Each year, Congress launches dozens of investigations into issues, industries and individuals. These investigations, which are undertaken by the various congressional committees through which Congress conducts most of its official business, are subject to almost no limitations. As long as a congressional committee is duly authorized and acting within the scope of its legislative powers, it has wide latitude to demand information and to call forth witnesses. When a particular business or industry becomes the object of such an investigation, the results can be devastating. For America’s oil and gas producers, there is reason to be concerned that they will soon be in Congress’ crosshairs.
Congressional committees are composed of members selected by each party’s leaders in the House and Senate. Each congressional committee is given jurisdiction over various subjects; for the oil and gas industry, while several committees can rightly claim at least some interest in aspects of the business, among the most important are the House Committee on Energy and Commerce and the House Committee on Natural Resources.
These committees have the authority to issue subpoenas demanding relevant information. Congressional subpoenas are a particularly powerful tool; courts will generally rebuff attempts to limit their scope, and Congress can demand information that would be shielded from discovery in a civil or criminal case. This means, for instance, the attorney-client privilege will not protect a company from having to disclose information requested by Congress. An important exception to this blanket power is that Congress must respect the privilege against self-incrimination, aka “taking the 5th.”
With very limited exception, what Congress asks for via subpoena it gets, and the courts will not stand in the way. Additionally, Congress is generally free to make the information it discovers in its investigations public, regardless of whether such information is privileged, confidential or proprietary.
Past congressional investigations have ruined careers and affected entire industries. For instance, on April 14, 1994, the CEOs of America’s largest tobacco companies were summoned before the House Energy and Commerce Committee to answer questions regarding the health effects of their products. The hearing was only one part of a congressional investigation that, over the course of the year, would delve into the companies’ most closely guarded secrets and splash them on newspapers and televisions across America.
It was a stunning reversal of fortune for an industry that had in prior years been championed by Congress as one of America’s most successful and important businesses. Four years later, the companies would settle a class-action lawsuit brought by states and private parties for more than $27 billion, as well as an agreement not to oppose new regulation.
Today, some are advocating Congress take the same course of action with respect to oil and gas. Activists view the congressional investigation of the tobacco industry as a blueprint for how to proceed against the oil and gas industry. This includes using Congress’ extraordinary ability to obtain otherwise protected information and sharing it with trial lawyers that are suing energy companies. Oil and gas companies face the prospect of a full-scale inquiry into all aspects of the business, driven in part by a desire to obtain information that can later be used in court to support claims for damages for the industry’s assumed role in climate change.
The pressure for such an inquiry is likely to only increase heading into the 2022 election season. Fortunately, there are steps companies can take now to prepare themselves. Establishing strong relationships with policymakers and key staff can help keep conversations civil. Identifying Congress’ true interests in conducting an investigation – be they political, policymaking or constituent driven – can help create pathways to managing information requests so that they don’t lead to compromising disclosures. Identifying allies and building coalitions can help ensure a company doesn’t have to fight alone when the time comes. And honing communications and public relations messages before a crisis erupts is always a good idea.
Preparing for climate-related investigations now is prudent. Congressional investigations can be daunting, but they don’t have to be disastrous.
Gregory P.J. Zerzan is former legal counsel to the House Committees on Agriculture, Financial Services, Energy & Commerce, and served in senior positions in the U.S. Treasury and Department of the Interior. Now a shareholder at Jordan Ramis, he counsels companies involved in government investigations. He may be reached at [email protected].