State water official warns of $1.3 billion shortfall; DWR to present cost-share study in March

Reese Haas, who delivered the Department of Water Resources update to LAWA, said state revenue tied to oil extraction taxes is shrinking and that the agency’s 14-year projection leaves “a $1,300,000,000 shortfall” against core Red River Valley water needs. He told the board that the resources trust fund—fed largely by oil extraction taxes, and affected by stripper-well exemptions—cannot sustain the current cost-share policy without changes.

Haas said DWR has contracted Deloitte to prepare two legislatively directed studies: a cost-share review and a governance-and-finance study of several regional water systems, including the Red River Valley Water Supply Project. He said the draft reports will be presented at the March Water Topics Overview Committee and cautioned that the studies are likely to recommend “pretty significant changes” to adapt to North Dakota’s new budget reality.

On budgeting, Haas outlined options and warned that, under status quo cost-share terms, the state would need daily oil production to reach about 1,700,000 barrels per day or oil to trade near $93 per barrel to maintain current funding levels—scenarios he described as unlikely. He urged member entities and the board to be prepared for modifications to the cost-share framework and to reduce administrative costs so more dollars go to construction.

Haas also offered to lead an operational-planning working group for user outreach and asked LAWA members to tell Brent Bogar which local participants should join. On federal engagement and permitting, he said DWR will lead discussions with the U.S. Army Corps of Engineers on requested water releases and asked members to coordinate technical input through DWR.

On the Missouri River, Haas said recent op-eds outside North Dakota have used contentious language; he said DWR responded to emphasize state sovereignty while calling for basin-wide cooperation. “We will protect our water resources,” he said, but added the state seeks collaboration over rhetoric.

DWR’s presentation outlined data-collection capabilities and administrative-efficiency work the agency will pursue while it finalizes budget planning with the governor’s office. The agency also noted that the studies and recommended policy changes will inform what the next legislative ask and budgetary strategy should be.

The board did not take formal action on DWR’s recommendations at the meeting; Haas invited questions and said more detailed recommendations would follow with the March presentations.