CDC Eviction Moratorium Declared Unconstitutional by Texas Court

On February 25, 2021 the U.S. District Court for the Eastern District of Texas granted plaintiffs’ (landlords’ and property managers’) Motion for Summary Judgment, ruling that decisions to enact eviction moratoriums rest with the states. In Lauren Terkel, et al. v. Centers for Disease Control and Prevention, et al., the court ruled that the federal government’s Article I power under the U.S. Constitution to regulate interstate commerce and enact necessary and proper laws (Necessary and Proper Clause) “does not include the power” to order all evictions be stopped during the Covid-19 pandemic.

The Centers for Disease Control and Prevention (CDC) issued an eviction moratorium order in September 2020 which was set to expire on December 31, 2020. Initially extended to January 31, 2021, the Order was then extended to March 31, 2021.  The CDC Order “generally makes it a crime for a landlord or property owner to evict a ‘covered person’ from a residence” provided certain criteria are met. Under the CDC Order, the tenant(s) must submit a Declaration, signed by the tenant(s) and served on the landlord, and requires the tenant(s) to make their best efforts to obtain governmental assistance before they can obtain status as a covered person to avoid an eviction. The landlord is not required to notify the tenant that they can execute a CDC Declaration to obtain status as a covered person.  The CDC’s Order also grants the Department of Justice (DOJ) authority to initiate criminal proceedings and allows the imposition of fines up to $500,000 against landlords who violate the Order after receiving a CDC Declaration from all tenants on the premises.

In the 2020 case KBW Investment Properties v. Azar, the Southern District of Ohio noted HHS and the CDC admitted the CDC Order does not prevent a landlord from seeking judicial review of a tenant’s right to remain on the landlord’s property, provided that no actual eviction occurs while the CDC Order remains in effect and applies to the tenant(s). This includes a landlord’s right to seek an evidentiary hearing to challenge the veracity of the tenant’s CDC Declaration and what efforts, if any, were taken by the tenant to obtain governmental rent assistance.

In Terkel v. CDC, the plaintiffs—owners and managers of residential properties located in Texas—argued the federal government does not have the authority under Article I to order property owners to not evict specified tenants, and that the decision as to whether an eviction moratorium should be enacted resides with the given state. The CDC countered that Article I afforded it the power to enact a nationwide moratorium, and argued, among other things, that “evictions covered by the CDC order may be rationally viewed as substantially affecting interstate commerce because 15% of changes in residence each year are between States.” However, the Texas Court disagreed, stating that the CDC’s “statistic does not readily bear on the effects of the eviction moratorium” at issue, and that moreover, “[i]f statistics like that were enough, Congress could also justify national marriage and divorce laws, as similar incidental effects on interstate commerce exist in that field.” The Texas Court determined that the CDC’s eviction moratorium exceeds Congress’ powers under the Commerce Clause and the Necessary and Proper Clause. The Texas Court asserted “The federal government cannot say that it has ever before invoked its power over interstate commerce to impose a residential eviction moratorium.” The Texas Court also noted “It [federal government] did not do so during the deadly Spanish Flu pandemic. . . .Nor did it invoke such a power during the exigencies of the Great Depression. The federal government has not claimed such a power at any point during our Nation’s history until last year.”

After the Texas Court ruling, the DOJ issued a statement on February 27 announcing its decision to appeal the Texas Court’s decision, citing the Court’s Order “does not extend beyond the particular plaintiffs in that case, and it does not prohibit the application of the CDC’s eviction moratorium to other parties. For other landlords who rent to covered persons, the CDC’s eviction moratorium remains in effect.”

Since the DOJ appealed the Texas case, it would be wise for landlords to continue to operate as if the CDC Order is constitutional and in effect, especially outside of Texas.  However, this does not prevent landlords from requesting an evidentiary hearing and contesting whether the tenant(s) met all the criteria in the CDC Declaration to obtain status as a covered person.  If not, or if the tenant(s) did not serve a CDC Declaration on the landlord, then it appears the landlord can proceed with the eviction.

Posted by Attorney Brian S. Weinstock. Weinstock concentrates on real estate and corporate transactional law, workers’ compensation, insurance defense, and other civil and commercial litigation. For businesses, he provides financial and legal analysis as well as operational strategies and ideas to manage risk.

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