On July 13, 2022, the general Agreement issued by the National Water Commission (“CONAGUA”) came into force, concerning the declaration of emergency due to the occurrence of severe, extreme or exceptional drought in watersheds for the year 2022 (“2022 Drought Agreement”).
The 2022 Drought Agreement establishes extraordinary measures and actions to support the country's watersheds in which it was determined that extreme, severe, or exceptional droughts or low water availability existed. As a result, holders of concessions and allotments for the exploitation, use or utilization of national waters in the watersheds listed1 in the 2022 Drought Agreement may take the following actions: 1. Notify CONAGUA in order to provisionally provide third parties with the total or partial use of the volumes covered by a water concession. 2. Temporarily assign or transfer their rights to CONAGUA and request the suspension of the lapsing of the concession volumes they do not use, for as long as the emergency subsists. In the case of industrial and agricultural use, CONAGUA will verify that the volumes temporarily transferred or assigned are delivered to the distribution network in coordination with the operating agency, provided the emergency subsists. The scenario marked with numeral 2 could be favorable for those concession holders who, to date, do not use the entirety of the volumes covered by their concession titles, since they will be able to temporarily assign to CONAGUA the rights and volumes covered thereby, request the suspension of the lapsing of unused volumes, and at the same time support CONAGUA in mitigating severe droughts in the corresponding watersheds. For the foregoing, we suggest carrying out a case-by-case analysis in order to determine the legal strategy for exercising one of the options referred to above. This includes the term, use and volumes of the assignment, as well as the current status of compliance with the conditions of the corresponding concession title. Finally, the 2022 Drought Agreement also provides that CONAGUA may implement transitional measures such as, for example, the temporary limitation of existing water rights, by means of a provisional reduction of concession volumes, for the purpose of guaranteeing the water supply for domestic and urban public use. It is important to review the list contained in the 2022 Drought Agreement of those watersheds classified as having extreme, severe, or exceptional drought or low water availability, in order to determine the options and/or obligations that companies could have under the 2022 Drought Agreement. For any matter related to this note, you may contact our experts: Edmond Grieger, Partner: +52 (55) 5258-1048 | egrieger@vwys.com.mx Roberto Flores, Associate: +52 (55) 5258-1008 | rflores@vwys.com.mx Ariela Frydman, Associate: +52 (55) 5258-1048 | afrydman@vwys.com.mx
