Amarillo City Council advances water deal with Fermi America

The Amarillo City Council on Tuesday unanimously approved the first reading of a resolution authorizing a water-supply agreement with Fermi America for up to 2.5 million gallons per day (MGD). The preliminary approval moves the proposal forward but does not finalize the deal. City officials said that final terms, including accountability provisions and technical infrastructure details, are still under negotiation ahead of the second and final vote set for Oct. 28.

The agreement would allow Fermi to purchase water from the city at $8.72 per 1,000 gallons—twice the current industrial rate—while also requiring the company to fund new wells, pipelines, and related infrastructure that would ultimately be deeded to the city. City engineers estimate the initial 2.5 MGD build-out would cost between $10 million and $12 million, with future phases potentially raising total investment in city-owned water assets to more than $200 million.

Mayor Cole Stanley emphasized that the arrangement is strictly a utility transaction. “Our role in this is just water,” he said. “We’re not investors in the project. We’re not assuming their risk.” At the current negotiated rate, Fermi would pay about $8 million annually for 2.5 MGD. If a future council ever expanded the agreement to 10 MGD, annual revenue could reach $32 million. Any expansion beyond 2.5 MGD would require additional analysis and a separate public vote.

Fermi’s Presentation and Water Plan

Fermi America co-founder and CEO Toby Neugebauer, along with company engineers, presented an over two-hour briefing to the council detailing the project’s scope, energy sources, and long-term water infrastructure plans. Neugebauer stated the company could secure water independently by leasing from private landowners tapping the same aquifer but argued that partnering with the city ensures transparency, public ownership of infrastructure, and community benefits.

“The only difference is whether Amarillo benefits,” Neugebauer said. He outlined hybrid cooling systems and closed-loop processes designed to reuse water multiple times, reducing overall demand. “We want this to be the start of a relationship that benefits the region for decades,” he added.

Public Works Director Donny Hooper confirmed that the 2x industrial rate would cover maintenance and operational costs for 2.5 MGD. He noted that any expansion would require additional engineering and financial review. Mayor Stanley also reminded residents that Amarillo’s drought contingency plan applies equally to all users. “If we ever enter mandatory restrictions, they’ll be restricted too. We all draw from the same bucket,” he said.

Councilmember David Prescott referenced Texas Water Development Board data showing the Panhandle region pumps roughly 1.1 trillion gallons of groundwater annually. At full expansion, Fermi’s 10 MGD use would represent about 0.32% of the total, while agriculture accounts for more than 90% of regional water usage, with municipal and industrial use combined under 5%.

Accountability Measures and Council Concerns

Councilmember Les Simpson emphasized the need for enforceable accountability measures in the final contract. “Our job now is to make sure every question that’s been raised is answered in full view,” Simpson said. In a written statement, he called for a “Commitment to Amarillo and the Panhandle Plan” within six months of approval, including benchmarks for transparency, workforce development, environmental safeguards, and community partnership. Simpson proposed that these commitments be incorporated into the contract and reviewed annually by the council.

Community Response: Support and Skepticism

The Amarillo Economic Development Corporation president, Elliot McKinney, spoke in favor of the deal, describing it as “a smart strategic move” to position Amarillo competitively for high-tech and energy industries. Fermi’s community liaison, Trent Sisemore, noted that the council meeting reflected a healthy exchange between the company and residents. “This was a very good meeting,” Sisemore said. “There was a lot of public comment—about two hours—and nearly three hours of presentation from Fermi explaining our plans and addressing concerns about the Ogallala. Fermi is building its own power systems, not drawing from the city’s supply, and we’re committed to using water responsibly. This project is going to be transformational for Amarillo.”

Despite reassurances, most residents who spoke opposed the proposal, citing concerns about groundwater depletion, environmental impacts, limited transparency, and the potential for short-term job gains with limited long-term local benefit. Several urged the council to delay the final vote until additional public meetings and environmental reviews are conducted.

Next Steps

The council’s final vote is scheduled for Oct. 28. If approved, Fermi would fund and construct the initial water system before transferring ownership to the city. Any expansion beyond 2.5 MGD would require new contracts, additional engineering analysis, and council approval. City officials said negotiations on contract language and accountability requirements will continue in the coming weeks.