Why Litigation Is A Poor Answer To RRG Disputes

The Liability Risk Retention Act ("LRRA"), 15 U.S.C. § 3901 et. seq., authorizes risk retention groups ("RRGs") to charter in one state and to then, after a specified filing, operate in any other state. The authority of the chartering states is not limited in any respect by the federal law; however, the regulatory authority of a non-domiciliary state is limited. 15 U.S.C. § 3902(a)(1).

This regulatory structure, sometimes referred to as "lead state" regulation, has resulted in friction with the laws of some of the non-domiciliary states. The LRRA does not establish oversight authority in any federal agency. Nonetheless, it envisions there may be conflicts and assumes litigation may ensue. The LRRA authorizes states to "make use of any of its powers to enforce the laws of such State with respect to which a risk retention group is not exempt under this chapter." 15 U.S.C. § 3902(f)(1). However, if a state seeks an injunction (which would include a cease and desist