Is the Eviction Moratorium Constitutional?
The COVID-19 Eviction Moratorium
In connection with the outbreak of COVID-19 pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), which included a 120-day prohibition of eviction proceedings for “covered property” (i.e., properties with federally-backed mortgages) was into law on Mach 27, 2020.
Although Congress did not renew the CARES Act, the Centers for Disease Control and Prevention (CDC), a part of the Department of Health and Human Services (HHS) did issue a Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19 on September 4, 2020. The CDC Order was not passed by Congress. The CDC Order is therefore just an Order from a federal agency, and is not federal law. The CDC Order was meant to afford emergency relief to (i) residential tenants who (ii) are unable to pay the rent. The CDC Order, by its own terms, was never meant to protect tenants who face eviction due to reasons other than non-payment of rent. For example, residential Tenants can still be evicted if the reason for eviction has nothing to do with non-payment of rent. The question of whether the CDC Order was constitutional has been addressed by a Federal Court sitting in Texas in the case of case Lauren Terkel et al. v. Center for Disease Control and Prevention et al. As set forth in greater detail below, the Federal Court sitting in Texas ruled that the CDC Order is unconstitutional. Whether other courts sitting in different states will agree remains to be seen.
Arguments for the unconstitutionality of the CDC Order
In Lauren Terkel, the property owner sued the CDC arguing that the CDC order halting evictions is unconstitutional because that the executive branch of the federal government does not have the authority to halt evictions across state lines. The landlord’s argument was that the powers given to the federal government in Article I of the Constitution, specifically, the commerce clause, do not allow the federal argument to halt evictions.
The CDC argued that its use of the Commerce Clause to halt evictions across state lines is constitutional
The CDC argued the fact that the CDC Order imposing a nationwide eviction moratorium is within Article I’ s grant of federal authority to regulate commerce among the States, claiming that allowing tenants to be evicted would affect the functioning of the national economy across state-lines and therefore, that the CDC Order was a constitutionally permitted under the Commerce Clause.
The Eviction Moratorium imposed by the CDC Order was ruled to be unconstitutional
The United States District Court for the Eastern District of Texas ruled that the CDC order halting evictions is unconstitutional because the federal government does not have the constitutional power to pass such an Order under the Commerce Clause of the Constitution.
- The main question presented in the case was whether a nationwide moratorium on evicting residential tenants is within the limited powers granted to the federal government by the Constitution, specifically, its authority to legislate necessary and proper commerce among several states.
- In reaching its conclusion, the Texas Court noted that the Federal government has never before exercised its powers over interstate commerce to impose a residential eviction moratorium. Although COVID-19 may cause severe illness and even death, the federal government has not claimed such power at any point in American history until 2020.
- CDC order criminalizes landlords or property owners to evict a “covered person” from a residence. To be considered a covered person, a tenant has to provide a landlord with a declaration consisting of five certifications (pg. 2). However, the order allows eviction in case of some exceptions (pg. 4-5). Additionally, the order only pauses evictions, not financial obligations.
- The government defends the order under the Commerce Clause. The court determined whether the order fell within one of the following categories of the Commerce Clause: (1) “the use of the channels of interstate commerce”; (2) “the instrumentalities of interstate commerce, or persons or things in interstate commerce”; and (3) “those activities having a substantial relation to interstate commerce”. Both parties agreed that if the order is authorized it would fall under the third category, known as the substantial-effect test.
- In order to determine whether or not Congress has the power to regulate local activity that has a “substantial effect” on interstate commerce, the Texas Court used the four “significant considerations” test that was previously used by the Supreme Court in United States v. Morrison, which analyzed the following: “(1) the economic character of the intrastate activity; (2) whether the regulation contains a “jurisdictional element” that may “establish whether the enactment is in pursuance of Congress’ regulation of interstate commerce”; (3) any congressional findings regarding the effect of the regulated activity on commerce among the States; and (4) attenuation in the link between the regulated interstate activity and commerce among the States.”
- The parties argued whether or not the substantial-effect test should be viewed with regards to the Necessary and Proper Clause. Although the government argues that it should not be used, that would put aside the origins of the test and prevent accuracy of its application. It was argued that the substantial-effect test itself does not examine the economic character of a regulated activity, and that the main point of the argument is to understand the connection of such local activity to the interstate commerce.
- Ultimately, the Texas Court determined that in this case, the regulated activity (namely, eviction of residential tenants) is not connected to the interstate market due to the following facts: (1) “real estate is inherently local”, (2) “residential buildings do not move across borders”, (3) “the challenged order disclaims any effect on the parties’ financial relationship”. Since the CDC Order, by its very own terms, does not have impact of parties’ financial relationship, it therefore should not be considered economic.
- Since it was found that the CDC Order “does not limit its application based on a connection to interstate commerce”, it was found that the order does not contain the “jurisdictional element” required to survive scrutiny under the substantial-effects test.
- Although the government claimed that public health benefits from the CDC Order, the Court found this claim to be inadequate due to the lack of substantial evidence of negative impacts on interstate commerce without the order.
- Lastly, the Court ruled that the CDC failed to demonstrate that residential evictions had substantial effect on interstate commerce. In addition, the Court also noted that the CDC Order interferes with protection of individual property rights, which is considered to be a state concern, not a federal concern.
The Texas Court ruled in favor of the plaintiffs/property owners, agreeing to that the nationwide eviction moratorium is unconstitutional due to the fact that the Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19 does not constitute a proper exercise of the federal government’s power under Commerce Clause of the Constitution. Although the Texas Court decided not to issue an injunction, it anticipated that the CDC would comply with the court’s judgment. To date, the CDC has not complied with the Court’s ruling and has not otherwise reversed its Order halting evictions. The CDC Order is set to expire March 31, 2021 unless extended.
Practical considerations for Landlords and Tenants
Landlords can still evict residential tenants for reasons other than non-payment of rent without implicating the protections afforded to Tenants by the CDC Order. Moreover, the CDC moratorium does not apply to commercial landlord-tenant relationships–only residential. Tenants, on the other hand, need to be aware that the CDC Order does not alter or effect a tenant’s financial obligations to their Landlord. Tenants who are unable to pay rent because of a loss in income stemming from COVID-19 should provide their Landlord with the CDC Declaration form. If you are a residential landlord or tenant seeking legal guidance on whether the CDC order applies to your specific case, contact our law firm today.