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New Mexico Officials Tell Legislative Finance Committee a Rio Grande Settlement Would Cut 18,200 Acre-Feet, Cost •$150M and Await Supreme Court Review
Summary
State officials told the Legislative Finance Committee that a settlement package resolving long-running Rio Grande litigation would require New Mexico to reduce Lower Rio Grande groundwater depletions by 18,200 acre-feet (one-time acquisitions over a 10-year window), would cost in excess of $150 million with $40 million in federal IRA funds leveraged so far, and is awaiting a special master recommendation to the U.S. Supreme Court.
At a Legislative Finance Committee briefing, state officials described a multi-part settlement with Texas and the United States intended to resolve decades of litigation over Rio Grande apportionment and groundwater impacts and to provide a framework for administering water below Elephant Butte Reservoir.
"In my view, this is a better outcome than the consent decree," said James Grayson, chief deputy of the New Mexico Department of Justice, summarizing the state position as presenters laid out the settlement's components and next steps.
The package contains four interlocking elements: (1) a compact decree that would fix interstate apportionment accounting between New Mexico and Texas; (2) a project operations agreement to reconcile project-level accounting with compact accounting; (3) a groundwater settlement requiring New Mexico to reduce groundwater depletions; and (4) federal contracting (a Miscellaneous Purposes Act contract and a third-party implementing contract) to allow the state to use acquired surface water to meet compact deliveries, presenters said.
The single largest operational commitment is a depletion-reduction obligation of 18,200 acre-feet that New Mexico must achieve through acquisition, leases or other measures. "We have 10 years to complete that depletion reduction," said Hannah Riesley White, director of the Interstate Stream Commission, adding the state has flexibility in how it meets the target and is designing a purchase program with stakeholder input.
Officials estimated the settlement implementation will cost "in excess of a $150,000,000," White said, and noted the state has leveraged about $40,000,000 in federal IRA funding toward water-rights acquisitions. Presenters also cited prior state appropriations and additional federal and private funding for habitat and channel projects connected to the work.
State leaders framed the settlement as avoiding risk: presenters said if litigation continued to a Supreme Court outcome unfavorable to New Mexico, courts could have required deeper cuts tied to a 1938 compact baseline and exposed the state to damages they estimated in prior briefings could exceed $1 billion. The settlement, they said, provides a predictable index-based delivery formula that scales obligations to available inflows.
Committee members pressed officials on several points. Vice Chair Munoz asked whether the state's legal team had water-law expertise; Grayson identified lead counsel Jeff Wexler and said multiple lawyers on the matter have long water-law backgrounds. Munoz also warned that acquiring non-adjudicated rights or adjudicating rights after initiating purchases could raise market prices; officials said purchases to meet the Lower Rio Grande obligation must come from the defined Lower Rio Grande geography and that separate strategic reserve work in the Middle Rio Grande would be managed independently.
Presenters emphasized the settlement does not eliminate New Mexico's ongoing delivery obligation to Elephant Butte Reservoir. Rather, the compact decree sets an index so deliveries scale to inflows: "If we have super low — if we have no water coming in, we actually don't have to deliver any water," a state attorney said during questioning, explaining the index-based mechanism is designed to reflect available supply.
Officials acknowledged open work remains on related adjudication and tribal claims for portions of the Middle Valley and said those negotiations are part of the implementation timeline. They also said channel-efficiency projects, recharge and conservation programs established with prior appropriations are already under way and will support the state's ability to meet delivery obligations.
Greg Davia, president of the Elephant Butte Irrigation District, spoke from the audience and said the district and local water users remain engaged: "The state has been extraordinarily cooperative in listening to our concerns and finding resolution," he said.
What happens next: presenters said they expect a recommendation from the special master and are preparing an initial solicitation for a purchase program, with officials urging the Legislature to consider early investment because delays could raise acquisition costs. The special master report will go to the U.S. Supreme Court for final approval; state officials said they anticipate that step next spring and are already planning the stakeholder work and purchase program needed to implement the settlement if the court approves it.
