This would be a great idea, and I find it puzzling Apple has kept this feature disabled.
ARRRGGGG!
It's because you can't fit an FM antenna inside the case.
It's basic radio physics.
Let me show you why. A typical FM radio station might have a frequency of 102.1. That corresponds to a wavelength of 2.9 meters. To be resonant, an antenna has to be some integer multiple of 1/2 the wavelength, so in this case, it has to be 1.5 meters. You can get reception with smaller antennas, but anything beyond about 1/10 a wavelength gets you practically no signal at all. So in this case, you'd need something at least 30 cm long, which is much larger than your phone.
If you don't believe me,
go get this book:
https://www.arrl.org/shop/ARRL-Antenna-Book-23rd-Softcover-Edition/
You can get the signal into the system by using the headphone as an antenna, it's almost long enough so even though efficiency is pretty poor, it works well enough in cities.
But
there's no headphone jack on a modern iPhone. So what they are asking for, for all intents, is physically impossible.
FM is a crap solution anyway. What if I'm on the subway? Or away from a city? Or simply listening to my music? Or on a phone call?
FM requires me to stop what I'm doing and hunt around for the right channel, and then listen to a linear program until I hear something that might be interesting.
What you really want is to get a message no matter what you're doing, one that's PUSHED to you instead of you having to find it, and ideally one that knows where you are so it can tell you the right things.
You know, like SMS. Which you get right on your screen no matter what you're doing. Which gives you information immediately. Which can do cell triangulation to tell you the road nearby is closed due to flooding. Which is backed up by batteries and generator.
This whole concept is dumb. FM is already crap for this task, and now they want to legislate it?