Reprinted from Automotive News
The National Automobile Dealers Association is celebrating the 5th U.S. Circuit Court of Appeals overturning a package of Federal Trade Commission regulations on auto dealers — a decision that leaves the future of the rules uncertain amid a change in presidential administration and FTC leadership.
NADA CEO Mike Stanton, whose organization joined the Texas Automobile Dealers Association in a 2024 legal challenge to the FTC’s 2023 Combating Auto Retail Scams Rule, called the Jan. 27 decision “a victory for the rule of law and a great outcome for consumers.”
Jennifer Stevens, spokesperson for the Texas dealer association, called the outcome a win for consumers and Texas retailers.
“Texas has adopted and passed rules and regulations for which Texas franchised dealers are charged with complying,” she said in a statement Jan. 28. “The proposed rule would have cost the consumer in time and money and made the vehicle shopping experience a more time consuming and complex experience.”
The 2-1 opinion by Judge Patrick Higginbotham determined the CARS Rule to be invalid because the FTC did not issue an “advance notice of proposed rulemaking,” a group of agency regulations including specific requirements for dealership advertising and finance and insurance practices.
“This case travels on the statutory rails and frame of the FTC,” Higginbotham wrote for the majority.
The FTC’s own internal regulations demanded it take the procedural step of advance notice, which involves alerting the public what issue the FTC thinks might need regulations and soliciting comment on that notion, the court ruled. Instead, the FTC improperly started at the regular notice stage of the process, which involves placing an actual draft of regulation language before the public for comment, according to the decision.
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