Newly elected state AGs outline enforcement priorities

Eighteen new state attorneys general will take office in 2019. There will be new AGs in Alaska, Colorado, Connecticut, Delaware, Florida, Hawai`i, Illinois, Maine, Michigan, Minnesota, Missouri, Nevada, New York, Ohio, Rhode Island, South Dakota, Wisconsin and Wyoming. Politically speaking, the impact of the 2018 midterm elections on the AG landscape was decidedly mixed, with Democrats flipping four AG seats previously held by Republicans, and the GOP maintaining their strongholds in Florida and Ohio. Overall, the midterms shifted the balance of state AG seats nationwide to a Democratic majority. Democrats now occupy 27 AG seats (including in Washington, DC) and Republicans, 24.

Companies should be aware that the newly elected AGs are expected to be as aggressive, or more so, than their predecessors. In Connecticut, for example, AG William Tong is succeeding AG George Jepsen, who led some of the largest bipartisan multistate investigations, including into opioid manufacturing and distribution, alleged price fixing in the generic drug market, and data privacy issues. Tong has signaled his intention to continue with these efforts, recently declaring: “I’ve always been activist in the legislature and I’m going to be activist as an attorney general because that’s what you need right now.”[

Other new AGs have started identifying their enforcement priorities. Some newly elected Democratic AGs have announced plans to investigate President Trump’s various business organizations. Others are targeting the administration’s policies. Illinois AG Kwame Raoul is challenging a recent ruling by a federal judge in Texas striking down the Affordable Care Act[, while Nevada AG Aaron Ford has indicated that he will reverse the course set by his predecessor, Republican Adam Laxalt, a staunch opponent of the ACA.

In Colorado, AG Phil Weiser, a Democrat, has outlined his intention to join a lawsuit against opioid manufacturers for allegedly misleading users as to the drugs’ addictive qualities, defend against federal overreach Colorado’s right to decide how it legislates and manages marijuana use, and protect consumers against financial scams. Minnesota AG Keith Ellison, a former Democratic congressman from the state’s 5th District, has pledged to address drug-pricing issues and allegations of anti-competitive activity in the nation’s agricultural sector. “We want to stand with Minnesotans against the big entities in this world as you are trying to make a go in this economy,” he recently told his constituents. “The middle class, I believe, is hanging on barely, and I think the attorney general ought to stand up against the fraudsters, against the monopolies, against these folks who would make your life so much more difficult to afford.”

New elected Republican AGs, for their part, are expected to continue their party’s stalwart defense of the Trump administration through the filing of amicus briefs in high-profile lawsuits challenging his executive orders and final agency actions. But they will also ramp up state enforcement actions in certain areas. For example, Ohio Republican AG Ted Yost is expected to continue his scrutiny of pharmacy benefit managers (PBMs), an industry that he focused on during his time as Ohio State Auditor.

State attorneys general will continue to combine their resources in an ever-growing number of multistate and multi-defendant investigations and civil and criminal enforcement actions, raising the stakes for both individual companies and entire industries. In addition to the issues the AGs campaigned on in the midterm elections, there’s no telling what new issues they will involve themselves in, given the unpredictability of the Trump administration. More relevant to assessing and addressing a business’s regulatory risks is understanding the scope of a particular AG’s authority, its level of activity and the political dynamics framing its choices.

Illinois legislative speed read: Senate fleshes out budget

The Illinois Senate convened executive hearings this week in the hopes of forging consensus over the bargain package to end the state’s budget impasse, though no votes were taken by the chamber.

The Senate Revenue Committee held a subject matter hearing on SB 9, which received an amendment with a potential additional amendment being introduced later this week Under Senate Amendment No. 1, the new provisions include:

  • Removal of the soda tax and is replaced by the Business Opportunity Tax Act. This tax is a tax imposed on businesses based on the number of Illinois employees of the business.
  • Raises corporate income tax rate to 7% and personal income tax rate to 4.99%.
  • Establishes the following service taxes; storage services, amusements, repair and maintenance services, landscaping services, and laundry and dry-cleaning services.
  • Establish a tax on cable television services and direct broadcast satellite services.
  • Decouples from the Domestic Production Activities Deduction.
  • Eliminates the unitary business noncombination rule.
  • Makes the research and development credit permanent.
  • Redefines manufacturing to include graphic arts production and includes items formerly included in the manufacturers purchase credit in the manufacturing machinery and equipment exemption.
  • Provides that False Claims Act cases may not be brought with respect to any taxes imposed, collected, or administered by the State of Illinois.
  • Repeals the Adult Entertainment Tax effective January 1, 2018.
  • Modifies pollution control facilities valuation under the Property Tax Code.

The Senate Executive Committee held a subject matter hearing on a number of bills in the package, including SB 12, the workers’ compensation proposal. Illinois Chamber and several of other business groups and insurance associations all opposed the bill for various reasons.

HOUSE

The House activity was primarily focused on the passage of the House Rules, which are passed at the beginning of every General Assembly. At this point, no committee assignments have been announced nor committee hearings scheduled.

Sine Die in Illinois

The Illinois State House of Representatives and Senate adjourned sine die on Tuesday for the final day of the 99th General Assembly, leaving dead all bills filed this session, including a slate of budget compromise bills.

It is expected, however, that Senate Pres. John Cullerton will reintroduce those bills as early as Wednesday when the new General Assembly is sworn in.

House

The House passed SB 513 HA-3, which extends the sunset date of the EDGE tax credit program to April 30, 2017. The bill passed 101-12.

The House also voted on HB 6630, sponsored by Rep. Batnick, which would freeze property taxes beginning with the 2016 levy year. The bill passed 76-24-6.

SB 2799, sponsored by Rep. Breen and Sen. Collins, passed the House unanimously. This agreed bill would amend the Employee Sick Leave Act by cleaning up several provisions in the Act. Among the changes included exempting collective bargaining agreements and clarifying paid and unpaid employees are covered under the Act.

Senate

The Senate concurred on House amendments to SB 550, sponsored by Sen. Steans, which requires lead testing of the water in schools and daycare facilities.

The Senate also concurred unanimously on House amendments to SB 2799, sponsored by Sen. Collins and Rep. Breen, which again is an agreed bill that makes changes to the Employee Sick Leave Act as specified above.

The final Senate concurrence was taken on the EDGE tax credit sunset extension, HA-3 to SB 513 . The bill passed 48-7.