Recent Developments Shed Further Light on Congressional Subpoena Authority

Throughout recent months, we have closely monitored important developments in the courts and on Capitol Hill related to Congress’s power to issue and enforce subpoenas for documents or witness testimony.  As members of the 117th Congress continue to develop legislative and oversight priorities, a number of recent events signal continued uncertainty in congressional subpoena authority and interest in Congress in clarifying and strengthening that authority.  As discussed below, these recent developments hold significant implications for Congress’s ability to compel cooperation with their investigations.

Back to Square One in the Courts

Historically, investigators on Capitol Hill have relied on civil enforcement proceedings to enforce their subpoenas and compel the production of sought-after documents or testimony.  As we detailed in November, however, the D.C. Circuit cast doubt on the ability of investigators in the House to pursue this common avenue for enforcing its subpoenas.

The case, Committee on the Judiciary v. McGahn, arose from the House Judiciary Committee’s effort to seek civil enforcement of a subpoena issued to former White House Counsel Don McGahn for testimony in the Committee’s impeachment inquiry of President Trump.  Last August, a three-judge panel of the D.C. Circuit concluded that federal law provides no cause of action for House committees seeking civil enforcement of subpoenas, even when authorized by a House resolution.  On its face, this ruling would strip the House—but presumably not the Senate, which has separate statutory subpoena enforcement authority—of its ability to obtain a court order to enforce its subpoenas.  This in turn could have significant implications for parties responding to House oversight requests.

In October, the D.C. Circuit agreed to rehear the case en banc. With that said, as we noted in the fall, the Court appeared to be laying the groundwork for disposing of the case without offering a definitive ruling on the scope of Congress’s subpoena enforcement authority.  Since then, the parties have repeatedly sought to delay oral argument in the case, while they continued to negotiate the conditions under which McGahn would testify.  Those negotiations culminated in McGahn appearing before the Committee in a closed-door transcribed interview earlier this month.  And, sure enough, the parties late last week jointly moved to dismiss the pending appeal and vacate the underlying panel decision.

Assuming the Court agrees, the decision will leave unresolved the question of whether House committees may seek enforcement of their subpoenas in federal court.  Nonetheless, though the panel decision would no longer be binding on lower courts, lingering uncertainty regarding the ability of the House to enforce its subpoenas will continue to be an important consideration for parties responding to congressional oversight investigations.

Frustration Mounting on the Hill

While the question of congressional subpoena authority is stymied in the courts, congressional investigators are actively considering legislative angles to strengthen the congressional subpoena power.  In particular, in the last week, two separate hearings highlighted growing frustration among congressional investigators on both sides of the aisle.

First, perhaps unsurprisingly, the topic of congressional subpoena authority arose repeatedly during the House Judiciary Committee’s closed-door interview of McGahn, which resolved the case above.  Although the resulting testimony largely focused on the substance of the Committee’s underlying investigation, the 241-page transcript reveals congressional investigators’ repeated frustration about their lack of subpoena enforcement authority.  For instance, the hearing began with Committee staff highlighting that they first issued a subpoena for McGahn’s testimony on April 22, 2019, then reissued its subpoena in January 11, 2021, and finally reached an agreement to compel testimony over two years after the initial subpoena.

Second, on June 8, the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet held a hearing about civil enforcement of congressional authorities.  The hearing focused on testimony from four witnesses who proposed ways to strengthen the congressional subpoena and impose penalties for both government officials and private parties who do not comply.  The bipartisan consensus of the witnesses and Subcommittee members was that the House’s subpoena power is largely toothless, but a number of proposals could change that reality.  Democrats and Republicans both cited examples of ignored subpoenas during the Trump and Obama administrations, with House Judiciary Committee Chairman Jerry Nadler (D-NY) expressly noting that addressing Congress’s interest in ensuring that its subpoenas are enforced “transcends partisanship.”

Space for Bipartisan Action?

As frustrations mount, congressional investigators are increasingly considering legislative options to strengthen Congress’s ability to enforce its subpoenas.  Regardless of the ultimate outcome, the McGahn case highlights the tenuous statutory authority underlying enforcement of congressional subpoenas.  With this in mind, rather than relying on case law and risk a potentially unfavorable ruling in the courts, there is increasing interest on the Hill to codify and strengthen Congress’s subpoena enforcement authority.

Last June, Representative Ted Lieu (D-CA) led a group of House Democrats in introducing a resolution that would amend the House rules to formalize and expand the chamber’s “inherent contempt” authority.  In particular, the resolution would create a process by which individuals who refuse to comply with subpoenas would be subject to a hearing to determine if they should be held in contempt of Congress.  A party found to be in contempt would have 20 days to comply with the subpoena, or else be subject to an initial fine of no more than $25,000.  The fine would then increase incrementally to a maximum of $100,000 if the party still continues to ignore the subpoena.

After it stalled in the House last Congress, Lieu reintroduced the resolution in April. Although it remains to be seen whether the proposal will draw additional support in the current Congress, there is some reason to believe that proposals to strengthen congressional subpoena authority could be an area of rare bipartisan agreement.  In particular, in October 2017, the Republican-led House passed a bill that would have formalized the civil enforcement process for congressional subpoenas.  During the recent House Judiciary Subcommittee hearing addressing civil enforcement of congressional authorities, all four witnesses cited the bill and called for legislation to authorize Congress to file civil actions in federal court to enforce subpoenas.

Largely, these proposals have arisen out of frustration with uncooperative executive branch officials and focused on separation-of-powers concerns in an era of aggrandized executive power.  Nonetheless, proposals to bolster congressional oversight authority also hold important implications for private parties who find themselves subject to congressional investigations.  For that reason, parties that are or may be subject to congressional investigations would do well to monitor these proposals and potential rule changes.

This post was written with research assistance from Summer Associate Josh Schenk.

The House Oversight Committee Investigative Agenda for the Next Two Years Highlights Likely Private Sector Targets for Congressional Investigations

Earlier today, the House Committee on Oversight and Reform’s “Oversight Plan” was published. The Oversight Plan provides a very useful roadmap of the Committee’s investigative priorities and should be seen as a fair warning to the industries and companies identified in the plan.

In a client alert today, we review key portions of the Committee’s Oversight Plan that are likely to have implications for our clients and others in the private sector.

Supreme Court Narrows Meaning of TCPA Autodialer Definition

Yesterday, the Supreme Court issued its decision in Facebook v. Duguid, adopting a narrow interpretation of a key definitional term in the Telephone Consumer Protection Act (TCPA) and resolving the circuit split we previously described here and here.

In effect, the Supreme Court’s opinion means that to qualify as an “automatic telephone dialing system” (ATDS) under the TCPA, a device must use a random or sequential number generator; a device that calls a prescribed set of telephone numbers without using such a number generator would stand outside that definition and thus not be regulated by the TCPA.

By way of background, the TCPA imposes a consent requirement on calls or text messages that are placed using an ATDS.  The TCPA defines an ATDS as equipment that has the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator,” and to dial such numbers.  The federal appeals courts were split on how to interpret this definition—specifically whether the clause “using a random or sequential number generator” modifies both “store” and “produce,” or whether the clause modifies only “produce.”  The practical difference is that the former approach excludes devices that have the capacity to dial only a prescribed set of telephone numbers.  The latter approach, which the Supreme Court rejected in Duguid, is more expansive, sweeping in any and all equipment that has the capacity to store telephone numbers to be called and to dial those numbers.

In a 9-0 decision authored by Justice Sotomayor, the Court adopted the narrow interpretation.  The Court held that to qualify as an ATDS—and therefore fall within the ambit of the TCPA—a device must have the capacity to store or produce a telephone number using a random or sequential number generator.  The Court reached this conclusion applying a careful analysis of the statutory text, noting that the narrow interpretation is the “most natural reading” of the statute and that it comports with “conventional rules of grammar.”  The Court also found that this interpretation aligns with the TCPA’s “statutory context,” which suggests that Congress was particularly focused on harms produced by random or sequential number dialing.  Finally, the Court noted that a contrary reading of the statute would render “almost all modern cell phones as autodialers,” an outcome the Court appeared eager to avoid.

Duguid is a significant ruling that places important guardrails on the scope of the TCPA, which has generated substantial and costly class-action litigation in recent years.

Use of FEC Data – The Vice Chair Says the FEC Has Taken “A Wrong Turn”

There are few things as seductive in politics today as good data, and few things as challenging for commercial firms as the statutory bar on the use of FEC data for commercial purposes.  That came to a head yesterday, when the FEC was unable to reach a decision on an advisory opinion request on use of the FEC’s donor data to, among other things, confirm the identity and score potential donors in a client’s existing database.  The case highlights the gap between the regulated community and where a majority of FEC Commissioners may soon take the law.

Aluminate, a commercial vendor that helps clients – often colleges and universities – refine their donor data to more accurately identify and target fundraising and outreach programs, asked the FEC for permission to use the FEC’s donor data when screening their clients’ databases.  The company did not want to use the FEC data to build contact information or to convey to clients specific information about particular individual’s donor history.  Instead, it intended to use the FEC data to better identify the interests of those in the database and score those more likely to respond to particular ‘asks’ the client might have. AO Request.

The initial draft opinion concluded that this was in conflict with the statute’s prohibition on data submitted to the agency being “sold or used by any person for the purpose of soliciting contributions or for commercial purposes…”  52 U.S.C. 30111(a)(4).  FEC AO 2021-01 Draft A This conclusion was met with a fervent cry from Perkins Coie’s political law group – writing as practitioners rather than for any particular client – that such practices were already common and are consistent with the FEC’s precedent on the use of its data.  Perkins Comments.  This was shortly followed by a competing draft response that concluded the request was entirely permissible.  FEC AO 2021-01 Draft B.

Some of what followed was entirely predictable to those who have followed the FEC over the past decade.  The three Commissioners associated with the Democratic Party (Chair Broussard and Commissioners Walther and Weintraub) voted for the original draft prohibiting the conduct.  Two Commissioners associated with the Republican Party (Commissioners Cooksey and Trainor) voted for the draft permitting the conduct.  The most noteworthy feature of the day was the decision of Vice Chair Dickerson to abstain.

In comments at the hearing, Vice Chair Dickerson said that he had concluded that the Commission’s prior decisions on this question had been overly permissive, and had drifted away from a fair reading of Congress’ intent in passing the law.  He emphasized that this data – reflecting citizens’ association with political candidates and causes – brought with it a significant privacy interest that prior FEC decisions had failed to accurately weigh.  His concern with fair notice and the regulated community’s reasonable reliance on prior decisions prevented him from voting to roll back those decisions in this case, but he was unwilling to proceed down a path of legal analysis that he thought was “a wrong turn.”  Consequently, he abstained and the matter failed 3-2.

This matter is important for those who would like to use FEC data in modeling for a commercial purpose or as a tool for solicitations.  The law did not change yesterday, but certainly a flag was raised that this is an area in which practitioners should not assume that precedent teaches them where the FEC will land in future cases.  This particular matter is only partially instructive, for it also highlighted the advantage of using experienced FEC counsel: the facts were at times obscured in a way that increased Commissioners’ suspicions, arguments were raised that were certain to fall on deaf ears, and helpful precedent was ignored.  But that said, Vice Chair Dickerson is a student of this area of law, and if he has concerns that prior decisions are misguided in an area of constitutional importance, everyone interested in how FEC data can be used should be alert to that concern and any statements he may issue later on this issue.

California Recall Contribution Limits Would Vary for Newsom and Replacement Candidates

It appears increasingly likely that California Governor Gavin Newsom will face a recall election, leading to questions about how to support or oppose his removal.  The “recall” will actually consist of two ballots, voted at the same election—a vote on whether to recall Newsom and a vote for his replacement if the recall passes.  Potential contributors may be surprised to learn that the state’s contribution limits apply differently to groups supporting or opposing the recall vote than to candidates seeking to replace Newsom.

Groups that are supporting or opposing the recall vote—that is, groups that are organized around whether to vote “Yes” or “No” on whether to recall Gov. Newsom—are not subject to any contribution limits.  Gov. Newsom himself is allowed to control such a committee, and he has already set one up into which he can raise unlimited contributions to defeat the recall; recall supporters have done the same.

Candidates running to replace the governor, however, are subject to contribution limits.  Those candidates will be subject to standard California limits for gubernatorial candidates, which were recently raised to $32,400 per election from an individual, business entity, or committee/PAC.  Thus, replacement candidates will be subject to limits, while Gov. Newsom can raise unlimited amounts from supporters to keep his current office.

The California Fair Political Practice Commission (“FPPC”) has published additional information on how the campaign finance laws apply to recall elections here.

Note that California has some of the country’s most complex campaign finance laws.  The amount and permissibility of contributions in the state may be affected by factors other than the limits above, including contributions by individuals and entities affiliated with the contributor; the contributor’s lobbying activity; and the contributor’s state or local contracting and permitting activity.  Additionally, the federal prohibition on contributions from foreign nationals applies to state races as well.  California also has a variety of disclosure requirements for contributors and lobbyists that should be reviewed and considered before making a contribution, including required disclosure of large pre-election contributions and periodic disclosure by “Major Donors,” among others.

Employees Running for Public Office: Political Law Compliance Considerations

Even corporations with careful political law compliance practices can be caught off guard when they learn that an employee is running for public office. The corporation may have a good understanding of what the corporation’s obligations and restrictions are in the political arena, but not fully know how to handle the compliance issues stemming from an employee’s personal candidacy. This alert describes three practical steps that corporations should take to ensure they are complying with the relevant campaign finance and ethics rules.

Understanding H.R. 1 (Part 4): Conflict-of-Interest and Revolving-Door Issues

With a growing chorus of support across the progressive landscape, the For the People Act of 2021 has emerged as a key legislative priority for congressional Democrats in the 117th Congress.  Envisioned as a “transformational anti-corruption and clean elections reform package,” the bill would enact sweeping changes to federal election laws along with important changes to federal campaign finance, lobbying, and government ethics laws.  Taken together, these changes would have significant implications for private parties engaged in all manner of political activity.

After House Democrats relied on their slim majority to pass the For the People Act, the bill now faces more uncertain prospects in the evenly divided Senate.  Nonetheless, Democratic leaders are sure to continue to press aggressively to move the bill through the upper chamber.  Likewise, even absent passage of the entire package, Democrats may look for opportunities to pass key elements of the broader bill on a bipartisan basis.

To assist clients in understanding how the For the People Act would affect their existing activity and compliance obligations, this alert is the fourth of several that will provide insights into key elements of the bill and what they mean for our clients.  This alert addresses the bill’s proposed changes to the federal conflict-of-interest and revolving-door provisions.

Understanding H.R. 1 (Part 3): Political Activity on the Internet

With a growing chorus of support across the progressive landscape, the For the People Act of 2021 has emerged as a key legislative priority for congressional Democrats in the 117th Congress.  Envisioned as a “transformational anti-corruption and clean elections reform package,” the bill would enact sweeping changes to federal election laws along with important changes to federal campaign finance, lobbying, and government ethics laws.  Taken together, these changes would have significant implications for private parties engaged in all manner of political activity.

After House Democrats relied on their slim majority to pass the For the People Act, the bill now faces more uncertain prospects in the evenly divided Senate.  Nonetheless, Democratic leaders are sure to continue to press aggressively to move the bill through the upper chamber.  Likewise, even absent passage of the entire package, Democrats may look for opportunities to pass key elements of the broader bill on a bipartisan basis.

To assist clients in understanding how the For the People Act would affect their existing activity and compliance obligations, this alert is the third of several that will provide insights into key elements of the bill and what they mean for our clients.  This alert addresses the bill’s proposed changes to the federal rules governing political advertising and other activity on the internet.

Understanding H.R. 1 (Part 2): Changes to the Lobbying Disclosure Act and Foreign Agents Registration Act

With a growing chorus of support across the progressive landscape, the For the People Act of 2021 has emerged as a key legislative priority for congressional Democrats in the 117th Congress. Envisioned as a “transformational anti-corruption and clean elections reform package,” the bill would enact sweeping changes to federal election laws along with important changes to federal campaign finance, lobbying, and government ethics laws. Taken together, these changes would have significant implications for private parties engaged in all manner of political activity.

After House Democrats relied on their slim majority to pass the For the People Act, the bill now faces more uncertain prospects in the evenly divided Senate. Nonetheless, Democratic leaders are sure to continue to press aggressively to move the bill through the upper chamber. Likewise, even absent passage of the entire package, Democrats may look for opportunities to pass key elements of the broader bill on a bipartisan basis.

To assist clients in understanding how the For the People Act would affect their existing activity and compliance obligations, this alert is the second of several that will provide insights into key elements of the bill and what they mean for our clients. This alert addresses the bill’s proposed changes to the Lobbying Disclosure Act (“LDA”), the main federal law regulating lobbyists, and to the Foreign Agents Registration Act (“FARA”), a statute that requires the “agent” of a foreign “principal” to register and disclose certain political, lobbying and public relations activities.

LDA’s Registration Threshold Increases By $1,000

Under the federal Lobbying Disclosure Act (“LDA”), an organization or lobbying firm must register if it employs an individual who meets the definition of a “lobbyist” and if its total expenses or income for lobbying activities meet certain monetary thresholds.  The two non-monetary thresholds determining when an individual becomes a “lobbyist,” discussed below, are usually the main factors driving when an organization or lobbying firm must register.  However, the monetary thresholds, one of which was recently increased from $13,000 to $14,000, may affect the registration obligations of entities engaged in only a de minimis amount of lobbying.

Under the LDA, the test for determining if an employee of an organization or lobbying firm qualifies as a lobbyist is two-pronged:

  1. Has the individual made two or more federal lobbying contacts on behalf of the organization (for in-house employees) or a firm client (for lobbying firms) at any time? and
  1. Has that individual spent 20% or more of his or her work time for the organization (for in-house employees) or that particular client (for lobbying firms) engaged in federal lobbying activities during any three-month period?

If both prongs of the test are satisfied, the individual qualifies as a “lobbyist” for LDA purposes and the organization or lobbying firm likely must register under the LDA, listing that lobbyist and the organization/client on its registration and disclosure reports.

Although employing a lobbyist usually leads to registration by the employer, the LDA provides an exemption from registration for organizations employing in-house lobbyists that spend no more than $14,000 (recently increased from $13,000) on lobbying activities in a quarterly period.  For lobbying firms, this threshold is $3,000 (unchanged from previous levels) in income from a client for lobbying activities in a quarterly period.  These thresholds are indexed for inflation every four years and rounded to the nearest $500.  The new $14,000 threshold for organizations is effective as of January 1, 2021.

Because these monetary thresholds are low, compensation associated with employees who meet the relatively high threshold of becoming a “lobbyist” will almost always cross these thresholds.  But for certain smaller organizations or non-profits, this threshold may be a factor in the LDA registration decision, as it may be for lobbying firms with a de minimis amount of activity on behalf of a particular client.  In addition, it is these monetary thresholds that exempt lobbying firms from triggering registration on behalf of certain pro bono clients.

The application of the LDA’s registration thresholds and triggers involves a detailed analysis of the activities of an organization or a firm, which must consider the broad and multi-factored definition of a “lobbying contact,” and the even broader definition of “lobbying activities.”  Covington has advised numerous clients on LDA registration requirements as applied to those clients’ activities.  If you have any questions on whether your organization is required to register under the LDA, please reach out to a member of our Election and Political Law Group.

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