Much like Alice’s observation in Lewis Carroll’s Alice in Wonderland, details surfacing about the proposed sale of 600,000 acre-feet (196 billion gallons) of water from the Toledo Bend Reservoir just gets curiouser and curiouser.
In attempting to follow the time line leading up to the issuance of a request for proposals (RFP) by the Sabine River Authority (SRA) and the sudden shelving of the water sale plan to private investors, events appear to be grotesquely out of sequence.
Sufficient questions exist to raise concerns over whether the SRA, at best, may have gotten the proverbial cart ahead of the horse and, at worst, the possibility that backroom deals may have been cut in anticipation of a financial windfall for investors and the SRA alike.
Toledo Bend Partners (TBP) initially approached SRA more than a year ago about purchasing the water for resale to Texas municipalities and at the SRA’s Water Sales Committee meeting on Jan. 19, 2011, SRA Executive Director Jim Pratt informed the committee that he had received a proposal for “an out-of-state water sales agreement from the Toledo Bend Partners, LLC.”
Pratt told the committee that TBP was offering to pay $3 million up front to reserve the water rights using a graduated pay scale over four years until the project was on online to actually take water. He added that TBP’s proposal was seeking to reserve 600,000 acre-feet of water from the reservoir and that the partnership would pay a $50,000 non-refundable application fee to help defray SRA legal costs.
Pratt also informed the committee that he had already spoken with attorney Marjorie McKeithen of the New Orleans law firm of Jones Walker about representing SRA during the sale negotiations with TBP.
TBP is a Delaware-chartered entity comprised of trusts and entities owned by Billy Joe “Red” McCombs of San Antonio, Donald T. “Boysie” Bollinger of Lockport and Aubrey Temple of Coushatta and their respective families. The principals and their families and business interests have combined to contribute more than $75,000 to the political campaign of Gov. Bobby Jindal.
Jones Walker, a firm with hundreds of attorneys in at least 14 offices in eight states and Washington, D.C., is also a big supporter of Jindal. The firm itself had eight contributions totaling $22,000 and Paul Cabon of Washington, D.C., the firm’s Director of Government Relations, and wife Susan had 12 more contributions to the Jindal campaign that totaled $28,300. Various other law firm partners also contributed between $500 and $1,000 each.
The committee voted unanimously to accept the $50,000 from TBP and to enter into a professional services contract “not to exceed $50,000” with Jones Walker “for legal counsel for the out-of-state water sales project.
Eight days later, at the Jan. 27, 2011 meeting of the full SRA Board of Commissioners, the Water Sale Committee’s actions were ratified, again unanimously and without discussion.
The board on Feb. 24, 2011, unanimously approved paying out-of-town travel expenses for commission Chairman Robert Conyer and Water Sale Committee Chairman Larry Kelly to attend negotiations for the out-of-state water sale.
That was six months before a letter from Jindal Chief of Staff Stephen Waguespack informing SRA that the governor’s signature would be required for the sale of water “outside the boundaries of the state of Louisiana.” Waguespack added that any sale would not be considered “unless it is, at a minimum, the product of a competitive RFP.”
Waguespack’s letter was dated Aug. 25, the same date that the SRA board voted unanimously to approve the water sale contract with TBP and to forward the signed contract to Jindal for his signature.
Those two documents apparently crossed in the mail because a month later, on Sept. 22, the SRA board, in a sudden reversal, unanimously authorized Water Sale Committee Chairman Larry Kelly, Pratt and SRA staff to prepare and issue the RFP—a month after first agreeing to and signing a contract to sell the water to TBP.
Several individuals and firms expressed an interest in purchasing the water and each was provided a copy of the RFP by mail except for TBP which had a representative pick up a copy of the RFP at SRA offices.
Despite the expressed interest of other entities, TBP subsequently was the lone bidder on the purchase of the water at a price of 28 cents per thousand gallons or $91.24 per acre-foot. That price is substantially lower than other localities where water sale prices range from $5.20 per thousand gallons ($1,700 per acre-foot) to $8.88 per thousand gallons ($2,903 per acre-foot).
Such a spread in the purchase price by TBP and market prices elsewhere would seem to set TBP principals up for substantial profits as middlemen, leaving unanswered the question of why the SRA could not issue an RFP and negotiate directly with the end users in order to enhance its financial bottom line.
If all this is not confusing enough, there is the business of a $10 million bond issue approved by the SRA in which the time line also appears to be out of sync.
The SRA ran the requisite legal advertisement on its intent to issue $10 million in revenue bonds on Sept. 7, 2011 even though the State Bond Commission had already approved the measure at its June 16 meeting in Baton Rouge—nearly three months before.
The legal advertisement said that the $10 million in revenue bonds to finance the acquisition of “any property or facilities which the Authority is authorized to acquire,” would be secured by the sale of water to industrial customers by the Sabine River Diversion System. The Diversion System sales water to the petrochemical industry in Southwest Louisiana and those sales are separate from the proposed purchase by TBP, according to SRA management consultant Carl Chance.