You are omitting a significant fact; that is, the restrictions will be
temporary during a period where there are high-interest events taking
place.
You bet they can issue temporary restrictions based on a high-traffic
event, ramp capacity, and the challenging topography of that airport.
Note also that they are limiting even IFR arrivals.
It is not without precedent.
> Can they close an airport to all VFR traffic? This is what they're
> doing at Friedman Memorial Airport at Hailey, Idaho [HLE].
>
> Link to the article:
> http://www.mtexpress.com/index2.php?issue_date=04-20-2005&ID=2005102705