Texas v. New Mexico and Colorado: US Supreme Court Weighs in on Federal Interstate River Management

Ripping a 10-year-old case back from the brink of resolution, the US Supreme Court sided in June with the federal government and rejected a settlement among Texas, New Mexico, and Colorado over the management of the Rio Grande, which flows southeast from Colorado’s San Juan Mountains, through New Mexico, and along the Texas/Mexico border. The Court found that the litigation, initiated by Texas in 2013, could not be resolved without the federal government’s approval. The case now returns to the Special Master and an uncertain future. What began as a dispute over whether groundwater pumping in New Mexico violated the Rio Grande Compact has morphed into a battle over the federal government’s role in enforcing interstate compacts to which the US is not a signatory.

States generally exercise jurisdiction over waters within their boundaries, but rivers that travel between states like the Rio Grande give rise to special management issues. Rather than litigate interstate river disputes, states often choose to enter into compacts to resolve differences and allocate water. The Rio Grande Compact is one such example. After a series of disputes over the waters of the Rio Grande dating back more than a century, Texas, New Mexico, and Colorado entered into the Rio Grande Compact in 1938, requiring Colorado to deliver Rio Grande water to New Mexico, and for New Mexico to deliver water to Texas at the Elephant Butte Reservoir, a federal facility within New Mexico. From there, the federal government delivers water under two irrigation-water contracts and fulfills the US’s treaty obligations with Mexico.

As in many areas of the West, drought stress-tested the Compact. With surface flows dwindling, New Mexican farmers turned to groundwater. That pumping, Texas alleged in its 2013 lawsuit, further reduced the Rio Grande’s supply in violation of the Compact. Though not a signatory to the Compact, the US moved to intervene in 2014, seeking similar relief. In a unanimous ruling in 2018, the Court permitted the United States to join, finding that the Compact is “inextricably intertwined” with the federal government’s administration of irrigation contracts out of Elephant Butte and US-Mexico treaty obligations. Texas v. New Mexico, 583 US 407, 413-15 (2018).

By 2022, the states had hammered out a deal to end the conflict and gained the Special Master’s support. The US, though, opposed it, arguing that the settlement improperly disposed of Compact enforcement claims the US wished to make independently.

In a 5-4 decision, the Supreme Court agreed with the US objections to the Special Master’s decision approving the settlement. Relying on reasons similar to those approving the US’s intervention, the majority found, among other things, that the US had unique interests in the Compact as a “sort of ‘agent’” in its administration of water from Elephant Butte to downstream irrigation districts and in its responsibilities to Mexico. Texas v. New Mexico, No. 220141, slip op. at 10 (US June 21, 2024). As a result, though not a Compact signatory, the US’s consent was required.

The four dissenting justices, headed by Justice Gorsuch (the lone westerner currently on the bench), objected to the majority’s decision as it “allows the government to exercise squatter’s rights over our original jurisdiction,” grants the U.S. a “veto power” over state-to-state settlements, and “federaliz[es] an interstate dispute.” Slip op. at 24-25. This, the dissenters worried, could “make it harder to secure the kind of cooperation” needed to govern interstate rivers.

The case marks the latest example of federal flex in interstate water management, as interstate rivers commonly feature federal projects. The opinion highlights that those projects may allow the United States to enforce interstate compacts, even where it is not a party, and to play other major roles in interstate disputes. Of particular note is the seven Colorado River Compact states and federal government’s renegotiation of the Colorado River’s long-term operational rules ahead of 2026, when existing rules will expire. In June 2022, the federal government threatened to enforce unilateral cuts absent a satisfactory deal; the states were able to reach a temporary agreement in May 2023, which the Bureau of Reclamation formally adopted in March 2024. The federal government plays a special role in managing the Colorado River under the Supreme Court’s decision in Arizona v. California, 373 US 546 (1963).

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. Zach Smith, an O'Melveny associate licensed to practice law in California and Colorado; Buzz Thompson, an O'Melveny of counsel licensed to practice law in California; Heather Welles, an O'Melveny counsel licensed to practice law in California; Matt Kline, an O'Melveny partner licensed to practice law in California; Daniel R. Suvor, an O'Melveny partner licensed to practice law in California; and Russell McGlothlin, an O'Melveny partner licensed to practice law in California, 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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