Who’s Benefiting from Attorney General Settlement Agreements?
Lately, when we read about state Attorneys General (AGs) in the news, we hear about them suing battleground states to try to overturn election results or suing the Trump administration 138 times—almost double the number of times the Obama and Bush administrations were sued—over various policies. Although state AGs are increasingly ramping up their focus on federal issues, they also have broad powers in other spheres that may or may not reach the public’s notice. One of the powers state AGs have at their disposal is called their parens patriae authority. This authority allows them to bring enforcement actions against entities that threaten the public health and welfare of their state. Parens patriae actions most often take the form of suing companies for environmental, health, or consumer abuses, such as the suits brought against opioid manufacturers and companies like Comcast and ExxonMobil. Most of these lawsuits end in settlement agreements which AGs get to promote in splashy press releases. These settlements often contain millions of dollars in penalties awarded to the state, but what actually happens to the money once all the press dies away?
The answer is complicated. Consumers will sometimes receive a direct refund for settlements resolving some types of consumer abuses, like those alleging that customers were overcharged. For environmental and health violations, it can be much more difficult to identify the victims of the violation and compensate them for the harm inflicted. This is a real problem because the burdens of public health and environmental harms disproportionately fall on communities of color and people with low incomes. Researchers have identified air pollutants and the associated respiratory illnesses as one of the reasons that Covid-19 has been extraordinarily deadly in Black communities. Quite often, the only kind of recompense that victims of these types of harms can ever hope to receive is through lawsuits from the state AG’s office. But those settlement agreements rarely funnel money back into the underserved communities.
In 1998, state AGs settled with the largest tobacco companies over their misinformation campaigns that led to various public health crises. Those settlement agreements were complicated and some of the money is still being paid out. Researchers estimate that as much as 90% of the funds from those settlements–intended for anti-smoking and health programs–were put to other uses. Two of the more egregious misuses of funds occurred when New York used $700,00 on sprinklers for a public golf course and $24 million for a county jail and office building.
Similarly, the settlement money from the mortgage foreclosure crisis was too-often diverted from needy hands. Michigan used $500,000 of its proceeds from Countrywide Financial to spruce up two local parks at the bequest of a major donor and 15 states said that they would use “all or most of the money” they received from a $2.5 billion settlement for purposes unrelated to consumer protection. By directing these funds to other purposes, state governments failed to compensate the Black and Latino families who were disproportionately victims of predatory lending and foreclosures.
Finally, companies that violate air and water pollution laws often see private benefits as the result of the settlement agreements they enter into with state AGs. As part of its agreement with eight state AGs and the Environmental Protection Agency (EPA), Ash Grove Cement was required to upgrade old diesel truck engines at its own facilities. Enforcers requested the upgrade in order to decrease smog, but Ash Grove Cement also benefited from making a capital investment in its own facilities, albeit under the guise of punishment. Additionally, three state AGs and the EPA entered into a settlement with Duke Energy requiring the company to upgrade the hydropower turbines at a plant it owned. Although more renewable energy is definitely a worthy goal, the beneficiary of this increased generating capacity was, of course, Duke Energy. Neither of these projects outlined in the settlement agreements focused on compensating the communities suffering from the years of unlawful pollution.
There are other ways to craft terms in settlement agreements that better serve the injured parties and prioritize the needs of the communities. Environmental harms that cannot be solved with a simple rebate can be addressed with specific, community-focused projects. In a 2016 agreement, State AGs and the EPA required Tesoro Refining to replace diesel-fueled school buses with natural-gas powered ones in a community surrounding one of their refineries. In 2013, SunCoke Energy Inc. agreed to conduct a lead abatement project in nearby residential facilities. Both of these projects ensure that some money is invested back into the injured community. Government enforcers should carefully consider who the beneficiaries of the proposed settlement terms are before they sign off on those agreements.
State AGs undoubtedly do important work in exercising their parens patriae authority and extracting large civil penalties from corporations that regular people cannot afford to sue. However, evidence from some of the largest settlement agreements show that the money does not always reach the people who have been harmed. Part of this problem is a function of state laws, like Minnesota’s, that require settlement funds from AG lawsuits to be deposited directly in the state’s general funds. Once the money enters the state’s general funds, it can be appropriated for any purpose that the politics of state legislatures deem important. These laws restrict state regulating authorities from giving money to the people who suffered the harm at the center of the lawsuit. This withholding of funds is just another example of the chronic disinvestment that has plagued communities of color for centuries. State legislatures and Attorneys General must do better to prioritize the welfare of those communities who bear the burdens of consumer, health, and environmental injustice.
*Anna Berglund, University of Minnesota Law School Class of 2021, Articles Editor of JLI
 Jeremy W. Peters & Maggie Haberman, 17 Republican Attorneys General Back Trump in Far-Fetched Election Lawsuit, NY Times (Dec. 9, 2020), https://www.nytimes.com/2020/12/09/us/politics/trump-texas-supreme-court-lawsuit.html.
 Erik Ortiz, State Attorneys General Have Sued Trump’s Administration 138 Times — Nearly Double Those of Obama and Bush, NBC News (Nov. 16, 2020), https://www.nbcnews.com/politics/politics-news/state-attorneys-general-have-sued-trump-s-administration-138-times-n1247733.
 Richard P. Ieyoub & Theodore Eisenberg, State Attorney General Actions, the Tobacco Litigation, and the Doctrine of Parens Patriae, 74 Tul. L. Rev. 1859, 1863–65 (2000), https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=1398&context=facpub.
 Marcheta Fornoff, Attorney General Ellison Expands MN Lawsuit against Purdue Pharma, MPR News (May 17, 2019), https://www.mprnews.org/story/2019/05/17/attorney-general-ellison-expands-minnesota-lawsuit-against-purdue-pharma.
 Judge Finds Comcast Violated the Consumer Protection Act Nearly Half a Million Times, Wash. State Off. of the Att’y Gen. (June 6, 2019), https://www.atg.wa.gov/news/news-releases/ag-ferguson-judge-finds-comcast-violated-consumer-protection-act-nearly-half.
 Mike Hughlett, Minnesota Files Climate Change Lawsuit against Oil Companies Including Koch Industries, ExxonMobil, Star Tribune (June 24, 2020), https://www.startribune.com/minn-files-climate-change-lawsuit-against-oil-companies-including-koch-exxon-mobil/571466182/.
 For a list of multistate settlement agreements and the associated settlement amounts, see Paul Nolette, Multistate Settlement Database, State Litig. and AG Activity Database, https://attorneysgeneral.org/settlements-and-enforcement-actions/searchable-list-of-settlements-1980-present/.
 See, e.g., AG Shapiro: PA Consumers Get $1 Million Back from Citibank, Pa. Off. of the Att’y Gen. (Feb. 8, 2021), https://www.attorneygeneral.gov/taking-action/press-releases/ag-shapiro-pa-consumers-get-1-million-back-from-citibank/.
 John R. Balmes, Air Pollution and Climate Change, in Achieving Respiratory Health Equal. 40–42 (Juan Carlos Celedón ed. 2017).
 Spencer Johnson, A Silent Injustice: Air Pollution as a Contributing Factor of COVID-19 Health Disparities, 1.1 Yale Undergraduate Res. J. 1, 1 (2020), https://yurj.yale.edu/sites/default/files/a_silent_injustice_air_pollution_as_a_contributing_factor_of_covid-19_health_disparities_0.pdf.
 Crystal Phend, Tobacco Master Settlement at 20 Years, MedPage Today (Nov. 24, 2018), https://www.medpagetoday.com/primarycare/smoking/76496.
 Sara Randazzo, In the Opioid Litigation, It’s Now States v. Cities, Wall St. J. (Aug. 6, 2019), https://www.wsj.com/articles/in-the-opioid-litigation-its-now-states-v-cities-11565123075.
 Jim Estes, How the Big Tobacco Deal Went Bad, N.Y. Times (Oct. 6, 2014), https://www.nytimes.com/2014/10/07/opinion/how-the-big-tobacco-deal-went-bad.html.
 Paul Harzen Beach, The Parens Patriae Settlement Auction, 52 Gonz. L. Rev. 455, 476 (2016), https://gonzagalawreview.com/article/10046.pdf.
 Margaret H. Lemos, Aggregate Litigation Goes Public: Representative Suits by State Attorneys General, 126 Harv. L. Rev. 486, 527–28 (2012), https://harvardlawreview.org/2012/12/aggregate-litigation-goes-public-representative-suits-by-state-attorneys-general/.
 Debbie Gruenstein Bocian, Wei Li & Keith S. Ernst, Foreclosures by Race and Ethnicity: The Demographics of a Crisis, Ctr. for Responsible Lending (June 18, 2010), https://www.responsiblelending.org/mortgage-lending/research-analysis/foreclosures-by-race-and-ethnicity.pdf.
 Settlement with Ash Grove Cement Company to Reduce Thousands of Tons of Air Emissions, U.S. Dep’t of Justice (June 19, 2013), https://www.justice.gov/opa/pr/settlement-ash-grove-cement-company-reduce-thousands-tons-air-emissions.
 Partial Consent Decree at Appendix A, U.S. v. Duke Energy Corporation, (No. 1:99-cv-01693-LJM-JMS, S.D. of Ind. 2009), available at https://www.epa.gov/sites/production/files/documents/dukeenergy-cd.pdf.
 Consent Decree at Appendix D, U.S. v. Tesoro Refining & Marketing Company LLC, (No. SA-16-cv-00722, W.D. of Tex. July 18, 2016), available at https://www.epa.gov/sites/production/files/2016-07/documents/tesoro-cd.pdf.
 SunCoke Energy Inc. and Haverhill North Coke Co. Settlement, EPA (June 26, 2013), https://www.epa.gov/enforcement/suncoke-energy-inc-suncoke-and-haverhill-north-coke-co-haverhill-settlement.
 Minn. Stat. §16A.151 (2020), https://www.revisor.mn.gov/statutes/cite/16A.151.
 Sarah Ivey & Andrea Waner, 7 Ways Spatial Inequality Compromises Health and Well-Being, Cmty. Commons, https://www.communitycommons.org/entities/9031622f-0d33-4f15-adce-442ad17e1aa9.