On October 1, 2025, Mexican President Claudia Sheinbaum marked her administration's first anniversary by submitting a proposal to enact a new General Water Law (Ley General de Aguas) and to reform the existing National Water Law (Ley de Aguas Nacionales). These reforms aim to reshape Mexico's water governance framework by consolidating government control over water concessions and pivoting away from treating water as a tradable commodity, designating it instead as a strategic national resource.
Key changes in the proposed reform to the National Water Law include a prohibition on transfers of water concessions,1 stricter reviews of extensions of concessions,2 a prohibition on changes of use,3 the creation of a National Water Registry,4 preventing water hoarding5 and combating the illegal use of water through stricter compliance obligations and sanctions for non-compliance.6 These changes carry risks for industries dependent on water concessions, such as mining operations that require water for ore processing or mineral extraction. Investors have avenues available to them to mitigate those risks.
The reform imposes limitations on water property rights
A major element of the reformed National Water Law is a prohibition on the transfer of water concessions, which are currently freely transferrable.7 Under the new framework, if a corporation holding a water concession (or a piece of land with an associated concession) is sold or transferred, the water concession does not transfer automatically to the new owner. Instead, the new owner must apply to the National Water Commission (Conagua) for a new concession under an "expedited" approval process.8 The process and criteria for the grant of such new concessions remain uncertain. While the draft reform states that the application process will be governed by the National Law for the Elimination of Bureaucratic Procedures (Ley Nacional para la Eliminación de Trámites Burocráticos), it does not specify what elements will be taken into consideration when deciding whether to grant concessions after transfers of ownership.
In addition to restricting transfers, the reform limits how water concessions may be held and used. The initiative establishes a time limit on holding unused water rights, after which the rights may be revoked.9 This provision is designed to prevent water hoarding but risks penalizing concessionaires facing unintended delays or project suspensions. Moreover, the reform also prohibits changing the originally granted use of a concession, thereby reducing operational flexibility and constraining the ability of investors with long-term investments to adapt water use to evolving needs.10
While concessions can still be extended beyond their initial term, the reform proposes that such extensions be scrutinized based on the availability of water, the concessionaire's past water management practices, and their past compliance with fiscal obligations.11 Under this procedure, should the state determine that water is unavailable, or that the concessionaire did not use it responsibly, extensions to concessions could be denied. These provisions may impair the property rights previously held by concessionaires and give the state more control and discretion over water concessions.
Discretionary powers granted to authorities create legal ambiguity and uncertainty
The proposed National Water Law gives extensive discretionary powers to the state that may affect the rights of water concessionaires. Under the proposed reform, Conagua is empowered to "issue the necessary measures and specific decrees, whether temporary or permanent, to address [water] emergency situations, shortages and overexploitation, as well as to guarantee water security."12 The reform proposal does not specify what measures Conagua can take in these circumstances, potentially giving Conagua broad discretion. Measures might include, for example, the temporary or permanent revocations of water concessions. Risks and uncertainty are heightened by the fact that the reform includes an article allowing Conagua to define the meaning of key terms such as "overexploitation" of water.13
Moreover, in cases of severe droughts, overexploitation and similar states of need or urgency, the reform permits the state to temporarily reclaim national water rights from existing concessionaires.14 Given recent government declarations of states of emergency due to water shortages nationwide, this provision may have an immediate impact on investors operating in water-intensive sectors.15
Sanctions for infractions are increased and broadened under the proposed law
Under the proposed National Water Law, sanctions for water-related infractions are significantly increased, and corresponding enforcement powers are expanded and more invasive. The reform increases the monetary penalties for existing violations16 and introduces new categories of infractions. While some of the new offenses are administrative in nature,17 others are classified as criminal acts and carry associated prison sentences.18
If concessionaires do not comply with the corrective or urgent measures imposed by Conagua, the state may direct a temporary or permanent closure of their operations.19 Depending on the severity of the violation, as determined by Conagua, sanctions may escalate to include the suspension or revocation of the concession itself.20
In the context of enforcement, the proposed law also grants Conagua extensive powers for verification and inspection procedures. This includes the power to access all types of information of concessionaires, even if such information is otherwise confidential.21 This broad authority may pose risks to the integrity of concessionaires' confidential information.
Transitional provisions contain an ambiguous exception
The proposed National Water Law includes a transitional article under which applications for concessions that have already been submitted and are in the approval process will be governed by the provisions of the applicable law at the time of submission, so long as those provisions are not contrary to the proposed National Water Law's "principles or objectives."22 This language creates uncertainty for investors with pending applications, as it appears to give the state broad discretion to apply the amended National Water Law to them immediately and retroactively. A recent decision by the Mexican Supreme Court, holding that the Mining Law passed in 2023 could retroactively apply to deny mining concessions that were in the approval process, signals that such retroactive applications of new laws may be upheld in court.23
Investors should explore legal strategies to protect their rights
Investors should consider avenues to protect their investments that may be impacted by the proposed General Water Law and amendments to the National Water Law, including seeking protection under international investment treaties to which Mexico is a party, such as the United States-Mexico-Canada Agreement (USMCA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Investors may have grounds under investor-state dispute settlement mechanisms to recover damages for unfair, arbitrary or abusive treatment by the Mexican authorities, or expropriations that may result from the proposed changes to the water concessions regime. Investors who do not currently have disputes should consider restructuring their investments to access investment treaty protections and investor-state arbitration under relevant treaties.
White & Case has extensive expertise in assisting clients in this context, including by developing strategies to avoid disputes, preserving and enhancing claims and defenses, advising on amicable dispute resolution, and, if necessary, pursuing claims or defending them in international arbitration. Last year, for example, White & Case helped the water treatment company Consolidated Water obtain a favorable settlement of investment treaty claims against Mexico (more information is available here) arising out of the termination of a public-private partnership agreement for the development, construction and operation of a desalination plant in Baja California, Mexico.
Ernesto Torres (International Arbitration Fellow, New York) contributed to the development of this publication.
1 Draft National Water Law Article 22.
2 Draft National Water Law, Article 22.
3 Draft National Water Law, Article 70.
4 Draft General Water Law, Article 29, subsection V.
5 Draft National Water Law Article 29 BIS 3.
6 Draft National Water Law Tenth Title.
7 Draft National Water Law Article 22.
8 Draft National Water Law Article 22.
9 Draft National Water Law Article 29 BIS 3, subsection VI. 3.
10 Draft National Water Law Article 70.
11 Draft National Water Law Article 24.
12 Draft National Water Law Article 9, subsection L.
13 Draft National Water Law Article 3, subsection L. BIS.
14 Draft National Water Law Article 29 BIS 3, subsection VI. 4.
15 In 2022, Conagua declared the start of a potential state of emergency due to drought in Baja California and Sonora. On November 6th, 2024, the State of Chihuahua declared a state of emergency due to a severe drought for the second consecutive year in a row.
16 Draft National Water Law Article 120.
17 Draft National Water Law Article 119, subsections XXV, XXVI, and XXVII.
18 Draft National Water Law Tenth Title, Chapter V. Contrasting with these additional sanctions, the proposed law no longer prohibits granting concessions on water channels or vessels and their federal zones to be used for the final disposal of mining waste or mineral wastewater deposits. These concessions can now be granted after projects certify certain "measures of protection for population centers, productive areas, bodies of water or ecosystems." Draft National Water Article 118.
19 Draft National Water Law Article 120, subsection IV.
20 Draft National Water Law Article 120, subsection VI.
21 Draft National Water Law Article 3, subsection L. BIS.
22 Draft National Water Law Sixth Transitional Article.
23 See Revised Amparo 583/2024, 25 September 2025.
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