November 18, 2014

Potential Popular Referendum on Mexico’s Energy Reform

By José María Lujambio I.

In August 2012, a decree of reforms to the Mexican Constitution on political matters was published in the
Official Journal of the Federation to, among other things, recognize the right of citizens to vote in popular
referendums on issues of national importance. Since then, this mechanism of direct democracy has complemented
the representative democracy model shaped by Articles 39, 40 and 41of the Constitution.

In terms of Article 35, section VII of the Constitution, popular referendums shall be called by Mexico’s Federal
Congress at the request of the President of at least 33% of the members of each of its chambers, or the equivalent
of a minimum of 2% of registered voters.

Under the latter option, last April members of the National Regeneration Movement (Movimiento de
Regeneración Nacional, or MORENA political party), presented a statement of intent before the Mexican Senate
so that on the election day in July 2015 the following question would be posed to Mexico’s electorate: “¿Do you
agree or not agree in granting contracts or concessions to private parties, whether national or foreign, for the
exploitation of oil, gas, refining, petrochemicals and the electrical industry?”. Members of the Democratic
Revolution Party (Partido de la Revolución Democrática, or PRD) submitted a corresponding notice to the
Chamber of Deputies so that citizens could be asked the following questions: “¿Do you agree that the reforms to
Articles 25, 27 and 28 of the Constitution in matters of energy should remain?”. Based on such initiative, the two
major political parties on the left of the ideological spectrum dedicated themselves to collecting the signatures of
millions of citizens that would support the referendum request, which results could reverse the constitutional
reform on energy that was enacted in December 2013.

In an exceptional example of prior review of constitutionality in the Mexican legal system, according to article 35
of the Constitution, Mexico’s Supreme Court of Justice (Suprema Corte de Justicia de la Nación, SCJN), shall
decide the constitutionality of the proposed referendum. Fundamentally, the high court must ensure that the

purpose of the popular referendum does not involve matters expressly forbidden by the Constitution, including,
among others, the restriction of human rights, national security, electoral matters and government income and
expenditures.

The Federal Public Referendum Law, which has been in effect since March of this year, puts the SCJN in charge
of deciding the constitutionality of this issue, in the case of those initiated by citizens, once the required
signatures have been obtained and certified with the National Elections Institute (Instituto Nacional Electoral,
INE) . Additionally, the SCJN should review whether the question posed arises directly from the subject matter of
the referendum; is not biased and does not contain value judgments; uses neutral, simple and understandable
language; and produces a categorical response, whether affirmative or negative.

On October 30th, the SCJN held in a plenary decision that the subject matter of the referendum requested by the
PRD and Morena was unconstitutional. The arguments of the majority of nine justices of the SCJN focused on
the direct relationship between the energy reform and government revenue. Some justices even emphasized the
fact that a principal justification of the reform was the need to increase such revenue. Apparently, the justices
were thinking only about revenue from the exploration and extraction of oil and gas, because it is not clear what
other energy sector activities are related in such a direct manner with the revenues of the Mexican government.
The only dissenting justice was José Ramón Cossío, who argued that the majority’s opinion was unduly
restrictive on the exercise of fundamental and political human rights that were recently incorporated into the
Constitution, based on an extremely broad definition of "income".

Also based on being linked to government revenue, some days afterwards the SCJN declared unconstitutional the
referendumproposed by the members of the National Action Party (Partido Acción Nacional, PAN) about
minimum wages. Similarly, it rejected the question posed by the Institutional Revolutionary Party (Partido

Revolucionario Institucional, or PRI) about reducing the number of deputies elected throughnominating slates,
because that is an electoral matter.

Therefore, in 2015 popular referendums will be held in Mexico. A long legal road ahead exists in order to define
the scope and limits of the rights provided by such popular voting instrument and, fundamentally, its effects. On
this issue, the Federal Public Referendum Law provides that the results of these plebiscites may be mandatory for
the Executive and Legislative branches and the “competent authorities”. At some point in the future, it will be
defined as to whether this includes the Constitution’s reforming body, which recently amended Articles 25, 27
and 28 of the Constitution on energy concerns. Someday, it will become clear what this constraint really means
and the consequences of ignoring it.

For now, the energy reform has become final at the constitutional level and deadlines have elapsed for
challenging its laws by way of a constitutional controversy and the appeal action alleging unconstitutionality. For
people dissatisfied with the implementation of these norms, they may file an “amparo” appeal lawsuit. Mexico’s
President has already issued the respective rules and decrees for the creation of new agencies. In this regard, there
have already been several appointments. In addition, Mexican regulatory agencies are beginning to issue some
documents and rulings required by the transitory provisions. In short, the implementation of the energy reform is
underway.


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Issue 127–November 2014