SCOTUS Evictions Decision Holds Lessons for Businesses (Bloomberg Law)

Donald F. McGahn II, Jones Day's Government Regulation Practice Leader, and Brett A. Shumate, a partner in the same practice, explain how the U.S. Supreme Court’s decision blocking the CDC’s nationwide eviction moratorium can help businesses and trade associations prepare for regulatory litigation in the Biden era.

The U.S. Supreme Court's recent decision blocking the Center for Disease Control and Prevention's nationwide eviction moratorium contains several important lessons for businesses and trade associations considering regulatory litigation against the Biden administration.

Businesses and trade associations should remember these lessons as the Biden administration continues to rely on executive authority to implement the president's policy agenda.

Public Health Laws Are Not a Blank Check

In Alabama Association of Realtors v. HHS, the CDC defended its eviction moratorium based on a provision of the Public Health Service Act authorizing the agency to issue any rules necessary to combat the spread of communicable diseases. In the government's view, the CDC could issue any rules necessary to stop the spread of any disease—including nationwide lockdowns, worship limits, school closures, etc.

The Supreme Court rejected that broad reading of this public health law, explaining that the CDC had stretched the statute far beyond its plain meaning.

Even as the COVID-19 pandemic continues, businesses and trade associations should insist that courts rigorously review the federal government's reliance on public health laws and not reflexively defer to an agency's claim of public health expertise.

The 'Major Questions' Doctrine Is Alive and Well

In reviewing the CDC's interpretation of its public health authority, the Supreme Court relied on the major questions doctrine. The Supreme Court has used that doctrine in recent cases to insist that Congress speak clearly when agencies assert power to make major political and economic decisions that impact a large portion of the economy or public.

That doctrine doomed the eviction moratorium in Alabama Association of Realtors because the CDC had made a major political decision that impacted a huge portion of the national economy, but Congress had never clearly authorized the CDC to issue such a moratorium. To uphold the agency's public authority, the court explained, "would give the CDC a breathtaking amount of authority."

Businesses and trade associations should demand that agencies deciding other major questions must be able to point to clear delegations of authority.

Process Matters

The CDC's eviction moratorium was doomed, in part, by a series of process fouls. The White House declared that the CDC lacked authority to extend the moratorium. The CDC then allowed the moratorium to lapse for three days before President Biden announced that the CDC would extend the moratorium after all—and for the purpose of causing delay.

The Supreme Court alluded to these procedural missteps, noting that the CDC had allowed the moratorium to expire, but "[t]hree days later, the CDC reimposed it" in a manner that was "indistinguishable" from the original order.

Businesses and trade associations should remember to highlight agency process failures when challenging agency decisions, and to use past statements to cast doubt on an agency's explanation for its decision—even when pursuing a challenge to the agency's substantive authority.

Preliminary Injunctive Relief Is Often Available

To obtain a preliminary injunction blocking a new federal policy, a plaintiff must demonstrate that it would suffer irreparable harm absent preliminary relief. The federal government has sometimes argued that the economic costs of new federal policies—from compliance costs and the like—do not impose irreparable harm on businesses.

The Supreme Court rejected that view in Alabama Association of Realtors. The court held that the CDC's eviction moratorium put businesses "at risk of irreparable harm by depriving them of rent payments with no guarantee of eventual recovery."

Business and trade associations can argue that monetary harms from unlawful agency actions—for which there is no "guarantee" of financial recovery in light of the federal government's sovereign immunity— constitute irreparable harm.

The Public Interest Favors Holding Agencies to Account

The CDC argued that courts should allow the eviction moratorium to continue because it prevents the spread of COVID-19, even though multiple courts had ruled that the policy exceeded the agency's authority. Indeed, the federal government will often argue that the public interest weighs in favor of allowing an unlawful policy to continue, notwithstanding doubts about its legality.

But in Alabama Association of Realtors, the Supreme Court rejected the CDC's argument that the public interest weighed in favor of allowing the unlawful moratorium to continue. Citing the Supreme Court's 1952 decision Youngstown Sheet & Tube Co. v. Sawyer, the court held that the public interest is served by ending unlawful federal policies—no matter how important the policy may be to public health or national security—because "our system does not permit agencies to act unlawfully even in pursuit of desirable ends."

Businesses and trade associations should insist that unlawful policies be stopped, regardless of how beneficial the policy may be to some constituency.

By learning these lessons from Alabama Association of Realtors, businesses and trade associations can increase their chances of success in regulatory litigation against the Biden administration.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Reproduced with permission. Published October 1, 2021. Copyright 2021 by The Bureau of National Affairs, Inc. (800-372-1033) 

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