Many parts of the Southwest, including New Mexico face increasing water supply challenges. Drought, new development, agricultural demands, and strict surface water allocations have put pressure on water managers to find alternate water sources. One such candidate is the treated produced water from oil and gas exploration activities.
On March 3, 2026, the Water Access Treatment and Reuse Alliance, the City of Bloomfield, and Lea County petitioned the New Mexico Water Quality Control Commission to amend 20.6.8 of the New Mexico Administrative Code (NMAC). The proposed amendments would establish a permitting framework for the treatment, discharge, and use of produced water outside oil and gas exploration, drilling, production, treatment, or refining. Because the petitioners anticipate further changes based on input from the New Mexico Environment Department (NMED), stakeholders, and the public facilities should treat the draft as an early planning signal, not a final compliance standard.
Which Facilities Could be Affected by New Mexico’s Proposed Produced Water Rules?
Depending on how treated produced water is managed, the permitting framework could apply to:
- Facilities that treat produced water for use outside oil and gas operations
- Industrial facilities proposing to use treated produced water in manufacturing, cooling, utility, refinery, chemical, or metalworking processes
- Hydraulic cement concrete facilities using treated produced water as mixing water
- Closed-loop geothermal and hydrogen production facilities
- Construction and road-maintenance operations using treated produced water
- Facilities using treated produced water for irrigation of industrial crops
- Facilities discharging treated produced water directly or indirectly to groundwater
- Facilities discharging treated produced water to surface water
- Organizations that receive and use treated produced water, but do not operate the treatment facility
- Pilot and demonstration projects evaluating treatment technologies or potential reuse applications
The proposed requirements would apply only in Chaves, Colfax, Doña Ana, Eddy, Harding, Lea, McKinley, Otero, Rio Arriba, Roosevelt, San Juan, Sandoval, and Union Counties. The draft would prohibit produced water discharge or use under this framework in other New Mexico counties.
How Could the Proposed Rules Affect Facility Design and Permitting?
Under the proposed framework, a treatment system’s ability to produce water of a particular quality would be only one part of the permitting evaluation. Facilities would also need to demonstrate how water will be stored, transported, monitored, used, and ultimately managed. Applications may need to address treatment residuals, release prevention, emergency response, potential exposure pathways, closure, and financial assurance.
These requirements could influence facility siting, process design, laboratory contracting, project schedules, operating procedures, and agreements among water producers, treatment providers, transporters, and end users.
New Mexico’s Four Proposed Produced Water Permit Classes
The draft establishes four permit classes based on the activity and the potential discharge pathway, 1) Class A: Non-Discharging Produced Water Uses, 2) Class B: Discharges to Groundwater, 3) Class C: Discharges to Surface Water and 4) Class D: Downstream Users of Treated Produced Water. Though, these categories could undergo modifications as the petition goes through the rule amendment process.
| Permit Class | Facilities or Activities Covered | Key Proposed Considerations |
| Class A | Facilities using treated produced water for non-discharging applications | Industrial uses, concrete production, closed-loop geothermal projects, hydrogen production, pilot projects, containment, spill prevention, monitoring, emergency response, closure, and financial assurance |
| Class B | Treatment or use facilities with a direct or indirect discharge to groundwater | Feasibility study, water characterization, targeted and non-targeted analysis, engineering documentation, operating plans, monitoring, reporting, and groundwater-protection requirements |
| Class C | Facilities discharging treated produced water to surface water | Surface-water standards, antidegradation requirements, targeted and non-targeted analysis, whole effluent toxicity (WET) testing, staged discharge authorization, monitoring, reporting, and public outreach |
| Class D | Facilities or other parties using treated produced water obtained from a Class B or Class C permit holder | Separate permit application, identification of the supplying facility, storage and containment controls, transportation procedures, emergency response, release prevention, closure, and financial assurance |
Permitting Responsibilities for Downstream Users
The proposed Class D structure is especially important for industrial and infrastructure entities. A facility could need its own permit even if it does not produce or treat the water. The user may have independent responsibilities for storage, secondary containment, transportation, emergency response, release prevention, unused-water disposition, closure, and financial assurance. Supply agreements should account for these responsibilities rather than assuming the treatment provider’s permit covers the entire chain of custody.
Technical Work for Permit Application
Class B and Class C applicants would be expected to complete technical evaluations before submitting a permit application. For both classes, the proposed rule calls for a feasibility study demonstrating that the treatment train is technically viable for the intended application. Applicants would also characterize untreated and treated produced water through targeted analysis of specified constituents and non-targeted analysis intended to screen for unknown or understudied chemicals.
Class C surface-water applicants would additionally conduct acute and chronic WET testing. They would need to identify the receiving water and evaluate applicable water-quality standards, downstream requirements, and antidegradation considerations.
The applications would also require:
- Operations and maintenance plan
- Transportation and release-prevention plan
- Emergency-response plan
- Hazard analysis
- Engineering and water-characterization report prepared by a licensed professional engineer
- Waste-management plan
- Closure plan and closure cost estimate
- Financial-assurance documentation
Facilities evaluating produced water projects may need to begin this work during conceptual design. Treatment selection, monitoring locations, waste streams, containment systems, discharge pathways, and closure assumptions could affect both the application and the facility design.
Monitoring Requirements
The proposal would establish continuing monitoring and reporting responsibilities rather than relying only on pre-permit testing. Depending on the permit class, facilities could be required to monitor operational indicators in real time or daily, test other indicators weekly, and periodically complete targeted and non-targeted analyses. Certain exceedances would require confirmation sampling, notification to the NMED, increased monitoring, or suspension of treated produced water delivery or discharge.
The draft would also require annual sampling for targeted and non-targeted analysis under standard permit conditions. Emerging contaminants identified after permitting could lead to additional monitoring or WET testing.
For affected facilities, this means that sampling design, laboratory capacity, recordkeeping, data review, and escalation procedures could become ongoing operational functions.
Class C Surface-Water Discharges Would Follow a Staged Approach
For Class C facilities, the proposed default authorization during the first 12 months would be up to 25,000 barrels of treated produced water per day. A higher initial rate could be authorized if the permittee submits verifiable treatment-performance evidence, independent laboratory or third-party documentation, and information showing that receiving and downstream waters would not be adversely affected.
If treatment performance or water-quality requirements are not maintained, NMED could reduce the discharge rate, modify or revoke the permit, or require discharge to stop. Confirmed failure of specified WET tests would require immediate suspension until the cause is identified, corrective action is completed, and subsequent testing passes. This structure could affect ramp-up assumptions, treatment capacity, water-use agreements, revenue timing, and contingency planning.
How Can Facilities Prepare for New Mexico’s Proposed Produced Water Rules?
Although the rule remains proposed, facilities considering treated produced water projects can begin evaluating:
- The complete pathway from produced water generation through treatment, transportation, use, discharge, residuals management, and final disposition.
- Whether the proposed activity would fall within Class A, B, C, or D.
- Source-water and treated-water characterization data that may be missing.
- Whether the proposed treatment train has sufficient performance and toxicity data for the intended use.
- Facility design needs related to containment, monitoring, release detection, waste handling, and emergency response.
- How permitting, reporting, closure, and financial-assurance responsibilities would be allocated among participating organizations.
- How staged authorization could affect facility capacity, start-up, and contractual commitments.
- Opportunities to follow and participate in the rulemaking process as the proposed requirements develop.
Take Away Message
Water shortages in New Mexico necessitate a quest for alternate sources of water. The proposed amendments to the produced water rules would create a detailed permitting and oversight structure for facilities that treat, discharge, transport, or use produced water outside oil and gas operations. The practical significance will depend on the final rule, but the petition indicates that water characterization, treatment validation, operational controls, public participation, and long-term facility responsibilities are likely to remain central to New Mexico’s consideration of produced water reuse.
