Rural water manager warns House bill 1537 could deepen territory dispute and threaten system finances

Neil Breidenbach, manager of East Central Regional Water, told the House Political Subdivisions Committee that House Bill 1537 would effectively change prior legal treatment of municipal annexation of rural water territory and could further reduce his system’s customer base and revenue.

Breidenbach said the dispute has already been litigated at the state supreme court and that his system prevailed. He said negotiations with Grand Forks stretched for years without resolution and that, after the city disconnected interconnect service lines, his system lost “two thirds of our income” when territory and its customers were transferred. “There's no way of assessing or we can't, there's no way of us charging for anything else to pay for our system. So it's quite devastating when we lose…customers,” he told the committee.

Why it matters: Breidenbach said the lost territory materially reduced the system’s revenue and its ability to serve new customers and industry. He told lawmakers an auditor estimated potential revenue loss in his service area far exceeding the $260,000 payment his system received for roughly 9,000 acres. He outlined ongoing infrastructure needs — including a roughly $200,000,000 estimate to replace aging mains, about 150 water breaks a year, and new demand from planned industrial customers such as a dairy requiring large supply — and said losing territory undermines the system’s capacity to cover those costs.

Details of the dispute and negotiations: Breidenbach said he tried repeatedly to negotiate with the city during 2018–2020 and that the city initially agreed to allow interconnects and shared use of mains, then disconnected lines. He described emergency mutual-aid assistance his system provided after the 1997 flood and argued rural systems rely on their customer base as “our only source of income.” He described mergers and cooperative arrangements that had worked elsewhere, citing Tri-County and Minot examples.

Farmers Union concerns: Lance Gaby, appearing on behalf of the North Dakota Farmers Union, told the committee the organization supports rural water systems and is concerned about potential statewide consequences if HB 1537 results in reduced territory or revenue for other rural systems. “We just don't want to have…unintended consequences in the rest of the state in terms of losing some revenue for those rural water systems,” Gaby said.

Committee discussion: Members of the Political Subdivisions Committee asked Breidenbach about the history of agreements, the timing of negotiations, and whether the matter was essentially a litigation issue between local political subdivisions. Representative Vosley and other committee members pressed for documentation and minutes; Breidenbach said the system can provide records of meetings and negotiations.

What the bill would change: The witnesses framed HB 1537 as affecting the allocation of territory and customer relationships between a municipal government and a regional water system. No committee action or vote on the bill was recorded during the hearing segment covered in the transcript.

Ending: The hearing on House Bill 1537 closed after public testimony and committee questions. Committee members requested records and clarification from the parties. No formal committee decision was recorded in the transcript excerpt provided.