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13 November 2006
Until recently, social acceptance of energy projects and similar developments was taken for granted. Every announcement of investment in a project was an opportunity for the federal government to praise its investment and energy policies, while states and municipalities were happy to swap permits in exchange for jobs and local taxes. The needs and expectations of local communities were overlooked by the authorities; as long as the project guaranteed local jobs, quality of life was not an issue.
New ideas about enhancing the quality of life through greater transparency, public participation and sustainable development have rapidly gained ground and have been reflected in the social policies included in new programmes and legislation. Public participation has become integral not only to decision-making processes, but also to legal challenges to ensure the protection of public rights.
In the past few years, environmental litigation has forced a change in the rules of legal standing before Mexican courts. Although fully fledged class actions are not yet a formal reality, the legal consequences of the change are similar. An individual opposed to a large-scale project with a potentially significant environmental impact may effectively convince a judge to issue an order to stop it, even if the individual's property and patrimony are not directly affected (as would normally be required by the rules of procedure). The precedents which have led to the present position have mostly involved infrastructure projects with considerable environmental impact, including piers, tourism developments, highways and airports, as well as energy projects. Investors long underestimated the importance of environmental authorization and public opposition, but the recent empowerment of the citizen has required them to think again.
Exposure commonly builds up from the planning stage. Only by understanding the relevance of social needs and expectations to projects that may affect the development of a community, as well as individuals' life plans, can the exposure of a project be assessed and a workable strategy for environmental approval be drawn up.
The process of deciding whether a project receives approval is based on the key issues of:
The entire process must be carried out according to regulations, as loose ends are sure to come back to haunt the project.
Good environmental planning depends on the identification of an appropriate site. Land use restrictions on the development of the project, as well as associated projects, must be identified from the beginning; obvious difficulties arise if environmental authorization is granted for a new energy plant, but not for its access road. Mapping the approval process and obtaining the necessary permits can be a long and involved process. Most energy projects involve consideration of local land use ordinances, regional or state land use plans and federally protected areas or zones, which requires permits from all three levels of government. Even the timing of the issuance of permits must be carefully planned; the granting of a municipal permit before the relevant federal or state permit is received might be considered a breach of procedure by opponents of the project. Therefore, a cross-referenced plan of all necessary permits and authorizations is required at every stage of the project. All related or associated projects must be prepared beforehand, as well as a realistic timeline for obtaining them. However, success in this task may prove elusive.
The environmental impact authorization is the main environmental permit for an energy project. In principle, the permit must be issued by the authority within 60 business days. However, the procedure may be suspended for up to 60 days if the authority deems that further information is required from the project's proponent. The term may be extended by a further 60 days if the complexity of the project so requires, so that obtaining an authorization may take up to 180 business days.
Two processes within the general procedure prevent an authorization from being issued within the 60-day term.
First, in accordance with legislation, the authority has up to 10 days after submission of an environmental impact statement in which to integrate the file, during which time it determines whether the file is complete and suitable for an extensive review. If the file is not complete, the authority may suspend the 60-day term for up to 60 days.
Second, the public participation process involves a mandatory written stage (ie, a public consultation), as well as an optional public meeting stage where written and oral comments are submitted. This process takes a minimum of 50 days from the integration of the file; in combination with the integration stage, this takes up the entire 60-day term, rendering an extension necessary.
All energy projects in Mexico so far assessed under this procedure have been referred to a public meeting and the authority has required additional information. Investors should not expect to receive an authorization in less than 120 business days. Applications for other permits may be dealt with at the same time as the main authorization, but their validity is conditional on the authorization being approved. Applications may take:
Public participation, both at the written stage and in public meetings, is by far the riskiest element of the authorization process. It must be approached carefully in order to minimize and control legal challenges to the project, as the entire public consultation process, including the minutes of public meetings, are referred to in detail in the assessment. Individuals who deem that their comments or queries have been inadequately addressed or answered in the authorization may go to court to demand an adequate response from the authorities and the suspension of the authorization until the response is issued. Recent cases involving liquefied natural gas projects show that court access for individuals may be granted on these grounds, effectively extending the legal standing established in procedural codes and creating an ever-increasing risk for project proponents of a direct challenge by individuals. Such projects in Baja California have been challenged, so far unsuccessfully, on the grounds of:
Opposition to a project on environmental grounds may come from an individual whose rights or patrimony have been affected by:
Another way of considering the issue is to determine who might have access to court. Courts have hitherto granted standing to participants in a consultation who are entitled to a response (ie, petition right) and parties that will be directly affected by the implementation or execution of the authorized works (eg, people living nearby). Two basic remedies are available to opponents: (i) an amparo lawsuit (ie, a summary proceeding that serves to guarantee constitutional rights), resulting in an injunction against the project on the grounds of possible irreparable damage; and (ii) a nullification lawsuit, brought on the basis of procedural errors.
The next question is when to expect legal action. An amparo lawsuit must be filed within 15 days of notification of the authorization, whereas a nullification lawsuit must be filed within 45 days of notification. Notification marks the beginning of the term for challenging the authorization, but the authorization must be notified to all interested parties, which includes not only the investors and other authorities, but also all participants in the public consultation and public meeting processes, as well as members of the local community. However, the procedural regulations do not explain how to notify these parties or whether a particular proposed method of notification (eg, publication of the authorization in the Official Gazette or a newspaper) will be considered legal and binding. This lack of rules results in a form of permanent risk for the investor, as opponents need only affirm that they were not aware of the authorization until 15 or 45 days before they eventually submitted an application for the corresponding remedy.
A winning strategy for a proponent of an environmentally sensitive project must involve a realistic consideration of the project's strengths and weaknesses and establish technical, legal and public relations strategies. An early and correct appreciation of the expectations and concerns of the affected community is vital in order to anticipate and thus minimize criticism of the project, both during the authorization process and, perhaps more importantly, afterwards. A proponent should consider the potential advantages of:
going beyond the requirements of the process by including compensation measures in its environmental impact statement;
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Luis Vera Morales