Republic of the Philippines oP
House Or Representatives \
Quezon City, Metro Manila

Sixteenth Congress
Second Regular Session.

HOUSE BILL No, 9485

Introduced by Honorable Rosenda Ann Ocampo

EXPLANATORY NOTE
This bill seeks to require owners and operators of environmentally-critical
businesses to secure a mandatory environmental insurance coverage for the
payment of damages and environmental rehabilitation as a result of environmental
impairment from its operation.

The economy of the country is steadily increasing due to the growth of
commercial and industrial businesses. | While these businesses provide
investments, incentives and employment, its large-scale operations may cause
environmental disasters and undue sufferings to the people. To ameliorate the
people and rehabilitate the environment from the environmental damages caused
by these businesses, it is essential to institute a Mandatory Environmental
Insurance Coverage.

The Mandatory Environmental Insurance Coverage is designed to relieve a
business firm of the financial burden to spend for environmental loss or damage as
a consequence of its project’s construction or operation. It will answer for all
claims for the payment of damages to health and property, environmental
rehabilitation, remediation and clean-up costs and expenses.

There have been many instances of man-made environmental damages like
the 1996 Marcopper Mining tragedy in Marinduque which led to the biological
death of the Boac and Makalupnit rivers, destroyed hectares of farmlands and
displaced families. The 2005 and 2007 massive fish kills in Rapu-Rapu, Albay
caused by cyanide spills from the mining operations of Lafayette, Philippines, Inc.


also caused severe damage to the community. However, despite these
environmental disasters, there is still no policy to ensure adequate compensation
for communities affected by man-made disasters.

Although the government recognizes the indispensable role of the private
sector, encourages private enterprise and provides incentives to needed
investments, it also protects and advances the right of the people to a balanced and
healthful ecology in accord with the rhythm and harmony of nature. This bill is
essential, therefore, to protect the business sector, the people and the environment.

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

Ge

Re ANN PO AMADO S. BAGATSING


Republic of the Philippines
House Or REPRESENTATIVES
Quezon City, Metro Manila

Sixteenth Congress
Second Regular Session

HOUSE BILL NO. 5485

Introduced by Honorable Rosenda Ann Ocampo

AN ACT
REQUIRING MANDATORY ENVIRONMENT INSURANCE COVERAGE
FOR ENVIRONMENTALLY-CRITICAL BUSINESSES

Be it enacted by the Senate and House of Representatives 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 to

commercial and industrial establishments and enterprises, among others, that could

pose serious risks to people and the environment.


SECTION 2. Forms of Mandatory Environment Insurance Coverage. —
The Mandatory Environment Insurance Coverage 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

b) 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 environment, bodily injury, and

property damage arising from a pollution event including environmental
2


rehabilitation, clean-up or remediation costs and expenses for contamination or
impairment of the environment.

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

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

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

SEC. 5. Beneficiaries. - The beneficiaries of the Mandatory Environment
Insurance Coverage include affected communities, stakeholders and local
government units within the projects’ primary impact areas. Beneficiaries also

include government departments, bureaus and agencies which are tasked under law


to undertake the rehabilitation, 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,

SEC. 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 from the business, labor, government, civil society and other
stakeholders to assure that claims are verified and rightful parties are compensated
and the environment is properly rehabilitated, cleaned-up, remediated, 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 rehabilitation and beneficiary of the

Mandatory Environmental Insurance Coverage as provided under Section 5 of this
4


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 EMB-
DENR and approved by the Secretary of Environment and Natural Resources.

SEC. 7. Penalties. — The failure of the owner and operator of
environmentally-critical businesses to take out Mandatory Environment Insurance
Coverage 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 proceedings in the Bureau of Immigration after the service of
sentence.

Government officials, employees and agents who shall approve the issuance
of certificates to owners or operators of environmentally-critical businesses
without the necessary Mandatory Environmental Insurance Coverage, 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.

SEC. 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.

SEC. 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.

SEC. 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,