July 1, 2008
An exclusive survey from Aggregates Manager reveals what producers can expect when seeking their next permit.
by Therese Dunphy, Editor-in-Chief
For years, the permitting process has remained predictable. A producer seeks a permit for a new aggregate operation or the expansion of an existing one. A group of local citizens or regulators oppose the permit. Community pressure is brought to bear upon the elected officials sitting on the zoning board. They either cave to said pressure or develop a costly laundry list of requirements if a permit is granted.
Typically, the important uses of aggregates such as the construction of highways, bridges, homes, schools, and hospitals are lost among concerns about blast vibrations, groundwater concerns, and noise and dust complaints. Urban legend (or at least industry lore) suggests that years may pass and millions of dollars may be spent in order to secure a permit. So what’s the real picture? How long does it take to secure a permit? What does it cost? How do those factors vary based on operation size and location? These are some of the questions tackled by the Aggregates Manager Permitting Survey.
In May, the survey was sent to a select portion of our readership including many company owners and executives. More than 400 responses were returned, including responses from every state with the nation. In terms of production, 49.3 percent of respondents produced less than 500,000 tons per year or less, while 16.2 percent produced more than 3 million tons per year. Slightly fewer than 70 percent of respondents worked for small, independent companies and slightly more than 30 percent worked for a site that was a subsidiary or part of a larger company.
The buck stops here
One goal of the survey was to capture industry sentiment about whether the permitting climate has changed during recent years. Rather than rely on anecdotal evidence, we sought specific information about producer experiences with this issue. On a scale of 1 to 5 (1 represents strongly disagree, 5 represents strongly agree), 75.1 percent of producers said they believe that permitting has become more difficult during the last decade. Not surprisingly, the West demonstrated the sharpest response to this question with 88.0 percent of respondents strongly agreeing that permitting was indeed tougher now than 10 years ago.
In terms of cost, 77.2 percent of respondents said that permitting has become more expensive during the last decade. In contrast 0.2 percent disagreed with that premise. Again, the West chimed in with the strongest reaction; 87.7 percent there strongly agreed with the statement. In terms of production, sand and gravel producers edged out crushed stone producers with 80.0 percent and 79.7 percent, respectively, agreeing with the assumption.
In some areas of the nation, local markets have already noted a shortage of aggregates. This was verified through survey responses. By region, the West noted the highest number of producers who say there is already an aggregates shortage with 33 percent. In descending order, the Northeast (26.2 percent), South (24.6 percent), and North Central (13.2 percent) agreed. When speculating on future aggregate availability, the regional trends remained true to that pattern. Producers in the North Central reported not only the lowest number of those who felt there is a current shortage, but also the highest number (5.0 percent) who said they don’t believe there will be a shortage.
Banking on reserves
Across the various segments of aggregates producers surveyed – crushed stone and sand and gravel, crushed stone only, sand and gravel only, and other – the most frequently cited response to an inquiry about existing permitted reserves was that the respondent had less than 5 million tons of permitted reserves at the site. While that is not surprising for smaller producers (77.7 percent of those who produced less than 250,000 tons per year responded in this manner), it is a somewhat disconcerting response from the 6.4 percent of producers in the 1.6 million tons per year category. At that rate of production, those sites noted slightly more than three years of remaining reserves.
It is important to note, however, that 21.8 percent of producers in that largest category also did claim to have reserves of more than 100 million tons, leaving them well positioned for future production.
In terms of regional disparity, 54.4 percent of producers in the Northeast reported having less than 5 million tons of permitted reserves, followed by the West (45.3 percent), the North Central (34.5 percent), and the South (28.1 percent). In contrast, 8.4 percent of producers in the North Central region reported more than 100 million tons of reserves, followed by the South (7.8 percent), the Northeast (7.6 percent), and the West (7.5 percent).
Looking at reserves as a company-wide issue, slightly less than half of respondents (48.9 percent) reported having corporate reserves of less than 10 million tons. The next largest category was 10 to 50 million tons of reserves with 23.4 percent of respondents. In contrast, 8.0 percent indicated they had 51 million to 100 million tons, 10.6 percent claimed 101 million to 500 million tons, 3.4 percent noted 501 million to 1 billion tons, and 5.7 percent topped the stockpile with more than 1 billion tons of reserves.
As anticipated, smaller annual tonnage operations tended to indicate they had fewer tons of reserves while larger annual tonnage operations were more likely to indicate higher tonnages. On a regional basis, the Northeast had the highest percentage of producers (65.7 percent) with less than 10 million tons of reserves while 13.3 percent of producers in the South claimed more than 1 billion tons.
Red light, green light
Of the producers who responded to our survey, 38 percent were actively seeking a permit. The larger the annual production, the more likely it seemed that the producer was involved in a current permit: 57.0 percent of those with production rates of more than 1.6 million tons per year were seeking permits compared to 44.9 percent of sites with 750,001 million to 1.5 million tons, 39.6 percent at sites with 250,001 million to 750,000 million tons, and 20.9 percent at sites producing fewer than 250,000 tons per year. In addition, those in the South (48.0 percent) and West (47.7 percent) were the most likely to be involved in a permitting effort.
When it comes to timeliness, small producers (less than 250,000 tons per year) experienced both extremes in obtaining permits. While 34.8 percent were able to secure permits in less than six months, 10.9 percent had been working on a permit for more than a decade. In contrast, large producers (more than 1.6 million tons per year) seemed to have the swiftest turnarounds; 83.6 percent were able to obtain permits within three years. Producers in the West also faced long waits with 14.5 percent saying they had been working on their current permit for more than 10 years. Meanwhile, those in the North Central and South seemed to be in relatively good shape – 37.5 percent and 43.8 percent, respectively, had obtained a permit within the last year.
One of the biggest surprises outlined in the survey came in the area of cost; 74.1 percent of respondents said they invested less than $100,000 in their last permitting effort. The large number of small, independent producers responding to the survey may have influenced this number. In addition, 89.8 percent of those in the smallest production category (less than 250,000 tons per year) and 88.9 percent of those who only produced sand and gravel indicated they were part of this spending category. In contrast, 9.9 percent of respondents in the West and 12.7 percent of those producing more than 750,000 tons per year indicated that they spent $1 million to $3 million to get their most recent permit.
Fact vs. fiction
While the results of the Aggregates Manager Permitting Survey confirmed some urban legends such as the shortage of aggregate reserves, they dispelled others related to the cost of permits. That said, there are still plenty of industry tales of woe related to permitting, and those cases will continue to underscore the importance of proactive public relations and education efforts.
* After nine years, Buffalo Crushed Stone is still trying to expand its operation in the Cheektowaga, N.Y.
* In July 2007, a Florida judge shut down operations owned by Florida Rock, Tarmac, and White Rock Quarries. The Lake Belt operations produce a combined tonnage of approximately 55 million tons per year and those shutdowns are likely to reduce state-wide production by 30 to 40 percent.
* In late July 2007, Granite Construction – working with its partner, Palomar Aggregates – won a legal battle to mine a greenfield site in North County, California. As part of that 20-year approval process, the partners will pay for the construction of a $26 million roadway to mitigate major development around the mine.
* In August 2007, Aggregate Industries opted to sue Alamo Township, Mich., for the right to operate a sand and gravel operation. It claimed that the township’s ordinance regulating gravel mines is unconstitutional.
* In early October2007, Kaweah River Rock, based in Tulare County, California, received court approval to proceed with mining after 21 years of hard work in the face of opposition from environmental groups.
So although the cost of permitting may not be as bad as legends tell, permitting difficulties are likely to continue. They will also impact the long-term health of all companies. That fact was underscored in late September, when Don James, chairman and CEO of Vulcan Materials Co., told security analysts,”Where it is possible, we work very hard to secure new greenfield sites. That is increasingly difficult, increasingly expensive, increasingly long term.”
In short supply
There is a shortage now 23.9%
Will be in 5 years 36.3%
Will be in 10 years 37.4%
No shortage 2.4%
caption: Percentage of aggregate producers who believe there is or will be a shortage of aggregates in their market.
Source: Aggregates Manager Permitting Survey
Less than 6 months 27.1%
6 months to 1 year 28.1%
1 to 3 years 22.6%
4 to 5 years 10.1%
6 to 10 years 3.5%
More than 10 years 8.5%
caption: Length of time respondents have been involved in their current permitting effort.
Want to know what restriction helped bring about a permit? Here is the breakdown of restrictions included on permits our respondents were able to obtain.
Hours of operation: 49.2 percent
Air/emissions: 48.2 percent
Setbacks: 43.9 percent
Tonnage/acreage restrictions: 40.1 percent
Screening/berming (aesthetics): 36.3 percent
Groundwater monitoring: 33.5 percent
Noise limitations: 31.7 percent
Blast monitoring: 26.1 percent
Wetlands mitigation: 24.6 percent
Trucking: 22.6 percent
Crushing: 17.5 percent
Other: 2.5 percent
No conditions/restrictions attached: 8.1 percent
Note: Respondents could select as many restrictions as applied to their situation.
No matter how well you argue a business case scenario, public pressure sometimes prevails. Here are the most frequently cited reasons why producers were denied a permit.
Community pressure: 38.3 percent
Zoning: 30.0 percent
Truck traffic: 25.0 percent
Ground water/well concerns: 21.7 percent
Noise: 18.3 percent
Air/emission concerns: 15.0 percent
Blast concerns: 11.7 percent
Endangered/threatened species: 11.7 percent
Wetlands: 11.7 percent
General health issues: 8.3 percent
Other: 5.0 percent
No reason given: 20.0 percent
Note: Respondents could select as many reasons for a permit denial as applied to their situation.
U.S. Permit Regions
Northeast: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, New Jersey, New York, Pennsylvania
North Central: Illinois, Indiana, Michigan, Ohio, Wisconsin, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota
South: Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia, Alabama, Kentucky, Mississippi, Tennessee, Arkansas, Louisiana, Oklahoma, Texas
West: Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming, Alaska, California, Hawaii, Oregon, Washington
Potential callouts, quick facts, or decks
More than 75 percent of survey respondents strongly agreed that permitting has become more difficult during the last decade.
More than 41 percent of respondents said that a community or activist group attempted to stop their permitting effort.
A third of producers in the West say there is already a shortage of aggregates while another 36.9 percent in that region expect a shortage to develop within five years.