BISMARCK, N.D. (AP) Lawmakers on April 26 approved using a patchwork of loans to finance a $150 million water pipeline project that would supply western North Dakota’s oil industry and a number of cities in the region.
House members approved the bill 81-12 followed by passage in the Senate, 39-8. It now goes to Gov. Jack Dalrymple.
The Western Area Water Supply project will take water from the Missouri River near Williston and pipe it into rural western North Dakota.
Supporters say it will take advantage of the oil industry’s insatiable demand for water to finance a pipeline network that can supply quality drinking water to rural areas. The proposal’s critics say the state is shouldering the financing risk for the project and that it would compete against private water suppliers. Construction could begin as early as July.
“This is going to position northwest North Dakota with good, usable water for the next 40 to 50 years,” said Rep. George Keiser, R-Bismarck. “That’s an amazing accomplishment out of one legislative session.”
Keiser headed a panel of House and Senate negotiators that met 19 times before settling on a final version of the legislation.
Their plan said the state-run Bank of North Dakota will loan the project $50 million and be paid back first. The state’s general treasury will lend $25 million, and a separate trust fund will supply another $35 million.
The legislation suggests that the 2013 Legislature approve another $40 million loan to finish the project.
The North Dakota House had favored selling state-guaranteed bonds to finance the project, which supporters said would make trust fund money available for other projects. Opponents of that approach disliked issuing debt for the pipeline.
“It gets the needs of that area taken care of in a timely manner,” said Sen. Rich Wardner, R-Dickinson. “By going through the bank and the general fund, we’re speeding things up and lowering the cost, compared to bonds.”
The bill creates an 11-member board to operate the pipeline. If the project defaults on its loans, the state Water Commission would take over its operations and be responsible for repaying its debts.
Robert Harms, a lobbyist who represents independent water companies, said the state financing money gives the project an unfair advantage over private water sellers that have invested money in their own supply network for oil companies.
“It’s a terrible public policy choice long-term,” Harms said. “First of all, if we use that model, why shouldn’t we use it to meet infrastructure needs in other areas, like roads? Number two, it’s putting the public sector in competition with private enterprise. That’s a problem.”
Sen. Margaret Sitte, R-Bismarck, compared the plan to the federal takeover of General Motors and said the $150 million price tag is too large.
“This is just so above and beyond anything we’ve ever considered before, and I really don’t think that it should be the state’s business to be looking at making money off the oil industry by selling water,” Sitte said. “I really believe that we have been suckered here.’’
The project will expand the Williston water treatment plant to handle 21 million gal. per day, up from the current capacity of 10 million gal. The pipeline will extend to Grenora to the northwest, Ray to the northeast and Alexander and Watford City to the south.
Smaller lines will bring water to individual properties that don’t currently have access to river water, said David Johnson, the project’s chief engineer. Those pipes should be carrying water by the end of 2012, he said.
“There will be several benefits, including getting more water to the oil industry that is helping our state and reducing the trucks on the road,” Johnson said. “But the biggest thing is getting people quality water who have never had quality water before.”
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