This is a rush transcript from "On the Record," March 30, 2010. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Well, if you've been to Michigan lately, it almost seems like a civil war has started there. Michigan Attorney General Mike Cox is suing the federal government over health care. But that's just the beginning of his fight. He's also in a battle with Michigan Governor Jennifer Granholm. Now, Governor Granholm went "On the Record" last night.

(BEGIN VIDEOTAPE)

GOV. JENNIFER GRANHOLM, D - MICH.: As the state attorney general, he represents the state of Michigan as an entity, and I'm his main client. Now, his main client has been one of the governors who's been a co-chair of the governors task force trying to get this bill through because it helps Michigan. So he wears two hats. He can file on behalf of himself, as the attorney general, or on behalf of some other entity or the people. But he cannot file on behalf of the state of Michigan. He does not represent me. So I've asked him instead, as my lawyer, to file in that very case on the other side.

(END VIDEO CLIP)

VAN SUSTEREN: Tonight, Attorney General Cox is here with his side of the story. Good evening, sir.

MIKE COX, MICHIGAN ATTORNEY GENERAL: How are you doing, Greta?

VAN SUSTEREN: I'm very well. Let me ask you, you have filed suit with the -- several other attorneys general in the state of Florida. Is your client the state of Michigan or the people of Michigan?

COX: Greta, it is the people of Michigan. Under Michigan law, I as the attorney general can intervene in federal cases on behalf of the interests of the people of Michigan.

As you know, never before has the federal government, Congress or the president, forced a consumer, forced a regular citizen as the price of citizenship to buy a product. That is unprecedented use of the interstate commerce clause and we believe it's unconstitutional.

VAN SUSTEREN: Before we get that question, you have to be a party in the lawsuit. I learned recently for instance in one state an attorney general has to have permission from the governor or the state legislature and didn't have that.

But can you go forward -- Governor Granholm says you can't represent the state of Michigan because she is the client, which I don't fully understand, but you can represent the people of Michigan. And can you then make your own decision without getting her authorization or your legislature?

COX: Yes. That is by custom. That has been in Michigan for 150 plus years. As she indicated last night, she had prior fights, as it were, with the prior governor of Michigan where she took a different side when she was attorney general.

Again, this has been part of Michigan law since we became a state in 1837. There have been prior occasions where she and I have been on opposite sides of federal cases.

Right now I'm defending a Michigan constitutional amendment to our constitution in 2006 in federal court where we rid of racial preferences. And the governor intervened on the other side to support the continued affirmative action racial preferences in Michigan. So this isn't anything unusual in Michigan law.

VAN SUSTEREN: If I were to pull up that pleading again in Florida, would it say the "state of Michigan" or the "people of Michigan"? I was curious because she says if it says "state of Michigan" she has asked to you top doing that and write yourself a letter and tell to you stop doing that.

COX: It says the "state of Michigan." As tens of federal cases that we're part of right now where I as the people's lawyer here in Michigan have intervened on behalf of the state.

That's -- under the federal court rules it is customary hat attorney general speaks for the state, but given the governor's request, we are going to accommodate her request and change the caption to say "Attorney General Mike Cox" on behalf of the people of Michigan.

And if she so chooses -- she hasn't yet -- she can intervene on President Obama's side.

VAN SUSTEREN: Now, you are running for governor. Do you have any sort of sense -- I know it is neck-and-neck in the polls that I've seen, that you and Congressman Hoekstra are close in these polls running in the primary.

Do you have any idea -- is there a decision in part political? Are the people of Michigan behind you on this one or against you?

COX: Well, Greta, like "USA Today" indicated, the people of mission, I think are behind me, as it were.

But more importantly, I think I would have made in decision two years ago or three years ago. The reality is Harry Reid is running for office this year. Nancy Pelosi is running for office this year. All 435 folks in Congress are running for office this year.

Philosophically and constitutionally, most importantly, as I said before, never before, in fact one of your colleagues at Georgetown Law School, Professor Barnett is supporting our position that never before Congress been allowed to do what they did here.

VAN SUSTEREN: And what we're talking about is whether the mandate itself, ordering people to buy health insurance is unconstitutional.

Have you yet done the research? Let's say hypothetically that you win on that argument, that the mandate is determined to be unconstitutional, that provision. Does that undermine the entire health care bill or just the mandate?

COX: Well, Greta, I suspect the federal legislation has a severability clause, which is often the case, where if one part is struck down the rest of the legislation continues on.

In terms of funding, I haven't seen the numbers, the internal numbers that the Obama administration has, but I expect this was part of the funding mechanism. As Speaker Gingrich went over, there's some funky accounting here, some cooked books that the Obama administration used to push this through.

But I expect that they are counting on the mandate to help provide some of the revenue that they need to make their numbers to the extent that they do work, work.

VAN SUSTEREN: All right, attorney general, thank you, sir, and we'll be watching. Thank you, sir.

COX: Thank you, Greta.

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