The attorneys general of Maryland and the District of Columbia plan to file a lawsuit on Monday alleging that foreign payments to President Donald Trump's businesses violate the U.S. constitution, according to a source familiar with the situation.
Trump already faces a similar lawsuit that was brought in January by plaintiffs including a ethics non-profit group.
However, the case from two Democratic attorneys general could stand a better chance in court as the first government action over allegations that Trump, a Republican, violated the constitution's so-called emoluments clause.
Democrat AGs have taken a lead role in litigating against Trump's policies, successfully blocking executive orders restricting travel from some Muslim-majority countries. They are also resisting efforts to roll back environmental regulations and insurance subsidies under the Affordable Care Act.
A spokesman for Maryland's attorney general declined to comment on the latest emoluments case. DC attorney general Karl Racine and a spokeswoman for the U.S. Department of Justice could not immediately be reached.
In the case filed in January in Manhattan federal court, an ethics non-profit, restaurant group and hotel events booker allege Trump violates the Constitution's "emoluments" clause, which bars him from accepting gifts from foreign governments without congressional approval, by maintaining ownership over his business empire despite ceding day-to-day control to his sons.
The Justice Department on Friday argued that those plaintiffs lack the legal standing to sue because they cannot allege enough specific harm caused by Trump's businesses. The government also said Trump hotel revenue does not fit the definition of an improper payment under the constitution.
AG Racine told Reuters in a March interview that the District of Columbia has suffered particular harm because it subsidized the construction of hotels that are now impacted by foreign payments to Trump properties.
That puts the district in a "unique position" to file legal claims over the emoluments clause, Racine said.
The Washington Post earlier reported the AG lawsuit.
(Reporting by Dan Levine in San Francisco; Editing by Michael Perry)