Reconciling Social and Environmental Protection

A first reading of the energy industry’s regulatory framework suggests that environmental impact assessments should be prioritized, followed by indigenous consultations and finally, the social impact assessment. But Luis Vera, Former Partner at socio-environmental law firm V&A, says this is not always the case. “The logic behind this established timeline is at odds with the actual fieldwork,” he says. “Environmental impact assessments have looser time frames and we use this time to simultaneously cover the social aspects that overlap with environmental issues.” This means the firm can get a sneak peek at social insights such as indigenous presence or sensitive environmental areas prior to carrying out the consultation process.

Compliance with the social and environmental requirements when developing a large-scale energy project can prove challenging, especially considering the regulatory framework remains largely in the draft stage. Duplication of responsibilities within government agencies does little to solve the problem, says Vera. “SEMARNAT and ASEA developed two different standards of the same regulatory framework due to their respective mandates,” he says. “Meanwhile, the Ministry of Energy’s social impact guidelines are still on the drafting table, meaning social impact assessments lack an established reference.”

In 2017, the firm obtained 43 authorized social impact assessments, with 24 more in the pipeline for 2018. Using this experience, V&A established a series of precedents related to energy law interpretation and how environmental legislation applies to both regulated and nonregulated users. “V&A showcased consistency in all its assessments and legal interpretation to help decision-makers streamline their authorization and permitting processes,” he says. “Our work also generates certainty in evaluation by financial entities.”

Oak Creek’s Tres Mesas wind farm in Tamaulipas is among the large-scale energy projects V&A was involved in. It started as a pilot project that soon extended to a first and second development phase totaling 148MW of installed capacity, operating since May 2017. The project now includes two additional development phases that will add another 150MW of installed capacity. “Each development stage required a different assessment, including social and
environmental impact assessments,” says Vera. Based on the 185 firm’s extensive work dealing with social and environmental issues, Vera believes it is essential for developers to be aware of the importance of these steps. “Investors must become increasingly aware that nontechnical issues have a prominent social component,” he says. “Anthropologists and sociologists must be involved to build lasting relationships with local communities.”

When presenting its social and environmental impact assessments, V&A adds a chapter that takes into account the project location’s needs and regional development goals. “By doing so, our clients obtain increased certainty on where to focus their investment, not only to grow the company’s own business but also to contribute to the long-term regional development of the project’s location,” Vera says. The firm is also actively involved in the public side of the social and environmental equation. “One of our partners is developing an algorithm together with the Ministry of Energy so it can be more selective in the projects it reviews, shifting from anecdotal to standardized procedures.”

In the near term, Vera worries litigation services will be more in demand due to the way the first procurements and allotments were carried out after the reform passed, both in the oil and gas licensing rounds and the long- term electricity auctions. “ASEA’s and SEMARNAT’s early heavy workload and understaffed agencies mean some shortcuts were taken, such as hastily granted authorizations and procedures, casting doubt over the legality of a few projects,” Vera explains.

From its outset, V&A established itself as a strategy firm rather than a litigation firm, given effective strategies eliminate the potential for later litigation, but that is changing. “We prioritized creativity over legal defense. But considering the coming scenario, we are also developing a specialized litigation department,” says Vera.