Flaget attended the First Provincial Council held by the American bishops in Baltimore to organize the Catholic Church as it was beginning to establish itself in the new nation. Worn out by this and his other labors, due to his poor health he submitted his resignation as bishop, which was accepted effective May 7, 1832. The outcry at this was so great from both the clergy and laity of the diocese, however, that he was appointed to that post again on March 17, 1833. The Bardstown Diocese was later transferred to Louisville, Kentucky on February 13, 1841, becoming the Diocese of Louisville.