Appropriate Tools
Need to Be Selected
for Providing
Assistance

Grants

The establishment of specific national goals and measures for homeland security initiatives, including preparedness, will not only go a long way towards assisting state and local entities in determining successes and areas where improvement is needed, but could also be used as goals and performance measures as a basis for assessing the effectiveness of federal programs. The Administration should take advantage of the Government Performance and Results Act (GPRA) and its performance tools of strategic plans, annual performance plans and measures, and accountability reports for homeland security implementation planning. At the department and agency level, until the new department is operational, GPRA can be a useful tool in developing homeland security implementation plans within and across federal agencies. Given the recent and proposed increases in homeland security funding, as well as the need for real and meaningful improvements in preparedness, establishing clear goals and performance measures is critical to ensuring both a successful and fiscally responsible effort.

The choice and design of the policy tools the federal government uses to engage and involve other levels of government and the private sector in enhancing homeland security will have important consequences for performance and accountability. Governments have a variety of policy tools including grants, regulations, tax incentives, and information-sharing mechanisms to motivate or mandate other levels of government or the private sector to address security concerns. The choice of policy tools will affect sustainability of efforts, accountability and flexibility, and targeting of resources. The design of federal policy will play a vital role in determining success and ensuring that scarce federal dollars are used to achieve critical national goals. The national strategy acknowledges the shared responsibility of providing homeland security between federal, state, and local governments, and the private sector and recognizes the importance of using tools of government such as grants, regulations, and information sharing to improve national preparedness.

The federal government often uses grants to state and local governments as a means of delivering federal assistance. Categorical grants typically permit funds to be used only for specific, narrowly defined purposes. Block grants typically can be used by state and local governments to support a range of activities aimed at achieving a broad, national purpose and to provide a great deal of discretion to state and local officials. In designing grants, it is important to (1) target the funds to states and localities with the greatest need based on highest risk and lowest capacity to meet these needs from their own resource bases, (2) discourage the

Regulations

replacement of state and local funds with federal funds, commonly referred to as supplantation, with a maintenance-of-effort requirement that recipients maintain their level of previous funding, and (3) strike a balance between accountability and flexibility. At their best, grants can stimulate state and local governments to enhance their preparedness to address the unique threats posed by terrorism. Ideally, grants should stimulate higher levels of preparedness and avoid simply subsidizing local functions that are traditionally state or local responsibilities. One approach used in other areas is the "seed money” model in which federal grants stimulate initial state and local activity with the intent of transferring responsibility for sustaining support over time to state and local governments.

Recent funding proposals, such as the $3.5 billion block grant for first responders contained in the president's fiscal year 2003 budget, have included some of these provisions. This grant would be used by state and local governments to purchase equipment; train personnel; and exercise, develop, or enhance response plans. Once the details of the grant have been finalized, it will be useful to examine the design to assess how well the grant will target funds, discourage supplantation, and provide the appropriate balance between accountability and flexibility, and whether it provides temporary "seed money" or represents a long-term funding commitment.

Other federal policy tools can also be designed and targeted to elicit a
prompt, adequate, and sustainable response. In the area of regulatory
authority, the federal, state, and local governments share authority for
setting standards through regulations in several areas, including
infrastructure and programs vital to preparedness (for example,
transportation systems, water systems, and public health). In designing
regulations, key considerations include how to provide federal
protections, guarantees, or benefits while preserving an appropriate
balance between federal and state and local authorities and between the
public and private sectors. Regulations have recently been enacted in the
area of infrastructure. For example, a new federal mandate requires that
local drinking water systems in cities above a certain size provide a
vulnerability assessment and a plan to remedy vulnerabilities as part of
ongoing EPA reviews, while the Transportation and Aviation Security Act
grants the Department of Transportation authority to order deployment of
local law enforcement personnel in order to provide perimeter access
security at the nation's airports.

Tax Incentives

Information Sharing

Several models of shared regulatory authority offer a range of approaches that could be used in designing standards for preparedness. Examples of these models range from preemption through fixed federal standards to state and local adoption of voluntary standards formulated by quasiofficial or nongovernmental entities."

As the administration noted, protecting America's infrastructure is a shared responsibility of federal, state, and local government, in active partnership with the private sector, which owns approximately 85 percent of our nation's critical infrastructure. To the extent that private entities will be called upon to improve security over dangerous materials or to protect critical infrastructure, the federal government can use tax incentives to encourage or enforce their activities. Tax incentives are the result of special exclusions, exemptions, deductions, credits, deferrals, or tax rates in the federal tax laws. Unlike grants, tax incentives do not generally permit the same degree of federal oversight and targeting, and they are generally available by formula to all potential beneficiaries who satisfy congressionally established criteria.

Since the events of September 11th, a task force of mayors and police
chiefs has called for a new protocol governing how local law enforcement
agencies can assist federal agencies, particularly the FBI. As the U.S.
Conference of Mayors noted, a close working partnership of federal and
local law enforcement agencies, which includes the sharing of
information, will expand and strengthen the nation's overall ability to
prevent and respond to domestic terrorism. The USA Patriot Act provides
for greater sharing of information among federal agencies. An expansion
of this act has been proposed (S1615; H.R. 3285) that would provide for
information sharing among federal, state, and local law enforcement
agencies. In addition, the Intergovernmental Law Enforcement
Information Sharing Act of 2001 (H.R. 3483), which you sponsored, Mr.
Chairman, addresses a number of information-sharing needs. For instance,
the proposed legislation provides that the Attorney General expeditiously
grant security clearances to Governors who apply for them and to state
and local officials who participate in federal counterterrorism working
groups or regional task forces.

Conclusion

Contacts and
Acknowledgments

The national strategy also includes several information-sharing and systems initiatives to facilitate dissemination of information from the federal government to state and local officials. For example, the strategy supports building and sharing law enforcement databases, secure computer networks, secure video teleconferencing capabilities, and more accessible websites. It also states that the federal government will make an effort to remove classified information from some documents to facilitate distribution to more state and local authorities.

The recent publication of the national strategy is an important initial step in defining homeland security, setting forth key strategic objectives, and specifying initiatives to implement them. The proposals for the Department of Homeland Security represent recognition by the administration and the Congress that much still needs to be done to improve and enhance the security of the American people and our country's assets. The proposed department will clearly have a central role in the success of efforts to strengthen homeland security, and has primary responsibility for many of the initiatives in the national homeland security strategy.

Moreover, given the unpredictable characteristics of terrorist threats, it is essential that the strategy be implemented at a national rather than federal level with specific attention given to the important and distinct roles of state and local governments. Accordingly, decision makers will have to balance the federal approach to promoting homeland security with the unique needs, capabilities, and interests of state and local governments. Such an approach offers the best promise for sustaining the level of commitment needed to address the serious threats posed by terrorism. This completes my prepared statement. I would be pleased to respond to any questions you or other Members of the Subcommittee may have.