Scrutiny for the Private Sector Will Come from Both Sides of the Aisle in the 118th Congress

This is the fourth part in our 2023 series examining important trends in white collar law and investigations. Up next: SEC.

Key Takeaways

  • With Republicans gaining control of the House, the party has plans to investigate both areas of focus from past Congresses, such as federal support for clean energy companies, and new areas, such as ESG practices.
  • Certain areas of interest—especially China, large technology companies, and health care costs—will draw scrutiny from both parties and likely will continue in future Congresses.
  • Some investigations that primarily focus on government actors, like scrutiny of the COVID-19 response or federal law enforcement investigations, are likely to draw in private sector entities as well.

Last year, as we laid out the landscape for congressional investigations in 2022, we noted that Democratic control of both the House and Senate enabled members of Congress to use investigations of the private sector and government entities to drive their party’s legislative agenda. In 2023, as the 118th Congress opens with a Republican-controlled House and Democratic Senate, companies can now expect potential scrutiny from Congress on even more fronts than before.

With a divided government and significant legislation having passed in 2022—such as the Inflation Reduction Act (IRA) provisions on drug pricing and climate change and the CHIPS and Science Act’s investment in the U.S. technology industrial base—Congress may find even more reason to focus on investigations rather than major legislation in 2023.

Leadership in each party has already identified numerous areas of investigative interest that may lead to requests or subpoenas for information and testimony from private sector entities, including U.S. companies’ relationship with China; the COVID-19 pandemic; turbulence in cryptocurrency markets; firms’ use of environmental, social, and governance (ESG) practices; federal support for clean energy companies; and health care and prescription drug costs.

Investigating COVID-19

In the House rules package released in early January, House Republicans established a Select Subcommittee on the Coronavirus Pandemic that will fall under the House Oversight and Government Reform Committee, following the Democratic House’s ambitious COVID-19 oversight committee in the 117th Congress. Like its predecessor, the new House committee looks likely to focus primarily on investigations of government entities, including federal funding of gain-of-function research, uses of COVID-19 relief funds by state and local governments, and governments’ pandemic response on issues like school closures.

However, the panel is also slated to investigate the development of COVID-19 vaccines and therapeutics, with Rep. James Comer (R-KY), chair of the House Oversight Committee, stating that he is planning to “talk to researchers” involved in the development of vaccines, including employees at the National Institutes of Health. Companies involved in the public-private vaccine and therapeutic development efforts, as well as companies that may have interests in oversight of federal scientific research funding, will want to stay tuned to Republicans’ COVID-19 oversight work.

Surveilling the China-U.S. Relationship

The House rules package also establishes a Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, chaired by Rep. Mike Gallagher (R-WI). Although Gallagher has primarily focused on national security issues in Congress, Republicans have indicated that they see China-related national security concerns as encompassing a wide array of economic and business relationships between U.S. firms and China. Republicans have identified a number of particular areas where they expect to use oversight to push back on what they have called China’s “coordinated whole-of-society strategy to undermine American leadership and American sovereignty”:

  • Chinese foreign direct investment in the U.S., including real estate, and S. firms’ investments in China.
  • American supply chains’ dependence on China, an issue that also attracted substantial interest in the previous Congress.
  • Chinese companies’ treatment of U.S. intellectual property, an investigation that U.S. private-sector stakeholders such as the National Association of Manufacturers and the S. Chamber of Commerce have identified as a positive opportunity for exposing Chinese practices and challenges facing U.S. companies.
  • Potential human rights abuses in China, which, under the Uyghur Forced Labor Protection Act, have now become a significant legal issue for U.S. firms.
  • Chinese companies’ practices in the U.S., with TikTok’s policies around content moderation and U.S. citizens’ personal data already having received detailed scrutiny from Gallagher and others.

As the above list makes clear, U.S. firms with significant exposure to China in a variety of ways—from having manufacturing facilities or other activities located in China to joint ventures, investment agreements, and other relationships—could potentially have interests at stake in the Select Committee’s work.

A select committee like this one lasts for the duration of the rules established for the 118th Congress, but it can also be continued into a future Congress under a future rules package. The House Select Committee on the Climate Crisis, for instance, lasted through the 116th and 117th Congresses. While Republicans opted not to continue the climate committee, a committee focusing on China-related oversight may be more likely to endure in a future Congress. In other words:  Don’t just expect the growing oversight interest on China issues to float away like a weather balloon.

The Financial Industry: Examining ESG and Cracking Down on Crypto

As we noted in our review of congressional investigations last year, new trends in the financial sector are always popular targets for congressional oversight—especially when they grab headlines, as turbulence in cryptocurrency markets did throughout 2022.

Last year, we noted Congress’s interest in a range of cryptocurrency issues, with particular focus on cryptocurrency practices that may have a greater effect on the broader financial system, such as “stablecoins” that are pegged to the price of a commodity or currency. In 2023, one particular focus will be cryptocurrency exchanges, with the Senate Banking Committee having launched an investigation of FTX’s bankruptcy in December 2022. This interest is certain to continue in 2023, covering not just the practices of cryptocurrency exchanges but also their relationships with regulators. Such activity may also directly inform legislation on cryptocurrency regulation, with now-Chairman of the House Financial Services Committee Patrick McHenry (R-VA) saying that the FTX events demonstrate the need for Congress to create a clear regulatory framework for cryptocurrency.

While financial firms’ use of environmental, social, and governance (ESG) principles may not generate as many exciting headlines as the cryptocurrency industry does, Republicans made it clear in recent years that they see ESG as a ripe area for investigation. The Securities and Exchange Commission’s work on its 2022 proposed rules on climate disclosure will also be an oversight target, with a top Republican on the House Financial Services Committee promising “rigorous oversight of both regulators and private sector asset managers who have politicized capital allocation.” ESG investigations may extend not only to companies that have touted their own ESG practices, but also firms that play a role in the dissemination or rating of practices throughout industries, such as proxy firms, accounting firms, and rating agencies.

Temperature Stays Elevated for Energy and Climate

In 2022, Democrats made investigations of oil and gas firms a high priority, using their oversight powers to build a case for legislation on energy and climate. Now, with the passage of the IRA’s major new programs to support green energy investments, as well as new programs created by the Infrastructure Investment and Jobs Act of 2021, Republicans see oversight of these programs as a top priority. This will include oversight of the Department of Energy’s Loan Programs Office and Office of Clean Energy Demonstrations, with one Republican member already saying that they view the dramatic expansion of such programs to be a potential “Solyndra on steroids” (referring to the bankruptcy of a solar firm that received a loan guarantee under the 2009 economic stimulus bill).

Republicans have also shown interest in investigating the Department of Energy’s management of the Strategic Petroleum Reserve during oil price spikes in 2021 and 2022, as well as dealings with foreign oil producers over pricing, which could sweep in private sector entities involved in those efforts. Although attention to energy and gas prices has abated somewhat, Democratic leadership has indicated that oil and gas companies remain a topic of significant interest for oversight, with Sen. Ron Wyden (D-OR) recently highlighting one oil company’s stock buyback and using it to draw attention to a proposal for a windfall tax on oil and gas profits.

Keeping an Eye on Health Care Costs

With the passage of the IRA in 2022, Democrats in Congress achieved a long-desired goal of overhauling how Medicare pays for prescription drugs. However, health care costs remain an area of vigorous interest, including hospital costs and drug-pricing issues that were not directly addressed by the IRA. Sen. Bernie Sanders (I-VT) has made no secret of his desire to investigate pharmaceutical companies and their pricing practices, promising a “very aggressive” oversight strategy and framing such concerns in a recent Fox News op-ed as an area of bipartisan interest.

Pharmaceutical companies aren’t the only health care firms that will be attracting oversight in the new Congress. House Ways and Means Chairman Jason Smith (R-MO) has emphasized an interest in price transparency measures and highlighted hospitals’ level of compliance with the 2020 final rule on price transparency as a particular area for oversight.

Focusing on the Federal Government

The new Republican leadership in the House has also shown that it plans to devote significant oversight resources to investigations of the Biden Administration and federal agencies. This will include the work of the House Select Subcommittee on the Weaponization of the Federal Government’s investigations of federal law enforcement agencies, but also the Biden Administration’s COVID-19 response, implementation of the energy programs mentioned above, Biden family members’ personal business dealings, and more.

Despite their primary focus on the government, these investigations may interact with private sector firms as well. Rep. Jim Jordan (R-OH), chair of the subcommittee investigating the federal government, has indicated that he sees this effort as covering cooperation by technology firms with federal law enforcement, such as collaboration on content moderation decisions, and part of broader Republican efforts to investigate “Big Tech.”


Foley Hoag will continue to monitor the evolving work of congressional investigations throughout 2023, and we have outlined best practices for companies responding to such investigations. Companies concerned about potential congressional interest should bear in mind not only the above stated priorities of the 118th Congress, but also the shifting political priorities of the two parties in Congress, the Biden Administration’s actions, and media storylines that can fuel potential congressional interest in 2023 and beyond.

Leave a Reply

Your email address will not be published. Required fields are marked *