a
Reublic of the Phelps
HOUSE OF REPRESENTATIVES
Quexon City
G

EIGHTEENTH CONGRESS
Second Regular Session

HOUSE BILL oP 089

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

AN ACT
REQUIRING MANDATORY ENVIRONMENT INSURANCE COVERAGE TO
PROMOTE ECOLOGICAL PROTECTION

There have been a number of manmade disasters that have been attributed to
businesses ignoring the effects of their acts. Instances such as the 1996 Marcopper
Mining tragedy, which led to the biological death of the Boac and Makalupnit rivers,
and the destruction of hectares of farmlands that displaced families or the 2005 and
2007 massive fish kills caused by a cyanide spill from the operations of Lafayette
Philippines, Inc. These operations have provided an honest living for the people in
the area but have left only misfortune and mishap on the environment.

Operations to mitigate and rehabilitate the unforeseen damages to the ecosystem
and its constituents need funds. However, the lack of an institutionalized financial
assistance from the institutions and corporations that caused these damages greatly
stunts the rehabilitation of the elements affected.

There is a need for financial compensation from environmentally-critical businesses
in order to prevent these disasters from happening and to be able to readily provide
for rehabilitation in case repercussions are inevitable. The goal is to be able to
handle the damage that unanticipated and unforeseen natural disasters make and to
compensate for losses to the environment through the insurance coverage. The
Philippines is already considered as the most disaster-prone region in Southeast
Asia. The creation of business entails the use of natural resources such as land and
water. Given that, an ecosystem is greatly affected as its natural resources is used
and manipulated for the interest of the business. With the country already being a
disaster-prone region, the need becomes greater in making sure businesses provide
insurance for possible environmental damages that may occur in the course of them
doing their business.


With businesses being created for the intended purpose of profit and economic
development for the area, the environmental degradation that comes with this is an
unfortunate side effect. It is considered as a “negative externality", which are
unintended and indirect negative effects of economic activities on other producers
and consumers. This could prompt owners to forego the importance of the social
costs that they impose on the other constituents of the area.

The Philippines must hold accountable the institutions and corporations that pose
risks to the environment, the ecosystem and their constituents. This bill seeks to
institutionalize an insurance plan given to corporations of a certain nature, in
coordination with the DENR, to ensure that possible damages to the environment are
well covered for. Every time an environmentally-critical business moves forward with
a project, they must avail of a Mandatory Environmental Insurance Coverage (MEIC)
as insurance for unforeseen damage towards the environment. The said insurance
will be used to guarantee sufficient funding coverage for the needed restoration and
rehabilitation of a damaged ecosystem and all of its constituents caused by the said
businesses.

In view of the foregoing, approval of this bill is earnestly sought.

ly iat

LUIS RA’ “LRAY” ILLAFUERTE, JR.


f~ la
Reswblec of the Philipines
HOUSE OF REPRESENTATIVES
exon Cts
Queso ‘ty

EIGHTEENTH CONGRESS
Second Regular Session

8089
HOUSE BILL NO.

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.
—[ Kai

AN ACT
REQUIRING MANDATORY ENVIRONMENT INSURANCE COVERAGE TO
PROMOTE ECOLOGICAL PROTECTION

Be it enacted by the Senate and the House of Representatives of the
Republic of the Philippines in Congress assembled:

SECTION 1. Mandatory Environment Insurance Coverage. — All owners and
operators of environmentally-critical businesses shall be required to secure a
Mandatory Environmental Insurance Coverage (MEIC) to compensate for damages
to health and property, environmental rehabilitation, remediation and clean-up costs
and expenses as a result of environmental impairment arising from their operations.

For purposes of this Act, environmentally-critical businesses refer (but not limited) to:

a. Energy companies
b, Food processing companies
c. Large scale fishing companies
d. Oil companies

SECTION 2. Forms of Mandatory Environment Insurance Coverage. - The MEIC
shall be obtained only from bonding or insurance companies duly accredited by the
Department of Environment and Natural Resources (DENR) in the following forms:


a) Environmental Performance Bond — which shall be required for all ongoing
activities or projects and applications for Environmental Compliance
Certificate or Certificate of Non-coverage to guarantee adequate and
timely compliance with the environmental standards and the terms and
conditions set forth by the DENR during the pre-development,
development and construction phases of the project. The Environmental
Performance Bond shall answer for all environmental damages, penalties
and legal obligations which may arise from the failure of the project
proponent to comply with its undertakings during the aforementioned
phases; and

Environmental Pollution, Impairment and Clean-Up Liability Insurance —
which shall be required for all existing and future activities or projects to
cover operational phases, including those that have been issued an
Environmental Compliance Certificate or Certificate of Non-coverage. The
Environmental Pollution, Impairment and Clean-Up Liability Insurance
shall answer for all claims arising from damages to the environmental
rehabilitation, clean-up or remediation costs and expenses for
contamination or impairment of the environment.

b)

The DENR shall determines which businesses or industries shall be classified as
environmentally-critical and shall be required to obtain and Environmental
Performance Bond or an Environmental Pollution, Impairment and Clean-Up Liability
Insurance.

SECTION 3. Pre-requisite for the Issuance of the Environmental Compliance
Certificate or Certificate of Non-Coverage. — Owners and operators of
environmentally — critical businesses shall not be issued and Environmental
Compliance Certificate or Certificate of Non-coverage by the DENR without first
obtaining the MEIC required by this Act.

SECTION 4. Environmental Risk Inspector. — During the insurance coverage
period, an environmental risk inspector from the DENR shall conduct quarterly, bi-
annual visit to the business firm's project to evaluate and recommend measures to
prevent environmental disasters.

SECTION 5. Beneficiaries. - The beneficiaries of the MEIC include affected
communities, stakeholders and local government unites within the project's primary
impact areas. Beneficiaries also include government departments, bureaus, and
agencies which are tasked under the law to undertake the rehabilitations, clean-up
and monitoring of the projects affected by the pollution event for which no
responsible private or public entity is specified,


The beneficiaries shall be represented by the government, particularly the DENR,
which shall identify the affected areas and prescribe rehabilitation or remediation
measures.

SECTION 6. Payment of Claims. - The insurance company shall place all
payments of claims into special escrow accounts in government depository banks
which shall in turn disburse corresponding payments to beneficiaries only upon the
advice of the Environmental Management Bureau of the DENR (EMB-DENR) after
proper documentation.

The EMB-DENR may create a multi-sectoral body composed of representatives for
the business, labor, government, civil society, and other stakeholders to asuure that
claimes are verified and rightful parties are compensated and the environment is
properly rehabilitated, cleaned-up, remedied, stabilized, and protected.

The EMB-DENR shall not receive and handle payments of claims for environmental
damages, penalties, and charges, except for the claim component which properly
accrues to it as an insurance beneficiary.

The government agency tasked with the rehabilitation and beneficiary of the MEIC
as provided under Section 5 of this Act shall undertake the same with funds coming
from the insurance claim upon recommendation of the EMB-DENR or the multi-
sectoral body created by the EMB-DENR and approved by the Secretary of
Environment and Natural Resources.

SECTION 7. Penalties. - The failure of the owner and operator of environmentally-
critical businesses to take out MEIC in violation of this Act shall be punished with a
fine of five hundred thousand pesos (P500,000.00) but not more than two million
pesos (P2,000,000.00) or imprisonment of not less than six (6) years but not more
than twelve (12) years, or both, at the discretion of the court.

In the case of a partnership, association, corporation or any juridical entity, the fine
shall be imposed upon the president, treasurer or any other officer or person
responsible for the violation.

If the offender is a foreigner, the offender shall be deported immediately without
further proceeding in the Bureau of Immigration after the service of the sentence.

Government officials, employees, and agents who shall approve the issuance of
certificates to owners or operators of environmentally-critical businesses without the
necessary MEIC, in violation of this Act, shall suffer the penalty of suspension of not
less than thirty (30) days but not more than six (6) months after due notice and
hearing in the appropriate administrative proceedings.


SECTION 8. Implementing Rules and Regulations. — Within sixty (60) days from
the approval of this Act, the Secretary of Environment and Natural Resources shall,
in coordination with the Commissioner of the Insurance Commission, promulgate the
necessary rules and regulations for the effective implementation of this Act.

SECTION 9. Repealing Clause. — All laws, decrees, orders, rules and regulations,
and other issuances inconsistent with the provisions of this Act are repealed,

amended or modified accordingly.

SECTION 10. Effectivity. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,