United States: What Impact Will The New Trump Administration Have On State Attorney General Activity?

Some state attorneys general are already expressing their intention to challenge the new Trump Administration ("Administration") as it moves to implement a number of reforms affecting federal policies, including those concerning financial services, health care, energy, environmental regulations, consumer protection, and business conduct. As part of these efforts by attorneys general, businesses perceived to benefit from these federal changes may be directly in the line of fire. As noted in Jones Day's recent Commentaries concerning what the Administration may mean for various industries, there is an expectation that various legislative and regulatory changes, combined with new regulators with new priorities, will result in easing of regulatory activity and enforcement, and more dramatically the striking of entire legislative schemes such as the Affordable Care Act and the Wall Street Reform Act ("Dodd‑Frank"). These "rollbacks" are seen as openings where state attorneys general can exert their own agenda to investigate, litigate, and regulate businesses.

As the business community prepares for a new Administration with a Republican Congress, significant attention has been focused on what potential changes in federal law, regulations, prosecutors, and enforcement could mean for national public policy and corporate strategies and operations. These anticipated federal policy developments will not occur in a vacuum, and they certainly have not gone without notice by a number of state prosecutors. The attorneys general for New York, Massachusetts, and California, for example, are out front of other attorneys general who intend to take on the new President's agenda and companies that stand to benefit from the reforms.

In a press statement, New York Attorney General Eric Schneiderman said that he was "deeply troubled by reports that the Presidential Transition Team is considering ways to eviscerate some of the most basic consumer and investor protection laws in the country." Attorney General Schneiderman specifically called out Wall Street and consumer protection issues for scrutiny: "Every day, state and local law enforcement effectively utilize Blue Sky laws to root out the worst types of fraud, corruption, and abuse on Wall Street and across major industries. In many cases, these anti-fraud statutes are consumers' and investors' first line of defense against exploitation, particularly when retail and institutional investor dollars are in the hands of increasingly complex and opaque financial institutions."1

In Massachusetts, Attorney General Maura Healey said that "[state attorneys general are] the first line of defense against illegal action by the federal government and I won't hesitate to take Donald Trump to court if he carries out his unconstitutional campaign promises."2

The California governor's nomination for attorney general, Xavier Becerra, telegraphed a broad and aggressive posture from which to challenge the President-elect. As explained in the Sacramento Bee by Marc Sandalow, a political analyst and an associate academic director for the University of California's Washington Center, "[a]ccepting Gov. Jerry Brown's nomination to be attorney general of California's nearly 40 million people gives him an important new platform .... This puts him in the forefront of being able to stand up to Donald Trump as the top law enforcement official in the largest state in the country."3 According to Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California, "Jerry Brown has declared war on Washington, D.C. and he's appointed Xavier Becerra to lead that fight."4 Becerra is expected to focus on combating the Administration on climate change, environmental, and immigration issues.

The challenges to the incoming Trump Administration by state attorneys general will largely fall along partisan lines—and will likely be done through collective action. State attorneys general all participate in the National Association of Attorneys General in a non-partisan collaborative fashion. But most attorneys general will also work with the party-based Democratic Attorneys General Association and Republican Attorneys General Association. While the attorneys general have taken on a number of issues devoid of politics, there have been a wide variety of partisan-influenced efforts. With respect to the incoming Trump Administration, the Democratic attorneys general seem poised to act together. Attorney General Schneiderman has indicated he has already contacted other states to coordinate their efforts. But these efforts will not be limited to individual state attacks against federal action.

These same states may also direct their attacks against companies and industries. The risks to companies are heightened when states act together. State attorney general use of multistate investigations and litigation has proven to be a significant threat to companies from virtually every industry. And while there may be efforts to reach more reasonable federal regulatory structures by the new Administration, it is expected that the more aggressive attorneys general will look to expand their reach and effectively regulate these industries.

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Footnotes

1 Press Release, N.Y. AG, "Statement by A.G. Schneiderman on Reports that the Presidential Transition Team Is Considering Ways to Dismantle State Consumer and Investor Protection Statutes, also Known as Blue Sky Laws."

2 "Maura Healey Threatens to Sue Donald Trump," Boston Globe (Nov. 30, 2016).

3 Sean Cockerham, "Meet Donald Trump's Newest Nemesis: Xavier Becerra, Son of Immigrants," Sacramento Bee (Dec. 21, 2016).

4 Jonathan J. Cooper and Don Thompson, "California Attorney General Pick Pledges Affront to Trump," Washington Post (Dec. 1, 2016).

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