Since 2020 and throughout 2021, the Mexican Government has enacted a series of measures and reforms that seek to strengthen the role of the Federal Electricity Commission (Comisión Federal de Electricidad or CFE) and Petróleos Mexicanos (“Pemex”), both state-owned entities, in the Mexican energy sector.
The Mexican Energy Regulatory Commission (Comisión Reguladora de Energía or CRE) has stopped granting private investors permits for the marketing of inter alia fuel products. This year alone it has canceled more than 200 permits, alleging inactivity by the permit holders.
In addition, last July, the Mexican Tax Administration Service (Servicio de Administración Tributaria or SAT) suspended more than 80 private companies from the registry of authorized importers, for not complying with a series of minor requirements under the Mexican Foreign Trade Rules (Reglas de Comercio Exterior). These companies will no longer be able to import fuels into Mexico.
These measures have stalled the Mexican fuel market and caused the closure of storage terminals owned by private investors; in addition, the measures help to ensure that Pemex will gain a dominant position in the Mexican fuel market. Such concerns were voiced by the Alliance for Trade Enforcement (AFTE) in a letter addressed to US Vice President Kamala Harris on September 7, 2021.
As a consequence of these and other measures adopted since 2020 by the Mexican government, investors who have participated in projects in this sector in Mexico are striving to remain informed about evolving energy policies in Mexico while considering their rights and available legal remedies, both at the local jurisdictional level (by means of amparo constitutional review actions), and under the applicable bilateral or multilateral investment treaties (by means of investor-state dispute settlement mechanisms, ie, arbitration).
DLA Piper’s commodities group lawyers in the US and Mexico are active in advising both US and Mexican entities that have invested in energy projects in Mexico and/or trade energy products in Mexico of their legal and contractual rights, as well as their dispute resolution options in both the court systems of the US and Mexico and the investment provisions of international treaties (such as NAFTA and USMCA). For more information, email CommoditiesGroup@dlapiper.com.