A multi-million-dollar lawsuit threatens to halt a massive project to widen Interstate 35W in Dakota County, according to the attorney for a Burnsville firm that has sued the state Department of Transportation.

Freeway Transfer Inc. and its owners, Mike McGowan and family, sued over the scheduled closing of the Black Dog Road exit on southbound 35W, just south of the Minnesota River. The family owns about 250 acres at issue on the west side of 35W and south of Black Dog Road, where their firm collects fees from cities that use a garbage transfer station there.

The landowners are prepared to go to court Monday, seeking an injunction to stop the project. They say the construction would force garbage trucks coming from the north to drive about 4 miles out of their way -- 2 miles south to the Cliff Road exit, where they'd turn around and then head north 2 miles to the northbound Black Dog Road exit, which is slated to remain open.

In addition, the firm says it will lose valuable access to southbound 35W.

Garbage trucks that gather trash from neighborhoods go to a transfer station there, where the garbage is consolidated and loaded into bigger trucks for hauling to landfills. The McGowan business sued May 4 in Dakota County District Court, asking to either have the project redesigned to keep the Black Dog exit open or to have MnDOT condemn the property and compensate the owners.

If the plaintiffs win, the damages they'll seek could climb to $20 million to $30 million, said one of their attorneys, Timothy Welch of the Leonard, Street and Deinard law firm.

The highway project is designed to ease commuter congestion from Minneapolis to the southern suburbs. The plans include adding a fourth southbound lane on I-35W from 106th Street in Bloomington to Hwy. 13 in Burnsville.

Even if a settlement is reached within the next few days, delays by the department in looking at the issue over the past six months have run up about $100,000 in legal fees and costs, which the state must now pay, Welch said.

He said it seemed this week that a tentative settlement had been reached, which would have involved keeping the Black Dog exit open, by moving it a short distance to the west. However, there was no official settlement as of Wednesday evening.

For six months, Welch said, attorneys for the landowners tried "fruitlessly" to discuss the situation with state officials.

A MnDOT spokeswoman said the agency couldn't comment while litigation is pending.

The plaintiffs are girded to go to court Monday, seeking an injunction.

Adding to the firm's damages, Welch said, is periodic flooding in the area of Cliff Road, which would prevent trucks from even getting to the transfer station, Welch said.

Traffic now hits bottlenecks on 35W around the Minnesota River and slows dramatically for two to three hours a day. But state officials have said the project will offer relief by adding a fourth southbound lane across the Minnesota River.

The project is funded through a large federal community grant, which must be used by September 2009 or be lost, according to a letter faxed from the Minnesota Attorney General's office to the McGowans' attorneys.

Joy Powell • 612-673-7750