‘‘(A) the purchase or upgrading of equip-
ment; 
‘‘(B) exercises to strengthen emergency re-
sponse; 
‘‘(C) training in the use of equipment; and 
‘‘(D) training for prevention (including de-
tection) of, preparedness for, or response to at-
tacks involving weapons of mass destruction, re-
gardless of their perpetrators or sponsorship, 
including exercises to strengthen emergency 
preparedness of State, regional, and local first 
responders. 
‘‘(2) PROHIBITED
USES.—Grant funds under 
this section may not be used to supplant State or 
local funds that would, in the absence of Federal 
aid, be available for homeland security or other first 
responder related projects. 
‘‘(A) 
CONSTRUCTION.—Grants 
awarded 
under this section may not be used to construct 
buildings or other physical facilities, except 
those described in section 611 of the Disaster 
Relief Act of 1974 (42 U.S.C. 5196), or to ac-
quire land. 
‘‘(B) COST
SHARING.—Grant funds pro-
vided under this section shall not be used for 
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any State or local government cost sharing con-
tribution request under this section. 
‘‘(3) FLEXIBILITY IN UNSPENT HOMELAND SE-
CURITY GRANT FUNDS.—Upon request by a grantee 
under this section, the Secretary may authorize the 
grantee to transfer all or part of funds provided as 
a grant under this section, from uses specified in the 
grant to other uses authorized under this Act, if the 
Secretary determines that such transfer is in the in-
terests of homeland security. 
‘‘(g) STATE AND REGIONAL RESPONSIBILITIES.— 
‘‘(1) PASS-THROUGH.—The Secretary shall re-
quire a recipient of a grant under this section that 
is a State or multi-State entity to provide to local 
governments, first responders, and other local 
groups, consistent with homeland security plans 
specified in the application for the grant, not less 
than 80 percent of the grant funds, resources pur-
chased with the grant funds having a value equal to 
at least 80 percent of the amount of the grant, or 
a combination thereof, by not later than the end of 
the 45-day period beginning on the date the grant 
recipient receives the grant funds. 
‘‘(2) COST SHARING.— 
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‘‘(A) IN GENERAL.—The Federal share of 
the costs of an activity carried out with a grant 
to a State or region under this section shall not 
exceed 75 percent. 
‘‘(B) EFFECTIVE
DATE.—The matching 
requirement under subparagraph (A) shall take 
effect 2 years after the date of enactment of 
this Act. 
‘‘(3) REPORT ON HOMELAND SECURITY SPEND-
ING.—Each recipient of a grant under this section 
shall annually submit a report to the Secretary that 
contains the following information: 
‘‘(A) The amount and the dates of receipt 
of all grant funds received. 
‘‘(B) The amount and the dates of dis-
bursements of all funds expended in compliance 
with subsection (g)(1) or pursuant to mutual 
aid agreements or other sharing arrangements 
that apply within a region. 
‘‘(C) How the funds were utilized by each 
ultimate recipient or beneficiary. 
‘‘(h) INCENTIVES TO EFFICIENT ADMINISTRATION 
OF HOMELAND SECURITY GRANTS.— 
‘‘(1) PENALTIES
FOR
FAILURE
TO
PROVIDE 
LOCAL SHARE.—If a grant recipient under this sec-
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tion that is a State or multi-State entity fails to pro-
vide to local governments, first responders, and 
other local groups funds or resources as required by 
subsection (g)(1) within 45 days after receiving 
grant funds under this section, the Secretary may— 
‘‘(A) reduce grant payments to the grant 
recipient from the portion of grant funds that 
is not required to be provided under subsection 
(g)(1); 
‘‘(B) terminate payment of grant funds 
under this section to the recipient, and transfer 
the appropriate portion of those funds directly 
to local first responders that were intended to 
receive funding under that grant; or 
‘‘(C) impose additional restrictions or bur-
dens on the recipient’s use of grant funds under 
this section, which may include— 
‘‘(i) prohibiting use of such funds to 
pay the grant recipient’s grant-related 
overtime or other expenses; 
‘‘(ii) requiring the grant recipient to 
distribute to local government beneficiaries 
all or a portion of grant funds that are not 
required to be provided under subsection 
(g)(1); or 
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