In the case of Texas v. New Mexico (1982), the Supreme Court was tasked with resolving a dispute over water rights between the two states. The controversy centered around the Pecos River Compact, an agreement that required New Mexico to deliver a certain amount of water annually from the river to Texas. However, due to changes in irrigation techniques and increased groundwater pumping in New Mexico, less surface water was reaching Texas than anticipated when signing this compact. As such, Texas claimed that these actions violated their rights under this agreement. The Supreme Court appointed a Special Master who recommended finding in favor of Texas on several issues including whether or not groundwater pumping could be considered as part of state's delivery obligations under compact and if it is permissible for one state to unilaterally change its use practices after entering into an interstate compact without renegotiating terms. The court largely accepted these recommendations and ruled against New Mexico stating they had failed their obligation by allowing too much consumption within its borders before delivering agreed upon share downstream thus violating terms set out by Pecos River Compact.

In the dissenting opinion for Texas v. New Mexico, Justice O'Connor argued that the Court had overstepped its bounds by appointing a River Master to oversee water distribution between states under an interstate compact. She contended that this was not within the Supreme Court's constitutional or statutory authority and it was inappropriate for them to take on such administrative duties. Furthermore, she believed that this decision disregarded state sovereignty as it allowed federal courts to interfere in matters traditionally handled by states themselves. The appointment of a River Master also raised concerns about separation of powers because it blurred lines between judicial and executive functions - something which could potentially lead to conflicts of interest down the line.