By Raj Lahoti and Miguel Suazo
When it comes to produced water use and reuse, Texas and New Mexico are on the same road but at very different mileposts. Texas is drafting permit mechanics for the land application of treated produced water. New Mexico is still deciding whether to authorize broader off-oilfield reuse at all. Operators, midstream water companies, data center developers, hydrogen and geothermal sponsors, and industrial users with Permian or San Juan Basin exposure should plan around the gap—not around an eventual convergence.
At a glance:
- Texas (TCEQ): On April 30, 2026, the Texas Commission on Environmental Quality (TCEQ) approved publication of proposed rules under Rule Project No. 2026-006-309-OW implementing Senate Bill (SB) 1145. Comment period closes June 16, 2026; adoption targeted 2027.
- Texas Supreme Court (2025): Produced water is oil and gas waste owned by the mineral operator, not the surface owner, absent express agreement. Cactus Water Services, LLC v. COG Operating, LLC.
- New Mexico (WQCC): On May 12, 2026, the Water Quality Control Commission (WQCC) voted 7-4 to advance WQCC 26-18, reopening 20.6.8 NMAC for off-oilfield reuse. Hearing to be scheduled; decision anticipated in 2027.
- New Mexico—current rule: Existing 20.6.8 NMAC generally prohibits discharge of untreated or treated produced water to surface water or groundwater outside of oil-and-gas activities, while allowing limited pilot projects under New Mexico Environment Department (NMED) permitting.
- Commercial takeaway: A reuse project that may be moving toward a permit pathway in Texas may remain legally uncertain in New Mexico. Multi-state projects should be structured by source state, treatment location, transport route, discharge or land-application location, end use, and contract risk allocation.
Texas
On April 30, 2026, TCEQ approved publication of proposed amendments to 30 Texas Administrative Code (TAC) Chapters 309 and 210 under Rule Project No. 2026-006-309-OW, “Land Application of Produced Water.” The proposal implements SB 1145 (Sen. Brian Birdwell, 89th Texas Legislature, effective Sept. 1, 2025), which transferred permitting authority for the land application of treated produced water from the Railroad Commission of Texas (RRC) to TCEQ and directed TCEQ to adopt standards preventing pollution of surface and subsurface water. The TCEQ public comment portal is open May 15 – June 15, 2026; the comment period closes June 16, 2026. Companion bill House Bill (HB) 49 provides expanded liability protections for parties involved in produced water treatment, transport, and reuse, and requires additional rulemaking on discharge standards. TCEQ is running two parallel rulemakings, both targeted for 2027 adoption: a memorandum of understanding (MOU) rule formalizing the RRC-to-TCEQ transfer, and the Chapter 309/210 rule on effluent limits and plant siting. TCEQ is separately reviewing individual discharge applications involving treated produced water, including applications affecting the Pecos River and other surface waters.
In summer 2025, the Texas Supreme Court held that, absent express agreement, produced water is oil and gas waste owned by the mineral operator and not the surface owner. That holding governs who has the right to commit, treat, transport, and monetize produced water under the new TCEQ framework, and should be addressed expressly in every produced water reuse contract, surface use agreement, and pipeline easement going forward.
New Mexico
On May 12, 2026, the WQCC voted 7-4, with one abstention, to advance WQCC 26-18—a rulemaking petition filed by the Water Access Treatment & Reuse (WATR) Alliance, the City of Bloomfield, and Lea County. The petition—the third major push in less than a year by WATR after two unsuccessful votes—proposes amendments to 20.6.8 NMAC, “Ground and Surface Water Protection – Supplemental Requirements for Reuse of Treated Produced Water,” seeking a permit framework across 13 New Mexico counties spanning the Permian and San Juan basins. Proposed end uses include industrial reuse, construction and concrete production, closed-loop geothermal, hydrogen production, livestock watering, non-food crop irrigation, and certain controlled environmental releases. A multi-day rulemaking hearing will be scheduled at a later date. Given the New Mexico gubernatorial transition timeline, the substantive decision may not be reached until 2027—meaning the next governor’s appointees could decide it.
The existing 20.6.8 NMAC rule (effective July 12, 2025; New Mexico Register Vol. XXXVI, Issue 12) generally prohibits the discharge of produced water to surface or groundwater and authorizes only limited pilot projects approved by the NMED. It was adopted under WQCC authority granted by HB 546 (2019), which amended the Water Quality Act (NMSA 1978 §§ 74-6-1 et seq.) and the Produced Water Act (NMSA 1978 § 70-13-3(B)) to give the WQCC and NMED jurisdiction over produced water reuse outside the oilfield. The rule is on appeal before the New Mexico Court of Appeals, where NMOGA is challenging the prohibition—running in parallel with WQCC 26-18.
Why this matters
Texas has identified its core policy choice; the remaining Texas questions are implementation: treatment standards, constituent limits, monitoring, permit duration, public participation, enforcement, and TCEQ-RRC coordination. New Mexico has not made that choice—its baseline is restrictive, and WQCC 26-18 is asking whether to change it at all. The commercial consequence is real: a Permian project potentially permittable in Texas may remain legally uncertain in New Mexico. For multi-state operations—produced water sourced in Lea or Eddy County, transported across the state line, treated in Texas, supplied to a Texas industrial end user—both regimes must be evaluated simultaneously, and contracts must be structured to absorb the asymmetry.
Action items:
- Texas stakeholders: Submit comments on Rule Project No. 2026-006-309-OW before June 16, 2026. Focus on treatment standards, constituent lists, monitoring, public participation procedures, permit duration, renewal criteria, enforcement safe harbors, and TCEQ-RRC coordination.
- New Mexico stakeholders: Monitor the WQCC 26-18 hearing schedule and evaluate party status, technical testimony, and trade-association coordination. Also track New Mexico Oil and Gas Association v. Water Quality Control Commission, No. A-1-CA-42732, in which NMED and several environmental and public-interest intervenor-appellees are defending the existing 20.6.8 NMAC framework. The appeal was fully briefed as of May 12, 2026, and NMOGA moved for oral argument on May 13, 2026; its outcome, together with WQCC 26-18, could materially affect the timing and scope of off-oilfield produced-water reuse in New Mexico.
- Industrial end users (data centers, hydrogen, geothermal, power): Diligence produced water as a regulated supply chain. Address source ownership (Texas Supreme Court 2025 ruling), treatment obligations, conveyance rights, permit status, appellate risk, water-quality specifications, and regulatory-change provisions in offtake and supply agreements.
- All counterparties: Build conditions precedent into long-term contracts tied to permit issuance, exhaustion of appeals, final non-appealable authorization, indemnity for legacy constituents, and termination rights for changes in law.
Produced water reuse is becoming a state-by-state legal strategy. Texas is at permit implementation. New Mexico is at threshold authorization. Evaluate every Permian Basin produced water project by source state, treatment location, transport path, permit type, end use, and contract risk allocation—not by basin geography alone.
Beatty & Wozniak advises operators, midstream water companies, utilities, data center developers, industrial users, treatment providers, landowners, and infrastructure sponsors across Texas, New Mexico, and the Permian and San Juan basins. The firm assists with TCEQ comments and permit strategy, WQCC and NMED proceedings, surface-use and easement agreements, treatment and reuse contracts, environmental compliance, and multi-state project structuring. Contact Miguel Suazo, or Raj Lahoti or any member of the firm’s Environmental or Regulatory Practice Areas.
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