Nat Chakeres, General Counsel for the New Mexico Office of the State Engineer, provided an in-depth analysis of the Lower Rio Grande dispute and its resolution during the New Mexico Water Advocates’ workshop on July 23, 2026. This is a lightly edited transcript of his presentation. Nat speaks extemporaneously in well composed prose to explain the origins and legal evolution of the dispute and its eventual agreed settlement.
Click here to view the video recording and review his presentation slides.
The Rio Grande Project and the Compacts of 1929 and 1938
The Rio Grande Project is an irrigation project constructed by the U.S. Bureau of Reclamation to serve about 155,000 acres of farmland across New Mexico and Texas, concentrated in the Mesilla Valleys of both [states] by and large. It was conceived in the first decade of the 20th century, and Elephant Butte Dam was completed in 1916. Per reclamation law, irrigation districts were formed in New Mexico and Texas, and they had to sign contracts with the U.S. that obligated them to repay the U.S. the costs of completing the dam. It would take 70 years for those contracts to be repaid, and that’s an important part of the story that we’ll get to.
It was a big focus for the United States and the states to ensure that there was sufficient water to deliver to these farms. So that was one of the drivers of the Rio Grande Compact. In 1929, there was a temporary compact that was intended to maintain the status quo so all the states and the United States could gather data. And then in 1938, a compact was signed. The compact includes very specific, detailed delivery obligations for Colorado to deliver water to New Mexico and for New Mexico to get water from the Middle Rio Grande into Elephant Butte. But it’s almost silent on how much water needs to go to New Mexico versus Texas out of Elephant Butte. And it’s completely silent as to groundwater. These are the two main drivers of the dispute that we’ve had. And it’s rather curious that the compact was silent on those. Why?
Why the Compact Said Nothing About Delivery Splits
As to the delivery obligations, the project wasn’t even completely built out by the time the joint investigation was happening. It was being at that time operated by a single entity, the Bureau of Reclamation, whose contracts obligated it to deliver an equal amount of water to farms in New Mexico and Texas, particularly in times of shortage. The unitary management and the fact the project wasn’t even built out also meant that it was hard to calibrate any sort of index delivery obligation. Canals and drains were crisscrossing the state lines. They feared that they would have to put meters at every single one of those canals and drains and it seemed infeasible and they didn’t need to worry about it because a single omnipotent United States would ensure everybody got the water they were entitled to.
Why the Compact Said Nothing About Groundwater
As for groundwater, Texas actually asked to keep it out of the negotiations at that time. They understood that groundwater pumping would affect surface flows, but the technology wasn’t fully appreciated [and] very soon after the compact was signed, it would be economical for large-scale groundwater pumping to take place in the region. It was deemed to be of little importance at the time.
After 1938: Wells, Drought, and a Growing El Paso
What happened after the compact was signed in 1938? Well, people started drilling wells when drought struck barely a decade after the compact was signed. There was a major expansion of groundwater use in both New Mexico and Texas. One, to support irrigators in times of drought, and that was with the encouragement of the United States, and then also to support the rapid growth of the city of El Paso and, to a lesser extent, the city of Las Cruces, which had been there all along, of course, but was growing considerably after World War II.
1938–1978: A Full Supply, Fully Delivered
Up until 1978, all the parties pretty much agreed the project operated as they thought it would when they signed the compact. The compact defines a full supply of water. This curve kind of indicates that in practice, that was about 763,000 acre-feet, but the compact said it was 790,000 acre-feet. (See related visuals here.) When there was a full supply sent out of Caballo, all the farms got full delivery of about three acre-feet of water per acre despite the fact that there was this very large expansion of groundwater use. So there was some degree of depletions on the system from that groundwater pumping during that period, but it wasn’t so much that it was preventing full delivery of water.
The 1978 Transition and Rising Tensions
After 1978, some things changed. The districts finally paid off those contracts, and now they got the opportunity to take partial ownership and operation of the project. So now instead of a single set of hands on the steering wheel for the project, we now had three different parties trying to drive it. And predictably, that led to conflict. There were also increased groundwater pumping impacts post-1978. And so the project was no longer operating the way it had been operating pre-1978. And that caused tension. The city of El Paso, looking for water stability, tried very aggressively to appropriate groundwater in New Mexico. And there was a lot of litigation over that. That all created an atmosphere of mistrust and conflict.
The D2 Benchmark
This is just some data about the pre-1978 operations. (See related visuals here.) For reasons we don’t need to get into, that is called the D2 period. The D2 period is shorthand for pre-1978 operations of the project.
The 2008 Operating Agreement and New Mexico’s Objection
During the 1980s, as I said, there was this conflict. And litigation continued into the 1990s and 2000s. The districts try to work things out. They try to work out their differences by negotiating, between 2006 and 2008, an Operating Agreement that basically said, well, yeah, things seemed like they worked OK in the D2 period. So if Texas isn’t getting the water based on a given release, based on a graph that was not this graph, (See related visuals here) but was something similar—if Texas isn’t getting the water that it was entitled to based on a release, the New Mexico District, EBID, would transfer some of its water to the Texas District, and that would take care of the Texas District.
EBID thought it was doing that on behalf of all New Mexicans. Unfortunately, in the view of the state of New Mexico, which was not part of those negotiations, we thought that some accounting changes within the project really moved us away from that graph I showed you and unfairly charged New Mexico too much for depletions that really were not attributable to New Mexicans. And so we objected to that Operating Agreement. In 2011, a related dispute erupted in litigation. And by 2013, we’re in the U.S. Supreme Court.
Supreme Court Litigation
What Each Party Claimed
What is everybody claiming in the Supreme Court? Texas says no groundwater pumping is allowed in New Mexico beyond what was being done in 1938. The compact doesn’t say you can do any groundwater pumping, therefore you can’t do any. That would have curtailed 99% of groundwater pumping in New Mexico. The United States signs on to that. New Mexico initially argues that since the compact is silent as to groundwater pumping and interference with deliveries to Texas, that the compact does not impose any limitations on New Mexico. There may be causes of action under reclamation law or nuisance law or some other law, but it’s not a compact problem if Texas gets no water at all. It’s not surprising the Supreme Court Special Master rejected that rather extreme argument that we presented. So New Mexico’s fallback argument was really the same theory behind the Operating Agreement, that the amount of depletions on the system that were happening in the pre-1978 period can’t be a compact violation because everybody was getting a full supply when there was a full delivery. And everyone was getting a full delivery when there was a full supply. Texas said, that’s crazy. You can’t define the compact’s obligations based on something that happened decades after the compact was signed. And we said, it’s not a question of interpreting some words in the compact. It’s a question of you can’t prove a compact violation at that level of depletions.
The Special Master’s Ruling and the Turn to Negotiation
So we’re heading to trial. In the litigation, the Special Master rules that New Mexico does, in fact, have a delivery obligation. But the issue is, do we have to do the 1938 level of depletions or that D2 level of depletions, the pre-1978 level of depletions, which incidentally means over 90% of the groundwater pumping that we have today, we were already doing in 1978. We go to trial. Halfway through trial, we take a pause and we go to negotiate.
Texas says, look, if you guys will agree to that thing that the Special Master said you need to do, i.e. an annual index, a delivery obligation we can measure, we’re okay with your D2 level of depletions, your pre-78 level of depletions. Looked pretty good to us because it looked like what we would get if we won in court. Texas also agreed to give up its money damages claims. So this seemed like a bargain that would work for New Mexico. We worked really hard with Texas. We worked really hard with Colorado and the United States.
The United States Withholds Consent
Ultimately, the United States at that time wanted some additional protections that we really got bogged down and stopped making progress on. So the states, again, maybe an aggressive move, decided to pull out of those negotiations and go to the Supreme Court and ask for a settlement agreement just between the states. And the Supreme Court said, the United States has a complaint here, and you can’t dismiss their complaint without their consent. And they have not consented. So in the summer of 2024, we went back, spent another year negotiating with the United States and the districts, and we’re happy that we reached a settlement agreement with them as well.
Key Agreements of the Settlement
The Supreme Court Consent Decree is the deal we struck with Texas and Colorado, almost completely unchanged. The other agreements are the things that we did with the United States and the districts.
The Groundwater Settlement Agreement
The Groundwater Settlement Agreement is effectively us promising stuff to the United States that gets rid of their claims of us interfering with their project deliveries. They want to make sure that if we’re making compact deliveries to the state line, we don’t do it in a way that will game the system, unfairly target Elephant Butte Irrigation District, or cause precipitous declines in the aquifer. There’s a lot of ways you can game just a single delivery point obligation, and they asked us to put in place enforceable hydrologic conditions, monitoring our aquifer health, as well as monitoring project efficiency to make sure that we did that in a way that was sustainable for the project. And another thing that they wanted to make sure of is that we were going to reduce depletions so that man-made depletions were the same as they were pre-1978.
Reducing Depletions by 18,200 Acre-Feet
We agreed on a number that we’re going to reduce depletions under that agreement by 18,200 acre-feet per year. And we’re going to do it through voluntary sellers selling water rights to the state of New Mexico. We have a methodology in the settlement agreement for how those water rights get turned into effective depletion reductions. But that’s something that we promised to the United States we would do. We’ve been out in public talking a lot about that purchase program. We’re in the process of standing it up and we’re likely to go live this fall. It is the single most pressing biggest thing that New Mexico has to do to comply with the settlement agreement right now is take 18,200 acre-feet out of production.
The Operations Settlement Agreement
The Operations Settlement Agreement that we have here, that really resolves our problems with the way the Operating Agreement in the project was being operated. I said before, there were some accounting issues that we had. I’m not going to go into the details there. The Operations Settlement Agreement alters the accounting a little bit, and it gives us some certainty that we can use project water to make compact deliveries if we need to, in a way that’s not going to be unduly harmful to New Mexico users.
The Miscellaneous Purposes Act Contract
And the Miscellaneous Purposes Act contract is the last agreement we have in the settlement. That is a requirement of federal reclamation law that allows us to use project water for compact purposes. And it also ensures one of the big concerns that the districts and the United States had was that the state would try somehow to seize surface water from the districts without compensation and use that for delivery. And this ensures that we’re not going to be able to do that, that there’s going to be fair compensation for the water rights that we use to make compact deliveries.
Water Scarcity and Future Outlook
Why 18,200 Acre-Feet Will Not Be Enough
Now, I said we’re going to be reducing our man-made depletions back to 1978 levels. We’re not in 1978 hydrology. In the Lower Rio Grande, we’re not in our worst water year in history, but we’re in the Hall of Fame. This is a really bad water year, and we’ve had a lot of really bad water years in the past 10, 15 years. And it’s not likely, we’re not going to go back to sort of the best years of the mid-80s or mid-90s. So there’s increased demand for water from the air, from the soils, from the vegetation, and our aquifer is lower than it was in 1978 because we’ve been pumping somewhat more water than we were during the D2 period. So the system needs to fill that hole before we can reach D2 levels of efficiency. And that’s going to mean that we’re going to need to reduce depletions more than just that 18,200 acre-feet.
[The following presentation includes data.] I haven’t had a chance to go through that in depth. I know that we [may not] agree precisely on the numbers, but qualitatively, we understand completely we are going to need to reduce depletions more than just those 18,200 acre-feet. The nice thing about this settlement is it gives us the discretion for how to do that in a way that works for the community. So if we’re able to do that, if we’re able to reduce our depletions in a managed way that enables us to meet our compact state line delivery obligation, as well as those metrics that the United States has put in place, we have safety and certainty that we didn’t have when we were litigating over whether we could use any groundwater at all in the Lower Rio Grande. We still don’t know what future hydrology holds, but we think we have the tools that, in terms of legal certainty, that we can use to go forward and work with water users.
The Alternative Administration Negotiations
We’ve been negotiating with major water users in the Lower Rio Grande for the last number of months about whether they can agree to some voluntary measures under our system of laws—it’s an alternative administration agreement—what it would be called—that would do some additional depletion reductions that would ensure that we can meet all of our obligations. Those negotiations are ongoing, and I’m hopeful we’re going to get somewhere really good with that. But we haven’t landed that yet.
From 350,000 to 320,000: The Diversion Target
Just to give people perspective, we right now divert around 350,000 acre-feet per year in the Lower Rio Grande. We’re going to have to bring that number down to somewhere between 300 and 320 [thousand acre-feet], we think, based on our analysis and modeling. That’s a reduction. And our charge is to do that in the way that makes sense for New Mexico, that’s fair, that’s equitable, and that people can plan around and still thrive in this region. So it’s an exciting opportunity. We’re big fans of the settlement. It’s going to cost a fair amount of money. That’s what a lot of confronting the realities of our water future is looking like around the state, unfortunately. But it’s much better to work out an agreed plan than to try and talk about strict priority administration.
Why Priority Administration Is the Alternative Nobody Wants
The priorities in the Lower Rio Grande are a dense, tangled web of different priorities for different sectors. And so it sort of means everybody is a loser if we just try to do this through priority administration. So hats off to the water users. They’re coming forward and the major water users are trying to come forward and come up with real proposals for how to reduce in a way that’s not going to hit some pretty vulnerable groups if we were to do strict priority administration.