State Attorneys General Blog

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.

On June 19, 2025, Chief U.S. District Judge John J. McConnell, Jr., of the District of Rhode Island granted a preliminary injunction to 20 states that had sued the U.S. Department of Transportation (DOT) and Secretary of Transportation Sean Duffy seeking to stop enforcement of an Immigration Enforcement Condition (IEC) that made transportation grants to the states conditional on their cooperation with federal officials in the enforcement of federal immigration law.  We previously posted a blog about the states’ lawsuit and a similar action against the U.S. Department of Homeland Security.

The states alleged that DOT has no statutory authority to impose the IEC as a requirement for federal funding that was appropriated for transportation; that the IEC violates the Spending Clause of the Constitution; and that, for various reasons, the DOT’s actions violate the Administrative Procedure Act (APA).  In granting the injunction, Judge McConnell held that the states were likely to succeed on the merits of some or all of their claims.  Specifically, the Court held that:

• The Defendants’ conduct violated the APA because they acted outside their statutory authority when Congress appropriated the funds for transportation purposes, not immigration purposes.
• The IEC is arbitrary and capricious and lacks specificity in how the states are to cooperate on immigration enforcement.
• The IEC violates the Spending Clause because “[t]he Government does not cite to any plausible connection between cooperating with ICE enforcement and the congressionally approved purposes of [the DOT].”
• The states will face irreparable and continuing harm–the loss of billions of dollars in federal transportation grant funds—if forced to agree to the IEC in order to receive the funds.
• The balance of the equities and the public interest favor granting the injunction, because without the injunction, there is a substantial risk that the states’ citizens will face a significant disruption in transportation services.

The Court’s order prohibits the Defendants from implementing or enforcing the IEC, or withholding or terminating federal funding based on the IEC.  The Court also denied the government’s request to stay the order pending appeal.

On May 15, 2025, Indiana Attorney General Todd Rokita issued a  Letter to the University of Notre Dame concerning the University’s diversity, equity, and inclusion (DEI) policies and practices. On June 4, 2025, he sent a similar letter to Butler University and DePauw University. Each states concern that the institutions may “treat students, faculty, staff and others differently based on race under the guise of DEI” in violation of the U.S. Supreme Court’s 2023 decision in Students for Fair Admissions v. Harvard (SFFA) in which the Court held that race-based admissions practices in higher education are unlawful. The AG requested information to determine whether the schools’ DEI programs are consistent with the law.

The AG based its inquiry on publicly available materials and statements, including leadership statements, strategic plans including purported faculty diversity targets, racially segregated ceremonies and other practices.  The AG’s inquiry addresses whether these schools’ operations may be governed by policies that “treat individuals — including students, prospective students, faculty, staff and job applicants — differently based on the individuals’ race or ethnicity; employ race in a negative manner when making admissions or hiring decisions; or utilize racial stereotyping.”

This state attorney general DEI investigation raises new risks, at both the federal and state level, for these universities. The AG is seeking to establish a potential violation of federal civil rights laws under its interpretation of the authority of SFFA, which may have repercussions not only at the state level but also for federal funding and accreditation status where a detailed finding is established. At the state level, the investigative demands suggest that the government may be seeking to develop a case that the universities are potentially in violation of state civil rights laws as well as state nonprofit law because “racial discrimination by any nonprofit university cannot be squared with the public or charitable purposes that a nonprofit is supposed to serve.” Any state finding of violation of state nonprofit tax formation law, conversely, could have impacts on the universities’ federal tax status.

Each university was asked to provide information about their admissions and hiring practices, including details about any changes made to their practices following SFFA.  Attorney General Rokita also requested documents showing what guidance the schools provide to faculty and admissions staff regarding DEI goals. He also asked the schools to explain whether and how race plays a role in their efforts to recruit, hire and enroll members of underrepresented groups.  Attorney General Rokita indicated that responses from the universities will be used to determine whether his office takes further action to ensure the schools are “operating consistently with the terms of their nonprofit statuses and Indiana’s legal and moral commitment to racial equality.”

In separate lawsuits filed on May 13, 20 Democratic state attorneys general sued the Trump Administration for conditioning their states’ receipt of funding appropriated by Congress for the Department of Homeland Security (DHS) and the Department of Transportation (DOT) on the states’ enforcing the President’s immigration agenda.

The states claim that the Trump Administration is unconstitutionally holding billions of dollars in their share of funding for DHS and DOT “hostage” by conditioning the states’ receipt of those funds on whether the states comply with a set of conditions requiring them to assist in federal civil immigration enforcement.  The lawsuits claim that the conditions on the funding are unconstitutionally vague and violate the separation of powers by encroaching on Congress’ power to set funding requirements.

The complaint against the DOT alleges that the funding that is subject to the immigration-related conditions is “essential to sustain critical public safety and transportation programs, including highway development, airport safety projects, protections against train collisions, and programs to prevent injuries and deaths from traffic accidents.”  The complaint against DHS alleges that the plaintiff states rely on DHS funding to “prepare for, protect against, respond to, and recover from catastrophic disasters.”

The states seek a declaratory judgment that the conditions imposed on the funding are unlawful and prospective injunctive relief on enforcement of the conditions.  The states bringing the two lawsuits include California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, Washington, Wisconsin and Vermont.

Continuing work on areas of broad agreement, the National Association of Attorneys General (NAAG) sent Letters to the House and Senate Appropriations Committee leaders on behalf of a bipartisan coalition of 40 state and territory attorneys general expressing strong support for continued federal funding in Fiscal Year 2026 to the congressionally-created Legal Services Corporation (LSC) through the Commerce, Justice, Science, and Related Agencies Appropriations bill. Congress established the LSC in 1974, stating “providing legal assistance to those who face an economic barrier to adequate legal counsel will serve best the ends of justice and assist in improving opportunities for low-income persons.”

LSC funding supports access to the legal system for individuals who may otherwise not have access to legal assistance –  including veterans, rural residents, domestic violence victims, low income individuals and others – through a network of independent legal aid organizations.

The Letter notes that LSC has been an effective steward of its federal investment, stating that the organization distributes 95 percent of its funding directly to legal aid organizations and that continued funding is critical to protecting equal justice under the law.

LSC operates a network of 130 independent legal aid organizations in over 900 offices in 50 states, the District of Columbia, and U.S. territories.

The letters were sponsored by Attorneys General for: Alaska, American Samoa, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Georgia, Hawaii, Illinois, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Northern Mariana Islands, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, U.S. Virgin Islands, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.