On February 25, 2021, the United States District Court in the Eastern District of Texas (“Texas Court”) granted summary judgment in favor of the plaintiffs in Lauren Terkel et al. v. Centers for Disease Control and Prevention et al.,[1] holding that a nationwide eviction moratorium issued by the Centers for Disease Control and Prevention (“CDC”) to mitigate the spread of COVID-19 exceeded the constitutional authority granted to the CDC.
On September 4, 2020, the CDC issued an order, the Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19[2] (the “Order”), under Section 361 of the Public Health Service Act, which was originally scheduled to expire on December 31, 2020 and was subsequently extended until March 31, 2021.[3] The Order was intended to mitigate the spread of COVID-19 within shared living spaces and the spread of the virus in between the States. Under the Order, any landlord, owner of a residential property[4] or other person with the legal right to pursue eviction was barred from evicting any “covered person”[5] from a residential property during the term of the Order. Any person who violates such Order is subject to a criminal penalty of up to one year imprisonment followed by one year of supervised release and a fine of up to $250,000. Prior to issuance of the Order, the federal government had never previously invoked its commerce power to impose a nationwide eviction moratorium. The Order did not apply to any State, local, territorial or tribal area which had a moratorium on residential evictions in place that provided an equal or greater level of protection than those set forth in the Order. The Order also did not preclude the tenant’s obligation to pay full contractual rent under its lease.
The plaintiffs[6] in the lawsuit are owners or managers of residential properties that sought to evict one or more tenants for nonpayment of rent but were prohibited from doing so based on the Order. The defendants named in the lawsuit were the United States, CDC, U.S. Department of Health and Human Services (“HHS”) and three HHS officials responsible for the Order. The primary question in the lawsuit was whether the CDC had the authority, through the “legislative powers” granted to Congress in Article I of the Constitution, which could be delegated to a federal agency, to issue a national eviction moratorium.
The plaintiffs argued that the Order exceeded the federal government’s constitutional authority and the authority to issue such a moratorium is not within the limited powers granted to the federal government under the Constitution and sought a permanent injunction setting aside the Order and halting the enforcement of the Order. The Defendants defended the authority of the CDC to issue the Order under the Commerce Clause which authorizes Congress to “regulate Commerce…among the several States” and in the alternative, the Necessary and Proper Clause of Article I of the Constitution[7] which gives Congress the power to make “all Laws which shall be necessary and proper for carrying into Execution” other federal powers.
In determining whether such authority exists under the Commerce Clause, the Texas Court first determined if the Order fell within one of the three categories of activity that the Supreme Court has held allows regulation under 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 that substantially affect interstate commerce.”[8] The parties agreed that if the Order was authorized, it would be under the third category also known as the substantial-effects test. Such substantial-effects test is based on “whether a rational basis existed for concluding that a regulated activity sufficiently affected interstate commerce.”[9] While the standard applied in the substantial-effects test gives certain deference to Congress to determine regulatory effectiveness, any court...
