FWIW, the state of NM has just passed legislation allowing the use of 'grey'
water for lawns, plants etc. We can use water from the clothes washer but
NOT
water from the bath or sink.

why one and not the other?

Here in Colorado we are not allowed to use grey water from the sink because of
the high concentration of organic matter (actually considered "black water") or
bath because it may contaminate the ground water with bacteria (ecoli, etc.)
that are washed from human bodies. For more information, see:
http://www.ext.colostate.edu/pubs/natres/06702.html
sed5555