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Womble Bond Dickinson Partners Kristina Moore and Lee Van Voorhis recently had a podcast discussion about what companies need to know about the U.S. midterm elections. This article is based on that podcast. Click here to listen. 

Tuesday, November 3 is Election Day, and Americans will find out which party controls the House and Senate. Historical trends show that the President’s party typically loses Congressional seats in the midterms. With thin margins in both the House and Senate, that may well be enough to flip control of one or both branches to the Democratic Party. Most polling data shows the House is likely to change hands, with control of the Senate still up in the air.

Congressional Democrats have promised to investigate a range of Trump Administration’s practices. Companies that contract with the government, particularly no bid arrangements, and corporate leaders who have advised the Administration or otherwise benefited from a change in Administration policy could find themselves having to answer questions in a Congressional hearing.

What to Know about Congressional Investigations

Moore said a Congressional investigation “is not a litigation, it’s not a courtroom trial, and it’s not an agency enforcement proceeding. The rules and the norms of a congressional investigation are unique to Congress.”

For example, Congress may not accept a common law assertion of privilege, meaning attorney client privilege or work product privilege.

For executives asked to testify, this can be unfamiliar ground. They need to know that political goals drive Congressional inquiries, and no wrongdoing is required to be a subject of inquiry.

So what exactly will Congress want to investigate, should Democrats assume control of either the House or Senate? A few possibilities include:

  1. An alleged pay-to-play culture in which political donors have heightened access to or improper influence over regulatory decisions;
  2. Rising consumer prices, including algorithmic pricing;
  3. The Administration’s regime change in Venezuela – and who may have benefitted;
  4. Data centers and their impact on local communities; and
  5. The dominance of private equity ownership throughout the economy.

“Private parties that have been interacting with the Administration certainly can find themselves in the crosshairs,” Moore said. “A company doesn't have to be accused of any sort of wrongdoing in order to become an important piece of an investigation. It may simply possess communications that Congress believes help explain what has happened.”

Van Voorhis questioned what might happen if control of Congress is split between the two parties. Such a scenario may lead to a heightened environment for Congressional investigations, including the two parties cooperating on areas of bipartisan interest (for example, consumer costs and data centers.)

The Looming Battle Over Executive Privilege

The Department of Justice recently issued an opinion greatly expanding the Executive Branch’s view of the scope of executive privilege protections, in advance of potential Congressional investigations in 2027.

“The DOJ opinion said essentially if you are you speaking with the President or somebody representing the words of the President, and if it is a confidential conversation then that could be considered to be covered by executive privilege.”

However, it’s important to note that this claim of executive privilege sits with the President or his designee within the White House. It cannot be asserted by a private advisor.

Also, it is highly likely that a Democratic Congress will reject this expanded definition of executive privilege, which goes beyond what the courts previously have recognized. 

That puts corporate executives in a tough position. They don’t wish to alienate the Administration by cooperating with Congressional investigations, but they may face tremendous pressure, including Contempt of Congress proceedings, to comply with a Congressional subpoena. 

Moore said companies should go ahead and conduct an internal investigation to identify which personnel have had conversations with the Administration and who might be called to testify.

“It starts with knowing what your vulnerabilities are and having a strategy,” Moore said.

Van Voorhis asked, “What would be the biggest mistake companies make during the investigation?” Moore said that not answering and engaging with Congress would be a big mistake, should investigators come calling. “You can certainly have a strategy that positions a company to lay low, to not raise any red flags, to not look interesting. But that is different from a strategy of non-engagement.”

Generally, she said cooperating with Congress is the best course of action. The key is finding “that space where cooperation isn’t too painful,” she said. 

In a recent Corporate Counsel magazine article, Moore also discussed the midterm elections and how the resulting Congressional investigations may impact companies. Click here to read more.