Devils Lake, North Dakota is a small American town with a big problem. The nearby lake is on the verge of flooding its namesake town, and the solution to the problem is raising a cross-border water controversy.

Devils Lake sits in a sub-basin of the Hudson Bay drainage basin, but no water flows out of the lake into the Hudson Bay basin. In the 1990s, a series of wet summers caused the lake to rise more than seven metres, swallowing more than 28,000 hectares of farmland and forcing 300 households to move.

The state has spent an estimated $400 million U.S. dealing with the flood situation by building a levee, raising roadways, and moving buildings and people.

• MAP: Devils Lake Rising

For years, the area's county commissioner, Joe Belford, has been looking for a solution. Several plans were proposed to divert water out of the lake and into nearby bodies of water.

The state decided to build the "Peterson Coulee temporary emergency outlet" to drain Devils Lake into the nearby Sheyenne River, which joins the Red River near Fargo and flows north into Manitoba's Lake Winnipeg.

• MAP: Proposed outlet

The outlet project is estimated to cost around $28 million. Officials had hoped to have the outlet ready to operate by July 1, 2005, but weather and construction delays have put off that date by at least a month.

The province of Manitoba and several U.S. groups – including the states of Minnesota and Missouri, the Great Lakes Commission, several U.S. Indian reservations, and environmental groups – however, have long opposed any diversion project that results in Devils Lake water entering Manitoba.

Provincial officials say Devils Lake has not joined the Hudson Bay drainage basin for at least 1,800 years, so some organisms -- such as fish diseases -- have become established in Devils Lake but not in the Hudson Bay basin.

The province says Devils Lake's water quality is much worse than the quality of water in the Red River and in Lake Winnipeg, citing concerns about the level of salts, arsenic, boron, mercury and phosphorus.

People who fish on the Lake Winnipeg, the Red River and its tributaries are also concerned. Devils Lake was stocked in the 1970s with striped bass, an aggressively competitive fish that does not live in the Red River basin. While none of the fish have been caught in the lake for several years, opponents to the outlet plan say surviving fish could escape into the Red River system through the outlet, harming the sport and commercial fisheries in Manitoba.

Officials in North Dakota believe that the state has no obligation to carry out an environmental impact assessment on the project because it will affect no "federal property interests." However, Manitoba, Canada and several U.S. groups have called for a full environmental impact assessment of the outlet.

The province also argues that Devils Lake is not likely to continue to rise; they say it reached its highest level in the summer of 2001. Even if the lake continues to grow, provincial officials say the proposed outlet won't remove water fast enough to protect area residents from further flooding. The province also suggests North Dakota could use other methods to protect residents from any further flooding.

Provincial officials say they sympathize with the plight of Devils Lake residents, but won't budge on the province's stance. They want the nearly completed flood water diversion project taken to the International Joint Commission, a U.S.-Canadian organization that resolves boundary water disputes.