Friday, August 31, 2007

Easy Pickens

Pickens seeks Kaufman's help to harness Panhandle's water, power

Plan would create entity that could plant lines stretching from Panhandle to D-FW

August 31, 2007

The Dallas Morning News
Copyright 2007

T. Boone Pickens may have found a way to push forward his multibillion-dollar proposal to send Panhandle groundwater and wind-generated electricity to North Texas:

Create a special government with the power to bury more than 300 miles of 8-foot-diameter water pipe and electric transmission lines across a dozen counties – whether the counties' leaders or affected landowners like it or not.

Commissioners courts in Kaufman County and Roberts County, northeast of Amarillo, are each scheduled to vote Tuesday on a petition for an election to create such a district.

If either measure passes, the stage will be set for a handful of the businessman's supporters to vote in November to form a freshwater supply district. Under state law, such districts can fund projects at low interest rates by issuing tax-exempt bonds. They can also exercise the power of eminent domain to use private property anywhere in the state, though they must pay the owners.

Both counties' meetings are open to the public. The meeting in Kaufman will be at 9:30 a.m. in the Kaufman County Annex Building, 100 N. Washington St.

Commissioners in Kaufman and Roberts counties have no problem with Mr. Pickens' goal: providing needed water plus electricity that backers say would match the output of two coal-fired power plants, without the coal-fired pollution.

But at least two of them are uneasy about the means to the end.

"My question was, 'Do we have the authority to approve this?' " said Kaufman County Commissioner Ray Clark. "Can I say what happens up in Amarillo, and by the same token, can Amarillo tell us what to do in Kaufman County?"

Roberts County Judge Vernon Cook has "a constitutional question": whether it's right to enable the use of government powers for the benefit of business, in this case Mr. Pickens' Mesa Water and Mesa Power.

"At what point, and at what level, is a governmental entity allowed to be involved in private enterprise?" Mr. Cook said.

Mesa Water consultant Ron Harris, a former head of the Collin County Commissioners Court, says that the concerns are overblown, and that the projects would benefit everyone: Landowners along the route would be paid for the use of their property, drought-prone North Texas would get needed water, and the state would get an infusion of cleanly produced electricity.

"It's really going to do some good," he said. "This will significantly benefit landowners in all of those 12 counties. They'll be able to make significantly more from the wind and the water than they can from their livestock or crops."

How it would work

As for the worry about making a decision that could affect faraway counties, Mr. Harris noted that the tables could just as easily be turned.

"You could flip it around and have some other counties doing the same thing to Kaufman County," he said. "The main thing is, if this is what the Legislature voted could happen in Texas, that's available for anybody."

And as for the concerns about creation of a government to benefit Mr. Pickens' businesses? "I haven't read the exact wording, but as long as there is a requirement that there is a public good that comes out of it, that balances it," Mr. Harris said.

Mesa Water spokesman Jay Rosser broadens the issue further.

"We believe the state, and the D-FW metroplex area in particular, faces some critical water supply and power supply issues," he said. "We think we have a solution to both of those."

And, he said, the power would come from sources that would help North Texas in its struggle to comply with federal clean-air rules

Mr. Rosser said that by pursuing petitions in two counties, Mesa was trying to leave nothing to chance in its bid to create a district: "We don't want to leave any stone unturned and delay it any more than we have to."

Wednesday is the deadline for commissioners to put an issue on the Nov. 6 ballot.

Although the new freshwater supply district would own the water pipeline, pumps and other infrastructure, Mesa Water would benefit from water sales. Eventually, some of that revenue would pay off the money borrowed, through the tax-exempt bonds, to build the $1.5 billion pipeline, Mr. Rosser said.

Mesa Power expects to make money by selling its wind-generated electricity, but it needs the transmission lines to hook into Texas' power grid near Dallas. Those transmission lines, which probably would be buried in the same 200-foot-wide right of way as the waterline, also would cost about $1.5 billion, Mr. Harris said. The wind farm in the Panhandle – which, with 2,700 turbines, would be the world's largest, according to news reports – would cost an estimated $9 billion.

Because there is not yet a buyer for the groundwater, the water district could enable the electric project to happen first, Mr. Harris said. In fact, Mr. Rosser said revenue from electricity sales probably would be used to make payments on the debt for the waterline until water sales revenue was available.

Potential stumbling blocks

If a freshwater supply district is created, the broader venture will still face other obstacles. Among the biggest is that Mesa has no buyer for its water. The company has begun new talks with the North Texas Municipal Water District and the Tarrant Regional Water District, but in the past both have characterized the company's water as more costly than that from other potential sources.

"As you might suspect, a water proposal of this complexity is pretty difficult to understand," said Jim Parks, North Texas Municipal's executive director. "To evaluate it, we're having some discussions with them to determine whether that project is more viable now than it has been in the past."

Another potential stumbling block could be concern about drawing down the Ogallala Aquifer in the Panhandle. Opponents note that the aquifer recharges very slowly.

Mr. Rosser, however, said Mesa Water has agreed that through 2048, it won't take the aquifer more than 50 percent below its 1998 volume. Company officials have said they can do that and still supply water for a century at a rate of 150,000 to 200,000 acre-feet a year. That amount is roughly half to two-thirds as much water as North Texas Municipal supplied to 1.6 million residents last year.

Another obstacle could be opposition from counties through which the project might pass. Collin County Judge Keith Self, for example, wrote this week to Mr. Clark, the Kaufman County commissioner:

"I have no issue with an entrepreneur using innovative ways to supply water to North Texas. I have a huge issue with developing a FWSD [fresh water supply district] that will have legal authority to condemn land over a 320-mile stretch of Texas land, the vast majority of which is not in Kaufman County. This is abuse of legal authority and must be an unintended consequence of an old law, a law that was never intended to give such broad authority to a local FWSD."

If a district is created in Roberts County, Mr. Cook said, it will consist of 8 acres deeded to five of Mr. Pickens' employees or supporters. The Kaufman County district would encompass a planned 69-home subdivision and lake on 319 acres owned by Mike Boswell, a Pickens employee. Mr. Boswell said he had plans to develop his land even before the idea came up of tying it to the Mesa projects.

Kaufman County Judge Wayne Gent said he doubts commissioners can legally turn down the request for an election.

"They have far-reaching authority, this is true," he said of freshwater supply districts, "but unless the petition is basically flawed, I don't think Kaufman County has the right to deny the petition."

And in Roberts County, Mr. Cook said that "as bad as it sticks in my craw and as nasty a taste as it leaves in my mouth," he would probably support the petition. Although he has concerns about draining the part of the Ogallala Aquifer that lies under the area, he said, they are offset by the promise of jobs, income for ranchers and other economic benefits that Mr. Pickens' projects could bring to a county with fewer than 900 residents.

"I feel it's my responsibility to do what's right for the landowners and residents of the county," Mr. Cook said. "And as one of my commissioners says, 'He owns that water, so he can do with it what he wants to.' "


Freshwater supply districts are a type of local government. Under Texas law, they:
  • Can be created to conserve, transport and distribute fresh water from any sources for domestic and commercial purposes.
  • Have authority to execute contracts, hire employees, acquire water rights, construct improvements and use eminent domain – either within or outside their boundaries – to acquire land.
  • Can borrow money at favorable interest rates by issuing tax-exempt bonds.
  • Are created after either 50 residents of a proposed district or a majority of voters within its boundaries petition county commissioners to order an election. Typically, such elections involve only a few voters who favor creating the district. The petition must include the district's boundaries, the general nature of the projects proposed and why the district is needed. The commissioners can consider, and hear testimony on, information in the petition and whether the proposed projects would "benefit the land" within the proposed district.
  • Are run by five supervisors. Under legislation that takes effect today, the only qualifications for a supervisor are that he or she be a Texas resident, own property within the district and be at least 18. Previously, a supervisor had to be a registered voter living within the district.

SOURCES: Chapter 53, Texas Water Code; Texas Senate Research Center; Texas Practice Series volume on county and special district law, by Austin lawyer David B. Brooks; Dallas Morning News research

© 2007 The Dallas Morning News Co

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE