NATIONAL APARTMENT ASSOCIATION CLAIMS NATIONWIDE FORECLOSURE FREEZE IS UNCONSTITUTIONAL

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"A recently filed lawsuit places renewed scrutiny on the constitutionality of the nationwide residential eviction freeze put in place by the Centers for Disease Control and Prevention (“CDC”) in response to the ongoing COVID-19 crisis. On September 18, an Amended Complaint was filed under Richard Lee Brown et al. v. Alex Azar et al. in the Northern District of Georgia seeking to invalidate the Order of the CDC that put a halt on evictions across the country.

The Order, published by the CDC in the Federal Register on September 4, 2020, recognized that “COVID-19 presents a historic threat to public health” and that the proper response to such a threat was a temporary eviction moratorium through December 31, “to prevent the further spread of COVID-19.” Although the Order does not fully relieve tenants of their obligation to pay rent, it affords tenants the option of submitting a formal declaration of financial hardship due to COVID-19 and a likelihood of homelessness if faced with eviction. In response, state and local authorities will generally refuse to proceed with the eviction process. Among other claims, the Plaintiffs in Brown contend that this Order violates the Administrative Procedure Act (“APA”) in that (1) the Order exceeds the statutory and regulatory authority of the agency, (2) the Order violates due process by preventing access to the Courts to litigate such matters, and (3) the Order is unconstitutional due to various issues such as a failure to validly preempt state law and an invalid exercise of legislative power.

Notably, the Order itself specifies that it “is not a rule within the meaning of the Administrative Procedure Act but rather an emergency action taken under the existing authority of 42 CFR 70.2.” However, the Order goes on to recognize that notwithstanding such a declaration, it may still be recognized as a rule under the APA. Thus, while Plaintiffs’ arguments certainly have merit, what remains unclear is whether the scope of the Order is sufficiently limited enough to survive such claims. Ultimately, this case could provide important guidance as to the limits of the powers of the executive branch during a time of national crisis. As such powers can affect landlords and tenants alike, Troutman Pepper will be keeping an eye on as the case moves forward."

-Ethan G. Ostroff & Eli Kaplan (Troutman Pepper)