President Andres Manuel Lopez Obrador’s reform initiative to Mexico’s Hydrocarbon Law might be challenging to fight in courts based on the administrative nature of the proposed changes, lawyers told OPIS. Defending the fuel industry in courts against the reform might be more challenging than the process renewable electricity generators faced to secure a permanent suspension against Lopez Obrador’s Electricity Reform Law earlier this month, sources added. While judges rejected the electricity reform on the basis of constitutional, environmental and health rights, the hydrocarbon law reform proposal has an administrative and economic competition impact. Any defense would have to be based on the rights for free market participation in the fuel sector, said Santiago Arroyo, director of Queretaro-based legal firm URSUS Energy. “The fuel industry is going to require more technical legal work to defend itself from this reform proposal,” the lawyer said. The initiative introduced on Friday proposes setting compliance with Mexico’s Public Policy on Minimum Fuel Inventories (PPMFI) as a condition for the approval of fuel permits and introduces a negative ficta, or automatic rejection of permit requests not processed in the time period set by law. Also, the proposal grants powers to the government to revoke permits to companies marketing fuel illicitly, including the sale of stolen fuel from Pemex’s pipelines, illegal importation or partial retail fuel dispense. Mexico could also revoke permits based on national or energy security reasons. Arroyo said the least contentious proposal in the reform initiative — and the most likely to be approved by courts — is raising the regulatory provisions of the PPMFI. The industry has legal elements to defend itself from this reform proposal. However, it is premature to pin down a court strategy, said Marcial Diaz, director of Mexico City-based energy legal firm Lexoil. The proposal is going to be discussed on Wednesday by the energy committee of the lower house of Mexico’s National Congress. “It is yet to be seen if the law will be approved in an expedited manner without any comma changes, something that is unclear at the moment,” Diaz said. “However, It seems clear the government will put all the meat on the grill to move this project forward,” he added. Arroyo said it is likely Lopez Obrador’s Morena party will seek to expedite the approval of the hydrocarbon law without changes from the version sent by the president as the current legislative period ends on April 30. The government has a sense of urgency as it foresees it might lose control of the lower chamber in the summer elections, creating a possibility that the reform initiative could be approved without changes from legislators, Arroyo said. “Maybe the government has access to models the rest of us do not have access to,” he added. Mexican political website Oraculus.mx projects that Morena and its alliance, which includes the PT and PVEM parties, could win between 60% and 70% of the seats. However, Javier Marquez, directing partner of Mexican research firm B&M, said in a column published Tuesday that this overwhelming number of seats depends on Mexico’s proportional representation mechanism, which is very susceptible to small trend changes. For example, under the proportional representation formula, which is currently under review by Mexico’s National Electoral Institute, the PVEM and the PT could win nearly 20% of the seats despite securing around 10% of the popular vote. The most important element is that a successful defense against this reform initiative depends on the fuel market joining forces in a common front like renewable generators did to suspend the electricity reform law, Diaz added. –Reporting by Daniel Rodriguez, drodriguez@opisnet.com; Editing by Justin Schneewind, jschneewind@opisnet.com
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