The South Florida Water Management District's governing board ordered a halt to digging what would be the world's largest free-standing reservoir and one of the nation's largest man-made water storage projects.
It agreed to pay a flat $1.9 million a month, starting June 1, to the two contractors to recover costs related to the delay.
The district reserved the option of killing the project at any time and paying contractors another $250,000 a month for every month work was stopped.
The reservoir is being dug south of Lake Okeechobee about 12 miles south of South Bay in far southwestern Palm Beach County. It is set to be finished in 2010.
When completed, the 26-square-mile, 27-foot-deep reservoir on 16,700 acres of former sugarcane land would hold 62 billion gallons to help replenish the Everglades and nearby farms.
Environmental groups complained the required blasting would limit options for restoring the Everglades and might let contaminants enter the water supplies.
The district agreed two years ago to pay the Barnard Construction and Parsons firms $400 million. In February, the district heard that price was forecast to rise to $700 million because of skyrocketing fuel prices and more stringent engineering standards adopted after Hurricane Katrina.
The district has spent about $250 million and has authorized at least $330 million more.
In June 2006, the U.S. Army Corps of Engineers gave the district a permit to start work.