It's not codified anywhere, but the FCC has has a longstanding internal policy allowing stations in markets that straddle the Mississippi River to use "K" or "W" calls interchangeably. It started with 106.5 in Granite City IL (St. Louis market), which spent some time as WWWK before the FCC gave in and allowed it to become KWK-FM. In more recent years, it's not uncommon to see Ks east of the river and Ws west of the river in markets such as New Orleans, Memphis, St. Louis, the Quad Cities, Dubuque and the Twin Cities.
Since the Mississippi ceases to be the state line in Minnesota (and down in Louisiana, too), the FCC is especially relaxed about K/W rules in those states. Look at the Hibbing area, where there's both WMFG and KMFG (on the same tower, no less!)
Because the Fargo market was already somewhat intermixed with Ws and Ks, thanks to WDAY's heritage, and since the station is licensed in Minnesota, historically a split W/K state, it probably wasn't a big deal for the FCC to approve this request. I suspect it would have been a bigger deal had the station been licensed on the ND side of the state line.