From Permits to Planning: What New Mexico Utilities Should Know About the 2025 Water Legislation

Written by: Andrew Kalemba, Operations Specialist, Southwest Environmental Finance Center (SW EFC)

In 2025, New Mexico passed three major water-related bills, Senate Bill 21/22, House Bill 137, and Senate Bill 37, that are set to reshape the regulatory and funding landscape for water, wastewater, and stormwater utilities across the state. These laws represent a shift toward local control and resource resilience. Whether you’re operating, managing, or assisting a utility, these changes could directly impact your work. Here’s what you need to know.

1. Senate Bill 21/22: New Regulatory Oversight for Surface Water Discharges

SB 21/22 creates a state-run Pollutant Discharge Elimination System (PDES), requiring permits for discharges into surface water under state—not federal—authority. This comes in response to the 2023 Sackett v. EPA decision, which stripped Clean Water Act protections from many New Mexico waterways. Without federal oversight, the state is stepping in to fill the gap.

Why It Matters to Utilities:

New Permitting Requirements: Utilities that discharge into streams, rivers, or wetlands may need to apply for permits through a new state-administered program.
Greater Local Accountability: The New Mexico Environment Department (NMED) will oversee compliance, giving utilities a more regionally focused point of contact.
Clearer Enforcement and Funding: Polluters, not state tax dollars, will fund cleanup and monitoring, with dedicated state funding backing the program.

2. House Bill 137: Establishing a Strategic Water Supply Program

HB 137 creates a $75 million fund for projects that increase New Mexico’s water supply, including:

$50 million for brackish water treatment: Utilities can apply for grants or contracts for projects involving treated brackish water or treated produced water for the purposes of reducing the state’s reliance on fresh water resources or expanding water reuse opportunities.
$28.8 million for aquifer research: The New Mexico Institute of Mining and Technology will lead the effort to map and monitor the groundwater resources, collecting essential data to help guide future planning and groundwater management decisions.

The bill also introduces a 3-cent fee on each barrel of produced water disposed of in the state. The revenue generated from the fee will fund water supply projects and management initiatives down the road.

Why It Matters to Utilities:

Alternative Supply Options: Brackish water projects can diversify supply portfolios, especially in drought-prone areas.
Data-Based Planning: Utilities will benefit from new groundwater mapping to better understand recharge and depletion patterns.
Fracking Reuse Not Included: Reuse from fracking is not included in this legislation to protect public health and the environment.

3. Senate Bill 37: Strengthening the Strategic Water Reserve

SB 37 enhances the state’s Strategic Water Reserve, a program the state uses to secure water rights and store water for times of extreme need, such as droughts or shortages. This reserve will now include:

Non-reverting funds, ensuring that allocated money remains available indefinitely, regardless of how long a water rights transaction takes to finalize.
Aquifer recharge as a formal use, helping tie surface water storage to groundwater sustainability.
Water transaction prioritization by the Interstate Stream Commission for uses that protect endangered species, support aquifer recharge, or meet compact obligations.

Why It Matters to Utilities:

Enhanced Water Security: Strengthens the Reserve program’s ability to secure water rights that can be used during times of drought, emergencies, or supply shortages. Indirectly benefits utilities by improving water management and potentially reducing
Aquifer Recharge: Expands the Reserve’s purpose to include aquifer recharge, which can help prevent depletion and reduce the strain on groundwater sources that many utilities rely on.

For a comprehensive overview of each bill, please refer to the following blog posts:

Image by Gordon Johnson from Pixabay.