Court to Test Congressional Authority to Subpoena President's Financial Records

Steven D. Schwinn, UIC John Marshall Law School

The Supreme Court will hear oral arguments tomorrow in Trump v. Mazars and Trump v. Deutsche Bank, testing whether Congress has authority to subpoena the President's financial records from third-party custodians of those records. Here's my Preview, from the ABA Preview of United States Supreme Court Cases, with permission. (This doesn't address the political question issue, which the Court asked the parties to brief after this came out).

FACTS

These cases test the authority of three different Committees of the U.S. House of Representatives to issue third-party subpoenas in support of their oversight and investigations into different aspects of President Trump’s private financial dealings. Let’s look at the Committees’ investigations one at a time.

The Oversight Committee Investigation

The House Committee on Oversight and Reform is engaged in an ongoing investigation into Executive Branch ethics and conflicts of interest, presidential financial disclosures, federal lease management, and possible violations of the Constitution’s Emoluments Clauses. As relevant here, the Committee is examining President Trump’s personal business interests and his decision to maintain ties to these interests (and not fully divest from them, consistent with prior presidential practice). In particular, the Committee has identified concerns with the Government Services Administration’s (GSA) ongoing management of the lease of the federal Old Post Office Building for the Trump International Hotel in Washington, D.C.; the adequacy and accuracy of President Trump’s financial disclosures and the adequacy of federal ethics laws; and allegations by Michael Cohen that President Trump falsely reported his assets. According to the Committee, the investigation is designed “to determine the adequacy of existing laws and perform related agency oversight.”

After the Committee heard testimony from Cohen that included allegations that President Trump falsely reported his assets, the chair wrote to Mazars and requested accounting documents related to President Trump and certain of his businesses from January 1, 2009, to the present. Mazars declined to produce this material.

On April 12, 2019, the chair then sent a memorandum to Committee members explaining the need for a subpoena to Mazars. The memo identified four subjects that the Committee had “full authority to investigate”: (1) “whether the President may have engaged in illegal conduct before and during his tenure in office,” (2) “whether [the President] has undisclosed conflicts of interest that may impair his ability to make impartial policy decisions,” (3) “whether [the President] is complying with the Emoluments Clauses of the Constitution,” and (4) “whether [the President] has accurately reported his finances to the Office of Government Ethics and other federal entities.” The chair also wrote that the Committee’s “interest in these matters informs its review of multiple laws and legislative proposals under our jurisdiction.”

The Committee then issued a subpoena to Mazars seeking documents related to financial statements, engagement letters, supporting documents, and related communications for President Trump and certain of his businesses, from 2011 through 2018.

The Financial Services Committee Investigation

The Financial Services Committee is engaged in an ongoing, broad investigation into financial institutions’ compliance with banking laws and whether those laws adequately protect against foreign money laundering, other financial crimes, and high-risk loans. As part of this investigation, the Committee is looking into practices at Deutsche Bank and Capital One.

These banks “have long provided business and personal banking services” to President Trump and his family. According to a series of media reports over the last few years, these banks made questionable loans to President Trump. Most recently, a New York Times Magazine article reported that Deutsche Bank had concerns that President Trump’s “real estate projects were laundromats for illicit funds from countries like Russia, where oligarchs were trying to get money out of the country.”

In order to further its investigation, the Committee issued two subpoenas. The first was directed at Deutsche Bank; it sought documents and records that included detailed financial information “belonging to, or likely to reveal information, concerning” President Trump and his family. The Deutsche Bank subpoena covered material from January 1, 2010, to the present (with no closing date). The second subpoena was directed at Capital One; it sought information about various Trump businesses and their principals and “other representatives,” including businesses affiliated with the Trump International Hotel in Washington, D.C. The Capital One subpoena covered material from July 19, 2016, to the present (again with no closing date). Deutsche Bank and Capital One declined to comply.

The Intelligence Committee Investigation

The House Intelligence Committee is engaged in an ongoing investigation into “efforts by Russia and other foreign actors to influence our political process before, during, and since the 2016 election.” The investigation includes assessing “whether foreign actors have financial leverage over President Trump, whether legislative reforms are necessary to address these risks, and whether our Nation’s intelligence agencies have the resources and authorities needed to combat these threats.”

In order to further its investigation, the Committee issued a subpoena to Deutsche Bank, covering the exact same material and time frames as the Financial Services Committee’s subpoena. Deutsche Bank declined to comply.

In all, the three House committees issue four third-party subpoenas for financial information about President Trump.

Before the response date for any of the subpoenas, President Trump brought two separate lawsuits—one in Washington, D.C., and the other in New York City—to stop Mazars and the banks from complying. President Trump sued “solely in his capacity as a private citizen.” Mazars and the banks took no position on the underlying issue—the Committees’ authority to issue the subpoenas—and so the Committees intervened as defendants.

After the President filed suit, the House passed Resolution 507, purporting to ratify the Committees’ subpoenas. The Resolution stated that the House “ratifies and affirms all current and future investigations” and “subpoenas previously issued or to be issued in the future, by any standing or permanent select committee of the House,” related to the President, his immediate family, his businesses and organizations, and others with ties to the President, including any “current or former” government employees.

Both district courts ruled against President Trump, and the D.C. and Second Circuits affirmed. This appeal followed.

CASE ANALYSIS

Congress has implied authority under the Constitution to engage in investigations and oversight of issues and areas that fall within its legitimate lawmaking power. As part of this implied authority, Congress can issue subpoenas to collect information to advance its investigations and oversight. Either house of Congress can delegate these authorities to its committees.

But a committee’s investigative and oversight authorities are not unbounded. Congressional investigations or oversight must serve a “legitimate legislative purpose,” they must be authorized by their full house, and they may not impermissibly encroach on another branch’s authority.

The parties frame their arguments around these baseline principles.

President Trump argues first that the committees did not have a legitimate legislative purpose in issuing the subpoenas. For one, he says that the subpoenas at best seek information that might lead to legislation. But he claims that this is not enough to bring the subpoenas within Congress’s legitimate lawmaking authority. For another, he asserts that the subpoenas probe into areas where Congress simply cannot legislate, for example, extending conflict-of-interest restrictions to, and imposing disclosure requirements upon, the President, and that they therefore lack a legitimate legislative purpose. For a third, he contends that the bank subpoenas impermissibly seek his personal financial information only as a “case study” for financial sector reform, and that simply does not fit within Congress’s legitimate lawmaking power. For a fourth, he contends that the subpoenas are part of the Committees’ exercise of law enforcement power, not law-making power, and that they impermissibly encroach on executive authority in violation of the separation of powers. And for a fifth, he asserts that the subpoenas are based on the Committees’ pure political interests, not legitimate lawmaking interests.

President Trump argues that for all these reasons even an ordinary congressional subpoena would fail. But he claims that the “unprecedented” congressional subpoenas seeking private information of the President should be subject to an even higher standard, and that under a higher standard these subpoenas would fail all the more.

President Trump argues next that the Committees lack express authority under House rules to issue the subpoenas. He claims that express delegation to the Committees to issue subpoenas is necessary in investigations, like these, that raise serious separation-of-powers issues, because “Congress seeks to encumber the President” and because the Committees are pushing the outer boundaries of congressional authority. Moreover, he says that requiring an express delegation, and ruling against the Committees because they lacked it, would allow the Court to avoid ruling on the underlying constitutional issues. President Trump contends that Resolution 507 did not provide express delegation, because it did not purport to amend House rules, did not expand the Committees’ authority, and acted retroactively “in violation of controlling precedent.” Finally, President Trump argues that interpreting Resolution 507 to expressly delegate power to the Committee to issue these subpoenas would only clear the way for every House Committee to issue its own subpoenas. According to the President, this, in turn, would “keep[] the President from fulfilling the obligations of his office.”

The government weighs in as amicus to support President Trump. The government lodges arguments similar to President Trump’s, but puts a finer point on the “heightened requirements” that it says Congress must meet in order to subpoena the President’s records. In particular, the government proposes this:

At the threshold, the full [House] chamber should unequivocally authorize a subpoena against the President. Moreover, the legislative purpose should be set forth with specificity. Courts should not presume that the purpose is legitimate, but instead should scrutinize it with care. And as with information protected by executive privilege, information sought from the President should be demonstrably critical to the legitimate legislative purpose. A congressional committee cannot evade those heightened requirements merely by directing the subpoenas to third-party custodians, for such agents generally assume the rights and privileges of their principal . . . .

For many of the same reasons raised by President Trump, the government says that the Committees’ subpoenas do not meet this heightened test.

The Committees counter that legislative subpoena power is an essential and time-tested part of congressional authority. (They rehearse in their merits brief the many similar congressional investigations that illustrate why their own investigations are hardly “unprecedented,” as the President contends.) They say that congressional authority’s “historical pedigree is too strong for it to be narrowed by the arguments” of the President and the government. They contend that instead of applying “heightened requirements” for these subpoenas (as the President and the government argue), the Court should defer to the Committees, so long as the subpoenas are related to a valid legislative purpose—one that “will inform Congress on a subject on which legislation could be had.”

The Committees argue next that they had “multiple legislative purposes” in issuing the subpoenas, as the courts below found. To illustrate this, they point to several pending bills, which are constitutionally permissible, that will be informed by these investigations. Moreover, the Committees contend that it doesn’t matter that they are investigating wrongdoing, so long as the investigations are related to a legitimate legislative purpose (which they are). And they say, contrary to the President and the government, these subpoenas (directed, as they are, to third parties) do not impair the President’s ability to perform his constitutional duties.

The Committees argue that the government’s “heightened standard” for subpoenas for material related to the President’s purely personal behavior conflicts with the Constitution. They say that the government’s proposed requirement that the full House authorize subpoenas concerning the President disregards the House’s constitutional power to determine its own rules. They contend that the proposed requirement that courts more closely scrutinize Congress’s stated purposes “invites inappropriate judicial micromanagement of Congressional oversight.” And they assert that the proposed requirement that a subpoena is “demonstrably critical” to congressional purposes “brazenly stacks the deck in favor of one Branch over another.” But the Committees contend that even if the Court applied the government’s test, their subpoenas would satisfy it.

Finally, the Committees argue that the House properly authorized them to conduct their investigations and issue their subpoenas. They contend that they have explicit authority to issue any subpoenas that they “consider[] necessary” to carry out “any of [their] functions and duties” under House Rule XI.2(m)(1). And they say that House Resolution 507 ratified and affirmed the specific subpoenas here.

SIGNIFICANCE

This case, just like the companion case Trump v. Vance, testing whether President Trump has to comply with a state grand jury subpoena for his tax records, has obvious and much-discussed political significance. But the subpoenas in this case sweep more broadly than the subpoena in Vance: these subpoenas seek a variety of material related to President Trump and his business organizations, while the subpoena in Vance now only seeks his tax records. As a result, this case has potentially higher stakes. In particular, a ruling against President Trump could allow the Committees to obtain a trove of material relating to President Trump’s financial dealings and their bearing, if any, on his public duties. On the other hand, a ruling for President Trump could hamstring the Committees’ investigations, or even halt them altogether, and close off this avenue to public disclosure of this material. While President Trump’s taxes may get more play in our popular political debates, his broader financial dealings are likely far more significant.

As with Vance, however, it’s not clear how much any of this will matter. Given President Trump’s remarkably stable and durable base, and given his similarly remarkably stable and durable opposition, the Court’s ruling, whatever it is, will likely be interpreted by the general public in pure political terms (pro-Trump, or anti-Trump). That’s especially true coming on the heels of the impeachment proceedings, when relations between President Trump and House Democrats are already at a new low. In this highly strained political environment, it’s easy to see how partisans will put a political cast on these rulings, and on the justices behind them. It’s equally easy to see how the inevitable reactions to these cases, therefore, threaten to do lasting harm to our collective faith in a politically independent judiciary.

This case also threatens to do lasting harm to Congress. If adopted by the Court, President Trump’s arguments, echoed by the government, could substantially rein in Congress’s investigation and oversight authorities. In particular, if the Court were to adopt the argument that Congress lacked a legitimate legislative purpose—an argument that this administration has pressed hard in other congressional investigations not directly involving the President—this could seriously constrain Congress’s power to check the Executive Branch. In its strongest form, sometimes adopted by this administration, this argument could allow the Executive Branch to wholly ignore congressional oversight and investigations, leaving Congress little practical authority to coax the administration to cooperate. But even at the very least, this argument, if adopted by the Court, could open the door to active judicial intervention in congressional oversight and investigations. In short, this argument, if adopted by the Court, would shift power away from Congress to the Executive Branch and the courts, and thus significantly alter our current separation of powers.