U.S. Supreme Court Approves Rio Grande Compact Settlement in Texas v. New Mexico and Colorado, Ending a Long-Running Water Rights Dispute

The U.S. Supreme Court has now approved a settlement in Texas v. New Mexico and Colorado, clearing the way for a new framework governing Rio Grande water deliveries and groundwater use. At the center of the dispute was whether groundwater pumping in New Mexico was reducing the river flows owed downstream to Texas. The agreement sets up stronger measurement and enforcement tools, while also requiring New Mexico to reduce groundwater depletions over time. More broadly, the case highlights how interstate water fights are increasingly becoming tests of both state obligations and federal influence.

Key Takeaways:

• Settlement revision: The settlement only moved forward after the States revised their earlier proposal to address the federal government’s objections to the 2022 deal.
• Compliance framework: It creates new compliance tools for measuring deliveries and requires New Mexico to make up future under-deliveries more quickly.
• Groundwater reductions: A related agreement requires New Mexico to reduce groundwater consumption by roughly 5.9 billion gallons annually within 10 years.
• Federal influence: The case also underscores a bigger legal trend: the federal government may have significant leverage in interstate compact disputes even when it is not a signatory to the compact itself.

A settlement among the Rio Grande Compact signatory states—Texas, New Mexico, and Colorado—passed the final hurdle last week, resolving a decades-long dispute over the impacts of groundwater pumping on the river’s flows. On May 26, the U.S. Supreme Court entered an order adopting a consent decree agreed to by the States—and, this time, without objection by the federal government. Part of a larger set of settlement agreements, the consent decree establishes new mechanisms for measuring and enforcing New Mexico’s delivery requirements to Texas, including obligations for New Mexico to make accelerated water deliveries to make up for any future under-deliveries. The broader settlement also requires New Mexico to gradually decrease its groundwater consumption by 5.9 billion gallons annually within 10 years.

What began as a dispute over water quantity resulted in a contentious refashioning of federal involvement in interstate compact disputes. In 2011, New Mexico first sued the United States in federal district court over its operation of major Rio Grande irrigation water projects. Two years later, Texas sued New Mexico and Colorado in the U.S. Supreme Court—an action in which the United States successfully intervened. Though the States proposed a settlement to the Court in 2022, the federal government objected. In a 5-4 decision, the Court sided against the States, finding the settlement would dispose of the federal government’s claims against New Mexico without its consent. Texas v. New Mexico, 602 U.S. 943 (2024). For a more in-depth discussion of the history of the dispute, see our prior article here.

Following that ruling, a new Special Master tasked the States with modifying their 2022 proposal to address the federal government’s objections. In response, the States removed points that the United States claimed would affect operation of federal projects. The accompanying agreements established a timetable for New Mexico to reduce current depletions within 10 years, a water management plan to be implemented by New Mexico to timely address future issues related to Compact compliance, a monitoring system to measure hydrologic conditions, and an agreement to dismiss claims between New Mexico and the United States.

At first, the most notable issue in the case appeared to be how the Court would address effects of groundwater pumping on surface-water supplies in the context of an interstate compact. Later, though, federal government’s attempt to stop a settlement agreed to by compact signatories highlighted the growing federal involvement in interstate water disputes. Such interstate compacts—contracts between States with the force of federal law—are a common mechanism for allocating shared water resources, but the United States is not usually a signatory. The Texas v. New Mexico dispute reveals that the United States may nonetheless be able to dictate resolution of compact disputes when it has a sufficient interest in the outcome. 

Increasing federal power in interstate water disputes remains a hot topic. Last week, in response to the Court’s requests for the view of the United States, Solicitor General D. John Sauer requested that the Supreme Court to take up part of a dispute between Nebraska and Colorado over the South Platte River. The U.S. Bureau of Reclamation is also expected to issue a final Environmental Impact Statement related to management of the Colorado River at the end of June. 

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Heather Welles, an O'Melveny partner licensed to practice law in California; Zach Smith, an O’Melveny counsel licensed to practice law in California and Colorado; and Harmukh Singh, an O’Melveny associate licensed to practice law in Texas, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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