Papers Relating to the Foreign Relations of the United States, 1920, Volume III

812.6363/679

The Chargé in Mexico (Summerlin) to the Secretary of State

Mexico, May 7, 1920.
[Received May 25.]

No. 3129

Sir: I have the honor to send enclosed, translation of a circular dated April 21, 1920, issued by the Mexican Department of Industry, Commerce and Labor, embodying regulations for the exploitation of petroleum and other hydrocarbons existing in the federal zones of Mexico.

This translation was made from an article which appeared in El Universal of April 30, 1920.

I have [etc.]

George T. Summerlin

[Enclosure—Translation⁴¹]

Circular No. 10 of the Mexican Department of Industry, Commerce, and Labor, April 21, 1920, Establishing Regulations for the Execution of the Executive Decree of March 12, 1920⁴²

For the purpose of fulfilling the provisions of article IV of the decree of the President of the Republic dated the twelfth of March of the current year, which fixes the general bases which shall regulate the concessions which may be granted for the exploitation of petroleum and other hydrocarbons existing in the subsoil of federal zones, etc., of the national territory, this Department has seen fit to issue the following regulatory articles:

I. For the purposes of the present regulations there is understood by exploitation of the subsoil the extraction and collection of the following substances:

(a) Petroleum which may be found in beds, pools, and natural deposits;

(b) Gaseous hydrocarbons which may be found in the subsoil or which may escape to the surface of the ground;

(c) Natural deposits of ozocerite and asphalt;

(d) All mixtures of hydrocarbons of the different groups which owe their origin to natural agents.

II. Concessions cannot be granted to exploit any portion of the lands under consideration to which there may apply any exclusive concession in force which was issued previously or any concession the settlement of which is pending.

III. Every petition shall refer exactly to a portion of land having a continuous surface. In cases of rivers or creeks, the concession which may be granted shall give the right to exploit the zone situated on a single one of the banks and the corresponding half of the bed.

IV. The petitioner for a concession shall present in triplicate to the proper agency of the Department of Industry, Commerce, and Labor in petroleum matters a written petition in which he states his name, age, profession, place of residence, and nationality as well as the location, extent, boundaries, and all other distinguishing marks which may serve to identify the zone the exploitation of the subsoil of which is requested.

V. If the petitioner should be a foreigner or foreign company, the petition shall be received and continue its regular course, but the concession shall only be granted to a Mexican by birth or naturalization or to a company, organized in conformity with the laws of the country, to which the petitioner may cede his rights within a period of three months from the date which the Department of Industry sets for this purpose.

VI. The petitioner shall present, together with his petition, a certified statement of the Main Tax Office having jurisdiction in which it is stated that he deposited the value of a year’s rent in accord with article X, section 1, of the relative regulations.⁴³

VII. The agent of the Petroleum Division shall receive the petition and record it in his register and shall note on the original and on the copies of the petition the date and the hour of presentation. The petitioner may require that these notations be made in his presence. If, in the opinion of the agent, the petition should not be sufficiently clear or data should be lacking, he shall ask the one presenting it for the necessary explanations and shall set these down on the original and on the copies and in the registry book. The lack of explanations shall not be a reason for failing to register the petition. The duplicate, with the proper notations, shall be returned to the person who presented it.

VIII. Within three days after the presentation of a petition and in view of the explanations, in case it has been necessary to make them, the agent shall determine whether or not it is to be accepted. In the affirmative case, he shall proceed to make out the papers; and in the negative, he shall set down in writing the reason for his determination, which shall be subject to revision by the Department of Industry, Commerce, and Labor upon the request of the petitioner presented to the same agent when advised that his petition is not accepted or within three days thereafter.

IX. When two or more petitions referring to the same land shall have been simultaneously declared acceptable, that one shall take its course which is designated by lot, unless the preference should be decided by agreement between the parties interested.

X. When several petitions are presented simultaneously for different tracts, all of which, however, contain a part in common, a drawing shall be held in which all the petitions presented play a part. If the petition favored by lot includes the other petitions presented, these other ones, which have entered into the drawing, shall be definitely excluded by that single fact alone; but if the petition favored includes only a part of the land denounced, the remaining part shall be subjected to a new drawing of all the petitioners except the one favored in the first drawing; and if after the second drawing some part of the land should still remain in dispute, another drawing or other drawings, if it should be necessary, shall be held in accordance with the same procedure. These shall take place at intervals of three working days so that the petitioners may be present at each one of them with their petitions duly inspected. Those who do not attend the drawing to which they are summoned shall lose on this account their rights to the advantage secured from participation in the first drawing.

XI. Once the agent accepts a petition, he shall publish it on his bulletin board for a month and shall order it to be inserted three times, within the same period, in the Diario Oficial and in two other newspapers chosen from among those having the largest circulation in the locality. The interested party shall be responsible on his own account for these inserts.

XII. Causes for objection which may suspend action on a petition to exploit the lands under consideration are:

(a) The total or partial invasion of a piece of land which has been granted previously to another person for its exclusive exploitation and the concession to which has not been canceled;

(b) A petition pending settlement which was presented previously, in accord with the law, for a concession to a part or the whole of the same land solicited;

(c) The holding of preferential rights to the portion of land solicited or part of it as established in the relative regulations.

XIII. An objection based upon any of the causes established by the foregoing article shall be made before the proper petroleum agency within a period of 60 days reckoned from the date on which the petition is published on the bulletin board of the agency.

XIV. The objector shall present, together with his objection, a certified statement from the Main Tax Office concerned in which it is stated that he has deposited a year’s rent for the tract of land in question in accord with article X, section 1, of the relative regulations. Without the presentation of this certified statement the objection shall not be entered.

XV. In case objection is made, the parties shall be summoned to a conference for the purpose of bringing about an agreement; in case an agreement is not effected, the agency shall inquire through the speediest channels whether this Department, acting in an administrative capacity, should definitely settle this matter or whether the judicial authorities are the ones who should do so, without detriment, in either case, to the rights of the one making the objection.

XVI. If the judicial authorities are the ones who should settle the question of the objection, proceedings in the case shall be suspended and the papers shall be sent, within 48 hours, to said authorities so that they may render the proper decision. The objector may only base his objection on the causes which he shall have alleged and which are expressly stated in the administrative papers just as they were transmitted to the judicial authorities.

XVII. If the administrative authorities are the ones who should decide the question of the objection, the proceedings in the case shall be continued to the end that in due time the Department of Industry, Commerce, and Labor may definitely decide upon the objection after hearing the petitioner and the one objecting to the granting of his petition.

XVIII. Any cause for objection different from those expressed in article XII should be alleged before the agency but the agency shall not suspend proceedings. When the papers pass to the Department of Industry, Commerce, and Labor for its examination, this Department shall decide whether that cause for objection should or should not be taken into consideration. In the affirmative case, the objection shall be thoroughly examined and shall be settled by observing, in so far as advisable and practicable, the stipulations of articles XIV–XVII. If the Department does not take that objection into account, it shall proceed as though this had never been made and shall respect the rights of the objector.

XIX. The Department of Industry, Commerce, and Labor may, during the examination of the papers, take into consideration objections which may be presented to it, provided the objector gives proofs that he has not taken up with the petroleum agency causes for objection which do not fall under its jurisdiction.

XX. The following persons shall be declared negligent: the petitioner for a concession who does not publish the inserts mentioned in article XI within the period of time set; the person who does not make the explanations requested of him to the end that his petition follow its regular course within the time fixed for it to do so; the person who does not attend the conference on arbitration when objection is made to the same petition; and the person who, once the examination of the papers is finished in the Petroleum Bureau, does not make the deposit mentioned in article XXVIII within the period of three months fixed for this purpose. The petitioner who has been declared negligent shall lose the rent which he shall have deposited in accordance with the provisions of article VI; but he may, if he so desires, present a new petition relative to the same concession provided he makes a new deposit and with the understanding that no preference is to be shown him with respect to any other petitioner who may present himself. The course followed by the second petition shall begin in accordance with the present prescriptions.

XXI. The objector who does not attend the conferences of arbitration shall be considered as having ceased his objections except in the case of force majeure.

XXII. The person who has ceased in his objections or whose objections prove unfounded shall lose the deposit fixed by article XIV, and this shall be applied to the payment of a year’s rent for the zone in question, counted from the date of the petition. In case the petitioner ceases in his action, he shall likewise lose the deposit which he shall have made.

XXIII. By the sole fact of objecting to a petition presented, the objector, in case he obtains the final decision in his favor, compromises himself to ask for the concession to exploit the land referred to in his objection. If the objector does not fulfill this obligation within the space of a month which shall be granted him from the time the objection has been decided in his favor, he shall lose ipso facto all his preferential rights to the land in question besides the deposit which he shall have made in accordance with the provisions of article XIV.

XXIV. In case a petitioner does not secure the final decision in his favor, on account of some objection made to his petition, the deposit which he shall have made in accord with article VI shall be returned to him.

XXV. The Department of Industry, Commerce, and Labor may pardon the offenses of the negligent petitioner whenever he gives proofs, within the time in which his petition is being acted upon and the papers examined, that his offenses were due to accident or force majeure.

XXVI. In case the period of 60 days elapses without any objection having been presented which might give occasion to the suspension of administrative proceedings, the petroleum agent shall transmit to the Department of Industry, Commerce, and Labor a copy of the papers, in the condition in which they are found.

XXVII. Concessions shall be issued through the Department of Industry, Commerce, and Labor after the Petroleum Bureau has examined the papers of the agency. These concessions confer the right to exploit the respective zones without any other formalities.

XXVIII. Before a concession may be granted, the petitioner shall prove to the Department of Industry that he has made the deposit in the General Treasury of the Nation referred to in article XIV of the relative regulations.

XXIX. Outside of the cases provided for in article V, concessions shall be granted, without detriment to a third party, in favor of the one making the denouncement. In order that these may be granted in favor of a different party, it shall be necessary to prove by means of a public document the transfer of the privileges of the petitioner in favor of this party.

XXX. The concessionaire may extract from the respective zone all the substances referred to in article I, the only limitations being that he must not invade the adjacent lands with his excavation works and that he must fulfill all the regulations in force in this regard.

XXXI. The concessionaire may make use of the surface waters for the necessities of exploitation in accordance with the ordinary laws on this subject. He may also use the subsoil waters to the same end after he has secured the authorization of the Department of Industry, Commerce, and Labor and has paid the proper indemnification to the one who may be entitled to it.

XXXII. Rent shall begin with the date of the petition and shall be paid yearly in advance. By the sole fact that he fails to pay any year’s rent during the month following the date on which it falls due, the concessionaire shall incur the penalty indicated in article XXIV, section 2, of the established regulations.

XXXIII. Each concessionaire is obliged to furnish the Department of Industry, Commerce, and Labor with the technical and economic data which it may request through the Petroleum Bureau, and to give admittance and all manner of facilities to the students of the official schools who wish to make a practical study of the petroleum industry.

XXXIV. If the land referred to in a concession canceled in accordance with the provisions of article XXIV of the established regulations should be in the process of exploitation by a third person by means of a contract in force, and if, besides, one of the persons having preferential rights, according to those regulations, to secure the concession makes use of them and is consequently granted the concession, said contract shall hold, and the new concessionaire shall take the place of the old for the purposes of this same contract. In the contrary case, the exploiter has the aforementioned preferential rights over a third person.

XXXV. All land, concessions to which have been canceled, may be again solicited for exploitation in accordance with the present prescriptions.

XXXVI. No documents shall be accepted which are based on any concession granted prior to the date of the regulations to which this regulation refers and in which information is given or authorization is asked for the drilling of wells or the making of installations in connection with the exploitation of lands with respect to which there has been granted or there is in process of being granted any concession protected by these same regulations.

XXXVII. In exploiting the subsoil of a piece of land in conformance to any concession granted in accord with the regulations mentioned, the protected zone, which, within the tract granted, legally belongs to each one of the wells located on this same land and protected by concessions previous to the date of the regulations referred to, shall be respected.

The foregoing is brought to the knowledge of the interested parties for the proper ends.

Constitución y Reformas.

Mexico, April 21, 1920.

José Vázquez Schiaffino

The Chief Clerk in Chargé of the Office

41. File translation revised.
42. For the Executive decree of Mar. 12, 1920, see supra.
43. For regulations, see the Executive decree of Mar. 12, p. 206.