In response to a once-in-a-century pandemic, the federal government has taken unprecedented actions to keep people in their jobs and homes. That does not mean every governmental policy has been wise, or even legal.
On September 1, the Centers for Disease Control and Prevention declared that, as part of an effort to prevent the spread of the coronavirus, it is illegal for any landlord in the United States to “evict any covered person from any residential property for the remainder of 2020 for failure to pay rent.”
In order to qualify for protection under the order, the residential tenant must earn less than $99,000 (or $198,000 if a couple married jointly) and attest that he is unable to pay despite efforts to obtain government assistance and that eviction would likely cause him to be homeless or move into “congregate housing.”
Trump-administration officials insist the moratorium won’t lead to a flood of renters skipping payments. “We want to be clear that those who benefit from this assistance are still obligated to pay any accrued rent or housing payments in accordance with their lease or contract,” a senior Trump-administration official told reporters during a background briefing last week. “Further, landlords are still permitted to pursue eviction against tenants committing criminal acts, threatening the health and safety of other residents, damaging property, or other health and safety considerations.”
But how exactly does the federal government have the power to issue an edict this sweeping?
The Trump administration claims its legal authority is derived from a law that grants the U.S. surgeon general, with approval of the Department of Health and Human Services secretary, “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.”
That “and other measures” is doing a lot of work. More work than the law may allow. As law professor Ilya Somin has written, “Esjudem generis, a standard canon of legal interpretation, requires that anything in a list of items in a law should be interpreted as being ‘of the same kind’ as other items on the same list. Here, everything on the list seems to be relatively limited in scope. Thus, the regulation only permits narrowly targeted, localized restrictions.”
If the statute allows the executive branch to declare a wholesale restructuring of contracts for potentially tens or hundreds of thousands of people, is there anything the administration couldn’t do to fight the spread of the virus?
If the administration can invoke this law in order to impose an eviction moratorium, could it use the same authority to impose a national mask-wearing mandate? When a reporter asked Trump administration officials that question during the press briefing, an aide replied: “This does not have to do with the call at hand, so we’re going to move on to the next question.”
Even if the eviction moratorium passed muster under an elastic reading of the statute, it still raises serious constitutional concerns. The Fifth Amendment states that private property shall not “be taken for public use, without just compensation.” The Trump administration’s order provides no new funding to compensate landlords affected by the order, but administration officials pointed to a variety of HUD programs — as well as the $150 billion fund to state and local governments set up in the COVID economic relief bill in March — that could help renters and landlords.
Still, landlords are worried that litigation won’t be resolved soon enough. “Housing experts warn that barring landlords from evicting nonpaying tenants without compensating them could have a massive destabilizing effect, felt first in the commercial housing market and then in credit markets, as both large and small-scale landlords default on mortgages,” CNBC reported last week.
“This new CDC order creates a real threat to the stability of the apartment market,” Paula Cino of the National Multifamily Housing Council tells National Review. “It does nothing to address a renter’s underlying financial distress.” Cino says that the “apartment industry at the professionally managed level is fairly stable” largely because of aid provided by the CARES Act in March, which provided stimulus checks to most Americans, an extra $600 a week in unemployment benefits, and additional funds for housing programs.
Stephen Oliner of the American Enterprise Institute tells National Review that a better policy than an unfunded housing moratorium — with much of the cost borne by landlords — “would have been cash assistance to low-income households, most of whom are renters, through the form of a second stimulus payment.”
How likely is it that the moratorium will lead to a crisis for landlords later in the year? It’s hard to say. Oliner notes there’s a “dearth of facts” about how many landlords are affected right now and how many are accepting partial payments. “Until there are more facts on the table, assuming the worst-case scenario is a big mistake.”
The potential for a real crisis could depend a lot on whether Congress passes another COVID economic-relief bill — prospects of which are dim — and the performance of the overall economy and efforts to contain the virus over the next several months. For now, Paula Cino says there are anecdotal reports of landlords dipping into their cash reserves. But that can only be sustained for so long. Eventually, something will have to give.