One big change coming from the current administration is that the federal government is shoving payments from FEMA down to States. The administration talked about completely closing FEMA, but just recently said that they would keep the agency open in the future. But with the budget cuts that came out of the OBBB, it’s clear that the federal share for paying for disasters will go down, meaning the State share will increase.

Depending on the state, this transfer of funding responsibility could have a huge impact on an electric utility or a telecom provider with an extensive network. FEMA has quietly helped to pay for damages to networks caused by major storms, fires, floods, or other disasters.

FEMA was created in 1979 by combining several emergency response efforts in the federal government. FEMA became part of the Department of Homeland Security in 2003 and has the dual mission of providing disaster relief and educating the public on disaster awareness.

FEMA was busy in 2024 and responded to 90 disaster events that included numerous fires, several major hurricanes, including Milton and Helene, floods, landslides, and tornadoes.

FEMA has served as a financial backstop when disasters cause widespread damage to infrastructure of all kinds. FEMA has shown up in the past when a governor and the President both declared a disaster event. FEMA typically has paid for a portion of storm damage, with additional help coming from a State.

FEMA isn’t the only source of federal funding, and Congress can directly approve funding to go to a state that has a disaster. However, all of the experts I’ve been reading expect that the federal funding for disasters will drop significantly, meaning States will be expected to fund a significant portion of storm damages.

A diminished FEMA is going to create havoc. States do not have the extensive disaster teams that swarm a disaster area for up to a year after a disaster. States may not have mechanisms in place to easily fund damages to infrastructure and may need to pass legislation to be able to reimburse an electric company, cable company, or other network owner.

I’ve witnessed numerous occasions when disasters cause extensive damage to networks. I worked with a client a few years ago who had large stretches of fiber burned from an extensive wildfire. There was a hurricane in the U.S. Virgin Islands a few years ago that snapped almost every utility pole on one island. Hurricane Helene last year not only knocked down poles in Appalachia, but in many cases, the ensuing floods washed away entire roads and the networks along them.

You might wonder why network owners don’t buy commercial insurance to protect networks. I suppose they could, but such a policy would be extremely expensive and would drive up the cost of the services supported. I’m not aware of any affordable network replacement insurance available in the market.

There are things that telecom network owners and utility owners might want to consider doing in reaction to a weakened FEMA. It’s important for network owners to work with states to make sure they are ready to help them after a disaster. With FEMA as the financial backstop, network owners have felt able to begin repairs immediately since they understood that the funding to cover repairs would eventually show up. It’s scarier to begin spending money without understanding how disaster reimbursement will work.

It’s not unrealistic to picture disasters where a state will be unable to cover the full cost of damages. It’s not hard to imagine network owners who can’t afford to make repairs without a guarantee of at least partial reimbursement. This could result in electric or broadband networks that sit unrepaired and customers unconnected to vital services, magnifying the negative impact of disasters.