Member Article

On November 29, 2005, the Chamber of Deputies of Mexico’s Congress approved a draft of the “Civil Liability for Environmental Damage Law” (the “Bill”) which regulates liability for acts or omissions which have an adverse impact on the environmental. The Bill was sent to the Senate on December 1, 2005 and is now in the process of being studied by the Environmental, Economic Development, Justice and Legislative Studies Committees. It is presumed that it will be discussed in the plenary session of the Senate this year which means the Bill may suffer some modifications with the result that it will be necessary to wait until final approval by Congress and publication to know what the new law will finally look like. Taking this into consideration, following are some general comments on the Bill as approved by the Chamber of Deputies: 1. This Bill sets the standards for civil liability resulting from damage to the environmental caused by the acts or omissions as outlined in the Bill. It is important to take into consideration that liability will be imposed regardless of the fault or negligence of the person causing the harm or damage. Accordingly, the individuals, companies, or public bodies that by themselves or through their legal representatives, officers, or employees, cause environmental harm or damage are considered liable; moreover, when the responsibility for causing the environmental harm or damage falls on several people all of them will be considered to be jointly liable. The Bill considers that liability for harm and damage to the environment caused by acts or omissions having an environmental impact is always presumed to be that of those who carry out such activities, unless the contrary is proven and provided that a link is proven between the act or omission and the harm or damage caused to the environment. 2. The Bill establishes that there will be no civil liability when: a) The harm was produced by the fraud, fault or inexcusable negligence of the person that suffered it, and b) The harm or damage caused to the environment as the result of force majeure or Act of God. The Bill considers as harm, the loss or impairment suffered to the property of a person or a determined group of persons, or public body, as a consequence of acts or omissions having an environmental impact. It defines environmental damage as the prejudice caused as a consequence of acts or omissions having an environmental impact and, at the same time, it defines environmental prejudice as the loss, impairment or negative modification of the chemical, physical or biological conditions of the natural flora and fauna, the landscape, the ground, subsoil, water, air or the structure or functioning of ecosystems. 3. Another important aspect of the Bill is that individuals and companies that, as a consequence of environmental harm or damage, have suffered a loss or injury to person or property, will be able to claim for the damage suffered or may sue for damages, as well as the costs incurred in containing the environmental harm or damage. 4. Furthermore, the Bill also establishes that the following will have the right to sue in the federal courts for environmental harm or damage: a) The Federal Environmental Protection Agency; b) Municipalities or delegaciones of the Federal District; c) Any individual with his or her residence in the municipality or delegación of the Federal District in which the harm was done; d) Any non-commercial company that acts as a representative of the above mentioned individuals and that existed at least three years before the act or omission that gave rise to the environmental damage. 5. Those that decide to sue for the environmental harm or damage caused may only claim restitution of the chemical, physical or biological condition of the prejudiced ecosystems or reimbursement of the costs incurred in avoiding a worsening of the environmental deterioration. If restitution is impossible, an amount will be decided upon as an indemnity for the environmental damage caused and this amount will be paid to a Fund for the Restoration and Preservation of Ecosystems, managed by the Federal Environment and Natural Resources Department (SEMARNAT). The amount to be paid may be calculated using the services of the National Ecology Institute, the Federal Environmental Protection Agency or institutions of higher education or scientific investigation, although there are no guidelines for their doing so. 6. It is important to take into account that civil liability will be determined without prejudice to any criminal or administrative liability that may apply. Moreover, the Bill also establishes civil liability resulting from a criminal offense or administrative violation. 7. Another important aspect of the Bill is the limitation period for filing an action, specifically actions for harm or environmental damage must be filed within five years, calculated from the date the potential claimant becomes aware of the act or omission that caused the harm or, at the latest, 25 years from the date of the act or omission that caused the harm or environmental damage. In the case of acts or omissions of a continuous or continuing nature, the limitation period of 25 years will begin running from the day on which the last of such acts or omissions occurred. 8. The Bill establishes that the person who repairs the harm or environmental damage as required by the Bill may seek recovery of the amount paid from others who may also be responsible for the environmental harm or damage in accordance with the Bill or other legislation. 9. The Bill also establishes that environmental impact authorization for activities considered to have a high environmental risk, as defined by the Ecological Balance and Environmental Protection Law and its regulations, connected to the disposal of toxic waste or materials, involving water works, public communications, the electricity industry, and real estate development that may cause harm to coastal ecosystems, will be conditional upon posting security or a strict liability insurance policy with SEMARNAT. SEMARNAT will determine the amount of the security or policy although there are no parameters or guidelines for doing so. SEMARNAT will be required, within a period of no more than one year, to carry out a study, based on the environmental impact evaluation prior to the publication of the new Law in order to determine the amount of the security or insurance to be posted or obtained so that the works or operations contemplated by the Bill can continue. 10. Finally, the Bill establishes that whoever is carrying out any of the abovementioned activities on the date of the publication of the new law, must comply, within the 365 days following the date on which the law enters into force, with the obligation to demonstrate that they posted the security or obtained a strict liability insurance policy, in accordance with the procedure outlined in the Federal Civil Code and other applicable laws and regulations. As commented, the Bill may be modified and it will be necessary to review it again, once it has been approved and published in order to be more certain of its effect. The lawyers of the environmental area of this firm are at your disposition for any further comments on this issue. Daniel del Rio [email protected] , Fernando Mejía [email protected]