Juan Francisco Torres Landa M. Jorge Yáñez V. Jeanett Trad Nacif November 28 2016 Environmental incidents in the hydrocarbons sector: new reporting obligations introduced Hogan Lovells | Environment & Climate Change - Mexico Juan Francisco Torres Landa, M. Jorge Yáñez V., Jeanett Trad Nacif Environment & Climate Change IntroductionReporting obligationsFurther obligationsIntroductionThe number of environmental incidents in the hydrocarbons sector has increased and those such as the Deepwater Horizon oil spill have highlighted the Mexican authorities' lack of preparedness in this regard. In this context, and following the number of projects being executed as a result of Mexico's energy reform, two important instruments were recently published:the Guidelines for Reporting the Occurrence of Incidents and Accidents to the National Agency for Industrial Safety and the Protection of the Environment in the Hydrocarbons Sector (ASEA), which were prepared by the ASEA; andthe National Hydrocarbons and Potentially Dangerous Hazardous Substances Spills on Mexican Maritime Zones Contingency Plan, which was prepared by the Ministry of the Navy.These instruments have generated a number of new environmental reporting obligations for companies involved in the hydrocarbons sector.Reporting obligationsIn accordance with the above guidelines, the ASEA must be notified in the event of an environmental incident or any other unforeseen event that results or could result in environmental damage, such as an oil spill or oil drill explosion. The National Hydrocarbons and Potentially Dangerous Hazardous Substances Spills on Mexican Maritime Zones Contingency Plan must also be considered, where applicable.The guidelines and contingency plan classify incidents based on the seriousness of the damage caused. Each type of incident requires different reporting and response obligations.Type 1 eventsType 1 events are minor spills caused by routine operations which do not result in the interruption of activities or major injuries. These events require the responsible company to file a report within the first five days of the calendar month following the event, which must include details of the event, such as its date and location and the number of workers who were injured as a result.Type 2 eventsType 2 events are medium-sized oil spills that require assistance from nearby regional authorities and incidents and result in:the death of one or more persons;the interruption of operations; andthe release of hazardous substances or materials within the boundaries of the company's facilities.In the event of a Type 2 event, responsible companies must file:an initial report providing a brief description of the event;a follow-up report after the event has been contained (ie, once persons and installations are no longer exposed to its risks and effects), which must detail:the response actions taken;the human lives lost; andthe damage caused to the environment and the company's facilities;a report providing detailed information about the facts surrounding the event, the measures taken to remedy it and its effects; anda closing report detailing the final results and statistics after the event has been mitigated.Type 3 eventsType 3 events are large spills that require national or international cooperation to mitigate and control their effects and expansion, as well as events resulting inthe death of one or more persons;the interruption of operations;the evacuation of company personnel or nearby people; andthe release of hazardous substances or materials outside the boundaries of the company's facilities.These events trigger all of the reporting obligations required in Type 2 events plus an obligation to file an event evolution report that describes the progress of the event's damage and the response measures adopted accordingly.All reports must be filed through the Incidents and Accidents Information System within the time limits defined in the reporting guidelines, which vary from one hour to one month after the event's occurrence.Further obligationsIn addition to the above obligations, parties that cause an incident or spill during the execution of a project must undertake all applicable measures and actions to contain, mitigate and repair the environmental damage and contamination caused, pursuant to the applicable environmental provisions (eg, the Federal Environmental Liability Law and the General Law for the Prevention and Integral Waste Management).Further, it is advisable that companies consider the fact that – based on the circumstances of the event and whether malicious or negligent conduct by the responsible party exists – the event may trigger overlapping environmental, criminal and civil liabilities and administrative penalties. Thus, companies are advised to comply with the new incident reporting obligations and fully understand their legal implications.For further information on this topic please contact Juan Francisco Torres Landa, Mario Jorge Yanez, Brenda Rogel Salgado or Jeanett Trad Nacif at Hogan Lovells BSTL, SC by telephone (+52 55 5091 0000) or email ([email protected], [email protected], [email protected] or [email protected]). The Hogan Lovells BSTL, SC website can be accessed at www.hoganlovells.com.