State Attorneys General Positioning to Fill Enforcement Gaps Based on Changing Priorities of Federal Agencies

Amidst the uncertainty in the current federal enforcement landscape, one message rings clear—State Attorneys General, including California’s Rob Bonta, New York’s Leticia James, and Oregon’s Dan Rayfield, are poised to enforce laws traditionally led by federal prosecutors. In key areas such as federal anti-bribery statutes, environmental regulations, and consumer financial protection and securities laws, State Attorneys General have already staked a position as the “new enforcer on the block,” in light of the diminishing role of the Securities and Exchange Commission (SEC), the U.S. Department of Justice (DOJ), and the Consumer Financial Protection Bureau (CFPB) in these enforcement areas.

California Claims the Right to Enforce the FCPA Under California’s Unfair Competition Law

On April 2, 2025, California Attorney General Bonta issued a Legal Advisory announcing that the California Department of Justice will enforce violations of the Foreign Corrupt Practices Act (FCPA) using California’s Unfair Competition Law (UCL). The announcement appears to have been prompted by the Trump administration’s pause on FCPA enforcement activity. Specifically, on February 10, 2025, President Trump signed an Executive Order placing a 180-day moratorium on new FCPA enforcement actions and investigations while the DOJ reviews current cases and issues updated guidelines and policies consistent with the administration’s prioritization of “American economic competitiveness” and “the efficient use of Federal law enforcement resources.”

The February 10 Executive Order was silent on the SEC’s parallel FCPA enforcement activity. But the chief and co-chief of the agency’s FCPA Enforcement Special Unit recently resigned, and the unit no longer exists. These developments signaled a retreat in federal enforcement of the FCPA’s anti-bribery provisions and the related books and records and internal accounting controls provisions.

Based on AG Bonta’s April 2 Legal Advisory, it appears that California and, maybe, other states are preparing to fill that void. Indeed, it explicitly reminds businesses and individuals “to continue complying with all applicable laws, including the FCPA, regardless of the federal administration’s pronouncements,” or else risk a UCL enforcement action brought by the state.

California’s UCL, codified at Business and Professions Code § 17200 et seq., prohibits unlawful, unfair, and fraudulent business acts and practices. The UCL “borrows” other laws to make violations of those other laws actionable as unfair competitive practices. The UCL traditionally has been used to address consumer-focused laws, such as false advertisements, consumer fraud, and antitrust violations. But, as the April 2 Legal Advisory points out, litigants have previously used FCPA violations as a basis for a UCL claim. See Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1144 (2003) (noting Court of Appeals’ decision that UCL claim may be predicated on FCPA violation).

In addition to authorizing enforcement actions by AG Bonta, the UCL also permits suits by private plaintiffs who “suffered injury in fact” and “lost money or property as a result of” the challenged business practice. Cal. Bus. & Prof. Code § 17204. Private plaintiffs with standing may seek restitution and injunctive relief. Cal. Bus. & Prof. Code § 17203; Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 179 (1999). The California Attorney General additionally may seek civil penalties. Cal. Bus. & Prof. Code § 17206.

The Legal Advisory further warns that FCPA violations may give rise to liability under other states’ consumer protection laws. As one example, New York might attempt to invoke its General Business Law Section 349(a), which prohibits “[d]eceptive acts or practices in the conduct of any business, trade or commerce in the furnishing of any service in [the] state,” to target alleged FCPA violations for companies doing business in New York. Although no other state attorneys general have publicly announced their intent to prosecute FCPA violations under state law, they may do so, particularly if the forthcoming DOJ guidelines and policies memorialize a significantly narrower focus in FCPA enforcement. Companies with nationwide operations could conceivably face multi-state enforcement actions brought by coalitions of state attorneys general for corrupt business practices or inadequate internal accounting controls.

California Could Enforce Its Climate Disclosure Rules in Contrast to the SEC’s Retreat from Defending Its Climate Disclosure Rules

In addition to “borrowing” federal statutes, California has also signaled that it will be active in enforcing its own regulations that overlap with federal law. One recent example involves California’s corporate climate disclosure regulations.

California’s regulations are analogous to the SEC’s Climate Disclosure Rules passed by the SEC under the previous administration. Adopted on March 6, 2024, the Rules required public reporting companies to make detailed and extensive disclosures about climate-related risks and greenhouse gas emissions. Shortly after the Rules were passed, the Rules faced legal challenges from both states and private parties before the Eighth Circuit (Iowa v. SEC, No. 24-1522 (8th Cir. March 12, 2024)). The SEC, as expected, began defending its Rules but stayed the effectiveness of the Rules pending the completion of litigation. On March 27, 2025, however, the SEC took the unusual step of voting to abandon the defense of its Climate Disclosure Rules in the case. Although the litigation remains ongoing despite the SEC’s announcement, the ultimate future of the SEC’s Rules is uncertain. But the Rules likely will never take effect, given that the current SEC views them as “costly and unnecessarily intrusive.”

In contrast to the SEC’s retreat in defending its Climate Disclosure Rules, California continues to defend its own regulations. California’s corporate climate regulations face ongoing litigation in Chamber of Commerce v. Cal. Air Resources Bd., No. 2:24-cv-00801 (C.D. Cal. Jan. 30, 2024). The lawsuit seeks to stop two regulations, Senate Bills 253 and 261, that mandate disclosure of various climate-related risks and data from going into effect.¹ The California AG has argued that one reason the laws were adopted is because many large companies were already disclosing climate-related information, but those disclosures contained inaccurate and misleading statements. On April 7, 2025, AG Bonta filed an opposition to the plaintiff business group’s motion seeking to enjoin the regulations on First Amendment grounds while the case proceeds on the merits. AG Bonta defended the need for California’s regulations, stating that the disclosure rules will “correct a massive blind spot for consumers, investors, and policymakers, who need this information to make intelligent and well-informed economic decisions.” (Dkt. No. 89 at 9:9-13 (cleaned up).)

California’s regulations also will likely come under further attack by the federal government in the coming months. On April 10, 2025, President Trump issued an Executive Order condemning state and local governments who “seek to regulate energy beyond their constitutional or statutory authorities.” The Executive Order notes that “[m]any States have enacted, or are in the process of enacting, burdensome and ideologically motivated ‘climate change’ or energy policies that threaten American energy dominance and our economic and national security.” Among other states such as New York and Vermont, the Executive Order names California and points to the state’s carbon use caps as an example of “radical” and problematic laws and policies in conflict with the administration’s energy initiatives. The Executive Order further requires the U.S. Attorney General to report to the President within 60 days (by June 9, 2025) on actions to be taken to stop “illegal” laws and policies at the state and local level.

Though it remains to be seen which environmental laws and policies DOJ will seek to invalidate pursuant to the April 10 Executive Order, California’s carbon use regulations and Senate Bills 253 and 261 are potential targets, particularly given the order’s singling out of laws and policies “purporting to address ‘climate change’” or involving “carbon or ‘greenhouse gas’ emissions, and funds to collect carbon penalties or carbon taxes,” as top priorities. We would expect the respective state attorneys general would vigorously oppose any challenges mounted by DOJ. We would also expect that California would actively investigate and pursue potential violations of its climate disclosure rules unless found to be unconstitutional or invalid.

Oregon and New York Attorneys General Using State Securities Laws for Enforcement in Areas Where the SEC Has Retreated

AG Bonta is not alone in staking out actions previously led by the SEC. In New York, AG James has initiated several enforcement actions against major cryptocurrency platforms and broker-dealers under New York’s securities and commodities laws. For example, in 2023, AG James sued KuCoin and CoinEx for allegedly failing to register as a securities and commodities broker-dealer and for allegedly falsely representing itself as an exchange. And in January 2023, AG James, along with a coalition of nine other states, including California, reached a $24 million stipulated judgment against Nexo Inc. and Nexo Capital Inc., for alleged unregistered offerings and sales. Given the state’s enforcement history, New York may well bring additional state enforcement actions in the cryptocurrency and other markets.

Oregon also recently took action in the cryptocurrency space. On April 19, 2025, the Oregon Attorney General filed an action against crypto exchange Coinbase alleging the exchange engaged in the unlawful sale of unregistered securities, in violation of Oregon’s securities laws, through its trading platform. The press release announcing the action expressly stated that “states must fill the enforcement vacuum being left by federal regulators who are giving up under the new administration and abandoning these important cases.” Indeed, the action comes on the heels of the SEC’s recent decision to dismiss its ongoing related case against Coinbase.

Dodd-Frank Empowers State Attorneys General to Directly Enforce the CFPA Even If the CFPB Does Not

In passing the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), Congress specifically provided for a system of cooperative federalism and dual enforcement at the federal and state level. Under Dodd-Frank Section 1042, state attorneys general are empowered to enforce all of the safeguards created by the Consumer Financial Protection Act (CFPA), codified in Title X of Dodd-Frank, and all regulations thereunder, including a CFPA provision that makes it unlawful for entities covered by the CFPA to violate other federal consumer financial laws. This broad grant of authority gives state attorneys general coextensive power with the CFPB, the agency charged with enforcing the CFPA at the federal level, and significantly expanded states’ enforcement authority to reach both the federal consumer financial protections that existed before Dodd-Frank and the new protections created by the CFPA. Section 1042 also allows state attorneys general to supervise nonbanking entities covered by the CFPA, inviting further state regulatory authority over federal consumer financial laws.

In the wake of the Trump administration’s efforts to defund and dismantle the CFPB, AG Bonta joined a coalition of 23 state attorneys general as amici in two lawsuits challenging the administration’s attempt to effectively shutter the CFPB (see Mayor and City Council of Baltimore v. Consumer Fin. Prot. Bureau, No. 1:25-cv-00458 (D. Md. Feb. 2, 2025); Nat’l Treasury Emps. Union v. Vought, No. 1:25-cv-00381 (D.D.C. Feb. 9, 2025)). In both cases, the state attorneys general argue that dissolving the CFPB would leave states with the sole responsibility to protect consumers from conduct regulated by the CFPB. On April 11, the D.C. Circuit stayed certain provisions of the preliminary injunction issued by the district court, and the Trump administration appears to have interpreted the stay order to allow it to proceed with a significant reduction of the CFPB. On April 17, the National Treasury Employees Union filed a motion estimating that 1,400-1,500 of its approximately 1,700 employees received layoff notices that day. The District of Columbia District Court has prohibited the administration from implementing the reduction in force until an April 28 hearing on the union’s motion to enforce the preliminary injunction.

State action to enforce the CFPA would not be novel. For example, California’s AG has participated in at least three enforcement actions pursuant to Section 1042 since the CFPA’s enactment, including two multi-state actions involving all fifty states and the District of Columbia (Alabama v. Nationstar Mortg. LLC, No. 1:20-cv-03551 (D.D.C.); Alabama v. PHH Mortg. Corp., No. 18-cv-0009 (D.D.C.)), and one independent action alleging a UCL violation based on the CFPA’s prohibition against UDAAPs, among other claims (California v. Volkswagen AG, No. 3:16-cv-03260 (N.D. Cal.)). The New York AG has similarly brought at least one enforcement action under Section 1042 (People of the State of New York v. Pa. Higher Educ. Assistance Agency, No. 19-cv-9155 (S.D.N.Y. Oct. 3, 2019)), and led a multi-state investigation against Intuit, Inc. pursuant to Section 1042 that resulted in a $141 million settlement joined by all fifty states and the District of Columbia.

California’s and New York’s prior enforcement of the CFPA’s consumer protection laws may increase as the capacity of the CFPB is substantially limited. Other states may also increase their enforcement of federal consumer protection laws.

Conclusion

Recent actions and announcements by the federal government curtailing enforcement efforts in numerous areas, including the FCPA, climate-related disclosures, and the CFPA, are prompting state attorneys general to step into the perceived void, as reflected by AG Bonta’s recent Legal Advisory and AG Rayfield’s complaint. Companies may want to review whether their business practices could be a predicate for a state enforcement action under the CFPA, unfair competition laws, or other state laws.

¹ Senate Bill 253 applies to any company doing business in California that generates annual revenue exceeding $1 billion and requires covered entities to measure and report greenhouse gas emissions data for the prior fiscal year. Senate Bill 261 applies to businesses operating in California with annual revenue in excess of $500 million and requires covered businesses to issue public reports on its climate-related financial risks, as well as measures taken to mitigate those risks. 

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Jorge deNeve, an O'Melveny partner licensed to practice law in California; Michele W. Layne, an O’Melveny of counsel licensed to practice law in California; Daniel R. Suvor, an O’Melveny partner licensed to practice law in California; Jim Bowman, an O'Melveny partner licensed to practice law in California; Mark A. Racanelli, an O’Melveny partner licensed to practice law in New York; Sharon M. Bunzel, an O’Melveny partner licensed to practice law in California; David N. Kelley, an O’Melveny partner licensed to practice law in New York and Connecticut; Elizabeth L. McKeen, an O’Melveny partner licensed to practice law in California; Danielle Morris, an O’Melveny partner licensed to practice law in California; Greta L. Nightingale, an O’Melveny partner licensed to practice law in the District of Columbia; and Kelsey A. Chandrasoma, an O’Melveny counsel licensed to practice law in California, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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