New water law has unknown impact in Surrey

SURREY North Dakota legislators have approved a bill to help resolve conflicts between cities and rural water districts over their territorial rights.

However, the new law has an unknown and possibly negligible role to play in determining whether the City of Surrey or North Prairie Rural Water District serves a proposed housing development in Surrey.

The City of Surrey had been a advocate for House Bill 1440, whose co-sponsors included Reps. Andrea Maragos and Roscoe Streyle, R-Minot, and Sen. Oley Larsen, R-Minot. Gov. Jack Dalrymple signed the bill into law on April 24. It takes effect in August.

HB 1440 outlines the method by which a city can work with a neighboring water district to develop a plan for future expansion of a city water system. Any water projects within a city’s extra-territorial area must be covered by a water service agreement between the city and rural water district to be eligible for state grants or loans. The bill also provides a method of mediation for resolving disputes.

As originally introduced, the bill was more strongly worded in favor of cities and drew opposition from North Prairie Rural Water District and the North Dakota Water Users Association. The argument was that federal law does not allow a rural water district holding a federal loan to transfer territory to a city, which could potentially endanger loan repayment.

James Maxson, attorney for North Prairie Rural Water District, Minot, said the language of the amended bill should not create a conflict in instances when federal money goes to the state for distribution to projects. However, it appears that conflict still could arise in instances when federal funds are earmarked to a project, he said.

By giving cities a way to serve formerly rural areas, the bill also could negatively affect rural water district customers, whose rates are affected by the number of water users sharing the costs, Maxson said.

Jason Vaagen, Surrey city administrator, said the city hasn’t had a legal review of the approved legislation to know whether the new law might apply to Surrey’s effort to distribute water to an annexed area that has been in North Prairie’s territory. He said the city, developer and North Prairie have reached a short-term agreement for North Prairie to serve customers through Surrey’s system. They are working on a long-term agreement.

Surrey operates its own water distribution system but contracts with North Prairie for its water supply.