Academic journal article Houston Journal of International Law

The Energy-Water Nexus: Water Regulation in the Wake of Mexico's Hydrocarbon Reform

Academic journal article Houston Journal of International Law

The Energy-Water Nexus: Water Regulation in the Wake of Mexico's Hydrocarbon Reform

Article excerpt

I.   INTRODUCTION  II.  HYDROCARBON REGULATION IN MEXICO: NEW      DEVELOPMENTS      A. The PEMEX Era: 1938-2013      B. The Constitutional Amendment Age: December 20,         2013 to Present      C. Water Permitting      D. The New Agency: National Agency for Industrial         Safety and Environmental Protection (ASEA)  III. GROUNDWATER SOURCING      A. Shale Development by the Numbers      B. Water Availability in Mexico      C. What Is at Stake?      D. The Changing Landscape of Water Regulation      E. Managing Water Scarcity with Government         Management Plans  IV.  POTENTIAL SOLUTIONS      A. Purchase Permits from Existing Users      B. Discover and Tap New Aquifers      C. Recycle and Treat Wastewater      D. Use Water from the Gulf of Mexico.  V. CONCLUSION 

I. INTRODUCTION

Water catalyzed political change throughout Mexican history: from ancient water management in Tenochtitlan (the area known today as Mexico City), to the 1910 revolutionaries demanding access to sanitary water in the capital city, to the early years of oil exploration in the desert, water has been a guiding force for Mexican policy makers. (1) Mexico has produced oil since the time of the Aztecs and Maya, who used petroleum to color fabrics and make glue. (2) Given that water is a key input for petroleum drilling, water has been an important concern for Mexico in developing its petroleum reserves.

In 1868, commercial oil production began in the state of Veracruz. (3) Beginning in 1938, when President Lazaro Cardenas del Rio expropriated foreign oil companies, Petroleos Mexicanos (PEMEX) conducted all petroleum exploration, exploitation, refining, and marketing in Mexico. (4) Decades of dysfunction, corruption, and decreasing production and profits, combined with soaring high oil prices on the global market, however, created the ripe conditions for a politically and economically expedient Constitutional amendment. (5) On December 20, 2013, Mexico amended Articles 25, 27, and 28 of its Constitution to establish new industry structures for oil, gas, and electricity. (6)

The reforms created by the Constitutional amendments, which overhauled the hydrocarbon, electricity, and financial industries, are broad and far-reaching. (7) The changes relevant to the reforms include the following. First and foremost, the reforms maintain state ownership of subsoil hydrocarbon resources. (8) For the first time in 75 years, however, private companies are allowed to take ownership of the resources once they are produced. (9) Second, the reforms transformed PEMEX into a productive state enterprise with the legal, contractual, and fiscal autonomy necessary to contract with private companies for shale oil and gas exploration. (10) Third, the four federal regulatory entities that oversee the hydrocarbons industry--the Ministries of Energy and Finance, the National Hydrocarbons Commission (CNH), and the Energy Regulatory Commission--were strengthened. (11) Additionally, the government created a new entity, the National Agency for Industrial Safety and Environmental Protection (ASEA). (12) Following the constitutional amendments, which outlined the general structure of the reform, secondary laws were enacted to fill in the gaps. (13)

While there is an abundance of material analyzing the strength and promise offered by Mexico's hydrocarbon reform, there is a relative dearth for the same information regarding water resources. According to water policy expert Regina Buono,

   Energy has long enjoyed a high degree of awareness by    the public; prices are watched carefully--made easily    available via newspapers, television, and prominent    websites--and advances have been made in energy    efficiency. In contrast, water has not benefited from the    same kind of attention and lacks any real incentives--commercial    or political--for conservation and efficient    use. (14) 

This Comment seeks to provide an overview of the existing laws governing water consumption in the oil and gas industry and to prescribe recommendations for amending the aquatic regulatory framework in light of the recent oil and gas reforms. …

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