She hasn't said it would be illegal.
The submission shows she hasn't the necessary degree of confidence that it would fall within the power of the Scottish Parliament.
The submission states,
"When introducing the Bill it will be necessary for the Minister introducing it to state that in his or her view such legislation would be within the legislative competence of the Scottish
Parliament.[...] any Bill must be accompanied by a statement, which has been cleared by the Law Officers, that
the Bill is within the legislative competence of the Scottish Parliament.[...] The Lord Advocate needs to have the necessary degree of confidence that a Bill would be within devolved competence in order to “clear” such a statement.
In the present case, the Lord Advocate does not have the necessary degree of confidence."
There is cleary an area of doubt and the Supreme Court has been asked to give their view on that doubt.