Mexico Prepares to Vote on Amendment to Streamline and Dissolve Government Agencies

The Constitutional Law Committee (Comisión de Puntos Constitucionales de la Cámara de Diputados or CPC) of Mexico's House of Representatives (Cámara de Diputados), on July 25, 2024, published a schedule to analyze and approve several bills for constitutional reform initiatives sent by the president to Congress in February.

Regarding the bill to amend the Mexican Constitution (Constitution) on constitutionally autonomous bodies (organismos constitucionalmente autónomos or OCA) and other regulators, which seeks to achieve "administrative simplification" of the federal government, the CPC announced that on Aug. 15, 2024, it will define the date on which it will analyze and approve the draft of the bill that will be voted on in Congress.

The bill for this particular initiative includes amendments to Articles 3, 6, 26, 27 and 28 of the Constitution. If the CPC approves the bill, it could pass either to the Permanent Commission of Congress (19 representatives; 18 senators), currently on duty in absence of a parliamentary term, or to the new legislators elected in June who will constitute the new Congress upon taking office on Sept. 1, 2024.

Summary of Constitutional Amendments in the Bill

• Generally, the bill proposes to amend the Constitution in order to dissolve the following government bodies and transfer their functions and authority to agencies within the Federal Public Administration (Administración Pública Federal or APF) of the executive branch:
  • OCA: the Federal Antitrust Commission (Comisión Federal de Competencia Económica or COFECE), the Federal Telecommunications Institute (Instituto Federal de Telecomunicaciones or IFT), the National Transparency Institute (Instituto Nacional de Transparencia or INAI) and the National Council for the Evaluation of Social Development Policy (Consejo Nacional de Evaluación de la Política de Desarrollo Social or CONEVAL).
  • Energy Sector Regulators: the Energy Regulatory Commission (Comisión Reguladora de Energía or CRE) and the National Hydrocarbons Commission (Comisión Nacional de Hidrocarburos or CNH).
  • Other Entities: the Commission for the Continuous Improvement of Education (Comisión para la Mejora Continua de la Educación or MejorEdu) and the System for the Continuous Improvement of Education.
  • The functions of each OCA, the CRE, the CNH and MejorEdu will be assumed by federal agencies within the executive branch according to their respective "nature."
• The amendment to Article 28 of the Constitution (state's role in conducting the economy) eliminates COFECE and IFT, establishing that the executive branch, through its agencies, will be responsible for conducting the economic policy in the energy sector and generally industrial, trade and pricing policy.
• A national infrastructure information system will be created to conduct telecommunications and broadcasting policy.
• The law applicable to successor agencies conducting antitrust and telecommunications policy will be "general administrative provisions" issued by the executive branch. Currently, antitrust and telecom policy and regulations are enshrined in laws passed by Congress.
• The available legal remedies of challenging "general provisions" (normas generales) and acts of agencies responsible for trade, supply, pricing and economic competition policies will be limited to amparo indirecto, a constitutional remedy, and will not be subject to stay orders (suspensión) (with some exceptions).
• The amendments to Article 26 of the Constitution establish that CONEVAL's functions will be transferred to INEGI, the national statistics body.
• Regarding freedom of information and data privacy protection, the bill dissolves the existing transparency bodies. The "autonomous" and "impartial" nature of such bodies is removed from the applicable constitutional provisions. In general, access to public information and data protection is referred to federal laws and state constitutions, and the functions and authority of existing transparency bodies will be transferred to and assumed by the "oversight or analogous bodies" of federal and state agencies.
• The notion of "republican austerity," a standard of prudent spending, is included in Article 134 of the Constitution as part of the principles for the administration of public funds and resources by any public entity.
• The "transitory" provisions of the amendment bill state the following:
  • A 90-day period for Congress to make the necessary "adjustments" to comply with the reform, and the acts of the OCA and other organizations will be valid, and public servants will remain in their positions until secondary legislation exists and comes into effect.
  • The legal instruments, agreements, inter-institutional agreements, contracts or equivalents entered into by the bodies that will be extinguished "shall be deemed valid," and their compliance will be the responsibility of the agencies that assume their functions.
  • The assets of the bodies that disappear will belong to the agencies that assume their functions.
  • The concession titles granted by the IFT will remain in force "without prejudice to the concessionaires complying with the obligations and considerations that the executive branch may impose."

General Considerations

• The draft of the bill published by the CPC largely mirrors the president's February initiative, signaling a sweeping reorganization of Mexico's governmental architecture. The proposed reforms aim to dissolve existing OCAs, regulators and autonomous institutions, integrating their functions into the AFP. This move seeks to constitutionally enshrine the executive's sole authority over energy policy through its agencies, curtail legal challenges against general regulations and agency actions and codify austerity principles in public administration.
• Should the CPC endorse the bill, it may then be submitted to the Permanent Commission of the outgoing Congress or the newly inaugurated legislature on Sept. 1, 2024. Whether the incoming lawmakers will prioritize the bill remains uncertain.
• The legislation poses a significant shift, potentially undermining the legal and institutional capacity of public watchdogs and regulators to act as counterweights to the executive branch. The agencies poised to inherit the OCAs' roles will be tethered to the executive, raising concerns about the risk of institutional capture and diminished oversight.
• The amendments to Article 28, which encompass broad mandates for managing "foreign trade," "domestic trade" and "prices," suggest a substantial expansion of the government's economic oversight. This broad interpretation may clash with other constitutional provisions that favor free and competitive markets, creating a tension that could disrupt established economic norms.
• The ambiguity surrounding potential price controls could lead to immediate market distortions, affecting supply and demand, supply chains, and possibly spurring black markets and informality. Such moves could also have repercussions under international trade agreements to which Mexico is a signatory.
• The consolidation of power within the executive branch aligns with the current administration's broader agenda: reducing checks and balances, expanding agency authority and limiting legal recourse.
• Ironically, the enactment of these constitutional amendments, should they pass, will necessitate an intricate and detailed legislative and regulatory process – far from the simplicity the reforms purport to deliver. Businesses and private sector stakeholders would do well to monitor these developments closely, as they stand to significantly reshape Mexico's regulatory landscape.

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