OVERVIEW OF THE ENVIRONMENTAL LAWS OF MEXICO

BY

HAIGHT, BROWN & BONESTEEL LLP

GEORGE R. GONZALEZ, ESQ.

LIC. MARIA ELIA GASTELUM

Overview of the Environmental Laws of Mexico

I. Introduction to the environmental laws of Mexico

A. History of environmental law in Mexico

B. The 1996 amendment to LGEEPA

II. Environmental governmental agencies and their procedures

A. Evolution of federal regulatory environmental agencies in Mexico

B. SEMARNAP and its decentralized departments

• INE

• CAN

• IMTA

• PROFEPA

• INE

C. State agencies and their procedures

III. Conclusion

I. Introduction to the environmental laws of Mexico

Mexico stands poised to enter the 21st Century committed to balancing industrial expansion with sound environmental laws and enforcement procedures. [ According to governmental statistics, the Secretaría del Medio Ambiente, Recursos Naturales y Pesca (SEMARNAP) (Secretary of the Environment, Natural Resources, and Fishery), Mexico's federal environmental agency, conducted 9,590 inspections of facilities in 1998. These inspections resulted in 7,357 minor infractions, 107 partial closures, and 45 total closures. SEMARNAP, Procuraduría Federal de Protección al Ambiente (PROFEPA) (Federal Agency for the Protection of the Environment). ] Environmental law in Mexico is the body of authority that includes the Constitution, laws, [ Including, without limitation, Laws such as the Ley General del Equilibrium Ecológico y la Protección al Ambiente (LGEEPA) (General Law of Ecological Equilibrium and Environmental Protection), Ley de Aguas Nacionales (LAN) (Law Governing National Waters), Ley Forestal (LF) (Forestry Law), Ley de Pesca (LP) (Fishery Law), Ley Federal del Mar (LM) (Federal Law of the Sea) and the Ley Minera (LM) (Mining Law) and any other legislation related to the environment enacted by the Mexican government.] regulations to implement each Law, executive orders [ Sometimes referred to as Resolutions, Orders, Notices, Decrees, Accords, Agreements and Circulars.] and standards known as Normas Oficiales Mexicanas [ These are mandatory standards and have the force of law. There are other standards known as Normas Mexicanas (Mexican Standards) that are not mandatory.] (NOMS) (Official Mexican Standards) governing environmental matters ("law"). This article outlines the environmental law of Mexico, its history and the agencies that implement and enforce it today.

A. History of environmental law in Mexico

From the end of the Mexican Revolution in 1917 through the 1930s, the concept of environmental protection in Mexico was more idealistic and theoretical than practical, and was not well regulated. It was first addressed in Article 27 of the Constitution of 1917, which provided that public interest must be taken into consideration in the exploitation of natural resources. [ Programa de Medio Ambiente 1995 - 2000 (Environmental Program 1995 - 2000), SEMARNAP.] In the period between 1930 and the 1970s, other laws were enacted that contained provisions concerning environmental matters which were primarily intended to address human health issues rather than the protection of the environment. One example of these laws is the Reglamento de Higiene en el Trabajo (Regulation for Hygiene in the Work Place) enacted in 1941 which focused on the protection of the worker from unsanitary working conditions and the effects of exposure to various industrial processes. [ SEMARNAP, www.ine.gob.mx.] Between 1930 and the 1950s the general public was not concerned with environmental damage caused by industry because industry existed in limited, relatively small, localized areas and natural resources appeared to be abundant and inexhaustible.

During the 1950s and 1960s, Mexico began to industrialize and many farmers migrated to the cities searching for work. [ Programa Nacional de Población 1995-2000 (National Population Program 1995-2000), Secretaría de Gobernación.] The former agrarian based society transformed into an industrial based society. Government subsidies kept the cost of fuel and energy low which allowed the number of motor vehicles in use to increase quickly. The low cost of electrical energy also allowed industries to use more energy than was justified by the level of their production, and much energy was wasted. Electrical generating facilities were major sources of air pollution. By the 1970s the high concentration of people, industry and air polluting motor vehicles inhabiting limited geographical areas created a visible and troubling pollution problem for Mexico. During the 1970s, the Mexican government made its first attempts to establish mechanisms designed to protect the environment.

On March 21, 1971, Mexico's first consolidated environmental Law, the Ley Federal para Prevenir y Controlar la Contaminación Ambiental (Federal Law for the Prevention and Control of Environmental Pollution), went into effect. This Law primarily addressed public health concerns, including provisions for the control of atmospheric emissions. Three sets of regulations were enacted to implement this Law: regulations to prevent and control atmospheric pollution caused by dust and smoke; regulations to control water pollution; and regulations to prevent and control pollution of the sea.

In 1982, Congress enacted the Ley Federal de Protección del Ambiente (Federal Law for the Protection of the Environment) which covered omissions issues more broadly than the prior Law did. This Law included provisions for the protection and preservation of ecosystems, and initiated a new legal framework to protect flora, fauna, soil and water. This Law was the first to deal with environmental principles with mechanisms for socioeconomic development.

Mexico amended its Constitution in 1987 giving Congress, among other powers, the authority to enact laws to promote the participation of federal, state, and local authorities in environmental matters and to impose limitations on the use and ownership of real property in order to protect the ecological equilibrium. This amendment gave rise to the enactment of new federal environmental laws, such as LGEEPA, which are still in effect today.

LGEEPA, Mexico's first comprehensive environmental law, went into effect on March 1, 1988. [ Diario Oficial de la Federación (DOF) (equivalent to U.S. Federal Register) , January 28, 1988 .] LGEEPA was amended in 1996. In contrast to its predecessor, LGEEPA addresses a broader range of environmental matters including protection of natural areas; exploitation of natural elements, including land and water; and protection of the environment, including atmospheric contamination, water and soil contamination, hazardous activities and waste, nuclear energy and other forms of pollution. LGEEPA also sets forth control and safety measures, penalties for non-compliance, guidelines for environmental impact statements and risk assessment. Additionally, LGEEPA addresses matters of jurisdiction, ecological zoning, and enforcement. The following five sets of regulations are currently in effect that implement this Law:

• Reglamento de la Ley General del Equilibrio Ecológico y Protección al Ambiente en Materia de Impacto Ambiental (Regulations of the General Law of Ecological Equilibrium and Environmental Protection for Matters Related to Environmental Impact). (DOF, June 7, 1988)

• Reglamento de la Ley General de Equilibrio Ecológico y Protección al Ambiente en Materia de Prevención y Control de la Contaminación de la Atmósfera. (Regulations of the General Law of Ecological Equilibrium and Environmental Protection for Matters Related to Atmospheric Pollution). (DOF, November 25, 1988)

• Reglamento de la Ley General de Equilibrio Ecológico y la Protección al Ambiente en Materia de Residuos Peligrosos (Regulations of the General Law of Ecological Equilibrium and Environmental Protection for Matters Related to Hazardous Waste). (DOF, November 25, 1988)

• Reglamento de la Ley General de Equilibrio Ecológico y la Protección al Ambiente para la Prevención y Control de la Contaminación Generada por los Vehículos Automotores que Circulan por el Distrito Federal y los Municipios de su Zona Conurbada (Regulations of the General Law of Ecological Equilibrium and Environmental Protection for the Prevention and Control of Pollution Generated by Motor Vehicles that Transit through the Federal District and the Municipalities of the Counties in the Metropolitan Zone). (DOF, November 25, 1988)

• Reglamento para la Protección del Ambiente Contra la Contaminación Originada por la Emisión de Ruido (Regulations for the Protection of the Environment against Pollution Originating from Noise Emissions). (DOF, December 6, 1982) [ This regulation was enacted to carry out the law of 1982; however, it remains in effect as a regulation for LGEEPA.]

B. The 1996 amendment to LGEEPA

The amendment to LGEEPA was published in the DOF on December 13, 1996 (the "Amendment"), and went into effect the next day. Some of the changes to LGEEPA brought about by this Amendment included:

• Purpose of the Law The Amendment changed the stated purpose of LGEEPA, expanding the purpose of the Law and adding the concept of sustainable development which had not existed previously in the Law. The Amendment also added elements which established the following:

- A guarantee of the right of all persons to live in an environment suitable for their development, health and well being;

- A specific environmental policy and the instruments for its implementation;

- The preservation of biodiversity;

- The establishment and administration of protected natural preserves;

- Sustainable use, preservation and remediation of soils, water and other natural resources in ways that make the obtaining of economic benefits and activities of society compatible with the preservation of the ecosystem;

- A guarantee of the participation of responsible persons, collectively or individually, in the preservation, restoration, and protection of the environment;

- The exercise of powers related to environmental matters delegated to the federal government, the states, the Federal District and the municipalities under the principle of concurrence provided for in Article 73 Section XXIX-G of the Constitution;

- The establishment of mechanisms for coordination, inducement and cooperation among authorities, the public and private sector, as well as with persons and public groups on environmental matters; and

- The establishment of control and security measures to guarantee compliance with, and the application of, this Law and the provisions derived from it and to impose applicable administrative sanctions and penalties.

• Sustainable Development The Amendment of Article 3 replaces the rational use theory with the sustainable use theory. Prior to the Amendment, Article 3 of LGEEPA defined "Rational Development" as the use of natural elements in the most efficient, socially useful manner and in a manner that tends to preserve them and the environment. Article 3, as amended, defines "Sustainable Development" as the use of natural resources for indefinite periods in a manner that respects the functional integrity and load capacity of the ecosystems of which those natural resources are a part.

SEMARNAP's Environmental Program 1995 - 2000 provides that Sustainable Development includes a set of principles directed at confronting the challenge of designing a more rational, stable and equitable future. Sustainable Development combines the fulfillment of today's social needs and aspirations with maintenance of biophysical and social balances that are indispensable in the present and future process of development itself. [ Environmental Program 1995 - 2000.] One of LGEEPA's present objectives is to achieve Sustainable Development. In order to achieve Sustainable Development, a balance must be reached between what is considered sustainable from the biophysical point of view and what is considered sustainable from the socioeconomic point of view.

Recent occurrences in the Monarch Butterfly Sanctuary [ Diana Teresa Perez, Vecinos del Santuario de la Mariposa Monarca Están Deforestando el Lugar Ante la Falta de Alternativas Económicas . La CRONICA de Hoy, May 21, 1999.] provide an example of the theory of Sustainable Development as defined in the amended LGEEPA. The Monarch Butterfly Sanctuary is located in one of the poorest regions of Mexico. The people in the region are surreptitiously desolating the land by transporting tourists, by horse, into the Sanctuary. Due to the economic need of the people in the area, the transportation business increases daily. Although tourism and the business of transporting tourists into the Sanctuary by horse provide a financial benefit to the populace, both activities cause serious damage to the environment. In order to stop the desolation of the ecosystem, the number of horses entering the Sanctuary must be limited. Horses should only be allowed into areas of the Sanctuary where they cannot cause long term damage.

The natural resources and the Monarch Butterflies found in the Sanctuary are threatened by taking an unlimited number of horses and tourists into the area and the stripping of vegetation. If the Sanctuary is completely destroyed, the economic benefits of the tourist activities realized by the local residents will not last. The area cannot be considered as one that is being developed in a sustainable manner because this activity produces only a temporary increase in the income per capita of the population and the Sanctuary is being desolated by it.

The promotion of tourist activities in the Sanctuary by the Government will damage the ecosystem further; Government actions to protect the environment without consideration of the economic needs of the residents will exacerbate the poverty level in the region. A solution some have suggested would result in Sustainable Development: the Government could offer incentives and promote agricultural activities in the areas which do not negatively impact the environment of the Sanctuary. In this way, the economic level of the residents would be raised with new economic activities in which the residents could engage indefinitely (in a sustainable manner), the ecosystem of the Sanctuary would be preserved, and Sustainable Development, as defined in the Amendment, would be achieved.

• Jurisdiction Prior to the Amendment, LGEEPA contained only a vague statement of environmental matters under federal, state and local jurisdiction. [ LGEEPA as enacted in 1988.] After the Amendment, Articles 5, 7, and 8 of the LGEEPA more clearly established federal, state and local jurisdiction. Currently, designation of jurisdiction is based on: the territory in which the activity takes place (i.e. underground, bodies of water, mines, air space, etc.), the type of activity (i.e. water works, oil, mining, hazardous waste, paint, etc.), and the source of pollution (i.e. fixed or mobile, industrial, commercial or for services). The federal government controls matters critical to the well-being of the population, and is in charge of the creation and implementation of environmental directives and guidelines. State and local governments assist in the implementation of these guidelines.

Article 5 of the amended LGEEPA provides that the following matters are exclusively within federal jurisdiction:

- Transportation, storage, recollection, handling, treatment and final disposition of hazardous waste;

- Industrial and commercial activities defined as highly hazardous;

- The issuance of NOMS;

- The management and oversight of federally protected natural areas;

- The prevention and control of environmental emergencies and contingencies ;

- The assessment of the environmental impact of industries under federal jurisdiction (i.e. water works, communications, oil ducts, petroleum industry, cellulose, sugar, concrete, electric industries, and mining);

- Air pollution from fixed sources under federal jurisdiction; and

- The enforcement of the Law.

Notwithstanding the provisions of Article 5, Article 11 of the amended LGEEPA authorizes the federal government to enter into coordination agreements or conventions with state government for purposes of delegating the following functions to the states or the Federal District:

- The management and oversight of protected natural areas under federal jurisdiction;

- The control of hazardous waste considered to be low hazard in accordance with the provisions of LGEEPA;

- The prevention and control of air pollution emanating from fixed and mobile sources under federal jurisdiction;

- The control of actions for the protection, preservation and restoration of the environmental balance and protection of the environment in the federal lands maritime zone as well as the federal zone in national bodies of water;

- The protection, preservation and restoration of natural resources to which this Law refers, and of the wild flora and fauna, as well as control of their Sustainable Development;

- The carrying out of operative actions tending to accomplish the ends anticipated by LGEEPA; and

- The carrying out of actions to oversee compliance with the provisions of the LGEEPA.

SEMARNAP created the Coordinación General de Descentralización (CGD) (Office of General Coordination of Decentralization) to complete decentralization. CGD's main purpose is to direct, promote, coordinate and evaluate the decentralization process to the state and local governments, social organizations and private parties in accordance with the provisions of LGEEPA. So far, CGD has signed numerous agreements with a number of states to promote decentralization.

• ENVIRONMENTAL CRIMES. The Código Penal para el Distrito Federal en materia del Fuero Común y para toda la República en materia de Fuero Federal (CPDF) (Penal Code for the Federal District [ The Federal District ( Distrito Federal or "D.F.") is a political entity originally organized in a manner similar to Washington D.C. in the United States. The Federal District is considered a sovereign, separate, political entity in the Republic of Mexico along with the various states that comprise it. Like the states, the Federal District has its own judiciary and local law, separate and apart from the federal court system. In some instances, such as is the case with the CPDF, the federal government has enacted laws that are the local law of the Federal District and federal law for the entire country. Encarta Encyclopedia Encarta Online Deluxe 8/17/99 .] on Matters of General Jurisdiction and for All of the Republic on Matters of Federal Jurisdiction) was amended the same day the Amendment went into effect, repealing Articles 183 to 187 of LGEEPA and adding a new section to the CPDF titled Environmental Crimes. The effect of the Amendment to the CPDF was to delete the section of LGEEPA dealing with environmental crimes and add it to the CPDF.

While LGEEPA does not contain sanctions and penalties for environmental crimes, it does provide for administrative sanctions for violations of environmental law. Those administrative sanctions may consist of the following: a fine equal to 20 to 20,000 days of minimum wage (approximately $70 to $70,000) which may be doubled in the case of repeat offenders; temporary or permanent closure of all or part of the facility; administrative arrest for up to 36 hours and revocation of permits and confiscation of equipment.

The sanctions for environmental crimes contained in the CPFD range from three months to six years of prison and a fine equal to 100 to 20,000 days of minimum wage (approximately $350 to $70,000). In addition, violators may be required to perform community service and execute remediation measures, such as the demolition of facilities or the removal of equipment causing the environmental damage.

Examples of environmental crimes listed in the CPDF are the performance of highly hazardous activities without the required license, the performance of any activity related to hazardous waste without a license, and pollution of air and water in violation of the law.

II. Environmental governmental agencies and their procedures

A number of governmental agencies on both the federal and state levels administer and enforce environmental laws, regulations, administrative orders, and standards in Mexico. These agencies differ in size, jurisdiction, and mission. Companies are often required to comply with the orders and standards of more than one agency.

A. Evolution of federal regulatory environmental agencies in Mexico

Regulatory environmental agencies in Mexico have changed over the past twenty years. Mexico's first federal environmental agency, the Secretaría de Desarrollo Urbano y Ecología (SEDUE) (Secretary of Urban Development and Ecology) was created in 1982 to oversee environmental laws and address national air pollution, water pollution, hazardous waste, and environmental impact assessment studies.

In 1992 the Secretaría de Desarrollo Social (SEDESOL) (Secretary of Urban Development and Ecology) was created. SEDESOL's duties included without limitation, coordinating social policy programs for the federal government and the operation of programs to overcome poverty, foster production and job opportunities, help low-income families to purchase homes, and provide subsidies to purchase food items such as tortillas and milk. [ SEDESOL, www.sedesol.gob.mx. Article 32 of the Ley Orgánica de la Administración Pública Federal.] SEDESOL was also entrusted with all the environmental duties previously assigned to SEDUE, and SEDUE ceased to exist.

On December 28, 1994, President Zedillo issued a decree which re-assigned SEDESOL's environmental duties to a different agency, SEMARNAP. SEMARNAP is primarily responsible for carrying out environmental laws and regulations on the federal level. Although SEDESOL's environmental duties shifted to SEMARNAP, SEDESOL remains in existence and continues to carry out the remainder of its previously assigned duties.

B. SEMARNAP and its decentralized departments

Presently, Mexico's primary federal environmental agency is SEMARNAP. SEMARNAP is primarily responsible for the following matters: [ Mark Stuckey, Fernando Ortiz Monasterio, and Paola Romero Crespo , Environmental Management for Mexican Industry I ncluding Maquiladoras (1994). ]

- Oversight and enforcement of the laws and standards concerning the environment;

- Administration of Mexico's renewable and non-renewable natural resources and the protection of the environment;

- Support Sustainable Development programs in Mexico;

- Protection, restoration, and conservation of natural resources and environmental welfare to ensure the adequate development of health and general well being of the population;

- Establishment of NOMS for the preservation and restoration of environmental ecosystems, use of natural resources including aquatic flora and fauna, wastewater, and environmentally safe management of hazardous materials and non-hazardous waste, air pollution, and noise;

- Granting of contracts, licenses, permits, and authorizations in the areas of air, water, forestry, ecology, fishery, mining, exploitation of flora and fauna, beaches, and other marine zones mostly through its decentralized agencies.

Five decentralized administrative departments within SEMARNAP oversee specific areas of environmental law. The five departments are the Instituto Nacional de Ecologia (INE) (National Institute of Ecology), the Comisión Nacional del Agua (CAN) (National Water Commission), the Instituto Mexicano de Tecnología del Agua (IMTA) (Mexican Institute of Water Technology), the Procuraduría Federal de Protección al Ambiente (PROFEPA) (Federal Agency for the Protection of the Environment), and the Instituto Nacional de la Pesca (INP) (National Institute of the Fishery).

• INE

INE, one of SEMARNAP's largest administrative departments, is responsible for ecological matters and the protection of the environment. INE develops environmental programs, issues administrative orders and standards, determines the adequacy of environmental impact statements, coordinates the development of environmental programs with state agencies, and grants federal approval on environmental impact studies.

• CAN

CAN is responsible for the administration and safekeeping of the national waters and related real property such as wetlands, marshes, and beaches. In addition, CAN oversees compliance with the Ley de Aguas Nacionales (LAN) (Law of National Waters) and its regulations, and issues orders necessary to ensure the preservation and quality of the national waters.

CAN also oversees concessions and waste water discharge permits affecting national waters for the drilling of water wells, and for water use pursuant to the provisions of the LAN. Further, CAN maintains a public registry of wastewater and inspects and verifies the measurement mechanisms for water consumption.

• IMTA

IMTA is responsible for the promotion and development of water technology including the management and use of water, research, and technological development.

• PROFEPA

PROFEPA, created in 1992, is the enforcement branch of SEMARNAP. PROFEPA is in charge of enforcing the law and is responsible for investigations and inspections of facilities and presides over administrative appeals of companies who have been sanctioned for failure to comply with the law. PROFEPA is also responsible for reporting violations of the CPDF to the Ministerio Público Federal (Federal Prosecuting Attorney) who is in charge of the prosecution of environmental crimes. [ Article 62 XII of the Reglamento Interior de la Secretaría del Medio Ambiente, Recursos Naturales y Pesca .]

• INP

INP designs, implements, and evaluates areas for fishing and aquaculture throughout Mexico. INP also prepares evaluations of water species, designs programs for use in issuing administrative orders to regulate fishery resources, prepares and updates the inventory of aquatic species, and explores and establishes new areas for species.

C. State agencies and their procedures

New and existing businesses in Mexico must comply with local, state, and federal environmental regulations and licensing requirements. Companies should be fully aware of the local, state, and federal environmental laws applicable to the place where the business will be located.

The states’ role in environmental protection has expanded as a result of the Amendment. Although the federal government authorized the delegation of many environmental functions to the states in the Amendment, these duties have not been delegated in all states because some states may not have the necessary local laws and/or administrative agencies needed to carry out these environmental functions. LGEEPA states that SEMARNAP is responsible for enforcing environmental laws in the states which have not yet enacted environmental laws. [ LGEEPA, Transitory Provisions , Article 3 and 5, DOF, January 28, 1988 .] LGEEPA provides that the following authority is delegated to the states: "establishment, regulation, administration and oversight of protected natural reserves as provided by local law, with the participation of municipal governments (Art. 7. V.); the regulation of systems for recollection, transport, storage, handling, treatment and final disposition of solid and industrial waste considered non-hazardous (Art. 7. VI); and the prevention and control of pollution generated by noise emission, vibrations, thermal energy, light, electromagnetic radiation or odors that negatively affect the ecological balance and the environment (Art, 7.VII)."

III. Conclusion

During the past decade, Mexico has taken steps to balance industrial expansion with environmental protection through the amendment of existing Laws, such as the Amendment, and the decentralization of environmental functions by delegation to the state governments. Current laws place emphasis on Sustainable Development, and state governments take more responsibility for environmental protection than ever before. Businesses in Mexico must now abide by strict and rigorous environmental laws. As Mexico enters the 21st century, a legal and governmental framework exists to protect its environment while continuing industrial progress.

George R. Gonzalez, Esq. is a Partner in Haight, Brown & Bonesteel's International Cross-Border Practice and works out of the firm's San Diego office. In addition to providing counsel concerning matters related to environmental laws, regulations and standard affecting clients' foreign operations, Mr. Gonzalez provides counsel to foreign clients establishing business in the United States and to foreign and U.S. clients engaged in international business transactions. Mr. Gonzalez is fluent in Spanish.

Maria Gastelum is a paralegal in Haight, Brown & Bonesteel's San Diego office and works with Mr. Gonzalez on diverse international transactions. Ms. Gastelum was admitted to practice law in Mexico in 1990 and practiced law there until 1994 concentrating on commercial litigation and business transactions.

Haight, Brown & Bonesteel, L.L.P. has more than 155 lawyers in five offices throughout California. Haight, Brown & Bonesteel is one the nation's largest litigation firms with in-depth litigation experience in a wide variety of practice areas. The firm's extensive litigation experience provides Haight, Brown & Bonesteel clients keen insight on how best to reduce liability and avoid litigation. The firm's practice areas include, environmental compliance and litigation, commercial litigation, intellectual property and unfair competition litigation, employment and ERISA, professional liability, life sciences: pharmaceutical, medical device and biotechnology, insurance law, and tort and product liability litigation.

Copyright 1999 National Law Center for Inter-American Free Trade

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