Authored By: Jan Maric Malaylay
United Arab Emirates
Introduction
One can argue that the rapid development of AI will always negatively impact the environment; others can argue that it will not always be the case. AI can be developed but still be regulated to reduce its impact on the environment. Furthermore, the economic benefits that AI development brings are something that should not be ignored. Powerful countries like the US recognise this and went ahead to propose a partnership with different countries to form a supply chain dedicated to materials for developing AI.[1] Signed on 12th of December 2025, the partnership, named Pax Silica, proposed investing in AI to foster economic prosperity among the partner countries that signed it. Becoming a signatory in 17th of April 2026, the Philippines announced plans with the US to use 4,000 acres of land in New Clark City to build an AI industrial zone project as part of Pax Silica.[2] While the plans are not yet in a stage of formal negotiations, pre-negotiation discussions have brought on dissenting opinions; some raised concerns about sovereignty, foreign ownership, and impact on the environment and community. These concerns are justified. However, despite the justification, it should be realised that the Philippine legal framework is robust enough that it can still maintain state sovereignty and environmental regulatory power in an economic zone like the New Clark City even if it is under a global economic partnership like Pax Silica.
This article, rather than arguing further about the downsides of the Pax Silica initiative, will instead argue that while the fears and concerns against the New Clark City AI industrial hub are valid, the Philippine legal framework will ensure that the project can be an advantage to the economy while balancing sustainable development, environmental and community protections. This article will pinpoint each main concern: sovereignty and regulatory control, environmental regulations, and community protection and environmental governance; all the while discussing how each one is legally protected and any recommendations, if needed.
Sovereignty and Regulatory Control
Jurisdiction
The size of the hub, being 4,000 acres, makes it possible to be an extraterritory, having its own legal and regulatory framework separate from the country’s laws. However, when there were concerns about the framework regarding jurisdiction according to the Philippine Constitution, Ceferino Rodolfo, the Undersecretary of the Department of Trade and Industry (DTI), stated that the hub’s development would first have to satisfy state requirements.[3] Additionally, when asked about giving diplomatic immunity to Americans who will be based at the site, the request was denied.[4] These events support the notion that the state ensures that the hub will still be fully under Philippine jurisdiction, preserving national law. This may quell fears that foreign investors may have special advantages once the project is built.
Land Ownership
There were concerns about land ownership, specifically for foreign investors who plan to have their own businesses in New Clark City. Initially, only Filipino citizens or corporations that are at least 60% Filipino-owned may be allowed to enjoy private land ownership.[5] However, due to a recent revision of laws related to foreign investors, they have more freedom in New Clark City and may not have the same restrictions as found in the Constitution. Specifically, while they can not buy the lands outright, they are legally allowed to lease the lands for a single term up to 99 years,[6] which is less limited than the allotted term before the revision, which was a term of 50 years with the ability to renew only once for up to 25 years.[7] For the economy, this revision may encourage foreign investors to invest in the land and develop it, which helps develop the economy. However, the lease license makes it plausible to suggest that the foreign investors can use the land unfairly by not developing it and selling the lease to another buyer instead. To ensure that the land will only be used and developed according to plan, the lease can only be given according to the purpose that the investor got it for, like building AI infrastructure or other manufacturing purposes.[8]
Environmental Regulations
Permits and Compliance
Before development can start in New Clark City, the project would need to get permits and pass regulations. One such permit needed is the Environmental Compliance Certificate (ECC). An ECC is required when a project has high potential to significantly impact the quality of the environment; without it, the project will not be able to proceed.[9] New Clark City has its own approved ECC, but individual developments will need their own ECC due to the separate purposes and processes each project may have. Not only that, but each project under the city may face scrutiny for concerns related to sustainability, as once built, they demand a lot of power and water to run. Due to this, while it is likely that these individual projects may get an ECC due to the city having its own permit, they would have to face more regulation due to the possible significant and negative impact they can cause to the environment.
Water Rights
One of the main concerns regarding the development of AI is the water footprint, or the damage it can cause to the water supply around the development zone. Using AI requires processes that are high-performance, often resulting in too much heat for the computer to handle.[10] To combat this, data centres use water to cool the computers.[11] The issue with this is that the cooling specifically only uses freshwater, which is already stressed and at risk for further scarcity. Additionally, the issue of water usage does not start with an already complete AI system. Rather, it already starts the moment that the AI is planned to be manufactured. While not a data centre specifically, the AI manufacturing hub planned for New Clark City will require between 65 and 90 million litres of water per day.[12] Not only does the hub need to consume a high amount of water per day, but the manufacturing process of AI hardware materials also produces wastewater containing heavy minerals like nickel and copper, minerals for which the Philippines has a large reserve, which poses a risk through pollution to the already dwindling water supply.
The guarantee to ensure that the water resources will stay clean and accessible for the community will rely on the state’s actions. Under Philippine law, the state governs the country’s water resources, and rights to use the water for industrial purposes, like manufacturing, will only be given via permit.[13] The permit ensures that the project will not leave local communities and ecosystems deprived of an essential supply of water. Currently, the proposal has provided solutions to the water-related issues of the hub, such as identifying other sources of water for use and using rainwater as an alternative to groundwater. However, most of them either lack enough study to back up the proposal, or it was not yet valid reasons for the permit under the law.[14] Due to this, the proposal is still subject to scrutiny and has yet to receive the permit to use the state-owned water resources. Furthermore, the permit will only be given once further review has established that the hub could sustainably meet its own water demand without undermining the water supply of the local community, and that the water will only be used specifically for the purpose of the hub, which is purely for industrialisation.
Community Protection & Environmental Governance
Indigenous Rights
Building a hub as large as it was described in the proposal would ultimately affect the community that already exists in the area, especially for the Indigenous Peoples (IPs). Indigenous communities serve a critical role in protecting the local ecosystems, with most of their lifestyle practices and culture relying on the environment, often with significant connection to the land.[15] Additionally, their practices are often sustainable, protecting the ecosystems they live on and conserving the biodiversity within them. However, their rights to the land they conserve are often limited, making it difficult to protect the community’s ownership of the land, especially when larger projects are considered, such as the New Clark City AI hub. To ensure that such projects can proceed without significantly affecting the Indigenous communities, the IPs can be consulted by following the guidelines in the ‘free, prior, and informed consent’ (FPIC). The FPIC is a safeguard to the right of self-determination over lands and resources; it focuses on obtaining consent from IPs by consulting them regarding any activity to be conducted on their land and giving them the ability to negotiate their conditions for the project.[16] In short, developers must acquire FPIC from the IPs affected by their project.
Before, Philippine IPs used to have no strict deadlines in holding assemblies for the consultation.[17] However, the National Commission on Indigenous Peoples (NCIP), a government agency responsible for protecting the rights of IPs in the Philippines, have revised the FPIC guidelines by requiring the Indigenous communities to hold an assembly 10 days after notification of a new project, with 30 days to decide compared to the previous 2-month allocation for previous consultations.[18] Representatives of the IPs argue that these revisions allow commercial projects to be approved faster and may be a result of the legal challenges and delays of projects that involved Indigenous land.[19] Considering that this was done just a month ahead of the New Clark City plans, it is arguable that these revisions may have been planned to ease the approval process of projects under the Pax Silica agreement, even at the expense of the IPs’ rights and land ownership. However, there is still another permit that these projects have to acquire. After getting an ECC, which New Clark City has already obtained, the project will need to get a Certification Precondition (CP). A CP is a certificate attesting that IPs have been fully consulted through FPIC and that they have permitted a project to be built on their land. While this can act as a safeguard for the IPs, it does not erase the fact that these communities have less time to be consulted and send a consensus due to the revision in the FPIC guidelines. A recommendation for this would be to either adjust the revision to balance the priority of economic development and protection of Indigenous land or remove it entirely.
Monitoring & Accountability
Scrutiny should not stop once the project in New Clark City is done; the hub should still be regulated even after approval of environmental permits. Previously mentioned, the project will have a high water demand and requires a lot of land to build. Not only that, but possible pollution will only be obvious once the project has been operated. To ensure that the hub and other future projects meet the standards even after they have finished building, constant environmental monitoring is required. Monitoring these projects once they operate can help identify violations of the standards and immediately rectify them through penalties. One such penalty is the suspension or cancellation of the project’s ECC.[20] If a project has incurred such a penalty, through ways like not regularly accomplishing its self-monitoring and reporting obligations, the project developer will be issued a Cease and Desist Order (CDO) to prevent further damage to the environment caused by the project.[21] This can act as a final safeguard, so that even if the project manages to pass pre-operating inspection despite having foreseen a potential negative impact on the environment, the operation will still be penalised in the end.
Conclusion
Understandably, the people who have fears and concerns about the potential impact that the Pax Silica project has on the Philippines are reasonable in saying that the project should be ceased immediately. On the other hand, the benefits it has on the economy should not be overlooked. The Philippine state can take advantage of this project not only for its own benefit, but also for the people. While the environmental impacts are noteworthy, the environmental regulations governing the project help ensure that the project is not a detriment to the environment and communities present in the area. Ultimately, while the Philippine legal framework is robust enough to regulate the project on its own, it is for the government to decide how well the New Clark City hub will be, and no matter what it is, the decision will end up as an example for future regulations in relation to jurisprudence under AI partnerships, and balancing the environment and economic development through regulations.
Bibliography
Primary Sources:
Constitution
Constitution of the Republic of the Philippines 1987
Legislation (Philippines)
Presidential Decree No 1586 (EIS System Law) 1978
Presidential Decree No 1067 (Philippines) (‘Water Code’) 1976
Republic Act No 12252 (Amended Investors’ Lease Act) 2025
Republic Act No 7652 (Investors’ Lease Act) 1993
Republic Act No 8371 (Indigenous Peoples’ Rights Act) 1997
Quasi-Legislative Materials (Philippines)
Department of Environment and Natural Resources (DENR) Administrative Order No 2003-30 (Implementing Rules and Regulations (IRR) for the Philippine Environmental Impact Statement (EIS) System) 2003
Secondary Sources:
Websites:
Kenny R, Lunj A & Kis A, ‘AI’s thirst for water’ (UK Government Sustainable ICT, 17 September 2025) <https://sustainableict.blog.gov.uk/2025/09/17/ais-thirst-for-water/> accessed 20 August 2026
‘Pax Silica’ (U.S. Department of State, n.d.) <https://www.state.gov/pax-silica> accessed 19 August 2026
Senthilkumar S, ‘Recognition of Indigenous Rights is Environmental Protection’ (University of Texas, 21 April 2025) <https://sites.utexas.edu/texasenvironmentallaw/recognition-of-indigenous-rights-is-environmental-protection/> accessed 21 August 2026
Taha A & Olufemi A, ‘Data centres ‘straining water resources’ as AI swells’ (SciDev.Net, 15 November 2023) <https://www.scidev.net/global/scidev-net-investigates/data-centres-straining-water-resources-as-ai-swells/> accessed 20 August 2026
What is Free, Prior and Informed Consent (FPIC)?’ (IHRB, 13 December 2022) <https://www.ihrb.org/resources/what-is-free-prior-and-informed-consent-fpic> accessed 21 August 2026
News:
Bacelonia W, ‘BOI: Key terms for proposed Clark AI hub remain unsettled’ Philippine News Agency (Manila, 14 August 2026) <https://www.pna.gov.ph/articles/1281882> accessed 21 August 2026
Chi C, ‘AI manufacturing hub at Clark would need up to 90 million liters of water daily’ Philstar (Manila, 14 August 2026) <https://www.philstar.com/headlines/2026/08/14/2549255/ai-manufacturing-hub-clark-would-need-90-million-liters-water-daily> accessed 20 August 2026
Editorial, ‘Eroding indigenous peoples’ rights’ Inquirer.net (10 August 2026) <https://opinion.inquirer.net/193675/eroding-indigenous-peoples-rights> accessed 21 August 2026
Rocamora JAL, ‘PH joins US-led Pax Silica; plan for industrial hub in Luzon unveiled’ Philippine News agency (Manila, 17 April 2026) <https://www.pna.govhigh-performance processes.ph/articles/1273139> accessed 19 August 2026
Venzon CH, ‘US, Philippines Moving ‘Very Quickly’ on 4,000-Acre AI Hub Plan’ Bloomberg (18 May 2026) <https://www.bloomberg.com/news/articles/2026-05-18/us-philippines-moving-very-quickly-on-4-000-acre-ai-hub-plan> accessed 21 August 2026
[1] ‘Pax Silica’ (U.S. Department of State, n.d.) <https://www.state.gov/pax-silica> accessed 19 August 2026.
[2] Joyce Ann L Rocamora, ‘PH joins US-led Pax Silica; plan for industrial hub in Luzon unveiled’ Philippine News agency (Manila, 17 April 2026) <https://www.pna.govhigh-performance processes.ph/articles/1273139> accessed 19 August 2026.
[3] Winard Bacelonia, ‘BOI: Key terms for proposed Clark AI hub remain unsettled’ Philippine News Agency (Manila, 14 August 2026) <https://www.pna.gov.ph/articles/1281882> accessed 21 August 2026.
[4] Cliff Harvey Venzon, ‘US, Philippines Moving ‘Very Quickly’ on 4,000-Acre AI Hub Plan’ Bloomberg (18 May 2026) <https://www.bloomberg.com/news/articles/2026-05-18/us-philippines-moving-very-quickly-on-4-000-acre-ai-hub-plan> accessed 21 August 2026.
[5] Constitution of the Republic of the Philippines 1987, art XII s 2.
[6] Republic Act No 12252 (Philippines) (‘Amended Investors’ Lease Act’), s 2.
[7] Republic Act no 7652 (Philippines) (‘Investors’ Lease Act’), s 4.
[8] Amended Investors’ Lease Act, s 2.
[9] Presidential Decree No 1586 (Philippines) (‘EIS System Law’), s 4.
[10] Abdallah Taha & Alfred Olufemi, ‘Data centres ‘straining water resources’ as AI swells’ (SciDev.Net, 15 November 2023) <https://www.scidev.net/global/scidev-net-investigates/data-centres-straining-water-resources-as-ai-swells/> accessed 20 August 2026.
[11] Rich Kenny, Avinash Lunj & Alexandra Kis, ‘AI’s thirst for water’ (UK Government Sustainable ICT, 17 September 2025) <https://sustainableict.blog.gov.uk/2025/09/17/ais-thirst-for-water/> accessed 20 August 2026.
[12] Cristina Chi, ‘AI manufacturing hub at Clark would need up to 90 million liters of water daily’ Philstar (Manila, 14 August 2026) <https://www.philstar.com/headlines/2026/08/14/2549255/ai-manufacturing-hub-clark-would-need-90-million-liters-water-daily> accessed 20 August 2026.
[13] Presidential Decree No 1067 (Philippines) (‘Water Code’), art 13.
[14] Ibid, arts 10, 29, 30.
[15] Srivatsan Senthilkumar, ‘Recognition of Indigenous Rights is Environmental Protection’ (University of Texas, 21 April 2025) <https://sites.utexas.edu/texasenvironmentallaw/recognition-of-indigenous-rights-is-environmental-protection/> accessed 21 August 2026.
[16] ‘What is Free, Prior and Informed Consent (FPIC)?’ (IHRB, 13 December 2022) <https://www.ihrb.org/resources/what-is-free-prior-and-informed-consent-fpic> accessed 21 August 2026.
[17] Republic Act No 8371 (Philippines) (‘Indigenous Peoples’ Rights Act’), s44(i).
[18] Editorial, ‘Eroding indigenous peoples’ rights’ Inquirer.net (10 August 2026) <https://opinion.inquirer.net/193675/eroding-indigenous-peoples-rights> accessed 21 August 2026.
[19] ibid.
[20] EIS System Law, s 9.
[21] Department of Environment and Natural Resources (DENR) Administrative Order No 2003-30 (Philippines), s 5.
