SUMMARY STATEMENT TO THE SENATE COMMITTEES ON THE ENVIRONMENT AND HEALTH, MARCH 19, 2013 By: Christian S. Monsod Climate Change Congress of the Philippines Page | 1The Climate Change Congress of the Philippines thanks the SenateCommittee on the Environment for the invitation to contribute to thisHearing in aid of legislation.My part of the presentation are our recommendations or commentson amendatory or supplementary legislation on mining and foraddressing incidents such as the Padcal spillage as well as otherincidents related to mining.I might make it clear from the start that our organization is not for aban on mining, not only because that position finds no traction in theConstitution that allows it but also because we agree that mining canmake a significant contribution to our industrial development,although that has not happened to date. Provided, of course, it is“responsible” mining.For purposes of this Hearing, we define responsible mining as miningthat is fully compliant with existing laws and regulations. Thus, thequestions to be asked are: (1) Are existing laws and regulations adequate to the task of fully taking into account the economic, social and environmental factors in evaluating mining projects and its operations? (2) Is the country getting a full and fair share of the value of the extracted resources? (3) Are the institutional capabilities of government in place to implement mining laws and regulations?The simple answer to all three questions is NO. Hence, this Hearing isboth timely and urgent. For lack of time, I will only dwell here on fourselected policy issues although we are going to submit later a morecomprehensive Paper to the Committee for its consideration, namely:
(a) the legal efficacy or validity of EO 79 in relation particularly to the new no-go areas and new environmental standards; (b) the perpetual liability condition; (c) a proposal on the new fiscal regime; Page | 2 (d) pursuing the development of the institutional capability of government.With regard to the legal aspect, EO 79 and the six Directivesaccompanying were precisely promulgated by the administration toaddress the gaps in the present mining framework, particularly ongovernance and the protection of the environment and primeagricultural and fishing grounds. The administration should becommended for its willingness to tackle tough mining issues, whichprevious administrations avoided, and for the broad coverage of EO79. That the mining industry had reservations about some of itsprovisions and those of its IRR may be an indication that thegovernment is on the right track in reforming the country’s miningframework.Firstly, there is the issue of whether an EO can promulgate miningpolicies when State policy-making is essentially a legislative function.However, this consideration is irrelevant with respect to the new no-go areas and new mining environmental standards because, even ifthese were enacted by law and not by an EO, existing miningoperations might still raise the issue of their applicability under theprinciple of “sanctity of contracts”. Against this position is thesovereign right of the State to “full control and supervision” on thegrant of privileges to exploit natural resources. The decisions of ourSupreme Court are fortunately heavily in favor of upholding Statesovereignty as well as the valid exercise of its police power on thisissue. Unambiguous legislation by the Congress may, however, benecessary in this regard. Otherwise, we might end up with two sets ofmining operations – those that are compliant with newenvironmental standards and those that are not, when miningincidents or geohazards and climate change effects do notdiscriminate on the basis of when the mining operations started. Ofcourse, compensation for discontinued operations, where proper,should be provided in the law.Secondly, the perpetual liability condition. This is covered underthe Directive to MICC to explore the possibility of compulsory and
mandatory insurance coverage as well as perpetual liability for themaintenance and rehabilitation of post-mining sites. The policy gapin this regard was raised by us in the Mining Conference of March2012. Page | 3In the Directive dated July 6, 2012 to the MICC, the DENR-MGB, DOFand DILG were tasked to complete the study on the matter within 6months of the Directive. Even before that, in April 2012, the MGB hadalready suggested alternatives in the absence of a law or regulation.Legislation is urgent because of the historical legacy of maintenancecosts and, in some cases, devastation costs wrought bydecommissioned mining structures still being borne by the taxpayersand directly by the affected populations at the sites.In the case of Tampacan, where perpetual liability is one of theconditions for the ECC, SMI to its credit has reportedly accepted theneed “ to establish an appropriate funding mechanism to provide forthe perpetual closure costs of the mine including the operating costsof on-going water treatment” and “promised that the SiteManagement Plan that must be prepared and submitted before SMIcan satisfy its closure obligations under RA 7942.” This alternative toa law was proposed in the MGB Memorandum of April 2012, andunderlines the urgency of legislation to avoid case-to-case solutionsin the future.Thirdly, on fiscal matters, the EO rightly deferred to the Congressthe task of promulgating a new fiscal regime. Only Congress has thepower to tax. (That is why there is a case before the Supreme Courtscheduled for oral argument on April 16 on the constitutionality of theMining Law that delegates to the Executive the power to determine thegovernment “takes” on mining.)We agree with the proposal to do away with all tax incentive schemesfor mining in addition to a higher take on mining revenues that alsoconsiders both the boom and bust character of mining operations.Mining is not a footloose industry, it goes where the minerals arelocated, and is driven by other considerations than tax incentives. Inreturn, the requirements imposed on mining, such as royalties toindigenous peoples and community social development projectsshould be removed. They are not very large anyway and are taxdeductible. It’s the government that should be providing theseservices, but for lack of resources, partly because it is not getting a
fair and full share of the mining revenues. The government can thenearmark and directly make available a large percentage of the highertake for the economic and social development of the peoples in themining area. That way, the people will rightly appreciate theirgovernment more and will not feel indebted to the mining companies Page | 4and can, thus, express their true sentiments about mining. Hopefully,the social divisions that money in the wrong places often engendersin local communities will also be mitigated. This kind ofunadulterated feedback, both for or against mining, is important togovernment for policy making and regulatory purposes.Fourthly, on the institutional Capacity of Government toEvaluate and Regulate MiningThe government admits in the Philippine Development Plan 2011-2016, that it does not have the capability to carry out these tasks, towit: (a) Page 310 of the PDP: “…currently, there is no standard resource and environment valuation. There is a need to have a cost-benefit analysis and standard parameters that will consider all relevant values (including non-market values)”; (b) Moreover, in Pages 320-322, the PDP states: “…institutional issues need to be addressed to ensure sustainability of the country’s fragile environment and natural resources…” (c) “implementation is confused by overlapping and conflicting policies,” (d) “government capacity for resource management is wanting”; (e) “Enforcement of environmental laws and policies is inadequate.....Relevant environmental laws, specifically those regulating the utilization of natural resources, i.e. NIPAS, etc. are poorly implemented.”EO 79 and the Directives authorize (1) the adoption of analyticaltools to address the lack of standard resource and environmentalvaluation with such tools as WAVES, an integrated mapping system,
full costs and benefits analysis, a centralized data bank, the use ofprogrammatic environmental impact assessment, etc. and (2) stepsto be taken to improve the government’s institutional capacity toevaluate and regulate mining, including changes to increase thesharing and its immediate payment to the LGUs. The Directives Page | 5themselves give deadlines, mostly 6 months for completion of studiesor compliance with the mandates or for providing progress reports.The Senate might want to request from the agencies, in aid ofpossible legislation, an update on these tasks since more than 6months have elapsed since the promulgation of the EO and theDirectives.I will stop here to give others time to make their presentations andwill just submit to this Committee a Paper on all ourrecommendations.(Before closing, I want to convey to the Committee a suggestion forwhat it is worth by somebody in the mining industry that theCommittee, might want to inquire, in aid of legislation, into thepossibility of under-declaration of volumes and/or of exportproceeds/pricing about which the DENR-MGB has raised questions inthe past partly on the basis of a discrepancy between exports andreported production values of minerals of P277 billion from 2000-2009.In fact, a Directive has been issued by the OP to the DOF to conduct asimilar review. )Thank you.