On May 4th, 2021, the Ministry of Energy published in the Official Federal Gazette a decree that amends and adds various provisions to the Hydrocarbons Statute (the “Amendment”), derived from an initiative submitted by the President of Mexico on March 26th, 2021, as previously reported in our past GC news. This Amendment will become effective on May 5th, 2021.
The Amendment contains the following amendments:
1. It adds the figure of “temporary suspension of the permits” that cover the activities regulated by the Hydrocarbons Statute and it restricts that only state productive companies (i.e. PEMEX or CFE) may operate the facilities that are temporarily occupied, intervened, or suspended.
2. Article 59 BIS is added to regulate a permit suspension proceeding that will proceed when an “imminent danger” to “national security”, or to “energy security”, or to the “national economy” is foreseen. The authority will determine the term of the suspension of the permit.
The Amendment states that such authority will be responsible for the administration and operation of the regulated activities and may rely on the permit holder’s personnel or hire a new operator.
It is also foreseen that the affected party may present arguments or offer evidence in the proceedings before the suspension is decreed.
3. It is added as a requirement to obtain the permits that the permit applicants shall demonstrate to have storage capacity to comply with the requirements established by the Ministry of Energy in accordance with the applicable legal provisions (i.e. the Public Policy on Minimum Storage of Petroleum Oils).
4. In the event of failure of the administrative authority to resolve within the legally established term in permit assignment authorization procedures, the Amendment eliminates the deemed approved figure (afirmativa ficta) (legal presumption by means of which the silence of the authority is considered as a resolution in favor of the claims of the individual) and establishes instead deemed rejected (negativa ficta) (legal presumption by means of which the silence of the authority is considered as a negative resolution of the claims of the individual).
5. New reasons for revocation of permits are established in connection with the commission of hydrocarbon offenses and with the recurrence of violations related to non-compliance with quantity, quality and measurement provisions, as well as those related to the modification of technical conditions without the corresponding authorization.
6. The transitory provisions establishes that:
- The permit holders who are adversely affected in their rights may request payment of the corresponding affectations.
- Regulatory authorities are instructed to revoke permits that at the date of entry into force of the Amendment fail to comply with the storage requirement determined by the Ministry of Energy.
- It is instructed to revoke the permits whose holders fail to comply with the requirements or violate the legal and regulatory provisions, in a generic sense.
- It is instructed the Energy Regulatory Commission (“CRE”) and the Tax Administration Service (“SAT”), verify compliance with the provisions for measurement of hydrocarbons, petroleum products, and petrochemicals.
Several provisions of the Amendment could affect the rights acquired by permit holders and recognized by the Mexican Constitution and international treaties.
The affected parties may challenge the Amendment through and amparo relief. The term to file such claims will run from the entry into force and/or from the first specific implementing action. It is also advisable to analyze the investment protection mechanisms in terms of the bilateral and multilateral treaties in force.
At González Calvillo we are prepared to provide the advice you require in relation to the content of the Amendment. We remain at your service for any questions or clarification in relation to the scope of this document.
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Note To Editors
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