Supreme Court Ruling on Chevron Deference and its Implication for Dealers

July 3, 2024

Recent news from the Supreme Court involves the elimination of the Chevron Doctrine, which has significant implications for how administrative rules are challenged. This change could affect the ongoing challenge to the FTC’s CARS rule by NADA and Texas auto dealers. Here’s an overview of what this decision means for the auto industry.

Chevron Deference Overview

 The Chevron Doctrine, established in the 1980s, required courts to defer to federal agencies’ interpretations of ambiguous laws, making it challenging to overturn agency rules. This doctrine empowered what’s known as the “administrative state.”

What’s Changed

The Supreme Court has now ruled that challenges to administrative rules should follow the same standard as other legal challenges. This means courts will no longer automatically side with agencies if their rules are contested. Instead, challengers only need to prove their case to have a rule overturned.

Impact on the Auto Industry

NADA and Texas auto dealers are currently challenging the FTC’s CARS rule in the Fifth Federal Circuit. With the elimination of Chevron Deference, the standard for challenging this rule is now more favorable to the challengers. Although outcomes cannot be guaranteed, increased scrutiny and media attention are expected.

Impact on Colorado Auto Dealers

To learn more about the Chevron deference and how it affects dealers, watch the video below where Matthew Groves explains the impact and what dealers need to do in detail: