The Pickens Water Play

by Andrew Wheat

A political shopping spree may have accelerated the efforts of Dallas billionaire T. Boone Pickens to hijack sweeping government powers of eminent domain. The tycoon wants these extraordinary powers to benefit his private utility companies: Mesa Water and Mesa Power. The $1.8 million that Pickens spent on Texas' last two elections made him the state's number 5 individual donor - up from number 12 in 2002. Pickens wants condemnation powers to lay 320 miles of utility lines from suburban Dallas to the Texas Panhandle - with or without the approval of the owners of the private land that he would excavate.

Such a power grab by a single entrepreneur would be stunning in a conservative state. As recently as 2005 Texas' Republican leaders appointed an interim legislative committee to study the abuse of eminent domain to promote economic development. When appointed co-chair of this committee, Representative Beverly Woolley, R-Texas, issued a stern warning in a House media release. "I believe it is important that private property be protected," Woolley said in the statement. "Eminent domain should be used in limited circumstances for necessary, traditional, public uses."

In their very next session, however, lawmakers enacted legislation that helped put these expansive powers in Pickens' hands. With Pickens spending up to another $1 million on state lobbyists in 2007, not a single lawmaker of either party voted against the legislation, which now is Texas law.

Pickens made an initial fortune through his Mesa Petroleum, which expanded through aggressive buyouts of other energy companies - including those much larger than Mesa. Pickens later founded BP Capital, a hedge fund specializing in energy trades. His most recent venture, Mesa Water, seeks to make a fortune off the "new oil" through water rights he has purchased in the Texas Panhandle.

The vehicle for Pickens' related land grab is a state water law that allows a handful of people to form a so-called "fresh water supply district." These districts wield the power to condemn private land for infrastructure far beyond their own borders. In this way, a Pickens-controlled district covering eight square miles in the Panhandle is on the verge of acquiring the power to condemn private land for a pipeline all the way to Dallas. Such districts also are authorized to raise cheap money by issuing tax-exempt bonds.

Although the legal requirements to form such a water district already were minimal, in 2007 the legislature weakened them further. Going into the 2006 election that preceded this legislative fix, Pickens personally contributed $1.2 million to state candidates and political committees. Recipients of his largesse included each of the 16 senators who faced election in 2006 and one third of the 150-member House. Republicans received 94 percent of all the money that Pickens doled out to state candidates. Pickens spokesperson Jay Rosser says that there is no connection between his boss's political activity and the recent changes to water-district law. "We weren't behind the changes in legislation," he says. Rosser says the increase in Pickens' Texas political contributions mirrors an increase in Pickens' net worth that also has been accompanied by major increases in his charitable contributions. In May, for example, the University of Texas Southwestern Medical Center in Dallas and the M.D. Anderson Cancer Center in Houston each received $50 million checks from the recently formed T. Boone Pickens Foundation.

Rosser does not dispute, however, that the water district that Pickens is seeking in the Panhandle would not have been viable without the recent legislative changes. Until last month, petitions to create a water district required the support of a majority of the registered voters within the proposed district's borders. Changes enacted this year dropped this electoral requirement for a more feudal one. Now a district can be formed with the backing of whoever owns the majority of the appraised land value within its proposed borders. Similarly, the 2007 legislature revoked a requirement that only local registered voters could serve on the boards of these water districts. Now any Texas resident who owns property in the district can sit on the board. The newly relaxed requirements for board members seem particularly advantageous to Pickens.

Six weeks after Governor Rick Perry signed the new water-district rules into law, Pickens sold a total of eight acres of his sprawling Mesa Vista Ranch in the Panhandle to five people who depend on him for their livelihoods. Three of these buyers are Pickens company executives who live hundreds of miles from the Panhandle parcels that they bought from Pickens. The only local buyers were Alton and Lu Boone (no relation to T. Boone Pickens), who manage Pickens' ranch near the town of Miami in Roberts County.

A Pickens attorney then filed a petition with Roberts County Commissioners in August to create a freshwater supply district to be confined to the eight acres of land that Pickens sold to his associates three days earlier. The petition proposed the Pickens' five - Alton and Lu Boone, plus the three Pickens executives who recently bought land within the proposed district but live hundreds of miles away - for the new water board.

Acting on Pickens' petition on September 4, Roberts County Commissioners voted 4-1 to hold an election on November 6 on whether or not to create the proposed water district. The only people eligible to vote in the water-district election - that could affect millions of Texans - were Alton and Lu Boone. Not surprisingly, the couple both voted for the proposed water district, giving Boone a victory of two votes to none. They also voted through $101 million in revenue bonds to acquire the rights-of-way through up to 12 counties for delivering water and wind-generated electricity and selected a five-member board of supervisors. Such a democratic farce could make a tinhorn dictator blush. Yet this farce allows Pickens to leverage broad governmental powers - condemning land and issuing municipal bonds - without any semblance of governmental accountability.

Pickens' ranch and the proposed water district sit on the vast Ogallala Aquifer, which covers parts of eight states. Since electric irrigation pumps became widespread in the late 1940s, the Ogallala has lost an estimated 11 percent of its total volume. Due to its notoriously slow recharge rate, little of its water is replenished. Most of the aquifer's water has been there since the last ice age.

Pickens caught the water bug in 1997, when the Panhandle's Canadian River Municipal Water Authority bought the rights to water under land near his ranch to supply Amarillo and Lubbock. The oil tycoon knew that tapping the aquifer from neighboring properties would draw down water under his land, too. So he organized some of his neighbors, bought up vast water rights and sought a way to sell aquifer water himself. To deliver the water to a lucrative, big-city market, the Pickens camp first applied to form a fresh water supply district in 2002. It abandoned this effort when it ran into serious challenges.

This round, Pickens is better positioned. In addition to benefiting from the legislature's newly weakened requirements for water districts, Pickens has sweetened the deal by promising a substantial public benefit. The new plan calls for investing $10 billion to build the world's largest wind farm in the Panhandle. The 320-mile water pipeline that Pickens has proposed building over private land would include power lines to transmit clean wind energy to the smog-covered Dallas area.

"At some point, portions of Texas - such as the Dallas Metroplex - will face critical shortages of energy and water," says Rosser. Pickens' project is a way to meet these critical public needs.

Yet Mesa Water also has said that the pipeline will allow it to legally extract up to 200,000 acre-feet a year from the Ogallala Aquifer. The pumping limits set by the Panhandle Groundwater Conservation District would permit the loss of half of the aquifer's remaining waters by 2050 in order to feed the metropolitan area that leads the state in per-capita water consumption.

Andrew Wheat is a Multinational Monitor contributing writer. He is research director for Texans for Public Justice, an Austin, Texas-based policy and research organization which tracks the influence of money and corporate power in Texas politics.