Combating Auto Retail Scams Trade Regulation Rule
| Published date | 22 February 2024 |
| Record Number | 2024-03559 |
| Citation | 89 FR 13267 |
| Court | Federal Trade Commission |
| Section | Rules and Regulations |
Federal Register, Volume 89 Issue 36 (Thursday, February 22, 2024)
[Federal Register Volume 89, Number 36 (Thursday, February 22, 2024)]
[Rules and Regulations]
[Pages 13267-13268]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03559]
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FEDERAL TRADE COMMISSION
16 CFR Part 463
RIN 3084-AB72
Combating Auto Retail Scams Trade Regulation Rule
AGENCY: Federal Trade Commission.
ACTION: Final rule; delay of effective date.
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SUMMARY: On January 4, 2024, the Federal Trade Commission (``FTC'' or
``Commission'') published a Final Rule in the Federal Register, titled
``Combating Auto Retail Scams Trade Regulation Rule'' (``CARS Rule,''
``Rule,'' or ``Final Rule''), in order to curtail certain unfair or
deceptive acts or practices by motor vehicle dealers. The CARS Rule was
to become effective on July 30, 2024. Because of a pending legal
challenge, this document announces that the effective date of the Final
Rule is delayed until further notice.
DATES: The effective date of the final rule adding 16 CFR part 463,
published at 89 FR 590, January 4, 2024, is delayed indefinitely. The
FTC will publish a subsequent notification in the Federal Register
announcing the CARS Rule's effective date.
FOR FURTHER INFORMATION CONTACT: Daniel Dwyer or Sanya Shahrasbi,
Division of Financial Practices, Bureau of Consumer Protection, Federal
Trade Commission, 202-326-2957 (Dwyer), 202-326-2709 (Shahrasbi),
[email protected], [email protected].
SUPPLEMENTARY INFORMATION:
I. Background 1
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\1\ This section is substantively identical to the order that
the Commission issued on January 18, 2024. See Order Postponing
Effective Date of Final Rule Pending Judicial Review, In re
Combating Auto Retail Scams Trade Regulation Rule, No. P204800 (Jan.
18, 2024), https://www.ftc.gov/system/files/ftc_gov/pdf/P204800CARSExtensionOrder.pdf.
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On January 4, 2024, the Commission published a Final Rule in the
Federal Register, titled ``Combating Auto Retail Scams Trade Regulation
Rule,'' to curtail certain unfair or deceptive acts or practices by
motor vehicle dealers. See 89 FR 590 (Jan. 4, 2024).\2\ The CARS Rule
was to become effective on July 30, 2024.
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\2\ In accordance with its rulemaking authority under 12 U.S.C.
5519(d), the Commission promulgated the CARS Rule pursuant to 15
U.S.C. 45 and 57a(a)(1)(B) and 5 U.S.C. 553. 12 U.S.C. 5519(f)(1)
and (f)(2) contain the pertinent definitions of ``motor vehicle''
and ``motor vehicle dealer,'' and the Rule applies only to a
``covered'' subset. See 89 FR 590, 693-94 (Jan. 4, 2024) (to be
codified at 16 CFR 462.3(e) through (f)).
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On or about January 5, 2024, the National Automobile Dealers
Association and the Texas Automobile Dealers Association
(``Petitioners'') filed a Petition for Review (``PFR'') in the United
States Court of Appeals for the Fifth Circuit. Nat'l Auto. Dealers
Ass'n v. FTC, No. 24-60013 (5th Cir. filed Jan. 5, 2024). On January 8,
2024, the Petitioners filed a motion with the Fifth Circuit seeking a
stay of the Rule and expedited consideration of their PFR. Although
Petitioners did not seek a stay from the Commission in the first
instance as required by Rule 18(a)(1) of the Federal Rules of Appellate
Procedure, the Commission has nonetheless reviewed Petitioners' motion,
construing it as though it were a stay request submitted under
Commission Rule 4.2(d), 16 CFR 4.2(d).
The Administrative Procedure Act (``APA'') provides, in relevant
part, that ``[w]hen an agency finds that justice so requires, it may
postpone the effective date of action taken by it, pending judicial
review.'' See 5 U.S.C. 705. The Commission believes the Rule will
provide consumers with critical protections from auto retail scams,
Petitioners' challenges to the Rule lack merit, and undue delay in the
Rule's effective date will harm consumers and honest businesses.
Petitioners' arguments for a stay rest on mischaracterizations of what
the Rule requires of covered motor vehicle dealers, including
inaccurate claims that the Rule will require dealers to overhaul their
practices and will substantially increase compliance costs. In fact,
the Rule does not impose substantial costs, if any, on dealers that
presently comply with the law, and to the extent there are costs, those
are outweighed by the benefits to consumers, to law-abiding dealers,
and to fair competition--because honest dealers will no longer be at a
competitive disadvantage relative to dishonest dealers. Nonetheless,
Petitioners have created uncertainty through their assertions and
suggestions that legally compliant dealers must make unnecessary
changes to satisfy Petitioners' misunderstandings of the Rule.
Additionally, Petitioners are seeking expedited consideration of the
PFR, and, if that request is granted, the stay of the effective date
should not postpone implementation of the Rule by more than a few
months, if at all. Balancing the equities here, the Commission has
determined it is in the interests of justice to stay the effective date
of the Rule to allow for judicial review. Once the PFR's merits are
resolved, the Commission will publish a
[[Page 13268]]
document in the Federal Register establishing a new effective date.
II. Administrative Procedure Act
Notice and comment is not required when an agency delays the
effective date of a rule under section 705 of the APA because such a
stay is not substantive rulemaking; it merely maintains the status quo
to allow for judicial review.\3\
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\3\ See Bauer v. DeVos, 325 F. Supp.3d 74, 106-07 (D.D.C. 2018);
Sierra Club v. Jackson, 833 F. Supp. 2d 11, 28 (D.D.C. 2012).
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To the extent that a delay in the effective date may be deemed a
rule, such action is also exempt from notice and comment as a rule of
procedure under 5 U.S.C. 553(b)(A).\4\ Alternatively, the Commission
finds, for good cause, for the reasons stated above, that notice and
solicitation of public comment regarding the delay of the effective
date for the CARS Rule are impracticable, unnecessary, or contrary to
the public interest pursuant to 5 U.S.C. 553(b)(B). Balancing the
equities here, the Commission has determined that it is in the
interests of justice to stay the effective date of the Rule to allow
for judicial review.
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\4\ Because a notice of proposed rulemaking is not necessary for
this delay of effective date, the Commission is not required to
prepare a regulatory flexibility analysis under the Regulatory
Flexibility Act. See 5 U.S.C. 603(a), 604(a).
By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2024-03559 Filed 2-21-24; 8:45 am]
BILLING CODE 6750-01-P
