From a law-enforcement perspective, the best protection we have against domestic terrorism is state, city, and municipal police. They are vastly more numerous than federal law-enforcement agents. (We have, for instance, approximately 35,000 police officers in New York City alone, but fewer than 14,000 FBI agents in the entire country.) The locals have more and often better intelligence sources at the street level, where domestic terrorism occurs, than their federal counterparts. Indeed, this is why the FBI invites robust local law-enforcement participation in its Joint Terrorism Task Forces, which are designed to combat both international and domestic terrorist operations on U.S. soil.
In the course of planning and carrying out their forcible intimidation, domestic terrorists commit many state crimes. These can be difficult for the feds to charge because they often lack a clear jurisdictional hook — e.g., some effect on interstate commerce. If domestic terrorism is going to be thwarted, local law-enforcement must be the point of the spear. This is not to say the feds do not have a role; in fact, they provide critical enforcement assistance, such as intelligence, interstate coordination, and prosecutions under RICO, civil-rights, and weapons-of-mass-destruction laws. If the feds nationalized domestic terrorism, however, it would deplete the sparse but essential resources necessary to combat international terrorism. State and local law enforcement would lack the jurisdiction to fill such a void.