Democratic AGs Unite to Counter Regulatory Rollbacks Pushed by Trump, Congress and Industry
ALM Media
Updated
Protesters at the People's Climate March highlight the need to take action on climate change in Washington DC on April 29, 2017, President Trump's 100th day in office.
President Donald Trump promised to re-create the government and diminish its regulations, but he faces an increasingly organized and determined opposition in Democratic state attorneys general.
Democratic AGs, who comprise 23 of the AGs (including the District of Columbia), have filed more than a dozen lawsuits against the president and threatened more. With eyes on the 2018 elections, when voters in 30 states will choose their next AG, these Democratic officials are positioning themselves as leaders of the resistance to the White House on health care, consumer protection, education and immigration.
In addition to litigation against the president's federal policies, many observers expect AGs to ramp up enforcement in their states when and if the federal government relaxes or shifts priorities. That means that the business community's post-election deregulation dreams may be more difficult to achieve.
Just taking care of Trump doesn't mean you've taken care of your problem, said James Tierney, a lecturer at Harvard Law School and former Democratic attorney general of Maine.
Some doubt that who's in the White House has any major effect on the attorneys general. Lori Kalani, co-chair of Cozen O'Connor's state attorneys general practice, said she's seen no change in her work since the election. Likewise, Republican Rob McKenna, a former attorney general in Washington state and co-head of the public policy group at Orrick, said he doesn't think the federal government factors heavily into decision-making of states' attorneys general.
But McKenna did note a growing partisanship among state AGs during and since George W. Bush was president. Indeed, Republican AGs sued President Barack Obama over numerous issues the Affordable Care Act, the Clean Power Plan and Obama's immigration executive orders. Now, the tables have turned, as Democratic AGs are fighting to defend those very policies.
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Eager to shed the characterization that they're playing politics, sitting AGs on both sides of the aisle said Democrats aren't simply taking a page out of the Republicans' playbook. Wisconsin Attorney General Brad Schimel, a Republican, said that lawsuits he joined against Obama fought against an overreach by the executive and were aimed at maintaining states' rights. The Democrats' lawsuits, he contends, are just political games.
That's unfortunate because AGs don't make policy, Schimel said. AGs defend the rule of law.
Democratic state AGs disagree. Attorney General Brian Frosh of Maryland said defending the rule of law is precisely what he and his fellow Democratic AGs are doing. Trump, Frosh said, is unlike any president in the country's history, and thus poses a unique threat.
I think this is distinctly different from what Republican AGs did during the Obama administration, because we're fighting for democracy, Frosh said. They were having policy issue fights with Obama, and we're literally engaged in battle to keep the American democracy.
Rhetoric aside, Democratic AGs' challenges to Trump's national policies and any increase in state-level enforcement will directly impact policies in several key areas.
Environment
The environment is an AG litigation hot spot that's likely to become an even more intensely fought arena. Republican Scott Pruitt, Oklahoma's immediate past AG and one of the lead crusaders against the U.S. Environmental Protection Agency under the Obama administration, now leads the agency under Trump. Democrats are now trying to force the EPA to make good on rules initiated in the last administration.
No matter who holds the White House, AGs love suing the EPA, said Michael Rossetti, a partner at Akin Gump Strauss Hauer & Feld and former chief deputy to the New York attorney general. That's an absolute target that's going to be ample grist for the mill for the next three-and-a-half years, and well beyond, for that matter.
In the months since Trump was elected, AGs have challenged the EPA's failure to publish final rules related to energy efficiency standards for air conditioners and other appliances, as well as its freeze on rules regulating methane and other greenhouse gas emissions standards at refineries and other facilities.
The Democratic AGs also united to protest Trump's decision to withdraw from the Paris Climate Accord, and they threatened legal action amid concerns that the EPA planned to rescind its Waters of the United States Rule, which identifies the scope of waters protected by the Clean Water Act. The EPA began the process to do so in June, and Republican AGs praised the decision.
Education
Student loan debt was a driving issue for Democrats in last year's presidential elections, and the party's AGs have continued the fight. Since the election, Democratic AGs have filed to intervene in two lawsuits against the U.S. Department of Education, as well as sued Education Secretary Betsy DeVos outright.
In July, 19 Democratic AGs sued DeVos over the Education Department's decision to delay, and eventually rewrite, regulations promulgated under Obama that were designed to protect student borrowers from for-profit schools with deceptive marketing practices. The department cited another lawsuit brought against the rules by an association of for-profit schools in California as the reason for its delay. A group of Democratic AGs had filed to intervene in that lawsuit too. The AGs said DeVos is arbitrarily and illegally delaying the regulations, which were set to take effect July 1 this year.
In September 2016, the Education Department revoked its recognition of the Accrediting Council for Independent Colleges and Schools as a national school accreditor, on the grounds that the organization accredited several fraudulent for-profit schools. ACICS sued the department, and six Democratic AGs intervened in January. It was unclear if the Trump administration would continue to defend the lawsuit, though it has so far.
The Democratic AGs also lambasted DeVos in April over her decision to withdraw Obama-era memos that controlled the government's contracts with servicers that collect loan payments on behalf of the department.
By revoking these critical protections, the department has abdicated its responsibility to student loan borrowers, the AGs wrote in a letter to the education secretary.
Consumer Financial Protection and Antitrust
Other AG sweet spots, consumer protection and antitrust, are areas where states are likely to take matters into their own hands. AGs have broad authority to enforce consumer protection laws, and the federal Consumer Financial Protection Bureau works closely with state attorneys general.
But the future of the CFPB is ominous. Republicans in Congress want the CFPB's director, Richard Cordray, fired and the agency's authority diminished. In March, Trump's U.S. Department of Justice abandoned its defense of the CFPB in a case pending in the U.S. Court of Appeals for the D.C. Circuit that challenges the constitutionality of the bureau.
Doug Gansler, the former Democratic attorney general of Maryland and partner at Buckley Sandler, said many of his clients have concurrent cases with both the CFPB and state AGs. He said if the CFPB's powers get watered down at all, there will be enormous activity from the Democratic state AGs.
Tierney, the Harvard professor, who informally advises AGs, added that given the push by the White House and Republicans in Congress to get government out of the way, subprime housing and auto lenders are seeing an opportunity.
[Subprime lenders] are getting very excited, anticipating that they're going to party like it's 2007, Tierney said. So the states are going to say, 'No, we're here.'
State AGs also have their eyes on antitrust. But that's an area likely left to states with more resources, said Akin Gump Strauss Hauer & Feld partner Corey Roush, who specializes in antitrust and consumer protection.
There are only a handful of states that are known as being fairly active in the antitrust space, Roush said. I don't necessarily think that you are going to see a ton of antitrust enforcement coming out of a bunch of places where you didn't see it before.
So where will it happen? New York is a safe bet. A spokesperson for Attorney General Eric Schneiderman's office said that the department is shifting resources to be able to focus on stepping in where the federal government relaxes. Schneiderman also recently hired Howard Master, a former assistant U.S. attorney under fired U.S. Attorney Preet Bharara of the Southern District of New York, to focus on White House issues.
And at the American Bar Association's antitrust meeting this spring, Beau Buffier, who heads the New York antitrust bureau, said his office and those in other states want to bulk up antitrust enforcement. Companies looking to merge shouldn't underestimate the AGs, he cautioned.
Health Care
Republican efforts to repeal and replace the Affordable Care Act remained stalled in Congress at the magazine's press time, but Democratic AGs are eager to sue over the issue.
If the version of the health care bill proposed last week ever becomes law, I've promised to go to court to challenge it and protect New Yorkers from these wrongheaded and unconstitutional provisions, said Schneiderman after U.S. Senate Republicans introduced their repeal bill in June.
It's been done before. Republican attorneys general famously challenged the ACA in court in 2010. Bill McCollum, the former Florida attorney general who led that lawsuit, said the Democrats' legal strategy will depend on the bill's final language.
Whatever Republicans pass, presumably the state AGs would be trying to maintain some benefit or some provision that provides money and resources to them. They have to come up with some kind of an argument, said McCollum, now a partner at Dentons' public policy and regulation practice in Washington, D.C. It wouldn't be the same approach that we took our challenge.
The Democratic AGs are also attempting to actively defend the ACA from Republican-led lawsuits, knowing Trump's government likely won't. In May, a group of states including New York, California and Maryland filed a motion to intervene in a lawsuit against the ACA, originally brought by House Republicans. As of press time, their motion was still pending.
Immigration
The Democratic AGs were able to get a head start on their legal battles against Trump's immigration policies. That's because of his explicit promises on the campaign trail to ban Muslims from entering the country and to crack down on so-called sanctuary cities.
We anticipated he was going to introduce a travel ban, so we were prepared for it, Washington state Attorney General Bob Ferguson said at the Time 100 Gala in April. We anticipated that move, so to speak, from the president.
Within days of Trump's executive order on the travel ban, Ferguson launched a lawsuit against it. When Trump revised the travel ban, Hawaii Attorney General Doug Chin challenged it. Now, the U.S. Supreme Court is set to consider the case in October.
[Immigration] was an area that, traditionally, is the federal government's, said Marquette University political science professor Paul Nolette, who studies AGs. AGs have gotten much more aggressive it's another area where AGs are saying, 'Oh yeah, we have power to do stuff too.'
Contact Cogan Schneier at cschneier@alm.com. On Twitter: @Cogan Schneier.
