FARGO — Diversion Authority officials admittedly are taking a multimillion-dollar gamble with tax money by pressing in court to resume construction even while a permit approving the flood project faces administrative review.
But the bet is calculated: Officials acknowledge the risk in seeking to build inlets and related diversion features at a cost of $46 million, but emphasized in court filings that the price of inaction is even higher.
If construction is further delayed, the $2.75 billion project’s cost will spiral at the “conservatively estimated” rate of $70 million a year, the Diversion Authority’s lawyers argued.
“Either way, tens of millions of dollars in public obligation will be committed during 2019,” the lawyers argued in a brief. “The question is whether the taxpayers will have anything to show for it.”
In pressing for permission to resume construction, the Diversion Authority risks ultimately losing the lawsuit, filed by upstream opponents of the project in 2013, which could render any built structures useless.
The sobering math lesson is laid out in a brief the Diversion Authority’s lawyers have filed seeking to persuade a federal judge to at least partially lift a court order, imposed in 2017, to halt construction on the diversion, a project that would create a channel to divert Red River floodwaters around Fargo-Moorhead.
The Diversion Authority is seeking approval in U.S. District Court in Minnesota to allow construction of the inlet structure, located about 2½ miles south of Horace, N.D., and about 5 miles from Minnesota, as well as a structure near the Wild Rice River in North Dakota. The motion will be heard April 1.
“If the work through 2020 occurs and is later abandoned for any reason, there would be no effect on any Minnesota waters,” Martin Nicholson, an engineer who works for the diversion project, said in court filings.
The Diversion Authority also is seeking court approval to resume procurement for project construction under a novel public-private partnership officials say will be more cost-effective.
“Resuming procurement is important to get approximately $1 billion of construction costs locked in to avoid further escalation of costs,” Nicholson said, adding that further delays increase the risk a developer could drop out, resulting in less competition and “potentially higher costs over and above the standard escalation.”
So far, about $430 million toward the $2.75 billion project has been spent. Project costs have risen by about $550 million in recent years, with $400 million stemming from design alterations that made the project acceptable to Minnesota regulators.
The remaining $150 million in cost increases was due to cost escalation, or inflation, according to the Diversion Authority.
The risks of allowing construction delays on the diversion go beyond the financial, the Diversion Authority argued.
“If construction does not proceed during the pendency of the contested case hearing, the residents of the Fargo-Moorhead Metropolitan Area will be subjected to the continued risk of catastrophic flooding for at least one additional year, if not longer given the lead times associated with remobilizing the project contractors even after the contested case hearing has been completed.”
One development that could increase the odds that the judge could approve the request: The Minnesota Department of Natural Resources, which has permitting authority over the dam for the diversion, isn’t objecting to lifting the order, at least partially.
Administrative appeals challenging the Minnesota DNR’s permit for the diversion, which hinges on meeting 54 conditions, have placed the permit in abeyance, pending the appeals’ outcome.
The Buffalo-Red River Watershed District and the Minnesota municipalities of Comstock and Wolverton filed the administrative appeals.
In its response to the Diversion Authority’s request to lift the court order, the Minnesota DNR said it would not object — provided the court order is consistent with the conditions it imposed on the permit.
Otherwise, the agency asked the judge to deny the motion. But Minnesota officials noted how flood-prone Fargo-Moorhead is, having reached or exceeded flood stage in 52 years between 1902 and 2017, and every year except 2012 and 2016 from 1993 through 2017.
The “contested case” appeals, which must be heard by an administrative law judge if they proceed, can take between one and two years to decide, the Minnesota DNR said in court filings.
Upstream opponents of the diversion, the Richland-Wilkin Joint Powers Authority, which combines North Dakota’s Richland County and Minnesota’s Wilkin County, argued against the motion to allow construction to begin.
The counties continue to argue that a Minnesota diversion would be the better alternative. That option was quickly discarded early in diversion planning, as many agreed it would not survive environmental review.
Also, the upstream opponents argue that they presented two better alternatives, but those options were rejected by a task force whose recommendations formed the basis for the modified diversion project, often called Plan B.
“Diversion Authority’s contention that there is no feasible alternative to Plan B is demonstrably false,” the opposition brief said.
The upstream opponents also argue that allowing construction to start would be contrary to basic water law.
“There is no property right in changing the course, current and cross section of public waters: indeed, the property rights are completely on the other side,” the opposition brief said.
“Farmers establish farms and farmsteads based on where water will flow. Grain elevators, churches and cemeteries, drainage infrastructure, road infrastructure, school enrollment and transportation routes, and the reasonable use of surface waters, wells, fence lines, and all the rest depend upon the natural flow of public waters.”