New Legislation regarding Changes in Use of Forest Land, and the Federal Environmental Impact Statement

When considering the development and construction of real estate in Mexico, it is necessary to verify whethersuch land is considered "Forest Land" and, if so, to inform the Mexican Department of Environment and NaturalResources ("SEMARNAT"), in advance, regarding the change of use of forest land. Such process requires,among other things, an approval of the environmental impact, which involves conducting an EnvironmentalImpact Statement ("MIA"). The General Law for Sustainable Forest Development broadly defines "Forest Land"by stating that such is land that is covered by "forest vegetation," or, "an environment where plants and fungi,grow and develop naturally, forming forests, jungles, arid and semi-arid areas and other ecosystems, developingthe coexistence and balance of other resources and natural processes." This broad definition of Forest Land andthe lack of coordination between the federal, state and municipal governments have resulted in a contradictoryand confusing system in Mexico. For example, a property that is in compliance with the municipal urbandevelopment plan, and is designated for use as urban land and for industrial or commercial use, may still beconsidered Forest Land by federal authorities, even when such property is part of the urban area of ​​a municipalityand is in compliance with local ordinances and for which a local MIA has been obtained. Though Annex 1 of theDecree which Integrates and Organizes Forest Zoning, which was published in the Official Journal of theFederation on November 30, 2011, established that urban areas and areas of human habitation, among others, areconsidered “non-forest land,” such decree did not resolve the lack of coordination between the three levels ofgovernment and, by its terms, is not sufficiently clear. A reform to Article 32 of the General Law of EcologicalBalance and Environmental Protection ("LGEEPA") was published in the Official Journal of the Federation onMay 20, 2013. Its purpose was to establish and make it a mandatory requirement (previously optional) that inorder to modify local and municipal urban development plans, whether state, municipal, or federal, as the casemay be, authorization from SEMARNAT must be obtained with respect to the environmental impact, prior to thechange of use of forest land, as well as jungles and arid zones, in accordance with the provisions of Article 28 ofthe LGEEPA. This recent amendment to the LGEEPA seeks coordination between the three levels of governmentregarding the change of land use of forest areas, prior to approval and/or amendment of the applicable urbandevelopment plans, which would incorporate additional land to urban areas and human habitations. Therefore,developers will no longer be required to utilize a federal MIA for the change of use of forest land, though it willstill be subject to the requirements established by local law and plans applicable to environmental matters.