The Water Volume You Are Not Using

In short

Mexico's July 2026 water relief program did not reach industrial users. The regime that can take away the water they are not using does — and on 5 August 2026 it got a new set of procedural rules. The window to protect an unused volume can now be extended. The route that let a holder sell that volume instead was deleted. And the titled volume turns out to have a ceiling as well as a floor.

Start with the contrast

The regularization program CONAGUA opened in July 2026 covers domestic, urban public, agricultural, livestock and aquaculture use, and only three categories of holder. A manufacturing plant is outside it, for two independent reasons — the use is not listed and a company is not an eligible holder.

The regime discussed here is the opposite. The Reglamento para la Determinación y Pago de la Cuota de Garantía de No Caducidad de Derechos de Aguas Nacionales, published in the Diario Oficial de la Federación on 4 August 2026 and in force since 5 August 2026, applies to “the concession or assignment holder of national waters” to whom partial or total caducidad is applied on “the volume of water granted or assigned that has not been exploited, used or availed of.”

It excludes no use and no category of holder. The relief did not arrive. This did.

1. What is actually at risk is the volume, not the title

Article 29 BIS 3, section VI of the Ley de Aguas Nacionales provides for “partial or total caducidad declared by ‘the Water Authority’ where the holder ceases partially or totally to exploit, use or avail itself of national waters for two consecutive years, absent a justified cause expressly set out in this Law and its regulations.”

The operative word is partial. A plant does not lose its concession. It loses the portion of the volume it did not use — and keeps the rest.

That is a different risk from the one most operators plan for, and it is triggered by an ordinary commercial decision rather than by a failure. A facility that titled volume for three production lines and runs two. A plant whose second-phase expansion was deferred. A site that invested in recirculation and now draws less than it is entitled to. None of those is a breach. All of them accumulate the period.

And the Law is explicit about how the authority forms its view: the declaration “shall be made considering jointly the payment of duties made by the user under the Federal Duties Law and the presumptive determination of the volumes availed of.”

Being current on water duties does not protect the volume. It documents how much of it you used.

2. Two years, counted in completed quarters — not from the day the plant slowed down

Several summaries of the reform state that the two-year criterion was replaced by a count of eight consecutive quarters. It was not replaced. The first paragraph of section VI was not amended and still reads “two consecutive years.”

What the new Reglamento does is specify the arithmetic. Article 3:

“The period of Two consecutive years shall be computed by completed quarters in which the granted or assigned volume has ceased to be exploited, used or availed of, partially or totally.”

Eight completed quarters are two years. The statutory criterion is intact; the regulation states how to count it.

The practical consequence is not trivial. The period runs on the calendar-quarter grid, not on the plant's operating history. A facility that reduced extraction in February does not begin counting in February. Whether a given quarter counts, and therefore when the eighth one closes, is a question about the calendar — which means it can be determined in advance, and should be.

3. The titled volume is a band, not a ceiling

If using less than the titled volume creates exposure, the natural question is whether using more is safe. It is not, and the mechanism at that edge is different in kind.

Article 29 BIS 4 of the Ley de Aguas Nacionales allows a concession, assignment or discharge permit to be revoked where the holder:

“Avails itself of water in volumes greater by more than a fifth than those authorised, where for the same cause the beneficiary has previously been suspended in its right.”

Read the second half carefully, because this is where most summaries go wrong. Exceeding the authorised volume by more than a fifth is not, by itself, a ground for revocation. The provision requires a prior suspension for the same cause. Revocation is the consequence of repetition, not of the first excess.

So the exposure is a two-step sequence, and what happens between the steps decides everything.

Step one is suspension. Article 29 BIS 2 suspends a concession where the holder “fails to comply with the conditions or specifications of the concession or assignment title, unless it establishes that such non-compliance is not attributable to it.” Drawing beyond the titled volume is a departure from the title's own terms, which is what puts over-extraction on this track rather than on any other.

The window to stop it is ten business days. Suspension does not apply if, within ten business days of being notified by the authority, the holder establishes that the non-compliance is not attributable to it. The Water Authority then resolves within five business days of the evidence being filed.

And here is the part that deserves attention. For non-payment, the statutory cure is to pay — the holder covers the amounts and the suspension does not apply. For failure to comply with the title's conditions, there is no equivalent. The only route the provision offers is to establish that the non-compliance is not attributable to the holder. Correcting the excess afterwards is not, on the face of the text, the same thing as showing it was never yours.

For a plant that has been over-drawing because of a metering error, a third-party supply failure or a process change it did not authorise, that door is real. For one that simply drew more than its title allowed, it is narrow. Either way, ten business days from notification is not enough time to assemble that case from a standing start — which is an argument for knowing your extraction position before the authority does.

Suspension, once applied, “shall subsist only while the infringing party does not regularise its administrative situation, or until a competent authority orders it lifted.” It is not a fine that closes the matter. It is the first step of the sequence that ends in revocation, and it stays on the record as the “prior suspension” that Article 29 BIS 4 requires.

So the titled figure operates as a band. Draw materially less than it over eight completed quarters and you can lose the unused portion by caducidad. Draw more than a fifth above it, twice, and you can lose the title by revocation. The two edges run on different clocks, are enforced by different mechanisms, and a compliance calendar built around only one of them is looking at half the exposure.

4. What the December 2025 reform added: the window can now be extended

Section VI lists the circumstances in which caducidad does not apply. The third is payment of the cuota de garantía de no caducidad — a charge that has existed for well over a decade, with the Ministry of Finance authorizing the per-cubic-metre rates by published oficio in successive years. The charge is not new.

What is new is a sentence added to that numeral by the decree of 11 December 2025:

“The foregoing period may be extended up to two times, provided it is duly justified before ‘the Water Authority’.”

A holder who pays to preserve an unused volume can now seek to extend that window twice. That is a real improvement in flexibility, and it is the only part of this analysis that runs in the holder's favour.

The same decree also reworked the fourth circumstance — temporary cession of rights to the Authority. Two things happened to it, and only one has been reported.

It was broadened: “or to guarantee water security” now sits alongside the existing grounds of extraordinary drought and severe aquifer overexploitation. Water security is not a defined term in that provision.

And a sentence was deleted. The enacting clause of the decree repeals the second paragraph of that numeral, which read:

“This is the only permitted case of temporary transfer, and it refers to the cession of rights to ‘the Water Authority’ so that it may address extraordinary droughts, severe overexploitation of aquifers or similar states of necessity or urgency.”

The substantive grounds survived — they were folded into the numeral itself. What did not survive is the express statement that cession to the Authority was the only temporary transfer the Law permitted.

Whether removing that sentence widens the field of permissible temporary transfers is not something the text answers, and we are not asserting that it does. A prohibition can rest on other provisions. But an express exclusivity clause was in the Law on 10 December 2025 and was not in it on 12 December, and any structure that depends on temporarily moving water rights is worth re-reading against the current text rather than against a memory of it.

5. And what was removed: the exit

The decree's own enacting clause repeals, in Article 29 BIS 3, “section VI, the second paragraph of numeral 4 and the eighth paragraph.”

The eighth paragraph of section VI read:

“Caducidad shall not operate if, before expiry of the two-year period, the holder of the concession or assignment transfers its rights fully and definitively in accordance with water availability and so evidences before ‘the Water Authority’, in addition to paying the guarantee charge referred to in Numeral 3 of Section VI of this Article. In that case the concession period recorded in the original title shall prevail.”

That was the holder's exit. A company that was not going to use the volume could transfer the rights outright before the two years elapsed — and keep the term of the original title, which is what made the volume worth something to a buyer. It converted a right about to lapse into a transferable asset.

It is gone.

Read together with the addition in section 4, the direction is clear: a holder can now buy more time, but can no longer buy its way out. The unused volume is retained by paying, potentially for longer than before — or it is lost. What it can no longer be is sold ahead of caducidad with its original term preserved.

6. The same pattern, in a second article of the same decree

This is where the December 2025 reform stops looking like a set of unrelated adjustments.

In Article 24, the decree deleted the instruction that the authority consider the full recovery of the investments made by the concessionaire when deciding on an extension. In Article 29 BIS 3, it deleted the route that let a holder realise the value of a volume it was not going to use.

Two deletions, in two different articles, both removing an exit available to the holder. Neither was announced as a policy shift. Both were framed as drafting.

There is a third piece that fits. The Second Transitory Article of the same decree suspends the new regime pending regulation — with the express exception of transfers of rights and changes of use, which are governed by the new rules immediately. So transfers are simultaneously the one thing the grace period does not cover, and the thing that stopped working as a way out of caducidad.

7. The machinery: three steps, all in business days

The Reglamento of 4 August 2026 sets out the procedure. Every period in it is expressed in business days.

Only on validation of that proof, the Reglamento says, is the interruption of caducidad applied. Article 7 adds a further 30 business days running from expiry of the payment deadline, and 15 business days to respond to a request for further information.

The Reglamento also abrogates the prior regulation on this charge, published on 27 May 2011.

The choice of “business days” is not a formality, and it changes who can work out the date.

A business-day period excludes Saturdays, Sundays and the days listed in Article 28 of the Ley Federal de Procedimiento Administrativo. It also excludes the additional non-working days that each ministry publishes by acuerdo in the DOF — days that are not in any statute, that change from year to year, and that differ between one authority and another.

Two consequences follow, and the second is the one that matters operationally.

First, the notice deadline runs backwards from a fixed quarter-end. Every additional non-working day in the intervening weeks does not delay the deadline — it moves it earlier. Non-working days are usually a reprieve. Here they are the opposite.

Second, and decisively: the deadline cannot be read off a calendar. It is a function of an administrative instrument published separately from the Law and the Regulation, which has to be in hand before any date is fixed. A holder who counts fifteen days on a wall calendar, or who counts fifteen working days without the acuerdo, will arrive at a date that is too late — and the sanction for arriving late is that the caducidad period was never interrupted at all.

The practical rule is short. Locate the eighth quarter-end first, then obtain the applicable acuerdo de días inhábiles for the period, then count. In that order. Doing it in any other order produces a number that looks like a deadline and is not one.

8. The trap: none of the protections operates by itself

This is the part that turns a favourable provision into a lost one.

Section VI protects a holder that stopped using water because of force majeure, because it invested in raising water-use efficiency and therefore uses only part of the volume, or because it is carrying out the corresponding investments or the authorised works within the term granted. Those are genuine protections and, in our experience advising industrial operators, the least known of the three.

They are conditional. The paragraph, as amended on 11 December 2025, requires the holder to file a reasoned written submission with the Water Authority within fifteen business days of the circumstance arising, accompanied by the evidence establishing it. And then:

“failure to file the submission referred to in the preceding paragraph shall result in the caducidad period not being deemed suspended, and in its being computed in the manner provided in Section VI of this Article, unless the holder establishes that the circumstances ceased before the two-year period.”

You invested in water efficiency. The Law protects the volume you therefore stopped using. You did not file the submission. The clock never stopped.

There is a drafting point worth flagging. The paragraph setting the deadline for numerals 1, 5 and 6 says “within the fifteen days following” — without the word “business” — unlike the paragraph immediately before it, which has it. That paragraph was itself amended on 11 December 2025; the legislature touched it and did not add the word. It can be read as a deliberate distinction or as a defect the reform left in place. We do not know which, and we have not found a judicial or Tax Court criterion resolving it. Until one exists, the prudent course is to count those fifteen days as calendar days — the reading that cannot leave a holder out of time.

9. Reading the Law and the Regulation together

The Law says caducidad does not apply where the holder pays the charge “before two consecutive years” without using the water. The Regulation places payment “within the forty-five business days following that on which the two-year period closes.”

Before and after are not the same, and a reader could stop there and conclude that one instrument contradicts the other. Mexican interpretive practice does not permit stopping there.

Provisions are to be read harmoniously and systematically, preferring a construction under which the norm makes coherent sense over one that leaves it self-contradictory. That method extends to the relationship between a statute and its implementing regulation — but asymmetrically, and the asymmetry is the point. A regulation issued under the executive's regulatory power exists to provide, in the administrative sphere, for the statute's exact observance. It is subordinate to the statute and cannot exceed or contradict it. So the harmonising runs in one direction: where a coherent reading is available it is adopted, and where none is, it is the regulation that yields — never the statute.

Here a coherent reading is available, and it is the natural one.

What the statute conditions on the two-year period is the holder's act of claiming the protection. What the Regulation governs is the execution of that claim: the notice through which it is made, the determination and payment of the amount, and the proof that validates it. The notice — due fifteen business days before the eighth quarter closes — falls inside the statutory window. The payment mechanics that follow are precisely what a regulation is for: providing for the statute's execution, not extending its terms.

On that reading the two instruments do not conflict, and the Regulation is doing its proper work.

Mexican courts have applied this method to an apparent contradiction of exactly this shape. A federal collegiate court settled jurisprudence this month on two state provisions that fixed different periods for the same annual payment obligation — one specifying the first two months of the year, the other January through March. A taxpayer argued that the divergence created legal uncertainty. The court held that it was “not a normative contradiction, but a complementary and extensive regulation of the temporal element” of the obligation; that a payment period “distributed across several provisions does not generate legal uncertainty” where the normative system yields it with sufficient and reasonable clarity; and that the coexistence of differently worded provisions “widens the temporal margin for satisfying the obligation.”

That is the same move: divergent periods for one obligation, read as complementary rather than contradictory, with the wider margin treated as consistent with legal certainty rather than corrosive of it.

Jurisprudence (IV Región)1o. J/1 A (12a.), digital registry 2032491, First Collegiate Court of the Fourth Region Auxiliary Centre, Xalapa, Twelfth Época, published in the Semanario Judicial de la Federación on 14 August 2026 and binding from 17 August 2026. Two differences should be stated rather than glossed. That case concerned provisions of equal rank, not a statute and its implementing regulation; and it was decided under the tax-legality principle of Article 31, section IV of the Constitution, which is not the frame here. We cite it for the interpretive method it applies to divergent time periods, not as authority on the hierarchy between a law and a regulation.

This is our reading, and we prefer it to the alternative — that the Regulation has moved a payment the statute placed inside a window to a point outside it. We prefer it because a construction that reconciles two instruments is to be preferred over one that sets them against each other, and because the alternative would require alleging that the Regulation exceeds the statute. That is a question of constitutional hierarchy, and it is not one a holder wants to be litigating from the position of having already missed a date.

But the reading resolves the design, not every case. A holder who gives notice on time and then pays late is, under the Regulation itself, outside the protection: interruption of caducidad is applied only on validation of the proof of payment. And the statutory language gives an authority arguing the point something to work with.

So the practical instruction survives either reading, and it is short: the notice is the date that governs your calendar. Everything after it is mechanics you should not be working out for the first time.

What to do

1. Identify every titled volume and compare it against actual metered extraction, quarter by quarter. The exposure is the gap at either edge, and the lower one is measured on completed quarters.

2. Establish which quarter would be the eighth, on the calendar grid, for each volume where a shortfall exists. This is determinable in advance.

3. Check the upper edge too. Identify any period of drawing more than a fifth above the authorised volume, and whether a suspension has ever been imposed for that cause. See section 3: the second occurrence is the one that reaches revocation, and the window to stop the first is ten business days from notification.

4. If you invested in water efficiency, or are executing authorised works, document it now — and diarise the fifteen-business-day submission. The protection exists. It is conditional on the filing.

5. Obtain the competent ministry's published acuerdo de días inhábiles for the relevant period before computing any date. Every deadline in this Regulation is in business days.

6. Treat the notice, not the payment, as the binding date. See section 9.

7. Re-examine any plan that assumed an unused volume could be sold ahead of caducidad with the original term preserved. See section 5.

What remains open — stated plainly

We have not found a judicial or Tax Court criterion on whether the fifteen-day period for numerals 1, 5 and 6 runs in calendar or business days. We are not resolving the tension between the statutory payment window and the regulatory one, for the reason given in section 9. And the Reglamento de la Ley de Aguas Nacionales itself remains the one issued in 1994 and last amended in August 2014; the regulation defining responsabilidad hídrica, ordered by the Seventh Transitory Article of the December 2025 decree, has not been issued.

A new regulation on one charge does not make the framework settled. We would rather say that than imply otherwise.

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