In 1996, Texas and Oklahoma agreed to create the Red River Boundary Commission to solve the border dispute between the two states. The Commission worked to better define the boundary through a compact, known as the Red River Compact. This compact was adopted into law by the State of Texas in 1999 by the 76th Legislature, Regular Session, House Bill 1355. The purpose of the compact was to establish an identifiable boundary between Texas and Oklahoma along the Red River as of the effective date of the compact without interfering with or otherwise affecting private property rights or title to property. The boundary between Texas and Oklahoma was determined by the United States in 1921 to be the south bank of the Red River, which has remained the boundary through the years. However, the boundary fluctuates as a result of natural action of the river. When the boundary must be clearly defined, expensive, time-consuming survey techniques have been used to define the boundary, which only defines it as it exists at the time of the survey. The compact established a permanent, political boundary, which has been adopted by the U.S. Congress as the official boundary. According to the federal legislation: "(b) The permanent political boundary line between the states of Texas and Oklahoma along the Red River is the vegetation line along the south bank of the Red River except for the Texoma area, where the boundary does not change. For purposes of this compact: (1) the Texoma area extends from the east bank of Shawnee Creek (which flows into the Red River from the south approximately one-half mile below the Denison Dam) at its mouth to the upper end of the normal pool elevation of Lake Texoma (which is 617 feet); and (2) the upper end of the normal pool elevation of Lake Texoma is along the latitude of 33 degrees 54 minutes as it crosses the watercourse at the approximate location of longitude 96 degrees 59 minutes. (c) The party states agree that the existing boundary within the Texoma area begins at the intersection of the vegetation line on the south bank of the Red River with the east bank of Shawnee Creek. From this point, the boundary extends west along the south bank of the Red River as the bank existed immediately before the commencement of the construction of Lake Texoma. From Shawnee Creek to Denison Dam, this boundary line is within the current channel of the Red River. Within Lake Texoma, this boundary line follows the south bank of the Red River as the bank was located and marked by the United States Army Corps of Engineers before the commencement of the construction of Lake Texoma."

The compact drafted an agreement defining the boundary line for a portion of the boundary along Lake Texoma, known as the Texoma Area Boundary Agreement. This agreement was signed by David Dewhurst, the Texas General Land Commissioner and Representative James H. Dunegan, elected designee of the State of Oklahoma Red River Boundary Commission on July 28, 2000. The 106th Congress, through House Joint Resolution 72, granted its consent to the Red River Compact and the new Texas-Oklahoma boundary established by the Compact, effective August 31, 2000.