# Title 61 — Waters

## Chapter 61-40 — Western Area Water Supply Authority

### § 61-40-01. Legislative declarations - Authority of western area water supply authority.

The legislative assembly declares that many areas and localities in western North Dakota
do not enjoy adequate quantities of high-quality drinking water; that other areas and localities in
western North Dakota do not have sufficient quantities of water to ensure a dependable,
long-term domestic or industrial water supply; that greater economic security and the protection
of health and property benefits the land, natural resources, and water resources of this state;
and that the promotion of the prosperity and general welfare of all of the people of this state
depend on the effective development and utilization of the land and water resources of this state
and necessitates and requires the exercise of the sovereign powers of this state and concern a
public purpose. To accomplish this public purpose, it is declared necessary that a water
authority to treat, store, and distribute water to western North Dakota be established to provide
for the supply and distribution of water to the people of western North Dakota for purposes,
including domestic, rural water, municipal, livestock, industrial, oil and gas development, and
other uses, and provide for the future economic welfare and prosperity of the people of this
state, and particularly the people of western North Dakota, by the creation and development of a
western area water supply project for beneficial and public uses. The western area water supply
authority may acquire, construct, improve, develop, and own water supply infrastructure and
may enter water supply contracts with member cities, water districts, and private users, such as
oil and gas producers, for the sale of water for use within or outside the authority boundaries or
the state. The western area water supply authority shall consider in the process of locating
industrial water depots the location of private water sellers so as to minimize the impact on
private water sellers. The independent water providers shall consider in the process of locating
industrial water depots the location of private water sellers so as to minimize the impact on
private water sellers.
### § 61-40-02. Western area water supply authority.

The western area water supply authority consists of participating political subdivisions
located within McKenzie, Williams, Burke, Divide, and Mountrail Counties which enter a water
supply contract with the authority. Other cities and water systems, within or outside the authority
counties' boundaries, including cities or water systems in Montana, may contract with the
authority for a bulk water supply. The authority is a political subdivision of the state, a
governmental agency, body politic and corporate, with the authority to exercise the powers
specified in this chapter, or which may be reasonably implied. Participating member entities may
be required to pay dues or water sale income to the authority, as determined by the bylaws and
future resolutions of the authority. Participating member entities may not withdraw from the
authority or fail or refuse to pay any water sale income to the authority until the state-guaranteed
loans have been repaid. The provisions of subsections 1 through 5 of section 61-35-02.1 apply
if the authority's board of directors unanimously votes to convert to a water district.
### § 61-40-03. Western area water supply authority - Board of directors.

1. The initial board of directors of the western area water supply authority consists of two
representatives from each of the following entities: Williams rural water district,
McKenzie County water resource district, the city of Williston, BDW water system
association, and R&T water supply association. The governing body of each member
entity shall select two representatives to the authority board who are water users of the
member entity. If a vacancy arises for a member entity, the governing body of the
member entity shall select a new representative to act on its behalf on the authority
board. Directors have a term of one year and may be reappointed.
2. Additional political subdivisions or water systems may be given membership on the
board upon two-thirds majority vote of the existing board. To be eligible for
membership on the board, the member entity must first contract with the authority for
financial participation in the project.

3. A member entity may designate an alternate representative to attend meetings and to
act on the member's behalf. The board may designate associate members who are
nonvoting members of the board. Notwithstanding this section, initial board members
must be removed if they have not entered a contract with the authority, before
August 1, 2013, for financial participation in the project.
### § 61-40-04. Board of directors - Officers - Meetings.

1. The board of directors shall adopt such rules and bylaws for the conduct of the
business affairs of the authority as it determines necessary, including the time and
place of regular meetings of the board, financial participation structure for membership
in the authority, and membership appointment and changes. Bylaws need to be
approved by member entity boards.
2. The board shall elect from its members a chairman and a vice chairman. The board
shall elect a secretary and a treasurer, which offices may be held by the same
individual, and either or both offices may be held by an individual who is not a member
of the board. Special meetings of the board may be called by the secretary on order of
the chairman or upon written request of a majority of the qualified members of the
board. Notice of a special meeting must be mailed to each member of the board at
least six days before the meeting, provided that a special meeting may be held at any
time when all members of the board are present or consent in writing.
3. Board members are entitled to receive as compensation an amount determined by the
board not to exceed the amount per day provided members of the legislative
management under section 54-35-10 and must be reimbursed for their mileage and
expenses in the amount provided for by sections 44-08-04 and 54-06-09.
### § 61-40-05. Authority of the western area water supply authority.

In addition to authority declared under section 61-40-01, the board of directors of the
western area water supply authority may:
1. Sue and be sued in the name of the authority.
2. Exercise the power of eminent domain in the manner provided by title 32 or as
described in this chapter for the purpose of acquiring and securing any right, title,
interest, estate, or easement necessary or proper to carry out the duties imposed by
this chapter, and particularly to acquire the necessary rights in land for the construction
of an entire part of any pipeline, reservoir, connection, valve, pumping installation, or
other facility for the storage, transportation, or utilization of water and all other
appurtenant facilities used in connection with the authority. However, if the interest
sought to be acquired is a right of way for any project authorized in this chapter, the
authority, after making a written offer to purchase the right of way and depositing the
amount of the offer with the clerk of the district court of the county in which the right of
way is located, may take immediate possession of the right of way, as authorized by
section 16 of article I of the Constitution of North Dakota. Within thirty days after notice
has been given in writing to the landowner by the clerk of the district court that a
deposit has been made for the taking of a right of way as authorized in this subsection,
the owner of the property taken may appeal to the district court by serving a notice of
appeal upon the acquiring agency, and the matter must be tried at the next regular or
special term of court with a jury unless a jury be waived, in the manner prescribed for
trials under chapter 32-15.
3. Accept funds, property, services, pledges of security, or other assistance, financial or
otherwise, from federal, state, and other public or private sources for the purpose of
aiding and promoting the construction, maintenance, and operation of the authority.
The authority may cooperate and contract with the state or federal government, or any
department or agency of state or federal government, or any city, water district, or
water system within the authority, in furnishing assurances and meeting local
cooperation requirements of any project involving treatment, control, conservation,
distribution, and use of water.

4. Cooperate and contract with the agencies or political subdivisions of this state or other
states, in research and investigation or other activities promoting the establishment,
construction, development, or operation of the authority.
5. Appoint and fix the compensation and reimbursement of expenses of employees as
the board determines necessary to conduct the business and affairs of the authority
and to procure the services of engineers and other technical experts, and to retain
attorneys to assist, advise, and act for the authority in its proceedings.
6. Operate and manage the authority to distribute water to authority members and others
within or outside the territorial boundaries of the authority and this state.
7. Hold, own, sell, or exchange any and all property purchased or acquired by the
authority. All money received from any sale or exchange of property must be deposited
to the credit of the authority and may be used to pay expenses of the authority.
8. Enter contracts to obtain a supply of bulk water through the purchase of infrastructure,
bulk water sale or lease, which contracts may provide for payments to fund some or all
of the authority's costs of acquiring, constructing, or reconstructing one or more water
supply or infrastructure.
9. Acquire, construct, improve, and own water supply infrastructure, office and
maintenance space in phases, in any location, and at any time.
10. Enter contracts to provide for a bulk sale, lease, or other supply of water for beneficial
use to persons within or outside the authority. The contracts may provide for payments
to fund some or all of the authority's costs of acquiring, constructing, or reconstructing
one or more water system projects, as well as the authority's costs of operating and
maintaining one or more projects, whether the acquisition, construction, or
reconstruction of any water supply project actually is completed and whether water
actually is delivered pursuant to the contracts. The contracts the cities, water districts,
and other entities that are members of the western area water supply authority are
authorized to execute are without limitation on the term of years.
11. Borrow money as provided in this chapter.
12. Make all contracts, execute all instruments, and do all things necessary or convenient
in the exercise of its powers or in the performance of its covenants or duties or in order
to secure the payment of its obligations, but an encumbrance, mortgage, or other
pledge of property of the authority may not be created by any contract or instrument.
13. Accept from any authorized state or federal agency loans or grants for the planning,
construction, acquisition, lease, or other provision of a project, and enter agreements
with the agency respecting the loans or grants. Other than state-guaranteed loans,
additional debt that may form the basis of a claim for territorial or franchise protection
for industrial water sales for oil and gas exploration and production may be acquired
by the authority or member entities only upon approval by the state water commission
and the emergency commission.
14. Contract debts and borrow money, pledge property of the authority for repayment of
indebtedness, and provide for payment of debts and expenses of the authority.
15. Operate and manage the authority to distribute water to any out-of-state cities or water
systems that contract with the authority.
16. Accept, apply for, and hold water allocation permits.
17. Adopt rules concerning the planning, management, operation, maintenance, sale, and
ratesetting regarding water sold by the authority. The authority may adopt a rate
structure with elevated rates set for project industrial water depot and lateral supplies
in recognition that a large component of the project expense is being incurred to meet
the demands of industrial users. The industrial water depot and lateral rate structure
must be approved in accordance with section 61-40-11.
18. Develop water supply systems; store and transport water; and provide, contract for,
and furnish water service for domestic, municipal, and rural water purposes; milling,
manufacturing, mining, industrial, metallurgical, and any and all other beneficial uses;
and fix the terms and rates therefore. The authority may acquire, construct, operate,
and maintain dams, reservoirs, ground water storage areas, canals, conduits,
pipelines, tunnels, and any and all treatment plants, works, facilities, improvements,

and property necessary the same without any required public vote before taking
action.
19. Contract to purchase or improve water supply infrastructure or to obtain bulk water
supplies without requiring any vote of the public on the projects or contracts. In relation
to the initial construction of the system and for the purposes of entering a contract with
the authority, municipalities are exempt from the public voting requirements or water
contract duration limitations otherwise imposed by section 40-33-16.
20. Accept assignment by member entities of contracts that obligate member entities to
provide a water supply, contracts that relate to construction of water system
infrastructure, or other member entity contracts that relate to authorities transferred to
the authority under this chapter.
21. Issue revenue bonds to repay its loan obligations to the Bank of North Dakota. For the
purpose of issuing such revenue bonds, the provisions of chapters 40-35 and 40-36
apply to the extent necessary and consistent with S.L. 2017, ch. 19, § 12.
### § 61-40-05.1. Revenue bonds and bonds exempt from taxation.

1. The authority shall have the power and authority to issue revenue bonds, to include
refunding bonds, for the purpose of financing construction of projects and incidental
facilities authorized by this chapter. Revenue bonds issued under this section must be
issued as provided in chapter 61-35, and are not subject to section 61-35-15.
2. Issuance of revenue bonds must be approved by a majority of the members of the
board of directors of the authority.
3. The authority shall pledge sufficient revenue from any revenue-producing facility or
other revenue sources, excluding industrial water sales, for the payment of principal
and interest on the bonds and shall establish rates for the facilities at a sufficient level,
together with any other available funds, to provide for the operation of the facilities and
for the bond payments in the manner provided by section 61-40-11.
4. Revenue bonds may not be a general obligation of any participating member entity or
the state and may not be secured by property taxes.
5. The revenue bonds may be issued and sold at public or private sale on the terms and
conditions determined by the board of directors.
6. Bonds issued under this section and their income are exempt from taxation by the
state.
### § 61-40-06. Oversight of authority projects.

Repealed by S.L. 2013, ch. 490, § 24.
### § 61-40-07. Easement granted for pipelines and appurtenant facilities on any public

lands.
In connection with the construction and development of the project, there is granted over all
the lands belonging to the state, including lands owned or acquired for highway right-of-way
purposes, a right of way for pipelines, connections, valves, and all other appurtenant facilities
constructed as part of the project. However, the plans of the authority with respect to the use of
right of way of roads must be approved by the director of the department of transportation and
the director of the department of water resources before the grant becomes effective.
### § 61-40-08. Proceedings to judicially confirm contracts and other acts.

The authority, before making any contract or taking any special action, may commence a
special proceeding in district court by which the proceeding leading up to the making of such
contract or leading up to any other special action must be examined, approved, and confirmed.
The judicial proceedings must comply substantially with the procedure required in the case of
judicial confirmation of proceedings, acts, and contracts of an irrigation district.

### § 61-40-09. Default.

If the western area water supply authority defaults on its payment of the principal or interest
on the infrastructure revolving loan provided for in section 61-40-14, the Bank of North Dakota
shall notify the legislative council, and the state water commission shall provide a payment,
subject to budget section approval, to the Bank of North Dakota in an amount of the default as
certified to the budget section by the Bank of North Dakota.
### § 61-40-10. Industrial water depot and lateral sales.

1. An accounting of industrial water depot and lateral sales collected and distributed by
the authority must be reported to the state water commission on a monthly basis.
Participating member entities shall transfer industrial water depot and lateral sales to
the authority within thirty days of receipt of the revenues. The boards of the authority
and participating member entities must be notified of the sweep of revenues; however,
board approval is not required. Upon the receipt of industrial water depot and lateral
revenues by the authority, the authority shall apply immediately all revenues each
month in the following order:
a. Reimburse the authority for industrial water depot capital improvements and the
cost for delivery of potable or nonpotable water sold at industrial water depots
and lateral lines, at a cost no greater than the participating member, or
submember, if applicable, entity rate at the location of the depot or lateral line.
b. Regular payments on the participating member entity debt as described in the
agreements with the authority as of March 31, 2013, and baseline 2010 industrial
water sales included in and subject to the terms of the authority and participating
member agreements as of March 31, 2013. Baseline 2010 industrial water sales
for the city of Tioga in the year 2013 are limited to the lesser of legally permitted
industrial water sales or the amount in the member agreement.
c. Required monthly payments on state-guaranteed loans. The required transfer
must occur no later than the twentieth day of the following month.
d. Additional principal payment on state-guaranteed loans.
e. Payment to the resources trust fund.
2. If the debt has not been repaid, without the written consent of the state water
commission the authority may not sell, lease, abandon, encumber, or otherwise
dispose of any part of the property used in a water system of the authority if the
property is used to provide revenue. Any requirements on the state-guaranteed loans
for establishment of reserve funds for operation and maintenance or debt service are
waived.
3. The western area water supply authority shall make additional payments on the
infrastructure revolving fund loan, authorized in section 61-40-14, in any month in
which the debt service coverage ratio exceeds one and one-tenth. Debt service
coverage ratio means net income before capital expenditures, interest expense, and
depreciation expense divided by the sum of interest expenses and the required
principal and interest payment.
### § 61-40-11. Water rates.

The authority shall provide a report on the rates to the commission and legislative
management's water topics overview committee on a regular basis. The authority shall develop
domestic water rates that must include all costs for operation, maintenance, and operating and
capital reserves, and debt repayment of all infrastructure managed or constructed by the
authority, with the exception of the costs identified in section 61-40-10 which are paid for by
industrial water depot and lateral sales.
### § 61-40-12. Construction funding.

The authority shall follow the state water commission requirements for funding through the
resources trust fund or Bank of North Dakota state-guaranteed loans and shall present the
overall plan and project components to the state water commission for funding approval. Priority

on project funding first is reserved for state-guaranteed loan payments if not met by industrial
water depot and lateral sales, second is for full repayment of existing federal debt if 7 U.S.C.
1926(b) protection for oil and gas exploration and production industrial water sales is asserted,
and third for expanding domestic water supply to areas currently not served. In accepting
construction funding, the authority and participating member entities agree to not hinder or
prevent depot and lateral industrial water sales for oil and gas exploration and production.
### § 61-40-13. Franchise protection.

Notwithstanding any other provision of law, neither the authority nor its participating member
entities may be required to waive the right to assert franchise protection under state or federal
law with regard to water used for purposes other than industrial sales for oil and gas exploration
and production.
### § 61-40-14. Western area water supply authority - Bank of North Dakota loan - Transfer.

The Bank of North Dakota shall transfer the outstanding principal balance of the
consolidation loan authorized in section 9 of chapter 19 of the 2017 Session Laws to the
infrastructure revolving loan fund, on August 1, 2023. Any accrued and unpaid interest of the
consolidation loan authorized in section 9 of chapter 19 of the 2017 Session Laws must be
consolidated with the principal balance of the loan transferred to the infrastructure revolving loan
fund. The loan must have an interest rate of two percent and a final maturity date not to extend
beyond July 1, 2053.
### § 61-40-15. Western area water supply authority accrued and unpaid interest.

All accrued and unpaid interest on the twenty-five million dollar loan from the general fund
to the western area water supply authority authorized in section 3 of chapter 500 of the 2011
Session Laws must be transferred to the general fund. All accrued and unpaid interest on the
ten million dollar, twenty million dollar, and nineteen million five hundred thousand dollar loans
from the resources trust fund to the western area water supply authority must be forgiven.
