New Water Resources director presents statewide water needs, proposes BND line of credit and project bonds

Reese (Director, Department of Water Resources) told the Appropriations Committee the department has reorganized and is laying out a multi‑year strategy for state water development that includes new investments, data collection and an approach to speed project delivery.

The department’s reorganization (House Bill 13‑53) combined responsibilities previously split among state entities. Reese said the Resources Trust Fund — a constitutionally rooted fund largely supported by oil‑extraction tax revenue — remains the primary source for state water project cost‑share. “Our department today is split into 6 different divisions,” he said, introducing the department’s regulatory, planning, development and data teams.

Why it matters: the department summarized a 14‑year inventory of projects that, on the department’s modeling, would require about $3.4 billion in state shares (roughly $5.2 billion total project cost including local and federal shares). The presentation addressed how to accelerate long‑running projects, manage cash and preserve buying power amid inflation.

Key technical and budget points

- Resource scale and use: the director noted North Dakota stores an enormous groundwater resource but uses less than 0.5% of it annually; major surface water resources centered on the Missouri River provide additional supply options. - Major projects and status: presenters reviewed the Northwest Area Water Supply (NAWS) and Southwest Pipeline projects, the Devils Lake outlets and regional/district rural water systems, and confirmed continued construction and planning work on multiple fronts. - Managed aquifer recharge: the department has identified three eastern aquifers (Spiritwood, Elk Valley, Wahpeton Buried Valley) with potential for managed aquifer recharge and plans further investigation. - Data expansion: the department reported more than 4,000 measurement sites in 2024 and launched an in‑house automated “presence” logger network to collect near‑real‑time surface and groundwater measurements.

Proposed funding tools

- Line of credit and bonds: the department and the Bank of North Dakota modeled a $200 million line of credit to smooth cash flows and proposed project‑specific bonding (House support in the engrossed bill for a $100 million Southwest bond package tied to Southwest Pipeline repayment capacity). The director described the line of credit as an “overdraft privilege” that officials expect ideally not to draw on but that would allow more rapid project cash burn to capture inflationary savings. - Investment strategy: the department described a laddered investment approach with the Bank of North Dakota that it expects could raise the resources trust fund’s effective biennial yield significantly compared with current short‑term placements, potentially producing additional interest income to support projects. - Water Infrastructure Revolving Loan Fund: House language would use trust‑fund dollars to pay down $45 million of the loan fund to free capacity for new local loan matches; that paydown was included in House Bill 10‑20 language the department reviewed with the committee.

Risks and committee questions

Senators repeatedly raised sustainability questions: how the state would repay borrowed amounts if oil prices dropped, whether the construction and contracting capacity exists to accelerate dozens of projects simultaneously, and whether the state’s funding mix should be reduced from the current 20.5% of oil‑extraction tax revenue. Director Reese said the Bank of North Dakota ran cash‑flow scenarios using pipeline authority oil forecasts; under a low‑price scenario the model still indicated several years of runway before a trust‑fund depletion event, allowing the Legislature time to pause approvals and protect commitments.

Senators also asked about how new money would be prioritized among municipal, rural and flood‑control needs; Reese said the House bill enumerates buckets and suggested remaining discretionary funds would be a tool for emerging needs. The department noted that tribal nations are now eligible for cost‑share awards after a recent change in law and reviewed recent tribal project approvals.

Ending

The department left the committee with the 14‑year project inventory and the Bank of North Dakota model results; committee members requested follow‑up detail on contingency planning for oil‑price swings, the construction market’s ability to execute an accelerated program, and the legislative tradeoffs of any change to the Resources Trust Fund rate.