$57M Settlement Keeps Red River Diversion Project Dispute Out of Court | Columbus Ohio Dump Trucks

The contractor and the flood control authority for the massive Red River diversion project in North Dakota have resolved $400 million in claims with a $57-million settlement, much of it related to the failure to use epoxy coating on rebar in parts of the project to protect against corrosion.

The settlement clears away unresolved matters just as new leaders take over at both project partners and they try to put the project's tumultuous past and conflicts behind them.

Under the agreement, the Metro Flood Diversion Authority will pay $57 million in increments to the project developer and contractor, the Red River Valley Alliance, whose design construction arm is ASN Constructors. The alliance had made a claim over the rebar coating and other matters.

The 13-member MFDA board unanimously approved the settlement, which reduces the risk of unknown legal costs and the delays that would result from litigation, MFDA said in a statement. The extra payments will come out of a contingency budget.

John Shockley, the authority's general counsel, said that the $400 million in claims encompassed delays, change orders and other issues in addition to the epoxy coating. The settlement represents less than 2% of the $3.2-billion project, he told the authority board at a July 2 meeting.

"Fifty-seven million dollars is obviously a lot of money, but sometimes with a large project like this I think sometimes it's appropriate to step back and take a 30,000 ft view," Shockley told the board.

The use of epoxy-coated rebar had been a matter of some concern to the public, Shockley added. The dispute centered on whether coated rebar would be used in all concrete structures or only those in a corrosive environment.

The Fargo-Moorhead Area Diversion project broke ground in 2017. Its 30-mile-long channel is the first public-private partnership done in conjunction with the U.S. Army Corps of Engineers and the first water management P3 in North America. It is also the first green finance initiative in the U.S. specifically designed for climate-change adaptation.

A partnership of ACCIONA, Shikun & Binui USA and North American Construction Group, the Red River Valley Alliance is the developer for the stormwater diversion channel and associated Infrastructure portion of the overall Fargo-Moorhead project.

There is a second major part of the overall project. The Corps is delivering the portion that will stage the water and control its flow. The Corps also serves as the federal agency overseeing the entire project. 

The P3 mechanism allows the Fargo-Moorhead part of the overall project to be constructed 10 years sooner than if the Corps was building it alone, saving millions of dollars. 

In March 2025, Luke Chenery took the helm of the Red River Valley Alliance as its CEO, and in February 2025 Jason Benson became permanent MFDA Executive Director.

Fargo City Administrator Michael Redlinger and Cass County Administrator Robert Wilson had been serving as co-executive directors since the resignation a year ago of Joel Paulsen.

In a LinkedIn post six months after his departure, Paulsen wrote that he still supports the project "and I sincerely hope it's successful but I have moved past it and have focused on the single issue that led to my resignation, construction disputes."

The authority and the alliance had been awaiting guidance on contract disagreements by the authority's technical advisory dispute board. The board had heard the initial claim over the need to use epoxy-coated rebar in Fargo-Moorhead area diversion structures in May 2024 but was delayed by a complaint over open meeting requirements that the state attorney general had to decide.

Surface Coating Substituted

ASN Constructors began incorporating epoxy-coated rebar in concrete structures in July of last year, MFDA reported in a statement, but concrete structures completed without coated rebar will have their surfaces coated with what the MFDA calls a "protective product" called Tex-Cote®. Under the agreement, a coating will be made at substantial completion and re-coatings made as dictated by the manufacturer's specifications.

The change in in leadership and wait "presented an opportunity for a collective review of past and present disputes,” said Benson. “We have reaffirmed our commitment to working together and established additional check-ins and collaborative approaches that are anticipated to reduce the need for formal conflict resolution processes.” Chenery expressed the same sentiments.

“Through our small leadership team discussions, the parties were able to reach this technical solution, without the need to remove and replace previously completed structures, which helps to keep the project on time and prevents economic waste,” Benson said.

With additional reporting by Jennifer Seward

Deputy Editor Richard Korman helps run ENR's business and legal news and investigations, selects ENR's commentary and oversees editorial content on ENR.com. In 2023 the American Society of Business Publication Editors awarded Richard the Stephen Barr Award, the highest honor for a single feature story or investigation, for his story on the aftermath of a terrible auto crash in Kentucky in 2019, and in 2015 the American Business Media awarded him the Timothy White Award for investigations of surety fraud and workplace bullying. A member of Investigative Reporters and Editors, Richard has been a fellow on drone safety with the McGraw Center for Business Journalism at the Craig Newmark Graduate School of Journalism at CUNY. Richard's freelance writing has appeared in the Seattle Times, the New York Times, Business Week and the websites of The Atlantic and Salon.com. He admires construction projects that finish on time and budget, compensate all team members fairly and record zero fatalities or serious injuries.