What the FEMA Review Council Report Gets Right — and Wrong — About Flood Risk Management

The Trump Administration’s FEMA Review Council concluded its work on May 7 with the release of a sweeping 75-page Final Report that could significantly reshape the future of federal disaster policy, the National Flood Insurance Program and the relationship between FEMA and state, local and tribal governments. Established under Executive Order shortly after President Trump returned to office, the Council was tasked with evaluating FEMA’s structure, effectiveness, and long-term role in national disaster management.  

At the final Review Council meeting, with newly-seated Department of Homeland Security Secretary Markwayne Mullin chairing, the Review Council approved the report which outlines its recommendations for reforming FEMA, including its role in disaster response, proposed staffing, and major programs. This report represents one of the most consequential federal disaster policy blueprints in decades. While many of the recommendations would require congressional action and are unlikely to be implemented quickly or fully, the report likely signals the Administration’s policy direction and could shape future Stafford Act reform and NFIP reauthorization debates. 

The report now goes to President Trump for consideration. A 30-day public comment period on the report closes June 8.

Themes Driving the Council’s Recommendations 

Many of the major themes for FEMA reform that were reported in the media following the Council’s earlier public hearings remain prominent in the final report; however, some have been modified or dropped completely, reflecting the significant pushback the Council received from the public and various sectors beginning in March 2025.

While the report contains several constructive recommendations, ASFPM is deeply concerned that some of the proposals reflect a misunderstanding of how floodplain management, hazard mitigation, and the NFIP function in practice.

Several themes consistently emerge throughout the report, including: 

• Moving substantially more disaster and emergency management costs and responsibilities to the state, local, tribal, and territorial governments (SLTTs). The report calls for shifting greater responsibility to SLTTs with FEMA serving more as a support role through grant-type funding, and focusing primarily on immediate response and recovery while reducing the agency’s involvement in long-term recovery efforts. A strong theme is to wrap up federal involvement as quickly as possible. 
• Reducing FEMA staffing and operational footprint. The report criticizes what it describes as FEMA’s “bloated” staffing and recommends cutting costs through downsizing. However, the final version of the report has dropped the call for draconian 50% staffing cuts and dispersing large numbers of staff away from FEMA headquarters to FEMA regions, and instead calls for a study of needed staffing.
• Raising disaster declaration thresholds. The Council recommends increasing the impact damage-cost thresholds for Presidential disaster declarations so as to substantially reduce the numbers of declared disasters where FEMA and other federal agencies would be called on to respond. 
• Accelerating the allocation and distribution of federal disaster funds. The report proposes streamlining federal disaster assistance by relying more heavily on direct grants that are based on first-line, less generous formulas to state and local governments, who would then disperse the funds directly to victims and communities. The final draft also recommends using somewhat more generous federal cost-shares than basic levels to help incentivize mitigation.
• Shifting the execution of training to the states while tasking FEMA primarily with curriculum development. By incentivizing the development of training resources at the SLTT level, the Council aims to address what it considers “a lack of a national standard for incident response and recovery.” 

A Detailed Look at the More Concerning Recommendations

The report features 10 main recommendations, but we focus here primarily on its recommendations for NFIP reform, hazard mitigation, and direct assistance programs — areas where ASFPM believes the proposals could have the most consequential implications for floodplain management, disaster recovery, and long-term community resilience.  

NFIP REFORM AND PRIVATIZATION CONCERNS 

ASFPM’s greatest concerns center on the report’s recommendations for the NFIP.   While the report identifies numerous, long-known issues with the program and contains a few positive recommendations, most others tend towards reflecting a fundamental misunderstanding of the comprehensive nature of the NFIP and the program’s history, while others simply defy logic.  

NFIP Debt and Financial Solvency
The report argues that NFIP’s long-term debt, combined with increasing disaster losses and repetitive claims, demonstrates that the program is financially unsustainable in its current form. What the report neglects to identify is that nearly all of the debt in the NFIP is legacy debt that occurred prior to the implementation of Risk Rating 2.0, which was designed primarily to improve the program’s financial solvency and long-term sustainability. Irresponsibly, the final report does not include an earlier recommendation to forgive the NFIP’s debt, and while the report seems to recognize that there is a significant program cost to service the interest on the debt (currently at $700 million/year), it does nothing in terms of recommendations to solve this problem.

For context on the NFIP’s financial solvency issue, it should be noted that the same Congress that oversees the NFIP is the one that has authorized our nation’s crop insurance program. The federal government subsidizes crop insurance by an average of roughly 60% of total premiums, with total taxpayer costs often exceeding $10–$12 billion each year. In 2026, total taxpayer costs for the program are expected to be approximately $14.7 billion, which includes about $12.6 billion for premium subsidies and $5.1 billion for private insurance company expenses. 

Flood Mapping and Risk Data
While the report appears supportive of the need for more and better flood mapping, it is disappointing to see that there was no call to complete flood mapping across the country or to increase funding for the national flood mapping program overall.  We do note that prior to FEMA’s near shutdown last year, FEMA’s flood mapping program was evolving to more fully utilize the more modernized “Future of Flood Risk Data (FFRD)” approach. ASFPM supports the recommendation that the program must improve the accessibility, transparency, and quality of flood risk data and communication tools.  

The report largely has solid recommendations related to risk-based pricing, including continuing FEMA’s new rating system implementation. ASFPM has noted several implementation issues, including lack of transparency, but does support the move and glide path towards more actuarially sound rating. Further, the report’s recommendation to work with Congress to address affordability challenges for select homeowners is broadly supported by ASFPM and others.

Concerns About CRS Changes
The report largely misidentifies the overall goal and intent of CRS, which is to more broadly incentivize and support comprehensive local floodplain management programs that go beyond NFIP minimums — not to transform it into a program that only recognizes measures to reduce measurable actuarial risks to individual structures. This has been a recent concern and ASFPM has written detailed comments to the Federal Register about this change in approach from the Administration regarding the CRS that we believe is a mischaracterization of Congressional intent. (Download the comments ASFPM submitted in May, July and August 2025.)  

Minimum Standards and Federal Oversight
Further, while the report seems to recognize that current FEMA minimum standards are inadequate for buildings in high flood risk areas, it falsely argues that it is not FEMA that should set higher national program standards. Instead, it claims that “State and locally tailored standards would better reflect local flood risk choices and ideally decrease community, state, and federal cost.”   

Once again, this is a missed opportunity — and worse, it gives cover to a FEMA action rumored to have occurred last year which was to kill the ongoing effort to update the 53-year-old NFIP minimum standards. FEMA had started that work in response to a rulemaking petition by ASFPM and the Natural Resources Defense Council. While the report supports raising state and local land use and building code standards to combat increasing disaster costs — a recommendation that coincides with ASCE 24-24 being considered for inclusion in the 2027 International Building Code and International Residential Code — what does “support” mean in the context of the report? Will FEMA actively support such efforts beyond simply recommending them in this report?

The Push Toward Privatization
A highly controversial recommendation focuses on the Council’s presumed need to aggressively move to phase down the NFIP program through “privatization” of flood insurance. We note that this was a theme in the Heritage Foundation’s Project 2025 treatment of NFIP.  During the Council’s tenure, Florida-based Neptune Flood, the nation’s largest private flood insurance company, made a hard press on the Council with a loosely documented proposal that ASFPM and many in the insurance industry believe is unrealistic and over-the-top optimistic. 

The recommendation in the Council’s report leans heavily on questionable assertions such as there being a large amount of capital just waiting for the opportunity to expand into the private flood insurance world. The report also speculated that this could be carried out under current law, by using a phased “take out” and “depopulation plan” for existing NFIP policies, through selling or otherwise enticing blocks of NFIP policyholders with incentives to move to private insurance carriers. Many insurance experts say that such a plan would foster “cherry picking” of the lower-risk policies or more reliable customers that would likely leave the NFIP as the “insurer of last resort” with the riskiest and most expensive policies. Obviously, this is not a good way to reduce the financial exposure of an insurance program. The Council’s report argues that a depopulation strategy has been done successfully by state insurance programs, such as Florida’s Citizens Property Insurance for other perils. 

Unfortunately, the myth of the private sector not being involved in flood insurance endures. The NFIP was created, in part, because the private sector wouldn’t write flood insurance in the 1950s and 1960s and it was viewed as wise public policy to encourage people and businesses to have some form of insurance versus relying solely on disaster assistance. Since that time, the private sector has and continues to write flood insurance policies where it sees a pathway to profitability and their interest and involvement ebbs and flows over time. In 2012 and 2014, the NFIP was reformed to better enable private companies to underwrite flood insurance with numerous reforms that have been successful, and in 2021 FEMA initiated Risk Rating 2.0 which was responsive to the widely held concern of NFIP solvency, but also to level the playing field for the private sector to meaningfully compete with the NFIP.   

The Overlooked Insurance Gap
One major missed opportunity is the report’s failure to meaningfully address the nation’s flood insurance gap — the fact that too few property owners carry flood coverage in the first place. Instead the report frames the NFIP as a destabilized program that should be depopulated rather than one that should meaningfully co-exist with the private insurance market to help make sure all Americans have the insurance coverage they need, while also providing all of the other benefits the NFIP offers. However, the report does identify the NFIP as a program that would benefit from additional thoughtful exploration from other formal groups or experts best positioned to offer cogent solutions to the President and the nation. With this, ASFPM wholeheartedly agrees. 

HAZARD MITIGATION: CONFLICTING GOALS AND MISSED OPPORTUNITIES 

While the report acknowledges the need for greater hazard mitigation to reduce rising disaster costs, it is contradictory to single out the Hazard Mitigation Grant Program (HMGP) for replacement given that it is FEMA’s only state-led mitigation program. This recommendation conflicts with one of the report’s central themes: shifting more authority to states and communities.   

What Actually Delays Mitigation Projects
Slow program delivery remains one of the biggest challenges across FEMA’s mitigation programs. However, the report’s two-phase approach to speed disbursement of mitigation monies would do very little to accelerate completion of hazard mitigation projects. In the first 30 days after a disaster, states are focused on establishing HMGP implementation plans, conducting outreach, coordinating with communities, explaining mitigation options, and helping local officials determine whether to pursue funding and how to meet cost-share requirements. One of the biggest drivers of delay is that FEMA’s initial 30-day HMGP estimate can later be revised significantly downward. Instead, let’s treat the 30-day estimate as a guaranteed funding floor — especially since hazard mitigation investments save taxpayer money.   

Other drivers of delay are strategic funds management (which ironically came about due to DHS Office of Inspector General reports concluding that states were not using funds efficiently), the increasingly frequent occurrences of FEMA entering Immediate Needs Funding due to the depletion of the Disaster Relief Fund, and Congress not doing timely appropriations. 

Environmental Reviews and Federal Oversight
Although not specifically framed as a HMGP reform, under Public Assistance, the report correctly identifies environmental and historic preservation reviews as a major source of project delay. The report also mentions an alternative approach that could be helpful — the HUD-CDBG model, which allows states to perform environmental and historic preservation (EHP) reviews on behalf of HUD. Unfortunately, the report dismisses the HUD-CDBG approach in favor of an unspecified locally certified process. ASFPM is concerned that such an approach would significantly increase state and local liability and further slow the process. 

A practical way to make the environmental and historic preservation review of HMGP projects more efficient is to ensure dedicated FEMA staffing and assistance in the Joint Field Office following a disaster. FEMA could also establish a specialized unit within its Hazard Mitigation Assistance division dedicated to expediting these reviews.    

Federal Priorities vs. State Priorities
Another concern with the proposed two-phase approach for the HMGP is that it takes authority and autonomy away from states. The report suggests that two-thirds of the federal funding available under HMGP should go to “Federal Administration priorities” rather than state hazard mitigation priorities based on a set of eligibility criteria, which is how HMGP functions now. While it is great to see more funding going to flood mitigation priorities (one federal priority listed in the report is to address repetitively flooded properties); it is wrong when it comes at the expense of usurping state hazard mitigation priorities under this program. In short, the proposal represents a significant increase in federal overreach and is contrary to the original intent of Congress when it established the HMGP in 1988.  

Every Administration seems to tweak hazard mitigation priorities, and hazard mitigation professionals at the state and local level are left scrambling to reformulate mitigation projects to align with changing federal preferences for programs like Building Resilient Infrastructure and Communities (BRIC) and Flood Mitigation Assistance (FMA). It was wrong when the Biden Administration prioritized hazard mitigation funds on climate change initiatives that had little to do with reducing long-term hazard risk, and it would be wrong for this administration to do it too.  States and communities have spent more than 25 years developing and refining hazard mitigation plans to address locally identified risks. Moreover, the report’s proposed federal priorities already align with the purposes of FEMA’s other mitigation programs, namely FMA and BRIC.     

Building State Capability
The key to strengthening state management of hazard mitigation is building and maintaining state capability. While the report repeatedly calls for greater state responsibility, it offers few recommendations that would actually help states build or sustain that capacity.

ASFPM concurs with the notion that for mitigation to work best, states should take on greater program management responsibility; however, it is clear that there was little understanding within the Council — despite having had members who are current and former emergency managers and government executives, largely from disaster-prone states in the South — how hazard mitigation projects are actually developed. The report appears to assume mitigation projects can be fully developed before disasters occur and implemented immediately afterward. This is not reality, and it ignores the program’s own design requirements including voluntary participation, the need for non-federal matching funds, and community/public buy in. Hazard mitigation projects are inherently complex as they are addressing complex issues. That complexity demands time and expertise to guide them through to successful implementation.   

We do note that some of the recommendations listed in the report are reasonable, such as encouraging greater use of pre-negotiated exemptions to streamline environmental reviews, and establishing an eight-year limit on fund availability. Others, however, such as maintaining an inventory of properties in high-risk areas not built to modern building codes, fall well outside the capacity of most states without substantial additional resources. 

Too often, state hazard mitigation programs are largely defined and built using management costs that are only obtained if hazard mitigation grant projects are approved. Capacity programs like the Emergency Management Performance Grant (EMPG) are already oversubscribed. This approach is neither dependable nor consistent. Instead, the report seems to simultaneously make the recommendation to strengthen state management of hazard mitigation and aims to reduce administrative costs by giving fewer resources to strengthen state management.

Administrative Costs and Program Capacity
Under the title of “Maximizing Every Dollar Spent by Reducing Administrative Costs” on page 51, the report makes a number of erroneous assumptions and conflicting conclusions while also correctly identifying some of the factors driving the problems.  For example, federal overhead spending is dictated by Congress and is not increasing — at least not at the state or local level. Prior to Katrina, it was 15% (state management costs were 10% and local management costs were 5%). After Katrina, Congress gave FEMA authority to change the cost structure, which it did, reducing it to 4.89%. This move was widely criticized by practitioners and others as inadequate, and in 2018 Congress restored it to the 15% level through the Stafford Act reforms.  

Further, ASFPM entirely rejects the notion that somehow the programs are structured to keep disasters open as long as possible to maximize administrative costs. This is simply not true — states who oversee the programs are driven by deadlines and the desire to get survivors back to normal as quickly as possible. While the report correctly identifies that program complexity leads to higher administrative costs and proposes to reduce program complexity as an overall goal, it seems to imply that federal agency staff moving to the private sector is somehow underhanded and problematic. In reality, the expertise that former federal staff have often ensures everything from application development to project implementation to go quicker because they are able to better navigate the increasing complexity of the programs. While the size and number of FEMA’s hazard mitigation programs has grown over the past three decades, FEMA’s system of delivering hazard mitigation programs has not been successful, because it does not recognize the need to help build and maintain state capacity to deliver these programs.   

ASFPM has experienced and evaluated numerous models for program management and one particularly effective example exists in the NFIP through the Community Assistance Program. This model provides a consistent, steady level of funding to states to build and maintain a base level of capacity to work alongside FEMA in implementing the NFIP and to ensure that over 22,000 communities remain in compliance with the program.  

For $20 million/year (which is tiny compared to the overall amount of funding for hazard mitigation), this concept could be applied to strengthen state hazard mitigation programs to effectively be FEMA’s partner in administering and delivering the agency’s hazard mitigation programs, which would, in turn, achieve many of the goals that have been elusive, such as faster program delivery.  

ASFPM believes meaningful mitigation reform should focus on building long-term state capability, streamlining program delivery, and providing stable administrative support. Without those investments, efforts to shift more responsibility to states and communities will fall short of the report’s stated goals.  

STAFFORD ACT AND ASSISTANCE CHANGES

Individual Assistance (IA) Overhaul
The Council proposes some radical changes in the Stafford Act’s Individual Assistance program by narrowing FEMA’s role to providing emergency and temporary housing or rental assistance. Long-term housing would be left to private insurance companies. This assistance would be available “only for Americans whose homes are uninhabitable.” This change would exclude properties with minor damage as well as secondary homes. The recommendation would also lower temporary housing payments from 100 percent to 75 percent. 

FEMA payments would be expedited and consolidated into a single payment, and the report says there should be an option for a state-managed program. Homeowner payments would be based on level of need and be capped at 15% of the home’s locally-assessed value. Renters would receive assistance  based on level of need and would cover three months of temporary rental at HUD’s “Fair Market Rate,” with those of greatest need given an option of another three months. The report says the intention is to greatly reduce administrative costs, simplify disaster payments, and “clarify federal responsibilities.”

Parametric Funding for Public Assistance
The Council proposes to employ “parametric funding” to pay PA damage costs. This amounts to “predetermined payments” for storms and flooding events where and when certain thresholds of extreme weather, rainfall, flood depths, wind speeds, or earthquake magnitude are met. Federal payments would range from 50 percent to a maximum of 75 percent. The primary purpose is to avoid “time consuming” initial damage assessments and to speed the start of reconstruction. 

SLTTs would be authorized to manage essentially all planning and normally federally-regulated permitting, in lieu of National Environmental Policy Act  (NEPA) and other federal environmental and preservation requirements. Communities would be required to prepare an initial certified audit within the first year, followed by a close-out audit at project completion to ensure all federal funds were either spent appropriately or returned. All close-outs must be completed within eight years. A stated purpose would be to avoid a federal audit. While the recommendation would undoubtedly help speed funding distribution, it raises serious questions about oversight and protections for taxpayers from fraud. 

Interestingly, one of the things that could make FEMA more efficient and less bureaucratic is to re-establish its standing as an independent cabinet-level agency, which ASFPM has supported since 2004. That recommendation did not make the final report.  

Congress Will Have the Last Word

The Review Council recognizes that most of the report’s recommendations will require legislative action by Congress. Thus, Congress will likely have final say on what ultimately happens to the proposals. The Council also notes that many of the proposals would require extensive work and additional cost to put into place. That is clearly true. ASFPM is also concerned that many of these proposals would not only take years to formulate, but may ultimately be far less effective than FEMA’s current programs, which already undergo continual reform and updating. Indeed, some would be seriously counter-productive. 

The report will likely become a policy document that contributes to federal flood and disaster debates in coming months and years; and elements of the report are already influencing appropriations discussions, FEMA reform legislation, and NFIP policy conversations. Ultimately, the FEMA Review Council’s final report represents a major philosophical shift in federal disaster policy — emphasizing decentralization, privatization, reduced federal involvement, and greater state and individual responsibility.

Although some recommendations warrant further discussion, others raise serious concerns about the future of floodplain management, hazard mitigation and the NFIP. ASFPM will continue educating Congress and congressional staff on the impacts and implications of the report’s recommendations, grounding the discussion in 50 years of practitioner experience, and real-world floodplain management expertise.