Electric Energy and Natural Gas: New Precedents by the Federal Courts for Administrative Matters

1.    The selection proceedings for members of ENARGAS and ENRE

The regulatory framework for natural gas (Law No 24,076 and Decree No 1738/1992) and electricity (Law No 24,065 and Decree No 1398/1992) establish that the members of the Board of Directors of the Federal Regulating Agencies of such areas (ENARGAS and ENRE) are appointed by the Executive and previously selected through a proceeding conducted by the Secretariat of Energy, which must guarantee that the final selection includes professionals with technical and specialized knowledge and experience. With regards to the ENRE, it is specified that the proceeding must comprise an open tender to all those interested in the position. In both cases, before the appointment, the Executive must provide its reasons for the appointment to a committee of the Federal Congress, and this committee must issue an opinion within thirty days.

Two Non-Governmental Organizations filed two lawsuits against the State in which they requested that the Board of Directors of ENARGAS and ENRE be appointed pursuant with the current and applicable legal rules.

On August 14, 2009, the Federal Court for Administrative Matters No 8 issued a ruling where the claim was admitted and ordered the Executive to comply with the proceeding established by Law No 24,076 and Decree No 1738/1992 for the appointment of the five members of the Board of Directors of the Federal Agency of Gas Regulation (ENARGAS). It was considered that at least since March 31, 2000, no member of such Board had been named in compliance with the current legal proceedings.

As a consequence, the Court instructed the Executive to comply with such proceeding once the current intervention of ENARGAS has concluded. It must be noted that the Court did not deal with the intervention issue itself because none of the parties had introduced the matter before.

On September 10, 2009, in re: “ACIJ y Otros v. Estado Nacional s/Proceso de Conocimiento” the Court of Appeals for Administrative Matters, Tribunal V, dealt with an appeal filed against the dismissal of the lawsuit seeking appointment of the Directors Board of the Federal Agency for Electricity Regulation (ENRE) pursuant to Law No 24,065 and Decree No 1398/1992. 

The Court considered that both Law No 24,065 and Decree No 1398/1992 establish a clear selection and appointment proceeding for members of the Directors Board of the ENRE. It also highlighted the independence sought by the Congress when settling the requisites for the designation and removal of such authorities.

The Court’s conclusion was that the legal proceeding set forth for the selection of ENRE’ s authorities had not been complied with by the Secretariat of Energy. Consequently, the appeal was partially admitted and it was ordered that such Secretariat respect the proceeding established by Law No 24,065, sections 58 and 59, and by its regulating decree.

 2.    Precautionary Measure filed by the Ombudsman against Natural Gas Charges

On September 10, 2009, the Court of Appeals for Administrative Matters, Tribunal V revoked the judgment that had rejected the precautionary measure filed by the Ombudsman in the context of a lawsuit against Decree No 2067/2008, Resolution No 1451/2008 of the Federal Planning, Public Investment and Services Ministry, and Resolution No 563/2008 of ENARGAS. (re: “Defensor del Pueblo de la Nación – Inc. Med. v. Estado Nacional – Dto 2067/08- Ms Planificación – Resol 1451/08 y otro s/ Proceso de Conocimiento”).

The rules whose validity was challenged by the lawsuit had created a Trust Fund to finance natural gas imports. Its assets were to be constituted by resources from new charges over gas consumption made effective as from November 1, 2008. 

The Ombudsman alleged that the application of such charges implied an increase of 70% up to 260% in the consumers’ bills, and thus, it was confiscatory and out of proportion. Therefore, he requested –by means of a precautionary measure- the withdrawal of the effects derived from the challenged rules, as well as an instruction to the agents to refrain from collecting sums from the charges.  

The Court understood that the requirements of the precautionary measure were complied with. it was considered that the charges imposed to users by Decree No 2067/2008, Section 2, had not been created by the laws invoked for the enforcement of such decree, and thereafter, the charges lacked of a previous formal law –which is a prerequisite for the implementation of any tax charges. On the other hand, the Court acknowledged that the process could take a substantially long time during which the users’ rights would be affected in an irreparable way.   

As a consequence, the Court partially admitted the precautionary measure and ordered ENARGAS to allow the payment of bills pursuant to the regime established before the enforcement of the challenged rules. It also ordered that ENARGAS must refrain from suspending, interrupting or cutting off the service of natural gas in cases of lack of payment of these charges.