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Regulatory framework and policy
What is the primary environmental legislation in your jurisdiction?
The main piece of legislation is the General Law of Ecological Balance and Environmental Protection 1988, which was amended in 1996 (after the entering into force of the North American Free Trade Agreement (NAFTA)). The legislation outlines:
- the core principles and obligations in the management of natural resources;
- environmental protection guidelines; and
- the powers bestowed on municipal, state and federal authorities.
The law was issued in line with many of the principles established in the Rio Declaration, such as the obligations for states to establish mechanisms to properly conduct environmental impact assessments, as well as norms embracing precautionary and preventive principles.
During the last two decades several additional laws have been enacted which cover numerous environmental matters, including:
- water consumption, treatment and discharge;
- the use of federal zones;
- waste management;
- land use change and forestry exploitation; and
- wildlife protection.
A relatively new Federal Law of Environmental Responsibility 2013 allows non-government organisations and individuals to seek the appropriate remedies if environmental damage takes place. Actions which arise from such claims are heard by the federal courts.
Aside from the above legislation, states and municipalities also issue environmental norms in their respective margins of competence. Local regulations cover the following activities among others:
- manufacturing processes which do not require the use of high-risk substances;
- building projects excluding land use change;
- the extraction of non-precious metals; and
- the treatment and disposal of non-hazardous waste.
Is your jurisdiction a signatory to any international environmental agreements/commitments?
Yes, Mexico is one of the most active jurisdictions in terms of international environmental public law. The country has ratified more than 70 international environmental agreements, mostly during the 1990s, including bilateral and regional treaties, declarations and memoranda of understanding. These agreements include:
- the Vienna Convention for the Protection of the Ozone Layer and its Montreal Protocol;
- the Basel Convention;
- the International Convention for the Prevention of Pollution from Ships;
- the UN Convention on the Law of the Sea;
- the Ramsar Convention;
- the Convention on International Trade in Endangered Species of Wild Fauna and Flora; and
- the Convention on Biological Diversity, for which Mexico recently acted as a host country in 2016.
Regarding international climate change treaties, the country is:
- a party to the UN Convention of the Climate Change Agreement;
- a signatory of the Kyoto Protocol; and
- a participant of the Paris Agreement (as part of its national determined contribution, Mexico committed to a 25% reduction of its greenhouse gas emissions by 2030 and to increase the generation of clean energy by up to 35% by 2024 and 43% by 2030).
Finally, it is also worth noting that the NAFTA, which is in principle a commercial agreement, includes provisions regarding environmental protection. This agreement created the Environmental Cooperation Agency which receives claims from the three state parties.
Which government bodies regulate compliance with environmental legislation and what is the extent of their powers?
The Secretariat of Environment and Natural Resources (SEMARNAT) regulates compliance with environmental legislation. The ministry is in charge of issuing permits in most areas of environmental regulation, including:
- traditional pollution control permits including:
- environmental impact assessment;
- hazardous waste management; and
- air emissions; and
- natural resources management permits including:
- land use changes; and
- use of federal zones.
Some other licences and permits are controlled by specialised environmental agencies which report to SEMARNAT. These include:
- the National Agency for Safety, Energy and Environment (ASEA);
- the National Commission of Protected Natural Areas (CONANP); and
- the National Water Commission (CONAGUA).
ASEA and CONAGUA also have powers to verify and enforce environmental compliance. All remaining regulated activities are overseen by the Federal Attorney’s Office for Environmental Protection (PROFEPA), which also reports to SEMARNAT.
All state governments have environmental ministries in charge of local environmental regulation, some of which have separate agencies which act as environmental prosecutors. Local authority powers are limited to the application and surveillance of state and municipal environmental ordinances, unless otherwise stated in a collaboration agreement properly executed with the federation.
How would you describe current government policy on environmental regulation and how does it compare on an international scale?
The current federal administration is perceived as a pro-development and business-friendly regulator by most companies, law firms and environmental consultants. Some developers have faced problems when having projects approved, but usually this is a result of a rigid interpretation of a broad legal definition or loophole rather than a pervasive arbitrary attitude on the part of the authority. It is usually most effective to engage in a constructive dialogue with SEMARNAT during the project design process, especially for large-scale developments.
It is important to note that certain criteria and guidelines are still being formulated for various matters relating to environmental regulation. Energy regulatory reform has brought about several new laws, regulations and official standards. In addition, new authorities and departments within existing bodies are still understanding and refining their operational processes. This is the case for the recently established ASEA and the Energy Regulatory Commission (CRE), which are in the process of establishing the definitions for a number of the projects they oversee.
In the case of CRE, SOLCARGO has successfully challenged certain decisions made by the commission which overlooked environmental concerns for commercial interests. As an example of this, an injunction was successfully imposed against a CRE decree which intended to increase the content of ethanol in gasoline and therefore effectively halted the potential rise of volatile organic compounds in urban environments.
Activities subject to permit
Which activities require an environmental permit and how are they classified for such purposes?
Environmental licences, permits and authorisation can be classified in the following way based on the governmental order responsible for their issue:
- federal authorities issue authorisation and permits for:
- environmental impact assessments for large-scale projects;
- wildlife management;
- federal natural protected areas;
- forest land use;
- hazardous wastes and national waters;
- high-risk industries;
- infrastructure development;
- mining operations;
- hydraulic projects;
- large-scale projects; and
- projects in:
- coastal areas; and
- natural protected areas;
- state authorities issue environmental licences for:
- atmospheric emissions;
- waste management;
- water discharge; and
- authorisations on local natural protected areas; and
- municipal authorities issue permits for:
- urban waste; and
Which authority issues permits?
The main environmental authority in Mexico is the Secretariat of Environment and Natural Resources (SEMARNAT). It has three subsidiary agencies:
- the National Agency for Safety, Energy and Environment (ASEA);
- the National Commission of Protected Natural Areas (CONANP); and
- the National Water Commission (CONAGUA).
Individual states have a local counterpart to SEMARNAT and some also have separate agencies which act as environmental prosecutors. Most municipalities have a Direction of Urban Development and Environment.
What are the procedural and documentary requirements to obtain a permit?
As a general rule, those interested in obtaining an environmental permit must submit, before the corresponding authority, a description of the proposed project and explain the measures taken to comply with the applicable regulations. Technical or scientific documentation would need to be properly developed, in order to sustain the application. When the permit concerns activities on a determined plot of land, proof of ownership or possession is required; for example, this standard is required for land use change applications.
Usually, legislation sets a fixed term for authorities to issue permits and approvals (judiciary criteria may apply when a fixed term is not expressly established). The duration of these terms ranges from 20 to 60 business days depending on the nature of the application (ie, complex approvals such as environmental impact authorisations will take longer to be processed). Similarly, regulations state a term in which applicants must:
- further elaborate on their submissions;
- clarify information; and
- fulfil requirements that may have been overlooked during the filing process.
Do any permit fees apply?
Yes, the Federal Law of Public Fees determines the fees for obtaining permits and approvals issued by federal authorities. Individual states have their own laws on fees or tax codes which specify the amounts due for permits. Fees are updated annually.
Validity period and renewal
What is the validity period for permits and how can they be renewed?
Environmental impact authorisations are issued for the duration of a project. Normally, SEMARNAT establishes:
- a period for the work to be completed; and
- a period in which operations and activities must be performed.
The first period can be deferred on previous notice. Such a request would trigger an inspection of the project by the Federal Attorney’s Office for Environmental Protection to ensure that all current conditions have been met and an extension can be granted.
The following apply for other approvals:
- authorisation to treat hazardous waste is usually valid for 10 years and can subsequently be extended;
- licences regulating air emissions are usually issued permanently; and
- water concessions, discharge permits and federal zone concessions are granted for between 5 and 30 years, subject to extensions.
The renewal of permits is normally granted through a simplified version of the original procedure to obtain the permit, with the sole obligation of updating the information initially submitted.
Can permits be transferred? If so, what procedure applies?
As a general rule, permits can be transferred after notifying the relevant environmental authority.
Are permit decisions subject to appeal? If so, what procedure applies?
As a general rule, both local and federal resolutions can be challenged through an administrative review filed before the authority above the one which issued the resolution in question. Alternatively, environmental resolutions can be challenged by administrative justice courts (eg, the Federal Court of Administrative Justice has a specialised panel on environmental justice).
An amparo constitutional protection suit can be filed before a federal judge against an environmental administrative resolution if fundamental rights are likely to be affected, including property rights and the freedom of work.
Individuals aggravated by an environmental resolution, including third parties, have access to a selection of actions, as long as they can prove their legitimacy to appeal. This standard is usually met when an interested party proves its vicinity or proximity to the project in question.
What are the consequences of violating permit rules and decisions?
Both the federation and individual states have an Attorney's Office for Environmental Protection, which is responsible for verifying compliance with environmental regulations. If a violation is detected, the corresponding authority may impose safety measures (eg, the suspension of activities) and penalties, which can include:
- partial or total shutdown of the project; and
- the revocation of permits.
Further, failure to comply with permits can constitute a criminal offence, which is punishable with a jail sentence.
Environmental impact assessments
Projects subject to assessment
What projects require a preliminary environmental impact assessment?
Industries which are heavily regulated and large-scale projects require an environmental impact authorisation. The General Law of Ecological Balance and Environmental Protection – which is the main piece of environmental legislation in Mexico – lists the activities and works that require environmental impact authorisation, including projects relating to:
- hydraulic works, general means of communication, oil, gas, coal and multipurpose pipelines;
- the oil, petrochemical, chemical, iron and steel, paper, sugar, cement and electrical industries;
- the exploration, exploitation and extraction of precious minerals and substances;
- the treatment, confinement or disposal of hazardous waste, including radioactive waste;
- forest exploitation in tropical rainforests and areas containing protected species and forest plantations;
- changes in the use of land in forest, jungle and arid areas;
- industrial parks which perform risky activities or manipulate controlled substances;
- real estate developments affecting coastal ecosystems;
- works and activities in mangrove swamps, lakes, rivers, lagoons, tideland linked to the sea and littorals or areas under federal jurisdiction;
- works in natural protected areas under federal jurisdiction; and
- fishing, aquatic or agricultural and livestock activities endangering the preservation of one or more species or causing damage to ecosystems.
Legal regulations contain further guidelines on completing the works and activities listed above. Regulated projects must submit an environmental impact statement. In certain cases, a report may substitute an environmental impact statement when certain criteria are met.
If a project does not feature on the list above, it is important to consult local legislation to confirm whether local environmental impact authorisation is needed.
Scope of assessment
What environmental factors and risks fall within the scope of the impact assessment report?
Risks to the following are taken into consideration in an impact assessment report:
- flora and fauna;
- landscape; and
- local populations.
The report must include in detail:
- the scale of the works (ie, pollutant emissions, amount of materials required, key elements of the project, including its location and extension within the given plot);
- whether the project complies with applicable legislation and norms;
- the definition and characterisation of influence areas;
- a full explanation of the environmental impact likely to take place; and
- an assessment of the measures proposed to prevent, mitigate or compensate any impact.
Who conducts assessments?
While any individual can sign an environmental impact report, this is usually entrusted to technical experts. Some states have registers of authorised experts who can conduct assessments. In either case, the said expert is obliged to write a letter stating that the best methodologies, practices and measures were used during the assessment. Although a single individual assumes this responsibility, many experts in different fields (eg, biology, forestry engineering and environmental law) can collaborate with the assessment.
Depending on the assessed project, the Secretariat of Environment and Natural Resources (SEMARNAT) or its local counterpart must evaluate the impact assessment report. The National Agency for Safety, Energy and Environment evaluates assessments regarding oil and gas projects.
Are the results of impact assessments publicly available?
Yes, any person can access the assessment and its ruling, either via the SEMARNAT website or by visiting the SEMARNAT offices.
Can the results of an impact assessment be contested? If so, what procedure applies?
The results of impact assessments are administrative resolutions, which may be challenged via:
- an administrative review filed before the authority above the one which issued the resolution;
- a judicial claim before an environmental panel of the Federal Court of Administrative Justice; or
- a constitutional claim, if the resolution of the assessment is considered to be against human rights (eg, the right to a clean and adequate environment).
What regime governs liability for soil pollution (including the allocation, transfer and limitation of liability)?
As a general rule, the individual or entity accountable for the activities relating to the generation and management of materials which pollute soil is obliged to perform remediation activities. Brownfield proprietors and tenants are jointly obliged to perform remediation activities. However, the following exceptions apply:
- in the case of brownfield abandonment or when the proprietors or tenants are unknown, the Secretariat of Environment and Natural Resources (SEMARNAT) undertakes remediation activities;
- when contaminated land is subject to purchase, the involved parties may agree on who is liable to perform remediation activities. Any agreement regarding cleaning-up obligations must be authorised by SEMARNAT. When liability is not established, the alienating party is obliged to complete remediation; and
- oil and gas tenders may operate sites with environmental passives. In this case – and after determining the extent of environmental passives through a baseline study – the contractor must organise the cleaning up and can then claim expenses through governmental royalties.
What environmental due diligence measures are recommended before concluding land transactions?
When conducting an environmental desk review, the performance of soil assessments or analysis is typically required. It is usually necessary to require Phase I and Phase II environmental site assessments before concluding a transaction, in order to evaluate the likelihood of soil pollution.
What remediation and clean-up measures are typically applied and how can remediation costs be recovered?
Cleaning up is accomplished through remediation programmes that include:
- descriptive studies;
- environmental evaluation and risk studies;
- historical investigations; and
- remediation proposals.
Remediation programmes must be authorised by SEMARNAT.
With regards to remediation costs recovery, liability scenarios must be accounted as follows:
- The proprietors or tenants that performed the remediation actions on sites polluted by a third party are able to seek recovery through civil proceedings against said party.
- In case of abandoned brownfields or of the proprietor or tenant being unaware, remediation actions performed by SEMARNAT are covered by taxation incomes.
- If liability is set through an arrangement, an escrow agreement can be subscribed to cover remediation activities.
- Baseline studies – which are performed as a result of tenders involving environmental passives – determine the probable costs of remediation. In this case, despite the contractor being bound to carry out remediation actions, remediation costs are deducted from governmental royalties.
How are air emissions regulated? What air quality standards and emission limits apply?
Air emissions are federally regulated by the General Law of Ecological Balance and Environmental Protection, which states that the Secretariat of Environment and Natural Resources (SEMARNAT) must provide the general guidelines for regulated subjects. The following stationary source industries are federally regulated:
- petroleum and petrochemical;
- paint and ink;
- cellulous and paper;
- power generation;
- cement and limestone quarry; and
- the treatment of hazardous waste.
The obligations of operators are established in the Regulations on Emissions Registry and Pollutants Transfer.
As state governments have responsibilities in regulating this matter, air emissions from stationary sources aside from those listed above are locally regulated. Companies which create air emissions must obtain a licence from the corresponding local authority.
Air emission limits are established in Mexican Official Standards, which contain technical specifications for each type of air pollutant.
What are the consequences of non-compliance with air emissions regulations?
Consequences of non-compliance vary depending on the severity of the offence. The penalties for non-compliance include:
- the temporary and permanent closure of facilities; and
- licence cancellation.
What rules govern the discharge of wastewater and the protection of water resources?
The discharge of wastewater into bodies of water and soil and the protection of water resources are regulated by the National Waters Law and its regulations. The discharge of wastewater into sewage is locally regulated by state and municipal regulations. With regards to water control, the federal authorities issue the following:
- concessions to use and consume national water (eg, water obtained from wells, water courses and reservoirs); and
- permits to allow the discharge of water in areas under federal jurisdiction (eg, soil, seas and rivers).
Wastewater discharge permits contain dispositions to avoid water pollution.
The protection of water resources is primarily intended to avoid pollution and as a general rule, parties that contaminate water must restore its quality and bear the costs involved.
What are the consequences of non-compliance with water pollution regulations?
The consequences of non-compliance with water pollution regulations are dependent on the severity of the non-compliance but can include:
- the temporary or permanent restriction of activities;
- the cancellation of permits, concessions and assignations for water use; and
- jail sentences.
Waste and hazardous substances
How is ‘waste’ defined in your jurisdiction?
Pursuant to the General Law for Waste Prevention and Integral Management, ‘waste’ is defined as any material which a proprietor or holder discards, which may require:
- treatment; or
- disposal according to the aforementioned law and its regulations.
Waste materials can be in the following forms:
- solid or semi-solid;
- gas; and
Depending on its characteristics, waste may be classified as:
- special handling (eg, steel, plastic and cardboard); and
- solid urban.
Hazardous waste is subject to federal control, while special handling and urban solid waste is regulated by local governments.
What rules and procedures govern the handling of waste, with particular respect to:
Facilities generating hazardous waste are allowed to keep it for up to six months. During this period the waste must be properly disposed of. If the waste generator wishes to use a separate company to store its waste, authorisation from the Secretariat of Environment and Natural Resources (SEMARNAT) is required.
Regulations and Mexican Official Standards contain provisions which specify the conditions for storing hazardous waste, which are designed for safety and for the prevention of pollution.
Local legislation may require that authorisation is needed for the management, including the storage, of non-hazardous waste.
The transportation of hazardous waste requires authorisation from both SEMARNAT and the Ministry of Communication and Transport. The transportation of hazardous waste by air is forbidden.
Local legislation stipulates that authorisation to transport non-hazardous waste is required.
The law defines ‘final disposal’ as the permanent deposit or confinement of waste, which means that it is not released into the environment. Final disposal must occur when:
- the recovery or treatment of the waste is economically unviable;
- the necessary technology to treat the waste is not available; or
- the environment is inadequate for the treatment of the waste.
The establishment of sites devoted to the final disposal of hazardous waste requires the authorisation of SEMARNAT.
Local legislation requires authorisation to build and operate landfills for non-hazardous waste. However, such sites must also comply with the requirements established by the Mexican Official Standards.
Hazardous waste recycling can take place on the site where the waste is generated or at dedicated waste recycling centres. When hazardous waste recycling is to take place on the site at which it was generated, a technical report must be submitted to SEMARNAT before recycling can be carried out. If the recycling process is likely to produce dangerous pollutants, an authorisation issued by SEMARNAT is also required. Hazardous waste recycling service companies also require authorisation from SEMARNAT.
The import of hazardous waste is permitted only if it is to be recycled. If this is the case, the requirements of the Basel Convention must be followed.
Some local legislation also has provisions which regulate the recycling of non-hazardous waste.
What is the extent of a waste producer’s liability after transferral of waste (eg, to a waste disposal agent)?
As a general rule, after waste is transferred to a third party which supplies a disposal service, the generator is no longer liable for it. However, the waste generator must verify that the third-party services have been authorised by SEMARNAT, otherwise the generator would still be held accountable if the waste were to cause any damage.
Are waste producers bound by any waste recovery obligations?
Large generators of hazardous waste must develop and apply a management plan for dealing with their waste. This plan must have waste recovery as one of its objectives and contain specific activities for its accomplishment. In addition, hazardous waste which can be recovered or recycled must not be mixed with waste that cannot be recovered or recycled.
Specific obligations regarding recovery if the waste requires special handling or for solid urban waste may be established by local governments. Large generators of waste may also be obliged to develop and apply a management plan accounting for waste recovery, which is regulated locally.
Waste disposal agents
How are the business activities of waste disposal agents/landfill operators regulated?
The business activities of waste disposal agents with regards to hazardous waste are regulated in the General Law for Prevention and Integral Management of Wastes and its regulations. In order to offer hazardous waste disposal services, disposal agents must be authorised by SEMARNAT. For disposal agents that deal with waste which requires special handling and solid urban waste, the corresponding local authority must issue special authorisation.
Landfill operators must ensure that their facilities comply with the official standard specifications and guidelines (under NOM-083-SEMARNAT-2003).
What special rules, regulations and safeguards apply to the handling and disposal of hazardous materials?
The following special regulations and safeguards apply for the storage of hazardous waste:
- waste must be kept separate from production and service offices and commodities and final product storage areas;
- waste must be located in areas where emission, leak, fire, explosion and flood risks are minimal;
- waste must be contained in special facilities, in order to contain liquid waste and leachate;
- waste facilities must contain passageways which allow for the movement of equipment, security groups and firemen;
- waste storage facilities must include relevant safety equipment, including fire extinction systems, according to the type and quantity of the waste;
- signs which indicate the hazard level of the stored waste must be clearly visible at the facility;
- waste containers holding hazardous waste must have clearly identifiable notices which describe the content’s chemical characteristics; and
- waste containers must be suitably designed to prevent leaks, spillages, emissions, explosions and fires.
For the transportation of hazardous waste, the operator must ensure that:
- the waste is clearly identified;
- a contingency plan is in place;
- qualified personnel are employed during the transportation;
- documentation is provided which states the amount of waste to be transported; and
- the incompatibility characteristics of the waste are accounted for.
Hazardous waste disposal sites must be equipped with essential facilities, including:
- cells with mineral isolating underlay;
- additional layers of isolating synthetic materials;
- leachate drainage; and
- leachate and gas treatment systems.
Detailed safety and design specifications are provided in the Mexican Official Standards, depending on whether the hazardous waste in question has previously been treated
Chemical and product regulation
What environmental regulations and procedures apply to the production, transportation and sale of chemicals and other products?
The production and handling of chemicals and dangerous substances are subject to Mexican Official Standards issued by the Federal Commission for the Protection against Sanitary Risks, which is part of the Ministry of Health.
With regards to environmental regulation, it should be noted that the facilities involved in and the emissions generated in the production of chemicals fall under federal jurisdiction.
Types of liability
What types of liability can arise for environmental damage (eg, administrative, civil, criminal)?
Environmental damage can give rise to the following types of liability:
- administrative; and
Regarding environmental liability, in 2013 the Federal Law of Environmental Responsibility established fault-based liability as a general rule for damages caused to the environment. On the other hand, in terms of the said law, strict liability applies when the responsible party causes damage as a result of a specific activity even when fault or negligence has not taken place (eg, during the handling of hazardous waste or risk substances).
Directors’ and officers’ liability
Can directors and officers be held personally liable for company environmental offences? If so, can liability be limited through insurance coverage and/or contractual indemnities?
Ordinarily, if a company causes damage, the company itself is deemed to be liable. However, directors and officers can be held subsidiarily liable or even criminally liable if they actively violate environmental regulations. Insurance coverage and contractual indemnities may significantly reduce liability.
Liability for authorised activity
Can environmental liability arise even in the course of authorised activities (eg, operations subject to environmental permits)?
Environmental liability does not arise in the course of authorised activities if the conditions of the relevant authorisation or permit are fully complied with and all information regarding the environmental impact and possible effects were disclosed to the relevant authority. Environmental liability cannot be claimed as a result of damage caused by emissions or as a result of activities performed under permitted standards.
What defences are available to environmental offenders?
Plaintiffs in environmental liability trials can claim that environmental damage has not taken place while conducting their activities due to granted approval or while operating under an official standard. Defences in this regard are likely to be sustained in merely legal allegations or to be grounded in technical allegations of whether a given parameter was surpassed. It is therefore common for technical experts to intervene in such procedures.
Plaintiffs can also claim for attenuating circumstances, including:
- holding the appropriate environmental and safety policies in place;
- holding valid insurance covering environmental damage for high-risk activities; and
- holding official environmental certificates issued by the relevant authority.
Liability in share sale/asset purchase
What rules govern the transfer of environmental liability in share sales and asset purchases?
The General Law of Commercial Enterprises establishes the rules applicable to share sales and asset purchases, even in the event of a company being found as environmentally liable.
What environmental due diligence measures are recommended before concluding share sales/asset purchases?
Environmental due diligence measures include:
- a background check through public records;
- a thorough desk review of granted approvals, as well as documentation on former inspections; and
- the conduct of appropriate Phase I and Phase II assessments.
Can lenders be held liable for environmental offences?
As a general rule, lenders cannot be held liable for environmental offences. However, when it comes to soil contamination, proprietors (including lenders) can be held liable for the cleaning up of brownfield land. If deemed to be liable, the lender has the right to subsequently sue the polluter to recover remediation costs.
Reporting and disclosure obligations
Under what circumstances must environmental damage be reported to the authorities?
Permits and authorisations may contain dispositions which require their holders to disclose any environmental damage to the authorities.
If spills or leakages occur and are likely to contaminate more than one cubic meter of soil, an immediate report must be submitted before the environmental prosecutor and proper measures must be taken, including the appropriate removal of the contaminant.
Is information on environmental damage/compliance available in a public register?
The authorities must keep a public registry detailing the emissions and transfer of pollutants to air, water, soil and subsoil, materials and waste. The registry information is included within the annual reports on regulated companies and individuals, which is then organised and published by the Secretariat of Environment and Natural Resources. However, the information is published every two years. To obtain more specific information it is necessary to make a formal request of access to public information to the federal system. A similar request must be made to obtain information on environmental damage, as there is no specific registry which publicly discloses claims for environmental damage.
Are regular environmental audits required?
Mandatory periodic environmental audits are required only in a small number of industries (eg, oil and gas). However, environmental authorities periodically verify the general environmental compliance of regulated companies and individuals.
Companies are also entitled to obtain certification from the environmental prosecutor, which is widely known as a ‘clean industry certificate’. This certificate is issued if a company can demonstrate, following self-requested audits, that it has an adequate level of environmental compliance.
What environmental disclosures are required in sales transactions?
Every permit, licence and authorisation held by the seller must be disclosed to the buyer. It is also recommended that buyers check whether the seller has been the subject of sanctions as a result of environmental offences.
Warrants and representations can be requested by the seller, including:
- affidavits detailing former environmental misconduct;
- the current environmental condition of the premises; and
- the potential existence of environmental passives.
What types of environmental insurance are available and what do they cover?
Environmental insurance covers the cost of the environmental compliance of an authorised project to undertake preventative and mitigation measures. The insurance is mandatory and can be contracted at different stages of a project, following the relevant authority’s approval.
In addition, companies usually acquire environmental insurance to cover potential risks (eg, spills and leakages) and events regarded to be accidents. However, insurance companies are reluctant to cover any continuous contamination that may derive from daily operation.
Is environmental insurance mandatory and/or commonly purchased?
Yes, the authorities require that environmental insurance is in place if:
- toxic substances could be released during operation;
- the project is located near to:
- bodies of water;
- species of flora and fauna; or
- endemic species which are threatened, in danger of extinction or subject to special protection;
- the project involves high-risk activities; or
- the project development is located in a natural protected area.
What environmental taxes are levied in your jurisdiction?
Besides fees for permits, there are few environmental taxes which apply. The most significant is the tax on new cars and the special tax on production and services, which applies to the use of fossil fuels.
Climate change issues
Emissions, renewables and efficiency
What regulations, targets and/or incentive schemes are in place to:
(a) Reduce greenhouse gas emissions?
The tax on new cars and the special tax on production and services are designed to reduce carbon emissions. Under the special tax on production and services, certificates of emissions reduction may be used instead of a tax payment.
The Mexican government is developing a strategy to establish a certificate of emissions reduction market on the Mexican Stock Exchange, facilitating the voluntary compensation of greenhouse gas emissions through the purchase of the certificates by Mexican companies (including those fully owned by foreign capital).
(b) Promote renewable energy/energy efficiency?
The Energy Regulatory Commission issues clean energy certificates, which certify that a determined amount of electrical energy has been generated from clean energies and serve to meet the requirements associated with the consumption of load centres. As associated products of the electric industry, clean energy certificates can be bought and sold and acquire an economic value which can become an additional income for clean energy generators.
According to the law, energy generated from the following is regarded to be ‘clean’:
- the capture and treatment of methane;
- the use of hydrogen through its combustion or use in fuel cells, provided that the minimum efficiency and emission criteria established by the authorities are met;
- waste conversion;
- cogeneration plants, provided that the required criteria established by the authorities are met;
- sugar cane treatment;
- thermal power stations with geological capture or storage processes or carbon dioxide biosequestration under certain parameters; and
- low-carbon technologies, provided that they meet international standards.
What regulations are in place to protect biodiversity and natural areas?
Natural areas are regulated by the General Law of Ecological Balance and Environmental Protection and its Regulation on Natural Protected Areas. Further, individual states have their own laws and regulations on locally protected natural areas.
A natural protected area is established by a presidential decree, which sets:
- its protection category;
- the surface area of protection; and
- other general prohibitions.
This is followed by the publication of the management programme by the Secretariat of Environment and Natural Resources (SEMARNAT). The programme will identify the internal zoning of the area and determine which activities are permitted and the conditions under which they must be performed.
Wildlife is regulated by the General Law of Wildlife and its Regulations. This law covers matters including:
- habitat conservation;
- wildlife management;
- hunting permits;
- population culling;
- scientific research; and
- non-extractive utilisation.
SEMARNAT has published several Mexican Official Standards which regulate the protection of endangered species and wildlife management.