High-rolling oilman Boone Pickens may have engineered one of his shrewdest takeovers yet in the form of eight acres of Texas scrubland.
The land in Roberts County, a stretch of ranchland outside Amarillo, holds no oil. Instead, it is central to Pickens' plan to create an agency to condemn property and sell tax-exempt bonds in the search for one of his other favorite commodities: water.
Approval of the district was all but certain as Texans voted Tuesday in state and local elections. By law, only the two people who actually live on the eight acres would be allowed to vote the manager of Pickens' nearby Mesa Vista ranch and his wife. The other three owners, who will sit on the district's board, all work for Pickens.
Pickens "has pulled a shenanigan," said Phillip Smith, a rancher who serves on a local water-conservation board. "He's obtained the right of eminent domain like he was a big city. It's supposed to be for the public good, not a private company."
Pickens and his allies say no shenanigans are involved. Once the district is created, the board will be able to issue tax-exempt bonds to finance construction of Pickens' planned 328-mile, $2.2 billion pipeline to transport water from the panhandle across the prairie to the suburbs of Dallas and San Antonio.
If Pickens can't find a buyer for the bonds or for his water and he hasn't yet he might buy the bonds himself to jump-start the project, said his Dallas-based lawyer, Monty Humble of Vinson & Elkins. The board will spend about $110 million to buy the right of way for the pipeline, using the power of eminent domain to acquire property if necessary, Humble said.
Water has been a cheap and relatively plentiful resource in the United States, and massive infrastructure projects like the ones Pickens envisions looked like pipe dreams a few years ago. Now, states such as Georgia are experiencing shortages, joining the ranks of Nevada, Arizona and other perennially water-poor states in the Southwest. Desalination plants are being built near California beaches, and water pipelines are snaking across the arid West.
Pickens still faces obstacles. To help pay for construction, he plans to piggyback wind power on the water infrastructure. He plans wind farms on the ranch land and wants to run electricity cables along the right-of-way of Mesa's water pipeline. All told, the wind and water project is projected to cost more than $10 billion. The pipeline alone will run $2.2 billion. Pickens said he has about $100 million invested so far.
Most of all, he needs a group of confirmed buyers for his water. That's in part because of political resistance to his plan for gobbling up water rights. Several Dallas-area water districts have refused to sign up.
"He's obtained the right of eminent domain like he was a big city."