Digest 7.19.2018 The State AG Report Weekly Update

2018 AG Elections

Alabama Incumbent Attorney General Wins Republican Primary Runoff Election

  • Alabama held a runoff election for the Republican AG primary race on July 17, 2018.
  • Incumbent AG Steve Marshall won the primary against former AG Troy King and will face Democratic candidate Joseph Siegelman in the general election.
  • As previously reported, AG Marshall and former AG King were the top two vote-getters in the Republican primary, which proceeded to a runoff election when neither candidate received a majority (more than 50%) of the vote required to secure the nomination.

Bureau of Consumer Financial Protection

Counsel to the Arizona Attorney General Appointed to Head New BCFP Office of Innovation

  • Acting Director of the Bureau of Consumer Financial Protection (“BCFP,” formerly the “CFPB”) Mick Mulvaney announced the appointment of Paul Watkins, Chief Counsel for the Civil Litigation Division of the Arizona AG’s office, to head the BCFP’s new Office of Innovation.
  • The Office of Innovation was recently created to promote “consumer-friendly innovation” through engaging with entrepreneurs and regulators and reviewing outdated or unnecessary regulations, among other things, initiatives previously coordinated through the BCFP’s “Project Catalyst” program.
  • While at the Arizona AG’s office, Watkins managed litigation in areas such as consumer fraud, antitrust, and civil rights, and he also created and oversaw the launching of a first-in-the-nation “FinTech Regulatory Sandbox” program, which allows companies limited access to the marketplace to evaluate new offerings and technology under relaxed regulations. Prior to serving at the AG’s office, Watkins was in private practice and clerked on the U.S. Court of Appeals for the Fourth Circuit.

Consumer Protection

20 Attorneys General Urge U.S. Department of Education to Continue Sharing Student Loan Information

  • A coalition of 20 AGs, led by New Jersey AG Gurbir Grewal and Washington AG Bob Ferguson, sent a letter to the U.S. Department of Education (“ED”) opposing the agency’s decision to discontinue disclosure of student loan information to law enforcement agencies, including AGs.
  • ED’s June 13, 2018 decision altered previous regulations that had allowed AGs and other law enforcement agencies to access ED records regarding consumer complaints and related student lending information, including for use in criminal and civil fraud investigations. This decision also eliminated ED’s prior policy of disclosing records related to borrowers’ requests for relief under borrower defense regulations.
  • According to the letter, this decision “reverses a long tradition of federal-state cooperation in protecting students and student loan borrowers from unfair and deceptive practices” and hinders AGs and other law enforcement officials from protecting students from such practices.

FTC, 7 States Conduct First Compliance Sweep Under Newly Amended Used Car Rule

  • The Federal Trade Commission (“FTC”) and state agencies in California, Florida, Illinois, New York, Ohio, Texas, and Washington jointly conducted an investigation of car dealerships in 20 cities to enforce compliance with the FTC’s amended Used Car Rule.
  • The amended Used Car Rule, which was published in 2016 and took effect January 28, 2018, requires dealers to display a revised Buyers Guide containing warranty and other consumer information on all used vehicles offered for sale. Noncompliant dealers may be fined up to $41,484 per violation of the Used Car Rule, which can also be enforced by state and local law enforcement agencies.
  • According to the FTC, the coordinated investigation found that only half of the vehicles inspected displayed the revised Buyers Guide. While no penalties were assessed, follow-up letters were sent to each dealership with the results of the inspections and materials to assist them in becoming compliant and avoid future penalties.


13 Attorneys General Oppose EPA Rule Suspending Truck Pollution Regulations

  • A coalition of 13 AGs, led by California AG Xavier Becerra, submitted a letter to the U.S. Environmental Protection Agency (“EPA”) urging withdrawal of the EPA’s July 6, 2018 memorandum “Conditional No Action Assurance Regarding Small Manufacturers of Glider Vehicles”.
  • The EPA’s action suspends enforcement of the 2016 Final Rule titled “Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles – Phase 2” (also known as the “Glider Rule”), which had sought to impose emissions standards on specific types of refurbished heavy duty trucks called “gliders.”
  • According to the letter, the EPA’s suspension of the Glider Rule is “unlawful” because it abdicates the agency’s statutory responsibility to implement the Glider Rule, and did not follow the notice and comment procedures required to alter a final rule.
  • As previously reported, AG Becerra led a coalition of 12 AGs in submitting comments in opposition to the EPA’s November 2017 proposal to repeal the Glider Rule.
  • As of this writing, the U.S. Court of Appeals for the District of Columbia Circuit has imposed an administrative stay on the EPA’s action following an emergency motion challenging the suspension that had been filed by environmental groups.

State v. Federal

Four Attorneys General Sue Federal Government Over State and Local Tax Deduction

  • New York AG Barbara Underwood, Connecticut AG George Jepsen, Maryland AG Brian Frosh, and New Jersey AG Grewal filed a lawsuit against the U.S. Department of Treasury and the Internal Revenue Service over a provision of a 2017 tax law, L. No. 115-97, § 11042, capping the State and Local Tax (“SALT”) deduction at $10,000.
  • According to the complaint, the SALT cap is unconstitutional under the 10th and 16th Amendments, as well as the anti-commandeering doctrine, because it interferes with states’ sovereign authority to determine taxation and fiscal policies by coercing states into lowering taxes and cutting services supported by state and local taxes, and it also contradicts longstanding historical precedent of federal income tax laws allowing taxpayers to deduct all or most state and local taxes from their federal taxes owed.
  • The lawsuit seeks a declaration that the relevant provision of the 2017 law is unconstitutional and an injunction against enforcing the SALT cap.