Do people really need to have everything spelled out to them? It seemed pretty clear what's happening. They're in Kansas City, where there used to be a FEDRA quarantine zone but there isn't anymore. The reason that there isn't anymore is that people rose up against their particular tyrannical military dictatorship, and ousted them from power. Now they are going around executing anyone they see as having collaborated. Apparently Henry gave FEDRA some information about Kathleen's brother that led to him being killed, leading her to blame Henry. None of this was in the game but it's all very obvious.
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