Combating Auto Retail Scams Trade Regulation Rule Publication: Federal Register Agency: Federal Trade Commission Byline: April J. Tabor Date: 22 February 2024 Subject: American Government

[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), 
ddwyer@ftc.gov, sshahrasbi@ftc.gov.

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