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As National AGs Group Drifts Left, Red States Eye the Exits

Washington, D.C., attorney general Karl Racine (D.) / YouTube
• March 30, 2022 12:00 pm

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Republican state attorneys general are sounding alarms about money management and left-wing bias at the National Association of Attorneys General (NAAG).

The flagship organization for top state legal officers controls tens of millions of dollars in settlement funds, which it disperses to support consumer protection training and enforcement. Some Republican attorneys general fear those accounts are turning into left-wing litigation slush funds as NAAG's programming grows increasingly progressive.

"It looks to me like an organization that's really lost its way," Montana attorney general Austin Knudsen (R.) told the Washington Free Beacon. "I don't think it's nonpartisan anymore. By all accounts it looks like it's gotten quite partisan." Knudsen says he's questioning whether Montana is well served by NAAG membership, which costs tens of thousands of dollars annually.

The organization's apparent ideological tilt keeps with the general trend in the law. While conservatives have a strong redoubt in the Federalist Society, the nation's top law schools, its most powerful firms, and the American Bar Association are largely in hand for progressives.

NAAG chief communications officer Allison Gilmore defended the organization's bipartisan pedigree in a statement to the Free Beacon.

"For over a century, NAAG has proudly served as the nonpartisan organization assisting America's attorneys general in their work protecting the rule of law and the U.S. Constitution," she said. "NAAG fosters bipartisan engagement and cooperation among attorneys general and their staff across the legal and law enforcement issues they all share, regardless of political party."

Over the years NAAG has been awarded portions of major settlement agreements between corporate defendants and coalitions of states alleging consumer protection violations. These awards are provided for specifically in the settlement agreement between the states and the given defendant. For example, Volkswagen and 44 plaintiff-states agreed NAAG would pocket $20 million when the car giant agreed to a $600 million settlement over the 2015 emissions scandal. And NAAG won $15 million out of the national mortgage settlement with five major financial institutions for alleged wrongful foreclosures.

In turn, NAAG puts the settlement money in accounts controlled by multi-member panels called fund committees. The committees then disperse the money to state AGs to use for consumer protection training programs or to support new lawsuits. Gilmore emphasized that NAAG staff do not control how money from these funds are spent. Rather, fund committees control disbursement.

Democrats have majorities on most of NAAG's fund committees, and Republican AGs say group leadership has stonewalled when they've asked how the committees are distributing the funds.

"I've specifically requested some more information from NAAG," Knudsen told the Free Beacon. "And frankly I've been given nothing so far but platitudes."

"NAAG is transparent with its members about the money distributed from the funds it administers, providing annual reports to members on each settlement fund, as required by the rules and regulations governing each fund," Gilmore countered. "Information can also be requested in this regard at any time by any NAAG member."

Fund committee rules and statements about them from NAAG leadership raise questions. In a February letter to AGs, NAAG executive director Chris Toth said state AGs can request "grants" from fund committees to use for any purpose sanctioned by the settlement. Fund committee operating rules use the same term. But the rules also make clear that awards should be repaid by the recipient state in many cases. Such an arrangement isn't a grant, properly speaking, but a loan.

If that's so, the accounts operate more like revolving-door funds that can support training or litigation for decades.

For example, the rules governing the $15 million mortgage settlement fund provide that recipients "shall promise to pay back to the Fund all of the amounts received from the Fund in the event the state is successful in the litigation for which funds have been appropriated." The rules for the $20 million Volkswagen fund have an identical provision.

Republicans can't point to a specific case or program the funds have financed that troubles them—in part because they aren't privy to settlement fund spending. But they object to state AGs taking significant money from outside the legislative appropriations process to fund blue-state litigation activity, and they have deep disagreements with the Democratic approach to consumer protection lawsuits.

In consumer protection cases, Republicans often prefer simply to direct damage payments to victims. Democrats support that tactic. But beyond repaying victims, they also angle for settlement terms that give AGs or other regulators oversight of defendant operations for years to come, a kind of litigation "mission creep." And they're glad to funnel damages payments to friendly third parties like NAAG.

Alabama attorney general Steve Marshall (R.) pulled out of NAAG in 2021, citing his frustration with the association's left-leaning consumer protection philosophy. NAAG landed a $15 million haul when consulting behemoth McKinsey & Company settled a class action lawsuit with 49 states relating to advice it gave to drugmakers like Purdue Pharma to boost sales of opioids.

Alabama, a nationwide leader in opioid prescriptions, got just $9 million out of the settlement. There were 97.5 opioid prescriptions for every 100 people in Alabama, according to a 2018 report from the National Institute on Drug Abuse.

"That was one of the very final straws for me," Marshall told the Free Beacon. "We have an opioid crisis in our country where we see the loss of lives as a result of overdose and addiction. That a national organization with a significant endowment receives more money than the state of Alabama did—to me, that was unacceptable."

Beyond financial issues, Republican NAAG members are growing frustrated at what they say is the heavy progressive current running through organization programming.

NAAG's immediate past president, D.C. attorney general Karl Racine (D.), launched a special organization initiative called "The People v. Hate," which meant to "counter hate and hate-related violence nationwide." Some of the initiative's programs had a distinctly ideological valence.

One such event was a Zoom panel on social media disinformation that canvassed progressive pet causes like reforming amplification algorithms in social media to isolate the far-right.

During the discussion, Harvard researcher Joan Donovan said Kyle Rittenhouse's actions in Kenosha, Wisconsin, were "definitely outside the law." She elsewhere asserted that GOP Spanish-language ads conflating the Biden-Harris ticket with socialist regimes amounted to disinformation.

Racine seemed aware he was broaching a partisan divide when he convened a summit on his initiative in Washington, D.C., in 2021. He delivered remarks thanking a handful of Republican AGs for attending.

"Issues in America, including issues relating to things like history, truth, and hate, can be divisive," Racine said. He went on to claim the preceding year was "one of the most violent, hate-filled years in our history," citing an increase in hate crimes per FBI statistics.

"We can do better. We must do better. And with truth and reconciliation, I have no doubt that we will do better," he said.