The past, present and future of energy law in Mexico: energy law from 1992 to 2022

Abstract

This paper analyses how the North American Free Trade Agreement (NAFTA) influenced the opening of the Mexican energy sector, beginning in 1992. It evaluates how the multiplication of legal bodies governing the energy industry calls the attention of scholars to the analysis and systematisation of this novel legal discipline. The survey includes a discussion of the 2013 constitutional energy reform and how international treaties shield this reform, preventing a new constitutional amendment from reversing the opening of the Mexican energy sector. Finally, it emphasises that Mexican energy law is now not separate from international commercial law.

Keywords:

• energy law
• international treaties
• trade agreements
• parity principle
• national treatment

Acknowledgements

I acknowledge with thanks the helpful comments of Don C. Smith, as well as the anonymous reviewers for their valuable comments and contributions.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 In 1901 Porfirio Diaz issued the first Petroleum Law.

2 DOF 28-11-2008.

3 JJ González Márquez, ‘Energy Security and Energy Sovereignty in Mexico’ in B Barton and others (eds), Energy Security Managing Risk in a Dynamic Legal and Regulatory Environment (Oxford University Press 2004).

4 In 1992, the Electric Energy Public Service Law reform allowed private investment in electricity generation under an independent producer.

5 JJ González Márquez, Nuevo Derecho Energético Mexicano (Universidad Autónoma Metropolitana 2017).

6 Hydrocarbons Law, Electricity Industry Law, Geothermal Energy Law, Law of the Coordinated Regulatory Bodies in Energy Matters, Law of the National Agency for Industrial Safety and Environmental Protection in the Hydrocarbons Sector, Law of Petroleos Mexicanos, Law of the Federal Electricity Commission, Law of Income on Hydrocarbons and Law of the Mexican Petroleum Fund for Stabilization and Development.

7 National Water Law, Organic Law of the Federal Public Administration, Foreign Investment Law, Mining Law, Public–Private Partnerships Law, Federal Law of Parastatal Entities, Public Sector Procurement, Leasing and Services Law, Public Works and Related Services Law, Federal Law of Rights, Fiscal Coordination, Budget and Fiscal Responsibility Law and General Law of Public Debt.

8 In Mexico, a constitutional reform requires the approval of two-thirds of the Congress of the Union and the majority of the 32 local congresses.

9 JJ González Márquez, ‘Regulation of Electricity Storage, Intelligent Grids, and Clean Energies in an Open Market in Mexico’ in D. Zillman and others (eds) Innovation in Energy Law and Technology (Oxford University Press 2018).

10 The reform published in the Official Journal of the Federation on 23 December 1992, allowed private companies to generate electricity for sale to the CFE under the independent electricity producer scheme.

11 Carlos Salinas de Gortari was the sixtieth president of Mexico, from 1988 to 1994.

12 The North American Free Trade Agreement (NAFTA) signed by Mexico, the United States and Canada in 1992 led to Mexico's energy sector reorganisation. In Annex 620 (3) of Chapter Six of NAFTA, Mexico formulated several reservations on strategic activities concerning, among other things, trade and investment in the energy sector. However, some exemptions to these reservations are possible. The Mexican state reserves the right to provide electricity as a public service in Mexico, including generation, transmission, transformation, distribution and supply of electricity. NAFTA does not allow private investment in any listed activities except under the conditions provided for in Annex 602(3) para 5. However, the Annex does allow private investment in the following areas: production of electricity for own use, cogeneration and independent power production.

13 By 2020, according to CRE's data, 649 electricity generation permits had been granted. See: Gobierno de México, Permisos Otorgados por la comisión. Available at: <https://datos.gob.mx/busca/dataset/permisos-otorgados-por-la-comision/resource/44c01494-885f-4cd8-b336-573f3212b9a1> accessed 17 January 2022.

14 M Becerra Ramírez and others, ‘La Soberanía en la Era de la Globalización’ in M Becerra Ramírez, and T Müeller Uhlenbrock (eds), Soberanía y Juridificación en las Relaciones Internacionales (Universidad Nacional Autónoma de México 2010).

15 This agreement replaced NAFTA, which in 1994 created the world's largest free-trade region. The new Free Trade Agreement between Mexico, the United States and Canada, known as T-MEC, entered into force on 1 July 2020.

16 For their part, Canada and the United States negotiated a side letter to the T-MEC on energy. Letter from Robert Lighthizer Christia Freeland (30 November 2018) <www.international.gc.ca/trade-commerce/assets/pdfs/agreements-accords/cusma-aceum/letter-energy.pdf> accessed 6 February 2020.

17 This equalisation stems from a bill that was widely debated during five legislative sessions in the US Congress between 1995 and 2002. The initiative, known as the Caribbean Basin Interim Trade Program/NAFTA Parity, was passed by both houses and signed by President Clinton on 18 May 2000, and authorised for implementation on 2 October 2000 in Presidential Proclamation 7351. M Gutiérrez Haces, ‘Incidencia Del TLCAN y De Los Acuerdos De Protección A La Inversión Extranjera Sobre Las Relaciones De México Con La Unión Europea’ (2014) 11(31) Economía UNAM 25.

18 The 2013 Mexican energy reform is incorporated directly into the CPTPP Annex I-Mexico, p 27.

19 The TPP negotiations were concluded on 5 October 2015. It is not a traditional free trade agreement; it is a form of ‘economic constitution’ that provides the ground rules for the governance of cross-border trade and investment in the Pacific region.

20 Adopted on 16 June 2000.

21 A Faya Rodríguez ¿Cómo se determina una expropiación indirecta bajo tratados internacionales en materia de inversión? Un análisis contemporáneo in S Rodríguez Jiménez and H Wöss (coords.), Foro de arbitraje en materia de inversión, tendencias y novedades (2016 UNAM, Instituto de Investigaciones Jurídicas).