Attorney General Clark Opposes Trump Administration's Effort to Undermine State and Local Laws Following Declared Disasters

Attorney General Charity Clark today joined a coalition of 20 attorneys general in filing a comment letter strongly objecting to the U.S. Small Business Administration's (SBA) interim final rule that seeks to preempt state and local permitting requirements under certain conditions following a declared disaster. To carry out this preemption, the interim final rule invites contractors to self-certify their own compliance with local building, health, and safety codes for building activities funded by SBA's Disaster Loan Program. In addition to being plainly unlawful under federalism principles, the SBA self-certification program is vague and poorly suited for maintaining health and safety standards. In the comment letter, the coalition asserts that the interim final rule's illegal, drastic, and unnecessary objectives will sow confusion and create significant safety risks that interfere with the needs of those harmed by natural disasters.

SBA's Disaster Loan Program was established through the Small Business Act of 1958. Through this program, SBA offers different types of loans to help disaster survivors, among other things, repair or replace residential and commercial property damaged or destroyed in Presidentially-declared disasters. On January 23, 2026, President Trump signed Executive Order 14377, which attacked California and local governments in Los Angeles County for alleged delays in the wildfire recovery process and instigated SBA's issuance of the interim final rule. Six days after President Trump issued the executive order, SBA issued the interim final rule. It took effect immediately without advance notice or any opportunity for public comment.

Except for the few federal statutes that regulate construction on a national basis, government regulation of construction for the public health, safety, and welfare has been left to state and local governments for generations. Congress did not grant SBA authority to override any state and local laws, let alone those having to do with the core local function of permitting. Permitting regulations are within the purview of state and local police power, and they do not frustrate the core objectives of SBA's Disaster Loan Program.

Evidence from recent disasters shows that state and local permits are not causing an undue delay in the disbursement and use of SBA funds. Several factors unmentioned by SBA, including delayed or insufficient insurance payouts or high out-of-pocket costs, contribute significantly to the rate of rebuilding. Further, permitting times have accelerated dramatically with local agencies approving home rebuilding permits nearly three times as fast as permits for homes in the five years before the fires. The interim final rule presents no evidence to the contrary but nevertheless attempts to undermine state and local requirements that promote efficient and safe disaster recovery.

In the comment letter, Attorney General Clark and the coalition assert that:

• The interim final rule unlawfully exceeds SBA's statutory authority because Congress has not delegated preemption power to SBA.
• The interim final rule is arbitrary and capricious because no evidence supports its claim that state and local permitting requirements conflict with the Disaster Loan Program.
• The interim final rule is arbitrary and capricious because it is vague and will result in significant and disruptive legal uncertainty in the aftermath of disasters. Specifically, it does not clearly define what it means for a state or local requirement to constitute a "but-for cause" of a delay. Accordingly, it is hard to know when state or local permitting rules would be preempted.
• The interim final rule was unlawfully promulgated and violated the Administrative Procedure Act's requirement to provide notice and allow for public comment.
• The interim final rule was promulgated against the dictates of Executive Order 13132, a separate executive order signed by President Bill Clinton in 1999 that instructs federal agencies to be guided by federalism principles.

In filing this letter, Attorney General Clark joins the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawai'i, Illinois, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Rhode Island, and Washington.

A copy of the comment letter is available on our website.

CONTACT: Amelia Vath, Senior Advisor to the Attorney General, 802-828-3171