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Business Observer Friday, Mar. 6, 2009 11 years ago

No Rock, No Roll

As federal stimulus funds for new road building increase demand for construction materials, taxpayers are caught in the middle of a permitting tug-of-war between mining interests, environmentalists and activist judges.
by: Jay Brady Government Editor

As federal stimulus funds for new road building increase demand for construction materials, taxpayers are caught in the middle of a permitting tug-of-war between mining interests, environmentalists and judges.

One of Florida's most precious commodities is at risk, just when the state needs it most for economic recovery.

Limestone rock is a main ingredient of every asphalt road and parking lot in Florida. Now, the future of road building in Florida is in jeopardy because of mining limits in Lee and Miami-Dade counties.

“We're very concerned,” says Stan Cann, district secretary with the Florida Department of Transportation (FDOT), whose region covers Polk to Collier counties.

The Secretary has many reasons to be concerned.

Lee County adopted a 49-page, 22,000-word mining ordinance after imposing a one-year mining moratorium that ended in September. And on Jan. 30, a federal judge in Miami, citing concerns for Miami-Dade's supply of drinking water, ruled that the Army Corp of Engineers erred when it issued mining permits in 2002.

Much is at stake for the entire state because of plans to expedite roadwork with federal stimulus dollars and put people to work. The Miami and Lee limestone formations are some of the best quality in the state, experts say.

Supply and demand
The Miami judge's ruling has effectively shut down 90% of the Lake Belt mine area, says Bob Burleson, President of the Florida Transportation Builders' Association. He doesn't expect the court to make a decision on an appeal until at least the fall.

FDOT Chief Engineer Brian Blanchard says there's widespread concern that the halt to mining in Miami will curtail supply and send rock prices higher. The five “mega-mines” in the Lake Belt are among the top 10 in production in the country and were producing nearly half of the limestone in Florida. Two Lee County mines are among the top seven in Florida.

It's a huge industry. The state is the third-largest consumer of crushed rock products in the U.S. Most of it comes from Florida.

And although demand has been soft this past year, it's expected to rise with the influx of federal stimulus funds for highways and bridges. This new flow of funds is about to begin at about the same time as local construction stimulus projects also get underway. Florida is to receive $1.35 billion for highways and bridges, and perhaps more later, according to Cann.

Road builders aren't the only ones that use limestone rock. It's also used to make concrete blocks and pipes in homebuilding. As the existing homes inventory is absorbed and new construction eventually returns, demand for limestone rock could quickly outpace supply. Fact is, it can take three years to start a mining operation because of site permitting and development. In the meantime, prices would likely spike.

Property rights at stake
Legal wrangling dominates the mining landscape in Lee County, too, where reserves are dwindling.

For example, on Feb. 12, a judge ordered Lee County to process a March 2006 rezoning application of Resource Conservation Holdings (RCH), which sought to permit a mine under older, less stringent regulations. A hearing examiner is expected to hear the petition by April. The Lee County Commission is not bound by the hearing examiner's decision, so more litigation appears likely.

Bill Moore, RCH's attorney, is determined to push the issue. “Our client intends to seek the mining permit it is entitled to under the law and pursue its legal remedies if it doesn't receive that,” he says.

If these obstacles weren't enough, one day into the Obama administration the Conservancy of Southwest Florida petitioned the Secretary of the Interior and the Fish and Wildlife Service to designate critical habitat for the Florida panther.

The proposed panther protection zones encompass 2.3 million acres, one-quarter of which is in private hands. Much of the 83,000 acres of the southeast Lee County mining area falls in that habitat. If the federal government decides these lands should be protected under the Endangered Species Act, it will be able to withhold development permits for large projects on more than half a million acres in Southwest Florida.

“The reality is there are two ways to stop mining,” says Richard Friday, chief financial officer of Youngquist Brothers. “Either you ban it completely...or you make the standard so that no one can ever reach it. That's the reality of what they've done. They just don't want mining anywhere.”

What the federal government gives, local government takes away. “It's kind of a de-stimulus,” says Burleson.

May lead to legislation
The adverse economic impact is the predictable result of government limiting supply just as demand is expected to rise. Rising prices will limit the amount of roads that can be built and the number of workers who can be paid good wages to build them.

The issue has caught the attention of the chairman of the Florida House Transportation and Economic Development Committee, State Rep. Rich Glorioso, R-Plant City. “Anything that makes it more expensive means we build less roads, because we're only going to have so much money. The more that costs, the less projects we do,” he says.

“The stimulus package will give us a little boost in the need for materials,” says Burleson. “That demand will come back and when it does we need to have some supplies ready.”

Shipping limestone rock into the state is hugely expensive. “Local sources are so much better than having it trucked over or shipped,” says Burleson. “The more opportunity you have for supply, the better opportunity you have for price.”

Glorioso says legal and economic issues are intertwined. “It raises a big concern for all of us,” he says. “It's a taking of property without due process.”

How much?
When it comes to supply, no one seems to agree how much is really down there. And as to water-contamination issues, there's no agreement either.

Lee County Commission Chairman Ray Judah, whose district includes southeast Lee County, doesn't buy the findings of the FDOT study cautioning about dwindling rock supplies. Judah says a county-commissioned study shows the Lee mines have enough supply to last until 2030.

One consultant for mining area landowners, Dennis Gilkey, wrote in a letter to the county in May that within the next 15 to 20 years, three major rock mines in Lee County will have exhausted their supply, leaving only one.

Gilkey's letter also disputes the county's contention that more mining will hurt Lee's water supply. There are hydrologists dueling on both sides.

“I think the county commission has pretty well decided they don't want to allow mining along Corkscrew Road,” says Moore. “These new regulations are making it extremely expensive or difficult for an owner to mine in that area.”

For now, it's unlikely Judah will vote to approve new mines given the county's unsuccessful attempt so far to derail the RCH application. But denying landowners the right to mine in southeast Lee County could cost the county as much as $1 billion to compensate property owners. If the county doesn't back down, landowners will likely file a lawsuit seeking compensation for government taking their property rights.

Judah recently suggested a system that would allow landowners to obtain transferable development credits in exchange for preserving land. “We have a whole slew of applications from mining interests,” he says. “We could forestall expensive lawsuits in the future” with such a program.

Going into this legislative session, Glorioso recognizes the state's multiple interests in the tug-of-war and the potential for the state to ensure a future supply of limestone rock. “We're going to need as much limerock as we can come up with,” he says.

Glorioso expects support from Rep. Trudi Williams, R-Fort Myers, chairman of the Agriculture and Natural Resources Policy Committee. “Are they going to have to get it from two or three counties away?” Williams says. “I don't think so. If a county has a moratorium and they want to get money from FDOT, they can't have it both ways.”

Everyone agrees litigation should only be the final option. “The counties need to be working with the property owners,” says Glorioso. “The idea of stopping them completely bothers me.”


What. Demand for limestone rock will rise as federal-government money gets spent for new roads, but future supplies face tough local-government restrictions
Issue. Limestone-rock mine permitting rules limit future supply of this precious and strategic resource.
Impact. Fewer miles of roads will get built, delaying the state's economic recovery.

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