Digest 3.8.2018 The State AG Report Weekly Update

2018 AG Elections

Democrat Paul Doyle and Republican Susan Hatfield Declare Candidacies for Connecticut Attorney General

  • Democratic Connecticut state Senator Paul Doyle and Republican Susan Hatfield, a state prosecutor, announced they are running for Connecticut AG in 2018.  As previously reported, Connecticut AG George Jepsen is not seeking re-election to a third term.
  • Senator Doyle is currently serving his sixth term in the Connecticut state Senate and previously served in the Connecticut state House of Representatives for twelve years.
  • Hatfield, a 2016 delegate for President Trump, was a public finance attorney at a New York City law firm and a policy staffer for former U.S. House Speaker Newt Gingrich before becoming a Connecticut state prosecutor in 2005.
  • Senator Doyle joins Clare Kindall and Chris Mattei in seeking the Democratic nomination; Democrats William Tong and Michael D’Agostino have also formed committees to explore candidacies for AG in 2018.  Hatfield joins John Shaban in seeking the Republican nomination.  The filing deadline for a candidate to declare is June 12.

Wisconsin Attorney General Brad Schimel Files to Run for Reelection

  • Republican AG Brad Schimel has filed to run for reelection to a second term in 2018.
  • Prior to his election in 2014, AG Schimel served as Waukesha County District Attorney.
  • Democrat Josh Kaul is the only other candidate seeking to run for the post to date. The filing deadline for a candidate to declare is June 1.

Consumer Financial Protection Bureau

Attorneys General Divide Along Party Lines Over Appointment of CFPB Acting Director

  • A coalition of 17 Democratic AGs, led by District of Columbia AG Karl Racine, and a coalition of 13 Republican AGs, led by Texas AG Ken Paxton, filed amicus briefs in the U.S. Court of Appeals for the District of Columbia Circuit taking opposing positions on the lawsuit brought by Leandra English, Deputy Director of the Consumer Financial Protection Bureau (“CFPB”), challenging President Trump’s authority to appoint an acting Director for the CFPB.
  • Former CFPB Director Richard Cordray designated English acting Director of the CFPB upon his resignation last November.  President Trump concurrently appointed Mick Mulvaney, who also serves as the Director of the Office of Management and Budget, acting Director of the CFPB.
  • English subsequently sought a preliminary injunction to restrain President Trump from appointing Mulvaney to the post and confirm her position as acting Director of the CFPB, arguing that the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act (“Dodd-Frank Act”) establishes succession of the position to the Deputy Director.  The district court’s denial of this request is now on appeal to the D.C. Circuit, and the subject of the AGs’ amicus briefs.
  • The Democratic AGs’ brief urges the D.C. Circuit to recognize the Dodd-Frank Act’s succession provisions while the Republican AGs’ brief asserts that the President’s decision to exercise his appointment power pursuant to the Federal Vacancies Reform Act and constitutional principles of executive appointment powers supplants the competing provisions of the Dodd-Frank Act.


Ohio Attorney General Sues Agriculture Company for Alleged Environmental Contamination

  • Ohio AG Mike DeWine filed a lawsuit against Monsanto Company, Solutia, Inc., and Pharmacia LLC (collectively, “Monsanto”) alleging negligence, public nuisance, and failure to warn and instruct, among other things.
  • According to AG DeWine, Monsanto produced polychlorinated biphenyls (“PCBs”)—synthetic organic chemical compounds used in products such as paints, inks, sealants, and electrical equipment and frequently marketed under the name “Aroclor”—from 1929 to 1977, while knowing that PCBs could pose serious risks to human health and the environment and failed to warn consumers of these hazards.
  • The lawsuit seeks, among other things, compensation for damages to natural resources and a payment to cover present and future costs of addressing ongoing negative effects of PCBs’ use.
  • As previously reported, Washington AG Bob Ferguson filed a lawsuit against Monsanto in 2016 alleging similar facts and seeking similar damages.

21 Republican Attorneys General Submit Comments Regarding Proposed EPA Rule

  • A coalition of 21 Republican AGs, led by West Virginia AG Patrick Morrisey, submitted comments to the U.S. Environmental Protection Agency (“EPA”) as part of the public comment period for a rule to replace the 2015 EPA rule entitled “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units” (commonly known as the “Clean Power Plan”).
  • In the comments, the AGs urge the EPA to preserve the states’ role in managing power resources within their borders and the states’ discretion to depart from guidelines where appropriate.
  • As previously reported, AG Morrisey led a similar coalition of AGs in supporting the EPA’s repeal of the Clean Power Plan in early 2018.

Financial Industry

New York Attorney General Settles With Bank Over Sales of Mortgage Securities

  • New York AG Schneiderman announced a settlement with RBS Financial Products Inc. (“RBS”) over the bank’s alleged deceptive practices and misrepresentations in the issuance, marketing, and sale of residential mortgage-backed securities (“RMBS”) to investors.
  • According to AG Schneiderman, between 2006 and 2007 RBS allegedly knowingly sold investors RMBS backed by mortgage loans that did not comply with underwriting guidelines, causing loan pools backed by these securitizations to suffer significant losses and other harmful effects, all contributing to the crash in home values during the financial crisis.
  • Under the terms of the settlement, RBS will pay $500 million: $100 million to the State of New York and $400 million to consumer relief for homeowners and communities.

State v. Federal

20 Democratic Attorneys General Pen Letter Opposing Proposed Rulemaking on Borrower Defense and Financial Responsibility

  • A coalition of 20 Democratic AGs, led by California AG Xavier Becerra, submitted a letter to the U.S. Department of Education (“ED”) criticizing the agency’s proposed regulations on borrower defense and financial responsibility following the rescission of the “Borrower Defense Rule” last year.
  • The Borrower Defense Rule, among other things, allowed borrowers to obtain loan forgiveness for federal student loans used to attend a school that was found to have violated state law due to the student loan structure or the educational services for which the loan was provided.
  • In the letter, the AGs urge ED to reconsider recent rulemaking proposals for replacing the Borrower Defense Rule, which the AGs argue would significantly impair students’ ability to assert defenses to debt repayment by heightening the standard of proof necessary to obtain relief, imposing a 3-year statute of limitation on these defenses, and allowing enforcement of mandatory arbitration clauses and class-action waivers, among other things.
  • As previously reported, 19 Democratic AGs, led by Massachusetts AG Maura Healey, sued ED in July 2017 for rescinding the Borrower Defense Rule.

Attorneys General Urge Congress to Pass Legislation Supporting Victims of Child Pornography

  • A bipartisan coalition of 55 state and territory AGs sent a letter to U.S. House of Representatives and House Judiciary Committee leaders urging them to pass the “Amy, Vicky, and Andy Child Pornography Victim Assistance Act of 2017” (S. 2152).
  • According to the letter, the Act would allow victims of child pornography to seek full restitution from every perpetrator of their exploitation and improve the mechanisms by which restitution is calculated and disbursed, among other things.
  • The Act was passed by the Senate in January 2018, and is now before the House Judiciary Committee.