New Congress, More Scrutiny? Preparing for Congressional Oversight and Investigations

Historically, congressional investigations have focused on issues of public concern, alleged government misconduct and private sector practices. During the last period of unified Republican control (Jan. 2017 – Jan. 2019), investigations focused on regulatory reform, cybersecurity, foreign election interference and alleged misconduct by the prior Democratic administration. Bipartisan probes into digital privacy and foreign influence also emerged, intensifying scrutiny on companies in those areas.

This time, Republican leaders have signaled new and heightened oversight priorities, and organizations should act now to mitigate risks and identify opportunities.

Congressional Oversight Structure, Powers and Processes
Congressional oversight is a powerful tool, allowing lawmakers to investigate issues across a broad spectrum of topics as long as the inquiries potentially relate to legislative activity. Oversight authority is decentralized, spread across various committees in both the House and Senate, each with its own jurisdiction and priorities. Congressional leadership often plays a coordinating—or, in some cases, deconflicting role—on issues falling within the jurisdiction of multiple congressional committees.

In the House, the Committee on Oversight and Government Reform has the most expansive mandate, focusing on government operations and matters that cut across multiple policy areas. Similarly, in the Senate, the Homeland Security and Governmental Affairs Committee plays a leading role in investigating federal agencies, national security issues and government spending. In those two committees, the primary targets of oversight are more likely to be federal agencies than private companies, but companies—particularly government contractors—are still often subjected to oversight activities. These activities include document requests, oral or written communications with committee staff, and submission of congressional testimony, to aid the committee in overseeing the agencies that either work with or regulate such companies. Beyond these broad mandates, all committees conduct oversight within their specialized areas. For example, the Armed Services Committees in both the House and Senate may focus on oversight of defense contractors.

In addition to standing committees, Congress establishes select committees to address high-profile or emerging issues requiring focused attention. For instance, the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party concentrates on matters such as Chinese influence, supply chain security, and U.S. companies and institutions of higher education with ties to China.

Congressional committees exercise substantial powers to carry out their investigations. These include holding hearings, collecting documents, taking testimony, and issuing either directive requests or subpoenas to compel the production of evidence. Committees set their own procedural rules, determining how investigations are conducted. These rules govern critical aspects such as who can issue subpoenas, the recognition of privileges, and whether hearings will be public or confidential. While constitutional privileges must be respected, Congress is not obligated to honor common law privileges like attorney-client privilege unless explicitly recognized in the committee’s rules. Nevertheless, in our experience, Congress will typically respect attorney-client privilege provided the subject of its oversight is perceived to be cooperating and/or acting in good faith.

Further, aside from committee action, individual Senators and Representatives often conduct oversight by seeking voluntary cooperation from agencies, organizations or individuals to provide information, and those activities can serve as a precursor to more formal investigation.

This flexible and wide-ranging oversight structure enables Congress to adapt its investigations to changing priorities and concerns, but it also creates a challenging and unpredictable environment for those under scrutiny. As such, it is often the goal of attorneys representing entities that are being subjected to congressional oversight to establish a good-faith working relationship with congressional overseers and to be responsive to their requests and concerns, while simultaneously zealously preserving institutional prerogatives, rights and interests and also being sensitive to the legal implications such inquiries necessarily carry.

What to Expect: Likely GOP Oversight Priorities
Republican leaders have signaled that the following areas are ripe for congressional attention in the upcoming Congress.

• Federal Spending and Government Resources. Expect Congress to probe Biden-era programs, like those created under the Inflation Reduction Act, the Infrastructure Investment and Jobs Act, and the CHIPS and Science Act, for alleged waste, fraud and abuse. In alignment with President-elect Trump’s creation of the “Department of Government Efficiency,” an advisory organization tasked with slashing excess regulations and cutting federal spending, congressional investigators are likely to use oversight activities to justify future cuts to and suspension of programs that are politically unpopular with Republicans, such as incentives for the electric vehicle industry. Recipients of federal funds should pay particular attention to activities that could spur audits, the cancellation of contracts and awards, or the clawing back of distributed funds.
•  China. Congress will continue to double down on a “tough on China” approach to legislating, which will extend to oversight. Congress will continue to investigate U.S. companies’ supply chain ties to China, data privacy and cybersecurity concerns, technology exports, and Chinese investments in U.S. companies (and vice versa). In particular, use of Uighur forced labor is likely to continue to be an issue investigated by Congress.
• Technology Companies. Congressional Republican leaders have signaled enthusiasm for scrutinizing social media and other Big Tech platforms for alleged censorship of conservative viewpoints, data security practices, the use of generative AI and foreign influence.
• Financial Services. Expect Congress to use investigations into federal financial regulatory agencies to lay the foundation for legislative action to reverse Biden-era regulations and supervisory activity perceived to have limited the cryptocurrency and firearms industries’ ability to access banking services.
• Environmental, Social and Governance (ESG) and Diversity, Equity and Inclusion (DEI) Policies. Through various channels and mechanisms, congressional Republicans are likely to examine ESG initiatives and DEI programs, particularly those seen as politically motivated, by large companies and nonprofit organizations, including banks and institutions of higher education.
• Higher Education. Congress is also likely to continue investigating university practices, especially with respect to foreign ties, DEI practices and responses to controversial events on campuses.

Mitigating Risk and Identifying Opportunities: Steps to Prepare for Oversight
With a new Congress ramping up oversight, companies should take steps to prepare before subpoenas or information requests are issued.

• Assess Risks and Strengthen Compliance. Monitor congressional priorities and trends to anticipate potential areas of scrutiny, tailoring internal audits and preparation accordingly. Identify areas of vulnerability, particularly related to oversight priorities. Review and update compliance programs accordingly.

  For those doing business with the federal government, recognize that the government has wide latitude to change or terminate grants and contracts and oversight activities can lead to these actions. Funding recipients and contractors should take care to fully understand and adhere to all obligations to minimize termination and clawback risks.

• Remember—An Ounce of Prevention Is Worth a Pound of Cure. Preparation for congressional investigations isn’t just about being reactive—it’s about being Building strong relationships with key committees and members of Congress who care about your industry and organization can help position you as a partner and as a resource, not a target. It is never advantageous for an entity to first forge relationships with members of Congress and staff when it is under public scrutiny; entities should invest in cultivating relationships with lawmakers who consider such entities to be constituents or to otherwise have shared interests so that those lawmakers can be of assistance in a time of need. Moreover, these congressional relationships are a valuable intelligence-gathering tool for entities seeking clarity on the congressional legislative and oversight landscape.
• Take Congressional Investigations and Oversight Seriously. If your organization receives an inquiry letter or becomes the subject of a congressional investigation, it’s critical to take the matter seriously from the outset. Engage professionals who understand the political dynamics, public policy interests, procedures and legal implications related to congressional oversight. Such experts can help you navigate the process, protect your interests and respond effectively. Preparation is key—having a clear plan, activating your congressional investigation protocols, and ensuring all communications are accurate and strategic will help mitigate risks and avoid escalating the situation.
• Consider Leveraging Oversight Activities to Resolve Issues. Congressional investigations don’t have to be just about defense—companies can use oversight as an opportunity to address systemic issues, advocate for regulatory change, win new business or highlight unfair practices. By taking a proactive approach, organizations can turn congressional attention into a tool for advancing their goals.

Why Act Now?
Congressional investigations can be both a challenge and an opportunity. On one hand, they often lead to unpredictable legal, regulatory and reputational risks for companies and their executives. Companies and their leaders may face intense public scrutiny, have to manage multiple inquiries simultaneously and navigate complex procedural rules. While Congress has nearly plenary power to investigate, it may respect some privileges, and negotiations are an essential part of any response. Companies, executives and entities should retain congressional and government investigations attorneys and other professionals who are experienced in negotiating the scope, sequencing, and timing of any requests for documents or other information, including the scope and public visibility, or lack thereof, of any testimony given to Congress, either via private interview or compelled or voluntary participation as a witness in a hearing. Moreover, in some circumstances for those subjects of investigation or oversight who have earned goodwill, a committee may offer an entity the opportunity to review and comment on certain investigative materials (e.g., a final investigative report on a particular subject) prior to publication. Targets and potential targets of congressional oversight should factor in these key considerations when planning their response to an investigation or inquiry.

Oversight also provides a unique platform to address important issues, advocate for change and demonstrate leadership. By taking a proactive approach, businesses can position themselves as problem-solvers, collaborate with Congress to resolve challenges and even influence policy in ways that benefit their industry. Pillsbury’s Government Law Strategies and Government Investigations and White Collar Defense teams can help you not only mitigate the risks of oversight, but also seize the opportunities it presents. Our team includes former members of Congress, former federal and state prosecutors and regulators, and former legislative staff members.