14 January 2015

A House of Representatives Rules Change that Will Affect Congressional Investigations: What it Means for the Private Sector

During the opening session of any new Congress, the House of Representatives sets the rules that will govern hearings, floor proceedings and debate. Typically, rule changes are minor. This year, the House quietly made one important change that could significantly affect institutions that are subject to government inquiries.

The rule change provides new investigation powers to four standing committees. This year for the first time, the chairmen of the committees on (1) Energy and Commerce, (2) Financial Services, (3) Science, Space, and Technology and (4) Ways and Means, upon consultation with the ranking minority member of the committee, may order the taking of depositions, including pursuant to subpoena, by a member or counsel of the committee. In previous Congresses, only the House Committee on Oversight and Government Reform had this authority. All other committees could only issue subpoenas upon a majority vote of the committee membership.

We believe that the House changed this rule and empowered these four committees because of their significant jurisdictional reach. We anticipate that these committees will primarily use their new powers aggressively to oversee the Administration’s implementation of the Affordable Care Act, Environmental Protection Agency actions and the implementation of the Dodd-Frank Act and IRS rules.

Opportunity for the Private Sector?

Heightened Congressional interest in Administration activity offers new possibilities for businesses that are fighting a regulation or are subjected to agency enforcement actions. We expect these newly empowered House committees to depose the senior agency staff leading many of these actions. During deposition sessions, Congressional investigators might be interested in inquiring about issues of concern to those businesses.

Change Affecting How Private Sector Interacts with the Investigating Committee

This new power will also change the ways that these committees interact with and investigate the private sector. With greater leverage and more power easily to compel the provision of information, we believe that Members of the House and their staffs will expect and demand even more cooperation when they engage in both informal outreach to companies and formal investigations. Informal investigations (inquiries that precede a decision by the committee to launch a formal investigation) begin with a letter or a phone call directed to a private sector entity posing questions. Companies are well advised to cooperate with these informal inquiries, and to see the inquiry as an opportunity to educate the committee staff on industry practices, creating a favorable context within which to explain the way the company has acted in the circumstances the committee is examining.

By participating in the process and not resisting it, a company can become a trusted advisor to the committee and inform a committee’s investigation as it matures. Not cooperating (or not appearing to cooperate) early in the process will likely trigger threats of formal depositions and the issuance of subpoenas and result in the target company receiving far less favorable treatment if a formal congressional investigation occurs. Accordingly, the rule creates a greater premium than ever before on the need for early engagement with senior committee staff by institutions subject to congressional inquiries.

Rick Boucher
Partner
+1.202.736.8290
rboucher@sidley.com

Michael E. Borden
Counsel
+1.202.736.8521
mborden@sidley.com

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