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National Code of Civil and Family Procedures

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Executive Summary:

  • The Senate of the Republic has been working on the Draft Decree Initiative that seeks to issue the National Code of Civil and Family Procedure.
  • The main goal of the Initiative is to standardize civil and family processes in order to strengthen and expedite the administration of justice in the country.
  • The initiative has been approved by the Senate of the Republic and is currently being studied by the Chamber of Deputies.

During the first months of this year, the Senate of the Republic worked on the Draft Decree Initiative that seeks to issue the National Code of Civil and Family Procedure.

This Code will replace the State and Federal Civil Procedure Codes, whose provisions, naturally, had several differences between them. 

The main goal of the Initiative is to standardize civil and family processes in order to strengthen and expedite the administration of justice in the country.

In terms of the Opinion of the Joint Committees of Justice and Legislative Studies of the Senate, the general objectives pursued by the Initiative are, among others, the following:

1. Count on the same procedures throughout the national territory to resolve civil and family disputes.

2. Minimize formalities in judicial proceedings.

The Opinion explains some generalities of the National Code of Civil and Family Procedures:

  • At the National Code Orality, equality, respect for human rights, and regulation of digital media are privileged as indispensable tools to achieve prompt and complete justice.
  • The figure of is added Social Representative with functions similar to those of the Public Prosecutor's Office.
  • Looking for the exclusion of unnecessary formalities.
  • It is arranged substitution in the procedure to members of social groups in vulnerable situations.
  • They become applicable rules and principles of oral justice in everything that is compatible.
  • The trial process is initiated through the use of information and communication technologies.

The initiative has been approved by the Senate of the Republic and is currently being studied by the Chamber of Deputies.

If you would like more information on this subject, please do not hesitate to contact our experts.

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Business plan and how to achieve the signing of the bankruptcy agreement

Written by Santamarina + Steta en . Published in Events and Webinars.

The Bankruptcy and Civil Law Commissions of the Illustrious and National Colegio de Abogados of Mexico (INCAM) invites you to a working breakfast where they will discuss the “Business plan and how to achieve the signing of the bankruptcy agreement”, Altán Redes Case.

Carlos Olvera, partner of the Firm and coordinator of Civil Law at INCAM, participates together with Gerardo Sierra Arrazola and Guadalupe Hinojosa Garatachía.

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NOM-016-ASEA-2023 Project for seismic surveys carried out in agricultural, livestock and wasteland areas

Written by Santamarina + Steta en . Published in Updates.

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Executive Summary:

  • On April 21, 2023, the Agency for Safety, Energy and Environment (“ASEA”) published the Draft Mexican Official Standard PROY-NOM-016-ASEA-2023.
  • The Project aims to establish specifications for the installation of camps, seismic sources, safety distances, safety procedures, drilling and loading of shot wells, among others, in the field of environmental protection and operational and industrial safety.
  • The NOM is currently undergoing a public consultation process, which ends on June 21, 2023, and will enter into force 180 calendar days after its publication.

On April 21, 2023, the Agency for Safety, Energy and Environment (“ASEA”) published, in the Official Gazette of the Federation (“DOF”), the Draft Mexican Official Standard PROY-NOM-016-ASEA-2023, Industrial Safety, Operational Safety and Environmental Protection Specifications that must be observed for Seismic Prospecting carried out in agricultural, livestock and wasteland areas (“the Draft”).

Seismic prospecting is a technique used in the exploration of natural resources such as oil, natural gas and minerals, and is an important tool for the exploration and extraction of natural resources. It must be carried out responsibly and in compliance with established regulations and standards to protect the environment and the safety of people, as well as the nearby communities that carry out these operations.

The Project cancels and replaces NOM-116-SEMARNAT-2005, which establishes the environmental protection specifications for terrestrial seismological surveys carried out in agricultural, livestock and wasteland areas.

The Project aims to establish specifications for the installation of camps, seismic sources, safety distances, safety procedures, drilling and loading of shot wells, among others, in the field of environmental protection and operational and industrial safety.

The Project is currently under public consultation, which will end on June 21, 2023, and will come into force 180 calendar days after its publication in the DOF.

Project Overview

The Project establishes the mandatory specifications for seismic prospecting activities in agricultural, livestock and wasteland areas in the hydrocarbon sector throughout the national territory. The above, starting with the planning and selection of the site where the factors of the conditions of the access roads and/or pre-existing gaps, the infrastructure associated with the hydrocarbon sector, surface and underground water bodies and the presence of flora and fauna in the study area must be considered for their registration.

It is important to identify, assess and mitigate the geological, chemical and health risks associated with land seismic prospecting, as well as to protect flora, fauna and aquatic ecosystems. The seismic source must be implemented safely, without affecting the environment and with proper disposal of the waste generated, prohibiting the use of agrochemicals or burning of vegetation for clearing.

Pre-Operational Specifications

To ensure the correct operation of vehicles and equipment for land seismic prospecting, a log must be kept to certify their correct operation and maintenance, using the documents provided by the manufacturer to avoid damage to the environment. The use of appropriate lifting techniques is also required for the installation, removal of camps and removal of equipment.

Specifications for Operation

For the operation, it is necessary to establish a methodology to carry out field tests and determine the maximum vibration levels and safety distances from the location of the Seismic Source, which respect the maximum vibration levels and avoid any damage to the environment. Safety distances and compliance with regulations and standards minimize the impact of the extractive activity on nearby fauna, flora and ecosystems, and prevent contamination of air, water and soil that cause possible environmental and social impacts.

A report must be prepared at the conclusion of the tests, including the start and end date, test parameters such as geographic coordinates, surface vibration monitoring, maximum particle velocity value and maximum frequency values. In addition, an updated log must be kept with specifications for the use of explosives or vibroseisms and a report must be prepared at the end of the tests. 

Specifications for the Termination of Operations

After completing the land seismic survey, the site must be cleaned and free of any material, equipment or waste generated by associated activities, including the installation of camps and the construction of shafts. In addition, all shafts used during the survey must be sealed or covered.

Conformity Assessment Procedure

The purpose of the Conformity Assessment process is to verify whether the regulated entities comply with the Project in question, so they must obtain an opinion for each terrestrial Seismic Prospecting and retain all the information to present it to the Inspection Unit, if required.

Finally, it is important to mention that projects that are in progress from the pre-operational phase will not be subject to this Project and will be subject to the regulations established at the time of the start of the respective project.

Link to publication: https://www.dof.gob.mx/nota_detalle.php?codigo=5686354&fecha=21/04/2023#gsc.tab=0 

conflict resolution

Collective bargaining agreements in Mexico: legitimation period has ended

Written by Santamarina + Steta en . Published in Updates.

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Executive Summary:

  • On May 1, 2023, the deadline granted by the 2019 Labor Reform for the legitimization of collective contracts in Mexico was met.
  • All contracts that have not been legalized or have not submitted an application to discharge the contract legalization procedure before this date have been legally terminated. 
  • Collective bargaining agreements that currently have a request for legitimation procedure on the electronic platform may be processed until July 31 of this year.

After 4 years of planning, strategy and execution by the unions, the deadline granted by the 1 Labor Reform for the legitimization of collective contracts in Mexico was met on May 2023, 2019, so all contracts that have not been legitimized or a request to complete the contract legitimization procedure before May 1, 2023 have been legally terminated. 

Those collective agreements that currently have a request for legitimation procedure on the electronic platform established for this purpose may be settled until July 31 of this year.

Unauthorized collective contracts will be terminated, meaning that unions will lose the administration of these contracts, as well as the right to collect union dues from workers. However, the termination of contracts will not mean that workers will lose the rights, benefits and/or obligations agreed upon in them, so employers will have to respect these conditions. 

Although the deadline for legitimization has concluded, this does not extinguish the right of workers to enter into collective contracts. However, all contracts entered into from this moment on must follow the process for entering into new collective labor contracts established in the Federal Labor Law.

On the other hand, collective bargaining agreements that have been legitimized by the majority support of workers expressed in a secret vote and in accordance with the consultation procedure established in the Federal Labor Law will remain in force and will continue to have all their legal effects, as long as they comply with the respective formalities for their periodic review and have the support of the majority of workers.  

The Federal Center for Conciliation and Labor Registration, through its website, has established a list of employment contracts in Mexico, so it is possible to review them on said portal: https://centrolaboral.gob.mx/listado-cct-legitimados/.

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Socio-environmental implications of legal reforms in mining matters

Written by Santamarina + Steta en . Published in Updates.

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In the evening edition of the Official Gazette of the Federation on May 8, 2023, a decree was published amending the Mining Law, the General Law on Ecological Balance and Environmental Protection (“LGEEPA”), the National Water Law (“LAN”) and the General Law for the Prevention and Comprehensive Management of Waste (“LGPGIR”), which came into force on May 9, 2023. 

Notwithstanding the scope of the aforementioned reforms, this note only refers to their implications in socio-environmental matters.  

  1. Prohibition of granting mining concessions and carrying out any mining activity in Protected Natural Areas (“ANP”).  

The Ministry of Economy and the Ministry of Environment and Natural Resources (“SEMARNAT”) will not be able to issue new mining concessions or environmental impact authorizations (“EIA”) for new mining projects in ANP. 

Once the validity of the concessions to develop mining in ANP ends, these concessions will not be extended. Likewise, it would not be possible to extend the validity of AIAs granted for mining projects located in ANP. Therefore, it is recommended that those projects in the exploration or exploitation stage that are located in ANP take this limitation into account. 

  1. Mining concessions that affect an ancestral territory or an indigenous people must be subject to a process of free, prior and informed consultation.

The right to free, prior and informed consultation of indigenous peoples and communities is recognized in Convention 169 of the International Labor Organization, signed and ratified by Mexico. This Convention obliges the Mexican State to respect it for the granting of mining concessions, even when this right was not provided for in the Mining Law prior to the aforementioned reform. 

In cases where a mining concession is requested on the ancestral territory of an indigenous people or community, the Ministry of Economy must request the competent authority to carry out a consultation process with the community that could be affected. This consultation process must be carried out before issuing the concession and in parallel with the environmental impact assessment to obtain the EIA of the project. 

In our opinion, the way in which the reform regulates this right presents the following problems: 

  • The processes for obtaining the mining concession and the AIA are not usually carried out at the same time, since, as a result of exploration, it could turn out that mining activity will only be carried out in a specific area and not on the entire concessioned surface. 
  • It does not consider the right to consent of indigenous peoples and communities, recognized in Convention 169. 
  • In addition to the obligation to carry out a consultation, the reform establishes the principles and procedures to which this must be subject. Convention 169 establishes that laws affecting an indigenous community must also be subject to a consultation process. Therefore, in our opinion, a law that contemplates an indigenous consultation process could require its own consultation process. 
  1. A social impact assessment will be required for the granting of mining concessions. 

The social impact assessment allows us to know the effects that a mining project will have on a community. In addition, this study proposes measures to mitigate and/or compensate for the adverse impacts. These effects include a decrease in income, possible displacements, infrastructure, connectivity and in general any cultural, economic and organizational impact on a community. 

The consultation process with indigenous peoples and communities is different from the social impact assessment. Therefore, it is important to consider that (i) if a mining project will affect an indigenous community, both the consultation process and the social impact assessment must be carried out; and (ii) if a mining project will affect non-indigenous people, only the social impact assessment will be required. 

  1. Mining projects must have a Mine Restoration, Closure and Post-Closure Program (“Program”) approved by SEMARNAT. 

This Program was already a condition established in the AIA of mining projects, where SEMARNAT ordered project owners to adopt measures for the abandonment of the mining project (for example, slope stabilization, soil restoration and vegetation regeneration). 

As a result of the reform, the Program will be a requirement for the granting of mining concessions, the AIA and concessions to exploit national waters. 

In our opinion, the requirement to generate a Program from the beginning of the project could be inefficient, since conditions may vary throughout the development of a mining project. 

  1. Current and future holders of a mining concession must present insurance, a letter of credit or another financial vehicle to ensure compliance with the measures for the prevention of social impacts and the Program. 

In the case of the social impact assessment, this financial vehicle must be approved by the Ministry of Economy, while the financial vehicle for the fulfillment of the Program must be approved by SEMARNAT. 

Current holders of mining concessions must comply with this obligation within 365 calendar days from the entry into force of the reform. 

  1. Ban on granting mining concessions in areas with low water availability. 

This ban affects new mining projects that are intended to be developed in areas with limited water availability. It is important to consider that among the areas most affected by drought in recent years is the north of the country, which also represents the area with the largest mineral reserves in Mexico.

The reform does not establish the criteria to determine that an area lacks water. In this regard, the Ministry of Economy could consider the declarations of bans by the National Water Commission (“CONAGUA”), the declarations of emergency or the drought reports that are published monthly by said CONAGUA. 

  1. The transfer of national water concessions for mining activities is prohibited.

Mining companies will not be able to obtain water for mining purposes by transferring a previously issued concession title, so they will only be able to obtain concessions directly from CONAGUA. 

It is important to consider that in restricted areas, where the issuance of new concession titles is not possible, a mining concession title could not be obtained by CONAGUA either, which would put the development or continuity of mining activity in these areas at risk. 

  1. National water concessions may be revoked in the event of subsequent events of public interest that cause economic, social, environmental or any other type of imbalance. 

This measure affects any person holding a national water concession, regardless of whether they are part of the mining sector or not. The reform to the LAN does not clearly establish what should be understood as social or environmental imbalance, so CONAGUA could act at its discretion to revoke water concessions regardless of whether they have complied with all their legal obligations. 

  1. Prior notification to CONAGUA of the use of working water will be required. 

Prior to this reform, the mining concession title granted the right to use the mining water without the need to carry out any additional procedures with CONAGUA. As a result of the reform, it will be necessary to give notice to CONAGUA before using these waters. 

  1. The concept of “water for industrial use in mining” is created and the depth of wells is limited. 

To use national waters in the mining industry, a concession must be obtained from CONAGUA that expressly allows water for industrial use in mining. 

This type of concession does not allow the construction of wells whose depth could affect the exploitation of water for other uses. Even CONAGUA is prohibited from granting permits for deepening existing wells. 

  1. CONAGUA is prohibited from granting concessions in riverbeds or basins and in its federal zone that have as their objective the final disposal of mining waste or wastewater deposits. 

Sometimes mining projects are developed in small riverbeds and in federal zones. However, sometimes these rivers are actually intermittent water flows that meet the requirements to be considered national assets under the responsibility of CONAGUA. 

Before this reform, it was common for mining projects to divert or build tailings dams, tepetateras or deposits for non-hazardous mining waste on these runoffs. However, with the reform, CONAGUA would not be able to grant concession titles to occupy these areas. 

In our opinion, this provision will affect the development of mining projects in mountainous areas, as it will be technically difficult to find a space with the appropriate characteristics to build mining waste facilities. 

  1. The categories of metallurgical waste and mining waste are created, in addition to establishing new obligations for their generators.

Metallurgical waste is waste from the smelting, refining and processing of metals, while mining waste is waste from the exploitation and processing of minerals. This waste must be subject to a management plan approved by SEMARNAT. 

  1. Waste from mining activities will always be the responsibility of its generator. 

The reform does not distinguish between the waste that must be subject to this rule. Consequently, environmental authorities could argue that all waste from mining activity, regardless of its category, will always be the responsibility of its generator, regardless of whether it contracts with authorized companies for its transportation and final disposal. 

In our opinion, this provision contradicts the principles established in the LGPGIR, in the sense that the responsibility of a waste generator ends at the moment in which the waste is delivered to a person duly authorized for its transport and final disposal.

To consult the original publication in the Official Gazette of the Federation visit:  https://www.dof.gob.mx/nota_detalle.php?codigo=5688050&fecha=08/05/2023#gsc.tab=0

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New CRE criteria and methodology to determine electrical inspection or verification visits

Written by Santamarina + Steta en . Published in Updates.

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Executive Summary:

  • On May 8, 2023, Agreement A/007/2023 was published in the Official Gazette of the Federation (“DOF”), by which the Energy Regulatory Commission (“CRE”) modifies Agreement A037/2016, which issues the criteria and methodology to determine the verification or inspection visits that must be carried out and establishes the criteria and methodology to determine the verification visits that must be carried out in electricity matters (“Agreement”).
  • The CRE has the power to order and carry out verification visits, in order to supervise and monitor compliance of those regulated in electrical matters through the performance of both ordinary and extraordinary verification, inspection and supervision visits.

Content of the Agreement:

The Agreement supersedes the previous Agreement A/037/2016 and establishes new criteria and methodology for determining the verification or inspection visits to be carried out in the field of electricity. 

Visits will be carried out to permit holders in non-compliance and to those who comply in a systematic manner using appropriate sampling techniques. The CRE considers it necessary to carry out verification visits to verify compliance with the permit holders' obligations and to promote their compliance through appropriate regulatory supervision. 

The Electricity Unit (“UE”) of the CRE will determine which permit holders will be subject to a verification visit, taking into account the human and budgetary resources available to the CRE. The CRE may be assisted by verification units, third-party specialists and specialized companies, chosen through competitive processes.

Ordinary verification visits will be scheduled by the EU within an annual programme of verification visits, using the methodology of Annex I of the Agreement. Extraordinary verification visits are those carried out outside the annual programme of verification visits or because the permit holders present behaviours or predominant factors not contemplated in Annex I, and will be ordered randomly.

The design and preparation of the annual verification visit program must adopt 12 criteria established in the Organization for Economic Cooperation and Development (OECD) Guide for regulatory compliance and inspections (OECD Regulatory Enforcement and Inspections Toolkit, OECD 2018).

The EU will prepare a bi-monthly report informing the CRE Governing Body of the verification visits carried out during said period and the findings, emphasizing the non-compliances and observations detected in order to follow up and implement the appropriate measures, including the application of immediate measures for security reasons, opinions on the initiation of sanction procedures or recommendations of sanctions to said Governing Body. 

The Agreement enters into force on 9 May 2023.

Links to the publication:

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New Criteria and Methodology of the CRE to determine Verification or Inspection Visits in Hydrocarbon Matters

Written by Santamarina + Steta en . Published in Updates.

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Executive Summary:

  • On May 9, 2023, the Agreement by which the CRE modifies Agreement A037/2016 was published.
  • The CRE has the authority to order and carry out verification visits, in order to supervise and monitor compliance with hydrocarbon regulations, through the performance of both ordinary and extraordinary verification, inspection and supervision visits.

On May 9, 2023, the Agreement by which the Energy Regulatory Commission (“CRE”) modifies Agreement A037/2016, which issues the criteria and methodology to determine the verification or inspection visits that must be carried out and establishes the criteria and methodology to determine the verification or inspection visits that must be carried out in hydrocarbon matters (“Agreement”), was published in the Official Gazette of the Federation (“DOF”).

The CRE has the power to order and carry out verification visits, in order to supervise and monitor compliance of those regulated.1 in the area of ​​hydrocarbons, through the implementation of both ordinary and extraordinary verification, inspection and supervision visits.

Contents of the Agreement

The Agreement supersedes the previous Agreement A/037/2016 and establishes new criteria and methodology2 to determine the verification or inspection visits that must be carried out in relation to hydrocarbons. 

Visits will be carried out to permit holders in non-compliance and to those who comply in a systematic manner using appropriate sampling techniques. The CRE considers it necessary to carry out verification, inspection or supervision visits to verify compliance with the permit holders' obligations and promote compliance through appropriate regulatory supervision. 

The Hydrocarbons Unit (“UH”) of the CRE will propose to the Governing Body the annual program of verification visits, after consulting the corresponding administrative units, and will determine which permit holders will be subject to a verification visit, taking into account the human and budgetary resources available to the CRE. The CRE may be assisted by inspection units, third-party specialists and specialized companies chosen through competitive processes.

Ordinary verification visits will be scheduled by the UH in November of the previous year within an annual program of ordinary verification visits, so that the CRE Governing Body approves it in February of the year evaluated, using the methodology of the Single Annex.3 of the Agreement. 

Extraordinary verification hearings will be carried out, by way of example, but not limited to, based on the following considerations: 

  1. At the request of any of the Substantive Areas of the CRE4 in certain cases5.
  2. At the request of any Federal, State or Municipal Government agency.
  3. In response to a citizen complaint.
  4. According to reports in the media.
  5. In compliance with specific legal requirements.
  6. When conducting verification visits in conjunction with other government agencies (Federal Consumer Protection Agency, Security, Energy and Environment Agency, National Guard, Navy, among others). 

The number of extraordinary verification visits will vary; however, they will have priority over ordinary verification visits.

The UH will prepare quarterly reports informing the CRE Governing Body of the ordinary and extraordinary verification visits carried out during said periods, including the findings, as well as the non-compliances and observations detected in order to promptly follow up and implement the appropriate measures. 

The Agreement entered into force on 10 May 2023.

Links to the publication:

1. Regulated companies are those that carry out transportation, storage, distribution, compression, liquefaction and regasification activities and sale to the public of oil, natural gas, liquefied petroleum gas, petroleum products and petrochemicals, as well as transportation by pipeline, storage, distribution and sale to the public of bioenergy.

2. The criteria and methodology will be evaluated every five years or when the CRE considers it appropriate.

3. Applicable to ordinary and extraordinary verification visits. This methodology was developed to optimize CRE resources and assign verification visits to regulated entities with the highest risk of non-compliance. 

4. Petroleum, Natural Gas, LP Gas, or Hydrocarbon Market.

5. Namely: (1) inconsistencies in volumes received and delivered, as well as differences between purchase and sale volumes; (2) inconsistencies in statistical reports without activity; (3) when the permit holder does not notify the CRE of any situation considered in its permit; (iv) any observation, inconsistency or non-compliance with any obligation by the permit holder, and (v) any inconsistency that, at the discretion of each Substantive Area of ​​the CRE, considers any technical, regulatory or economic/financial issue.

Research Handbooks in Competition Law

Research Handbook on Cartels | Economic Competition in Mexico

Written by Santamarina + Steta en . Published in Updates.

The Cartel Research Handbook is a comprehensive and in-depth analysis of the most significant issues relating to the legal regulation of cartel activity in the area of ​​economic competition in Mexico and around the world. It also offers a practical overview of the experiences of numerous international jurisdictions in relation to the application of anti-cartel legislation.

Ivan Szymanski contributed to the “North America” chapter to provide the main economic, substantive and procedural issues encountered in cartel law in Mexico.

See the full manual here:

Research Handbook on Cartels

UPDATE cogeneration systems and efficient cogeneration SITE copy

CRE publishes updates to the values, criteria and methodologies regarding cogeneration and efficient cogeneration systems

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Executive Summary:

  • On May 26, 2023, the Energy Regulatory Commission published the agreement updating the values, criteria and methodologies regarding cogeneration and efficient cogeneration systems.
  • The Agreement considers combined cycle plants as sources of “clean energy”, creating problems in relation to the clean generation goals set by Mexico, also contravening the commitments it has in terms of emissions reduction with respect to its NDC and with the functioning of the clean energy certificate market.
  • The Agreement entered into force on May 29, 2023. It is relevant to note that the Agreement may be challenged through an indirect amparo trial.

On May 26, 2023, the Energy Regulatory Commission (“CRE”) published, in the Official Gazette of the Federation (“DOF”), the “Agreement No. A/018/2023 of the Energy Regulatory Commission updating the reference values ​​of the methodologies for calculating the efficiency of electric power cogeneration systems and the criteria for determining efficient cogeneration, as well as the efficiency criteria and calculation methodology for determining the percentage of fuel-free energy established in resolutions RES/003/2011, RES/206/2014, RES/291/2012 and RES/1838/2016, respectively” (the “Agreement”).

The Agreement was previously published as a draft by the CRE on the website of the National Commission for Regulatory Improvement (“CONAMER”) on May 23, 2023, along with a request for exemption from the Regulatory Impact Analysis (“RIA”) and was approved by the CRE in an Extraordinary Session on May 24, 2023. 

The Agreement considers combined cycle plants as sources of “clean energy”, generating the problems analyzed herein in relation to the clean generation goals set by Mexico, also contravening the commitments it has in terms of emissions reduction with respect to its NDC and with the operation of the clean energy certificate market (“CEL”).

Contents of the Agreement

The Agreement updates the values, criteria and calculation methodology for cogeneration and efficient cogeneration systems, including changes to: (i) different loss factors for different voltage levels; (ii) references for each capacity range of different power plants; (iii) the inclusion of power generation with two or more sequenced thermodynamic cycles (i.e. combined cycles); and (iv) the inclusion of power plants using auxiliary cooling technology.

The Agreement's updates indicate that combined cycle power plants should be considered as sources of "clean energy." The following problems are observed:

  • By considering combined cycles as clean energy plants, the CRE aims to artificially improve compliance with environmental goals to combat climate change and promote a low-carbon economy set by Mexico. These goals are included, among others, in the Energy Transition Law (“LTE”) and consist of Mexico generating 35% of its electricity from clean energy by 2024, as well as in international commitments such as the Paris Agreement where Mexico committed to reducing its greenhouse gas emissions by 22% by 2030.
  • By redefining the concept of clean energy to include combined cycles, the CRE would allow these power plants to obtain CEL, which would generate an imbalance in the CEL market, causing an oversupply of CEL that would nullify the value of the CEL market and nullify its value as a guide to verify progress in decarbonizing the country's energy matrix. 

Compliance with clean energy and emissions reduction goals, as well as Mexico's domestic and international commitments, must be achieved through a transition to a cleaner and more sustainable energy sector that promotes renewable energy, energy efficiency and reduces greenhouse gas emissions, and not through simulations such as the one promoted by the CRE through the Agreement. 

Likewise, the CEL mechanism and its legal regime must be respected in the terms in which it was designed with the aim of integrating new clean generation in the country, which will continue to encourage decarbonization and move towards a fair energy transition.

Furthermore, with regard to cogeneration, the LTE states verbatim that “electrical generation through combined cycles cannot be considered as efficient cogeneration”, which could lead to the interpretation and arguments that the Agreement's intention to consider combined cycles as clean energy sources is illegal.

Furthermore, the publication of the Agreement in the DOF took place only 3 days after its publication as a draft on the CONAMER website, where the CRE requested the exemption from the AIR to prevent the Agreement from being publicly consulted. The Agreement was approved by the CRE and published in the DOF without sufficient discussion or analysis by the commissioners, according to the words of CRE Commissioner Norma Leticia Campos Aragón.

The Agreement entered into force on May 29, 2023. It is relevant to note that the Agreement may be challenged through an indirect amparo trial.

See the original document: https://www.dof.gob.mx/nota_detalle.php?codigo=5690142&fecha=26/05/2023#gsc.tab=0

UPDATE LIMITS VAT ACCREDITATION SITE copy

Taxpayers who offset debts could be seriously affected by the jurisprudence that limits the crediting of VAT

Written by Santamarina + Steta en . Published in Updates.

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EXECUTIVE SUMMARY:

  • As we informed you in the Update of March 2023, as of May 12, 2023, the jurisprudence by which the Second Chamber of the Supreme Court of Justice of the Nation determined that civil compensation is not a means of payment for VAT, nor can it give rise to a request for a credit balance or accreditation, is mandatory for all Courts.
  • This has generated uncertainty regarding its application and possible effects for taxpayers who offset debts.

On May 12, 2023, jurisprudence 2a./J. 19/2023 (11a.) was finally published, issued by the Second Chamber of the Supreme Court of Justice of the Nation, which essentially states that, although civil compensation is a means of extinguishing the principal debt, it cannot be considered as a means of payment for VAT purposes, therefore, if compensation is used for the VAT part, this cannot be credited nor can a refund of the balance in favor derived from it be requested.

In this regard, although the ruling refers to the VAT Law in force in 2019 and 2020, the truth is that the scope and obligatory nature of the criterion has generated multiple questions regarding its application by the Courts and, of course, by the tax authority.

Some harmful consequences that could arise for taxpayers who use or have applied the figure of compensation in their transactions are mainly:

  • Uncertainty regarding the possibility of applying case law to the past, which could lead to reviews by the authorities, with respect to the last five years, in which the rejection of the crediting of the compensated VAT is determined and, consequently, to the determination of tax credits. 
  • Refusal of refunds in process.
  • Reviews of previously authorized returns in which verification powers were not exercised.
  • Analysis of a possible change in the way taxpayers who use offsetting on a daily basis operate; assessment of the possible risks if they do not do so.
  • Possible absorption of VAT as a cost, as it must necessarily be paid in cash.
  • Evaluating operational issues and potential risks in the event of applying options such as offsetting the principal amount of the debt and paying VAT in cash.

In this regard, we recommend that all our clients carefully analyse the impact that such jurisprudence may have on their various operations, in order to anticipate and mitigate potential VAT risks. At Santamarina + Steta we will be happy to advise you.

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Annual Operation Certificate

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The hydrocarbon, transportation, chemical, metallurgical, automotive, energy, cement and lime, asbestos, glass, agricultural and hazardous waste treatment industries that generate emissions into the atmosphere, hazardous waste and/or discharge wastewater into rivers, lakes, the sea or subsoil are required to submit each year to the Ministry of Environment and Natural Resources (“SEMARNAT”) the Annual Operation Certificate (“COA”) report.

The COA is a reporting instrument on emissions, generation and discharge of pollutants into the air, water, soil and subsoil. 

This is one of the most important environmental compliances, since, with the information collected, SEMARNAT updates the database of the Registry of Emissions and Transfer of Pollutants for statistical purposes and national pollution control.

In relation to this obligation, it is important to consider the following:

  1. Who must submit the COA? The hydrocarbon, transportation, chemical, metallurgical, automotive, energy, cement and lime, asbestos, glass, agricultural and hazardous waste treatment industries that (i) in their processes have fixed sources of federal jurisdiction, (ii) are large generators of hazardous waste (10 tons or more per year), (iii) provide hazardous waste management services, (iv) discharge wastewater into receiving bodies considered national waters, and/or (v) generate 25,000 tons or more of carbon dioxide equivalent of emissions of compounds or greenhouse gases.
  1. When does it show up? The COA must be submitted annually during the period from March 1 to June 30, and the previous year must be reported. It is important to note that the system closes on June 30 at 24:00 hours (CDMX) and does not allow late submission. In our experience, the system tends to become saturated during the last days of the submission period, so we recommend that you submit your application on time.
  1. How does it present itself? Electronically on the official platform that SEMARNAT created for its presentation: https://sinatec.semarnat.gob.mxThe generator must register on the platform and have a user, for which he/she must have the company information on hand, as well as that of his/her legal representative and, where applicable, the data entry specialist, and enter the corresponding documentation in PDF format so that SEMARNAT can validate it within one business day.
  1. What are the consequences of not filing or reporting incorrect information? If the COA is not submitted in a timely manner, SEMARNAT could impose a fine of $51,870.00. a $311,220.00 pesos. In the event that SEMARNAT detects that incorrect information was reported, it could impose a fine of up to $1 pesos. The above, considering that the unit of measurement and update is $037,400.00 pesos for 103.74. Since the presentation of the COA is the endorsement of the Single Environmental License (LAU), not presenting it would additionally imply processing the obtaining of a new license.
  1. Do I get any response from SEMARNAT? No, only the electronic proof of submission is obtained to prove compliance. It is necessary to keep the proof of submission for the last 5 years and show them in case the authority requires them. However, SEMARNAT may require any clarification on the information reported within 20 business days following its submission, and will give the company a period of 15 days to respond.
  1. Is it useful for anything else? Yes, in addition to being a compliance report, companies can use the COA to assess whether the information in their logs matches that in their manifests, as well as whether their periodic reports on emissions, discharges and generation are within the quantities authorized for the generator.
  1. Is there a similar obligation in the federal entities? Emissions, discharges and transfers under state jurisdiction (such as special handling waste) are subject to annual reporting by the entity in which they are generated, regulated by applicable local provisions. Some entities require that, once the report is submitted, the printed electronic receipt be displayed at the counter. The deadline for submitting the state report usually coincides with the federal report, with some exceptions such as the state of Baja California, which requires compliance from January 1 to March 31.
  1. Additional aspects to consider. For the correct display of the platform's content, we recommend using the Google Chrome browser, versions 44 to 50 and a minimum resolution of 1280 x 1024 pixels. We recommend constantly saving changes, as the platform only allows browsing the site for periods of 30 minutes. Afterwards, it is necessary to log in again.

UPDATE SAT SITE

The SAT cannot request sensitive data from third parties

Written by Santamarina + Steta en . Published in Updates.

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In a recent jurisprudence issued by the Federal Judicial Branch (PJF), it was established that, during a tax audit, the Tax Administration Service (SAT) cannot request personal information from third parties that are not being audited, such as their name, telephone number, email, RFC and address. This information is usually requested by the SAT, however, the PJF considered that this action is illegal and violates the right to data protection and privacy of the third parties involved.

Case law has established that personal information of third parties cannot be considered part of the tax accounting that companies must maintain, so the SAT does not have the authority to request this information.

In short, this jurisprudence will have a significant impact on all ongoing audit procedures, as it limits the extensive powers that the SAT has been exercising in its tax audits. This situation, in our opinion, will limit certain arbitrary actions that the authority has incurred, since in practice it usually requests excessive information that is impossible to provide.

If you are currently undergoing a tax audit, we recommend that you contact us for advice on the impact of this jurisprudence.