The Minnesota Department of Natural Resources has "serious concerns" about a $2 billion federal project that would protect Fargo from floods by diverting the water onto Minnesota land instead.

The DNR has compiled a 568-page study of the proposed Fargo-Moorhead Diversion and the effect it would have on Minnesota's water quality, environment and people.

"The question that fundamentally has to be answered is, 'Is the project a reasonable approach to address the flood risk to the area, or are there other possible ways to provide flood protection with less impact,' " DNR Commissioner Tom Landwehr said Monday. "We still think there are still some serious, unanswered questions."

To protect flood-prone Fargo from the Red River of the North, the U.S. Army Corps of Engineers is proposing a massive public works project that would carve a 36-mile ditch around Fargo and build flood control dams across the Wild Rice and Red rivers. In the event of a flood, water from the Red River and its five tributaries would be diverted away from Fargo — the region's bustling economic hub — and into miles of North Dakota and Minnesota farmland and prairie.

If the project goes ahead, Landwehr said, 2,000 acres in Minnesota would be flooded, while thousands of acres in North Dakota, including current flood plains, would be high and dry. "So, some significant upstream impacts," he said. The agency will take an even closer look at those potential effects as it launches it permitting process next.

Key parts of the project hinge on Minnesota's approval, including state permits for a proposed dam across the Red. Landwehr will make his final decision at a later date, using Monday's environmental impact statement as a guide. But first, the public will have one more chance to look over the report and weigh in.

Supporters and opponents of the project saw the DNR report as a validation for their side.

Diversion supporters have been waiting two years for this final review. The first phase of construction is set to begin this fall, with or without Minnesota's approval.

Darrell Vanyo, chairman of the Flood Diversion Board of Authority, noted that the DNR analysis did not come up with a reasonable alternative to diversion.

"We are gratified to know that after many independent studies, a diversion project remains the only project which will provide 100-year flood protection for Fargo and Moorhead, and a chance at 500-year protection with emergency measures," he said in a statement.

The U.S. Army Corps of Engineers will break ground on the first phase of construction, a $5 million inlet structure that will sit on the southern end of the diversion trench around Fargo. Project Manager Terry Williams said construction will continue piecemeal — work crews would not reach the Red River, where Minnesota permitting comes into play — until 2019.

"We'll continue to work with both states as we enter the permitting phase," Williams said. "This marks the beginning."

The Richland-Wilkin County Joint Powers Authority, one of the groups aligned against the diversion, put out its own statement, welcoming a DNR report it says "vindicates our position that the [diversion] inflicts significant avoidable impacts on Minnesota and North Dakota counties (Cass, Clay, Richland and Wilkin) as well as the Red River basin as a whole."

The project has already sparked legal challenges and tense exchanges between Minnesota and North Dakota officials. Preliminary construction had been idled by court order until Minnesota completes its environmental review.

No one questions that Fargo needs flood protection. The Red River flows south to north and when spring runoff hits the still-frozen north, it backs up and spills across the tabletop-flat prairie for miles. The Red has flooded 49 of the past 112 years, causing millions of dollars in damage to homes and businesses around Fargo and the region.

Across the river, Moorhead sits 4 feet higher on the banks of the Red, protected by a network of flood control projects Minnesota put in place over the years.

The question for Minnesota is whether the diversion is the best flood control option, and whether the benefits to Fargo are worth the cost to upstream communities. The DNR studied alternatives that range from building more flood retention areas upstream to taking no action at all.

"While this does provide substantial flood protection to a very large area, primarily in North Dakota, some of that area currently is flood plain," Landwehr said. "At the same time, it impacts some land that historically had not been flooded. So it really is a flood risk approach that changes the flood impact from areas where the flood has historically hit to areas where it has not. So it's very much a philosophical question … as much as it's a mechanical or environmental question."

Once the public weighs in on the report, the DNR will launch its permitting process, when it will evaluate whether the diversion is compatible with state and local land and water management policies. There are lingering questions, Landwehr said, about whether landowners would be properly compensated for the days or weeks their fields might spend submerged under Red River runoff.

More than 800 people commented on the first draft of the DNR study when it was released several months ago. The public will have until May 31 to comment on the final version of the environmental report.

The DNR study is available for public review at