I also enclose an English translation of the amendments in question and
of the proposed form of confirmatory concession.20 This translation, which
indicates the origin of the changes made in each case,
[Page 301]
has been used by Mr. J. Reuben Clark, Jr.
in his negotiations on my behalf with Señor Paredes, of the Department
of Industry, acting on behalf of Minister Morones, and represents the
substance of the amendments agreed on between them.
Finally, I enclose a copy of a statement handed to the press on my behalf
today, in connection with the amended regulations.
[Enclosure
1—Translation]
Mexican Decree of March 27, 1928, Containing
Amendments of the Petroleum Regulations Promulgated April 8,
192621
Plutarco Elias Calles, Constitutional President of the Mexican United
States, to its inhabitants, know ye:
That in the use of the power conferred upon the Executive of the
Union by Fracción I of Article 89 of the
Constitution and of the power set forth in Article 22 of the Law of
December 26, 1925, I have decided to issue the following
modifications and additions to the corresponding regulations in
accordance with the amendments of January 3 of this year of Articles
14 and 15 of the Law itself.
There are modified in the terms hereinafter expressed the respective
articles:
Article 147. In conformity with the
provisions of Article 15, amended, of the Law, private! individuals
or companies possessing rights referred to in Article 14 shall
petition for confirmation before the respective Agency, according to
its jurisdiction, or directly, before the Department of Industry,
Commerce and Labor, within the period of one year, counted from
January 11, 1928.
[Article 148. Confirmation of the
concessions referred to in Article 12 of the law shall be effected
through a concession executed in accordance with the provisions in
these regulations, and the security that shall have been deposited
under the former concession will be applicable to the same purpose
in the new concession on the one condition that it was made in
national gold.]
[Article 149. In accordance with the
provisions in Article 12 of the law the concessions which may have
been granted between the first of May, 1917, and the 31 of December,
1925, with power to explore and exploit land under Federal
jurisdiction throughout the territory of the nation, or without
exactly defining the area and
[Page 302]
site on which such exploration and
exploitation work is to be done, shall be exchanged for others drawn
up in accordance with the terms that these regulations indicate in
lands also under Federal jurisdiction, the area of which as a whole
shall not exceed the figure given in Article 39 of these
Regulations. The former deposit will be applicable to the new
concession provided it was made in national gold.
The federal zones for whose exploration and exploitation the said
rights were conferred by some of these concessions shall be left out
of the new ones; but the beneficiaries of those which on the date of
the enactment of the law had been in full enjoyment of their rights
may obtain a contract in accordance with Article 81 by which they
will be empowered to carry on their work.]
Article 150. The confirmation of rights, as
mentioned in Article 14 of the Law, shall be effected without cost
and by virtue of a concession after proof of said rights, in the
manner provided by Articles 151 and 152.
[Article 151. The rights derived from works
done prior to May 1, 1917, referred to in Section 1 of Article 14 of
the law should be proved in the manner established by the laws on
the subject or on the strength of documents authentic in the opinion
of the Ministry of Industry, Commerce and Labor which technically
prove that the said work has been done.]
Article 152. For the purposes of the
foregoing Article the following should be considered as petroleum
exploitation work:
The performance prior to May 1, 1917, of some positive act which
would manifest the intention of the owner of the surface or of the
persons entitled to exercise his rights to the oil under the surface
to make use of or obtain the oil under the surface such
as;—drilling, leasing, entering into any contract relative to the
sub-soil, making investments of capital in lands for the purpose of
obtaining the oil in the sub-soil, carrying out works of
exploitation and exploration of the sub-soil, and in cases where
from the contract relative to the sub-soil it appears that the
grantors fixed and received a price higher than would have been paid
for the surface of the land because it was purchased for the purpose
of looking for oil and exploiting same if found; and in general
performing or doing any other positive act or manifesting an
intention of a character similar to those heretofore described.22
Article 153.—suppressed.
Article 154.—suppressed.
[Page 303]
Article 155. The confirmatory concessions
shall be issued in accordance with the provisions of Article 14 of
the Law, without limitation of time when they be issued in favor of
surface owners, and for the term stipulated in the contracts when
they be issued in favor of lessees or cessionaires. Said concessions
shall be drawn in the terms in which the form annexed to these
Regulations is expressed, except those which may require
modifications or additions by reason of the special circumstances of
the case.
Article 156. The confirmatory concessions
issued in accordance with Article 14 of the Law do not require
guarantee deposits, nor the execution of the regular works
prescribed for other concessions granted in accordance with these
regulations.
In the said confirmatory concessions there shall only be established
police and security conditions in the petroleum works, in accordance
with these regulations, and those which may be issued on these
matters, and failure to comply shall give rise to the sanctions
provided by Article 18 of the Law and those stipulated in the fiscal
laws.
[Article 157. The last assignee of any
contract executed since May 1, 1917, and before December 31, 1925,
for express petroleum purposes will hold a preferential right from
December 31, 1925, to the same time in 1926 to obtain concessions in
accordance with the provisions of the law and those laid down in
these Regulations.]
[Article 158. The rights derived from
denouncements in accordance with the provisions in Article 13 of the
law shall be ratified through applications which must be filed
within the first three months of the year 1927. After that time the
right of confirmation which was not sought shall be considered as
having been relinquished.]
[Article 159. For the purposes of Article 4
of the law if the holder of the rights recognized by Articles 12 and
14 of the said law and 157 of these Regulations is a foreign company
or a Mexican company with foreign stockholders in accordance with
the provisions in Article 5 of the organic law and Section I of
Article 27 of the Constitution, and Article 10 of its regulations,
such rights may be held by the said company during the life of the
contracts from which they flow, or if the case arise, for the life
of the company according to the articles of association.]
Transitory
[Article 1. Pending a meeting of the board
referred to in Section IV, Article 7 of the law there shall not be
granted any concession with the special privileges to which the said
section refers.]
[Article 2. In compliance with the provisions
in Article 15 of the law, during the year 1926 no application shall
be received or
[Page 304]
other
concessions granted than those resting on the rights recognized by
Articles 12 and 14 of the law and 157 of these Regulations.]
The new petitions for confirmation of rights shall be accepted within
the period of one year established by Article 15, amended, of the
Law.
[Article 3. During the year 1926 in addition
to the general grounds provided by these Regulations, opposition to
an application may be based on the rights emanating from Articles 12
and 14 of the law.]
In the term of the year fixed by Article 15, amended, of the Law,
there shall also be a cause of opposition to a petition for a
petroleum concession, in addition to the general ones, that which
may be based upon rights emanating from Article 14 thereof, the
confirmation of which may not have been requested during the year
1926.
Article 4. The petitions for concessions
confirmatory of rights, as well as the oppositions to their
granting, shall be subject to the procedure (tramite) indicated for those for ordinary concessions,
with the exception of what is provided by Articles 11 and 12 of this
Regulation, and saving that which refers to the presentation of
proof documents, which can be done at the will of the interested
party before the corresponding Agency or directly before the
Department of Industry, Commerce and Labor.
[Article 5. During the three months referred
to in Article 158 of these Regulations the existence of a claim (denuncio) not patented (titulado) on the whole or part of the zone applied for
shall be regarded as a ground of opposition to an application for a
petroleum concession provided the opponent be the denouncer in
person or his legal representative.]
[Article 6. In concessions which may be
granted as a result of applications filed up to December 31, 1926 it
will be stated that they are issued without prejudice to the rights
named in Articles 12, 14 and 15 of the law and the preference
established by Article 157 of these Regulations.
In those which are granted as a consequence of the applications filed
between the first of January, 1927 and the 31 of March of the same
year it shall be stated that they are issued without prejudice to
the rights referred to in Article 158 of these Regulations.]
And in those based upon ordinary petitions presented within the
period of the year, counted from January 11, 1928, and which may be
granted in the course of the said term, it shall be stated that they
are issued without prejudice to the rights recognized by Article 14
of the Law and which may not have been the object of a confirmatory
petition.
[Article 7. In order to be taken into
consideration applications for
[Page 305]
concessions filed in the Ministry of Industry,
Commerce and Labor or its Petroleum Agencies prior to the date of
the promulgation of these Regulations must be ratified by the
parties concerned within sixty days counted from that same date in
the manner and in the offices determined by the said Regulations and
at the same time the declaration of the office and date of filing of
the first application shall be made so that upon the substantiation
of those facts the ratification may be considered as submitted on
the date of the first application.]
[Article 8. The provisions of the Regulations
in force up to date will continue to apply to every matter that is
not inconsistent with these Regulations pending the issuance of the
regulations on petroleum work.]
The following Transitory Articles are added:
Article 9. In order to carry out the
provisions of Article 15, amended, of the Law, there shall be
admitted petitions for confirmatory concessions in the period
indicated by the same article, even when the lands may have been the
object of prior confirmatory petitions presented by the surface
owners, when the new confirmations ere requested by the lessees or
cessionaires; and vice versa.
Article 10. During the period of ninety days,
counted from the date on which these amendments go into effect,
there shall be suspended the admission of petitions for ordinary
petroleum concessions on free lands, as well as the tramitación of those already accepted and of
those presented based on Articles 13 of the Law and 158 of these
Regulations.
On the expiration of the ninety days, the substantiation of the
petitions suspended shall be concluded and the admission of ordinary
petitions shall be renewed; but always provided both the former and
the latter refer to lands as to which until that moment a
confirmatory petition may not have been formulated.
The titles which may be issued in respect of those petitions shall
contain a clause in which it is stated that their granting does not
prejudice the confirmable rights which might exist in the lands they
cover and which may have been invoked in due form in the remainder
of the term established in Article 15, amended, of the Law.
Article 11. In every case in which within the
year indicated by Article 15, amended, of the Law there is presented
a petition for confirmation on lands asked for in an ordinary
concession or (a petition) of those based upon Article 13 of the
Law, or as to which titles have already been issued in consequence
of a petition of one or the other kind, the substantiation of the
petitions in process (en tramitación) shall
be suspended and the effects of the titles issued
[Page 306]
(shall be suspended) pending the tramitación of the file of the confirmatory
petition.
If the latter prospers and the respective concession is therefore
issued, the prior petition shall be declared unfounded, whether
ordinary or based upon denouncement, when it might affect the same
lands, or the title which upon the basis of one of these petitions
may have been already granted.
Article 12. The companies or private
individuals who may have in their favor rights of those specified in
Article 14 of the Law and the confirmation of which may not have
been requested in the year 1926, shall be able to exercise them
directly by means of a confirmatory petition or in the form of
opposition to the petitions for ordinary concessions which may be
presented, or to ordinary ones and those derived from Article 13 of
the Law already in tramitación and of which
they may have knowledge. For the latter purpose the term of
opposition shall be considered amplified for the whole period of
Article 15, amended, of the Law and the substantiation of the
ordinary petition or one based upon denouncement, regarding which
opposition may be formulated, shall not be suspended.
Therefore, I order it to be printed, published, circulated and given
due compliance.
Given in the Palace of the Executive Power of the
Union in Mexico on the 27th day of March,
1928.
(Signed) By the President.
(Countersigned) By the Secretary of Industry, Commerce and
Labor.
[Enclosure 2]
Statement Handed to the Press, March 27, 1928,
on Behalf of Ambassador Morrow22a
These Regulations when taken with the Supreme Court decision handed
down November 17, 1927, the legislation passed by the Mexican
Congress on December 26, 1927, and promulgated on January 10, 1928,
and the letter of Minister Morones issued on January 9, 1928,
evidence the determination by the judicial, the executive, the
legislative, and the administrative departments of the Mexican
Government to recognize all rights held by foreigners in oil
properties prior to the adoption of the 1917 Constitution.
The Supreme Court decision declared that the cutting down of the oil
companies’ rights to a fifty-year period was unconstitutional. In
connection with that decision the Court said that “the confirmation
of a right is the express recognition of the same, to limit it is to
modify that right instead of confirming it.” Following this decision
the President asked Congress is [to] modify
the law of 1925 to conform
[Page 307]
with the Constitution as interpreted by the Court. The committee of
Congress reporting upon this law said:
“To confirm a right is to recognize it expressly in its whole
extent and with the conditions inherent therein in such a
way that no restriction whatever can be established with
regard to the extent or conditions of the right which is
confirmed.”
After the legislation had been passed certain oil companies still had
doubts as to whether those who took confirmatory concessions under
the new law would get a new grant or have their old rights
confirmed. Because of these doubts Minister Morones, the head of the
Department of Industry, Commerce and Labor, wrote a letter in answer
to an inquiry from an oil company, stating that such confirmatory
concession would operate “as the recognition of rights which will
continue in force subject only to police regulations.”
President Calles, on the advice of Minister Morones, has now issued
new Regulations modifying the old Regulations in accordance with the
decision of the Supreme Court and the new act of Congress. These new
Regulations make clear what Minister Morones had already made clear
in his letter, that those who take confirmatory concessions under
the amended law get a confirmation of their old rights rather than a
new grant of rights. The form of confirmatory concession as set out
in the new Regulations expressly declares that it is to “operate as
a recognition of acquired rights which continue in force.”
There remains, of course, the determination of what rights the oil
companies had on May 1, 1917. While there may well be honest
differences on this point, there is no reason why such differences,
if any, cannot be satisfactorily settled through the due operations
of the Mexican governmental departments and the Mexican courts.
The changes in the Mexican laws and regulations have been made by the
voluntary act of the Republic of Mexico. In the informal
conversations which have taken place, Minister Morones and his
official staff have approached the whole matter with a disposition
to frame the Regulations in such a way as to meet such essential
points as are susceptible of adjustment by general provisions.
