ivey-Soto 12 Albuquerque, NM 13 George K. Muñoz 14 Gallup, NM 15 Gerald Ortiz y Pino 16 Albuquerque, NM 17 Intervenors-Petitioners, pro se 18 Office of the Governor 19 Holly Agajanian, Chief General Counsel 20 Kyle P. Duffy, Associate General Counsel 21 Maria S. Dudley, Associate General Counsel 22 Santa Fe, NM 23 for Respondent 24 L. Helen Bennett, P.C. 25 Linda Helen Bennett 26 Albuquerque, NM 27 for Real Party in Interest 1 OPINION 2 VARGAS, Justice. 3 {1} The federal government, through the American Rescue Plan Act of 2021, 4 provided approximately $1.75 billion in COVID-19-related financial assistance to 5 New Mexico. This case presents a separation of powers question concerning whether 6 the legislative or executive branch controls the funds. Consistent with our writ of 7 mandamus issued November 18, 2021, we conclude that the authority lies with the 8 Legislature. 9 I. BACKGROUND 10 {2} In response to the challenges posed by the COVID-19 pandemic, the President 11 signed the American Rescue Plan Act of 2021 (ARPA) into law. Pub. L. No. 117-2, 12 135 Stat. 4 (codified as amended in scattered sections of the U.S.C.). Among other 13 things, this law established the Coronavirus State Fiscal Recovery Fund. 42 U.S.C. 14 § 802; Coronavirus State & Loc. Fiscal Recovery Funds, Interim Final Rule, 86 Fed. 15 Reg. 26786-87 (May 17, 2021) (codified as amended at 31 C.F.R. pt. 35). The funds 16 “are intended to provide support to State, local, and Tribal governments (together, 17 recipients) in responding to the impact of COVID-19 and in their efforts to contain 18 COVID-19 on their communities, residents, and businesses.” 86 Fed. Reg. at 26787. 1 {3} Of the $350 billion in COVID-related financial assistance provided to eligible 2 recipients, id. at 26816, New Mexico received approximately $1.75 billion in ARPA 3 funds. The Legislature attempted to appropriate the ARPA funds through the 4 General Appropriation Act of 2021, 2021 N.M. Laws, ch. 137, §§ 1-15. In response, 5 Governor Michelle Lujan Grisham vetoed the portions that related to ARPA funds, 6 “asserting that the Legislature . . . lack[ed] the authority to direct the Executive’s 7 administration of federal funds.” 8 {4} Prior to the commencement of this proceeding, the Governor spent 9 approximately $600 million of the $1.75 billion in ARPA funds received by New 10 Mexico, leaving approximately $1.08 billion to be distributed. Petitioners State 11 Senators Jacob R. Candelaria and Gregory Baca filed suit against the Governor, 12 seeking a writ of mandamus prohibiting her from expending any additional ARPA 13 funds. Petitioners also requested a stay prohibiting the Governor and any official 14 under her control from “transferring, encumbering, committing, expending or 15 appropriating” any additional ARPA funds for the duration of these proceedings. 16 Petitioners limit their request for a writ to the remaining $1.08 billion in ARPA funds 17 and do not request relief related to the $600 million previously spent by the 18 Governor. We denied the request for a stay and requested responses from the 19 Governor and from Tim Eichenberg, New Mexico State Treasurer and real party in

2 1 interest in this proceeding. We also allowed the intervention of four additional state 2 senators. Following oral argument, we issued a prohibitory writ of mandamus and 3 an order providing that the Governor and State Treasurer “shall not transfer, 4 encumber, commit, expend, or appropriate any additional [ARPA] funds . . . absent 5 legislative appropriation.” This opinion explains the basis for that order. 6 II. DISCUSSION 7 {5} Before reaching the merits of Petitioners’ claims, we first consider two 8 preliminary matters: (1) whether Petitioners have standing and (2) whether a writ of 9 mandamus is the proper form of relief. 10 A. Standing 11 {6} Petitioners assert that they have standing on two separate grounds. First, they 12 contend that the dispute between the legislative and executive branches of 13 government confers standing as a matter of great public importance. Next, 14 Petitioners assert that standing is proper by virtue of their positions as members of 15 the state senate. 16 {7} We need not reach the question of Petitioners’ standing based on their 17 membership in the state senate, as we conclude that this case presents a matter of 18 great public importance. This Court has long recognized that we may, in our 19 discretion, “grant standing to private parties to vindicate the public interest in cases

3 1 presenting issues of great public importance.” State ex rel. Sego v. 2 Kirkpatrick, 1974-NMSC-059, ¶ 7, 86 N.M. 359, 524 P.2d 975. Matters of 3 “great public importance” are those that involve “clear threats to the essential nature 4 of state government guaranteed to New Mexico citizens under their Constitution— 5 a government in which the three distinct departments, legislative, executive, and 6 judicial, remain within the bounds of their constitutional powers.” State ex rel. Coll 7 v. Johnson, 1999-NMSC-036, ¶ 21, 128 N.M. 154, 990 P.2d 1277 (ellipsis, internal 8 quotation marks, and citation omitted). In this instance, Petitioners’ claims require 9 us to decide the bounds of the constitutional powers of the legislative and executive 10 branches to spend federal funds. Such separation of powers claims present matters 11 of great public concern conferring standing on Petitioners. See State ex rel. Clark v. 12 Johnson, 1995-NMSC-048, ¶ 15, 120 N.M. 562, 904 P.2d 11 (concluding the claim 13 “that the Governor has exercised the state legislature’s authority” is a matter of 14 “great public interest and importance” conferring standing (internal quotation marks 15 and citation omitted)); N.M. Bldg. & Constr. Trades Council v. Dean, 2015-NMSC- 16 023, ¶ 7, 353 P.3d 1212 (“The balance and maintenance of governmental power is 17 of great public concern.” (internal quotation marks and citation omitted)).

4 1 B. Mandamus 2 {8} Having determined that Petitioners have standing, we next consider whether 3 a writ of mandamus is the proper method of relief. “Mandamus may be used either 4 to compel the performance of an affirmative act where the duty to perform the act is 5 clearly enjoined by law, or it may be used in a prohibitory manner to prohibit 6 unconstitutional official action.” State ex rel. Riddle v. Oliver, 2021-NMSC-018, 7 ¶ 23, 487 P.3d 815 (ellipsis, internal quotation marks, and citation omitted). It is 8 well-established that “[w]e have . . . original jurisdiction in mandamus in instances 9 where a petitioner [seeks] to restrain one branch of government from unduly 10 encroaching or interfering with the authority of another branch in violation of Article 11 III, Section 1 of our state constitution.” Unite New Mexico v. Oliver, 2019-NMSC- 12 009, ¶ 2, 438 P.3d 343 (internal quotation marks and citation omitted); see also 13 Riddle, 2021-NMSC-018, ¶ 23 (“Mandamus is often utilized to restrain one branch 14 of government from encroaching on the powers reserved to another branch.”). This 15 case presents precisely such an instance. Petitioners ask us to issue a prohibitory writ 16 restraining the Governor from encroaching on the authority of the legislative branch 17 to appropriate money under Article IV, Section 30 of the New Mexico Constitution, 18 which provides that “money shall be paid out of the treasury only upon 19 appropriations made by the legislature.” Therefore, mandamus is proper.

5 1 C. ARPA Is Broad With Few Limitations 2 {9} ARPA provides four broad eligible uses of federal funds provided to the 3 states: 4 (A) to respond to the public health emergency with respect to the 5 Coronavirus Disease 2019 (COVID-19) or its negative economic 6 impacts, including assistance to households, small businesses, and 7 nonprofits, or aid to impacted industries such as tourism, travel, and 8 hospitality; 9 (B) to respond to workers performing essential work during the 10 COVID-19 public health emergency by providing premium pay to 11 eligible workers of the State, territory, or Tribal government that are 12 performing such essential work, or by providing grants to eligible 13 employers that have eligible workers who perform essential work; 14 (C) for the provision of government services to the extent of the 15 reduction in revenue of such State, territory, or Tribal government due 16 to the COVID-19 public health emergency relative to revenues 17 collected in the most recent full fiscal year of the State, territory, or 18 Tribal government prior to the emergency; or 19 (D) to make necessary investments in water, sewer, or broadband 20 infrastructure.

6 1 42 U.S.C. § 802(c)(1)(A)-(D).1 2 {10} All four categories allow state governments broad discretion to determine how 3 ARPA funds should be used. Indeed, the revenue loss provision is particularly 4 flexible because this category allows governments to replenish their general funds 5 as a result of a “reduction in revenue of such State . . . government due to the 6 COVID-19 public health emergency.” Section 802(c)(1)(C). If used to offset a 7 reduction in revenue due to COVID-19, the limitations on the state are minimal, 8 prohibiting only the use of the funds to offset tax cuts or to add to pension funds. 9 Section 802(c)(2)(A)-(B). Further, because ARPA does not limit the percentage of 10 funds that may be allocated to a certain category, a state retains the discretion to

1

Unless otherwise specified, all references to 42 U.S.C. § 802 are to the 2021

version of ARPA in effect at the time we issued our writ of mandamus and

accompanying order. After we issued the prohibitory writ in November 2021,

Congress amended Section 802 to provide additional flexibility by adding an

additional use category aimed at “provid[ing] emergency relief from natural

disasters or the negative economic impacts of natural disasters, including temporary

emergency housing, food assistance, financial assistance for lost wages, or other

immediate needs.” Section 802(c)(1)(E) (2022).

7 1 deposit the entirety of the awarded funds into a single category. 2 The broad 2 discretion that states are given to determine how ARPA funds are used is also 3 evidenced by the lack of any guidance or requirements governing the process by 4 which states allocate these funds. 5 {11} The accompanying federal regulations reinforce the broad nature for which 6 ARPA funds can be used, setting out dozens of examples of eligible uses within the 7 statutorily defined categories. See generally 31 C.F.R. § 35.6 (2021). For example, 8 Category (b), Public Health Emergency or Its Negative Economic Impacts, lists 9 twelve subcategories and twenty-two sub-subcategories of permissible uses.

2

We recognize that the 2022 amendment to ARPA Section 802 categories imposed minimal limitations on the percentage of funds that may be allocated to infrastructure projects, while other categories remain free from limitations. Compare § 802(c)(5)(C)(i)(1)(aa)-(bb) (2022) (limiting the amount of funding to be used on infrastructure projects to the greater of “$10,000,000; and . . . 30 percent of such payment”), with § 802(c)(1)(A)-(B) (2022) (providing no limitation on the allocation of funds under these categories). This structure provides recipients with broad discretion to deposit all or significant portions of the awarded funds into a single category and also to forego allocating any funds for other categories. Therefore, subsequent amendments do not alter our conclusion.

8 1 31 C.F.R. § 35.6(b) (2021). 3 Importantly, the regulations are silent as to how the 2 funds shall be distributed among the categories, subcategories, and sub- 3 subcategories, thereby leaving significant discretion to each recipient. 4 {12} The Interim Final Rule issued by the Secretary of the Treasury, which 5 provides additional guidance to assist in the implementation of ARPA, reiterates the 6 federal government’s intention to give broad discretion to the states to use ARPA 7 funds. The Interim Final Rule explains that “recipients have considerable flexibility 8 to use [ARPA funds] to address the diverse needs of their communities.” Interim 9 Final Rule, 86 Fed. Reg. at 26806. For example, the Interim Rule addressing the 10 category of public health and economic impacts, “provides flexibility for recipients 11 to use payments . . . for programs or services that are not identified on these non- 12 exclusive lists but that fall under the terms of [ARPA] by responding to the COVID- 13 19 public health emergency or its negative economic impacts.” Id. at 26788

3

As with ARPA, the federal government subsequently amended the federal

regulations. The amended version of the regulations is equally as broad and therefore

does not alter our conclusion. See 31 C.F.R. § 35.6(b)(3)(i)(A)-(D) (2022) (listing

four subcategories of eligible uses to address public health impacts, each of which

include an extensive list of eligible uses ranging from contact tracing to payroll

expenses related to community policing strategies, reductions in gun violence, and

“investing in technology and equipment”); id. § 35.6(b)(3)(ii)(A)-(E) (encompassing

five categories and seventeen expansive subcategories of negative economic impacts

for which ARPA funds can be used).

9 1 (emphasis added). 4 The broad nature of the statute and the accompanying rules 2 leaves to the states the responsibility to decide how best to use the ARPA funds. 3 D. Separation of Powers 4 {13} The flexible and broad nature of the funds raises the separation of powers 5 question before us today. To answer this question, we consider the constitutionally 6 defined powers of our legislative and executive branches, evaluating in particular 7 whether the ARPA funds are more properly administered by the Governor or 8 appropriated by the Legislature. Article III, Section 1 of the New Mexico 9 Constitution provides: 10 The powers of the government of this state are divided into three 11 distinct departments, the legislative, executive and judicial, and no 12 person or collection of persons charged with the exercise of powers 13 properly belonging to one of these departments, shall exercise any 14 powers properly belonging to either of the others, except as in this 15 constitution otherwise expressly directed or permitted.

4

The Final Rule, promulgated by the Department of Treasury after we issued

our prohibitory writ of mandamus and order, provides even greater flexibility. 87

Fed. Reg. 4338 (Jan. 27, 2022) (codified at 31 C.F.R. pt. 35). In general, it “provides

broader flexibility and greater simplicity” beyond the flexibility provided within the

Interim Rule. Id. at 4339. For example, “the final rule provides a broader set of

enumerated eligible uses.” Id. Such uses include “making affordable housing,

childcare, and early learning services eligible in all impacted communities and

making certain community development and neighborhood revitalization activities

eligible for disproportionately impacted communities.” Id. Moreover, even if a

recipient uses ARPA funds in a manner that is beyond what is specifically

enumerated, such use is permitted so long as the recipient satisfies a standard process

set out in the Final Rule. Id. at 4339-40.

10 1 Article IV, Section 30 of the New Mexico Constitution reserves the power to 2 appropriate to the Legislature, requiring that “money shall be paid out of the treasury 3 only upon appropriations made by the legislature.” Article IV, Section 30 draws no 4 distinction between state and federal funds. The Governor, by contrast, is 5 empowered to “take care that the laws be faithfully executed.” N.M. Const. art. V, 6 § 4; see also State ex rel. Taylor v. Johnson, 1998-NMSC-015, ¶ 22, 125 N.M. 343, 7 961 P.2d 768 (“A governor’s proper role is the execution of the laws.”). 8 {14} Notwithstanding the specific powers reserved to the legislative and executive 9 branches by our Constitution, we have recognized that “the constitutional doctrine 10 of separation of powers allows some overlap in the exercise of governmental 11 function,” as “the absolute separation of governmental functions is neither desirable 12 nor realistic.” Clark, 1995-NMSC-048, ¶ 32 (internal quotation marks and citation 13 omitted). Total compartmentalization and separation of functions between the 14 executive and legislative branches would result in a state of dysfunction. See id. 15 Even giving due weight to such overlap, however, “we have not been reluctant to 16 intervene when one branch of government unduly interfere[s] with or encroach[es] 17 on the authority or within the province of a coordinate branch of government.” Id. 18 (internal quotation marks and citation omitted). Our approach is one of practicality 19 and common sense, which recognizes that “[a]lthough the executive, legislative, and

11 1 judicial powers [set out in our Constitution] are not hermetically sealed, they are 2 nonetheless functionally identifiable one from another.” Id. ¶ 33 (internal quotation 3 marks and citation omitted). 4 {15} In this instance, we must determine whether the Governor’s authority to spend 5 the ARPA funds is a permissible overlap under the separation of powers doctrine, or 6 whether such an act would improperly infringe on the authority vested in the 7 Legislature. See id. ¶ 34 (“The Governor may not exercise power that as a matter of 8 state constitutional law infringes on the power properly belonging to the 9 legislature.”). To answer this question, we must determine “whether the Governor’s 10 action disrupts the proper balance between the executive and legislative branches.” 11 Id. Our assessment necessarily, 12 focuses on the extent to which the action by one branch prevents 13 another branch from accomplishing its constitutionally assigned 14 functions. Only where the potential for disruption is present must we 15 then determine whether that impact is justified by an overriding need to 16 promote objectives within the constitutional authority of [the 17 Legislature]. 18 Id. ¶ 34 (brackets and internal quotation marks omitted) (quoting Nixon v. Adm’r of 19 Gen. Servs., 433 U.S. 425, 443 (1977)). “One mark of undue disruption would be an 20 attempt to foreclose legislative action in areas where legislative authority is 21 undisputed.” Id. This approach strikes the appropriate balance between the

12 1 coordinate branches of government, while giving the required “effect to Article III, 2 Section 1.” Id. ¶ 32. 3 {16} Petitioners contend that the Governor improperly encroached on the authority 4 of the Legislature because the ARPA funds were “made available to the state 5 generally,” and Congress did not designate them “for any specific state program or 6 state agency.” Because Congress did not specifically designate the funds, Petitioners 7 argue, the ARPA funds are public money subject to legislative appropriation under 8 Article IV, Section 30. The Governor responds that Sego, 1974-NMSC-059, 9 established a categorical rule that the Legislature does not have authority to 10 appropriate federal funds in any circumstance. She further asserts that because the 11 funds are in a “suspense account” for funds that have not yet been earned pursuant 12 to NMSA 1978, Section 6-10-3(C) (2011), they are not “in the state treasury” and 13 are therefore beyond the reach of the appropriation requirement of Article IV, 14 Section 30. Alternatively, she invites the Court to conclude that she retains control 15 over the funds under a case-by-case approach developed by the Colorado Supreme 16 Court. 17 {17} For the reasons outlined below, we do not agree that this Court’s holding in 18 Sego, 1974-NMSC-059, answers the question presented by this case. Nor are we 19 persuaded that the type or location of the account where the ARPA funds have been

13 1 deposited is dispositive of the right to allocate those funds. Finally, we decline the 2 Governor’s invitation to adopt a bright-line rule that all federal funds fall outside the 3 purview of the Legislature’s power to appropriate. Instead, we adopt a more nuanced 4 case-by-case approach that considers the amount of discretion left to the states to 5 determine how best to expend federal funds. 6 E. Sego and Carruthers 7 {18} Relying on Sego, 1974-NMSC-059, and State ex rel. Coll v. Carruthers, 1988- 8 NMSC-057, 107 N.M. 439, 759 P.2d 1380, the Governor contends this Court has 9 already concluded that federal funds received by the State are properly administered 10 by the executive branch, rather than appropriated by the Legislature. Those cases, 11 while informative, do not control the result of this proceeding. Further, our holding 12 today does not have any bearing on the validity of either Sego or Carruthers. 13 {19} In Sego, we focused on the constitutional mandate giving boards of regents 14 “control and management” of the state’s higher educational institutions, Art. XII, 15 § 13, and the Legislature’s encroachment on that authority by trying to appropriate 16 and control the expenditure of funds granted or given to those institutions from 17 sources other than the state. 1974-NMSC-059, ¶¶ 42-44, 51. The dispute did not 18 involve a claim by the Governor that he had the power to administer those funds. 19 William Sego, a state senator, sought a writ of mandamus commanding the Governor

14 1 and other executive branch officials to “treat as nullities certain vetoes attempted by 2 the Governor” of legislation purporting to appropriate federal funds to institutions 3 of higher education in New Mexico. Id. ¶¶ 1, 9, 41-51. Among the vetoes challenged 4 by Sego was a veto of legislation giving the department of finance and 5 administration authority to temporarily use excess funds appropriated to institutions 6 of higher education, which included, among other things, federal funds and “funds 7 in the form of scholarships, gifts, donations, private endowments or other gratuities 8 received from an outside source.” Id. ¶ 41. To determine whether the Legislature 9 was acting within the scope of its power, we considered “the authority of the 10 Legislature to appropriate and control non-state funds available to these educational 11 institutions.” Id. ¶ 45. Relying on Article XII, Section 13 of the New Mexico 12 Constitution, we explained that the “powers of control and management of each of 13 these [affected] institutions is vested in a Board of Regents,” which supported our 14 holding that the Legislature “has no power to appropriate and thereby endeavor to 15 control the manner and extent of the use or expenditure of Federal funds made 16 available to our institutions of higher learning.” 5 Id. ¶¶ 49-51. Instead, the Court 17 concluded, “[c]ontrol over the expenditure of these funds rests with the Federal

5

Since Sego, Article XII, Section 13 has been amended multiple times and this

does not affect our analysis.

15 1 government and the Boards of Regents of the respective institutions.” Id. ¶ 51. The 2 Sego Court did not consider the Governor’s authority to administer federal funds, as 3 it was not at issue in that case and it does not control the outcome of this proceeding. 4 {20} In reaching its conclusion, Sego quoted with approval the Supreme Court of 5 Colorado’s opinion in MacManus v. Love, 499 P.2d 609 (Colo. 1972), which “held 6 ‘that federal contributions are not the subject of the appropriative power of the 7 legislature’ and the Legislature’s attempt to do so was . . . void as an infringement 8 upon the executive function of administration.” Sego, 1974-NMSC-059, ¶ 50. The 9 Governor argues that our approval of the statement in MacManus supports the 10 conclusion that this Court intended to create a categorical ruling that all federal funds 11 are subject to the administration by the executive and not appropriation by the 12 Legislature. Rather than announcing a categorical rule in Sego, however, we 13 specifically concluded that Article XII, Section 13 controlled the manner in which 14 the funds were spent and that the control over the funds at issue in that case “rest[ed] 15 with the Federal government and the Boards of Regents of the respective 16 institutions.” Sego, 1974-NMSC-059, ¶ 51. MacManus was quoted to support our 17 conclusion in Sego that the New Mexico Constitution provided a specific mandate 18 that boards of regents, and not the Legislature, were authorized to direct federal 19 funds received by institutions of higher learning. See id. ¶¶ 48-51. It did not establish

16 1 a categorical rule regarding appropriation of federal funds. And, rather than give the 2 Governor exclusive control over the funds at issue in Sego, as she requests in this 3 proceeding, we concluded that those funds were subject to the state constitutional 4 mandate set out in Article XII, Section 13, giving control and management to the 5 board of regents of each institution of higher learning. Id. 6 {21} Furthermore, in the half-century since MacManus was decided, Colorado case 7 law has evolved. Although the Supreme Court of Colorado has acknowledged that 8 it stated “rather broadly [in MacManus] that federal contributions are not subject to 9 appropriations by the legislature,” it now recognizes that federal funds can be subject 10 to the legislative appropriation process. See In re Interrogatories Submitted by Gen. 11 Assembly on House Bill 04-1098, 88 P.3d 1196, 1203 (Colo. 2004) (rejecting the 12 broad holding in MacManus that federal funds are not subject to legislative 13 appropriation because “some funds deriving from the federal government are more 14 akin to state moneys, and therefore subject to legislative appropriation”). Having 15 examined the development of its own case law, Colorado has adopted a case-by-case 16 approach focused on the nature of the specific grant or appropriation before the 17 court. 18 {22} We therefore decline the Governor’s invitation to interpret this Court’s 19 holding in Sego as a broad categorical rule that all federal funds are beyond

17 1 legislative appropriation. Sego did not consider expenditure of federal funds 2 generally, only those funds “made available to our institutions of higher learning,” 3 1974-NMSC-059, ¶ 51, and we will not rely on Sego for a proposition that it did not 4 consider. See Dominguez v. State, 2015-NMSC-014, ¶ 16, 348 P.3d 183 (“The 5 general rule is that cases are not authority for propositions not considered.” 6 (brackets, internal quotation marks, and citation omitted)). 7 {23} Carruthers, likewise, does not support the Governor’s view that the 8 Legislature does not have authority to appropriate federal funds no matter the 9 circumstance. The Governor argues that, because we did not clarify in Carruthers 10 that our holding in Sego “was limited to institutions of higher learning,” we “strongly 11 implied” that Sego created a categorical rule prohibiting legislative appropriation of 12 all federal funds. As an initial matter, we disagree that Sego required clarification. 13 In Sego, 1974-NMSC-059, ¶ 48, we expressly stated that “[a]s to the authority of the 14 Legislature to appropriate non-state funds available to the institutions of higher 15 learning, we are of the opinion that the Legislature lacks authority to appropriate 16 these funds or to control the use thereof through the power of appropriation.” Thus, 17 our limitation of Sego to “non-state funds available to the institutions of higher 18 learning,” id., as opposed to all non-state funds was clear.

18 1 {24} Turning to Carruthers, the Legislature in that case appropriated funds through 2 the General Appropriation Act of 1988, and the Governor vetoed several portions of 3 the legislation. 1988-NMSC-057, ¶ 2. As relevant here, one portion of the legislation 4 at issue in Carruthers appropriated certain funds, which included federal funds, for 5 data processing services. Id. ¶ 23. Although the Governor in Carruthers supported 6 his veto with some general reasoning that the Legislature cannot appropriate federal 7 funds, he did not attempt to veto the Legislature’s appropriation of federal funding. 8 Id. ¶¶ 23-24 (explaining that the Governor’s objection was to the Legislature’s 9 mandate that the funds be used to purchase a specific system from a specific 10 contractor). Instead, Carruthers confirms that Sego addressed the New Mexico 11 Constitution’s particular mandate that authorizes boards of regents, not the 12 Legislature, to direct federal funds received by institutions of higher learning. Id. 13 Therefore, the veto presented to this Court did not attempt to prohibit the Legislature 14 from appropriating any federal funds, but with a veto that prohibited the Legislature 15 from directing the specific system and specific contractor to be used. See id. 16 {25} To hold that the Legislature lacks the authority to appropriate federal funds 17 under any circumstance would contradict Carruthers, where we relied on Sego to 18 explain that “the legislature ‘has the power, and perhaps the duty, in appropriating 19 State monies to consider the availability of Federal funds for certain purposes.’”

19 1 Carruthers, 1988-NMSC-057, ¶ 23 (quoting Sego, 1974-NMSC-059, ¶ 51). Instead, 2 this Court’s explanation in Carruthers aligns with our view that Sego focused on the 3 notion that the New Mexico Constitution provided a specific mandate that 4 authorized boards of regents, and not the Legislature, to direct federal funds received 5 by institutions of higher learning, rather than to establish a categorical rule regarding 6 appropriation of federal funds. See id. This reading is consistent with the remainder 7 of Carruthers where we stated that “[w]ith few exceptions, money shall be paid out 8 of the public treasury only upon appropriations made by the legislature.” Id. ¶ 5. 9 Because the power to appropriate rests with the Legislature, the Governor retains 10 “only a negative power to disapprove; it is not the power to enact or create new 11 legislation.” Id. ¶ 6. 12 {26} The Court in Carruthers took issue with the Legislature placing improper 13 conditions on appropriations when it “limited the expenditure of appropriated funds 14 to a specific system and a specific contractor,” thereby eliminating the Governor’s 15 discretion to exercise his executive management function. Id. ¶ 24. (“We have 16 previously observed . . . that conditions and restrictions on appropriations which 17 reserve to the legislature ‘powers of close supervision’ over the executive function 18 are not looked upon with favor.” (citation omitted)). The Legislature’s conduct in 19 this regard fell outside the confines of “its traditional oversight and appropriation

20 1 functions” because it left the Governor without discretion to exercise his 2 management of the funds. Id. But we did not hold that the Legislature is without 3 authority to appropriate federal funds no matter the circumstance. Indeed, the 4 Legislature’s appropriation of federal funds in Carruthers remained intact. See id. 5 ¶ 23 (retaining the Legislature’s appropriation of federal funds even after the veto 6 struck the provision placing specific contractor and system conditions on the 7 appropriation). This close examination of Carruthers cuts against the Governor’s 8 assertion that Carruthers created a bright-line rule precluding legislative 9 appropriation of federal funds under any circumstances. Further, we decline to adopt 10 an approach that would categorically exclude the Legislature from ever 11 appropriating federal funds. Because neither Sego nor Carruthers answers the 12 question before us today, we look to the text of our Constitution and relevant statutes. 13 F. Constitutional and Statutory Framework to Appropriate and Administer 14 Money in the State’s Possession 15 {27} Our statutes and Constitution set forth the process for handling money 16 received on behalf of the state. Section 6-10-3 provides that “[a]ll public money in 17 the custody or under the control of any state official or agency obtained or received 18 by any official or agency from any source . . . shall be paid into the state treasury.” 19 And, “except interest or other payments on the public debt, money shall be paid out 20 of the treasury only upon appropriations made by the legislature.” N.M. Const. art.

21 1 IV, § 30. The Legislature, however, has recognized that on occasion state officials 2 receive funds that are not currently and may never become public money. The 3 Legislature established a process to account for and administer funds on such 4 occasions where those funds are not yet property of the state. Section 6-10-3(C) 5 provides that 6 every official or person in charge of any state agency receiving any 7 money . . . which money has not yet been earned so as to become the 8 absolute property of the state, shall deliver or remit to the state treasury 9 . . . which money shall be deposited in a suspense account to the credit 10 of the proper official, person, board or bureau in charge of any state 11 agency so receiving the money. 12 “All unearned moneys deposited in a suspense account with the state treasurer . . . 13 shall, as soon as the same shall become the absolute property of the state of New 14 Mexico, be transferred out of said suspense account to the proper fund.” NMSA 15 1978, § 6-10-41 (1977). 16 {28} Petitioners contend that the ARPA funds are subject to legislative 17 appropriation because they are located within the state treasury. In response, the 18 Governor contends that the funds fall outside the legislative appropriation 19 requirement because they are located in a suspense account within the treasury and 20 are subject to conditions, including repayment if misused, such that the funds are not 21 the absolute property of the state. As explained later in further detail, we disagree 22 that the fund’s location within the treasury—whether within a suspense account or

22 1 the general fund—is dispositive or even relevant. However, we agree that the 2 limitations imposed on a state as a condition for receiving such funds from the 3 federal government are relevant. Conditions imposed by the federal government that 4 specify how funds are to be used do not require legislative appropriation and allow 5 the executive branch to simply execute the law by adhering to a federally pre- 6 established purpose. By contrast, federal funds provided with a broad or 7 discretionary purpose such that they can be put to a variety of uses must be 8 appropriated by the Legislature. Because our Constitution and statutory scheme do 9 not appear to create a distinction between funds that are received from the federal 10 government and funds that are generated by the state, we look to approaches adopted 11 in other states to assist us in our examination of what factors or conditions ultimately 12 determine which branch of government controls the funds. 13 G. Other States 14 {29} Other states have addressed similar separation of power questions by 15 considering the nature and purpose of the federal funds at issue. In determining 16 “whether certain moneys fall under the powers of the legislative or executive 17 branch,” Colorado primarily examines “whether those moneys constitute general 18 state funds or custodial funds.” In re Interrogatories, 88 P.3d at 1200. This 19 examination involves

23 1 distinguish[ing] between funds akin to state moneys, which allow the 2 state broad flexibility in determining how such funds should be used, 3 and therefore become part of the state’s general fund, and custodial 4 funds, which are to be used only in the manner specified and for the 5 purposes designated by the federal government. 6 Id. at 1202. 7 {30} Under this approach, Colorado has established that noncustodial funds are 8 subject to legislative appropriation, while custodial funds “fall outside the scope of 9 legislative authority and instead are subject to executive control.” Id. at 1202-03. 10 “[W]hen evaluating whether certain moneys constitute custodial funds,” Colorado 11 considers all circumstances regarding the funds, including “the source of the funds, 12 the degree of flexibility afforded to the state as to the process by which the funds 13 should be allocated, and the degree of flexibility afforded to the state as to the funds’ 14 ultimate purposes.” Id. at 1202. 15 {31} Oklahoma, like Colorado, distinguishes between custodial and noncustodial 16 funds when presented with a separation of powers issue. See Application of State ex 17 rel. Dep’t of Transp., 1982 OK 36, ¶ 10, 646 P.2d 605, 609-10. However, Oklahoma 18 does not specifically rely on enumerated factors in assessing whether a fund will be 19 custodial, instead focusing on whether the federal funds are held in trust for a specific 20 purpose. See id. In applying this principle to grant-in-aid programs, the Supreme 21 Court of Oklahoma noted that “[f]ederal money deposited in the state treasury

24 1 pursuant to some grant-in-aid program is held in trust for a specific purpose. Like 2 other custodial funds, it retains its original legal character. The legislature wields no 3 authority over such funds.” Id. (footnote omitted). When these federal deposits take 4 place, the Legislature “may not subvert congressional policy by diverting the money 5 to another purpose.” Id. ¶ 10, at 610. 6 {32} The Massachusetts high court likewise recognizes that only certain federal 7 funds fall outside the Legislature’s power to appropriate. In assessing whether 8 federal funds are subject to appropriation or are merely held in trust, Massachusetts 9 focuses on whether the federal funds “are received by State officers or agencies 10 subject to the condition that they be used only for objects specified by Federal 11 statutes or regulations.” Opinion of the Justs. to the Senate, 378 N.E.2d 433, 436 12 (Mass. 1978). When the funds are received with specific conditions attached, “the 13 money is impressed with a trust and is not subject to appropriation by the 14 Legislature.” Id. In that circumstance, “[t]he recipient of such funds has no choice 15 but to comply with the requirements imposed by Federal law.” Id. The court 16 explained, however, that not all funds received from the federal government would 17 be held in trust. Id. Instead, “[f]ederal reimbursements may be made to a State 18 without conditions imposed as to expenditure.” Id. When this occurs, the “money 19 would be subject to the legislative power of appropriation.” Id.

25 1 {33} We glean from these cases that the answer to the separation of powers 2 question lies in a case-by-case examination of the amount of discretion that the 3 federal government affords to state recipients in spending federal funds. When the 4 funds come with specific conditions attached, the executive branch is merely 5 administering the funds consistent with the requirements established by the federal 6 government and no legislative appropriation is required. If a state retains wide 7 discretion, then such funds must be appropriated—a function constitutionally 8 reserved for the Legislature. 9 H. The ARPA Funds Are Subject to Legislative Appropriation 10 {34} Today, we adopt a totality of the circumstances approach to determine 11 whether the legislative or executive branch has the power to spend ARPA funds. The 12 amount of discretion the federal government left to New Mexico in allocating the 13 ARPA funds compels us to conclude that they are subject to legislative 14 appropriation. We base our conclusion on the language of ARPA, which includes 15 broad categories bestowing vast discretion on state recipients, as well as federal 16 regulations and rules reinforcing such flexibility through numerous categories and 17 subcategories covering a wide array of eligible uses, even allowing recipients to 18 allocate funds to programs or services that are not explicitly enumerated as long as 19 they “meet the objectives” of the statute. U.S. Dept. of the Treasury, 2021 Interim

26 1 Final Rule: Frequently Asked Questions, Section 2.3 (2023), 2 https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf (last visited October 3, 3 2023). We reiterated in State ex rel. Smith v. Martinez that the “New Mexico 4 Constitution vests the power to appropriate money exclusively with the Legislature,” 5 and that “a law making an appropriation must ‘distinctly specify the sum 6 appropriated and the object to which it is to be applied.’” 2011-NMSC-043, ¶ 4, 150 7 N.M. 703, 265 P.3d 1276 (emphasis added) (citing N.M. Const. art. IV, § 16; quoting 8 N.M. Const. art. IV, § 30). The Governor, on the other hand, retains the power to 9 “‘approve or disapprove any part or parts, item or items, of any bill appropriating 10 money . . . .’” Id. (quoting N.M. Const. art. IV, § 22). 11 {35} The number of eligible uses contained within ARPA is simply too broad to 12 allow the executive to administer or execute the funds without infringing on the 13 Legislature’s constitutional duty to appropriate. This broad flexibility embedded 14 within ARPA is evidence of significant discretion, such that the Governor, if she 15 were to control these funds, would not be able to allocate the funds through the mere 16 “execution” of the laws. See N.M. Const. art. V, § 4 (empowering the Governor to 17 execute the law). Instead, the Governor would be required to exercise the 18 Legislature’s constitutional prerogative to assess “how, when, and for what purpose” 19 the ARPA funds would be used. State ex rel. Schwartz v. Johnson, 1995-NMSC-

27 1 080, ¶ 14, 120 N.M. 820, 907 P.2d 1001 (internal quotation marks and citation 2 omitted) (“The legislature must exercise its exclusive power of deciding how, when, 3 and for what purpose the public funds shall be applied in carrying on the 4 government.” (internal quotation marks and citation omitted)). 5 {36} For example, even if we focused solely on the first eligible use category— 6 Public Health/Negative Economic Impacts—the Governor would need to choose 7 between twelve subcategories and twenty-two sub-subcategories of permissible uses 8 within that broad category. 31 C.F.R. § 35.6(b) (2021). Alternatively, the Governor 9 could forego funding that category at all, instead focusing on the premium pay or 10 revenue loss categories. Or, at her discretion, the Governor could use ARPA funds 11 “for programs or services that are not identified on these non-exclusive lists but that 12 fall under the terms of [ARPA] by responding to the COVID-19 public health 13 emergency or its negative economic impacts.” Interim Final Rule, 86 Fed. Reg. at 14 26788 (emphasis added). 15 {37} If the Governor were to unilaterally control how ARPA funds are spent, she 16 would exceed her power to execute the laws and infringe on the Legislature’s 17 appropriation power—a power that is constitutionally vested in the legislative 18 branch by Article IV, Section 30. Clark, 1995-NMSC-048, ¶ 34 (“The Governor 19 may not exercise power that as a matter of state constitutional law infringes on the

28 1 power properly belonging to the legislature.”). Just as the Legislature did not have 2 the authority to infringe on the “executive management function” in Carruthers, 3 1988-NMSC-057, ¶ 24, so, too, the executive does not have the authority to intrude 4 on the Legislature’s exclusive authority to appropriate funds. This is a proper 5 balance of power between the coordinate branches of government. 6 {38} If the executive was allowed to unilaterally spend the ARPA funds absent 7 prior appropriation, it would “disrupt[] the proper balance between the executive and 8 legislative branches” because it is indisputable that the power to appropriate money 9 falls exclusively within the purview of the legislative branch. Clark, 1995-NMSC- 10 048, ¶ 34 (“One mark of undue disruption [of the proper balance between the 11 executive and legislative branches] would be an attempt to foreclose legislative 12 action in [an area] where legislative authority is undisputed.”); Smith, 2011-NMSC- 13 043, ¶ 4 (explaining that our Constitution vests appropriation power with the 14 Legislature). We cannot allow such an unconstitutional infringement on the 15 legislative branch of government. 16 I. Suspense Funds 17 {39} In an attempt to avoid such infringement, the Governor contends that the 18 ARPA funds are “properly held in a suspense account pursuant to” Sections 6-10- 19 3(C) and 6-10-41 because the funds “ha[ve] not yet been earned so as to become

29 1 absolute property of the state.” The Governor reasons that because the funds are held 2 in suspense, they “do not implicate Article IV, Section 30’s appropriation 3 requirement because they fall outside of the state treasury.” The Governor submitted 4 an affidavit from the Secretary for the New Mexico Department of Finance and 5 Administration (DFA), who affirmed that the ARPA funds are in a suspense account. 6 She also affirmed that she is responsible for the DFA’s exercise of its statutory 7 authority to make disbursements from accounts maintained by the Treasurer’s office, 8 including from those funds held in suspense accounts. According to her affidavit, 9 the ARPA funds were deposited into suspense accounts, coded as “unearned 10 revenue,” and treated as liabilities instead of assets for audit purposes. 11 {40} Upon close examination, we conclude that Section 6-10-3 is an accounting 12 provision that does not remove the ARPA funds from the treasury or impact the 13 constitutional separation of powers analysis that we must engage in when we are 14 assessing whether it is the legislative or the executive branch that controls the funds 15 at issue. For this reason, we decline to allow coding procedures for auditing or 16 accounting purposes to subvert or determine the branch of government authorized 17 to appropriate funds when our Constitution explicitly provides that “money shall be 18 paid out of the treasury only upon appropriations made by the legislature.” N.M. 19 Const. art. IV, § 30.

30 1 J. Funds Held in Suspense Accounts Become the Property of the State 2 Before They Are Spent 3 {41} Even assuming that the use of a suspense account should control which branch 4 of government has the power to spend the ARPA funds, at oral argument the 5 Governor advanced that the ARPA funds are not earned until the funds are “spent, 6 reported, and approved by the federal government.” Counsel for the Governor 7 argued, “If [the funds are] unearned, [the funds] should not be in the state treasury 8 and therefore [are not] subject to appropriation pursuant to Article IV, Section 30.” 9 {42} We are unconvinced. Once state moneys are “earned so as to become the 10 absolute property of the state” under Section 6-10-3(C), the moneys shall “be 11 transferred out of said suspense account to the proper fund.” Section 6-10-41. 12 Fundamentally, a suspense account is a temporary holding account where the funds 13 are placed while a decision is being made as to their classification. See Black’s Law 14 Dictionary, 24 (11th ed. 2019) (defining a suspense account as a “temporary record 15 used in bookkeeping to track receipts and disbursements of an uncertain nature until 16 they are identified and posted in the appropriate ledgers and journals”). If the 17 predicate has been satisfied, the funds must, by statute, be transferred into “the 18 proper fund.” Section 6-10-41. Therefore, the Governor’s argument that the ARPA 19 funds are not earned until they are spent is unpersuasive because the funds must be

31 1 transferred from the suspense account into the proper fund before they are spent— 2 not after. 3 III. CONCLUSION 4 {43} For the foregoing reasons, we hold that the ARPA funds are subject to 5 legislative appropriation and so have granted a prohibitory writ of mandamus that 6 Governor Michelle Lujan Grisham and State Treasurer Tim Eichenberg shall not 7 “transfer, encumber, commit, expend, or appropriate any additional [ARPA] 8 funds . . . absent legislative appropriation.” 9 {44} IT IS SO ORDERED. 10 11 JULIE J. VARGAS, Justice 12 WE CONCUR: 13 14 C. SHANNON BACON, Chief Justice 15 16 MICHAEL E. VIGIL, Justice 17 18 DAVID K. THOMSON, Justice 19 20 BRIANA H. ZAMORA, Justice

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