BEND — Federal agencies have approved a controversial project to replace Arnold Irrigation District’s main canal with a 12-mile pipeline, opening the door to funding it.

The Natural Resources Conservation Service said in a statement that it has authorized Arnold’s modernization project. The decision follows the August release of the Final Watershed Plan-Environmental Assessment and a finding of no significant impact.

The one-page memorandum, which authorizes federal assistance, was signed Tuesday by Terry Crosby, chief of the Natural Resources Conservation Service.

The project is designed to conserve water by preventing seepage into the soil, a common problem in Central Oregon where canals are lined with porous volcanic rock. Multiple years of drought have compounded the problem, forcing the district to shut down early. But the project has also invited controversy from some south-side Bend residents who object to replacing the canal.

The first phase of construction is expected to start in January, said Steve Johnson, Arnold Irrigation District general manager. The district will be scheduling face-to-face meetings with landowners before construction begins, he adds.

Construction of the pipeline could last four to six years and will result in the district conserving 32.5 cubic feet of water per second. Currently, the main canal experiences a 34% average water loss due to seepage.

The conserved water, which equates to 11,000 acre-feet of water per year, will be transferred to junior water rights holder North Unit Irrigation District. North Unit will in turn release this amount of water into the Deschutes River during the winter months to support wildlife.

The conserved water is equivalent to a six-month supply of water used by the city of Bend, said Johnson.

The project carries a price tag of $34.9 million. The Natural Resources Conservation Service will fund $26.2 million toward the project.

The remaining $8.7 million must be nonfederal funds and can consist of any combination of dollars from different sources, including Arnold Irrigation District, the Oregon Water Resources Department, Oregon Watershed Enhancement Board grant programs, the Oregon Department of Environmental Quality, and the Clean Water State Revolving Fund.

The project is needed because the lack of dependable irrigation water the past three summers has reduced the ability of farmers to grow crops, feed their animals and plan for their farms’ futures, said Johnson.

“There have already been several patrons that have sold their farms to move to irrigation districts with more senior water rights, and sell off their livestock and animals because they can’t afford to feed them,” said Johnson. “This affects families and the local community. We are excited to get going this winter.”

The pipe not only helps farmers but will also increase the level of water in the Deschutes River in winter to protect wildlife habitat, said Johnson.

The conservation service said the modernization project will occur in four phases. Piping will begin at the eastern end of the main canal and stop about 1.5 miles from the district’s diversion on the Deschutes River. The project will not modify or affect the district’s existing flume.

The Save Arnold Canal group, formed by area residents who live near the canal, has filed a lawsuit to block the construction of the pipe. The group argues that the open canal supports wildlife and a forest ecosystem that will be lost once the water and seepage are gone. Many are also concerned about plummeting property values when the open canal disappears.

Brian Sheets, a lawyer representing the group, said Save Arnold Canal has been ignored by Natural Resources Conservation Service and Arnold Irrigation District when it tried to present alternatives to the pipe.

“These included canal lining options and water marketing solutions,” said Sheets. “We were rebuffed repeatedly by both organizations. Instead, both NRCS and AID stubbornly see piping as the only solution. We look forward to judicial review in the courts where NRCS and AID will finally hear our voices.”

Johnson said the district has received an official summons of the lawsuit by the Save Arnold Canal group as did the Natural Resources Conservation Service.

“While this isn’t a total surprise, it is unfortunate that instead of being able to focus on conserving water and providing varied benefits to the greater community, there will now likely be thousands of taxpayer dollars wasted on an action intended to preserve a backyard water feature of a few landowners,” said Johnson.