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Republic of the Philippines
DEPARTMENT OF ENERGY

(Kagawaran ng Enerhiya)

DEPARTMENT CIRCULAR NO. °W12S-10-002| oo

GUIDELINES ON PROGRESSIVE REHABILITATION AND COAL MINE
DECOMMISSIONING

WHEREAS, Section 2, Article XII of the 1987 Philippine Constitution states that all
lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils,
all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and
other natural resources are owned by the State and their exploration, development,
and utilization shall be under its full control and supervision;

WHEREAS, Presidential Decree (PD) No. 972, as amended, otherwise known as "The
Coal Development Act of 1976," declares it a policy of the State to immediately
accelerate the exploration, development, exploitation, production, and utilization of the
country's coal resources, and vested the Energy Development Board (now the
Department of Energy) with the authority to promulgate rules and regulations for its
implementation;

WHEREAS, Section 4 of PD No. 972 allows the Government to undertake exploration,
development, and production of coal resources, either directly or through operating
contracts;

WHEREAS, Section 9(d) of PD No. 972, provides, as one of the obligations of the
operator under a coal operating contract, to “operate the area on behalf of the
Government in accordance with good coal mining practices using modern methods
appropriate for the geological conditions of the area to enable maximum economic
production of coal, avoiding hazards to life, health and property, avoiding pollution of
air, land and waters, and pursuant to an efficient and economic program of operation’;

WHEREAS, Republic Act (RA) No. 7638, as amended, otherwise known as “The
Department of Energy (DOE) Act of 1992”, declares it a policy of the State to ensure
a continuous, adequate, and economic supply of energy with the end in view of
ultimately achieving self-reliance in the country’s energy requirements through the
integrated and intensive exploration, production, management, and development of
the country’s indigenous energy resources, and through the judicious conservation,
renewal and efficient utilization of energy to keep pace with the country’s growth and
economic development and taking into consideration the active participation of the
private sector in the various areas of energy resource development; and to rationalize,
integrate, and coordinate the various programs of the Government towards self-
sufficiency and enhanced productivity in power and energy without sacrificing
ecological concerns;

WHEREAS, Section 5(k) of RA No. 7638, as amended, mandates the DOE, to
formulate such rules and regulations as may be necessary to implement the objectives
of the Act;

Energy Center, Rizal Drive cor. 34th Street, Bonifacio Global City, Taguig City, Philippines 1632
Tel. No. (Trunkline) (632) 8479-2900
Website: http://www.doe.gov.ph; Email: infocenter@doe.gov.ph
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WHEREAS, Department Circular No. DC2018-12-0028, otherwise known as the “Coal
Mine Safety and Health Rules and Regulations,” provides that it is the commitment of
the DOE to take all reasonably practical steps to ensure the safety and health of all
workers involved in coal mining operations in the Philippines;

WHEREAS, coal mining in the Philippines supports the country’s energy security,
contributes significantly to the economy, and provides employment opportunities to
Filipinos;

WHEREAS, even with its recognized economic benefits, coal operations are
associated with hazards to life, health, and the ecology.

WHEREAS, there is a need to establish well-defined regulations that promote
responsible coal operations with equal emphasis on safety and ecological protection;

WHEREAS, responsible coal operations will not only mitigate the associated negative
impacts but are also aligned with the country’s international commitments and clean
energy aspirations;

NOW, THEREFORE, the foregoing premises considered, the DOE, recognizing the
role of coal in energy security and economic growth, hereby promulgates the following
guidelines for compliance of all concerned.

Section 1. Policy Guidelines. The following policy guidelines shall govern the
implementation of this Circular:

1. This Circular shall support and supplement policies and regulations to ensure
good coal mining practices that enable maximum economic production of coal
while avoiding hazards to life, health, and the ecology.

2. It shall ensure the responsible coal operations at all stages—from exploration,
development, and production to mine closure and decommissioning.

3. Coal Operating Contract (COC) Operators shall be responsible for the
availability of sufficient funds for the implementation of the guidelines set forth
in this Circular.

4. This Circular mandates the adoption of measures to ensure good coal mining
practices in all stages of operations. Non-compliance with any of its provisions
shall be a ground for the cancellation of COCs.

Section 2. Progressive Rehabilitation. To mitigate the expected impact of coal
operations, accelerate recovery, and ensure the continued safe use of affected areas,
rehabilitation activities shall be adopted and implemented concurrently with ongoing
coal operations.

In the exploration phase, rehabilitation shall mean the mitigation of the expected
impacts of coal exploration activities such as, but not limited to, trenching, test pitting,
aditting, tunnelling, shafting, and borehole drilling.
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In the development and production phase, rehabilitation shall mean the mitigation of
the expected impacts of both surface and underground coal mining activities such as,
but not limited to, abandoned mine pits, mine shafts, adits, and stockpile areas.

The Work Program and Budget (WPB) of all COC Operators shall include a
progressive rehabilitation plan and budget, which shall clearly and comprehensively
define the ecological protection and management strategies pertinent to the phase of
coal operations. The COC Operator shall allocate a portion of its budget for
progressive rehabilitation activities, which shall in no case be less than three percent
(3%) of the approved annual exploration cost or operating cost, whichever is
applicable.

Section 3. Additional Requirement for COCs in Development and Production
Phase. In addition to the requirements under Section 2 hereof, all COC Operators in
the development and production phase shall likewise allocate funds for Coal Mine
Contingency and Decommissioning Fund (CMCDF).

The CMCDF shall be composed of the following:

1. Coal Mine Contingency Fund (CMCF). This shall cover expenses related to
unexpected emergencies from the coal operations that cause ecological
damage and/or adverse effect to the communities.

The following amounts shall be allocated for the CMCF:

a. For surface mining — Five Million Pesos (PhP5,000,000.00)
b. For underground mining — One Million Pesos (PhP1,000,000.00)

In case of disbursement from the CMCF, the COC Operator shall replenish the
same in an amount equal to the disbursed amount, within sixty (60) days from
such disbursement.

2. Final Mine Decommissioning Fund (FMDF). This shall cover expenses for
the implementation of the DOE-approved Final Mine Decommissioning Plan
(FMDP) for the cessation of the mining operations upon expiration or
termination of the COC. The FMDP shall include a management plan for the
remediation of contaminated soil and water resources, land restoration, proper
dismantling/abandonment of facilities and equipment, and other necessary
activities. The FMDP shall take into account all possible mine closure scenarios
using risk-based methodologies and shall contain cost estimates for its
implementation, considering expected inflation, technological advances, and
specific circumstances faced by the coal mining operation upon consultation
with the host community. The cost estimates shall cover the full extent of work
necessary to achieve the objectives of mine closure.

Annual cash provisions under the FMDF shall be allocated by the COC
Operator based on the formula:

Annual Provision for FMDF = Total Cost of Implementing the Approved
FMDP x Percentage Required Per Annex A
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The FMDP shall form part of the requirements for the conversion of COCs under
the exploration phase to the development and production phase, and shall be
updated periodically, as may be necessary.

The CMCDF shall be deposited in an escrow account in a government financial
institution, under the joint name of the COC Operator and the DOE, within sixty (60)
days from approval of the FMDP.

Deposits made to the escrow account shall be recovered as part of Operating
Expenses. No withdrawal or disbursement from the escrow account shall be allowed
without the prior consent or approval of the DOE.

Section 4. Transitory Provision. All existing COC Operators shall submit the
required progressive rehabilitation plan and budget within sixty (60) days from the
effectivity of this Circular.

Additionally, for existing COCs under the development and production phase, the COC
Operator shall submit the required FMDP within six (6) months from the effectivity of
this Circular.

Section 5. Separability Clause. If for any reason, any section or provision of this
Circular is declared unconstitutional or invalid, such sections or provisions not affected
thereby shall remain in full force and effect.

Section 6. Repealing Clause. All other previous issuances, rules, and regulations
inconsistent with the provisions of this Circular are hereby repealed or amended
accordingly.

Section 7. Effectivity. This Circular shall take effect fifteen (15) days following its
publication in two (2) newspapers of general circulation or in the Official Gazette. A
copy of this Circular be furnished to the University of the Philippines Law Center-Office
of National Administrative Register (UPLC-ONAR).

Issued this OCT 0 8 2025 at DOE, Energy Center, Rizal Drive corner 34"
Street, Bonifacio Global City, Taguig City, Metro Manila.

S. GARIN
ecretary

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Annex A. Schedule on the deposition of the FMDF

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| 0.132] 0.124] 0.114] 0.105] 0.095] 0.086] 0.076) 0.067] 0.057/ 0.048] 0.038
; 83

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