This article describes the Fed vs. State problems between Bush and Blanco. It's a good read but I wanted to highlight the parts that I found very disturbing...
http://nytimes.com/2005/09/09/national/nationalspecial/09military.html?ei=5094&en=29839ee3ffe8c2ba&hp=&ex=1126238400&adxnnl=1&partner=homepage&pagewanted=print&adxnnlx=1126234206-npRbHx9AwZb5UnXOAJT0AAThe issue of federalizing the response was one of a number of legal issues considered in a flurry of meetings at the Justice Department, the White House and other agencies, administration officials said.
Attorney General Alberto R. Gonzales urged Justice lawyers to interpret the federal law creatively to assist local authorities. For example, federal prosecutors prepared to expand their enforcement of some criminal statutes like anti-carjacking laws that can be prosecuted by either state or federal authorities.
On the issue of whether the military could be deployed without the invitation of state officials, the Office of Legal Counsel, the unit within the Justice Department that provides legal advice to federal agencies, concluded that the federal government did possess authority to move in even over the objection of local officials.
This act was last invoked in 1992 for the Los Angeles riots, but at the request of Gov. Pete Wilson of California, and has not been invoked over a governor's objections since the civil rights era - and before that, to the time of the Civil War, according to administration officials. Bush administration, Pentagon and senior military officials warned that such an extreme measure would have serious legal and political implications.