On February 27, 2021, the Centers for Disease Control and Prevention (the “CDC”), the United States Department of Health and Human Services (the “HHS”), and the United States of America (collectively the “Government”) appealed a federal court’s holding that Congress exceeded its authority when it imposed a national eviction moratorium in response to the COVID-19 pandemic. The United States District Court for the Eastern District of Texas so held in Terkel v. Centers for Disease Control and Prevention.1
I. Case Overview
On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The provision at issue in Terkel is the prohibition against “the initiation of eviction proceedings for covered properties, defined as those participating in special federal programs or with specified federally backed loans.”2 Though the initial 120-day moratorium lapsed on July 27, 2020, the CDC extended the moratorium until March 31, 2021.3
The plaintiffs in this case, Lauren Terkel and the owners and managers of covered properties, wanted to initiate eviction proceedings against nonpaying tenants before the CDC’s extended moratorium date.
Accordingly, the plaintiffs challenged the constitutionality of the eviction moratorium, seeking a declaration that the order exceeded Congress’s authority under Article I of the Constitution.4 The Government argued in defense of the moratorium’s constitutionality. The court, not being presented with any issues of material fact, addressed the constitutional challenge as a pure question of law.5
II. Constitutional Analysis
The district court’s decision opens with a primer on the distinction between the police powers afforded to the States and the deliberate absence of that power for the federal government:
The State’s police power [is] an exercise of the sovereign right of the government to protect the lives, health, moral, comfort, and general welfare of the people. But while the States have broad authority to enact legislation for the public good [referred to as the police powers] . . . the Federal Government, by contrast, has no such authority.6
The court also noted that never in the country’s history had Congress imposed similar restrictions on property owners’ rights to reclaim their property, observing that not even the Spanish Flu nor the Great Depression had moved Congress to such measures.7
a. The Substantial Effects Test
The court analyzed whether the CDC’s eviction moratorium was constitutional under the “substantial effects” test, one of the three recognized categories of permissible regulation under the Commerce Clause. This test considers whether the activity regulated has a substantial effect on interstate commerce.8 In making that determination, courts have focused on four factors:
- The economic character of the intrastate activity;
- Whether the regulation contains a jurisdictional element that may establish whether the enactment is in pursuance of Congress’s regulation of interstate commerce;
- Any congressional findings regarding the effect of the regulated activity on commerce among the States; and
- Attenuation in the link between the regulated intrastate activity and commerce among the States.9
These are known as the Morrison factors. They shape “the reach of Congress’s power to regulate based on a local activity’s substantial effect on interstate commerce.”10
The district court analyzed each factor in turn.
i. Economic Character of Eviction Regulation
The court held that the local activity regulated, the eviction proceeding, is not of an economic character that could affect interstate commerce in a substantial way. Comparing this case to a previous decision on Congress’s attempt to regulate gun possession under the Commerce Clause, the court asserted that, “the order at issue here criminalizes the possession of one’s property when inhabited by [a person covered under the CDC’s order]. Neither regulated activity is economic in material respect.”11
The court acknowledged that real estate and rental housing transactions are economic, but that the application of “the substantial effects test must look ‘only to the expressly regulated activity’ itself.”12 Concluding that the regulated activity is the eviction proceeding and that the CDC’s order does not alter the financial obligations between the parties, the court held that the CDC’s order regulating evictions is not a regulation of economic activity applicable under the substantial effects test.
ii. Presence of a Jurisdictional Element
As to whether the CDC’s order contained a jurisdictional element, the court found the Government’s admission that the CDC order does not limit its application based on a connection to interstate commerce as being dispositive on the matter.13 The court then made short work of the Government’s argument that because it was acting “as necessary to prevent the introduction, transmission, or spread of communicable diseases . . . from one State or possession into any other State or possession[,]” the order contains a jurisdiction element.14
iii. Congressional Findings
With respect to the third factor, looking at any findings Congress may have made about the economic effects of the regulated activity, the court held that “neither Congress nor the agency made findings that a broader regulation of commerce among the States would be undercut without the [eviction] order.”15 Comments in the administrative record that evictions have some “ultimate tie or correlation to national-employment or socio-economic statistics . . . is not enough of a nexus under the constitutional test.”16 The court found that arguments about mere connectedness are not enough to pass muster. And, though evidence of findings about public health and housing stability may be relevant in other contexts, there was not enough in this instance to constitute “findings explaining how a broader federal regulation of commerce among the States is undercut without the order.”17 Seeing no relevant Congressional findings in the record regarding the effect of evictions on commerce among the states, the court held that his factor cut against the Government.
iv. Attenuation Between Regulated Activity and Commerce Among the States
Finally, the court examined the extent of attenuation between interstate commerce and evictions, concluding that the relationship is “attenuated in several dimensions.”18
The first way is that the eviction of one person from a dwelling does not alone have a self-evident substantial effect on interstate commerce. Second, the eviction moratorium does not serve in the aid of another regulation or is otherwise part of a larger problem Congress is already regulating. For example, the order is unlike regulations that work together to proscribe discriminatory leasing practices that could be circumvented were it not for the prohibition against discriminatory eviction practices. Third, although a quarantine order has the effect of prohibiting an infected person from traveling interstate, the CDC eviction order is not a quarantine order; it applies to a person regardless of whether they are infected or even desire to cross state lines. Finally, the CDC’s order threatens to cross too deeply into areas left for the states to regulate—“remedies protecting property rights.”19 The court recounts that this type of regulation falls under the police powers and that the federal government has never come close to attempting to impose analogous moratoriums in similarly dire circumstances.
In concluding its analysis under the fourth factor, the court took special notice of, and cautioned against, the potentially dire implications that might flow from the Government’s view “of constitutional authority that would allow a federal eviction moratorium for any reason, including views on fairness.”20
Consequently, after the analysis of the Morrison factors, the court held that “the CDC order exceeds the power granted to the federal government to ‘regulate Commerce . . . among the several States’ and to ‘make all Laws which shall be necessary and proper for carrying into Execution’ that power.”21 Accordingly, the court held the order to be contrary to constitutional authority and granted summary judgment on that basis.
The district court’s decision in Terkel is now just one of four cases addressing the constitutionality of pandemic-related eviction moratoriums, and the only one declaring a moratorium unconstitutional as beyond Congress’ power to regulate commerce among the states. In Chambless Enterprises v. Redfield, Judge Terry Doughty, writing for the Western District of Louisiana, upheld the constitutionality of the moratorium under the Commerce Clause.23 That court viewed the “rental of real estate” as the regulated activity, rather than the initiation of eviction proceedings. The Supreme Court has held that the rental of real estate “unquestionably” has a substantial effect on interstate commerce, leading the court in Chambless to hold that the moratorium did not exceed Congress’s power to regulate commerce.24
Another case upholding the validity of the eviction moratorium is Brown v. Azar.25 In Brown, the plaintiffs, property owners and a trade association for property owners, sought to evict nonpaying tenants. And, just like in Terkel, the property owners challenged the validity of the CDC’s order prohibiting them from doing so. But unlike Terkel, the court analyzed the CDC’s order in the context of a preliminary injunction seeking to stop the CDC from enforcing the order against the plaintiffs.
The constitutional deficiency alleged in Brown was also different from the one in Terkel. In Brown, the court was asked to address whether the order interfered with citizens’ constitutional right to access courts. In addressing the issue, the court analyzed whether the plaintiffs adequately met their burden of establishing four key requirements for obtaining a preliminary injunction—whether the plaintiffs had a substantial likelihood of success, whether irreparable damage would result without the injunction, whether the threatened injury to the plaintiffs outweighed any damage the proposed injunction may cause the defendants, and whether the injunction, if issued, would be adverse to public interest. Ultimately, the court held “that Plaintiffs have not clearly established their burden of persuasion as to any of the four prerequisites,” and therefore, “Plaintiffs’ Motion for Preliminary Injunction is Denied.”26
Without a higher court’s resolution, there is a fundamental conflict among these four cases. With the Government's appeal of Terkel to the United States Court of Appeals for the Fifth Circuit on February 27, 2021, property owners and managers may get more clarity on what their rights are, if any, in the face of the CDC’s eviction moratorium.
2 Id. at 3. (citing the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, § 4024, 134 Stat. 281, 492-93 (2020)).
3 Id. at 4.
4 Id. at 6.
5 Id. at 7. (quoting United States v. Clark, 582 F.3d 607, 612 (5th Cir. 2009) (“A facial challenge to the constitutionality of a statute presents a pure question of law”)).
6 Id. at 1–2.
7 Id. at 2.
8 United States v. Lopez, 514 U.S. 549, 558–59 (1995).
9 United States v. Morrison, 529 U.S. 598, 609–13 (2000).
10 Terkel, No. 20-cv-564-JCB at 9.
11 Id. at 11.
12 Id. at 12 (quoting GDF Realty Invs., Ltd. v. Norton, 326 F.3d 622, 634 (5th Cir. 2003).
13 “The [G]overnment admits that the CDC order does not limit its application based on a connection to interstate commerce. Accordingly, the order has no jurisdictional element.” Id. at 13 (internal quotations omitted).
14 See Id. at 14.
18 Id at 15.
19 Id. at 17.
20 Id. at 19.
21 Id. at 20. (quoting U.S. Const. art. I, § 8.)
22 On March 10, 2021, the United States District Court for the Northern District of Ohio ruled against the CDC on the narrow, and separate, issue of “whether Congress has given the [CDC] the authority to make and enforce a nationwide moratorium on evictions.” The court held that the CDC’s eviction moratorium orders “exceed the agency’s statutory authority under [the Public Health Act’s Quarantine and Inspection provision].” Skyworks, Ltd. v. Centers for Disease Control and Prevention, No. 20-cv-02407 at 31 (N.D. Ohio Mar. 10, 2021). In so doing, the court did not address the constitutionality of the CDC’s eviction moratorium under the Commerce Clause.
23 Chambless Enterprises v. Redfield, No. 20-cv-01455 at 16 (E.D. La. Dec. 22, 2020).
24 Id. (citing Russell v. United States, 471 U.S. 858, 862 (1985)).
25 No. 20-cv-03702 (N.D. Ga. Oct. 29, 2020) (appealed docketed, Nov. 9, 2020).
26 Id. at 66.