Sunday, February 28, 2021

Federal Judge's Invalidation of the Eviction Moratorium Threatens the Fair Housing Act and More

 by Michael C. Dorf

When I read the headline that a federal district judge had struck down the CDC eviction moratorium, I assumed that the ruling said the moratorium went beyond the authority Congress had delegated to the CDC. I was mistaken. According to the actual ruling of Judge J. Campbell Barker in Terkel v. CDC, even Congress itself lacks the power under the Commerce Clause to enact the moratorium that the CDC adopted by rule.

That decision is not just wrong but potentially dangerously so. As I explain below, its logic threatens federal civil rights legislation. I conclude this essay with a proposal for Congress to circumvent the immediate danger from the moratorium's invalidation. Unfortunately, I do not have a solution to the broader threat to congressional power. 

Before coming to the Commerce Clause issue, I note that the Texas landlords who challenged the moratorium could have but did not include in their complaint a claim that the statutory delegation of authority to the Surgeon General and the Secretary of HHS to take public health measures was not broad enough to include an eviction moratorium. That's at least a prima facie plausible claim--although there's strong evidence that even the last Congress and administration believed the CDC does have statutory authority for the moratorium. The second COVID relief package, which Congress enacted at the end of last year, expressly extended the CDC moratorium from its originally scheduled Dec. 31, 2020 expiration date to January 31. (The CDC itself re-extended the moratorium to March 31, 2021 after that.) Of course the views of Congress and the President as reflected in subsequent legislation cannot override contrary plain text, but to the extent that the scope of the statutory delegation is unclear, the December 2020 legislation should weigh substantially in favor of recognizing CDC authority for the moratorium.

None of that came before Judge Barker, however, because the plaintiffs contested only the constitutional authority of Congress (and thus of the agency). That was enough for Judge Barker. He concluded that an eviction ban--even for the purpose of preventing an increase in the homeless population and thus COVID, which has a huge negative impact on the national economy--is not a regulation of "economic activity" within the meaning of the Supreme Court's modern case law, and because dwellings are inherently stationary, the regulation is thus of intrastate, not interstate, commerce.

Can that be right? I admit that there is a certain logic to Judge Barker's opinion, but if taken seriously it would lead to a much more dramatic cutting back of Congressional power than anything thus far accomplished by the conservative Justices of the Rehnquist and Roberts Courts during the last three decades of the "federalism revolution." To see why, I'll start with a very condensed summary of the Supreme Court's interpretation of the Commerce Clause. 

In the early Republic, Chief Justice John Marshall construed the Commerce Clause broadly, allowing Congress wide latitude to interpolate and extrapolate among the enumerated powers (in McCulloch, the bank case) and avoiding a view that would restrict congressionally regulable commerce to the mere crossing of borders (in many cases but most clearly in Gibbons v. Ogden, involving ferry boats). To be sure, Marshall recognized that the Commerce power did not reach purely intrastate commerce, but that category seemed small and with industrialization and advances in transportation, it grew even smaller. In its libertarian phase, however, the Court sought to impose formal limits, most notoriously a little over a century ago in Hammer v. Dagenhart, which struck down a law banning the interstate shipment of goods made with child labor. The Hammer Court thought that manufacturing preceded but was not part of commerce--a proposition that was already dubious in the early 20th century and is downright preposterous today, given the role of extended interstate and international supply chains in production.

Accordingly, more or less simultaneously with the abandonment of robust enforcement of individual rights to contract, the Court abandoned its restrictive definition of Commerce in the late New Deal. Wickard v. Filburn, which upheld restrictions on the growing of wheat even if (as the Court somewhat unrealistically assumed in the particular case) it was consumed entirely by the farmer's family. By growing their own wheat, rather than purchasing it, the Court reasoned, the Filburns affected the interstate market. The Court later upheld civil rights legislation on the ground that racial and other forms of illicit discrimination in restaurants and lodging were a burden on commerce. Although the Court never formally said so, it was clear by the 1970s that Congress could legislate on almost any subject under the Commerce Clause.

The tide turned again somewhat under the Rehnquist and Roberts Courts, which have insisted that there is a line Congress may not cross, articulating a requirement in the Lopez and Morrison cases that more or less forbids Congress from regulating intrastate activity based on its impact on interstate commerce unless the interstate activity is "economic" in nature. The meaning of that term, however, has been somewhat unclear. The one case that ventures a definition--Raich v. Gonzales, which upheld the application of the federal marijuana possession prohibition even if legal under state law--quoted Webster's Dictionary for the proposition that "economics" is "the production, distribution, and consumption of commodities." That's way under-inclusive, as it completely omits services. It's also over-inclusive. Eating a raspberry can be consumption of a commodity but hardly seems like economic activity.

Yet while the Raich definition is problematic, it's not clear that a good definition is out there, nor is it even clear why the regulated intrastate activity must be economic at all, given the necessary and proper clause--under which the Court in the Comstock case upheld the federal civil confinement of felons who had served their sentences without any inquiry into whether civil confinement targets economic activity. (It does not. The status of being mentally ill and dangerous is not activity. The Comstock decision is nonetheless correct, because preventing harm to the community is necessary and proper to carrying out the criminal laws that lead to incarceration, and those laws carry out enumerated powers.)

The Roberts Court added an additional limit in the Obamacare case, in which five justices would have ruled that Congress lacks power under the Commerce Clause to impose a purchase mandate: one who has not yet made a purchase has not engaged in economic activity, these justices would have ruled. But that determination was not especially important in the particular case, because Chief Justice Roberts joined the Democratic appointees to form a majority to uphold the so-called individual mandate as an exercise of the Taxing power. And even if we treat the views expressed by Roberts and the four conservative dissenters as establishing a rule forbidding purchase mandates under the Commerce Clause, Congress has many other means of accomplishing its goals--via the Taxing power, as in the Obamacare case itself, through differently structured uses of the Commerce power itself, and through the Spending power (although the part of the Obamacare case that invalidated conditions on Medicaid expansion imposes some limits there).

If Judge Barker's opinion stands up on appeal, those same means of circumventing it will be available to Congress. As he himself notes, the CARES Act that Congress enacted in late March 2020 included a four-month-long eviction moratorium applicable only to federally funded housing. Congress could re-enact such a measure. (More about that below.)

But a moratorium applicable only to federally funded housing would still leave many Americans vulnerable to eviction. For that reason, when Congress has legislated with respect to housing in other contexts, it has relied on its Commerce Clause power, not the Spending Power. The Fair Housing Act (FHA) is an extremely instructive case in point. The original version applied only to federally funded housing, but beginning in 1969, it has applied to all real estate sales and rentals, except for small owner-occupied housing. If an eviction moratorium is not within the power of Congress under the Commerce Clause because property law is local, perhaps neither is the FHA.

Judge Barker's opinion purports to distinguish the FHA by invoking a 2000 Fifth Circuit case that relied on the existence of federal findings of the impact of housing discrimination on interstate commerce, but even though that case extensively cites Morrison's lip service to findings, it fails to deal with the fact that the Morrison Court overrode Congressional findings with respect to the impact of gender-motivated violence on interstate commerce. The distinction seems ad hoc.

More broadly, Judge Barker's methodology is worrisome. He notes that the moratorium does not target the economic elements of the rental transaction: tenants permitted to stay in their rental units pursuant to the moratorium continue to accrue a financial obligation. Judge Barker acknowledges that "the market for rental housing consists of economic relationships between landlords and tenants," but, again citing Fifth Circuit precedents, insists that the relevant test looks only to "the expressly regulated activity."

That approach threatens the FHA even if Judge Barker claims it does not. The FHA forbids various forms of discrimination in the sale or rental of housing, but it does not stop at regulating the sale or rental. It also applies to discrimination "in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith." Suppose a Texas landlord systematically evicts Latinx and African American tenants when they are two months behind in rent but gives white Anglo tenants a six-month grace period. That is undoubtedly a violation of the FHA. But under Judge Barker's reasoning, it is also beyond the power of Congress to forbid, because evictions are not economic activity.

Nor does Judge Barker's aggressive application of the "expressly regulated activity" approach logically stop at housing. Consider the landmark civil rights decisions upholding federal public accommodations laws. In the Jim Crow era, some restaurants completely barred African American patrons, while others seated white customers in the main area while relegating "Colored" customers to a pick-up window in the back. Title IV of the 1964 Civil Rights Act clearly forbids this practice, as the discriminatory and segregationist denial of "the full and equal enjoyment of the goods, services, facilities, privileges, advantages, and accommodations of any place of public accommodation." Yet where in or around the restaurant one sits or stands is not economic activity. The expressly regulated activity in the particular case is not the handing over of money for food.

Am I saying that Judge Barker or like-minded jurists necessarily would strike down the FHA or Title IV? No. Yet the fact that the district court opinion in Terkel even calls federal civil rights legislation into question shows that there is something amiss. It's also a problem that, as Ian Millhiser notes on Vox, the "expressly regulated activity" approach as applied to housing contradicts a 1985 SCOTUS decision affirming that "congressional power to regulate the class of activities that constitute the rental market for real estate includes the power to regulate individual activity within that class." Perhaps it can be argued that this view was displaced by the Rehnquist/Roberts Courts' federalism revolution, but no SCOTUS case expressly so holds, and lower courts are supposed to follow existing SCOTUS rules, not anticipate new ones.

The good news is that Judge Barker did not issue a nationwide injunction, nor any injunction at all. He issued only declaratory relief. But he somewhat ominously added that he would allow the plaintiffs to seek an injunction--of as-yet undetermined geographic scope--"should defendants threaten to depart from the declaratory judgment."

The CDC moratorium will expire in a month. In the meantime, the Biden administration should appeal Judge Barker's order, making clear that it poses a threat to landmark civil rights legislation. Simultaneously, Congress should take immediate action.

Senate Democrats are currently attempting to circumvent the Parliamentarian's ruling that a minimum-wage hike cannot be accomplished through the reconciliation procedure that bypasses the filibuster. "Plan B" would raise the minimum wage by taxing large companies that do not provide the higher wage. If a freestanding statutory eviction moratorium would likewise be out of order for reconciliation and thus subject to a potentially fatal filibuster, it might be possible to include in the new bill a reconciliation-friendly eviction moratorium like the one on federally funded housing in the CARES Act.

I would urge Congress to include such a provision in the current relief package, along with the following express caveats: (1) The provision should state that the new statutory moratorium remains in effect until the CDC declares that it is no longer needed on public health grounds; (2) It should also state that the moratorium in the statute supplements but does not supplant any broader moratorium (i.e., one that applies to non-federally-funded housing) adopted by the CDC; and (3) It and the whole Act should include a clear and sweeping severability clause.


Joe said...

It might not be directly on point but some of this discussion to me underlines the value of a broader understanding of congressional power generally.

Thus, there was an argument made that the 14th Amendment could be used to target federal civil rights law ends, not just the Commerce Clause. If this requires overruling the Civil Rights Cases, so be it. John Harlan was deemed right (to some degree at least) in other cases such as Plessy v. Ferguson. He was right there too.

Likewise, fair housing is in at least in some part a 13th Amendment issue.

A broader power is however less likely to get a fair hearing in the #ButGorsuch federal courts. (Hat trip there to Prof. Segall). Still, perhaps some new blood in the federal courts can help for the future. See, e.g., Goodwin Liu's article from years back on how Congress can/should support education as a means to protect national citizenship.

I appreciate the discussion.

CW said...

Barker's opinion actually addresses your concerns about the FHA directly in his discussion of Groome Resources Ltd. v. Parish of Jefferson, 234 F.3d 192 (5th Cir. 2000) and Woods-Drake v. Lundy, 667 F.2d 1198, 1201 (5th Cir. 1982).

In particular, he notes that a ban on discriminatory evictions could be upheld as essential to a broader economic regulation against discriminatory renting. "[A] law barring landlords from refusing to lease property for a prohibited reason could likewise bar landlords from evicting tenants for the same prohibited reason, lest the equal-leasing rule be readily undermined."

That is basically just applying the Necessary and Proper test as articulated by Scalia in Raich.

He also noted that there were reams of findings in Groome about the interstate effects of housing discrimination, which simply were not present in the CDC Order. That's prong three of Morrison.

I know folks like to scare-monger about civil rights in these commerce clause cases, but Barker addressed the issue here directly. I'd be curious what you think of those arguments.

Frank Willa said...

Just a query about the difference between this state activity and the prohibition in the CARES ACT pertaining to 'federally funded housing'; would the analysis change if these apartments were, or had been, a 'low income housing tax credit property' administered through the IRS?

Michael C. Dorf said...

CW: The key distinction he draws is based on congressional findings, which really don't count for very much post-Morrison. But I'll amend accordingly. Thanks.

Joe said...

"That is basically just applying the Necessary and Proper test as articulated by Scalia in Raich."

One justice's concurrence. I'm unsure how far that takes one since (1) the N&P test should have worked in the Affordable Care Act Cases (2) unclear where we are given the number of members of SCOTUS that would be more sympathetic to the dissent in Raich.

The argument is also that the NP test should work in the rental case too. It wasn't. So, shrugs. As to findings, even the opinion cites findings; but, it argues that they don't find the right thing. So "housing stability" [which others can argue has economic effects] is not enough. I'll be agnostic about that, but I'll bet that someone more knowledgeable of the record can cite to some findings here that can provide support of the other side.

I don't know how much "scare mongering" there is. Multiple of these cases very well challenged civil rights (especially taken the strongest positions).

egarber said...

Connecting some dots here, I'm reminded of Scalia's concurrence in Raich, where (I think) he essentially concludes that even NON economic behavior can be regulated as part of a larger regulatory scheme. Even if you carve out power to compel behavior (an insurance mandate), that seems plenty wide enough to encompass an eviction moratorium. Of course, I realize his concurrence wasn't necessarily controlling.

CW said...

Joe: Well Scalia articulated the test more clearly, but it is supported by the majority opinion in Raich as well.

Basically, the federal government can regulate non-economic intrastate activity if failure to do so would undercut federal regulation of interstate economic activity. (That test actually goes back to dicta in Lopez). In Raich, the issue was that intrastate marijuana is largely indistinguishable from interstate marijuana, so enforcement of a ban on interstate marijuana would be substantially undercut if law enforcement couldn't punish the possession of potentially intrastate marijuana as well.

In the CDC opinion, Barker applies this reasoning directly to discriminatory evictions (citing Woods-Drake). Even if eviction is not economic activity, leasing is. Thus, Barker clearly states that discriminatory evictions could be regulated, because any prohibition on discriminatory leasing would be circumvented if landlords could just evict folks for discriminatory reasons as soon as the lease was signed. So Barker actually addresses the issue that everyone is concerned about and no one deals with his actual argument.

If you look at the case, you will note that DOJ conceded that there was not a larger regulation of economic activity at issue that would be undercut. It put all its eggs in the economic v. non-economic basket.

Everyone forgets that Morrison is a 4 step test. Even if Barker had held that evictions are economic, the government would still have to deal with the fact that 2) it admitted that there was no jurisdictional element in the order, 3) its findings didn't address commerce at all, even after it supplemented the record, and 4) it admitted in open court that its theory didn't have a limiting principle that would preclude federal regulation of divorce, etc.

Maybe that was bad lawyering on DOJ's part. But it just isn't comparable to FHA or civil rights cases. And it doesn't make sense to treat those issues as if they are the same.

Asher Steinberg said...

I was curious what you thought the "certain logic" of Judge Barker's opinion you concede it has was.