Member Article

The Ministry of Energy published the General Administrative Rules on Social Impact Assessment of Projects in the Energy Sector (“Rules”). The Rules set forth requirements for drafting and filing an Assessment report, as well as the procedure for the issuance of a Resolution and Recommendations.

After a 3-year public consultation process, on June 1^st, 2018, the Rules were finally published on the Official Gazette of the Federation, entering into force on June 2^nd.

Pursuant to the Hydrocarbons Law and the Electric Industry Law, assignees, contractors, as well as those interested in obtaining a permit or an authorization to develop energy projects, should file with the Ministry of Energy a Social Impact Assessment, that is, a report identifying local communities within the area of influence of the project and containing the identification, description, prediction and assessment of the consequences which may arise, as well as mitigation measures and social management plans.

The Rules regulate the content and methodology applicable to the Assessment report and the processing and issuance of a Resolution and Recommendations by the Ministry of Energy. Moreover, the Rules set forth a comprehensive list of activities within the hydrocarbon and electricity sectors which are subject to Social Impact Assessment, along with a list of exempted activities.

Activities subject to Social Impact Assessment are divided into four categories. General requirements are established for all four categories along with additional requirements specific to each category.

Application processing times are consistent with the ones set forth by Regulations of the Hydrocarbons Law (90 business days) and the Electric Industry Law (90 calendar days), but the Ministry of Energy will now be obliged to notify the applicant within 30 (electric sector) or 40 business days (hydrocarbons sector) following the date of submission of the Assessment, if and whenever a consultation to the indigenous communities is required.

A change of control provision is incorporated by the Rules requiring legal entities to inform the Ministry of Energy of any change in ownership of the assessed projects. It should be noticed that the Rules are not clear as to the legal effects a change of control may have in the assessed projects (e.g. modification or revocation of the Resolution).

Last and also consistent with the Hydrocarbons Law, the Electric Industry Law and their Regulations, the Rules condition the initiation of energy projects to securing a Social Impact Assessment Resolution.