The Interstate Stream Commission can now move forward with a meeting next week to consider the future of the Gila River.
During a hearing Thursday, state District Judge Francis Mathew lifted a temporary restraining order that had blocked action by the commission.
New Mexico faces a Dec. 31 deadline for deciding how to manage its share of the river under the Arizona Water Settlements Act.
The commission plans to meet Monday to consider a recent staff recommendation to build a diversion and storage system along the Gila.
Critics say the cost of any diversion would far outweigh the federal subsidies available for the project.
Former commission director Norm Gaume is among the critics. He sued, alleging the commission's handling of the Gila River violated the state Open Meetings Act.
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