Public health policy and practice priorities involve ethical choices across "spheres of justice" (Walzer 1983) that are related to potential benefits and risks for communities. This paper addresses an important issue about how public health and funds are allocated in response to local, regional, and national priorities and interests in light of ethical consequences of those priorities and decisions. Current federal policy emphasis on bio-terrorism preparedness has the potential to divert public health resources with negative impacts on community health and group disparities in healthcare. This paper compares ethical decisions for local programs made by public health professionals in the southwestern United States, in response to policy changes, using ethnographic evaluation and participant observation of a statewide peer- review process. Ethical choices and local health priorities vary among rural and urban communities in relation to diverse social, economic, political, and inter-organizational environments.