Did the Supreme Court Greenlight Takings Claims after Striking the Eviction Moratorium?

I have not written much about the national eviction moratorium of the Centers for Disease Control and Prevention (“CDC”). My position has been that successful challenges to the CDC’s moratorium most likely would be on the basis that the moratorium exceeded the power Congress granted the CDC.  However, on August 26th, in a short opinion the Supreme Court of the United States may have cracked the door open to challenging the moratorium as an illegal taking of property rights.  Alabama Association of Realtors v. Department of Health and Human Services, 594 U.S. ____ (2021).

The U.S. District Court of the District of Columbia entered a judgment in favor of the Alabama Association of Realtors (“Association”) which declared the moratorium unlawful, but the District Court delayed enforcement of its order to give the CDC time to appeal.   Concluding that the Association was virtually certain to prevail on the merits of its argument, the Supreme Court vacated the District Court’s stay of its judgment, paving the way for the Association to enforce it.

The CDC relied on §361(a) of the Public Health Service Act for authority to promulgate and extend the eviction moratorium. See 58 Stat. 703, as amended, 42 U. S. C. §264(a).  In two sentences, the statute provides:

The Surgeon General, with the approval of the [Secre­tary of Health and Human Services], is authorized to make and enforce such regulations as in his judgment are necessary to prevent the introduction, transmis­sion, or spread of communicable diseases from foreign countries into the States or possessions, or from one State or possession into any other State or possession. For purposes of carrying out and enforcing such regu­lations, the Surgeon General may provide for such in­spection, fumigation, disinfection, sanitation, pest ex­termination, destruction of animals or articles found to be so infected or contaminated as to be sources of dan­gerous infection to human beings, and other measures, as in his judgment may be necessary.

(emphasis added).  See also 42 CFR §70.2 (2020) (delegating this authority to the CDC).

Originally passed in 1944, this provision was rarely invoke — and never before to justify an eviction moratorium. Regulations under this authority were gener­ally limited to quarantining infected individuals and prohibiting the import or sale of animals known to transmit disease.  See, e.g., 40 Fed. Reg. 22543 (1975) (banning small turtles known to be carriers of salmonella).  The Association sued to enjoin enforcement of the CDC’s moratorium.

The CDC contended that the first sentence of §361(a) gave it broad authority to take whatever measures it deemed necessary to control the spread of COVID–19, in­cluding issuing the moratorium.  According to the Court, the problem with the CDC’s reading the first sentence of §361(a) so broadly is that it made the second sentence demonstrably superfluous.

As the majority of the Supreme Court noted,

[T]he second sentence informs the grant of authority by illustrating the kinds of measures that could be necessary: inspection, fumigation, disinfection, sanitation, pest extermination, and destruc­tion of contaminated animals and articles. These measures directly relate to preventing the interstate spread of disease by identifying, isolating, and destroying the disease itself. The CDC’s moratorium, on the other hand, relates to inter­state infection far more indirectly: If evictions occur, some subset of tenants might move from one State to another, and some subset of that group might do so while infected with COVID–19. See 86 Fed. Reg. 43248–43249. This downstream connection between eviction and the interstate spread of disease is markedly different from the direct tar­geting of disease that characterizes the measures identified in the statute. Reading both sentences together, rather than the first in isolation, it is a stretch to maintain that §361(a) gives the CDC the authority to impose this eviction moratorium.

Indeed, the CDC’s reading of §361(a) would give it a breathtaking amount of authority. It is hard to see what measures this interpretation would place outside the CDC’s reach, and the CDC identified no limit in §361(a) beyond the requirement that the CDC deem a measure “necessary.” To be fair to the CDC, the Supreme Court’s decision never really addressed head-on the phrase, “or other measures,” in the second sentence of §361(a).

The Supreme Court felt that the equities were in the Association’s favor.  The moratorium put millions of landlords across the country at risk of irreparable harm by depriving them of rent payments with no guarantee of eventual recov­ery. Despite the CDC’s determination that landlords should bear a significant financial cost of the pandemic, many landlords have modest means.  This argument about who should bear the financial costs of the pandemic informs any takings analysis.  The CDC moratorium prohibited landlords from enforcing their property rights to evict tenants who breached their leases, made it difficult for them to recoup their financial losses, and forced them to file suit.

Takings clauses safeguard against private property rights being taken for a public use without compensation because it is fundamentally unfair to force a landowner “alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”  Armstrong v. United States, 364 US 40, 49 (1960).  Preventing landlords from evicting tenants who breach their leases intrudes on one of the most fundamental elements of property ownership – the right to exclude others from property.  The Supreme Court cited to Loretto v. Teleprompter Manhattan CATV Corp., 458 U. S. 419, 435 (1982), for this principle, perhaps signaling its willingness to consider straight-up takings claims arising out of the eviction moratorium.

One can see how the moratorium deprived landlords of the right to decide the rights appurtenant to a leasehold interest in property without compensation.  When a law or regulation deprives a landowner of the right to exclude others from property (one of the most important sticks in the proverbial bundle of sticks that comprise private property), the Supreme Court has not been reluctant to order compensation to be paid to the owner.

Jay Small practices in the areas of eminent domain, condemnation, property rights, inverse condemnation, and land use law. If you have any questions about how government regulations can affect your property, contact him at (407) 425-9044, by email at [email protected], or follow him on LinkedIn

This blog and these materials are not intended to provide legal advice.  They do not represent the legal opinions of the firm, nor should they be regarded as the legal positions of any client of the law firm of Mateer Harbert, P.A. They are provided for general informational purposes only.  These materials should not be used as a substitute for the advice of qualified legal counsel.

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