GeoLegal Weekly #49 - Trump-proofing and Trump-boosting States
The US is about to go through a massive "unruling" - how will the states respond?
Thanks to everyone who bought a copy of my first book Unruly on the back of my announcement last week. The book has already landed on BCA Research’s list of books to read for the coming year and is ranking in a number of Amazon micro-niches I can brag (only) to my kids about. If you haven’t grabbed a copy, I’d grateful if you support my writing by doing so here.
This week I’ll dive into the politics of “Trump-proofing” and “Trump-boosting” at the state-level. Not because I think one is good and one is bad but because they both present risks to business and represent further weaponization of the legal system.
Resisting to Resist
In 2017, Donald Trump assumed office with unified control of Congress, much like he will have in January of this year. His surprising, divisive victory led governors of Democratic states to act as a state-level resistance, channelling anti-Trump sentiment into protests and support for state-level policies that went against the president’s agenda.
The first-term “resistance” also filed lawsuits. A lot of them. Washington state participated in 99 cases against Trump polices, won 55 and only lost 3. California sued over 100 times. All told there were 160 multi-state lawsuits against Trump in his first term and Democratic Attorney Generals won 83% of the cases.
With Trump set to resume office in a few weeks, some Democratic governors are dusting off the same playbook. There will be challenges and those challenges will leave business caught in the cross-hairs. But the landscape is different this time around.
First, Democratic voters seem more resigned and less pugnacious than after the 2016 victory. Many are resisting calls to resist. Trump won the Electoral College and popular vote handily. Democrats are growing tired of fighting Trumpism — they have done so for over a decade and are unsure they’ve achieved much in the process. At least anecdotally, it feels like many simply plan to shelter in place and stop watching the news rather than put up a fight. Without outrage, energy and protests, the resistance will feel simply like sour grapes.
Second, the court system is not nearly as favorable to Democrats as it was in the past. To the extent the resistance is anaemic politically, then its core strategy will be to win in court. But a shift in federal court make-up moves against Democrats. The 9th Circuit Court of appeals, which will be a venue for some of these battles, has more Republican appointees than last time, for instance. In fact, the sheer number of judges Trump has appointed or will appoint everywhere will serve as a blocker to such strategies. He appointed over 200 federal judges in his first term and it is possible that Trump will appoint replacements for Justice Alito and Justice Thomas during his term which would mean that a majority of the Supreme Court was appointed by him personally.
Third, many Democratic governors sit atop swing states that voted for Trump and will fear the consequences of aggressively countering their populace’s presidential choice. Especially when Trump’s proposals will have cross-cutting constituencies supporting them: Businesses that like de-regulation and voters who have turned more protectionist and xenophobic than in recent cycles. This is true even in blue states where the governors want to keep the door open to collaboration but also look like fighters. As New Jersey’s governor said “If it's contrary to our values, we will fight to the death…If there’s an opportunity for common ground, we will seize that as fast as anybody.”
Fourth, Trump’s operation is much more professionalized than in 2017. Much reporting on the first term resistance highlighted the ability to win on administrative grounds because it seemed like policies and executive orders had not been properly reviewed by lawyers. The incoming Trump administration is proving that it’s able to move with more efficiency than in the first term - filling the cabinet and even jettisoning controversial candidates with replacements without missing a beat. That simply means it will be harder to win than last time.
Fifth, the scale of regulatory roll-back at the federal level is likely to be huge. Even Democratically controlled state-houses won’t be able to build a consensus to replace evaporating federal policy with tighter state-based rules. And it’s not clear to me that voters will even want that in blue states. The politics of fighting for more rules - more environmental rules, for instance — is simply different than coming off eight years of the Obama administration. I address this “unruling” of America - literally the removal of rules and regulations, as we will see over the next four years - at length in Unruly.
Resistance Playbook
So how will this play out?
First, regardless of the above, Democrats will challenge Trump in Court. California Governor Gavin Newsom called a special session of the legislature largely to get funding to fight Trump in court.
Second, blue states will try to resist enforcing some of the more controversial policy directives Trump puts forward. Banning local police forces from assisting with enforcing Trump’s new immigration policies will be one example.
Third, states like California may engage in what Berkeley Law’s California Constitutional Center executive director David A. Carrillo calls “soft secession” - they may simply go it alone in brokering their own agreements. During the first Trump administration, for instance, California negotiated directly with automakers to raise environmental standards. And it’s presence at the COP29 climate talks underscores that the state has broader foreign policy ambitions. States doing foreign policy is constitutionally dicey but - hey - anything is possible in today’s unruly world.
Trump Boosters
Of course, Trump will find a lot of support for his policies in red states that will do what they can to support him. The Wall Street Journal has an excellent summary of how Texas will help Trump with his immigration crack-down.
Oklahoma’s governor has made similar noises. Legislators in Missouri are working to similar ends and Iowa, Arizona and Louisiana have passed laws in line with Trump’s immigration agenda over the course of the year.
NBC has a great piece on how Trump is heavily relying on Floridian talent in his administration and how Florida’s politics have been reshaped in many ways to support his agenda.
So, while the resisting states may get the most attention, others will move in lockstep with the federal government, exacerbating differences in implementing federal policy across the US.
Risk to Business
Ultimately, this type of approach - where states go it alone and hope to overcome federal policies they don’t like in state court presents all sorts of risk. Companies need to think about:
Uncertainty: The only certainty may be uncertainty. As Trump moves at lightening speed to implement his new agenda, it will be challenged in state and federal courts where injunctions will be filed and states will refuse to comply. How this all nets out is impossible to say other than that simply because Washington says something is the law will not actually mean it is the law until it is tested in court.
Lobbying and Compliance costs: As excited as businesses are for de-regulation, states that swoop in and re-regulate will amplify the patchwork challenge that companies face across the United States. Companies will need to focus on statehouses where they face the risk of re-regulation or anticipatory regulation for monitoring and influence.
Reputational risks: Companies have been whipsawed around from national conversations on state policies related to everything from gendered bathrooms to immigration policy. Companies will be pressured to take a stand and will suffer pain when they don’t - or when they do, but do so ineffectively.
In other News
AI Weaponization of State Courts: I’ve been tracking potential weaponization of the law using AI (for instance, in long form here with Stephen Heitkamp) so I was intrigued to read Josh Kubicki’s Brainyacts newsletter highlighting an article from his students Kennith Echeverria and Parker McGuffey. Their article talks about overwhelming courts with filings and fake evidence but goes further to talk about solutions related to blockchain for evidence and AI detection tools. Check it out here (and sign up for his newsletter if you haven’t, as it’s really good).
Beneficial owner: Congress passed the Corporate Transparency Act earlier this year which required small businesses to file onerous paperwork about their beneficial owners by January 1, 2025. Those that didn’t procrastinate spent money and time on doing this. But earlier this month, a nationwide injunction stopped the requirement. The Attorney General is fighting to put it back in place before the deadline. Key elements: 1) The use of a Texas nationwide injunction to stop federal law as I’ve written about before 2) The unpredictability of law being law, because everything is now tested in court to slow the clock down for administration change.
TikTok and US Steel: I wrote about both of these at the beginning of the year and here we are at the end, possibly going to see how the story finishes. TikTok has failed to overturn the law banning it from US app stores at the beginning of the year but I suspect Trump will work to give it a stay of execution even if there is a temporary blackout. Meeting TikTok’s CEO, he said “I have a warm spot in my heart for TikTok, because I won youth by 34 points.” Many Trump donors do as well. On US Steel, the relevant government agencies are split on whether it’s takeover by Nippon Steel raises a national security threat. There are numerous indications Biden is positioning to block the deal.
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Wow. 2024 has been quite a year to narrate for all of you given the immense political change happening. And I’m sincerely appreciative for those of you who have been on this journey and engaged with my writing over the year.
While many (all?) of you may be hoping for GeoLegal notes under your tree on 25 December, I plan to give you a break for the holidays. I’ll be back in your box 8 January, though get in touch if I can be helpful in the interim.
-SW