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On Reclaimed Mine Sites in the Construction of the I-73/74 NHS Corridor

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On Reclaimed Mine Sites in the Construction of the I-73/74 NHS Corridor Potential Economic Benefits of Public-Private Partnership (P3s) on Reclaimed Mine Sites in the Construction of the I-73/74 NHS Corridor (Final Report) By Junwook Chi, Ph.D. Justin Matthews, Ms. Jessica Weddington, Ms. Pamela Hamilton, Ed.D. Nick J. Rahall, II Appalachian Transportation Institute (RTI) Center for Business and Economic Research Marshall University Huntington, West Virginia The report has been prepared with funds provided by the West Virginia Department of Transportation. The contents of this report reflect the views of the authors, who are responsible for the facts and accuracy of the information presented herein. The contents do not necessarily reflect the official views or policies of the West Virginia Department of Transportation. February 2012 Technical Report Documentation Page 1. Report No. 2. Government Accession No. 3. Recipient's Catalog No. 211085 4. Title and Subtitle 5. Report Date Potential Economic Benefits of Public-Private Partnership (P3s) on Reclaimed Mine Sites in the Construction of the I-73/74 NHS 6. Performing Organization Code Corridor 7. Author(s) 8. Performing Organization Report No. Junwook Chi, Ph.D., Justin Matthews, Jessica Weddington, Pamela Hamilton, Ed.D. 9. Performing Organization Name and Address 10. Work Unit No. (TRAIS) Nick J. Rahall II, Appalachian Transportation Institute at Marshall University, PO Box 5425, Huntington, WV 25703 11. Contract or Grant No. DTRS- 12. Sponsoring Agency Name and Address 13. Type of Report and Period Covered WV Department of Transportation FINAL Building 5 14. Sponsoring Agency Code 1900 Kanawha Blvd East WVDOT Charleston, WV 25305 15. Supplementary Notes 16. Abstract A public private partnership (PPP or P3), according to the FHWA, ―…is a contractual agreement between a public agency and a private entity for private sector participation in the delivery of transportation projects‖. One of the most innovative aspects of the KCH is the P3’s which have developed and continue to develop. These consist of using surface mine sites as locations for portions of the KCH roadbed. Under this form of P3, after extraction of the coal by surface mining, instead of returning the property to as near as possible its original contour, the mining company agrees to build a section of rough roadbed. When completed, the roadbed will be turned over to the WVDOT for further development. Further, the company which extracted the coal proceeds as a construction company to build the rough road bed on adjacent property. The coal company is allowed to remove all coal located within the right of way. The sale of the coal extracted is used to reduce the cost to the public sector of building the roadbed. This project examines the potential for the expansion of P3 in the construction of the KCH. The analysis also includes an estimation of the possible economic benefits of using P3’s along the route of the KCH and the economic development which could result. 17. Key Word 18. Distribution Statement King Coal Highway, Public Private Partnerships (P3), Regional Economic Impacts 19. Security Classif. (of this report) 20. Security Classif. (of this page) 21. No. of Pages 22. Price Unclassified Unclassified Form DOT F 1700.7 (8-72) Reproduction of completed page authorized West Virginia Department of Transportation Potential Economic Benefits of P3s on Reclaimed Mine Sites in the Construction of the I-73/74 NHS Corridor ACKNOWLEDGMENTS The authors would like to thank the West Virginia Department of Transportation for supporting this report. In particular, we are grateful for the direction and support given by Secretary Mr. Paul A. Mattox and Mr. David Cramer, WVDOT. We also received helpful advice and assistance from Division Administrator Mr. Tom Smith and Mr. Henry Compton, West Virginia Division of FHWA. Additionally, we would like to thank Director Mr. Robert Plymale of the Nick J. Rahall, II Appalachian Transportation Institute and Dr. Calvin Kent of Center for Business and Economic Research for their guidance. Mr. Juan Barrios provided substantial efforts on the maps; Mr. Eric Pennington provided valuable editorial comments; and a number of students supported this report. DISCLAIMER The contents of this report reflect the views of the authors, who are responsible for the facts and the accuracy of the information presented herein. This document is disseminated under the sponsorship of the Department of Transportation, University Transportation Centers Program, in the interest of exchange. The U.S. Government assumes no liability for the contents or use thereof. February 2012 Page i West Virginia Department of Transportation Potential Economic Benefits of P3s on Reclaimed Mine Sites in the Construction of the I-73/74 NHS Corridor EXECUTIVE SUMMARY This report explores the economic benefits The I-73/74 NHS Corridor will extend available through the use of Public Private approximately 150 miles from Huntington to Partnerships (P3s) for construction of the Bluefield and is divided into two sections, I-73/74 NHS Corridor. The Tolsia Highway, extending from Huntington to Williamson (51 miles) and the Chapter 17 of the West Virginia Code refers King Coal Highway (KCH) which will extend to a P3 as a ―consortium that includes the 95 miles from Williamson to Bluefield Division of Highways, a governmental entity, (Figure 1). Based on the estimates in our a highway authority or any combination study, the entire I-73/74 NHS corridor is thereof, together with a private entity or project to cost approximately $3.9 billion. entities, which proposes to finance, acquire, plan, design, construct, expand, improve, One of the innovative aspects of the I-73/74 maintain or control a transportation facility. NHS Corridor consists of using reclaimed Public private partnerships (P3s) are fairly surface mine sites as locations for part of the new to the United States, but with issues such roadbed. With this form of P3, coal is as insufficient highway funds and needs for extracted through surface mining, but instead improved financial practices becoming more of returning the property to as near as possible urgent, their usage for funding transportation its approximate original contour (AOC), the infrastructure is becoming more widespread. mining company agrees to build a section of P3 activities include financing, planning, rough roadbed as part of an approved Post design, construction, operation, and Mine Land Use (PMLU). When completed, maintenance of projects. the roadbed will be turned over to the West Virginia Department of Transportation In 1991, Congress identified the need for a (WVDOT) for further development and north-south corridor that would extend from eventual placement into the West Virginia northern Michigan to Myrtle Beach, South road system. Carolina, not only passing through these states but North Carolina, Virginia, West A previously negotiated agreement between Virginia and Ohio as well. This roadway the WVDOT and Alpha Natural Resources came to be known as the ―I-73/74 North- (ANR) provides for 11.37 miles of rough South Corridor‖ and was named by Congress roadbed as a result of surface mining in as a high priority corridor on the National Mingo County. When completed this roadway Highway System in 1995. The West Virginia is expected to save $170 million in portion of this congressionally designated construction costs, an estimated savings of 50 corridor is to serve as a multi-lane percent. CONSOL Energy Inc. (CONSOL) replacement of the existing US 52 alignment. has entered into a P3 with the WVDOT concerning roadbed construction at the Buffalo Mountain site in Mingo County. February 2012 Page ii West Virginia Department of Transportation Potential Economic Benefits of P3s on Reclaimed Mine Sites in the Construction of the I-73/74 NHS Corridor This project will provide the state with 5 impact to the surrounding areas. Obvious miles of rough roadbed with estimated choices for commercial development include savings of more than $110 million. Once fast food, full service restaurants, gas stations, CONSOL has obtained the permits, it will hotels, retail shops and a variety of service then take 6 to 8 years to remove the coal. businesses. Figure 1 – King Coal Highway route Realizing that PMLU presents the state with an opportunity to pursue options for the betterment of the state, former Governor Joe Manchin III established the Post-Mine Land Use Redevelopment Group/Task Force. This group is committed to assisting counties with surface mined land in exploring the best post- mine options. Counties should focus on economic development, planned roads, utilities, and possible sources of funding to achieve desired results. Mingo County has the most experience in Our study reviewed coal reserve maps along PMLU and has achieved success with a the route of I-73/74 to examine the potential number of projects that benefited from the for additional P3s with mining companies. creation of the Appalachian Development Figure 2 shows that while coal reserves exist Highway Corridor G which extends from along the route, there is not enough coal in the Huddy, Kentucky to Charleston for southern portion of the roadway to justify the approximately 81 miles. Among these current P3 practice without proper incentives. projects include the Mingo County Air Transportation Park, a 900 acre site with a Figure 2 – Coal reserves along the KCH state of the art 7,000 foot runway and an additional 800 acres of developable property. This project is estimated to generate 25 new jobs in Mingo County. Also in Mingo County, TransGas has proposed a $3 billion Coal-To-Liquids Plant that will produce 750,000 gallons per day of ultra-clean Premium 92 Octane gas using only 8,300 tons of low quality coal. This project is expected to create 1,500 temporary The creation of I-73/74 leaves a large quantity construction jobs, 300 permanent jobs and of land that could be used for commercial 300 additional jobs in services directly related development projects that provide a positive February 2012 Page ii West Virginia Department of Transportation Potential Economic Benefits of P3s on Reclaimed Mine Sites in the Construction of the I-73/74 NHS Corridor to the facility.
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