On March 26, 2021, the Federal Executive submitted to the Chamber of Deputies an “Initiative with a draft Decree amending and adding various provisions of the Hydrocarbons Law.”
This initiative seeks to amend articles 51, 53 second paragraph, 56 section XI and 57, as well as to add a section XII to article 56, article 59 Bis; and a second paragraph to section II of article 86 of the Hydrocarbons Law. The purpose of the initiative is, in general terms, the following: 1.- To establish that the permits granted to Petróleos Mexicanos, to other State Productive Enterprises and to private parties, be subject to demonstrating that they have the storage capacity determined by the Ministry of Energy. 2.- To modify the regime for the issuance of permits granted by the Ministry of Energy or the Energy Regulatory Commission, so that, in the event that the term set for the issuance of a permit has elapsed without an express resolution by the competent authority, instead of presuming that the permit has been granted, it will be understood that the authority's response is negative for the applicant. That is, the concept of negative administrative silence (“negativa ficta”) is introduced. 3.- To modify the sanctions regime, in order to supplement the monetary sanctions provided for by imposing the revocation of the operating permit on all parties that repeatedly engage in the following conducts: a. Noncompliance with the provisions applicable to the quantity, quality and measurement of hydrocarbons and petroleum products; and b. The modification of the technical conditions of systems, pipelines, facilities or equipment without the corresponding authorization. 4.- To empower the Ministry of Energy and the Energy Regulatory Commission to revoke the permits issued when the holders thereof commit the crime of smuggling of hydrocarbons, petroleum products or petrochemicals, and this has been determined by final resolution of the competent authority. 5.- To empower the corresponding authorities to temporarily suspend the permits issued under the terms established by the Hydrocarbons Law, when an imminent danger is foreseen for national security, energy security or for the national economy. Likewise, the initiative establishes that the authority that issued the corresponding permit may take charge of the administration and operation of the permit holder, as well as use the personnel that the permit holder had been using, hire a new operator, or a combination thereof. Additionally, it is established that, for continuity of operation, the authority may hire State Productive Enterprises for the management and control of the facilities subject to a suspension, temporary occupation or suspension. The aforementioned suspension will have the duration that the authority itself determines. However, it is established that the permit holder that disagrees with the continuation of the suspension may request its termination when it demonstrates that the causes of such suspension have ceased, “provided that the cause does not originate in an unlawful act in the marketing and/or transportation or alteration of the components of the fuel.” Within the transitory articles of the initiative it is established, among other things, that: (i) the competent authority will proceed with the revocation of those permits that, as of the date of entry into force of the proposed Decree, fail to comply with the storage requirement determined by the Ministry of Energy; and (ii) upon the entry into force of such Decree, the permits with respect to which it is proven that their holders do not comply with the corresponding requirements or that infringe provisions of the Hydrocarbons Law will be revoked. Likewise, in the third transitory article it is established that “those permit holders that could be harmed in their legal sphere and their rights, may request, within the framework of the regulations of the corresponding matter, the payment of the corresponding damages.” We recommend that our clients and friends review their situation and current status in relation to compliance with their permits, since with the new regime of sanctions, revocations and suspensions of permits proposed through the aforementioned initiative, it is vital that permit holders be up to date in the compliance with each and every one of their obligations. Likewise, we consider that there are arguments to sustain that some of the provisions established in the reform generate legal uncertainty, and that they are unconstitutional and in violation of international treaties. Permit holders must consider their options with respect to domestic means of defense – amparos – and international ones. At Von Wobeser we have an Industry Group focused on the Energy and Natural Resources industry with specialists in the most relevant areas of the sector (including Oil and Gas, Litigation, Arbitration, among others) ready to advise you to analyze your current situation, in order to comply with all your obligations, establish measures aimed at mitigating the risks arising from the initiative proposed by the Executive, as well as to initiate any action aimed at protecting the rights of permit holders. For additional information about our firm and our team, click here. Likewise, you may contact our experts: Alberto Córdoba, Partner: +52 (55) 5258 1016 | acordoba@vwys.com.mx Luis Burgueño, Partner: +52 (55) 5258 1003 | lburgueno@vwys.com.mx Edmond Grieger, Partner: +52 (55) 5258 1048 | egrieger@vwys.com.mx Adrián Magallanes, Partner: +52 (55) 5258 1077 | amgallanes@vwys.com.mx
