My thesis examines how principles of vertical power allocation interact with rising security imperatives at different stages of the EU’s Critical Entities Resilience Directive (CER) multi-level legislative process. Specifically, it examines how the principle of subsidiarity and Swedish municipal self-government are conceptualized within the EU’s ordinary legislative procedure (OLP) and the Swedish public inquiry (SOU) dedicated to the CER-directive and how they interact with the security imperatives. I employ an embedded case study design and thematic content analysis as my methodological foundation. I apply a hierarchical theoretical framework, with input-output legitimacy theory as the overarching theory, complemented by an interpretive framework on municipal self-government and multi-level governance theory. I find that the conceptualization of municipal self-government is characterized by a restricted scope of municipal capacity and political discretion, driven by security imperatives. The conceptualization of the principle of subsidiarity is nuanced, operational autonomy is respected but rising security imperatives justify sectoral integration, creating ambiguity in the application of subsidiarity. The CER-directive’s legislative process illustrates an emerging tension between decentralized governance and the expansion of security-oriented measures. However, these tensions are not purely antagonistic, as the legislative process reconcile security imperatives with existing democratic structures through adaptive interpretations of decentralization. The thesis contributes to the literature on subsidiarity, decentralized crisis governance and the democracy-security trade-off.