The House’s Sovereign Immunity Objection to the SEC Subpoenas

As discussed in my last post, the SEC is suing the House Committee on Ways & Means and Brian Sutter, a committee staffer, to enforce two administrative subpoenas, one to the committee seeking documents and one to Sutter seeking both documents and testimony.

A May 19 letter from the House General Counsel lays out 11 objections to the subpoenas. The first objection, which I want to address today, is that “[e]ach of the subpoenas is barred by the sovereign immunity, never waived, that attaches to the Committee and Mr. Sutter in their official capacities.”

If I understand this objection correctly, it means that the House is asserting that the SEC is barred from compelling the production of official House documents or testimony related to the official functions of the House, even if that information is not constitutionally privileged and no matter how relevant it might be to the SEC’s investigation.

What might be the basis of such an objection? Well, during my time in the House Counsel’s office, we dealt with administrative subpoenas from several different federal agencies. We objected to these subpoenas based on the fact that House Rule VIII, which authorized compliance with subpoenas issued by courts, did not apply to administrative subpoenas. One aspect of this argument (I think) was that Rule VIII’s silence meant the House had not waived its sovereign immunity with regard to administrative subpoenas.

Now frankly sovereign immunity never struck me as exactly the right rubric for this argument. Historically the House (like the Senate) has maintained that its consent is needed before another branch of government can obtain documents from its files or testimony regarding its official functions, but this position has been grounded in the separation of powers. Thus, Deschler explains that the attempt by “another coordinate and coequal branch of government” to exercise authority over the House by serving process upon it “has historically been perceived by the House as a matter intimately related to its dignity and the integrity of its proceedings, and as constituting an occasion for the raising of the question of the privilege of the House.” 3 Deschler’s Precedents § 14. This view held that each branch of government had the constitutional authority to make the final determination regarding the disposition of its own documents and information. See Nixon v. Sirica, 487 F.2d 700, 742 (D.C. Cir. 1973) (MacKinnon, J., concurring in part and dissenting in part) (“It thus appears that the judiciary, as well as the Congress and past Presidents, believes that a protected independence is vital to the proper performance of its specified constitutional duties.”)

Be that as it may, in 1977 the House first adopted the predecessor to Rule VIII, providing standing authority to comply with judicial subpoenas. This rule obviated the need for the House to authorize compliance with such subpoenas on a case-by-case basis (which remains the practice in the Senate to this day). To the extent that the doctrine of sovereign immunity applies, the rule also presumably acts as a waiver of this defense so long as a subpoena meets the criteria set forth in the rule.

As noted, there remained a problem with respect to administrative subpoenas because Rule VIII did not address them. Thus, whether viewed as a question of sovereign immunity, separation of powers, or both, administrative subpoenas to the House were arguably barred and could not be complied with absent a specific House resolution authorizing compliance. (The merit of this position was never tested in court, to my recollection).

In the 107th Congress, however, Rule VIII was broadened to cover administrative subpoenas. This was done at the suggestion of the House Counsel’s office precisely because there seemed to be little sense from a policy standpoint (as well as some legal risk) in maintaining that administrative subpoenas were categorically barred.

Given that Rule VIII now expressly authorizes (and indeed requires, if the rule’s prerequisites are satisfied) compliance with administrative subpoenas, it is a little difficult to understand how the House could sustain a sovereign immunity objection. Perhaps a clue is the citation in the May 19 letter to Lane v. Pena, 518 187, 192 (1996), which it describes as holding “any waiver of sovereign immunity must be ‘unequivocally expressed in statutory text.’” Rule VIII, of course, is not a “statute” and thus, it might be argued, its language does not count for determining whether sovereign immunity has been waived.

If that’s the argument, it does not strike me as a winner.

4 Replies to “The House’s Sovereign Immunity Objection to the SEC Subpoenas”

  1. Michael – how often does the House receive subpoenas, administrative or otherwise? It strikes me as irrelevant to the SEC’s authority, which should not be construed to cover information from the House or Senate as it would a private corporation. The notion that governmental information could be used to prosecute an “inside trading” case seems fundamentally flawed. It’s the responsibility of each House to protect its information and discipline its members and staff. I don’t see the need for the SEC to obtain this information,and if it did need it to pursue activities within the statutory framework, should request it. I find the notion of a subpoena from an agency to turn the Constitution’s structure on its head.

  2. Hey Alec- its not all that uncommon for the House to receive subpoenas. If you search the Congressional Record for Rule VIII notices in this Congress, you would see there have been about 15-20 so far (and not all subpoenas end up with Rule VIII notices).

    As a historical matter, the House has never claimed to be exempt from providing information relevant to judicial proceedings, though (as noted in my post) it maintains the right to make the final decision, if it so chooses, as to whether compliance with a subpoena is appropriate. Under Rule VIII, however, the subpoena recipient is required to comply with a subpoena (absent contrary instruction from the House), so long as it meets certain prerequisites, one of which is that it seek information that is “material and relevant.”

    Your comment suggests that the SEC is not seeking information that is material and relevant. That is a different issue than the one addressed in the post, and I may write something separately on that. I will say that my general understanding of the insider trading laws would be that a violation has to begin with a corporate insider disclosing nonpublic corporate information, which I think is your point. The SEC’s brief relies a lot on the Stock Act, which says Congress is not exempt from the insider trading laws, though I am not sure what that means. So its a bit murky and perhaps further briefing will clarify exactly what legal theory underlies the SEC’s investigation.

    With regard to the general point that congressional discipline should be handled solely by Congress, I am sympathetic but I think that ship has sailed.

  3. I meant to mention that in contrast to the House (and Senate), the British Parliament historically maintained a categorical exemption from any participation in judicial proceedings, to the point that it was considered improper for courts to examine Parliamentary proceedings in any way. This has softened in recent decades, but my understanding is that it is still far less common for evidence regarding parliamentary activities to be introduced in British courts.

  4. Michael,

    My non-expert understanding of the Stock Act is that it was aimed at action to enrich Members and staff who used their inside knowledge to enrich themselves rather than criminalizing someone who passed along information that was used down the road to trade.

    If Congress left itself vulnerable to prosecution because information that was leaked (as it always is) was used to trade by third parties for their own profit, well, Congress is just too stupid for their lawyers to protect any longer.

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