Executive summary
The bill proposes structural changes to the LAN and its Regulations to prioritize the human right to water and sanitation, curb misuse, and reorder titles.
Critical impact on the administration of concession titles, especially for groundwater extraction/exploitation in the industrial sector.
Key proposed changes vs. current framework
State’s exclusive regulatory role: Reinforces that the State is solely responsible for regulating and guaranteeing water use. (LAN arts. 4 and 5 already prioritize human use; this would tighten it).
Ban on transfers of titles between private parties: Today LAN allows transfers with authorization and registration (arts. 33–36; Reg. arts. 65–71). The bill would ban private-to-private transfers, affecting M&A, restructurings, and “water banks.”
Renewals subject to review: Today available for an equal term if requirements are met (LAN art. 24). The bill would subject every renewal to authority review, increasing discretion and denial risk.
New National Water Registry: Today there is the Public Registry of Water Rights (LAN arts. 29 BIS–31). A new registry implies migration, clean-up, and greater traceability.
National Water Reserve Fund: Strategic reallocation prioritizing human use and sustainability; could facilitate rescues and reallocations (LAN already recognizes “rescate” for public utility).
Tougher sanctions and water-related crimes: New offenses for illegal extraction/transport, corruption, diversion; 1–10 years imprisonment and fines. (LAN provides administrative sanctions and some penal coordination; this expands it).
Recognition of community/indigenous systems for personal/domestic, non-profit use.
Impact on industrial groundwater concession holders
Portfolio lock-in risk: Without private transfers or change of use, operational, corporate, and investment reconfigurations are constrained.
Higher non-renewal or volume reduction risk: The authority may already reduce/cancel for human-use risk (LAN art. 4 added 2023); renewal scrutiny would rise.
Potential reallocation to the Reserve Fund: Idle or underused volumes may be reallocated per strategic planning.
Criminal and compliance exposure: Harsher penalties require robust extraction, metering, and traceability controls.
Increased registry and audit burden: Migration to the new Registry could trigger verifications, clean-ups, and documentation demands.
Projects and CAPEX: Modernization and metering (including telemetry where applicable) likely more mandated.
Recommended actions (immediate and preparatory)
Audit titles and compliance: Verify term, authorized use, meters, extraction/discharge points, reports, and registry information.
Map renewal risks: Prepare technical-environmental files, evidence of investment, efficient use, and compliance for renewals.
Freeze discretionary changes: Avoid change-of-use or moves that may become unviable; document current uses.
Review ongoing transfer deals: Accelerate closings allowed under current law or design alternatives (assignments, internal reorganizations) within current limits.
Strengthen metering and telemetry: Install/upgrade certified meters, telemetry, and data controls; ensure maintenance and records.
Penal/administrative compliance program: Water due diligence, extraction controls, data chain-of-custody, anti-corruption training, incident protocols.
Water portfolio strategy: Assess alternative sources (reuse, treated water, regulated rainwater), process efficiency, and footprint reduction.
Prepare for new Registry: Build a data room (titles, drawings, rights payments, metering, reports), reconcile with RPDAs and internal catalogs.
Contract clauses: Adjust supply/maquila/M&A contracts for non-renewal, volume cuts, sanctions, and regulatory force majeure risks.
Regulatory engagement: Track the legislative process; prepare technical comments and sector positions.
Regulatory (bylaw) considerations
If enacted, the LAN Regulations will need updates (e.g., transfers, change of use, renewal procedures, registry, metering).
Anticipate transition: grace periods, migration rules to the new Registry, and transitional provisions for existing titles.
What to monitor
Final decree text and transitory provisions (effective dates and regularization windows).
Scope of transfer ban (exceptions, transfers with the State, intra-group restructurings).
Renewal criteria and evaluation of “efficient use” and compliance.
Reserve Fund design and reallocation rules.
Metering/telemetry parameters and reporting duties.
Criminal offenses and enforcement guidelines.
How we can help
Risk diagnosis and action plan by site/portfolio.
“Ready-to-file” renewal packages.
Contract and corporate governance strategy.
Design/implementation of water compliance programs.
Notice
This document is informational and not legal advice. We recommend project/site-specific counsel.
Authors
Juan S. Vázquez Silveyra / juan.vazquez@ecrubio.com
Sofía Ramírez Necoechea / sofia.ramirez@ecrubio.com
