New Delhi, Aug. 30 -- A simmering feud over management of one of North America's longest rivers reached a boiling point when the U.S. Supreme Court sent western states and the federal government back to the negotiating table last year.

Now the battle over waters of the Rio Grande could be nearing resolution as New Mexico, Texas and Colorado announced fresh settlement proposals Friday designed to rein in groundwater pumping along the river in New Mexico and ensure enough river water reliably makes it to Texas.

New Mexico officials say the agreements allow water conservation decisions to be made locally while avoiding a doomsday scenario of billion-dollar payouts on water shortfalls.

Farmers in southern New Mexico increasingly have turne...