On the one-year anniversary of its signing, the implementation of the IIJA remains a heavy lift for the federal agencies charged with carrying out its requirements.
The 118th Congress is slated to be sworn in on January 3, 2023, and with it will come a new agenda, particularly with respect to government investigations. With the new Congress, another era of political gridlock is apt to begin. Republicans will control the House of Representatives by a very narrow margin, and Democrats will retain control of the Senate by a similarly small margin, meaning progress on President Biden’s legislative agenda will likely slow in the coming months. In the absence of opportunities to achieve policy goals, both chambers are expected to undertake an increasing number of investigations. This shift would be consistent with trends from the 116th and 117th Congresses—in periods when the House of Representatives and the White House are controlled by different political parties, oversight activities increase.
For potential targets, government investigations pose many distinct risk management challenges. Such government investigations are unpredictable, political and public. Congressional investigations can be especially challenging because Congress serves as the investigator and arbitrator. Even if investigators find no evidence of wrongdoing, targets can experience significant fallout from the negative media attention and public scrutiny that a congressional investigation imposes. As such, potential targets should take proactive steps to avoid and mitigate risks related to a congressional investigation.
Congressional Oversight Powers
Congress has near plenary power to conduct investigations so long as they relate to legislative activity. Within the scope of this investigatory power, Congress may hold hearings, take testimony and gather documents, and even compel such evidence via subpoena. Congressional investigators may invoke their subpoena power to “secure needed information” so long as (1) it is related to and in furtherance of a congressional task; (2) it serves a “valid legislative purpose;” and (3) the subject of the investigation is a topic on which Congress may legislate. (Trump v. Mazars USA, LLP, 591 U. S. ____ (2020) (slip op., at 11—12).) The exact processes and procedures for issuing subpoenas are determined by congressional and committee leadership.
Congress also exercises significant control over the testimony that it may solicit. While Congress is required to respect constitutional privileges, many are surprised to learn that it is not obligated to recognize common law privileges, such as the attorney-client privilege. It is up to committee chairs to set the rules for investigations by their respective committees. These rules may address who can exercise subpoena power, whether the committee will choose to recognize claims of privilege, whether hearings will be confidential and other crucial procedural issues. This all combines to form an environment that can be unpredictable and unusually risky for targets.
Given the unique risks presented by congressional investigations, an effective response to such inquiries requires a strategic combination of litigation, negotiation and advocacy skills and experience.
Likely Targets of Aggressive Congressional Oversight by House Republicans
We expect that Republican leaders in the House will act quickly to increase and intensify their use of congressional investigative powers. Already, several likely incoming Republican committee chairs have begun to telegraph their investigative targets. Those chairs include the Republican members who will lead the House Oversight Committee, House Judiciary Committee, House Financial Services Committee and House Permanent Select Committee on Intelligence.
In Republican leadership elections on November 15, 2022, Rep. Kevin McCarthy (R-CA-23) received majority support from congressional Republicans, making him the presumptive speaker of the house for the 118th Congress. However, Rep. McCarthy will likely need to make concessions within his own caucus to garner the 218 votes needed to be named speaker. As McCarthy navigates these dynamics over the coming months, it is likely that House Republican’s investigative priorities will crystalize. That said, the following topics are likely to be top priorities for investigation during the 118th Congress:
Mitigating Risks: Three Steps Companies Can Take to Prepare for Increased Congressional and Government Oversight
Companies concerned about potential investigations should not wait until they receive a subpoena or request for information to begin preparing. In preparation for January, companies should invest the resources now to institute best practices to mitigate the risks and effects of a congressional inquiry.
Congressional investigations and the public attention they generate can often trigger civil actions or criminal investigations. A thoughtful response requires a broad view of the legal landscape, familiarity with congressional investigative committees and an artful application of best legal practices for responding to a committee’s investigation. Pillsbury’s Public Policy and Corporate Investigations & White Collar Defense teams have extensive experience successfully representing public companies, foreign investors, nonprofits and individuals in congressional, criminal and regulatory investigations conducted by various federal and state enforcement authorities.