Governor Paul LePage delivers a speech in September 2017 at The Woodlands Club in Falmouth. Credit: Jake Bleiberg

Gov. Paul LePage said Thursday that he directed the state controller to transfer $10 million under the sole discretion of Attorney General Janet Mills to another account controlled by the Legislature.

Mills countered that LePage lacks the legal authority to order the transfer.

The funds, which are the result of class-action settlements against Volkswagen and Moody’s Corp. that benefitted Maine, were deposited in a fiduciary account identified in the settlement-agreement language and controlled by Mills, LePage said in the letter.

On Thursday morning, the funds were moved to an “Other Special Revenue” account.

“I do not believe the relevant laws or the Maine Constitution gives her such broad and unrestricted discretion,” LePage wrote.

Maine was one of 21 states that benefitted from a settlement earlier this year in which Moody’s paid a total of $864 million for inflating ratings on risky mortgage investments. In a class-action lawsuit against Volkswagen for doctoring emissions readings in its vehicles, Maine received about $21 million out of the $14.7 billion settlement. That money was designated for emissions-reducing infrastructure and grant programs.

Mills said the transfer overdrew the nearly 30-year-old Consumer Protection Trust Fund and is a violation of state law, court orders and the Maine Constitution. She said those funds are intended for victim restitution payments, expert witnesses and other litigation expenses.

“Now he wishes to misappropriate funds that the attorney general’s office is using instead to fight the opiate epidemic, to litigate against corporate wrongdoers and to win restitution for the state and its people,” Mills said in a written statement.

State Controller Doug Cotnoir backed LePage’s argument in a written statement Thursday night, and provided additional context. According to Cotnoir, Maine received about $7.2 million from the Moody’s settlement in February of this year and almost $3.7 million from the Volkswagen settlement in December 2016. The sum of those settlements, around $10.9 million, is what was transferred.

Cotnoir argued that the settlement agreement language didn’t call specifically for the funds to be held in trust, which he said means that how they are spent should be subject to legislative appropriation.

“There is no legislative authorization for the attorney general to expend these funds for any purpose,” he wrote.

Democratic House Speaker Sara Gideon and Republican Senate President Mike Thibodeau did not immediately respond to requests for comment.

LePage wrote that he “took the necessary executive action to protect these funds from expenditure until the Legislature makes a decision about whether it will check the attorney general’s exercise of self-delegated discretion or not.”

The Legislature is scheduled to start a special session Oct. 23 for a range of issues, but so far this has not been on the expected agenda.

LePage and Mills have been at odds for years on a spectrum of issues. Earlier this year, LePage sued Mills in her official capacity for refusing to represent the executive branch in matters that she deemed to have no legal merit.

With LePage term limited out of office next year, Mills is considered to be among the leading Democratic candidates in the party’s effort to replace him.

Christopher Cousins

Christopher Cousins has worked as a journalist in Maine for more than 15 years and covered state government for numerous media organizations before joining the Bangor Daily News in 2009.