Land controversies threaten to impede Mexico's opening of oil and gas projects to international investment, warns an issue brief from the Baker Institute for Public Policy at Rice University, Houston.
Energy-reform legislation passed last summer gives energy development priority in land-use disputes (OGJ Online, Aug. 7, 2014). That already has provoked political resistance, write authors of the brief, Baker Institute Fellow Tony Payan and University of Texas at Brownsville Associate Prof. Guadalupe Correa-Cabrera.
The authors note that the reform law requires owners and users of land not owned by the government to sell acreage to or negotiate agreements with developers of energy projects. The obligation applies to private land, owners of which don't own mineral rights, and social land, much of which is owned communally under provisions of the Mexican Constitution.
"In other words, land owners and users are to permanently or temporarily cede their property for energy projects" and do not have the right of refusal, the authors write.
The law establishes obligations for energy developers related to matters such as notice and payment. And the government avoided the word "expropriation." The law nevertheless enables developers to ask the federal judiciary to force cession of land and to ask the Ministry of Agriculture to start compulsory mediation on how land will be ceded when they're unable to negotiate agreements with landholders within 180 days.
The development priority in use of private and social land has sparked a resistance movement and become an issue of leverage for groups opposed to energy reform. And energy developers might find Mexican courts unaccommodating in land-use cases.
"The government must move to anticipate these disputes and resolve them in advance by establishing a whole new regime on land ownership and use that deepens property rights and puts land owners and users on an equal footing with companies developing energy projects," write Payan and Correa-Cabrera. "Legislating that energy projects have priority and that there is no right of refusal is a sure way to invite social conflict rather than resolve it, particularly when it comes to social lands.
"Without such equity and respect for current landholders, the energy reform faces considerable hindrances despite the government's efforts to foster a more vibrant energy sector."
