Much remains to be seen about the COVID-19 pandemic, but one thing is certain: US congressional oversight of the public and private sector’s response – including, most particularly, the unprecedented federal spending on response efforts – will dominate Capitol Hill’s attention for many years.[1] Indeed, the US House of Representatives has already made oversight an institutional priority and committee chairs are initiating inquiries into the myriad of issues arising from the pandemic. Though COVID-19 oversight is in its very early stages, we outline below what Congress has done to date and forecast on the shape of Hill oversight for the balance of 2020 and beyond.

The Federal Response to Date

The federal government’s multi-faceted response to the COVID-19 health crisis has been just as unprecedented as the pandemic itself.

On Capitol Hill, lawmakers have now passed four pieces of legislation to address the pandemic, each of which standing alone would have been a huge milestone in any given year. Our firm has detailed at length these new laws: (1) the Coronavirus Preparedness and Response Supplemental Appropriations Act[2]; (2) the Families First Coronavirus Response Act[3]; (3) the “Coronavirus Aid, Relief, and Economic Security Act” (the CARES Act)[4]; and (4) the Paycheck Protection Program and Health Care Enhancement Act.[5]

At the same time, the Trump Administration invoked and deployed its considerable executive powers. President Trump himself issued two national emergency declarations. The first was under the National Emergencies Act (NEA),[6] which provides a framework for the president to declare a national emergency. The second was pursuant to the so-called “Stafford Act,” which authorizes the president to provide federal assistance to states and localities in response to a public health incident.[7] President Trump also invoked the Defense Production Act (DPA), which confers upon the president a broad set of authorities to direct domestic industry in the interest of national defense.[8]

Under the legislation cited above, numerous federal agencies – with wide discretion – are injecting trillions of dollars into the economy without much guidance from Congress regarding how to distribute that money.[9] Federal agencies also continue to take regulatory steps – some very controversial – to mitigate the economic harm caused by the pandemic. For instance: (i) the US Food and Drug Administration (FDA) is allowing states leeway in virus testing[10] and easing rules to increase ventilator production;[11] (ii) the US Environmental Protection Agency (EPA) is easing enforcement of environmental obligations;[12] (iii) the US Department of Health and Human Services (HHS) is allowing licensed health care professionals to work in different states[13] in which they are licensed, and providing temporary relief from many audit and reporting requirements[14] and relaxing enforcement of the Anti-Kickback Statute[15] in relation to certain remuneration related to COVID-19; and, (iv) the Internal Revenue Service has extended various tax deadlines.[16]

The Board of Governors of the Federal Reserve System (Federal Reserve) also acted swiftly in administering financial assistance, both domestically and globally. Among other steps, the Federal Reserve reduced interest rates[17] nearly to zero, launched several emergency lending facilities,[18] and sent billions of dollars[19] to central banks all over the world.

The effects of the COVID-19 pandemic will be felt in virtually every aspect of American life for years to come. Unsurprisingly, the federal response to the crisis has been swift, overwhelming, historic, and largely bipartisan. The congressional and executive branch efforts, however, have been by necessity conducted largely without the benefit (or the luxury) of hearings or public comments. The decisions, spending, and policy implementation of the last two months will therefore be a very fertile source for congressional oversight beginning immediately and perhaps extending for years to come.

Indeed, in the CARES Act itself and in numerous public statements, congressional leaders emphasized the institutional imperative of overseeing the federal response to the COVID-19 pandemic. A massive effort would not be without precedent: Congress has flexed its oversight muscles repeatedly in response to major public health and economic crises to which the federal government has had to respond. Below is a graph of prior, large-scale congressional oversight efforts that may be predictive of the magnitude of what is to come.

Chart of Congressional Hearings in Response to Recent Crises

Below is a graph of prior, large-scale congressional oversight efforts that may be predictive of the magnitude of what is to come.

Likely Congressional Oversight Priorities  

Having legislated trillions of dollars in federal spending, tax relief, and entitlement enhancements in just two months – and there may be more on the way – Congress has already inexorably begun to exercise its oversight function. We forecast here what those efforts may entail.

The political context is important to consider at the outset. It is, of course, a presidential election year: the White House and control of the House and Senate are up for grabs. That political climate could not be more highly charged even in the absence of a crisis; the country just concluded a bitter presidential impeachment process for only the third time in history. Republicans in the Senate have a slim 53-47 majority, and 22 of its GOP-held seats are in cycle, versus only 12 Democratic seats. The political stakes surrounding both the legislative and executive handling of the pandemic could not be higher.

The Administration’s Handling of the COVID-19 Crisis

Virtually every executive branch entity has seemingly played some kind of role in the pandemic response. Here are some of the more prominent offices and agencies that will receive scrutiny:

  • The Executive Officer of the President (EOP). President Trump has in many ways made himself the face of the administration’s response to COVID-19, though he early on designated Vice President Mike Pence to lead the White House Coronavirus Task Force Head.
  • HHS is the nation’s lead public health and health regulatory department, encompassing both the FDA and CMS, and it has now been tasked with allocating over $100 billion to health providers.
  • The Department of the Treasury (Treasury). Treasury has used a number of mechanisms under pre-existing law to confront the crisis, and Congress has now appropriated hundreds of billions of dollars to allocate for economic relief.
  • The Small Business Administration (SBA). SBA is responsible for the Administration of the Paycheck Protection Program (PPP) for which Congress has appropriated $659 billion to date.

At least initially, particularly with a Democrat-controlled House of Representatives, it is certain that there will be intense scrutiny of the Trump Administration’s response to the COVID-19 crisis. The administration’s response has already prompted numerous investigations, briefing requests, and oversight letters from congressional committees. The House Committee on Oversight and Reform (HCOR), for example, sent[20] several COVID-19-related letters to the administration and non-government entities. Committees and individual members already publicly released initial investigative findings, including documents[21] produced in response to investigative requests, as well as analyses[22] derived from publicly available federal data. Testimony from executive branch officials is sure to follow.

Private Sector Oversight

Private industry is playing an integral part in the United States’ response to the COVID-19 pandemic. These efforts, however, may also expose companies to congressional investigations and inquiries as House and Senate committees examine the response to the pandemic.

At the top of the agenda is likely to be oversight of the trillions of dollars Congress has appropriated for COVID-19 relief to the private sector. Congress will want to “follow the money,” as it has in the past with respect to major spending legislation. We know, for instance, that Congress is eager to conduct oversight of the disbursement of funds from and eligibility of determinations for the small business-oriented PPP.[23] Funds in the CARES Act that support the health care and other industries will also be under scrutiny, such as how the funds were allocated and why, who were the major beneficiaries of federal largess, and whether these amounted to failed “bailouts” or unwise investments.

Congress will also eye the behavior of the private sector since the onset of the pandemic. For instance, some members have expressed concern about supply chain manipulation and specifically price gouging or “crisis profiteering,”[24] an issue that Attorney General Barr has publicly identified as a law enforcement priority.[25] Companies across a wide array of industries (e.g., cruise lines) may also face inquiries relative to their handling of the COVID-19 outbreak.[26] Similarly, professional and amateur sports leagues and other sponsors of widely attended events may face questions about the timing of their decisions to cease activities.

Finally, industries that have benefitted from any kind of governmental regulatory relief will be vulnerable to inquiry. Congressional leaders have been quite outspoken, for example, about the EPA’s efforts in this regard.[27] 

How Congress Will Get the Job Done

The House and Senate will deploy its standing committees and at least two new panels for conducting its oversight.

Standing Committees

The standing committees of the House and Senate with jurisdiction over the central aspects of the COVID-19 pandemic – public health, financial aid to industry – as well as the oversight committees in both chambers, are likely to conduct the bulk of coronavirus oversight. Some, such as the House Committee on Energy and Commerce, not only are jurisdictionally front and center, but also have a storied history in this field. We have set forth in a table below the committees likely to conduct oversight and the matters in their jurisdiction that will likely draw attention.

New Congressional Watchdogs

The CARES Act Oversight Commission 

The CARES Act created a Congressional Oversight Commission (the Commission), which will consist of five members selected by bipartisan leadership from both the House and the Senate.[28] The Commission is charged with oversight of the implementation of the CARES Act’s economic stabilization provisions by the Treasury Department and Federal Reserve Board, and with assessing its effectiveness. The Commission will have significant authority to hold hearings, call witnesses, take testimony, and receive evidence from federal agencies – but there is no mention of subpoena power.[29] It is required to submit monthly reports to Congress on the impact of the CARES Act, and will terminate on September 30, 2025.[30]

The House Select Subcommittee on the Coronavirus Crisis 

Separately, the House created, on a party-line basis, a Select Subcommittee on the Coronavirus Crisis (the Subcommittee) as a select investigative subcommittee of the House Committee on Oversight and Reform.[31] The Subcommittee has no legislative authority, but will have broad jurisdiction and, among others, the power to issue subpoenas and compel witness testimony. This jurisdictional authority, of course, duplicates that of many of the standing committees of the House.

At this writing, it is unclear how those jurisdictional boundaries may be drawn. And, although Speaker Pelosi has chosen her members,[32] Republican Leader McCarthy has not, so the actual functioning of the Subcommittee’s future operations is unclear.

Oversight Challenges in the Age of COVID-19

Congressional oversight at this time is easier said than done. The COVID-19 pandemic has virtually shut down Congress like much of the rest of the world. The Senate has returned to session, but with a great deal of controversy, and certainly only in a limited sense. The House has not set a date for its return.

Most of the real power behind congressional oversight lies in the threat of subpoenas and the inherent prospect for contempt proceedings. Clearly, the standing committees and the new Subcommittee have those subpoena powers at their disposal, but presently have no mechanism to hold anyone in contempt because committees are not meeting (and therefore cannot hold votes).

To address this challenge, congressional leadership and outside observers[33] are debating how to adapt their proceedings. Some committees made attempts at “paper hearings,” with prepared testimony and written questions. But these attempts were generally viewed as ineffective. Lawmakers are now considering “virtual” or “remote” hearings, where members and witnesses would be technologically, if not physically, present. Plans are underway also to have in-person hearings with appropriate “social distancing.” That may be possible (and safe) in some instances, but is simply unworkable – or, at least, logistically difficult – for many committees.[34]

Conclusion 

Capitol Hill veterans know with certainty that an avalanche of congressional oversight is coming in response to the COVID-19 pandemic. There will be dozens of letters from standing and ad hoc committees to those with a role in the pandemic response. There will, in addition to routine hearings on agency budgets and program reviews, be high-profile hearings with star witnesses. There will be more than one lurid scandal involving waste, fraud, or abuse of federal money.

There are also uncertainties: because of the pandemic itself, it is not clear how Congress and its committees will function. It is difficult to believe, however, that Congress will not find a way to conduct its historic oversight role in some very vigorous fashion much sooner rather than later. Those in the private sector with any significant involvement in the pandemic should carefully consider this impending scrutiny.

 

 

 


[1] For historical context, we have attempted to catalogue the magnitude of some congressional oversight efforts in response to past crises. The figures included in the chart below demonstrate that, even in the face of relatively less overwhelming health care threats, Congress has undergone large-scale oversight proceedings.

[2] Coronavirus Preparedness and Response Supplemental Appropriations Act, Pub. L. No. 116-123, 134 Stat. 146 (2020) (providing $8.3 billion in emergency funding for public health agencies).

[3] Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020) (providing $192 billion in economic aid, free virus testing for the uninsured, emergency paid sick leave, expanded family and medical leave programs, unemployment assistance, food aid, and increased Medicaid funding).

[4] Coronavirus Aid, Relief, and Economic Security Act (CARES Act), H.R. 748, 116th Cong., 2d Sess. (2020) (providing over $2 trillion to address the near-term economic impact the virus is having on families, organizations, and businesses).

[5] Paycheck Protection Program and Health Care Enhancement Act, 266 H.R. 266, as amended, 116th Cong., 2d Sess. (2020) (providing another round of money in the amount of $484 billion to generally replenish CARES Act funding).

[6] National Emergencies Act, Pub. L. No. 94-412, 90 Stat. 1255, (1976), codified at 50 U.S.C. §§ 1601, et seq.

[7] Disaster Relief and Emergency Assistance Amendments, Pub. L. No. 100-707, 102 Stat. 4689 (1988), codified at 42 U.S.C. §§ 5121, et seq., amended the Robert T. Stafford Disaster Relief and Emergency Assistance Act, Pub. L No. 93-288 88 Stat. 143 (1974), codified at 42 U.S.C. § 5155.

[8] Defense Production Act (DPA), Pub. L. No. 81-774, 123 Stat. 2006 (1950) codified as amended at 50 U.S.C. §§ 4501 et seq.; see, e.g., Exec. Order No. 13917, 85 FR 26313 (April 28, 2020) (invoking the DPA to declare meat processing plants as “essential infrastructure,” effectively exempting them from state closure orders, and delegating to the Secretary of Agriculture the authority to compel the operation of such plants).

[9] See, e.g., US Small Business Administration, Coronavirus (COVID-19): Small Business Guidance & Loan Resources (last visited May 4, 2020) (SBA to small businesses); Press Release, US Department of the Treasury, Statement by Secretary Mnuchin on the Payroll Support Program (April 14, 2020), (Treasury assistance to airlines); Press Release, US Department of Health & Human Services, Eligible Providers Can Submit Information to Receive Additional Provider Relief Fund Payments (April 28, 2020), (HHS to facilities and providers). For details on these programs and others, please see Steptoe & Johnson LLP’s Coronavirus Resource Center.

[10] Stephen M. Hahn M.D., Commissioner of Food and Drugs, FDA, US Food and Drug Administration Statement, Coronavirus (COVID-19) Update: FDA Provides More Regulatory Relief During Outbreak, Continues to Help Expedite Availability of Diagnostics (March 16, 2020).

[11] News Release, US Food and Drug Administration, Coronavirus (COVID-19) Update: FDA Continues to Facilitate Access to Crucial Medical Products, Including Ventilators (March 22, 2020).

[12] News Release, US Environmental Protection Agency, EPA Announces Enforcement Discretion Policy for COVID-19 Pandemic (March 26, 2020).

[13] US Department of Health and Human Services, Waiver or Modification of Requirements Under Section 1135 of the Social Security Act by Alex M. Azar II, Secretary of Health and Human Services (March 13, 2020).

[14] Press Release, Centers for Medicare & Medicaid Services, Trump Administration Makes Sweeping Regulatory Changes to Help U.S. Healthcare System Address COVID-19 Patient Surge (March 30, 2020).

[15] US Department of Health and Human Services, Department of Inspector General, OIG Policy Statement Regarding Application of Certain Administrative Enforcement Authorities Due to Declaration of Coronavirus Disease 2019 (COVID-19) Outbreak in the United States as a National Emergency (April 3, 2020).

[16] US Internal Revenue Service, Filing and Payment Deadline Extended to July 15, 2020 – Updated Statement (March 21, 2020).

[17] Press Release, Board of Governors for the Federal Reserve System, Federal Reserve issues FOMC statement (Mar. 15, 2020).

[18] Matthew B. Kulkin, et al., Steptoe & Johnson LLP, Coronavirus Resource Center, Federal Reserve Establishes, Expands Emergency Capital Liquidity Facilities (March 25, 2020).

[19] Press Release, Board of Governors for the Federal Reserve System, Swap Lines FAQs (March 19, 2020).

[20] 116th Congress Letters, The House Committee on Oversight and Reform (2020).

[21] Press Release, The House Committee on Oversight and Reform, New Document Shows Inadequate Distribution of Personal Protective Equipment and Critical Medical Supplies to States (April 8, 2020).

[22] Office of Congresswoman Katie Porter (CA-45), Everyone But Us, The Trump Administration and Medical Supply Exports (April 6, 2020).

[23] Senate Small Business Committee Chairman Marco Rubio, for instance, has promised rigorous oversight of the program. See Press Release, US Senate Committee on Small Business and Entrepreneurship, Rubio: Small Business Committee Will Use Subpoena Power to Review Paycheck Protection Program Compliance (April 20, 2020).

[24] Letter from Sen. Edward J. Markey (D-Ma.) to Jeffrey P. Bezos, Amazon.com, Inc. (March 4, 2020).

[25] Press Release, US Department of Justice, Justice Department Cautions Business Community Against Violating Antitrust Laws in the Manufacturing, Distribution, and Sale of Public Health Products (March 9, 2020).

[26] See, e.g.Letter from Peter A. DeFazio, Chair and Sean Patrick Maloney, Chair, Committee on Transportation and Infrastructure, US House of Representatives to Arnold W. Donald, President and Chief Executive Officer, Carnival Corporation & PLC (May 1, 2020).

[27]See. e.g., Press Release, U.S. House Committee on Energy and Commerce, Committee Leaders Demand Changes to EPA’s Policy Relaxing Enforcement During Coronavirus Pandemic (April 21, 2020).

[28] CARES Act, H.R. 748, § 4020(c)(1).

[29] CARES Act, H.R. 748, § 4020(e)(1).

[30] CARES Act, H.R. 748, § 4020(f).

[31] H.R. Res. 935, 116th Cong. (2020).

[32]166 Cong. Rec. H1967-68 (daily ed. May 1, 2020).

[33] See, e.g., Videoconference of Roundtable, US Senate Committee on Homeland Security and Government Affairs, The Permanent Subcommittee on Investigations, Roundtable – Continuity of Senate Operations and Remote Voting in Times of Crisis (April 30, 2020).

[34] For instance, the House Transportation and Oversight Committee has 67 members. Combined with committee staff, personal office staff, witnesses, and administrative staff, and the media – not to mention members of the public – a hearing could easily be a gathering of 150 people. It is unlikely that the Capitol complex has a facility that would accommodate such a crowd in a “socially distant” fashion.