FEMA Disaster Deductible Could Survive Trump Deregulation Drive

By | February 3, 2017

Donald Trump has said he wants to roll back many of Barack Obama’s regulations linked to climate change but there may be one exception: a federal disaster proposal aimed at getting states to prepare for the more intense storms forecast to come their way.

The regulation, proposed by the Federal Emergency Management Agency a week before Trump took office, would impose on states a “disaster deductible” — a requirement that they shoulder some of the recovery costs up front, before receiving federal dollars. The deductible would be reduced for states that pass stricter building codes or take other steps to reduce their residents’ exposure to disasters.

The federal government has paid out $357 billion in the past decade after disasters such as hurricanes and wildfires, and the risk of bigger storms and greater losses looms. Keeping those costs in check is something the Trump administration may be interested in, as well.

“If you’re a good-government person, there’s a lot of common sense in this,” said James Carafano, the head of Trump’s transition team for the Department of Homeland Security, which includes FEMA. The deductible idea is “fiscally responsible and politically feasible,” he said.

“I don’t think it’s dead, because it’s a reasonable idea,” Carafano, vice president at the conservative Heritage Foundation, said in an interview Jan. 26, less than a week after his work with the transition team ended.

A spokeswoman for FEMA declined to comment.

Whether the administration pursues the disaster deductible could signal its broader approach to policies aimed at adapting to climate change. While Trump campaigned against programs to reduce greenhouse-gas emissions, such as the 2015 Paris agreement and the Clean Power Plan, his position isn’t clear on initiatives designed to help Americans cope with the consequences of emissions: heat waves, sea-level rise, and more frequent and intense hurricanes, floods and wildfires.

Flood-Prone States

That relative silence may reflect the fact that unlike the climate debate, which according to opinion polls increasingly falls along ideological lines, protecting Americans against extreme weather remains largely bipartisan. Some of the states most exposed to hurricanes and floods are led by Republicans, who have become increasingly aggressive about responding to those threats.

The push to adapt to climate change still has divisions. When FEMA released an outline of its deductible proposal last year, property and casualty insurers supported the idea. Meanwhile, homebuilders, whose costs would increase if houses had to meet stricter safety standards, opposed it. The National Association of Home Builders, a trade group, called the idea “a back-door way to impose federal building code requirements.”

The fight over disaster-policy reform has highlighted another fault line: Between state and local governments, for whom any restrictions on development mean less tax revenue, and the federal government, which now pays all or most of the cost when houses, roads, bridges and other property gets damaged by storms.

Extreme Weather

Under the current rules, the federal and state governments have a cost-sharing arrangement for emergencies, but the president can waive the state share. The deductible would put states on the hook for the initial payouts, before most federal aid begins.

Craig Fugate, Obama’s FEMA director, said in an interview with Bloomberg in December that states may prefer the federal government’s current approach to disaster recovery, which imposes no penalty on states that fail to address risks from extreme weather. But he said Congress won’t keep spending more money for disaster recovery forever.

“You may not like what I’m proposing, but what’s your alternative?” Fugate recalled telling state officials. “The Government Accountability Office and the Department of Homeland Security Inspector General have both continued to say that the threshold for disaster declarations for public assistance is too low, and it should be increased.”

Carafano, the former transition head, said that while Fugate was the driving force behind the deductible concept, that didn’t mean it was a partisan issue. “It’s associated with a FEMA director who everybody liked and respected,” Carafano said. “It’s not like it’s an Obama idea.”

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