DC District Court Underscores the Breadth of Congressional Investigative Authority in New Opinion

DC District Court Underscores the Breadth of Congressional Investigative Authority in New Opinion

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Last week, in a decision that has a number of important implications for businesses that may find themselves facing a congressional investigation, the US District Court for the District of Columbia dismissed former President Trump’s suit seeking to block the Treasury Department from turning over his tax returns to the House Committee on Ways and Means. While the court’s opinion focuses in large part on the interplay between congressional oversight and executive privilege, the court reaffirms the broad scope of congressional oversight authority in a way that will likely impact private sector entities as well.

Case Background

In April 2019, House Ways and Means Chairman Richard Neal (D-MA) requested, pursuant to § 6103(f) of the Internal Revenue Code, tax returns and any associated IRS audit information for then-President Trump and several of his businesses from 2013-2018. Section 6103(f) requires the Treasury Department to provide to the Chairs of the House Ways and Means and the Senate Finance Committees tax return or tax information upon request. The Committees may then place the returns into the congressional record, effectively publishing them, although this is rare.

In making his request, Chairman Neal stated that his purpose was to investigate the extent to which the IRS audits and enforces the federal tax laws under the Presidential Audit Program. Treasury denied the request, alleging that Chairman Neal’s stated purpose was pretextual and his true purpose was to publicly disclose the returns, which is not a legitimate legislative purpose. The Committee sued the IRS and Treasury to obtain the returns, and President Trump and his businesses intervened. While the suit was pending, President Biden was inaugurated and Chairman Neal submitted another request, this time for 2015-2020. Treasury and the IRS, having changed leadership under the new Administration, announced their intention to comply with the new request. Now-former President Trump then brought counterclaims and crossclaims against both the Committee and the agencies to prevent disclosure of his and his businesses’ returns and associated audit files. In last week’s decision, the court rejected those claims and dismissed the case.

The Court’s Decision

In its decision, the court notes that “any action by Congress must be ‘related to a valid legislative purpose,’” and indicates that, in practice, this grants Congress very broad jurisdiction. Comm. on Ways and Means, US House of Representatives v. US Dep’t of the Treasury, Case No. 1:19-cv-0197, slip op. at 21 (D.D.C. Dec. 14, 2021) (quoting Barenblatt v. United States, 360 U.S. 109, 127 (1959)). Among other things, former President Trump argued that Chairman Neal’s stated purpose was pretextual based on various public comments by Chairman Neal, Speaker Pelosi, and other members of Congress, and that his request lacked a legitimate legislative purpose. The court rejected those arguments.

The court began by cataloguing “general principles” governing judicial review of a congressional investigation. The court said that any congressional investigation “must be related to a valid legislative purpose;” that is, it must relate to “any subject on which legislation could be had.” Id. at 13-14. On the other hand, the court said, Congress may not use its investigatory materials simply for the sake of exposure or for law enforcement purposes.

Applying those principles, the court first determined that Chairman Neal had articulated a legislative purpose for his request. Turning to the charge of pretext, the court found that while statements by Chairman Neal and Speaker Pelosi “plausibly show mixed motives” for the request, that was insufficient to invalidate a congressional investigation that served a valid legislative purpose. Finally, the court found that the mere fact that the Chairman’s request “might possibly disclose crime or wrongdoing” did not show that he was impermissibly engaged in law enforcement. Id. at 21.

The court concluded its opinion with the observation that it lacks the authority to prevent publication of the tax returns, noting that “[i]f Chairman Neal’s true interest in the former President’s tax returns is indeed to better understand the Presidential Audit Program, he will doubtless be able to accomplish this objective without publishing the returns . . . but it is the Chairman’s right to do so” because “Congress has granted him this extraordinary power, and the courts are loath to second guess congressional motives or duly enacted statutes.” Id. at 45.

Implications for Private Business

The court’s decision has a number of important implications for private sector entities. First, while the court reiterates that Congress must have a “valid legislative purpose” for conducting oversight and notes that this authority has limits, the practical impact of the court’s lengthy discussion and holding is to underscore the breadth of Congress’s investigative jurisdiction.

Second, the decision makes clear that courts are exceedingly hesitant to limit the authority of a co-equal branch or to become the arbiters of oversight disputes. This means that targets of congressional investigations who turn to the courts to adjudicate oversight disputes may find themselves disappointed.

And finally, the court observes that, while it may not be “right or wise” to publish documents obtained through oversight investigations, there is little that limits the Committee’s ability to do so. In other words, as practitioners in this space have long been aware, businesses should be mindful of this congressional authority to disclose when responding to congressional requests.

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