April 2, 2013
Throughout the first few months of 2013, each standing committee in the House of Representatives drafted and distributed its oversight agenda for the next two years. These oversight plans provide a roadmap for understanding each committee’s likely oversight investigative and, derivatively, legislative priorities for the 113th Congress.
The House Rules for the 113th Congress require each standing committee to submit its oversight plan to the Committees on Oversight and Government Reform ("OGR") and House Administration by February 15, 2013. These plans were first required in the 104th Congress (1995).
The House Rules for the 113th Congress prescribe, among other things, that "[i]n developing its plan each committee shall, to the maximum extent feasible," "consult with other committees that have jurisdiction over the same or related law, programs, or agencies within its jurisdiction with the objective of ensuring maximum coordination and cooperation." Despite this provision, as detailed below, several committees have reported an interest in reviewing or investigating similar, popular topics.
With the House under Republican control, conventional wisdom suggests that the Obama administration, and not the private sector, will be the target of House investigations and oversight efforts during the next two years. We caution that, though a committee may appear to be focusing an investigation on the executive branch, that investigation’s focus can expand to include the private sector. For example, OGR’s investigation of the administration’s investments in the green energy sector ensnared several companies, including Solyndra, Severstal, and others. In 2011, as part of an investigation into the administration’s regulation of automobile mileage and CAFE standards, major automobile manufacturers received letters requesting a wide range of documents. Opposition to the Patient Protection and Affordable Care Act (i.e., Obamacare) led to investigations of AARP’s role in the bill’s passage and administration negotiations with the Pharmaceutical Manufacturers of America.
These examples illustrate that private companies do not need to be an initial target of a congressional committee in order to eventually fall under the scope of an investigation.
We have reviewed the oversight plans, which can be accessed here, and summarized below areas of focus that may be of interest to our clients and friends.
Foreclosure practices appear to be continuing target areas. Both the government-sponsored enterprises ("GSEs") Fannie Mae and Freddie Mac, as well as government agencies like the Federal Housing Administration, Veterans Affairs, and the Rural Housing Service, have been identified as entities to be reviewed by four committees. Areas of review include the financial risk to taxpayers, borrower default and foreclosure rates, foreclosure prevention activities, allegations of foreclosure abuse, and protections for borrowers. HAMP, a Treasury loan modification program for private and government-backed loans, was specifically identified as a program for review. The Committee on Financial Services posits that "HAMP has not met the goals set for it," and does not "justify the program’s cost." While Congress may have its eyes set on HAMP’s creator–the Treasury Department–and on the other federal agencies with responsibility for housing, these government entities may in turn point the finger at mortgage servicers or other private parties as culprits for poor program performance or foreclosure abuses.
In 2011, the Treasury Department and the Federal Reserve Board entered into consent orders with several of these mortgage servicers, requiring independent consultants to evaluate the servicers’ foreclosure practices (including compliance with HAMP requirements). In early 2013, most of these servicers settled with the government, ending the independent review of their foreclosure practices. This review and settlement is an area of interest to the Financial Services Committee. Servicers and independent consultants may be evaluated regarding both the review and settlement. The Senate Committee on Banking, Housing, and Urban Affairs reportedly has scheduled a hearing on this topic for mid-April.
Foreclosures on certain populations of borrowers, particularly veterans and active duty members of the military, likely will receive extra scrutiny. The Committee on Veterans’ Affairs has identified the Servicemembers Civil Relief Act ("SCRA") as an area for review. The SCRA, among other things, regulates foreclosures against members of the military.
The Committee on Financial Services also plans to review housing counselors and other non-profit entities that contract with Fannie Mae and Freddie Mac to provide services to potential homeowners. In particular, the committee plans to review "whether GSE funds provided to non-profits are used for political activities," and whether the GSEs are properly guarding against fraud.
2. Financial Sector
Several topics framed as "consumer rights" issues are slated for oversight and investigation attention by congressional committees. In its oversight plan, the Committee on Financial Services specified credit scores and credit reports, particularly the "accuracy and completeness of information reported to and contained in consumers’ credit files, with a specific focus on their impact on the availability of consumer credit." The committee also identified for review "marketing, fees and disclosures" regarding payment cards, federal enforcement against discrimination in lending, and the confidentiality and security of consumer financial information.
The Committee on Financial Services also set its sights on proxy advisory firms. The committee announced that it plans to "examine the services provided by proxy advisory firms to shareholders and issuers to determine whether conflicts of interest exist."
The Committees on Financial Services and Agriculture both plan to review the recent alleged manipulation of the London Interbank Offered Rate ("Libor") "and the effect of that manipulation on financial markets." While the initial review may focus on "whether a more timely and aggressive intervention by these regulators might have prevented the manipulation or mitigated its effects," as cautioned earlier, the focus could broaden to include financial institutions.
Recently targeted for their ratings of mortgage-backed securities, credit rating agencies are identified for review by the Committee on Financial Services. The committee plans to examine whether credit rating agencies’ "methodologies accurately reflect the risks associated with different debt instruments."
The environmental impact of hydraulic fracturing (or "fracking"), especially upon drinking water, and related government regulatory efforts are slated for review by both OGR and the Committee on Energy and Commerce. The Committee on Energy and Commerce also plans to evaluate "safety and security issues relating to energy exploration, production and distribution" generally, and the Committee on Transportation and Infrastructure plans to evaluate responses to oil spills.
The green energy sector is likely to be further scrutinized, especially regarding any government funds that were provided to failed or struggling companies. OGR plans to "continue its broad investigation of the Department of Energy’s loan guarantee programs." OGR also singled out wind energy tax credits as another area for review, along with renewable energy projects that have been "fast track[ed]" by the Bureau of Land Management. The Committee on Energy and Commerce announced that it too will review how American Recovery and Reinvestment Act (i.e., stimulus) funds were spent in the green energy sector.
4. Broadband Programs
The Committees on Agriculture and Energy and Commerce both plan to review the Department of Agriculture’s Rural Utility Service and Rural Broadband Access Loan and Loan Guarantee Program, including the programs’ controls on waste, fraud, and abuse. These programs and the Federal Communication Commission’s Lifeline program, which provides subsidies for telephone service for low-income persons, may receive additional attention with recent news reports of possible waste in the Lifeline program.
The Committee on Education and the Workforce plans to investigate what it termed "union democracy." This includes ensuring "employee freedom when electing and participating in a union," and "investigat[ing] actions that reduce union transparency and accountability to their members."
Port security was identified by the Committees on Homeland Security and Transportation and Infrastructure as an area for review, particularly regarding access restrictions and identification cards for port employees (the Transportation Worker Identification Credential).
The Committee on Transportation and Infrastructure plans to evaluate airline safety, including "pilot and controller training" and "ways to reduce operational errors."
The Committee on Homeland Security also plans to review procurement of screening technologies used in airport security.
7. Indian Gaming
The Committee on Natural Resources noted that it plans to conduct hearings "specifically on gaming to ensure that appropriate enforcement and oversight" by government agencies is ongoing.
8. Food Safety
The Committee on Agriculture will review "implementation of new protocols for meat, poultry, eggs, or seafood safety inspection." This issue may take on added importance in light of recent reports in Europe and elsewhere regarding horse meat labeled as beef. In 2010, the House Committee on Energy and Commerce requested documents and information from Wright County Egg and Hillandale Farms of Iowa after eggs were recalled in response to a suspected salmonella outbreak.
9. Money Laundering
The Committee on Financial Services announced that it will review "recent consent orders and other enforcement actions taken against non-compliant financial institutions and whether those actions have resulted in improved [Bank Secrecy Act], anti-money laundering, and counter-terrorist financing programs."
Committee oversight agendas provide the private sector with valuable insight regarding the priorities and intentions of House committee chairmen. Though congressional investigations and oversight hearings tend to be guided by the topics of the day, committee chairmen often try to develop particular themes or narratives over the course of a Congress, frequently in attempts to further legislative goals. Oversight agendas can serve as roadmaps for such themes and narratives and can help companies and other private sector entities prepare for congressional attention before it arrives.
 See Press Release, House Committee on Oversight and Government Reform, Oversight Chairman Issa Questions Energy Department About $700 Million Loan Offer to Severstal (Oct. 27, 2011), http://oversight.house.gov/release/oversight-chairman-issa-questions-energy-department-about-700-million-loan-offer-to-severstal/.
 See Press Release, House Committee on Oversight and Government Reform, Oversight Committee Expands Investigation into Secret CAFE Standards Rulemaking (Aug. 11, 2011), http://oversight.house.gov/release/oversight-committee-expands-investigation-into-secret-cafe-standards-rulemaking/.
 See Press Release, House Committee on Ways and Means, Ways and Means Members Demand Answers from AARP (June 25, 2012), http://waysandmeans.house.gov/news/documentsingle.aspx?DocumentID=300869; Press Release, House Committee on Energy and Commerce, Committee Investigation Reveals Tactics and Negotiations Used to Build Obamacare (May 31, 2012), http://energycommerce.house.gov/brand/committee-investigation-reveals-tactics-and-negotiations-used-build-obamacare.
 Id. at 5. The Committee on Financial Services’ focus comes on the heels of a February 60 Minutes segment on the accuracy of credit reports. See http://www.cbsnews.com/8301-18560_162-57567957/40-million-mistakes-is-your-credit-report-accurate/.
 See Press Release, House Committee on Energy and Commerce, Energy & Commerce Committee Requests Documents Related to Salmonella Outbreak and Egg Recall (Aug. 23, 2010), http://democrats.energycommerce.house.gov/index.php?q=news/energy-commerce-committee-requests-documents-related-to-salmonella-outbreak-and-egg-recall.
Gibson, Dunn & Crutcher’s lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn lawyer with whom you work or the following lawyers:
Michael D. Bopp – Chair, Financial Markets Crisis Group, Washington, D.C. (202-955-8256, firstname.lastname@example.org)
Mel Levine – Los Angeles (310-557-8098, email@example.com)
F. Joseph Warin – Washington, D.C. (202-887-3609, firstname.lastname@example.org)
Nikesh Jindal – Washington, D.C. (202-887-3695, email@example.com)
John W.F. Chesley – Washington, D.C. (202-887-3788, firstname.lastname@example.org)
Noah A. Kuschel – Washington, D.C. (202-955-8623, email@example.com)
DeLisa L. Lay – Washington, D.C. (202-955-8516, firstname.lastname@example.org)
© 2013 Gibson, Dunn & Crutcher LLP
Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.