On January 23, 2026, one year after the Los Angeles wildfires, the President issued Executive Order 14377 directing the Secretary of Homeland Security, acting through the Administrator of the Federal Emergency Management Agency (FEMA), and the Administrator of the Small Business Administration (SBA) to consider regulations that would preempt state and local permitting requirements for federally funded reconstruction projects in the Pacific Palisades and Eaton Canyon areas. The Order mandates expedited federal environmental and historic preservation reviews, directs the development of legislative proposals, and orders an audit of California’s use of Hazard Mitigation Grant Program (HGMP) funding.
Federal Preemption of State and Local Permitting
The Order directs FEMA and the SBA to consider promulgating regulations that would preempt state or local permitting processes found to have “unduly impeded” the timely use of federal emergency-relief funds by homeowners, businesses, or houses of worship seeking to rebuild. Under the proposed framework, preempted permitting regimes would be replaced with a self-certification requirement, whereby builders would certify to a federal designee that they have complied with all applicable substantive state and local health and safety standards. FEMA would retain authority to review all repairs and construction for compliance with applicable health and safety standards. Proposed regulations must be published within 30 days, with final regulations due within 90 days.
Expedited Federal Reviews
Agency heads are directed to use all available authorities under the National Environmental Protection Act, the Endangered Species Act, and the National Historic Preservation Act to expedite waivers, permits, reviews, consultations, or approvals for structures proposed to be rebuilt using federal emergency-relief funds. Reviews must be limited to the minimum scope and duration required to expeditiously advance the policy of the Order while ensuring public health and safety.
Within 90 days, FEMA and SBA must submit legislative proposals to the President that would enable the agencies to address situations where states or local governments are not enabling timely disaster recovery, including through appropriate regulation.
Audit of California’s Hazard Mitigation Grant Program Funds
The Order mandates a two-phase accountability review of nearly three billion in unspent HMGP funding granted to California, which was awarded to mitigate hazards. Within 30 days, FEMA must determine whether any funding was awarded arbitrarily, capriciously, or contrary to law. Within 60 days, FEMA must complete a federal audit examining whether funded projects were completed as approved and on time, whether projected risk reduction matched actual outcomes, and whether California’s use of federal funds demonstrably mitigated future wildfire impacts. Administrative actions, including potential recoupment or future grant conditions, must follow within 30 days of the audit’s completion.
Implications and Takeaways
Stakeholders with federally funded rebuilding projects in the affected areas should monitor the forthcoming proposed regulations closely, as they may substantially alter permitting timelines and compliance obligations. State and local governments, as well as HMGP recipients, should prepare for heightened federal oversight and potential enforcement actions related to grant funding.
Interested parties should also be mindful of potential litigation that may follow from FEMA’s or SBA’s issuance of rules, particularly in light of preemption. Among others, it is not uncommon to see environmental and historic-preservation NGOs, along with community groups, litigate to police environmental and historical preservation interests. Despite preemption, it is also possible that either the State or applicable municipalities assert claims regarding the loss of their ability to protect municipal interests and program interests, which claims sometimes arise under the Administrative Procedures Act.
