The Irving City Council on Thursday unanimously approved what is believed to be the first water sales agreement between an Oklahoma water authority and a Texas customer.

Oklahoma currently has a moratorium on out-of-state water sales, but Irving officials on Thursday agreed to spend up to $500,000 to fight it.

Irving's agreement is with the Hugo Municipal Authority and the city of Hugo, Okla., which collectively own the water and storage rights to Hugo Lake in southeast Oklahoma.

Irving officials said Thursday night they plan to build a pipeline to bring the water from Oklahoma to North Texas if a probable legal challenge to the moratorium is won. They estimate such a pipeline would cost about $125 million, which would probably come from bond money.

If the moratorium is overcome, the agreement requires Irving to pay Hugo Municipal Authority about $3.8 million while the pipeline is designed and built. Irving would also pay $1.7 million a year once the pipeline is operational. Those amounts do not include money Irving would pay to buy the actual water.

"This is the first step on a long road, and it's going to help the region, not just Irving," said City Manager Tommy Gonzalez.

The Tarrant Regional Water District has a pending lawsuit against Oklahoma's water board that alleges the moratorium is unconstitutional. Tarrant Regional, however, does not have a sales contract with any Oklahoma water providers. It has a pending application to capture water in that state before the Oklahoma Water Resources Board. The Upper Trinity Regional Water District and the North Texas Municipal Water District also have pending applications before Oklahoma's water board.

Oklahoma officials have argued that they need to do a statewide study on their water supply and projected demand before selling it to other states. That study is expected to be complete in 2011. North Texas water officials, however, have said that Oklahoma is practically soaking in water and has plenty to sell.

Irving officials this week said the deal is another step toward diversifying the city's water sources – and could set up the city to use existing and new pipelines to move water for North Texas' major suppliers.

Irving and the North Texas Municipal Water District share ownership of a pipeline that runs from Jim Chapman Lake – Irving's primary water source – to Lavon Lake. Irving owns outright the portion of the pipeline from Lavon Lake to Lewisville Lake, a source for Dallas Water Utilities. Irving and North Texas also own enough right of way to build a parallel pipeline. And the current pipeline isn't used to capacity.

Dallas Water Utilities provides water for Dallas and more than 20 area suburbs. Irving buys a small portion of its water from the entity, which also treats all of the water Irving transports from Jim Chapman Lake.

Last year, Irving's City Council entered into exclusive negotiations with Paris, Texas, for the purchase of excess water from Pat Mayse Lake. The city will pay Paris up to $200,000 to study whether that lake would be a viable additional water source for Irving. Irving City Council member Rick Stopfer said this week that lake could also be used to store water from Oklahoma.

Irving already transports some water through for the Upper Trinity Regional Water District.

Irving officials said one thing that sets their deal apart from others is that Hugo already has an approved permit from Oklahoma's water board to provide more than 9.2 billion gallons of water.

But a water board spokesman said Wednesday that he's not sure that the permit gives Hugo the green light to sell to Irving even if the courts toss out the moratorium, because there's also an existing state law requiring Oklahoma legislative approval for such sales.