Legal disputes for that water began in 2013 when Texas argued that New Mexico violated the 1938 Rio Grande Compact by pumping groundwater and diverting south of Elephant Butte. Texas claimed New Mexico was essentially taking water that legally belonged to Texas.

New Mexico owes Texas water primarily due to the Rio Grande Compact of 1938, a legal agreement between Colorado, New Mexico, and Texas that governs how the water of the Rio Grande is distributed. Under this compact, New Mexico is required to deliver a specific volume of water to Elephant Butte Reservoir for use by Texas and southern New Mexico farmers. The "debt" typically arises during prolonged droughts or periods of excessive groundwater pumping in New Mexico, which reduces the surface flow of the river before it can reach the delivery point. In early 2026, this decades-long dispute has seen significant developments; New Mexico has faced legal pressure to repay a massive "water deficit" accumulated over previous dry cycles. Texas argues that New Mexico's failure to meet its obligations has devastated agricultural operations in the Rio Grande Valley. To settle these claims, the states have recently negotiated new frameworks for groundwater management and "repayment" deliveries, though the issue remains sensitive as climate change continues to impact the river's overall yield and the ability of both states to meet their municipal and industrial needs.