A joint client alert update by WilmerHale and Creel García-Cuéllar Aiza & Enriquez.¹

This publication updates our April 8, 2020, client alert regarding the Mexican federal government’s response to the COVID-19 pandemic. That alert focused on the federal March 31 Administrative Ruling,² which suspended all “nonessential activities” in Mexico until April 30, 2020. 

In the weeks since the March 31 Administrative Ruling, as the pandemic has rapidly developed in Mexico,³ so too has the response of the Mexican government at the federal, state and local levels.The federal government has extended emergency measures until May 30, 2020, with limited exceptions. It has also issued proclamations, both formal and informal, intended to clarify the meaning of “Essential Activities.” And at the same time, individual Mexican states have begun enforcing the federal directives—in some instances, aggressively—and have continued issuing their own localized proclamations. This has a created a complex, tense and ever-changing landscape for companies with operations and installations in Mexico.

WilmerHale and Creel, García-Cuéllar, Aiza y Enriquez have identified additional practical considerations for companies with operations and installations in Mexico in light of the federal and state COVID-19 developments addressed in this subsequent regulatory update. Specific questions about cross-border business may be directed to the authors of this alert at both WilmerHale and Creel, García-Cuéllar, Aiza y Enriquez.

This alert covers the following developments:

• April 8 Resolution of the Federal Ministry of Communication and Transport⁴
• April 16 Press Conference Comments by Dr. Hugo López-Gatell⁵
• April 21 Extension of Administrative Ruling by Federal Health Ministry⁶
• State Developments: Enforcement and “Segmentation”

I.  April 8 Resolution From the Secretary of Communication and Transport

On April 8, the federal Secretary of Communication and Transport (SCT) issued a publication itemizing certain “Essential Activities” within its purview (the April 8 Resolution). These Essential Activities stemmed from the categories originally laid out in the March 31 Administrative Ruling as “passenger and freight transportation,” “telecommunications” and “logistics (airports, ports and railroads).” The descriptions of the activities covered by the April 8 Resolution are quite rigid, and they should be read narrowly, in part because they seem to have been lifted directly from existing SCT regulatory directives.

The full text of the April 8 Resolution can be found here, and the specified Essential Activities are summarized in English here:

A. Infrastructure: toll and toll-free federal highways; federal rural highway program; bridges given to federal and municipal agencies.

B. Transport:

• Air: certifications on safety, airworthiness and export; issuance and validation of certificates for air services operation; permits for workshops outside of Mexico that provide services to Mexican aircraft; authorizations for overflight, aircraft repair or maintenance, and rescue and humanitarian flights; aid services for air navigation; airport and associated services; registration of public service aircraft; approval of insurance policies.
• Rail: public freight and passenger transport services and maintenance of railways; rail equipment.
• Automotive: federal passenger and cargo transport services; vehicle maintenance services, parts suppliers and related services; cleaning and disinfection services for all vehicles, terminals, truck stops, mechanics and gas stations; loading and unloading operations and truck stops; package delivery and messenger services; towing, rescue and vehicle storage; passenger terminals and verification installations; supervision in main central passenger bus terminals; license and license plate issuance. 
• Maritime: permits and authorizations for naval vessels that provide services related to passenger and cargo transport and to the production and distribution of natural gas, oil, petroleum or jet fuel; authorizations to act as a general shipping agent or ship consignee; humanitarian bridges; certain essential port operations, including certain private port projects, the entry and exit of ships, the loading and unloading of goods and passengers, and attention necessary for ships and crews.

C. Communications: continuity of telecom and broadcasting networks for mass media and telecom; safeguarding the security of critical infrastructure; continuity of social coverage projects; information dissemination about the use of telecom technologies and broadcasting; services by the Mexican Postal Service; satellite, office and resource services for TELECOMM social coverage; maintenance of the private network of the federal government; evaluation of technological development projects. 

II.  April 16 Press Conference Statements by Dr. Hugo López-Gatell 

In a nightly press conference, on April 16, Dr. Hugo López-Gatell, the Undersecretary of Prevention and Promotion of Health and the face of the Mexican federal response to COVID-19, provided a brief update on compliance with the March 31 Administrative Ruling.⁷

Dr. López-Gatell stated that large numbers of private businesses had not complied with the federal directives. He cited statistics drawn from federal inspections and complaints compiled between April 3 and April 14 from 11 “industrial zones”—which may very well mean that only these manufacturing-focused states were targeted for inspection.⁸ He explained that, of the businesses surveyed, 18% were conducting Essential Activities and appropriately remained open; 50% were not conducting Essential Activities and suspended operations of their own accord; 17% were not conducting Essential Activities and complied with a post-inspection order to suspend operations; and 15% were not conducting Essential Activities and did not comply with a post-inspection order to suspend operations. Among the 15% that refused to comply with a post-inspection order to suspend operations, Dr. López-Gatell highlighted the following industries: automotive, nonessential sales or distribution, textiles, aerospace, machinery, paper and cellulose, tobacco, and construction.

Dr. López-Gatell emphasized that the federal inspections will continue. And those companies that remain open post-inspection while conducting nonessential activities, such as the 15% surveyed, could be subject to severe sanctions, including forced closure and potential criminal prosecution.

Notably, the press conference was not followed by any document that codified, or guidance that clarified, Dr. López-Gatell’s comments. To date, it is unclear whether any of his proclamations will be issued in writing through more official channels or whether they will be enforced as threatened, but state-level authorities appear to have taken them as a statement of national policy, as discussed further below.

III.  April 21 Extension of Federal Administrative Ruling, and Segmentation Policy

On April 21, the federal Secretary of Health released a resolution (the April 21 Resolution) extending until May 30 all provisions of the March 31 Administrative Ruling (suspension of nonessential activities, the exhortation to stay at home, etc.). In addition, the April 21 Resolution announced a new strategy of “segmentation” within Mexico, under which the federal emergency provisions would be lifted for municipalities determined by the federal Ministry of Health to have “low or no” transmission of COVID-19, as soon as May 18.⁹ The April 21 Resolution pledged federal cooperation with state and local efforts to restrict travel between areas with differing levels of transmission and infection.¹⁰

The April 21 Resolution mirrored and supported the efforts of a number of Mexican states to establish “sanitary filters” at their borders to restrict travel from virus hotspots to less-impacted areas, as described below.

IV.  State Developments: Enforcement and Segmentation Policy

In conjunction with the federal actions described above, Mexican state governments have begun enforcing the suspension of nonessential activities and, in cooperation with the federal government’s April 21 Resolution announcement, have begun laying the foundation for the segmentation of communities within Mexico.

A. Border State Enforcement: Sonora, Baja California and Chihuahua

Mexican states that border the United States have largely been the first to invoke and strictly enforce the March 31 Administrative Ruling and associated directives.  

As noted in our April 8, 2020 client alert, on March 25, the state of Sonora declared a state of emergency and issued a stay-at-home order to “prevent, control, combat, and eradicate the existence and transmission of COVID-19.”¹¹ The Sonora declaration mandated the closure of certain businesses, but allowed other, essential businesses to continue with social distancing protocols provided by the State Health Council.

The Ministry of Labor and Social Welfare for Baja California—which covers significant manufacturing operations in Tijuana and Mexicali—has aggressively identified and closed, in some cases without warning, companies that continue to perform nonessential activities.¹² In one example, the Governor of Baja California posted a Twitter video to make his case for closing a US-owned ventilator factory, arguing that because the factory’s output was destined solely for export and not for use in Mexico, its activities should not be considered essential.¹³ The Baja California government has not accepted factories’ claims that because they are performing Essential Activities under US Cybersecurity and Infrastructure Security Agency (CISA) guidance, they should be considered essential in Mexico (see WilmerHale alert on the latest CISA Guidance here).¹⁴ As of April 17, these enforcement efforts had resulted in the reported closure of 562 businesses in the state.¹⁵ Notably, local unions have aggressively sought to win over support from workers during the COVID-19 crisis, which has made union relations especially important and sensitive for companies operating in Baja California.

In the state of Chihuahua, which borders New Mexico and parts of Texas and includes the cities of Chihuahua and Ciudad Juárez, the Ministry of Labor and Social Welfare has also begun invoking the federal directives in its closure of dozens of companies that it deemed to be not performing Essential Activities—eight of which were on the border with the United States.¹⁶ In addition, Chihuahua recently announced that it would establish sanitary checkpoints at all international border crossings and freeway entry points. At these checkpoints, state authorities collect personal information about the visitors (place of origin, destination, domicile and contact information) and conduct analyses to detect symptoms and potential signs of infection and contagion—and in positive cases to transfer the visitor to the closest clinic or hospital.¹⁷

B. Jalisco and Michoacán Enforcement 

Even far from the US border, in the states of Jalisco and Michoacán, the Governors have announced that municipal authorities will be responsible for verifying compliance with the emergency COVID-19 measures laid out in not only the federal resolutions but also state restrictions on movement and business operations.¹⁸ On April 19, Jalisco issued a ruling that, among other measures, made it compulsory for all persons in the state—residents and nonresidents—to stay at home; Michoacán followed suit shortly thereafter by issuing a similar ruling on April 20. Jalisco has also established COVID-19 sanitary checkpoints comprising state, national and municipal security forces and health officials coordinated to prevent the spread of the virus across state lines. These measures contrast with the milder admonishment to stay home contained in the March 31 Administrative Rulings.

Conclusion

Mexico’s response to COVID-19 at both the federal and state levels has developed in a way that has had significant impacts on business operations that initially appeared to be permitted to continue as Essential Activities. Attorneys at WilmerHale (linked below) and Creel García-Cuéllar Aiza & Enríquez (Jean Michel Enríquez, Leonel Pereznieto and Guillermo Govela Martínez) are monitoring the situation and will update this alert in the event of major developments. We are available to provide timely guidance on the March 31 Administrative Ruling and related legal matters as Mexico continues to take actions to address COVID-19 impacts.