New Era of Aggressive Oversight Expected from House Democrats

An increasing number of companies will be targeted by investigators with letters demanding information or requests to meet; we expect some will even be subpoenaed by Congressional committees as a first step. This is a trend that will accelerate in the 116^th Congress.

Stakes are high in these investigations—both for targets of investigations and for company executives who are compelled to testify under oath before Congressional investigators.

In our representation of companies, associations and executives in high-profile congressional and federal agency investigations, a key objective is to respond effectively to investigators in a manner that protects their interests in other pending or potential criminal or civil investigations. Many foreign-based companies and governments face unique issues and concerns as they face U.S. government investigations.

We are pleased to share below an outlook on Congressional powers to investigate and what the change in control of the House will mean for key private sector industries.

Congress: Possessing “All Legislative Powers” to Conduct Investigations
Congress enjoys broad powers for conducting investigations and hearings. Congress is required to recognize constitutional privileges, but many are surprised to learn that common law privileges such as the attorney-client privilege do not apply to Congressional investigations. Committee Chairs make the rules for their committees’ investigations, enforce those rules, and control the scope of information requests, including requests for witnesses to appear in public hearings or in private depositions.

Outlook for Aggressive Congressional Oversight by House Democrats
We expect Democratic leaders in the House to act quickly to increase and intensify their use of Congressional investigative powers. Indeed, several incoming committee chairs—including those who will lead the House Oversight and Government Reform Committee, House Judiciary Committee, House Financial Services Committee, and House Permanent Select Committee on Intelligence, to name just a few—have already telegraphed some of their key oversight priorities since Election Day.

Democratic committee chairs are expected to expand and intensify oversight activities with a special focus on investigating leaders in the Trump Administration, including from the White House, Environmental Protection Agency (EPA), Department of Interior (DOI), Department of Justice (DOJ), Department of Homeland Security (DHS), Department of Education (ED), and the Consumer Financial Protection Bureau (CFPB). These investigations will aim to impede agency activity to deregulate certain industries favored by the current Administration by forcing officials to focus significant attention on responding to Congress.

However, House Democrats will not only be examining practices by Executive Branch officials; they will also, in many cases, choose to investigate a range of private-sector businesses, industries and individuals. Each Congressional committee can pursue investigations of issues that fall within the Committee’s jurisdiction. We expect Democratic leaders will intensify reviews of potential misuse of federal funds by loan and grant recipients and possible conflicts of interest related to taxpayer-funded lobbying. Expect significant pushback from the White House and ranking Republicans in response to Democratic oversight initiatives.

Financial Services
Under Democratic control of the House Financial Services Committee, there is likely to be much more oversight of federal financial regulators’ activity, as well as financial institutions that are believed to be mistreating consumers or that have been implicated in questionable dealings with President Trump or his Administration.

Congresswoman Maxine Waters (D-CA) is expected to take over as Chair of the House Financial Services Committee. Congresswoman Waters is known as a progressive firebrand and fierce opponent of President Trump and will certainly use her gavel to scrutinize activities by the various federal financial regulatory agencies to reduce regulation and/or compliance burdens for financial institutions, as well as individual financial services providers. Expect numerous hearings focused on regulatory agencies’ adoption of new rules intended to reduce regulations for financial institutions, perceived actions by regulators to reduce enforcement activity against financial services providers, and alleged malfeasance by financial services companies.

In particular, we expect that Chairman Waters will seek to shed new light on activities undertaken by the CFPB under the leadership of Acting Director Mick Mulvaney and his nominated (though not yet Senate-confirmed) successor, Kathy Kraninger. The CFPB’s initiative to revise its final rule governing short-term/payday lending and its reduction in enforcement actions against financial institutions are likely to come under the committee’s microscope. 

Additionally, Congresswoman Waters has publicly stated that she will investigate the conduct of certain financial institutions that have had a relationship with the Trump Organization over the years. 

Energy and Commerce
Congressman Frank Pallone (D-NJ) is expected to take over as Chairman of the House Energy and Commerce Committee, which enjoys wide-ranging jurisdiction over energy, the environment, health care and telecommunications. He is expected to engage the committee in an aggressive oversight agenda, including oversight of the EPA, its budget and its operations. Congressman Pallone will have authority to investigate the fossil fuel industry, including investigations of the oil, natural gas and coal industries.

Congressman Pallone also is expected to expand the committee’s investigations of pharmaceutical companies, health insurers, medical device manufacturers, broadcasting companies and technology companies.

Natural Resources
Congressman Raúl Grijalva (D-AZ) is the top-ranking Democrat on the House Natural Resources Committee. If Congressman Grijalva is named Chair as expected, he has promised rigorous oversight of the Department of Interior and Secretary Zinke. He may also activate the Committee’s powers to oversee mining regulation and enforcement, including the environmental effects of mining.

Armed Services
Congressman Adam Smith (D-WA) leads the Democrats on the House Armed Services Committee (HASC) and is expected to serve as the Committee’s next Chairman. He will be well positioned to focus his oversight authority on President Trump’s national security policies, including policies related to Russia and China. Congressman Smith is also a vocal opponent of President Trump’s Space Force proposal. He may want his Committee to shed light on the proposal and his concerns about costs and bureaucratic inefficiencies.

National Security
As chairmen of the House Judiciary Committee and House Permanent Select Committee on Intelligence, respectively, Reps. Jerry Nadler (D-NY) and Adam Schiff (D-CA) have asserted that they will seek to address unanswered questions pertaining to Russian interference in the 2016 election and the Trump Administration and Trump campaign’s interactions with Russian actors, among other legal and national security issues.

House Oversight and Government Reform Committee: Broad Powers
There are numerous other industries that House Democrats will likely to seek to scrutinize under their new leadership. A significant portion of this oversight will occur under the auspices of the House Oversight and Government Reform Committee (OGR), which has broad authority to investigate any matter within its own jurisdiction and within the jurisdiction of any other standing committee.

Watch this committee for the most explosive partisan battles. Congressman Elijah Cummings (D-MD) will serve as Chairman of OGR, and he has signaled his interest in investigating charges of ethics violations in the Executive Branch, as well as the Trump Administration’s response to federal disasters.

Reputation Management and Crisis Management
The political stakes underlying the use of investigative powers are especially high in a divided Congress, where each party seeks to use Congressional oversight authority for political advantage.

Congressional investigations and the public attention they generate often can trigger civil actions and other government inquiries. 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 Committee subpoenas or requests for information. Entities or individuals who believe they are vulnerable to Congressional scrutiny are well advised to assess the risks and develop a response plan for potential congressional oversight focused on their conduct.