On June 7th 2013 the Environmental Liability Law (“ELL”) was published in Mexico’s Official Federal Gazette. The ELL will enter into force thirty calendar days as of its publication.
Implications for your company
With this new law, any person from an affected community, an environmental non-governmental organization, the Federal Bureau of Environmental Protection (PROFEPA) or a state environmental agency, may bring a civil action before federal courts against a party that causes environmental harm, in order to seek repair or compensation.
The ELL regulates the environmental liability borne out of harm caused to the environment, as well as its repair and compensation. It also contemplates alternative mechanisms for the solution of controversies, administrative procedures and those that may correspond in the case of environmental crimes.
Subjective and Objective Liability
The ELL states that, as a general rule, environmental liability will be subjective except in the following cases:
- Any action or omission involving the handling, use, transportation or disposal of hazardous waste
- The use or operation of ships in coral reefs
- Carrying out high-risk activities (high risk activities are defined as those that imply the generation or handling of substances having corrosive, reactive, radioactive, explosive, toxic, flammable or bio-infectious characteristics in accordance with the General Law of Ecological Balance and Environmental Protection);
In other cases specified by the Federal Civil CodeThe ELL states that no environmental harm will be deemed caused if losses or damages are not adverse in the following cases:
- They were expressly manifested by the responsible party and explicitly identified in their scope, as well as evaluated, mitigated and compensated through specific conditions, in addition to being previously authorized by the Ministry of Environment and Natural Resources (SEMARNAT) either as part of an environmental impact, land-use change procedure or any other permitting process.
- They do not surpass the limits established by environmental laws and applicable Mexican standards.
If requirements or conditions established by SEMARNAT were not met or complied with, the existence of environmental harm may be established through the corresponding procedure.
The ELL states that a judge may impose any of the following economic penalties as a result of harm being caused to the environment:
- 300 to 50,000 times the minimum wage in Mexico City if the party responsible is an individual.
- From 1,000 to 600,000 times the minimum wage in Mexico City if the party responsible is an entity.
According to the ELL, fines imposed to a legal entity (such as a corporation) may be reduced up to a third of the total amount if at least three of the following circumstances may be demonstrated:
- If the entity has not been previously sentenced in the terms of the ELL and/or is not a repeat offender;
- If none of its employees, representatives or directors have been sentenced for crimes against the environment;
- If during a term of at least 3 years prior to the conduct that caused environmental harm, the entity has had an internal organism in charge of permanently verifying compliance with environmental laws and licensing requirements;
- If there is a financial guarantee in place (such as a bond or insurance) to cover against environmental harm;
- If it holds one of the audit certificates established by the General Law of Ecological Balance and Environmental Protection (such as a “clean industry certificate” issued once an environmental audit has been successfully carried out).
A judge may order whoever is found liable for causing environmental harm to repair such harm and if this is not possible, to implement compensatory measures either partially or totally, as well as implement the necessary actions to prevent environmental harm from increasing.
Statute of Limitations
It is important to mention that the statute of limitations for bringing an action for environmental harm is 12 years as of the moment when the harm has been produced and its effects.
The following individuals and entities have legal standing to file an action for environmental harm:
- Individuals that inhabit a community adjacent to the location where the harm has been caused.
- Private non-profit Mexican entities incorporated for the purpose of protecting the environment, when acting on behalf of a inhabitant of a community adjacent to the location where the harm has been caused.
- The federal government through PROFEPA.
- State environmental protection bureaus and agencies.