On June 6, 2025, the U.S. Court of Appeals for the Federal Circuit declined to rehear its earlier decision in Darby Development Co. v. United States, denying both panel rehearing and rehearing en banc without issuing a written opinion. Judges Dyk and Cunningham dissented from the decision, joined by Judge Stark, while Judge Chen concurred in the denial but noted that the case raises significant constitutional questions that may be better resolved by the U.S. Supreme Court.

The original panel ruling, issued on August 7, 2024, reversed the Court of Federal Claims and held that the Centers for Disease Control and Prevention’s (CDC) COVID-era eviction moratorium plausibly constituted a physical taking under the Fifth Amendment. The court determined that although the CDC’s actions may have lacked full statutory authority—as previously found by the Supreme Court in Alabama Association of Realtors v. HHS—they were still considered “authorized” for purposes of takings law. Under longstanding Federal Circuit precedent, a taking may be compensable if carried out by a government agency acting within its general duties or pursuant to the natural consequences of congressional direction, even if the agency’s authority is later found to be legally deficient.

The government had argued that the CDC’s eviction ban could not result in liability because it was unauthorized. However, the majority of the Federal Circuit rejected this argument, emphasizing that “authorization” in takings law does not strictly require valid statutory authority, so long as the government acted in good faith and within its general remit. The dissenting judges strongly disagreed, warning that the decision could open the door to widespread compensation claims for agency actions later found unlawful. Judge Chen, while agreeing that rehearing should be denied, suggested the Supreme Court is the proper venue to resolve the broader constitutional implications.

With rehearing denied, the case will return to the Court of Federal Claims for further proceedings. The ruling carries significant implications for property owners seeking compensation for losses stemming from pandemic-era eviction restrictions and signals a potential shift in how courts interpret “authorization” in regulatory takings claims.