On August 4, 2026, the Federal Official Gazette (“DOF”) published the Decree issuing the Regulation for the Determination and Payment of the Non-Lapse Guarantee Fee for National Water Rights (the “Regulation”), enacted by the President of the United Mexican States with the countersignature of the Ministry of Finance and Public Credit (“SHCP”) and the try of Environment and Natural Resources (“SEMARNAT”). The Regulation, administered by the National Water Commission (“CONAGUA”), establishes the procedure whereby holders of national water concessions and allocations may prevent the declaration of total or partial lapse of their rights when they have not exploited, used, or utilized the conceded or allocated volumes for two consecutive years.

Important Note: The Regulation will enter into force on August 5, 2026, the day following its publication in the DOF, pursuant to its first transitory article. As of that date, the Regulation published on May 27, 2011 is abrogated, and any administrative provisions that contradict the new regulation are repealed, except as provided in its transitory regime.

1. Background

Prior Regulatory Context for National Waters

The Mexican national waters regime derives from Article 27 of the Political Constitution of the United Mexican States, under which waters located within national territory are the property of the Nation, and the State may transfer dominion to private parties without relinquishing original ownership. Implementing this principle, the National Waters Law (“LAN”) regulates the exploitation, use, or utilization of national waters through concession and allocation titles, subject to grounds for termination provided, among others, in Articles 20 and 29 BIS 3 thereof.

Within this framework, total or partial lapse may be declared when the holder ceases to exploit, use, or utilize national waters for two consecutive years. The non-lapse guarantee fee operates as a legal option to prevent the authority from declaring such lapse with respect to unused volumes, without substituting the need to timely demonstrate compliance with applicable procedural and payment requirements.

From the Preliminary Draft to Publication in the DOF

The immediate regulatory precedent is the Regulation published in the DOF on May 27, 2011, which established the guidelines for the application of the non-lapse guarantee fee and assigned to SHCP the determination of the corresponding government fee under the terms of the Federal Revenue Law. The new Regulation, published in the DOF on August 4, 2026, updates that procedural framework and, pursuant to its transitory regime, abrogates the 2011 Regulation and repeals any administrative provisions that contradict it, except as expressly provided.

The Regulation was initially disseminated as a preliminary draft on the Comprehensive Regulatory Governance Platform (the “Platform”) on June 16, 2026, within the regulatory improvement process, prior to its definitive publication in the DOF. The amendment process is also linked to the fiscal authorization contained in Official Letter No. 349-B-143, dated May 13, 2026, through which SHCP authorized CONAGUA, under the figure of government fees, 40 rates per cubic meter necessary to determine and pay the non-lapse guarantee fee during fiscal year 2026. SHCP justified the fee as the social opportunity cost caused by ceasing to use conceded or allocated national waters for two consecutive years, with the objective of rationalizing conceded and allocated volumes through better allocation of titles.

2. Key Aspects of the Regulation

Purpose and Effect of Payment

The Regulation’s purpose is to establish the procedure for the determination and payment of the non-lapse guarantee fee and its extensions, pursuant to Article 29 BIS 3, section VI, third paragraph, numeral 3 of the LAN. The effect of payment is to prevent the application of partial or total lapse of the conceded or allocated water volume that has not been exploited, used, or utilized.

Relevant Definitions

Article 2 of the Regulation establishes the following key definitions:

• Authorized rate per m³: the rate set by SHCP for each cubic meter of water, under the terms of the Federal Revenue Law for the corresponding fiscal year.

• Two consecutive years: the last eight quarters in which the conceded or allocated volume has been partially or totally unexploited, unused, or unutilized.

• Non-lapse guarantee fee: the amount calculated pursuant to Article 4 that the concessionaire or allottee opts to pay so that its volume does not lapse totally or partially.

• Covered volume: volume not subject to lapse because payment has been made.

• Uncovered volume: volume subject to lapse because it has not been used for two consecutive years and the fee has not been paid, or because the extension request was denied.

• Non-lapse extension: CONAGUA’s authorization to extend up to two occasions the option to pay the fee with respect to unused volumes.

Computation of the Two-Year Period

The period is computed by concluded quarters: January–March, April–June, July–September, and October–December (Article 3).

Formula for Determination of the Fee (Article 4)

CGNC_t = CA_t × VASEUA_t

VASEUA_t = Minimum [(VAACA_t-1 – VAEUA_t-1), (VAACA_t-2 – VAEUA_t-2)]

Where:

CGNC = Non-lapse guarantee fee

CA_t = Authorized rate per m³ in effect at the time of payment

VASEUA_t = Minimum volume of water unexploited, unused, or unutilized in the last eight quarters

VAACA = Annual conceded or allocated water volume

VAEUA = Water volume exploited, used, or utilized

_t = Eight-quarter period for which the non-lapse guarantee fee is calculated.

expiration

_t-1= Period comprising the first four quarters of period t.

_t-2= Period comprising the last four quarters of period t.

Volumes are expressed in cubic meters (m³).

Notice and Payment Obligations (Article 5)

• Prior notice: file a notice with CONAGUA at least 15 business days before the end of the eighth quarter, through the corresponding platform or electronic system.

• Payment deadline: within 45 business days following the conclusion of the two-consecutive-year period.

• Payment methods: offices authorized by SHCP or CONAGUA’s electronic means (Sistema Declar@gua, internet portals, or authorized bank windows).

• Information required in payment: start and end date of the period, concession or allocation title (and annex, if applicable), and unexploited/unused/unutilized volumes used as the basis for calculation.

• Proof of payment: within 15 business days following payment, submit proof to CONAGUA for validation and application of the lapse interruption.

Extension Regime (Article 6)

• Application: at least 15 business days before the end of the eighth quarter, accompanied by justification of the reasons for non-use, reasons for retaining the volume in relation to the purpose of the concession/allocation, and supporting documentation.

• Resolution: CONAGUA determines admissibility within 45 business days thereafter.

• Payment upon authorization: 15 business days from notification to pay and submit proof.

• Limit: up to two extension occasions (consecutive or not) during the term of the title.

• If extensions are not consecutive, the holder is not authorized to leave volumes unused for two-year periods in the interval; other grounds for lapse interruption under Article 29 BIS 3, section VI, LAN, may be triggered.

Consequences of Non-Compliance

CONAGUA will apply the lapse provisions set forth in the LAN and its Regulation with respect to uncovered volumes. Additionally, CONAGUA may request clarifications within 30 business days following the expiration of the payment deadline, granting the holder a period of no more than 15 business days to respond to the request.

Relevant Transitory Provisions

• Entry into force: August 5, 2026, the day following its publication in the DOF (first transitory article).

• Abrogation of the 2011 Regulation and repeal of conflicting provisions (except the fifth transitory article of the abrogated instrument).

• Pending proceedings: those initiated before entry into force shall be resolved under the provisions in effect at the time of filing.

• Initial computation: the first occasion and the two extensions shall be computed for each title from the first complete two-consecutive-year period without use following entry into force (August 5, 2026).

• Special transitory provision: for titles with periods shorter than two years at the time of entry into force that conclude thereafter, the 2011 Regulation shall apply on a one-time basis; such payment shall not count as the first occasion or an extension, but if not made, the title may not benefit from the new regime.

3. Fees Authorized for Fiscal Year 2026

Through SHCP Official Letter No. 349-B-143, published in the DOF on July 14, 2026, 40 government fees were authorized. The fees vary according to the type of use, the source (surface or groundwater), and the water availability zone defined in the Federal Duties Law. Below is a summary of the main fees (pesos per m³):

Use / Source	Zone 1	Zone 2	Zone 3	Zone 4
General - Surface	$25.6326	$11.8006	$3.8692	$2.9588
General - Surface	$34.5392	$13.3693	$4.6550	$3.3838
Drinking water - Surface	$0.7618	$0.3653	$0.1824	$0.0909
Drinking water - Groundwater	$0.7952	$0.3666	$0.2067	$0.0963
Hydroelectric generation (Surface or Groundwater)	$0.0087	$0.0087	$0.0087	$0.0087
Aquaculture - Surface	$0.0064	$0.0032	$0.0015	$0.0006
Aquaculture - Groundwater	$0.0069	$0.0032	$0.0015	$0.0006
Spas/Recreational (Balnearios) - Surface	$0.0188	$0.0104	$0.0048	$0.0020
Spas/Recreational (Balnearios) - Groundwater	$0.0224	$0.0109	$0.0053	$0.0023

Note: Water availability zones are defined pursuant to the Federal Duties Law. Fees for hydroelectric generation are uniform across all zones and sources.

4. Practical Implications for Clients in the Energy and Natural Resources Sectors

El Reglamento tiene relevancia directa para titulares de concesiones o asignaciones de aguas nacionales que, por diversas razones operativas, no estén aprovechando la totalidad de sus volúmenes autorizados. Al encontrarse ya en vigor, los periodos de dos años consecutivos comenzarán a computarse conforme a su régimen transitorio, por lo que resulta prioritario evaluar la exposición de cada título. Entre los escenarios más frecuentes se encuentran:

• Scheduled or unscheduled operational shutdowns (major maintenance, force majeure).

• Delays in obtaining permits, environmental authorizations, or interconnections.

• Gradual project expansion or incomplete water infrastructure.

• Projects in the development stage with concessions already granted (renewable energy, thermoelectric, mining, oil and gas, hydrogen, storage).

• Contracted capacity exceeding current demand (cooling systems, auxiliary industrial services).

Sector-Specific Considerations

Hydroelectric generation: The specific fee is very low ($0.0087/m³, uniform); however, the main risk is not the economic cost but rather the loss of the conceded volume if the fee is not paid or non-use is not adequately justified.

Thermoelectric and industrial projects: General fees (up to $34.54/m³ in Zone 1 groundwater) may represent a significant cost. The cost-benefit analysis between paying the fee and retaining the strategic volume is critical.

Mining and beneficiation, oil and gas: Projects with multiple titles and diverse sources require granular monitoring by title, source, and annual volume, not merely by plant or project.

Agroindustry and food: The relationship between conceded volumes and actual consumption by season should be reviewed, assessing whether underutilization is seasonal or structural.

5. Recommended Actions

In light of the entry into force of the Regulation, holders of national water concessions and allocations are advised to adopt the following measures:

1. Comprehensive title inventory: Update the registry of concessions and allocations, including annexes, sources (surface/groundwater), water availability zones, annual authorized volumes, and specific uses.

2. Utilization assessment: Review the volumes effectively exploited, used, or utilized during the last eight quarters for each title, and calculate the minimum unused volumes pursuant to the formula in Article 4 of the Regulation.

3. Economic exposure estimate: Apply the fees authorized by SHCP to unused volumes and budget the payment when retaining the volumes is strategically appropriate.

4. Compliance calendar: Design an alert system with critical dates: (a) 15 business days before the end of the eighth quarter for the notice; (b) 45 business days following the close of the period for payment; and (c) 15 business days to submit proof of payment.

5. Extension support preparation: When seeking an extension, gather documentation evidencing the causes of non-use and the reasons for retaining the volume.

6. Internal coordination: Align the legal, environmental, operations, finance, and projects areas; designate a responsible person per title for compliance with the Regulation.

Should you have any questions regarding the scope or implementation of this note, please contact us.

Legal Disclaimer: This analysis is based on the text of the Decree issuing the REGULATION FOR THE DETERMINATION AND PAYMENT OF THE NON-LAPSE GUARANTEE FEE FOR NATIONAL WATER RIGHTS, published in the DOF on August 4, 2026, and on SHCP Official Letter No. 349-B-143. This document is for informational purposes only and does not constitute legal advice.

Bernardo Mendoza: bmendoza@k-g.com.mx

Dorothy Lerch: dlerch@k-g.com.mx

Demetrio Fernández: dfernandez@k-g.com.mx