Eviction Moratorium Deemed Unconstitutional by Federal Judge in Texas

Judge J. Campbell Barker of the Eastern District of Texas, sided with plaintiffs who challenged the CDC’s eviction moratorium on Constitutional grounds. We’ve embedded the opinion for Terkel v. Centers for Disease Control and Prevention at the end of this post. Even though some will be inclined to dismiss the ruling as politically-motivated (Barker was a Trump nominee), recall that it was the Trump Administration that first launched the eviction freeze. It initially ran through December 31, and covered tenants who gave their landlord a declaration attesting that the made less than $100,000 a year, had suffered a large hit to their income, were seeking assistance and would pay as much rent as they could. The Biden Administration planned to extend the moratorium to the end of March.

Bear in mind that the eviction halt dumped the cost of keeping coronavirus-whacked workers housed on landlords, rather than having the government provide income or rental subsidies.

Before we turn to the reasoning of the ruling, keep in mind that Judge Barker did not issue an injunction against the CDC’s moratorium, since the CDC apparently made noises at trial that they’d withdraw the moratorium if they lost. However, Barker told the plaintiffs they could come back and seek an injunction if the CDC didn’t play nice. There is no indication yet as to whether the Administration will appeal.

Constitutional law is often a slippery area of jurisprudence, but this short ruling is well argued. The Administration declared that its authority to impose the moratorium resided in the Commerce Clause: “To regulate commerce with foreign nations, and among the several states, and with the Indian tribes” and the Necessary and Proper Clause.

The obstacle for the defendants is that the Commerce Clause has been found to cover interstate commerce, and instrastate commerce to the extent that it also impacts interstate commerce. For instance, in 2005, in Gonzales v. Raich, the Supreme Court upheld Federal regulation of within-state marijuana production, since having some states permit marijuana farming and sales would clearly lead to sales in neighboring states.

The ruling on which Barker relied most heavily was United States v. Lopez, a 1995 Supreme Court decision challenging a prosecution under the Gun Free School Zones Act of 1990. The defense argued that the Federal government lacked the authority to regulate guns at local schools, while the Department of Justice argued that it fell under the Commerce Clause, since violent crime in schools would affect the economy generally. The Supreme Court sided against the government, using three tests, as cited here:

(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, . . . i.e., those activities that substantially affect interstate commerce.”

Dirt law has long been reserved to the states and looking at those tests, you can see why. Both sides agreed to argue whether the moratorium met the “substantially affects” standard. The court had to determine if enough information has been presented for it to conclude this test had been satisfied. There are then at least four subordinate considerations, per a 2000 Supreme Court decision, United States v. Morrison:

(1) the economic character of the intrastate activity; (2) whether the regulation contains a “jurisdictional element” that may “establish whether the enact-ment 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) a attenuation in the link between the regulated intra-state activity and commerce among the States

Judge Barker made a pretty conventional “real estate is local, buildings don’t move across state lines” contention. But he also pointed out that the “substantial effects” test is to be applied solely to the “regulated activity,” which here is eviction. The CDC moratorium made a point of not impairing the landlord’s economic claims: the tenants still owed any un/underpaid rent. Judge Barker found that the two cases that the government cited didn’t support its contention that eviction “affected commerce” to the required Constitutional standard. The Supreme Court in Lopez had already rejected “everything is connected, so everything affects interstate commerce” type arguments. The fact that coronavirus crosses state lines does not even begin to make an explicit connection to how stopping evictions would have a substantial effect on interstate commerce.

The government was only able to make general claims, of the sort that “reducing homelessness will keep people out of shelters, which can spread Covid” and “15% of the people who change residence go across state lines.” Judge Barker retorted that public health falls under state and local policing powers, so the arguments about shelters or other health hazards didn’t establish Federal authority. On top of that, the CDC order was not devised to limit disease spread to other states:

The order applies without regard to a tenant’s infection with, prior exposure to, or vaccination against COVID-19. It applies without regard to whether an evicted tenant would move to a new city, much less a new State.

As for the 15%, not only was the data not specific to evictions, but even if it were, even higher levels moved across state lines as the result of marriage and divorce, yet that condition didn’t result in Federal government being able to circumvent the states in family law matters.

It didn’t help that government had to admit that its claims about its Constitutional power would empower eviction moratoriums for any reason, including its beliefs about fairness.

Barker’s key point:

The federal government cannot say that it has ever before invoked its power over interstate commerce to impose a residential eviction moratorium. It 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….

The absence of an historical analog here calls to mind the Supreme Court’s instruction that “[p]erhaps the most telling indication of [a] severe constitutional problem . . . is the lack of historical precedent.” … Similarly, the Necessary and Proper Clause inquiry asks whether a challenged law is “a modest addition to a set of federal . . . statutes that have existed for many decades” or “reasonably extended [a] longstanding [] system.” …Here, no historical practice of analogous federal regulation has been cited.

Needless to say, this decision affects many struggling households. Some states like New York have established eviction freezes; so have cities like New York and Seattle. But plenty of others are at risk. From CNN:

An estimated 10 million renters were behind on their rent and at risk of eviction in the middle of January, according to a Census Bureau survey. And an estimated 16 million renters had little to no confidence they could pay their rent in February.

Mind you, I am not saying that this ruling won’t be overturned on appeal. The government may file a much more cogent legal argument. But don’t let anyone tell you this decision is cray cray. Real estate and police powers, and public health is deemed to be part of police powers, have been repeatedly found to fall outside the Federal purview. I don’t see that the government made a strong case as to why not. And with the stimulus bill already having a rough go in Congress, it’s not as if the Administration could now add meaningful subsidies for renters at this late date.

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  1. Adam1

    While I mostly agree with the judge here and I most definitely agree with Yves here that rental income support would have been the better original approach; if I was the government trying to argue under the commerce clause then I’d argue a more direct commerce argument. Follow the money and the goods. How much rental income is being paid to out of state landlords? In this day and age I’d suspect way more than in years past. How much of building maintenance require resources from out of state or are done via interstate businesses? Beyond local labor I would suspect it’s near impossible to complete any meaningful repair or renovation without purchasing materials that have either not crossed state lines or were not purchased from a business that is actually headquartered in another state or country. Therefore the government could claim (or attempt to claim) that the act of being a landlord is tied to interstate commerce and therefore covered under the commerce clause.

    1. Yves Smith Post author

      Private equity has demonstrated that rental property management does not scale. It is therefore not recommended by investment advisors:


      Individuals are still the main property owners. They own 41% of all rental units. The actual # is much higher due to more owners choosing to use LLCs for liability and privacy reasons.

      And in NYC, where you have developers and major investors that own rental buildings, they are local. The Rudins, Steve Ross (the Related Companies), the Lefraks, Fred Wilpon, Trump, the my old landlord Stanley Stahl, all locals.

      1. sam

        Off the main thread I realize, but I have to disagree with the linked BP article and the conclusion that ownership is (and should be) local. As the saying goes, real estate investment is all about location since appreciation is mostly driven by market factors vs management skill. Local investing is fine if the local market has growth potential but if not you’re much better off seeking out a more distant location with better fundamentals. Yes you will pay more for services but not many investors have the time, knowledge or inclination to self-manage and anyway adding a couple of points to your expense ratio is not going to make much difference to your return if market rents are rising. Of course you will not be able to tap into the same deal flow as a well-connected local investor but just about any deal can be a good one in a rapidly appreciating market.

  2. carl

    This moratorium applies only to housing purchased through the Federal government housing agencies. Housing purchased for cash or private lending doesn’t fall under it.

    1. Mark K

      Hmm. Are dealings with the Federal Government considered interstate commerce?

      Yves, when you turn out cogent summaries like this one, I think you can forego apologizing about the lack of original posts.

    2. Yves Smith Post author

      That is not correct. Do not mislead readers. The onus is on you to check the CDC order. You are confusing the moratorium on mortgages, which is still in place, with the moratorium on rentals. There would be zero basis for the Texas challenge on Federally guaranteed mortgages.

  3. Bob Hertz

    I wrote my own article calling for eviction relief last spring. And I still favor the concept. However, the implementation of relief has been problematic even where money was made available. There are quite a few instances of unspent federal relief money, even after months of a program supposedly being in place.

    The main problem on the ground seems to be verifying eligibility for relief, An applicant has to submit a detailed history of how the pandemic has hurt them. They have to provide proofs of past income, and get verifcation from former employers (who have in many cases gone out of business.)

    Then the landlord has to agree to the process. Some landlords would rather refuse federal aid, and find a new tenant who is fully employed. They feel that anyone who needs federal aid is a problem tenant anyways.

    This might be a case where “just give ’em cash” is better than targeted welfare.

  4. Alex Morfesis

    First the old parliamentarian won’t let us trick and now the gosh darn it wouldn’t you know it, some local federal judge somewhere with a non binding even in his own appellate district ruling has just forced us to help you and children to the buffet by the dumpster…cause ya know…the ADA and EPA and clean air and water stuff…that water going down a stream or river in your home town…that must be interstated commerce too…gosh darn it…

    1. Fraibert

      Due to the “liberal” fondness for litigation over legislation, it’s now quite normal for a federal district judge to issue an injunction that applies nationwide rather than to just federal conduct within the relevant judicial district. There are serious questions of whether this is legal and/or appropriate under our common law system but it is incorrect to imply that one federal district judge’s order cannot apply throughout the country. In fact, one of the Biden administration’s immigration policy changes was hit with a preliminary injunction with nationwide scope.

      1. Fraibert

        To be clear, the particular case here has no related injunction (as noted in the original post) but it’s quite possible the court, or another federal district court reaching similar conclusions, will issue a nationwide injunction.

        The result of any such injunction is the federal government would need to prevail on appeal in the relevant federal court of appeals (or in the Supreme Court if that fails) or otherwise the enjoined behavior would be contrary to law in all parts of the country.

  5. Dr. G.

    If even only 2 million people were evicted over the next 6 months, what would happen? Whose responsibility would it be, if anyone’s? Would we put them in “eviction camps” next to the “illegal immigrants”? Would it be okay with Americans because the Supreme Court said it was legal to kick put them on the streets?

    Who would pay to occupy all of those empty rentals? Oh, I forgot, in a capitalistic society, it’s better the rentals be empty and collect no $, than to have squatters in them paying no $. In this system, no money is better than no money.

    1. GeorgeNYC

      Maybe the homeless can mobilize on Facebook? I mean we no longer really have any local media that might cover “camps” appearing locally. To the extent that something is not covered by the “national” news (which is just talking heads anymore), most people seem to rely on what their friends on Facebook tell them. So the homeless should just log onto Facebook with their iPhones and complain to their friends. Right? Eventually death or disease will get them. That’s the beauty of Capitalism. No one really is responsible for anything because Mr. Market is our God. If I were to rant on here about taking all capitalists and throwing them in re-education camps I could be reported to the authorities. I could even be charged with murder if they were ultimately killed in those camps (even if I really did not think that might happen). If people are evicted because they have no jobs and end up in camps where they die from disease or famine. Even though I know with 100% certainty that all of our collective inaction will result in their death, there are zero consequences for any of us. No one really “caused” that. It was just the “market”. Maybe if they believed in God they would have gone to a church that would have helped them with charity. So they had “choices” right? Inaction is a decision just like any other decision. “I think, therefore I am” is actually a big loophole as it implies that “I did not think, therefore I am not”.

      1. responseTwo

        ‘No one really “caused” that. It was just the “market”’ – This is how psychopaths justify massive income inequality and lack of health care as normal. If a Dad commits suicide after his job gets offshored, it was a “business decision” to offshore the job and it is just how the market works.

    2. Anthony Noel

      If the powers that be aren’t careful what they’ll get is an instant army with nothing to lose and absolute proof that they live in a failed state with a completely unresponsive government that does nothing for them regardless of who they vote into power.

      From there who knows what happens, but as Mark Blyth once put it “The Hamptons are not a defensible position.”

  6. I have lived in your future

    Long overdue.
    The proper course of action would have been financial support for the tenants who lost income rather than voiding valid lease agreements between private parties.
    It’s well known that once a tenant is in arrears, very seldom the landlords can collect.
    Terrible policy by the government.

  7. Roquentin

    I don’t know exactly how or when, but the mortgage forbearances and eviction moratoriums ending are going to be one hell of an acrimonious row. It’ll probably be what defines the later half of 2021, puts massive downward pressure on real estate heading in to 2022. I’m no lawyer, wouldn’t claim to understand the implications of this verdict, but this was never going to last. Maybe we’re seeing the canary in the coal mine now.

    1. Jeremy Grimm

      The next stages of this debacle may prove interesting. Who will fill the vacancies left when the tenants who cannot pay their arrears have been evicted? How will the landlords renew their income streams and how many may be foreclosed upon? How many home owners may be foreclosed upon? Who will buy the properties when they go on the market? What will become of the homeless? How many small and medium size businesses have shut their doors and who will pick up their customers? What will become of State and Local Government? Add in a few more events like the Texas freeze and utilities collapse and we could be living in very interesting times.

  8. TMR

    It also violates that most important of unspoken Constitutional principles, that the interests of property-holders take precedence over those of non-holders.

  9. QuicksilverMessenger

    This is probably going to appear naive- I really don’t know anything about Constitutional law, or case law, but I quote:

    “We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.”

    Do, or have any cases, ever been argued or decided on the words of the preamble? Is this or could this be a part of law? Or is it just considered some gibberish at the beginning to get the whole thing going, and they didn’t really mean what it says?

    Yes, sure it’s broad and full of big words like ‘justice’ and ‘liberty’ but doesn’t the Federal Government, by the words of this document, have the obligation to ‘promote the General Welfare’? If keeping millions of people in their homes during a pandemic is not promoting the general welfare, then the phrase is meaningless.

    1. Fraibert

      The preamble has no operative effect. The federal government was supposed to be a national government of limited scope necessary to secure the joint interests of the original states and thereby promote the general welfare. The states were supposed to be the primary political entities through which most legislative programs would be furthered.

      1. Fraibert

        I should further observe that attempting to read the Constitution as your post suggests destroys much of the document’s purpose. Why bother enumerating the federal powers at all if anything that “promote[s] the general welfare” is fair game (unless it violates other provisions such as those contained in the Bill of Rights). In my opinion, people (mostly on the political “left”) who want a maximalist reading of federal power along such lines really need to be pushing for a constitutional convention.

        State powers are in many (often underlooked) respects much broader (the legal term of art is the “police power”) than federal powers. States can do all sorts of public health measures that the federal government may not be able to do. For example, states potentially have more latitude for eviction restrictions (though these would be limited by whatever remains of the Contracts Clause–aka not much–and by the Takings Clause of the Fifth Amendment–which still has serious teeth).

        1. QuicksilverMessenger

          But certainly doesn’t only appear in the Preamble but again, in the enumerated powers, Article 1, Section 8:

          “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;”

          There must be some history to this clause, case law, interpretation etc, on “providing for the general welfare’. And certainly I’m sure Madison and Hamilton had some ideas about this, though probably very different ones. But wondering more about it’s historical applications.

          1. Fraibert

            As far as I know, there is no legally operative treatment of the notion of “providing for the general welfare.” The Preamble itself, as I have said, isn’t treated as defining any particular power. And in the taxation case, the issue probably never arises because the courts would assume (absent further evidence) that any attempt at taxation is in good faith and therefore for the purpose of furthering the common defense or general welfare, with, given how Constitutional interpretation has developed, any proof of bad faith more likely to focus on issues such as discriminatory treatment than on failure to promote the public interest.

            I can give you a starting point if you want to probe the issue further. Justice Joseph Story’s classic _Commentaries on the Constitution of the United States_, the early (1833) and extremely influential treatise on the Constitution, had the following to say on the Preamble:

            § 462. And, here, we must guard ourselves against an error, which is too often allowed to creep into the discussions upon this subject. The preamble never can be resorted to, to enlarge the powers confided to the general government, or any of its departments. It cannot confer any power per se; it can never amount, by implication, to an enlargement of any power expressly given. It can never be the legitimate source of any implied power, when otherwise withdrawn from the constitution. Its true office is to expound the nature, and extent, and application of the powers actually conferred by the constitution, and not substantively to create them. For example, the preamble declares one object to be, ” to provide for the common defence.” No one can doubt, that this does not enlarge the powers of congress to pass any measures, which they may deem useful for the common defence.(1) But suppose the terms of a given power admit of two constructions, the one more restrictive, the other more liberal, and each of them is consistent with the words, but is, and ought to be, governed by the intent of the power; if one would promote, and the other defeat the common defence, ought not the former, upon the soundest principles of interpretation to be adopted? Are we at liberty, upon any principles of reason, or common sense, to adopt a restrictive meaning, which will defeat an avowed object of the constitution, when another equally natural and more appropriate to the object is before us? Would not this be to destroy an instrument by a measure of its words, which that instrument itself repudiates?

            (1) Yet, strangely enough, this objection was urged very vehemently against the adoption of the constitution; 1 Elliot’s debates, 293, 300.

            (Direct link: http://resources.utulsa.edu/law/classes/rice/Constitutional/Storey/story_hist_const_preamble.html)

            1. JBirs4049

              Remember that part of the reason why the War of Independence started came from Parliament insistence that they enforce a right that they could not enforce and to so in ways that themselves would cause anger. The colonies never disputed that they needed to pay for their defense. They just said that individual duties and taxes were unacceptable especially with any representation in Parliament. The British government could have just ask the individual colonies to pay using the individual legislative bodies agreements as had been done in the past century. The British government could have accepted new members of parliament, which would have chopped up the colonies’ arguments, but enough additional members to adequately represent at three million would threaten the system of rotten boroughs and having them around? The British could have called off the whole thing with some face saving nonsense.

              Or do the last option of using the military to enforce the new taxes and the various punishments over the various protests while not only ignoring the whole rights arguments, but also the shortage of currency, the too expensive tariffs and duties imposed on the colonies’ own trade. The charges that were imposed at the request of local British home island businesses like molasses producers. Not to mention that the only way to pay for their needed imports, as there were no factories, was in using the rum. (Because the British government did not want the colonies to make anything for themselves.) The rum that could only be profitably made use the cheaper, better quality French molasses from their colonies in the Caribbean

              This after over a century of being ignored economically. While much of the individual opposition to the new taxes was your basic “we don’t wanna pay” so of it was that the economy of the colonies was going to get hit hard. Hard while all the taxes (were apparently although not really) going to the national government just for that government’s use and the British businesses like those makers of inferior and more expensive molasses would be fine. Not to mention all those needed goods would be more expensive, perhaps too expensive to buy.

              From the little I know about Constitutional law especially as it deals with the Preamble, your explanation is correct. However, much of the Bill of Rights has been sliced and diced into something that doesn’t mean what it says, but means instead whatever benefits the elites and their human tools, and often justified using interesting reasoning; just in reading it one can make a good argument for it having been greatly ignored.

              Forcing two million people to leave their homes is likely to turn the “temporary” encampments into permanent shantytowns. Imagine how the local governments are going to treat them. Even in California the removals usually means the destruction of much of what the occupants have. They usually go right back or maybe down the street to form another shabbier encampment.

              The more successful arguments today seem to be in property rights, which are very important, but always seems to favor those who have a lot more property than most people. The inherent right to not starve, or to be homeless, or be in a civil war, which could be inferred from the preamble as would just about ever major religion. Somehow, that’s not enough as if millions of homeless, hungry Americans including entire families is not against the general welfare; it’s still the wet season in California and will be later in much of the country.

              The right you cannot enforce (successfully?) is one you do not have. I get why the fools in the Texas government are libertarians. But really, the entire Bill of Rights was a reaction to the abuses of the British government.

              I realize that my comment is turning into a mess. So I will end on a question. Just what in Hades does our collective leadership think is going to happen late Spring or early Summer arrives this year??

  10. Bob Hertz

    When most unemployed persons were getting an extra $600 a week, (plus regular jobless benefits), that was probably enough to limit evictions. A group called Eviction Lab tracks actual evictions, and the last time I saw their website they counted about 350,000 evictions through the fall.

    We do need a strategy for the coming months. One idea would allow the tenant to bring in their rent bill, current and past-due. and if they had no job then the government would just pay the bill. Might cost the government $100 billion but I do not see an alternative right now.

    1. JBird4049

      Like that’ll happen. The Job Creators ™️ think that we’re all moochers wanting their precious money.

      Seriously, there is a deep, almost instinctual, belief in the idea of the deserving and undeserving poor. The former should get charity and the latter best just find work or starve. The Victorians seemed to be almost deranged with it those ideas and it was a favorite target of Charles Dickens’ venom. It does echo with the means testing fetish of the Democratic Party and in the worst libertarian instincts of the Republicans. But then Social Darwinism and perhaps the original version of Libertarianism originate as best as I can find with the British.

      The American and British elites have always been close. This has allowed evil ideas to spread like an open sewer between the countries such as Eugenics from England to the United States. I would not be surprised if some people didn’t steal the then ideology and repackage it for modern times. I should research it even though I really don’t like the ideology, but it is important. Although I don’t want to.

      Anyways, the British government is guilty of worsening a number of famines in the 19th century. The Irish Potato Famine and several in India by such tactics as using the army to guard warehouses of grain for businessmen to ship it overseas where they could get a higher price. This while people were dying of starvation in front of the warehouses. Prior to the 1800s the policy was usually to distribute grain to drive the prices down. It was a deliberate change of policy not that they actually said that, but it was a clear switch. They also provided work that paid so little that they starved or in poorhouses that provided barely enough food to survive.

      I think that a fair number of politicians and influential people think of these as good ideas. A way for the hand of providence to “get rid of the surplus population.” Some of the British leadership were really monstrous in their beliefs and actions.

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