On August 11, 2014 the Official Daily of the Mexican Federation2 published the Executive Order that  issues the Law of the Coordinated Regulatory Entities in the area of Energy, which amends, adds and derogates various provisions of the Organic Law of the Federal Public Administration and issues the Law of the National Agency of Industrial Safety and Environmental Protection of the Hydrocarbons Sector.3 The Executive  Order became effective the day after its publication in the Official Daily. The purpose of this Law is the creation of the Agency (“ASEA”), as an entity of the Secretariat of the Environment and Natural Resources, with technical and management autonomy.4

On August 19, 2014 by instructions of Mexico’s President, Enrique Peña Nieto, the Secretary of the Environment and Natural Resources, Juan José Guerra Abud, appointed Carlos de Regules Ruiz-Funes as Executive Director of ASEA. The activities of the new agency began on March 2, 2015.

The purpose of ASEA is to protect the people, environment and facilities of the hydrocarbons sector through the regulation and supervision of: (i) industrial safety and operational safety; (ii) dismantling activities and abandonment of facilities; and (iii) wastes and polluting emissions.5

In accordance with Article 2 of this Law, ASEA in the exercise of its authority must take into consideration the provision set forth in the General Law on Ecological Balance and Environmental Protection, the General Law for the Prevention and Comprehensive Management of Wastes, the General Law on Sustainable Forestry Development, the General Law on W ildlife, the Law on Biosafety of Genetically Modified Organisms and other applicable provisions.6 Please note that such provision does not expressly include the Law on National Waters7 nor the recent Law on Spills in the Mexican Marine Zones,8 despite the fact that a very important part of the exploration and extraction of hydrocarbons will be carried out within the Mexican marine zones where relevant environmental impacts might occur. It seems that the environmental protection of the hydrocarbons sector by ASEA only refers to the comprehensive control of wastes and polluting emissions, without including the pollution to national waters (fresh waters and marine waters) despite their importance. If this is correct, then the National Water Commission and the Secretariat of Marine would continue as the corresponding authorities for water pollution but not ASEA.

If the intention was to create an agency to regulate and supervise the environmental aspects of the hydrocarbons sector, it is not clear why ASEA was not granted authority in the area of prevention and control of pollution of national waters provided in the Law of National Waters and the Law on Spills in the Mexican Marine Zones.

For purposes of this Law, the following must be understood about the hydrocarbons sector:9

  1. The reconnaissance and superficial exploration, and the exploration and extraction of hydrocarbons;
  2. Treatment, refining, transfer, commercialization, transportation and storage of petroleum;
  3. The processing, compression, liquefaction, decompression and regasification, as well as the transportation, storage, distribution and the selling to the public of natural gas;
  4. Transportation, storage, distribution and sales to the public of liquefied petroleum gas;
  5. Transportation, storage, distribution and sales to the public of petroliferous material, and
  6. Transportation by pipelines and the storage (linked to pipelines) of petrochemicals derived from the processing of natural gas and refining of petroleum.

Unless stipulated by this Law, it shall apply in a supplementary manner the provisions contained in the Hydrocarbons Law, the General Law on Ecological Balance and Environmental Protection, the General Law for the Prevention and Comprehensive Management of Wastes, the General Law on Sustainable Forestry Development, the Law of Biosafety of Genetically Modified Organisms, and the Federal Law of Administrative Procedures.10 The Law on National Waters and the Law on Spills in the Mexican Marine Zones were not included.

Article 5 of this Law sets forth a long list of the ASEA authorities; among the most relevant ones are the authority to regulate and to supervise: (i) industrial safety and operational safety; (ii) dismantling activities and abandonment of facilities; and (iii) wastes and polluting emissions. ASEA has authority to issue, suspend, revoke or deny the licenses, authorizations, permits and registrations in the area of environment referred to in Article 7 of this Law.

ASEA shall establish rules in order for the regulated parties to implement Management Systems for the activities they carry out, including the standards, actions, responsibilities and those in charge of the industrial safety, operational safety and environmental protection,11 in accordance with that set forth in Article 13 of this Law.

ASEA may impose the following measures:12

  1. Suspend work related to the construction of projects and facilities;
  2. Temporary, total or partial closure of facilities or systems;
  3. Order the temporary suspension of the supply or the service;
  4. Secure substances, materials, equipment, accessories, pipelines, facilities, systems or vehicles of any kind, and
  5. Disable substances, materials, equipment or accessories.

These measures will apply when a project or facility represents Critical Risk in the area of industrial safety, operational safety or environmental protection. Critical Risk is understood to imply an imminent danger and requires immediate action to reduce it to acceptable conditions without limit on the cost for its solution.13

Resolutions of ASEA can be challenged through an administrative remedy in accordance with the Federal Law on Administrative Procedure, or through a trial for annulment in accordance with the Federal Law on Administrative Contentious Procedure.

ASEA may impose sanctions to the violations provided in Article 25 of this Law with fines between 7,500  and 7.5 million times the daily minimum wage in effect in the Federal District (up to MX$525 million, approximately US$35 million), at the time of the violation. To impose those fines ASEA must take into account the seriousness of the violation, the economic conditions of the violator, recidivism, the intentional or negligent character of the action or omission that generates the violation, and the direct benefit obtained.14 In case of recidivism the amount of the fine could be up to double the amount imposed, as well as the definitive closure of the facilities.15

On October 31, 2014 the Interior Regulations of the National Agency on Industrial Safety and Environmental Protection in the Hydrocarbons Sector were published in the Official Daily of the Mexican Federation. ASEA began its activities on March 2, 2015.