The fast-track approval of the new General Water Law and the reforms to the National Water Law by Congress marks the end of an era for the corporate sector in Mexico. Water has legally ceased to be treated as a commodity subject to speculation and has been consolidated, without ambiguity, as a human right under strict State stewardship.
For General Counsels and business leaders, this implies that water management is no longer merely an administrative formality, but a critical business continuity risk and, now, a matter of criminal liability.
- Restrictions on Transmission and the Agricultural Exception (Critical Clarification)
The most drastic change for industrial expansion strategy is the prohibition of buying and selling water concessions separately from the land. The reform seeks to neutralize hoarding and the “paper trafficking” of rights. This significantly hinders M&A strategies that relied on acquiring third-party rights to ensure operational viability.
Operational Adjustment and Comparison: Contrary to the preliminary version that suggested a total ban, the approved text incorporates a flexibility mechanism negotiated with the agricultural sector:
- Transmission Linked to Land: The right to transmit (sell or inherit) concessions is guaranteed provided it is executed alongside the transfer of land ownership. Water cannot be sold on a stand-alone basis.
- Expedited Reassignment Mechanism: Upon finalizing the sale of the land with its concession, the authority (Conagua) will issue a new title to the buyer.
- Regulatory Advantage: This procedure will be exempt from the average annual availability analysis (a major technical obstacle in deficit basins).
- Timeframe: The authority has a maximum period of 20 business days to resolve the issuance of the new title, maintaining the characteristics and validity of the original.
- Blockade on Third-Party Supply (Corporate Structure Risk)
The reform eliminates the regulatory flexibility that permitted water supply to third parties via a simple notice. This represents an immediate operational disruption for corporate groups and shared infrastructure models.
- Atomization of Title Ownership (“One Tax ID, One Concession”): The new regulations disregard the economic unity of the corporate group. Water supply between subsidiaries, related parties, or from an industrial park developer to its tenants -without an individualized title for the end user- ceases to be a valid administrative scheme and becomes a legal contingency.
- Compliance Contingency: Maintaining structures where one entity concentrates rights and supplies its operating units exposes the organization. Under the new state perspective, this could be reconfigured as “illegal transfer” or “exploitation without title,” triggering the criminal liabilities described in this alert.
- Strategic Imperative: It is critical to execute the segregation and assignment of rights among group entities before the reform enters into force. The objective is to ensure that each operating legal entity is the direct holder of its consumption volume, eliminating third-party reliance and shielding business continuity against inspections.
- New Criminal Liability Regime (Corporate Risk)
A specific chapter on Crimes Against National Waters is incorporated, transforming administrative non-compliance into a serious criminal contingency that will be prosecuted ex officio.
- Sanctions: Prison terms ranging from 3 months to 14 years.
- Risk Scenarios: Illegal transfer of water volumes and exploitation without a valid title. Aggravating factors apply specifically if public officials participate or if undue profit from the resource is detected.
- Impact on Compliance: Companies must audit not only title holding but also the physical traceability of their volumes to avoid falling under criminal classifications of “illegal transfer.”
- Public Registry and Historical Rights
The Public Water Registry is created, which will include the explicit recognition of the historical rights of indigenous and Afro-Mexican communities. While this offers legal certainty to said communities, for the private sector it implies greater complexity in the due diligence of projects located in territories with the presence of native peoples, raising the standard for consultation and community relations.
- Immediate Strategic Implications
Faced with this scenario of operational scrutiny and criminal risk, inaction is a costly mistake. Companies must immediately execute:
- Validity and Traceability Audit (36-month horizon): Do not wait for standard legal deadlines. Verify that actual usage fully coincides with the title to avoid revocation or criminal sanctions.
- Technical Shielding Dossier: Reclassify 2026 CAPEX allocated to water technology (treatment, rainwater harvesting). These investments are not operational improvements; they are the “regulatory insurance premium” necessary to defend title ownership against volume reduction attempts by the authority under the premise of “excessive concentration.”
If you have questions regarding the content of this Alert, please contact:
- Fernando Pérez Correa | Email: fperez@pcga.mx
- Luis González | Email: lgonzalez@pcga.mx
- Omar Aguilar | Email: oaguilar@pcga.mx
