North Dakota Supreme Court says Grand Forks-East Central water user agreement was never valid
Jul. 9—GRAND FORKS — The North Dakota Supreme Court has ruled that an agreement between the city of Grand Forks and the East Central Regional Water Users District was never valid.
The nearly 25-year-old agreement, which governed the annexation of rural water customers, was found to be void ab initio, meaning from the beginning, and therefore incapable of being ratified because the Bank of North Dakota was not a party to the agreement. The court's unanimous decision means that the city and East Central, despite having been operating with this agreement since 2000, legally don't have an agreement since it was invalid from the start.
The city and East Central will now continue federal court proceedings. East Central alleges that the city has violated federal and state law by curtailing its water service area and seeks damages and forfeiture of the city's water infrastructure it has built in what it considers its service area. The agreement being void was one of East Central's charges laid against the city.
Because the contract's validity was an issue with state law, the federal court sent the question to the North Dakota Supreme Court to interpret North Dakota Century Code before federal proceedings could continue. The court's decision, issued July 5, said Century Code requires the Bank of North Dakota to be a party for the contract to be valid and that it cannot be retroactively approved.
The agreement was originally with Grand Forks Traill Rural Water, a nonprofit, which later merged and reorganized with Traill Rural Water District into East Central. The bank needed to be a party since East Central, then Grand Forks Traill Rural Water, had outstanding bonds with debt servicing which could have been affected by the city annexing and taking over customers.
Annexations of rural water customers most recently occurred in late 2023 under a similar agreement with the
Agassiz Water Users District
. The city paid Agassiz almost $62,000 to compensate for taking over 25 rural water customers on the north side of Grand Forks.
The agreements were originally put in place as the city grew and had more resources to build out water infrastructure that the water districts did not have. When the city annexes land it would also take over the water service and then compensate the water district for the loss of customers.
East Central supplies water across Grand Forks, Traill and parts of Steele counties to rural customers and cities and has coverage on the rural parts south and west of the city. The court case has been active since 2020.
East Central Water Users District Attorney Steven Harris said that they were pleased with the ruling.
