On a Need-to-Know Basis With Congressional Investigations? Don’t Be.

Manatt on Washington

When Democrats retook the majority in the House of Representatives last fall, Washington and much of the country braced for clashes between the White House and Congress. In particular, the new majority was said to be preparing a “subpoena” cannon to supercharge investigations and oversight of the Trump administration and its allies. This week saw high-profile escalations of this effort.

For example, the Treasury Secretary announced that the department would not turn over President Trump’s tax returns. Attorney General William Barr, after testifying in a contentious hearing before the Senate Judiciary Committee, also declined to appear before the House Judiciary Committee under conditions he considered inappropriate. Specifically, Barr objected to being questioned by Committee counsel and members of the committee, thereby enabling, as Committee Democrats argue, Barr to dodge important follow-up questions. As a result, and after some theatrics involving fried chicken, the House Judiciary Committee voted to hold Barr in contempt of Congress.

Congressional investigations involving cabinet members like Barr tend to dominate the headlines, lead to court battles and define the politics of the day. While many of the marquee battles involve investigations into the Trump administration, Congress’s investigatory powers are not limited to the public sector. Private-sector companies and individuals may also find themselves the targets of Congress’s investigatory functions. As such, it is more important than ever that companies and individuals understand the mechanics of the investigatory process. Read on for leveraged insights into this process, its storied history and contemporary implications.

What Gives Congress Investigatory Powers?

Article I of the United States Constitution, which establishes the powers of Congress, principally concerns that body’s core legislative function (to author and pass bills), but it has long been accepted that Congress also possesses considerable investigative authority which flows from its explicit powers. The most obvious is the impeachment power. Congress’s ability to impeach and remove an official from office after a trial in the Senate convicts that official of “high crimes and misdemeanors” clearly implies its right to conduct an inquiry into the evidence of those crimes. Similarly, as part of the Senate’s advice and consent power, it conducts investigations into the backgrounds of men and women nominated for judicial and high-ranking executive offices. This being said, Congress’s investigatory powers sweep far more broadly than removing and confirming officeholders.

In fact, courts have recognized that the investigative function is implicit to the legislative function. If Congress has the power to legislate, the Supreme Court has held, it must have the power to conduct investigations—and compel the production of evidence—to establish the need for legislation. As the Court put it nearly a century ago, “the power of inquiry—with process to enforce it—is an essential and appropriate auxiliary to the legislative function.”

Hill Investigations: Then and Now

Congress is currently contemplating a federal data privacy law, and, to that end, several congressional committees have held hearings at which executives from major technology companies have testified and faced public grillings. But there is no requirement that Congress be considering specific legislation in order to conduct a fact-finding hearing. The Supreme Court has made clear that Congress’s power to investigate exists in its fullness even if no immediate legislation is planned.

Every congressional committee can conduct oversight and investigations within their areas of jurisdiction. Some committees have particularly broad jurisdiction and a reputation for holding important inquiries. The Senate’s Permanent Subcommittee on Investigations, a subset of the Homeland Security and Governmental Affairs Committee, has a particularly storied history. The Valachi hearings, commonly referred to as the McClellan hearings after Sen. John L. McClellan (D-Arizona) who initiated them in this committee in 1963, investigated organized crime activities of the day and shed light on leading mafia figures and the many details of their organizations’ operations, activities and members. The Subcommittee also conducted hearings as part of an investigation into to causes of the financial crisis a decade ago.

The House Committee on Energy and Commerce has also held many high-profile hearings into the practices of private industry. Special or select committees can also be formed to look into particular controversies. Many will remember the 2014 establishment of the House Select Committee on Events Surrounding the 2012 Terrorist Attack in Benghazi, the last of six investigations conducted by Republican-controlled House committees to further investigate the Benghazi attack on September 11, 2012. While there is broad similarity between hearings conducted by different committees, the House and the Senate, as well as each individual committee, have their own rules of procedure.

A Look Inside: Mechanics, Nuances and Other Considerations

When congressional committees seek evidence, whether testimony or requests from private or public figures, they typically first ask for the evidence on a voluntary basis. The targets of these requests may seek to negotiate the conditions for this information, but ultimately Congress does have subpoena power to compel production or testimony.

Congressional investigations share some vocabulary with judicial proceedings—testimony, document production, and so on—but targets of congressional investigations should be aware those investigations are very different beasts than are lawsuits. For instance, familiar features such as attorney-client privileges do not necessarily exist in the congressional context, and the leaking of documents meant to be kept under seal may occur more frequently. These factors can be particularly challenging when a company or individual faces parallel legal proceedings concerning the same matters.

Witnesses before congressional committees must not only prepare for direct and cross-examination, but also they must be prepared to respond to a dozen or more questioners, all of whom have many different interests and agendas. The public context in which these examinations occur is also important and can potentially change or raise the stakes. For example, an experienced deponent who carefully and narrowly answers questions from opposing counsel may come off as evasive or disrespectful in a congressional hearing. Understanding the nuances and procedural differences between a Congressional investigation and a civil deposition is very important.

Why It Matters

Companies and individuals need to be aware that no one is immune to investigations, and those launched on Capitol Hill are high stakes and require a unique legal, political and cultural response. Understanding the context, players and potential liabilities of congressional investigations is an essential component of any organization’s corporate governance. Manatt’s team of seasoned professionals helps corporations recognize and mitigate these liabilities and, if necessary, advises them as they navigate the hearings process and the many reputational, political and media implications that accompany a congressional investigation. Our team members, including regulatory defense attorneys, former government attorneys and prosecutors, dedicated investigative lawyers, federal and state government advocates, and former regulators, as well as senior in-house legal and compliance professionals, have represented clients in front of myriad committees and subcommittees. Read more about our practice and get in touch to learn more about how we can help you.