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Notice-and-Comment Rulemaking in Comparative Perspective: Some Conceptual and Practical Implications

  • Graciela BASE (a1)

Abstract

Public participation in administrative rulemaking is typically embodied in notice-and-comment procedures essentially mandating the publication of a proposed rule and an opportunity for the public to submit comments thereon prior to its adoption. This article presents a comparative analysis of the notice-and-comment regimes under the Philippine Administrative Code (PAC) and the United States’ Administrative Procedure Act (APA). In stark contrast to the Philippine legal framework which renders compliance with the notice-and-comment procedure practically discretionary on the part of the agency, the APA prescribes the conduct of notice-and-comment as a general rule, and courts rigorously police agencies’ compliance with the procedure. This article argues that the mandatory (or discretionary) nature of the notice-and-comment mechanism impinges on the efficacy of procedural challenges to administrative rules, the standard of judicial review applied to agency statutory interpretation, and the statutory creation of public norms. The article hopes to inspire a re-evaluation of the Philippine framework while providing valuable lessons to other jurisdictions with similar legal architectures.

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LLM (Yale Law School). Professorial Lecturer, University of the Philippines College of Law (2017–2018). The author has practised in the fields of constitutional law, administrative and regulatory law, and international trade law. I am most grateful to Professor Susan Rose-Ackerman of Yale Law School and Professor El Cid Butuyan of Harvard Law School for their insightful comments on an earlier draft of this article. All errors remain the author's sole responsibility.

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References

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1. A.L.A. Schechter Poultry Corp v United States, 295 U.S. 495, 553 (1935) (Cardozo J, concurring).

2. Regulatory capture refers to ‘the result or process by which regulation, in law or application, is consistently or repeatedly directed away from the public interest and toward the interests of the regulated industry, by the intent and action of the industry itself’: Carpenter, Daniel & Moss, David A, ‘Introduction’, in Carpenter, Daniel & Moss, David A (eds), Preventing Regulatory Capture: Special Interest Influence and How to Limit It (Cambridge University Press 2014) 13.

3. Katzmann, Robert A, ‘The American Legislative Process as a Signal’ (1989) 9 Journal of Public Policy 287, 288, 292.

4. Bugaric, Bojan, ‘Openness and Transparency in Public Administration: Challenges for Public Law’ (2004) 22 Wisconsin International Law Journal 483, 502.

5. Rose-Ackerman, Susan, ‘Citizens and Technocrats: An Essay on Trust, Public Participation, and Government Legitimacy’, in Rose-Ackerman, Susan, Lindseth, Peter & Emerson, Blake (eds), Comparative Administrative Law (Edward Elgar Publishing 2017) 254.

6. Bugaric (n 4) 503.

8. Carpenter & Moss (n 2).

9. Executive Order No 292, s 1987.

10. 5 USC s 553.

11. ibid.

12. Donnelly, Catherine, ‘Participation and Expertise: Judicial Attitudes in Comparative Perspective’, in Rose-Ackerman, Susan, Lindseth, Peter & Emerson, Blake (eds), Comparative Administrative Law (Edward Elgar Publishing 2017) 371.

13. ibid 372.

14. Texaco, Inc v Federal Power Commission, 412 F 2d 740 (3d Cir 1969) 744.

15. Donnelly (n 12) 370.

16. Executive Order No 292, s 1987, Book VII, ch 2, s 9(1).

17. Republic Act 10667, s 50.

18. Executive Order No 292, s 1987, Book VII, ch 2, s 9(1).

19. Republic Act 10173, s 39.

20. Heated debates and rallies, both in favour of and against the bill, took place nationwide while the bill was pending in Congress. When the bill was finally passed into law, its constitutionality was challenged before the Supreme Court. See Imbong v Ochoa, GR No 204819, 8 April 2014, 732 Phil 1.

21. Republic Act 10354, s 26.

22. While the law received support for penalizing illegal acts done via the Internet which were not covered by the old laws, it generated opposition from certain sectors who feared that several of the law's provisions could potentially curtail freedom of expression and affect data security. The constitutionality of the law was challenged before the Supreme Court: Disini v Secretary of Justice, GR No 203335, 11 February 2014, 733 Phil 717.

23. Republic Act 10175, s 28.

24. Act No 2711.

25. ibid Book II, Title VI, ch 25, art I, s 551.

26. Peck, Cornelius J, ‘Administrative Law and the Public Law Environment of the Philippines’ (1965) 40 Washington Law Review 403, 419, 446.

27. Presidential Decree No 1587, s 1978.

28. ibid, Whereas Clauses.

29. See Executive Order No 168, s 1987.

30. Presidential Decree No 1587, s 1978, Book IV, ch 11, s 212.

31. ibid s 215(2).

32. Executive Order No 292, s 1987, Third Whereas Clause.

33. Executive Order No 292, s 1987, Book VII, ch 1, ss 1, 2(1).

34. ibid s 1.

35. ibid s 2(2).

36. ibid s 2(4).

37. ibid ch 2, s 3.

38. ibid s 4.

39. ibid ss 5, 6(1).

40. ibid s 6(1).

41. ibid s 6(2).

42. ibid s 9(1).

43. ibid s 9(2).

44. GR No 84818, 18 December 1989, 180 SCRA 218.

45. Quasi-judicial power refers to ‘the power of the administrative agency to determine questions of fact to which the legislative policy is to apply, in accordance with the standards laid down by the law itself. As it involves the exercise of discretion in determining the rights and liabilities of the parties, the proper exercise of quasi-judicial power requires the concurrence of two elements: one, jurisdiction which must be acquired by the administrative body and two, the observance of the requirements of due process, that is, the right to notice and hearing’: Alliance for the Family Foundation, Philippines, Inc v Garin, GR No 217872, 26 April 2017, 809 Phil 897 (emphasis added).

46. See Central Bank of the Philippines v Judge Cloribel, GR No L-26971, 11 April 1972, 150-A Phil 86.

47. Ang Tibay v Court of Industrial Relations, GR No L-46496, 27 February 1940, 69 Phil 635.

48. Perez v Philippine Telegraph and Telephone Company, GR No 152048, 7 April 2009, 602 Phil 522.

49. Ang Tibay (n 47).

50. Executive Order No 292, s 1987, Book VII, ch 2, s 9(2).

51. ibid s 9(3).

52. Philippine Communications Satellite Corporation (n 44) (Gutierrez J, concurring).

53. ibid.

54. ibid.

55. See Dagan v Philippine Racing Commission, GR No 175220, 12 February 2009, 598 Phil 406: ‘As a rule, the issuance of rules and regulations in the exercise of an administrative agency of its quasilegislative power does not require notice and hearing.’

56. Quezon City PTCA Federation, Inc v Department of Education, GR No 188720, 23 February 2016, 781 Phil 399.

57. ibid.

58. ibid.

59. Executive Order No 292, s 1987, Book VII, ch 2, s 9(1).

60. 5 USC s 553(b).

61. ibid s 553(b)(1)(2)(3).

62. ibid s 553(b)(3)(B).

63. ibid s 553(b)(3)(A).

64. ibid s 553(b)(3)(B).

65. Executive Order No 292, s 1987, Book VII, ch 2, s 9(1).

66. ibid ch 1, s 2(2).

67. Republic v Drugmaker's Laboratories, Inc, GR No 190837, 5 March 2014, 28 Phil 480.

68. 5 USC s 553(c).

69. Mashaw, Jerry, ‘Reasoned Administration: The European Union, the United States, and the Project of Democratic Governance’ (2007) 76 The George Washington Law Review 99, 101.

70. ibid.

71. Quezon City PTCA (n 56).

72. GR No 128399, 15 January 1998, 284 SCRA 150.

73. Presidential Decree No 442 of 1974.

74. Texaco (n 14).

75. In the more recent case of Texas v US, 809 F 3d 134 (5th Cir 2015), twenty-six states sued to prevent the implementation of the Deferred Action for Parents of Americans and Lawful Permanent Residents program (DAPA) of the Department of Homeland and Security. The DAPA would provide legal protection for illegal immigrants who were parents of citizens or lawful permanent residents. The states argued, among others, that the DAPA is a substantive rule that violated the procedural requirements of the APA as it did not undergo the requisite notice-and-comment rulemaking. On the other hand, the US Government contended that the DAPA is exempt from notice-and-comment as a policy statement. The Court of Appeals for the Fifth Circuit held that the states had established a substantial likelihood of success on the merits of their procedural claim, upon finding that the DAPA meets the test of an agency rule that modifies substantive rights and interests subject to notice-and-comment. This judgment was affirmed by the Supreme Court. See Texas v US, 136 S Ct 2271 (2016).

76. N.L.R.B v Wyman-Gordon Company, 394 US 759 (1969).

77. ibid.

78. Idaho Farm Bureau Federation v Babbitt, 58 F 3d 1392 (9th Cir 1995) 1404.

79. ibid.

80. While procedural defects in the conduct of the notice-and-comment procedure potentially provide a ground for judicial challenge against an administrative rule, the APA nevertheless requires courts to take ‘due account’ of harmless error. See Idaho (n 78) 1405: ‘Ordinarily when a regulation is not promulgated in compliance with the APA, the regulation is invalid … However, when equity demands, the regulation can be left in place while the agency follows the necessary procedures.’

81. Reeder v FCC, 865 F 2d 1298 (DC Cir 1989).

82. ibid 1305.

83. Lorelei Laird, ‘Political lawsuits bring the Administrative Procedure Act to the forefront’ (ABA Journal, 5 Mar 2018) <http://www.abajournal.com/news/article/political_lawsuits_bring_the_administrative_procedure_act_to_the_forefront> accessed 23 Mar 2020.

84. ibid.

85. Suzy Khimm, ‘Critics tap decades-old law to stall Trump bid to undo Obama regulations’ (NBC News, 5 Mar 2018) <https://www.nbcnews.com/politics/white-house/critics-tap-decades-old-law-stall-trump-bid-undo-obama-n852091> accessed 23 Mar 2019.

86. See Open Communities Alliance v Carson, 286 F Supp 3d 148 (DDC 2017).

87. See State v Bureau of Land Management, 286 F Supp 3d 1054 (ND Cal 2018).

88. Executive Order No 292, s 1987, Book VII, ch 4, s 25(7).

89. Ang Tibay (n 47).

90. See Ngei Multi-Purpose Cooperative Inc v Filipinas Palmoil Plantation Inc, GR No 184950, 11 October 2012, 697 Phil 433.

91. ‘The term “grave abuse of discretion” means such capricious or whimsical exercise of judgment which is equivalent to lack of jurisdiction. To justify judicial intervention, the abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to perform a duty enjoined by law or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility’: Unilever Philippines, Inc v Tan, GR No 179367, 29 January 2014, 725 Phil 486.

92. 1987 Constitution of the Republic of the Philippines (1987 Constitution), art VIII, s 1.

93. 1997 Philippine Rules of Civil Procedure, r 65, ss 1, 2.

94. GR No L-19337, 30 September 1969, 140 Phil 20.

95. ibid, citing Ahlers v Farmers Mut Ins Co, 264 NW 894.

96. ibid, citing 2 Am Jur 2d 66–67.

97. ibid, citing 2 Am Jur 2d 69–70.

98. ibid.

99. ibid, citing 2 Am Jur 2d 70, fn 11, para 2.

100. ibid, citing 2 Am Jur 2d 70, fn 11, para 3. See also Phil Sugar Central Agency v Collector of Customs, GR No L-27761, 6 December 1927, 51 Phil 131. This case, which was decided during the American occupation of the Philippine Islands, heavily cites American authorities. It states, for example: ‘In the case of Kelly vs. Multnomah County (18 Ore., 356, 359; 22 Pac., 1110), the Supreme Court of Oregon said: “In all cases where those persons whose duty it is to execute a law have uniformly given it a particularly construction, and that construction has been acquiesced in and acted upon for a long time, it is a contemporary exposition of the statute, which always commands the attention of the courts, and will be followed unless it clearly and manifestly appears to be wrong.”’

101. Asturias (n 94).

102. GR No 86738, 13 November 1991, 203 SCRA 504.

103. See also Energy Regulatory Board v Court of Appeals, GR No 113079, 20 April 2001, 409 Phil 36; Pest Management Association of the Philippines v Fertilizer and Pesticide Authority, GR No 156041, 21 February 2007, 545 Phil 258; GMA Network, Inc v National Telecommunications Commission, GR No 196112, 26 February 2014, 728 Phil 192; Eastern Telecommunications Philippines, Inc v International Communication Corp, GR No 135992, 31 January 2006, 516 Phil 518.

104. The case involves the constitutionality of the government's Disbursement Acceleration Program (DAP), a mechanism invented by the Department of Budget and Management to pool together unspent funds and use them to accelerate other government projects without the approval of Congress. Rumours that the DAP funds were used by the administration to bribe legislators to impeach and oust the then Supreme Court Chief Justice Renato Corona triggered several petitions against the program before the high court.

105. See Araullo v Aquino, GR No 209287, 1 July 2014, 737 Phil 457.

106. 323 US 134 (1944).

107. The aforementioned Philippine case of Asturias in which the judicial respect doctrine was introduced cites Skidmore in one of its footnotes. See Asturias (n 94).

108. Skidmore (n 106) 140.

109. ibid.

110. See Nat'l Muffler Dealers Ass'n, Inc v US, 440 US 472 (1979) 477: ‘In determining whether a particular regulation carries out the congressional mandate in a proper manner, we look to see whether the regulation harmonizes with the plain language of the statute, its origin, and its purpose. A regulation may have particular force if it is a substantially contemporaneous construction of the statute by those presumed to have been aware of congressional intent. If the regulation dates from a later period, the manner in which it evolved merits inquiry. Other relevant considerations are the length of time the regulation has been in effect, the reliance placed on it, the consistency of the Commissioner's interpretation, and the degree of scrutiny Congress has devoted to the regulation during subsequent re-enactments of the statute.’

111. See Asturias (n 94) citing 2 Am Jur 2d 66–67.

112. ‘Under the Supreme Court's administrative law jurisprudence, there are now four different strands of deference. The courts are required to employ one of these four standards depending on the type of interpretation the agency invokes. The four strands are: the arbitrary-and-capricious standard, applicable to so-called legislative regulations; the Chevron standard, applicable to certain other types of agency interpretations; the Skidmore standard, applicable where the agency interpretation is subject to neither the arbitrary-and-capricious standard nor the Chevron standard; and the Auer standard, applicable where the agency's interpretation, as distinguished from the statute, is ambiguous’: Blattmachr, Jonathan, Gans, Mitchell & Rios, Damien, The Circular 230 Deskbook (Practising Law Institute 2018), 1-1, 12.

113. 467 US 837 (1984).

114. ibid.

115. ibid.

116. Nat'l Cable & Telecomms Ass'n v Brand X Internet Servs, 545 US 967 (2005).

117. Blattmachr, Gans & Rios (n 112) 1–4, 1–5.

118. Chevron (n 113) 866.

119. Blattmachr, Gans & Rios (n 112) 1–6.

120. Chevron (n 113) 863–864.

121. Blattmachr, Gans & Rios (n 112) 1–6.

122. Nat'l Cable (n 116).

123. 517 US 735 (1996).

124. ibid 740.

125. ibid 740–741. In contrast, the Philippine Supreme Court explained that judicial respect for administrative construction is warranted because agencies frequently are the drafters of the law they interpret, and the legislature normally relies on the agencies for advice as to the practical working out of statutes: Asturias (n 94). See also in particular n 97.

126. 533 US 218 (2001).

127. ibid 226–227.

128. ibid 230. The notice-and-comment procedure ‘must be followed when an agency is exercising its legislative function in order that its rules have the force of law’: Texaco (n 14) 744.

129. ibid. See also Smiley (n 123) 741.

130. The Court nevertheless added that the want of a formal procedure does not necessarily preclude the application of Chevron. In some cases, the Court found reasons for Chevron deference even when no administrative formality was required and none was afforded, eg Nations Bank of NC, NA v Variable Annuity Life Ins Co, 513 US 251 (1995).

131. See eg Estrada v Escritor, AM No P-02-1651, 4 August 2003, 455 Phil 411, on freedom of religion: ‘Torcaso v. Watkins, an American Supreme Court decision, has persuasive weight’; Chavez v Gonzales, GR No 168338, 15 February 2008, 569 Phil 155, on freedom of expression: ‘As early as the 1920s, the trend as reflected in Philippine and American decisions was to recognize the broadest scope and assure the widest latitude for this constitutional guarantee.’

132. See Asturias (n 94) citing Ahlers v Farmers Mut Ins Co, 264 NW 894 and 2 Am Jur 2d 66–70.

133. Philippine Communications Satellite Corporation (n 44).

134. Kovacs, Kathryn E, ‘Superstatute Theory and Administrative Common Law’ (2015) 90 Indiana Law Journal 1207, 1232.

135. Eskridge, William Jr & Schwartz, Kevin, ‘Chevron and Agency Norm-Entrepreneurship’ (2006) 115 Yale Law Journal 2623, 2624.

136. Eskridge, William Jr & Ferejohn, John, ‘Super-Statutes’ (2001) 50 Duke Law Journal 1215, 1215.

137. ibid 1216.

138. ibid.

139. ibid.

140. ibid 1217.

141. ibid 1230.

142. ibid 1230–1231.

143. ibid 1247.

144. ibid 1249.

145. ibid 1252.

146. Chevron (n 113) 866.

147. Eskridge & Schwartz (n 135) 2632.

148. Eskridge & Ferejohn (n 136) 1266.

149. Eskridge & Schwartz (n 135) 2624.

150. Kovacs (n 134) 1207.

151. ibid 1224.

152. ibid 1227.

153. ibid 1234.

154. ibid 1207.

155. ibid 1210.

156. Eskridge & Ferejohn (n 136) 1230.

157. 1890 Sherman Anti-Trust Act.

158. Eskridge & Ferejohn (n 136) 1231.

159. ibid 1232.

160. ibid.

161. ibid 1234.

162. ibid 1235.

163. ibid 1236–1237.

164. Tristan Catindig, ‘The ASEAN Competition Law Project: The Philippines Report’ (31 Mar 2001) <https://www.jftc.go.jp/eacpf/02/philippines_r.pdf> accessed 23 Mar 2020.

165. ibid.

166. ibid.

167. ibid.

168. ibid.

169. Marquis, Mel, ‘Competition Law in the Philippines: economic, legal, and institutional context’ (2017) 6 Journal of Antitrust Enforcement 79, 98.

170. The 1973 and 1987 Constitutions similarly provide that the State shall regulate or prohibit monopolies when the public interest so requires and that no combinations in restraint of trade and unfair competition shall be allowed. See 1973 Constitution, art XIV, s 2, and 1987 Constitution, art XII, s 19.

171. See Tatad v Secretary of the Department of Energy, GR No 124360, 5 November 1997, 347 Phil 1, where the Supreme Court declared the Downstream Oil Industry Deregulation Act of 1996 unconstitutional for imposing substantial barriers to the entry of new players.

172. United Nations Conference on Trade and Development (UNCTAD), ‘Voluntary Peer Review of Competition Law and Policy: Philippines Full Report’ (2014), 5 <http://unctad.org/en/PublicationsLibrary/ditcclp2014d1_en.pdf> accessed 23 Mar 2020.

173. Marquis (n 169) 99.

174. UNCTAD (n 172) 6. The then President Fidel Ramos was reported to have repeatedly urged Congress to pass an antitrust law in line with his policy to liberalize the economy. See Rappler, ‘#AnimatED: Finally, an antitrust law’ (Rappler, 15 Jun 2015) <https://www.rappler.com/views/animated/96355-antitrust-law-philippines> accessed 23 Mar 2019.

175. Bills must undergo three readings before passing into law: 1987 Constitution, art VI, s 26.

176. See Catindig (n 164).

177. UNCTAD (n 172) 6.

178. Marquis (n 169) 99.

179. UNCTAD (n 172) 6.

180. ibid.

181. 1987 Constitution, art XII, s 19.

182. Janina Lim, ‘How the PCC is regulating a changing game’ Business World (26 Jul 2018) <https://www.bworldonline.com/how-the-pcc-is-regulating-a-changing-game/> accessed 23 Mar 2020.

183. Republic Act 10667, s 12.

184. ibid s 3.

185. ibid s 12.

186. Within the first year of its operation, the PCC found itself in a legal battle against the country's telecommunications duopoly. The controversy arose from a multi-billion-peso transaction whereby the duopoly sought to evade, through court injunction, the PCC's review of its joint acquisition of a potential third player by invoking a technicality in the PCC's memorandum circular which allegedly exempted the transaction from review. The Court of Appeals, disregarding the PCC's interpretation of its own rules, issued an injunction preventing the PCC from performing its statutory mandate to prohibit or impose remedies on a potentially anticompetitive transaction. See Chrisee Dela Paz, ‘PCC takes buyout battle with telcos to Supreme Court’ (Rappler, 19 Apr 2017) <https://www.rappler.com/business/167331-philippine-competition-commission-supreme-court-review-san-miguel-telco-buyout-pldt-globe> accessed 23 Mar 2020. This decision did not sit well with the public and was largely seen as a serious setback in the government's push for more competition in the telecommunications market. See Chrisee Dela Paz, ‘San Miguel's sale of telco business: Will consumers benefit?’ (Rappler, 31 May 2016) <https://www.rappler.com/business/industries/172-telecommunications-media/134809-impact-pldt-globe-acquisition-smc> accessed 23 Mar 2020.

187. Philippine Competition Commission, ‘PCC issues draft IRR for Competition Law; welcomes public comments’ (Press release, Philippine Competition Commission, 10 May 2016) <https://phcc.gov.ph/press-releases/pcc-issues-draft-irr-competition-law-welcomes-public-comments/> accessed 23 Mar 2020.

188. Brown, Erin, ‘Developing a Durable Right to Health Care’ (2013) 14 Minnesota Journal of Law, Science & Technology 439.

189. Donnelly (n 12) 371.

190. Eskridge & Schwartz (n 135) 2626.

191. Donnelly (n 12) 372–373.

192. Rose-Ackerman (n 5) 252.

193. Eskridge & Schwartz (n 135) 2623.

194. ibid 2624.

* LLM (Yale Law School). Professorial Lecturer, University of the Philippines College of Law (2017–2018). The author has practised in the fields of constitutional law, administrative and regulatory law, and international trade law. I am most grateful to Professor Susan Rose-Ackerman of Yale Law School and Professor El Cid Butuyan of Harvard Law School for their insightful comments on an earlier draft of this article. All errors remain the author's sole responsibility.

Notice-and-Comment Rulemaking in Comparative Perspective: Some Conceptual and Practical Implications

  • Graciela BASE (a1)

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