Category: General

On December 19, 2025, a bi-partisan coalition of 23 state attorneys general submitted reply comments to the Federal Communications Commission (FCC) urging the agency not to issue any declaratory ruling purporting to preempt state and local laws that seek to govern or limit uses of Artificial Intelligence (AI).  The AGs stated that such a ruling would be beyond the FCC’s authority.

In its Notice of Inquiry, the FCC requested comment on the question “As [AI] begins to play a bigger role in the provision of communications services, should the Commission consider whether state or local laws seeking to govern or limit uses of AI are prohibiting or effectively prohibiting the provision of wireline telecommunications services?” Various commenters supported a declaratory rule preempting state or local laws regulating AI.  The state AGs’ comments were issued in reply to these comments. 

While acknowledging that AI is “a transformative technology with a number of promising uses,” the AGs claim that “[s]tates across the political spectrum are legitimately concerned about how businesses using AI may harm their citizens and/or interfere with their own core responsibilities.” 

The state AGs argue that AI is a broad and undefined term that encompasses a wide category of information services that are beyond the FCC’s jurisdiction to regulate and urge the FCC to “stand down and allow Congress to first decide what, if any, federal preemption of state (and local) regulation of AI is appropriate.” 

Examples of current or pending state and local laws that seek to govern or limit AI include laws involving:  AI-generated deepfakes and AI-generated explicit material; basic disclosures when consumers are interacting with specific kinds of AI; the setting of rents through the use of AI; new forms of consumer scams; ensuring identity protection for endorsements and other AI-generated content; and consumer opt-out of consequential automated decisions.

The state AGs argue that none of these laws is “remotely related to limiting the entry or operation of telecommunications networks.”

The reply comments follow a December 11 Executive Order by the President setting forth a national policy framework for AI and directing the FCC to initiate a proceeding to determine whether to adopt a federal reporting and disclosure standard for AI models that preempts conflicting State laws.

The reply comments are signed by the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Tennessee, Utah, Vermont, Washington and Wisconsin.

In a fairly remarkable turn of events, New Jersey Senate President Nicholas Scutari announced yesterday that he is pulling his proposed legislation, S. 4924, to transfer investigative and subpoena powers of the State Comptroller to the State Commission of Investigation. Instead, he intends to pursue legislation to re-establish an Inspector General in the next legislative session in 2026.

This move follows intense criticism at and after a marathon lame duck legislative hearing last week. Criticism centered on the substance of the proposal and the process by which it was considered, including the treatment of witnesses at the legislative hearing.

This development is expected to allow for more fulsome and considered discussion among stakeholders about how best to re-organize New Jersey’s government watchdog functions. It is sure to give Governor-Elect Mikie Sherrill control of the issue as she transitions into office on January 20.

Stay tuned for further developments on this and the Governor-Elect’s plans more generally for the State’s Department of Law and Public Safety post-transition. Like New Jersey’s Governor, New Jersey’s Attorney General possesses some of the broadest powers in the nation, with wide-ranging responsibility for State Police, licensing boards and many other government functions well beyond prosecuting crimes and advising state agencies. We will continue to provide updates on what her nominees and priorities mean for companies doing business in New Jersey.

Addressing legislation proposed by the Senate President to reform New Jersey’s watchdog agencies at a New Jersey Senate hearing on December 1, New Jersey Attorney General Matt Platkin defended his record, and that of the State Comptroller, against pointed criticism from state senators.

The Senate President’s bill calls for the transfer and reform of current oversight efforts in the interest of efficiency among three current watchdog agencies – the AG, the Office of State Comptroller, and the State Commission of Investigation (SCI), a quasi-independent investigative agency in the legislative branch led by a board of four part-time political appointees.

The hearing was a rare open display of sharp disagreements. The AG and State Comptroller both characterized the bill as targeting them for publicizing and prosecuting incidents of waste, fraud and abuse involving powerful public officials.

At the close of public comments largely opposed to the proposed changes, the committee chair contended the legislation was proposed because of legislators’ concerns about AG Platkin’s management of his office.

New Jersey’s AG exercises a broad scope of authority, being responsible for state criminal prosecutions (including the power to supersede and take charge of county prosecutor offices), civil representation of most state agencies, as well as control of the State Police, the Division of Consumer Affairs, the Division of Civil Rights, and dozens of boards that regulate professions and industries.

The bill would move investigative powers from the State Comptroller to the SCI—and would provide the SCI more explicit authority to investigate the AG and county prosecutors, and grant the SCI wiretap authority. The bill would also allow legislative leaders to select the SCI chair, currently appointed by the Governor, and increase the salaries of SCI commissioners.

The AG noted significant separation of powers concerns raised by granting the SCI (a legislative commission) authority over criminal prosecutions and to conduct wiretaps. New Jersey’s Constitution provides that “[n]o person or persons belonging to or constituting one branch shall exercise any of the powers properly belonging to either of the others, except as expressly provided in this Constitution.”

New Jersey’s Constitution, adopted in 1947, established a strong governor who appoints virtually all statewide officials, including the AG, all 21 county prosecutors, and all state court judges. New Jersey is among only 7 states that do not elect their AG: Alaska, Hawaii, New Hampshire, New Jersey, and Wyoming (Governor); Tennessee (Supreme Court), and Maine (Legislature). New Jersey’s Constitution also grants the AG and county prosecutors a broad degree of independence, insulating the AG from removal except by way of impeachment.

Also unlike many other states, county prosecutors and the State Comptroller are not elected. They too are appointed by the Governor with Senate advice and consent. However, the Senate has declined to vote on the Governor’s nominee for State Comptroller, who nevertheless has aggressively pursued waste, fraud and abuse in state and local government despite his acting status.

Introduced on Thanksgiving Eve, the proposed legislation was the subject of a Senate committee hearing the following Monday. The move during New Jersey’s lame duck legislative session sparked criticism from numerous governance groups who packed the hearing room with opponents of the bill. 

The bill was approved unanimously, though Democrat John McKeon and Republican Michael Testa expressed reservations they hope to address before a full Senate vote.

Whether the proposed reform will pass before the end of the lame duck session on January 20 remains to be seen. No Assembly analogue has yet been introduced in the lame duck session following New Jersey’s off-year election. Democratic Governor-elect Mikie Sherrill and outgoing Governor Phil Murphy have taken no position on the proposal to date. We will report on developments and implications as matters progress.  

New Jersey’s unique system of law enforcement, regulatory oversight and watchdog agencies can present challenges for business and individuals who do business with or in the state. Duane Morris attorneys have served in these offices and have decades of experience advising our clients with matters before each of these offices.

On November 13, 2025, Washington State Attorney General Nick Brown announced the formation of a unit in the state attorney general’s office focused on workers’ rights.  Attorney General Brown said the unit will help enforce already strong state laws protecting workers, including laws against wage theft.  The move is the latest effort by Democratic attorneys general to strengthen state enforcement of laws protecting workers in response to Trump Administration changes to federal enforcement that they allege have weakened worker protections. 

In September, Oregon Attorney General Dan Rayfield announced the formation of a “working families unit” in a new section of the state Attorney General’s Office designed to address “unfairness in the workplace,” in light of “federal rollbacks.”  At least 13 state attorney general offices now reportedly have such units, including California, Massachusetts, New York, the District of Columbia, Illinois, Michigan, Minnesota, New Jersey, Pennsylvania, Arizona and Colorado. 

Employers with operations in these states face potentially more significant enforcement threats from the state attorneys general than from private suits.  Attorneys general can pursue broad investigations and obtain consent orders requiring enhanced reporting or training in areas such as minimum wage, overtime pay, independent contractor classification, meal and rest breaks, recordkeeping and tipping compliance. 

On October 20, 2025, 20 Republican state attorneys general, led by Iowa’s Brenna Bird, wrote a letter to SEC Commissioner Hester M. Peirce, urging the SEC to provide “clear, narrowly tailored definitions regarding when a digital asset or related transaction constitutes a security under federal securities laws.”  The letter, sent in response to the SEC’s solicitation of public input on issues relating to cryptocurrency and digital assets, states that clarity is essential to prevent federal overreach which could negatively impact the AGs’ ability to enforce consumer protection laws in their states.

The AGs contend that the federal government has only limited powers to protect consumers, and that the states have primary responsibility over consumer protection and economic regulation.  In the absence of clear definitions, they argue, there is a risk of federal overreach, which could lead to preemption of important state laws that are specifically tailored to digital assets.  The AGs point out that at least 40 states have introduced or enacted legislation on digital assets–laws that provide regulatory certainty for businesses, allowing them to innovate, invest, and create jobs in their states.  The AGs argue that federal overreach could also preempt state money transmitter statutes, criminal laws, and consumer protection laws.

The AGs also argue that states’ unfair and deceptive acts and practices (UDAP) laws are better suited to protect consumers in the digital assets space than any federal law.  State UDAP statutes are broader than federal securities laws, they claim, allowing states to capture practices that may not qualify as securities violations. Finally, the AGs argue that clear definitions are necessary for states to determine whether it is lawful for them to enforce their unclaimed-property statutes.  Many states have laws that treat abandoned virtual currency as escheatable property that must be remitted to the state.  Because many states do not have digital wallets, they require the holder of unclaimed digital assets to “liquidate” those assets and then remit the cash to the state.  The AGs are concerned that such a transaction could constitute the unlawful sale of unregistered securities.

On October 14, 2025, a coalition of 13 state attorneys general, including those from California, New York, Massachusetts and Illinois, filed a motion seeking to intervene in the Tunney Act review by the United States District Court for the Northern District of California of the U.S. Department of Justice’s (DOJ) settlement that allowed the $14 billion merger between Hewlett Packard Enterprise (HPE) and Juniper Networks to proceed.

Read the full Alert on the Duane Morris website.

On October 1, 2025, the state attorneys general for Virginia, Arizona, Connecticut, New York, and Washington sued Zillow, Inc., and Redfin Corporation, two of the country’s largest online rental housing advertisers, over an agreement that the states claim eliminates competition for multifamily rental advertising between the two companies.  The complaint mirrors a complaint filed on September 30 by the Federal Trade Commission.

The states’ lawsuit, filed in the U.S. District Court for the Eastern District of Virginia, alleges that Zillow and Redfin executed an unlawful agreement to remove competition from the already highly-concentrated market for online apartment advertising.  Prior to the agreement, the complaint alleges, both Zillow and Redfin competed on online rental marketplaces—Internet Listing Services or “ILSs”—where consumers search for rental homes or apartments.  According to the complaint, on February 6, 2025, Zillow and Redfin entered into an agreement whereby Zillow paid Redfin $100 million to stop competing, to facilitate the transition of most of its multifamily rental advertising business to Zillow, and to shut down the remainder.  The complaint also alleges that Redfin fired most of its rentals salesforce, including those with key customer relationships, and agreed to help Zillow hire its pick of these employees.

The AGs allege that the agreement will result in reduced choice, higher prices, and reduced quality for multifamily rental advertising in their respective states.  According to the states, the agreement constitutes an illegal restraint of trade under Section 1 of the Sherman Act, and an illegal acquisition in violation of Section 7 of the Clayton Act.  The states seek an injunction providing structural relief such as “divestiture of assets, divestiture or reconstruction of businesses, and such other relief sufficient to restore the competition that would exist absent the anticompetitive conduct alleged.”

On September 17, 2025, a coalition of 22 Democrat State Attorneys General filed a public comment Letter with the U.S. Department of Education opposing regulatory changes set forth in a Notice of Proposed Rulemaking (Docket ID ED–2025–OPE–00160) impacting the Public Service Loan Forgiveness (PSLF) program. The PSLF program currently authorizes the Department to cancel the Direct Loan balance of any borrower who has worked for at least 10 years for a “qualifying employer” – currently all U.S. federal, state and local government entities and 501(c)(3) entities.

The Proposed Rule would amend the definition of “qualifying employer” to “not include organizations that engage in activities that have a substantial illegal purpose” and would define “substantial illegal purpose” as six specific categories: (1) aiding or abetting violations of immigration laws; (2) supporting terrorism; (3) engaging in “chemical and surgical castration or mutilation of children”; (4) child trafficking; (5) engaging in a pattern of aiding and abetting illegal discrimination; or (6) engaging in a pattern of violating State laws of trespassing, disorderly conduct, public nuisance, vandalism, and obstruction of highways. Any employment at such organization would be ineligible for PSLF under the proposed rule change.

The Letter cites the bipartisan origins of the PSLF program, signed into law by President George W. Bush, to relieve students choosing and remaining in certain public service careers from burdensome debt.  The Letter notes concern about the Proposed Rule, if implemented, resulting in uncertainty for borrowers who have already committed to work in public service and future student borrowers who now may be unable to choose public service due to the public and private sector wage gap.

The AGs strongly oppose language in the Proposed Rule that could allow the Department to exclude government and nonprofit employees from the PSLF program if their employers engage in “substantially illegal activities” and warn that the rule’s vague language could discourage public service careers.

One of the purposes of public comment submission in the Department’s rulemaking process is to provide an opportunity for the Department to respond to stakeholder concerns. An inadequate agency response can lay the foundation for a future Constitutional and Administrative Procedure Act (APA) challenge to any Final Rule.  The Letter sets forth several arguments that would likely form the basis of a future legal challenge by the coalition or others to any Final Rule, primarily based on the APA, the federal statute that governs the process for how agencies create and issue regulations. The Letter also cites potential First Amendment challenges based on lack of specificity with regard to the meaning of “substantially illegal activities” and impermissible content and viewpoint discrimination, as well as potential challenges grounded in Equal Protection, should the rule change disproportionately affect organizations serving specific communities or causes. 

The state attorneys general for California, Colorado, Massachusetts, New York, Arizona, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Washington, and Wisconsin signed the Letter.

On August 18, 2025, attorneys general from 20 states and the District of Columbia sued the Trump Administration for tying the states’ receipt of crime victim funds to their assistance in the Administration’s immigration enforcement program.  The lawsuit, filed in the United States District Court for the District of Rhode Island, challenges recently imposed conditions on the states’ receipt of funds under grant programs established by the Victims of Crime Act, passed by Congress in 1984 to provide direct compensation and service programs to assist victims of crime.

The suit attacks conditions recently placed upon states’ receipt of funds by the Office for Victims of Crime (OVC), an agency housed within the United States Department of Justice.  In late July 2025, OVC issued notices to grant recipients specifying new immigration-related conditions on issuance of funding for FY 2025, including cooperation with, and assistance to, the United States Department of Homeland Security (DHS) in its immigration enforcement efforts. 

The states claim that these conditions are unlawful for a variety of reasons, including that they violate the separation of powers, the Spending Clause, the Administrative Procedure Act, and principles of federalism.  They claim that the conditions put the states in an untenable position: “either forfeit access to critical resources for vulnerable crime victims and their families, or accept unlawful conditions, allowing the federal government to conscript state and local officials to enforce federal immigration law and destroying trust between law enforcement and immigrant communities that is critical to preventing and responding to crime.”   Complaint, at 4.  The states seek an injunction against implementation of the conditions against them.

The lawsuit echoes the claims made in another suit by a group of 20 state attorneys general challenging similar immigration-related conditions on the state’s receipt of transportation grants.

The plaintiffs are the states of New Jersey, Rhode Island, California, Delaware, Illinois, Colorado, Connecticut, Hawaii, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New York, Oregon, Vermont and Washington and the District of Columbia.

On August 1, the state attorneys general from California, Connecticut, Delaware, D.C., Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, New York, New Jersey, New Mexico, and Pennsylvania, Rhode Island, and Wisconsin filed a Lawsuit in the District of Massachusetts against President Trump, Attorney General Pam Bondi and the U.S. Department of Justice (“DOJ”) challenging Executive Order 14,187 (the “EO”), entitled “Protecting Children from Chemical and Surgical Mutilation”) (90 Fed. Reg. 8,771) (Jan. 28, 2025).

The Lawsuit also seeks to enjoin two actions by DOJ to implement that EO: (1) an April 22, 2025 memorandum issued by U.S. Attorney General Bondi titled “Preventing the Mutilation of American Children” (“Bondi Directive”) and a June 11, 2025 memorandum from Assistant Attorney General Brett A. Shumate to all U.S. DOJ Civil Division employees with the subject “Civil Division Enforcement Priorities” (the “Shumate Directive”).

The Bondi Directive “direct[s] all U.S. Attorneys to investigate all suspected cases of [female genital mutilation] FGM—under the banner of so called ‘gender-affirming care’ or otherwise—and to prosecute all FGM offenses to the fullest extent possible.”  The Bondi Directive also states that U.S. DOJ “will investigate and hold accountable medical providers and pharmaceutical companies that mislead the public about the long-term side effects of chemical and surgical mutilation.”  In addition, the Bondi Directive “direct[s] the Civil Division’s Fraud Section to pursue investigations under the False Claims Act of false claims submitted to federal healthcare programs for any non-covered services related to radical gender experimentation.”  It further states that “[f]alsely billing the government for the chemical or surgical mutilation of a child is a violation of the False Claims Act and is subject to treble damages and severe penalties.”  The Bondi Directive includes, by example, gender dysphoria is an “illegitimate reason” for a provider to prescribe puberty blockers.

The Shumate Directive mirrors the policy objectives and directives in the EO and Bondi Directive, and “directs Civil Division attorneys to prioritize investigations and enforcement actions advancing these priorities.” It directs the Civil Division to “use all available resources to prioritize investigations of doctors, hospitals, pharmaceutical companies, and other appropriate entities” to pursue alleged violations “of the Food, Drug, and Cosmetic Act and other laws by (1) pharmaceutical companies that manufacture drugs used in connection with so-called gender transition; and (2) dealers such as online pharmacies suspected of illegally selling such drugs.”   The Shumate Directive further directs the Civil Division to “aggressively pursue claims under the False Claims Act against healthcare providers that bill the federal government for impermissible services.  This includes, for example, providers that attempt to evade state bans on gender dysphoria treatments by knowingly submitting claims to Medicaid with false diagnosis codes.” 

Plaintiffs assert that gender affirming care in question is not violative of any federal law and that the federal government’s actions are interfering with state interests and rights, based on the regulation of medicine as a core traditional police power belonging to the states and protected by the Tenth Amendment. The state attorneys general also claim that the EO and Directives are chilling the provision of gender-affirming care to individuals under 19 years old despite their view that such care is lawful and protected by state law.  The complaint cites mainly to certain states’ anti-discrimination laws, but also includes state constitutional provisions protecting access to healthcare, and “shield laws” protecting patients and providers who seek gender affirming care in a state where it is legal from civil and criminal penalties in an out-of-state jurisdiction.  The plaintiffs note that in many of their states, their state legislatures and administrative agencies have enacted statutes, laws, and regulations consistent with nondiscrimination in the provision of health care, and that the effect of the EOs and Directives is to “coerce[] hospitals, individual providers, and others to potentially violate Plaintiff States’ antidiscrimination and age-of-majority state laws.” The complaint details specific instances where medical providers in plaintiff states have altered their care practices to conform to the EO and Directives, despite the legality of the conduct under state law.    

The complaint additionally challenges the Bondi Directive, and the EO’s, interpretation of the statute criminalizing female genital mutilation as applying to provision of gender affirming care, stating that the statute has two exceptions for medical care provided by a licensed physician.  The complaint criticizes this interpretation and any enforcement pursuant to it as novel.  Lastly, the complaint challenges the application of the False Claims Act to “medically necessary healthcare” and accurately billing for treatments, and states that the Act does not say that gender affirming care is “inherently fraudulent.” 

The Lawsuit challenges the legality of the EO and Directives in their entirety and seeks to have them declared unlawful and vacated.  The Lawsuit also requests that the court enjoin enforcement of the female genital mutilation statute, Food Drug and Cosmetic Act, and False Claims Act pursuant to the EO and Directives, and issue declaratory judgments stating that providing gender affirming care does not on its own violate these statutes.  The states also seek that the court find the EO and Directive unlawful due the alleged violations of the Tenth Amendment, and states’ sovereignty in regulating the practice of medicine and the medical profession. As this complaint was recently filed on August 1st, there has not yet been any response filed.