#ClientAlert 21/2022

General decree that declares the beginning of an emergency of severe, extreme or exceptional drought, for several basins during 2022

On July 12, 2022, the General decree that declares the beginning of an emergency of severe, extreme or exceptional drought, for several basins during 2022 (hereinafter, the “Decree”) was published in the Federal Official Gazette, with the purpose that the National Water Commission (“CONAGUA”) attends to the current situation of the drought experienced in many regions of the country.

In the Decree, CONAGUA attends to its attributions to order temporary measures to attend to the current drought in the affected basins, in order to guarantee the supply of water for uses that have a preferential right pursuant to the Law of National Waters, such as domestic and public urban uses.

Pursuant to the above, among the measures that may be undertaken by CONAGUA, the most important one is the possibility of limiting the volumes that may be used pursuant to the concessions secured for industrial and agricultural use. Besides such measures, CONAGUA is expected to initiate proceedings of expiration of water volumes, in order to reduce the volumes of water granted under concessions, when the holders of the same have not used the totality of granted volumes for two consecutive years and failed to apply in due time with CONAGUA for the interruption of water volumes.

Likewise, in the case of lack of compliance with the Law of National Waters, the risk of CONAGUA suspending or cancelling water concessions is more likely to be implemented in practice.

We are available at your convenience to discuss the different measures that may be undertaken by CONAGUA in your specific cases pursuant to the Decree, analyzing the particular risks that may be applicable to your activities, and the risk of the water volumes granted in your concessions of being reduced.