U.S. Supreme Court Enters Decree in Texas v. New Mexico

On May 26, 2026, the United States Supreme Court entered a consent decree approved by all parties, including the United States, resolving, for now, the dispute over the 1938 Rio Grande Compact. The decree makes official a set of agreements between Texas, New Mexico, and the United States over the management of the Rio Grande. Now, however, New Mexico is left to grapple with requirements to reduce groundwater depletions and, specifically, to limit depletions from domestic water wells. The actions taken by New Mexico could have profound implications on the water well industry in that state and more broadly.

Although the Rio Grande Compact involves a river, the most recent dispute, which began in 2013 when Texas filed suit against New Mexico, centers on groundwater withdrawals. Specifically, Texas alleged that excessive groundwater pumping in New Mexico deprived Texas of its fair share of Rio Grande water under the compact. Texas further alleged that groundwater pumping along the river between the Elephant Butte Reservoir and the state line took water from the river that rightfully belonged to Texas. 

Note that lawsuits between states originate in the United States Supreme Court. The Court appoints a Special Master to hold hearings and make recommendations to the Court, which ultimately decides the issues.

After a convoluted series of rulings, the parties reached this agreement, the Special Master recommended that the Court approve the agreement, and the Court did so. In 2014, the United States filed a motion to intervene in the case, alleging that their management of the Elephant Butte Reservoir, a federal project, gave the United States a vested interest in the outcome. The Court allowed the intervention due to the unique circumstances of the case.

In 2023, Texas and New Mexico reach an agreement to settle the matter. However, the United States objected. In a surprising ruling, the United States Supreme Court ruled in 2024 that the United States must agree before a settlement can be finalized, sending the parties back to the drawing board.

The new agreement (a set of agreements) ensures that the federal government can meet treaty demands with Mexico and can operate the Elephant Butte Reservoir as in the past. Irrigation Districts are also assured that they will continue to receive water.

Under the agreements, New Mexico agrees to reduce groundwater depletions in the Lower Rio Grande by 18,200 acre-feet per year within 10 years by permanently retiring groundwater rights. A minimum of 9,100 acre-feet reduction must be achieved within five years. Annual progress reports must be filed.

New Mexico must also draft and implement a Lower Rio Grande Water Management Plan within two years. The Plan must reflect enforceable hydrologic conditions contained within the agreement, and actions to satisfy the depletion reduction, close the Lower Rio Grande Basin, and maintain an Upper Valley Diversion Ratio above a certain level. Importantly, the plan must include actions to limit present and future depletions from domestic wells.

If New Mexico fails to deliver the required water to Texas at Elephant Butte Reservoir, penalties in the form of transferring water rights to Texas will accrue. These penalties would make a difficult situation in New Mexico even more dire. New Mexico lacks sufficient water supplies at present. Reductions in available water would impose economic and other hardships in the state.

The State of New Mexico is now facing some difficult decisions. With domestic water wells specifically targeted by the agreement, water well contractors in the state must continue to be proactive to protect the industry. Given the water shortages in the state, many are concerned that New Mexico may not be able to meet the requirements in the agreements. In any case, domestic water wells in Lower Rio Grande in New Mexico are now being targeted for severe cutbacks. Those cutbacks may impact water wells in other parts of the state. Future actions in the state will likely have ripple effects across the country. WSC will continue to monitor the situation and keep the industry informed on significant developments.