The House Transportation and Infrastructure Committee has introduced  bipartisan legislation that could fundamentally transform how local governments receive federal disaster assistance. The Fixing Emergency Management for Americans (FEMA) Act of 2025 (H.R. 4669), sponsored by Chairman Sam Graves (R-MO) and Ranking Member Rick Larsen (D-WA), represents the most comprehensive FEMA reform package since Hurricane Katrina 

The FEMA Act of 2025 represents a generational opportunity to modernize federal disaster assistance in ways that benefit local governments. While the reforms introduce new responsibilities and risk allocations, they promise faster aid delivery, greater local control, and stronger incentives for community resilience.

For city and county managers who have long struggled with FEMA's bureaucratic processes and unpredictable timelines, these changes could fundamentally improve their ability to serve residents effectively during disasters and build more resilient communities for the future by providing new tools and flexibility for disaster preparedness, response, and recovery.

Why Reform Is Needed

The current FEMA system has drawn criticism for its slow reimbursement processes, complex bureaucratic requirements, and lack of predictability for local governments. Traditional disaster recovery often leaves communities waiting months or years for funding, straining local budgets and delaying critical infrastructure repairs. The FEMA Act of 2025 aims to address these systemic issues through comprehensive reforms across all phases of disaster management.

The legislation elevates FEMA to Cabinet status, removing it from the Department of Homeland Security and making the Administrator directly accountable to the President. This structural change is designed to improve coordination, reduce bureaucratic layers, and enhance the agency's focus on disaster management.

Key Benefits for Local Governments
 

1. Faster, More Predictable Funding Through Public Assistance Reforms

The most significant change for local governments is the transformation of FEMA's Public Assistance (PA) program from a reimbursement model to an upfront grant system. Under the new Section 409, communities will receive engineer-certified cost estimates that become binding grant amounts, eliminating the uncertainty of traditional cost-reimbursement approaches and significantly accelerating recovery timelines.

Critical Timeline Improvements:

• FEMA must review and approve cost estimates within 90 days of submission
• Emergency work reimbursements must be disbursed within 120 days once 90% of costs are documented
• Long-term project funding becomes available within 30 days of estimate approval

2. Enhanced Local Flexibility and Control

The legislation includes several provisions that give local managers greater control over disaster response:

• Block Grant Option for Small Disasters: For events up to 125% of the state per-capita indicator, governors and tribal leaders can elect lump-sum grants equal to 80% of estimated damages, giving localities flexibility in how they allocate resources without navigating complex project worksheets.

• Streamlined Environmental Reviews: Like-for-like repairs are excluded from major federal environmental review requirements, and state and local governments may assume environmental and historic preservation review responsibilities through enforceable agreements.

• Management Cost Modernization: The bill allows communities to pool "excess" management costs across multiple open disaster events, addressing chronic administrative shortfalls and providing much-needed budgetary flexibility.

3. Improved Mitigation Incentives

The legislation creates a sliding federal cost-share ranging from 65% to 85% based on local mitigation efforts. Communities that implement strong mitigation practices can receive higher federal cost-sharing (up to 85%), while those failing to address causative hazards may see reduced federal participation (down to 65%). This structure rewards proactive communities while encouraging others to invest in resilience.

Additionally, states must develop lists of pre-approved mitigation projects with at least one project per county, enabling faster implementation when funding becomes available. The pre-disaster mitigation program transitions to a formula-based grant system, improving predictability for long-term planning.

4. Build Back Better Authority

Perhaps most significantly for long-term community resilience, the legislation permits rebuilding to more resilient standards rather than simply restoring pre-disaster conditions. This "build back stronger" authority allows communities to invest in infrastructure improvements that reduce future disaster risks, though cost overruns beyond the one-time adjustment for market fluctuations remain the local government's responsibility.

5. Enhanced Transparency and Accountability

The bill mandates creation of a Public Assistance dashboard that publicly displays information for each major disaster declaration, including cost estimates, review status, and project-level updates. This transparency tool will help local managers track progress and provide better information to elected officials and the public.

6. Procurement and Administrative Improvements

Local governments will be treated as "states" for federal procurement purposes under 2 C.F.R. Part 200, reducing audit risk and administrative burden. Additionally, when arbitration panels decide in favor of applicants, attorney fees become eligible for FEMA reimbursement, providing important protection for communities forced to dispute federal decisions.

Implementation Considerations

While these reforms offer substantial benefits, they also shift certain risks and responsibilities to local governments:

• Estimation Accuracy is Critical: Under the new grant model, cost overruns are generally non-reimbursable except for the one-time adjustment for market fluctuations. Communities will need to invest in qualified cost estimators and robust change management processes.

• Compliance Deadlines: The new 90-day and 120-day disbursement requirements will require local governments to be more prepared with documentation and data, as failure to meet deadlines may trigger withholding of funds.

• Insurance Integration: The legislation includes mandatory insurance integration requirements that will require communities to review their coverage adequacy and may drive demand for more sophisticated insurance programs.

Congressional Timeline and Next Steps

The bill is expected to move through the House Transportation and Infrastructure Committee in September 2025, following the August recess. If passed by the House, it will move to the Senate Homeland Security and Governmental Affairs Committee.