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As Hurricane Season Heats Up, Supreme Court Ruling Throws Federal Disaster Relief System In Doubt

FEMA faces a challenge to its future on another front.

Risk Market News
Risk Market News

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US Supreme Court ruling that rolled back federal agencies ability to oversee vast swaths of economic activity will hit squarely at the federal government's disaster relief system heading into what experts say will be an active hurricane season.

Friday's 6-3 ruling overturned a 1984 decision that allowed lower courts to defer to federal agencies when laws passed by Congress were considered ambiguous. It was known as “Chevron Deference” for one of the original parties in the 40 year old lawsuit that prompted the original ruling.

With the collapse of Chevron the legal infrastructure underpinning federal disaster relief programs will now be in the crosshairs of the plaintiffs bar as a result of the Supreme Court ruling, according to industry watchers.

As attorneys from Baker Donelson pointed out prior to Friday’s ruling, the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) and other governing statutes of the Federal Emergency Management Agency's (FEMA) are “written almost exclusively in permissive terms” that will no longer protected by Chevron Deference.

The result will include everything from post disaster lawsuits against FEMA for individual claims to a challenges to the entirety of the federal government's disaster relief programs.

“FEMA's denials may be prime targets for judicial review in the event the high deference currently applied by courts is no more,” Baker Donelson attorneys wrote. "This in turn would certainly result in a higher level of scrutiny of FEMA's decisions and policies."

The federal government's role in catastrophe recovery has grown as the private market has retreated from growing natural disaster risks in the United States. The U.S. experienced 28 separate billion-dollar weather and climate disasters in 2023, the highest number of billion-dollar disasters in the U.S. on record.

The Supreme Court's broadside against FEMA's authority comes as the conservative political movement makes plans for a possible second term for Donald Trump.

Organizations like the Heritage Foundation Heritage Foundation have made FEMA, the National Flood Insurance Program (NFIP) and federal crop insurance programs targets for cutback in new Trump administration.

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