Relevant social and environmental impact matters for project development

April 2017 | EXPERT BRIEFING | SECTOR ANALYSIS

financierworldwide.com

In Mexico, there is an increasing tendency to see the development of projects either delayed, or cancelled, as a consequence of social protests. Social discomfort around a project may arise when the rights of indigenous people are not respected and they are not consulted prior to development. It may be a consequence of a lack of proper information and access to it. Or it may be caused by political interests, when relevant actors within the community generate anger and confusion around a project for personal gain.

In Mexico, we have different procedures to ensure the right to consultation, participation and hearing of communities (including indigenous peoples) regarding the development of projects affecting their environment. This consultation is not only enshrined within national legislation but also protected by international treaties, such as Convention 169 of the International Labour Organisation (ILO).

For communities in general, Mexico’s environmental legislation foresees a process known as public consultation in which community members may reach out to the Ministry of Environment and Natural Resources (SEMARNAT) to gain access to the environmental impact assessment study. As such, interested parties may be informed and even propose mitigation and compensation measures, which SEMARNAT may include as part of the evaluation process to issue an environmental impact authorisation.

Mexico is one of the most diverse countries in the world; however, the current administration has attempted to achieve what may seem contradictory: promoting large economic developments while preserving the environment for future generations. This poses a real challenge to any company hoping to construct and operate a new project, since in addition to all the environmental studies (which from a technical and legal standpoint are required prior to any project), communities are becoming, regardless of the source of their concern, much more protective of their ecosystems; at the same time, they have become more distrustful of the government. Hence, people tend to start by doubting the veracity of the information they receive, and even when an environmental impact authorisation is issued, it is possible for a community to seek its nullification if a problem is found. Nongovernmental organisations have become key players in this respect, following developments near relevant or sensitive ecosystems, and are actively involved in the organisation of communities (including indigenous ones) against projects considered a threat.

Considering that energy projects are strategic for Mexico’s development, with the energy reform, legislators sought to provide legal certainty around social aspects for projects associated with hydrocarbons and electric industry sectors. The legislation on the matter, deemed as mandatory the development of a social impact assessment, to be approved prior the issuance of the corresponding permits for the development of activities within such sectors. The assessment differs from the environmental consultation process and is designed to provide an identify, characterise, predict and value the social impact consequences of developing energy projects, as well as social mitigation measures and management plans, including the design and implementation of grievance mechanisms. For the purpose of such an assessment, the Ministry of Energy must issue general administrative dispositions regarding the social impact assessment, establishing the methodologies for defining the influence area and determination of impacts. A project was submitted on 6 March 2015, and this project is still under revision. This situation represents a challenge since the assessments are currently made following international experiences but without a precise guideline.

Social assessment does not exempt a petitioner from also following the public consultation process of the environmental impact assessment. Furthermore, the environmental impact assessment process for hydrocarbon sector projects is to be followed before the Environmental Agency for the Energy Sector (ASEA), which establishes the need to submit, along with the application for environmental impact authorisation, the conclusions of the consultation of indigenous people on environmental aspects. The Ministry of Energy is also required to carry out a public consultation with indigenous communities (in terms of Convention 169) when a project could affect their interests and rights. It is important to note that, although it is the Ministry of Energy which needs to carry out this public consultation, in the event of neglecting such an obligation, any permits issued could be voided to the detriment of the project’s developers.

According to information from the World Bank and the non-profit Foundation of Indigenous Patrimony Mexico, Mexico is the Latin American country with the largest number of indigenous people and native languages, with 67 (accounted for) indigenous communities. Convention 169 clearly specifies that indigenous and tribal peoples have, regarding the process of development, the right to: be consulted; carry out impact assessment studies (which should be undertaken, when appropriate, before any planned development can take place); decide the kind of development and the way and speed at which it should take place; participate in all steps of relevant plans and programmes for development at local, national and regional levels; and control their own economic, social and cultural development and to develop their own institutions and initiatives.

Convention 169 also states that indigenous and tribal peoples have rights to the land they traditionally occupy. This can be problematic for many projects, particularly highways and pipelines.

The Convention states that governments shall take measures, in cooperation with the peoples concerned, to protect and preserve the environment of the territories they inhabit. Use of, and access to, natural resources forms the basis of many indigenous peoples’ subsistence economies. To ensure the survival of indigenous and tribal peoples, it is therefore necessary to protect their natural resources, as well as their traditional practices for using, managing and conserving these resources.

Mexico’s Supreme Court has issued several jurisprudence criteria regarding the protection and defence of indigenous and tribal communities in light of the Convention 169. Among the most relevant has been the ruling which states that since there is a lack of a formal procedure established in the Constitution in order to determine a person’s indigenous or tribal condition, the mere self-declaration or self-identification as an indigenous or tribal individual will be sufficient to be fully subject of the constitutional dispositions for the protection of such communities; this is a double edged sword, however, that could be used to discourage project development.

To conclude, the success of project development will not only depend on legal and technical feasibility, but will also require a strong social grounding, controlling the expectations of involved stakeholders, otherwise the investment can be compromised by third parties with their own agendas and interests.

Leopoldo Burguete-Stanek is a partner at Gonzalez Calvillo. He can be contacted on +52 (55) 5202 7622 or by email: lburguete@gcsc.com.mx.

Leopoldo Burguete-Stanek

Gonzalez Calvillo