A judge has halted a water permit issued by the state to Sunland Park and a private landowner.
The Las Cruces Sun-News reported that court documents show a district judge recently ordered the state engineer to cancel a permit for the city and rancher Charles "Chip" Johns.
A permit was requested last year as part of a plan for Johns to sell water leased from Sunland Park to contractors constructing a rail yard outside Santa Teresa.
Officials say the permit was needed to move water rights from the city's ground wells to two wells on Johns' land.
County irrigation officials have protested the permit gaining approval before the proposal was publicized, which state law requires.
The state engineer says a hearing on the application is planned for June.