Blue State AGs Prepare to Use Loper Bright Ruling to Defend ESG

The top law enforcement officers for blue states are planning to turn conservatives’ own legal arguments against them to defend environmental, social, and governance principles during the Trump-Vance administration.

The blue state AGs are ready to use the Supreme Court’s June Loper Bright Enterprises v. Raimondo decision as a line of attack if the Trump administration issues anti-ESG edicts that aren’t prescribed by Congress, Minnesota Attorney General Keith Ellison said. The high court’s ruling made it easier to fight some agency regulations in court by striking down the so-called Chevron doctrine that had required judges to defer to reasonable agency interpretations of ambiguous laws.

Democratic states’ top lawyers will take on a more prominent role in defending ESG with Republicans in control of both the White House and Congress. The blue state AGs started preparing for a possible Donald Trump victory months before the presidential election and now they are ready to fight anticipated efforts to curtail diversity, equity, and inclusion (DEI) efforts in corporate America and across federal agencies.

The officials are also on the lookout for Securities and Exchange Commission moves making it more difficult for shareholder activists to get environmental and social proposals on company annual meeting ballots.

Republicans on Capitol Hill had hailed the Loper Bright ruling as one path toward dismantling the agency’s ESG-related regulations.

“What’s good for the goose is good for the gander,” Ellison said in an interview. “We are scrutinizing the Administrative Procedure Act, Loper Bright—every decision to make sure that we will maximally defend the rights of the American people.”

The fall of Chevron is a “double-edged sword,” said Nevada Attorney General Aaron Ford. To the extent Trump may try to use ambiguity in the law to his advantage without explicit congressional approval, AGs are “prepared with legal nuance to respond to that,” Ford said.

Culture Wars

Proponents of ESG fear the second Trump administration and Republican-controlled Congress will take aim at corporate environmental and social initiatives in particular. Project 2025, Republicans’ blueprint for governing once in office, mentions the term “ESG” 32 times and “DEI,” 35. The blueprint’s recommendations include an “ESG/DEI collusion task force” at the Federal Trade Commission and prohibiting the SEC from requiring companies to disclose certain information about their workforces.

A bill introduced by Vice President-Elect Sen. JD Vance (R-Ohio) would redefine DEI as discrimination and prohibit the federal government from hiring contractors with DEI initiatives, among other provisions.

“You can’t get rid of DEI and not open the door to racial discrimination,” Ellison said. “To say we’re going to eradicate DEI is saying we’re going to eradicate Black and Brown people and women and gay people and people with disabilities.”

The Trump administration is also expected to roll back SEC guidance that made it easier for activist investors to get ESG-related proposals on company ballots.

While Ellison and Ford said they didn’t want to tip their hands on what they’d tackle first in challenging Trump, they pointed to proposals in Project 2025.

“I’m prepared to file cases to uphold shareholders’ rights and uphold the rights of owners and companies to do what they need to do to make their own decisions, and in that same vein, if they want to assess risk regarding certain products,” Ellison said.

AGs are also ready to defend ESG-related regulations already on the books and at risk under the new administration, including the SEC’s March 6 emissions disclosure rules that are now paused during litigation. Ellison, Ford and 16 other Democratic state attorneys general joined President Joe Biden’s SEC in April to defend rules, which require companies to report their greenhouse gas emissions and disclose climate change-related risks. Trump’s SEC could stop defending the regulations in court, but the Democratic AGs could keep the case alive.

Battle Lines

Republican state attorneys general, for their part, are ready to fight back against any challenges by Democrats and are prepared to help Trump carry out his deregulatory agenda, Tennessee Attorney General Jonathan Skrmetti said.

Their support will likely come in more of a back-bench role with comment letters, amici briefs, and intervening when necessary, Skrmetti said.

“As the administration comes into office, there will undoubtedly be a relationship between the AGs and the White House, as there has been through the last several administrations,” he said. “There will be ample opportunity for cooperation.”

They’ll have to match a coordinated team of Democratic state AGs pouring more resources into challenges of Republican policies.

The Democratic Attorneys General Association that Ford formerly co-chaired is ramping up its efforts, said Sean Rankin, president of the association.

“It’s now our turn to do the work to prepare for what we see coming based upon exactly what it is they said, and that was a wide range of issues,” Rankin said of the coalition—started in 2002 by a handful of state AGs as a part-time panel but reorganized in 2016 to help get Democratic AGs elected and organize united attacks on state policies that don’t reflect Democratic values.

Ford said his office is closely watching Elon Musk and Vivek Ramaswamy’s government-efficiency effort to recommend cutting federal jobs and slashing regulations. The Nevada AG is “gearing up” for attacks on SEC rules and the Department of Labor’s ESG-investing rule.

As an anti-ESG evangelist, Ramaswamy has attacked ESG and DEI initiatives dating as far back as his tenure as founder and CEO of biotech company Roivant Sciences in 2014.

“He’s expressed his opposition to ESG policies, and so we certainly expect him to try to put his thumb on the scale,” Ford said.