0001
 1                     STATE OF FLORIDA
 2           DIVISION OF ADMINISTRATIVE HEARINGS
 3
 4    SUGAR CANE GROWERS COOPERATIVE OF )
 5    FLORIDA, INC., ROTH FARMS, INC.,  )
 6    and WEDGWORTH FARMS, INC.,        )
 7                  and                 )
 8    FLORIDA SUGAR CANE LEAGUE, INC.,  )
 9    UNITED STATES SUGAR CORPORATION,  )
10    and NEW HOPE SOUTH, INC.,         )
11                  and                 ) CASE NOs.
12    FLORIDA FRUIT AND VEGETABLE       ) 92-3038
13    ASSOCIATION, LEWIS POPE FARMS,    ) 92-3039
14    W.E. SCHLECHTER & SONS, INC., and ) 92-3040
15    HUNDLEY FARMS, INC.,              )
16              Petitioners,            )
17                  v.                  )
18    SOUTH FLORIDA WATER MANAGEMENT    )
19    DISTRICT,                         )
20              Respondent,             )
21                  and                 )
22    MICCOSUKEE TRIBE OF INDIANS OF    )
0002
 1    FLORIDA, the UNITED STATES OF     )
 2    AMERICA, FLORIDA DEPARTMENT       )
 3    OF ENVIRONMENTAL REGULATION, and  )
 4    FLORIDA WILDLIFE FEDERATION,      )
 5              Intervenors.            )
 6             -    -    -    -    -
 7             The deposition of DR. BRUCE L. GARDNER
 8    was taken on Monday, February 1, 1993, commencing
 9    at 12:52 p.m., at the offices of Bossard
10    Associates, Inc., 1023 Fifteenth Street, N.W.,
11    Second Floor, Washington, D.C., before Doreen M.
12    Dotzler, Notary Public.
13
14
15
16
17
18
19
20
21
22
0003
 1                 A P P E A R A N C E S
 2
 3    ON BEHALF OF THE SUGAR CANE GROWERS COOPERATIVE
 4    OF FLORIDA, ROTH FARMS, INC., AND WEDGWORTH
 5    FARMS, INC.:
 6             DONNA H. STINSON, ESQ.
 7             Hoping, Boyd, Green & Sams
 8             Post Office Box 6526
 9             Tallahassee, Florida  32314
10             (904) 222-7500
11
12
13    ON BEHALF OF INTERVENORS:
14             KEITH E. SAXE, ESQ.
15             United States Department of Justice
16             Environment & Natural Resources Division
17             General Litigation Section
18             Post Office Box 663
19             Washington, D.C.  20044
20             (202) 272-4016
21
22    (Index appears following the transcript.)
0004
 1                 P R O C E E D I N G S
 2                 -    -    -    -    -
 3    Whereupon --
 4                 DR. BRUCE L. GARDNER
 5    a witness, called for examination, having been
 6    first duly sworn, was examined and testified as
 7    follows:
 8                      EXAMINATION
 9           BY MS. STINSON:
10      Q.   Would you please state your name for the
11    record.
12      A.   Bruce Gardner.
13      Q.   Where do you work, Mr. Gardner?
14      A.   At the University of Maryland.
15      Q.   What is your position there?
16      A.   I am a professor of agricultural and
17    resource economics.
18      Q.   And how long have you held that position?
19      A.   Since the summer of 1981.
20      Q.   I have your resume, but rather than attach
21    that as an actual exhibit to this deposition,
22    maybe we can identify this by document numbers
0005
 1    and we will just have this for posterity.  Let me
 2    show you what has been given to me as being your
 3    resume.  Is that in fact you and your
 4    background?
 5      A.   Yes.
 6      Q.   Would you read the document number on the
 7    bottom.
 8           MR. SAXE:  Is this the first page?
 9           MS. STINSON:  There is a cover sheet.
10           THE WITNESS:  This number here?
11           BY MS. STINSON:
12      Q.   Yes.
13      A.   DBG0000001.
14      Q.   Et seq.
15      A.   Through 28.
16      Q.   Before I go into some of the publications
17    and your work, can you tell me generally if you
18    have a particular area of specialty within your
19    specialty of agricultural economics?
20      A.   Well, I have done things in almost every
21    area of agricultural economics, which is a
22    specialty of economics, but more than anything
0006
 1    else I have concentrated on agricultural policies
 2    and the analysis of the policies.
 3      Q.   You are aware, I'm sure, that we are here
 4    regarding the so-called Everglades SWIM plan and
 5    the litigation involving that in Florida?
 6      A.   Yes.
 7      Q.   You have been retained by the U.S. Justice
 8    Department to possibly be a witness in that case;
 9    is that your understanding?
10      A.   Yes.
11      Q.   When were you retained?
12      A.   It was in August last year when I first
13    talked to Keith.  I don't remember the date.
14      Q.   August of 1992?
15      A.   Uh-huh.
16      Q.   Have any of the written works you've done,
17    and there are a zillion pages of them, but do any
18    of your publications deal with the sugar
19    industry?
20      A.   Some of them have addressed sugar policy
21    in the context really of the whole range of
22    agricultural policies, though.
0007
 1      Q.   Can you tell me and you are welcome to
 2    look at this if it would help you, which
 3    publications --
 4      A.   Well, I wrote a book.  It is called The
 5    Governing of Agriculture, which discussed sugar
 6    among all of the other commodities.  It was not
 7    focused on sugar.
 8      Q.   But it has some discussion of the sugar
 9    industry?
10      A.   No, it is more in this book I was
11    reviewing a lot of work that had been done on a
12    lot of commodities and I constructed some tables
13    that would show the extent of protection that
14    different industries had and so sugar would have
15    a role in those tables.
16      Q.   And when was that published?
17      A.   1981.
18      Q.   Any other publications?
19      A.   Well, sugar would have been mentioned in a
20    similar way in several of them.  For instance,
21    under Consequences of Policies in the Seventies,
22    again, that was a fairly wide ranging discussion
0008
 1    of agriculture policy and one of those policies
 2    is sugar.
 3      Q.   If you could help me out by citing to
 4    those that would deal with sugar.
 5      A.   Well, again, dealing with is an
 6    overstatement.  But there would have been a
 7    similar kind of discussion of sugar, among other
 8    commodities on the consequences of foreign
 9    policies of the seventies and this article here
10    (indicates).  That is a chapter in a book which
11    is a general survey.
12      Q.   That is U.S. Agricultural Policy?
13      A.   Yes.
14      Q.   Its Economic --
15      A.   Uh-huh.  Would you like me to go through
16    the whole list?
17      Q.   Yes, if you would.
18      A.   That's a general review also.
19      Q.   Agricultural Policy?
20      A.   But I think in that one I concentrated
21    entirely on the grains.
22           This one similarly may have also a little
0009
 1    on sugar.
 2      Q.   For the record that is the Why, How and
 3    Consequences.
 4      A.   And similarly with this Agricultural
 5    Protection in Industrial Countries, that would
 6    cover sugar among other commodities.
 7           This one may have a little bit on sugar,
 8    too.  Farm Commodity Programs as Economic
 9    Transfers.
10      Q.   Okay.
11      A.   And this one also, Causes of Farm
12    Commodity Programs.
13           This paper on International Commodity
14    Grains, which was just a mimeographic report and
15    was never published, but I believe I did have a
16    section on the international sugar agreement.  It
17    doesn't bear on U.S. sugar policy --
18      Q.   But it bears on sugar?
19      A.   It bears on sugar, yes.
20           I'm trying to think of this paper on crop
21    insurance.  I looked at several county programs.
22    Again, I don't believe sugar was one of them.  If
0010
 1    sugar was in there, it would have been sugar
 2    producers who covered them under the U.S. crop
 3    insurance programs.  I can't remember if I ended
 4    up with sugar in any of those sample counties.
 5           I think I mentioned some sugar issues in
 6    "U.S. Farm Policy Implications for the EEC."
 7    That's all.
 8      Q.   Thank you.
 9           MR. SAXE:  May I see that for one moment,
10    please?
11           MS. STINSON:  Sure.
12           BY MS. STINSON:
13      Q.   Dr. Gardner, have you ever testified as an
14    expert witness in any judicial administrative
15    proceeding before?
16      A.   No, I haven't.
17      Q.   I am sure Mr. Saxe has told you about
18    this, but let me just say if you don't understand
19    what I'm asking, please feel free to tell me so.
20    This is not a test.  I will attempt to rephrase
21    the question if you don't understand it.
22           I believe in your resume I noted that you
0011
 1    were at Texas A&M and had edited/coedited a
 2    publication with Dr. Richardson?
 3      A.   Yes.
 4      Q.   Did you become involved in this proceeding
 5    through your friendship with him?
 6      A.   No, no.
 7      Q.   Or working with him?
 8      A.   No.
 9      Q.   What have you been retained to do in this
10    proceeding, as you understand it?
11      A.   Well, it is evolving still.  I think what
12    has been happening is, as I understand it, I am
13    retained as an expert witness to provide input on
14    several aspects, possibly, but it is not clear
15    what exactly to me yet except sugar policy comes
16    up and the trade agreements come up.
17      Q.   Have you reviewed the SWIM plan and the
18    proposals in there?
19      A.   I have seen some documents having to do
20    with it.  I have not reviewed them in depth.
21      Q.   What is your understanding of the action
22    that is proposed and contested in the
0012
 1    litigation?
 2      A.   Again, I have some -- I have been -- I
 3    have heard some discussion of what is happening
 4    and it had to do with phosphates.
 5      Q.   Do you understand the actual project that
 6    is proposed in the SWIM plan that is protested by
 7    petitioners?
 8      A.   You mean the things that have to be done
 9    to --
10      Q.   Clean up the phosphates?
11      A.   Yes.
12      Q.   Yes.  What is your understanding of what
13    is going to be required?
14      A.   Well, as I recall there are several
15    aspects to it but one is the management of
16    groundwater in the area.
17           It seems that there is an issue about
18    the -- setting aside certain areas that water can
19    go into which will contain plants that will use
20    up the phosphates so that the water that leaves
21    those areas will have less phosphates in them.
22    And there is an issue about the financing of the
0013
 1    acquisition of these areas.
 2      Q.   Have you been asked to look at or
 3    determine the regional economic impact of those
 4    actions that are proposed in the SWIM plan?
 5      A.   Well, I have heard the issues discussed,
 6    but I haven't understood that my area of
 7    expertise will be to pass a judgment on them.
 8      Q.   Have you reviewed the report contracted
 9    for by the water management district for
10    evaluating the economic impact of implementing
11    the SWIM plan done by the Hazen and Sawyer
12    report?  Have you reviewed that?
13      A.   I have not reviewed it in depth.  Again I
14    have heard it discussed, but I have not read
15    every word in it.  I have looked through it.
16      Q.   Have you formed any opinions as to the
17    methodology or the reliability of the report?
18      A.   I really haven't.
19      Q.   Are you familiar with the FLIPSIM model
20    for evaluating impact?
21      A.   That is something that I have heard of and
22    when I was at Texas A&M and James Richardson was
0014
 1    working on that model, I had some sense of what
 2    he was doing then.  That was 10 years or more.
 3    So I have not seen detail of the model as it
 4    exists today.
 5      Q.   It is not a model that you've used?
 6      A.   I have not used it, but I have seen the
 7    results of it.  Let's say that I have seen the
 8    consequences or what other people have done using
 9    it.
10      Q.   What other studies can you recall or
11    evaluations/analyses in which FLIPSIM has been
12    used?
13      A.   I don't have any now but when I was at
14    Texas A&M when they were developing the model it
15    was being used to -- let's step back one second
16    and make sure that we are talking about the same
17    thing.  FLIPSIM, that stands for farm level --
18    that is the FL and it is a simulation of what
19    happened to firms over time.  That was being used
20    to look at Texas cotton farms and some work that
21    was going on when I was at Texas to see how many
22    of them would survive 15 years with what
0015
 1    probability.
 2      Q.   Have you seen it used since you have been
 3    away from Texas A&M?
 4      A.   No, I haven't.  I have seen it referred
 5    to, but I have not really looked at the
 6    consequences of using it.
 7      Q.   In the documents produced to me was some
 8    information on GATT and NAFTA.  Are you generally
 9    familiar with those agreements?
10      A.   Of course those agreements have evolved as
11    they have come along and I have been more
12    familiar with some stages when they were being
13    negotiated than others, but generally I am
14    familiar with them.
15      Q.   Have you reviewed those to determine what
16    possible effect they may have on sugar?
17      A.   I have read the NAFTA summaries and the
18    write-ups that the Department of Agriculture has
19    put out on the provisions of the NAFTA and I have
20    given some consideration as to how they would
21    affect commodities, not specifically sugar.  But
22    some of the Department of Agriculture materials
0016
 1    have done some assessment of NAFTA.
 2      Q.   Have you seen analyses of NAFTA done by
 3    sugar interests?
 4      A.   I have seen a couple of short pieces that
 5    I believe it was Mr. Polopolus had in some
 6    University of Florida pamphlets.
 7      Q.   What you have given me as part of the
 8    document production is a document entitled
 9    Preliminary Analysis of the Effects of North
10    America Free Trade Agreement on U.S. Agricultural
11    Commodities which contains a section on effect of
12    NAFTA on the sugar industry.
13      A.   Yes.
14      Q.   Are there other publications of the U.S.
15    Department of Agriculture or anyone else, for
16    that matter, relating to the effect of NAFTA on
17    sugar that you have reviewed?
18      A.   This is the main one.  It may have been
19    mentioned in some general discussions of NAFTA
20    that were put out, but I don't believe that those
21    general discussions get into any commodity
22    specific elements.  That's the main --
0017
 1           MR. SAXE:  Excuse me, Donna.  Dr. Gardner
 2    indicated to me subsequent to his production he
 3    did acquire some general published materials
 4    which are arguably responsive.  These came very
 5    late in the week last week and I'm not sure, you
 6    may want to get into that to determine whether
 7    you are going to want copies of these published
 8    materials because they are not listed on the
 9    curriculum vitae nor were they produced in the
10    previous document production.
11           MS. STINSON:  I appreciate that.
12           BY MS. STINSON:
13      Q.   Can you tell me without having them what
14    these additional publications are?
15      A.   Yes.  They are called the Sugar Situation,
16    An Outlook Report.  The December 1992 issue was
17    in there and a couple of previous ones.
18           And there was a -- I don't know if it is a
19    transcript.  I haven't really looked at it in
20    detail yet, and it might have been a debate
21    between someone from the sugar industry and a man
22    who I worked with at The Department of
0018
 1    Agriculture as it relates to sugar.
 2      Q.   Who is that?
 3      A.   I don't remember who the person from the
 4    sugar industry was.
 5      Q.   No, the person that you worked with.
 6      A.   Oh, Dan Sumner.
 7           MS. STINSON:  Off the record.
 8           (Discussion off the record.)
 9           BY MS. STINSON:
10      Q.   I gather from your discussion earlier that
11    you have never concentrated in any way on the
12    sugar industry in the United States in terms of
13    your previous work?
14      A.   No, I have not concentrated on it except
15    that I suppose the closest I came to
16    concentrating on it was because I was at the
17    Department of Agriculture for a couple of years
18    when we were developing the Farm Bill in 1990
19    principally, somewhat in 1989, I went through
20    educational processes on all of those commodities
21    one at a time so at that time I did get a sense
22    of what the administration was recommending and
0019
 1    the state of the debate let's say on the Hill on
 2    each of the commodities.  And when sugar's time
 3    came up to be discussed, I spent time on sugar.
 4      Q.   Please tell me what your understanding is
 5    of the effect NAFTA will have on the sugar
 6    industry in the United States, and the potential
 7    effects.
 8      A.   Well, first, I think you have to know a
 9    couple of things.  NAFTA has not yet been agreed
10    to so that -- and normally we would have a full
11    draft agreement, but we don't have -- I have not
12    seen all of the details spelled out.  What I have
13    seen are descriptions of the main features that
14    NAFTA will have.  But you have to remember that
15    one of the things with the new administration is
16    that there will be some side agreements on NAFTA
17    so we can't treat it as a completed treaty or
18    completed agreement yet.
19           So I have some tentative notions of what
20    NAFTA would do based on the broad thrust of its
21    provisions as we know them and of course there
22    are some particular ones that are in there for
0020
 1    sugar.
 2      Q.   Okay.
 3      A.   And those will have some particular
 4    effects.
 5      Q.   Tell me what those are.
 6      A.   Again, I don't know that they will all end
 7    up being exactly as they are stated now.
 8      Q.   Given what we know now of NAFTA, obviously
 9    it is speculation to some degree because it
10    hasn't happened yet, but explain to me what the
11    potential effects are, what may happen given the
12    current state of NAFTA.
13           MR. SAXE:  Objection to form.  I want to
14    note for the record that it is not quite clear
15    what we know now about NAFTA.  I think Dr.
16    Gardner indicated he had seen some less than
17    final terms and descriptions of terms, but I'm
18    not sure what you mean by what we know now about
19    NAFTA.
20           BY MS. STINSON:
21      Q.   Well, in answering my question it would be
22    helpful if you would tell me what provisions you
0021
 1    are referring to in terms of talking about what
 2    effect they may have so we are on the same
 3    wavelength.
 4      A.   I would say generally the agreement of
 5    course reduces barriers to trade, with particular
 6    to imports, both for Mexicans, for things that we
 7    send them and on our part for things which come
 8    from Mexico and the question arises of what will
 9    the resultant trade flows be.
10           The general sense that I have is that
11    there will not be large changes in trade flows
12    for just about every commodity.  I think the main
13    ones effected would be more like corn and some of
14    the meats, but even there depending on what is
15    done in Mexico to their domestic policies.
16           So my reading overall is that sugar would
17    not be significantly effected by this agreement
18    one way or the other based on what I know now.
19           One thing that makes it difficult now it
20    is not a matter of just trade agreements, it is
21    what each country does with its policies which is
22    not specified in the agreement.
0022
 1      Q.   Under NAFTA isn't it true that the United
 2    States would reduce tariffs on Mexican sugar
 3    under certain conditions?
 4      A.   That will undoubtedly happen that it will
 5    reduce tariffs.  Although it is hard to know what
 6    the binding restraint on U.S. sugar imports is.
 7      Q.   Can you explain that to me.
 8      A.   The tricky thing about NAFTA in general is
 9    that we are talking about bilateral trade between
10    the U.S. and Mexico.  And we want to know say for
11    any commodity how would the results of the change
12    in bilateral trade affect one of our domestic
13    industries, like sugar.
14           You also have to know what happens to
15    trade in that same commodity between the United
16    States and all of the other countries in the
17    world so in the case of sugar, for example, we
18    have a quota and if it should happen that Mexico
19    sent more sugar, which isn't quite clear to me
20    that it will, but if it were to happen, you would
21    see some offset in the quota of imports from
22    other countries and what really is going to make
0023
 1    a difference to the U.S. is what is the total
 2    imports into the U.S. as opposed to just Mexico
 3    and so that is a complicating element.
 4      Q.   Have you done any study to determine
 5    actually what those may be based on the state of
 6    sugar production in other countries?
 7           MR. SAXE:  Objection to form.  I think it
 8    may be a little unclear in what sense one does
 9    studies about what future actions might or might
10    not be.
11           BY MS. STINSON:
12      Q.   You can answer my question if you
13    understand it.  If you don't understand it, I can
14    try again.
15      A.   Well, you are saying if I made
16    projections?
17      Q.   Yes.
18      A.   I have not done that.
19      Q.   Have you gathered information other than
20    the publications you've mentioned to me and
21    produced to me regarding Mexico's sugar industry
22    and the possible future for that as it would
0024
 1    affect the U.S. sugar industry?
 2      A.   What I have is what you have although
 3    those documents that Keith mentioned I just
 4    received about the sugar situation from USDA do
 5    address Mexico's prospects and other countries,
 6    too.  But I don't have any other documents.
 7      Q.   If there are, as I understand, some fairly
 8    significant changes in reducing tariffs
 9    between -- on sugar from Mexico and this is not
10    my area of expertise, so help me understand it --
11    why is it that you don't think that there will be
12    much impact?  Why are these changes being made if
13    there will not be an effect?
14      A.   In general, not only for sugar, for other
15    commodities also, the reason that you don't get a
16    lot of effect for the NAFTA agreement with
17    respect to Mexico, protection is already fairly
18    low.  The significant protection, and this is
19    true in peanuts and cotton, and it is true in the
20    commodities where we have protection, it is a
21    generic kind of protection that goes across all
22    countries and is part of a domestic program that
0025
 1    we have.  Of course one of the things that will
 2    have to be worked out in NAFTA that I don't know
 3    the details of is how will our domestic policies
 4    change as a result of NAFTA and how will the
 5    Mexicans change theirs particularly with respect
 6    to corn being a big issue.
 7      Q.   What domestic policies are you speaking
 8    of?
 9      A.   Well, if there were going to be one for us
10    it would be the sugar program, but as I
11    understand it we don't have to change our sugar
12    program because of NAFTA.
13      Q.   You mean that we are not required to by
14    NAFTA?
15      A.   Right.
16      Q.   Again, pardon me for seeming ignorant,
17    what is the interrelationship between the
18    domestic program and NAFTA and how would changing
19    the domestic sugar program affect the effects
20    from NAFTA?
21      A.   Well, there is no direct link, but we have
22    a sugar program that keeps the price in the
0026
 1    United States higher than the general world price
 2    of sugar.  And the only way that can be done is
 3    through limiting the quantity of imports that
 4    come into the United States.
 5           The way that could conceivably fit into
 6    NAFTA is NAFTA would somehow force us to bring
 7    more sugar into the United States than we would
 8    otherwise have to and so that would be the
 9    potential way.  But the reason that it seems to
10    me unlikely that any consequence will come of
11    that is, as I understand NAFTA as it is in place
12    now, our domestic sugar program will stay in
13    place very much as it is.
14      Q.   Doesn't NAFTA lift the restrictions under
15    certain circumstances of sugar being imported
16    from Mexico?
17      A.   It does.
18      Q.   So wouldn't that then affect the ability
19    to keep the prices higher through the domestic
20    program?
21      A.   The reason I would say that it is unlikely
22    is that first of all, we already have sugar
0027
 1    imports from other places and what one has to do
 2    to keep a sugar program is work with the total
 3    volume of imports so that even if the worst case
 4    from the sugar industry came to pass, which I
 5    don't think is likely, but even if it did, there
 6    would be some adjustments in the program.  It
 7    would affect the operation of the sugar program,
 8    but I would say not the results.
 9      Q.   The U.S. would get more sugar from Mexico
10    and less from other countries, is that what you
11    are telling me?
12      A.   That's a possibility.  Again, I would not
13    expect it to happen from what I have seen so
14    far.
15      Q.   Why is that?
16      A.   Because those circumstances that NAFTA has
17    that could allow that to happen to me don't seem
18    likely to happen which has to do with the net
19    production position of Mexico.
20      Q.   That Mexico would become a net exporter of
21    sugar, is that the circumstance you are referring
22    to?
0028
 1      A.   Yes, under the provisions of NAFTA it
 2    isn't just their becoming an exporter, but they
 3    would have to become a net exporter through a set
 4    of conditions that would be very much like they
 5    are having a comparative advantage in sugar.
 6    There are a number of safeguards in the NAFTA
 7    which would prevent them from using their
 8    policies to create a surplus.
 9      Q.   Do you mean by that that they would
10    actually have to grow it, they couldn't import it
11    from somebody else and then turn around and
12    export it?
13      A.   Yes, and some countries will subsidize
14    production of a commodity.
15      Q.   Is that prohibited by NAFTA?
16      A.   I am not sure that it is prohibited in
17    that language exactly, but it is clear to me from
18    looking at the discussions of NAFTA that every
19    attempt is made to prevent the Mexicans from
20    becoming exporters of sugar as a result of their
21    policies.  It seems to me if there were a case
22    that emerged as of course Congress and others
0029
 1    will be discussing about NAFTA down the road, if
 2    it looked like there were a loophole of some kind
 3    as the debate proceeds on that, then there will
 4    be steps taken to close that loophole, I would
 5    guess.
 6           Again, I don't want to speculate how an
 7    international negotiation would go, but there is
 8    a general sense that the countries are agreeing
 9    to have free trade but with a sense that we don't
10    want to damage each other's industries
11    unnecessarily.
12      Q.   You indicated a moment ago that you
13    believe that the worst case scenario is the
14    removal of price supports from domestic sugar?
15           MR. SAXE:  Objection.  I don't know that
16    Dr. Gardner characterized that as his worst case
17    scenario, did he?
18           BY MS. STINSON:
19      Q.   I think you were talking about the worst
20    case scenario of the sugar industry?
21      A.   I think I said from the point of view from
22    the industry.
0030
 1      Q.   But that worst case scenario is what, the
 2    removal of price supports, as you understand it?
 3      A.   No, I was not thinking about removal of
 4    price supports.
 5      Q.   What were you thinking about?
 6      A.   If you -- suppose you had a scenario in
 7    which there were possibilities for the Mexicans
 8    to become sugar exporters for two successive
 9    years, allow more sugar in, that's what I meant
10    by the worst case scenario.
11      Q.   When you were at the Department of
12    Agriculture working on I believe the Farm Bill
13    in '79 --
14      A.   No, 1990.
15      Q.   -- 1989-1990, I mean, was there discussion
16    then when you were learning about sugar of
17    removing price supports and subsidies for sugar?
18      A.   There were a number of options discussed,
19    but I don't believe that was ever one of them.
20           (Interruption at door.)
21           MR. SAXE:  Would you read where we left
22    off.
0031
 1           (The record was read as requested.)
 2           MR. SAXE:  Thank you.
 3           BY MS. STINSON:
 4      Q.   Was not the continuation of the price
 5    support system, the various components of it, for
 6    the sugar industry highly controversial at the
 7    time the Farm Bill was being developed in
 8    1989-1990?
 9      A.   There were a number of controversies.  I
10    don't recall that sugar really was one of them
11    that was contentious.  I don't believe that it
12    was.  There were some discussions, as I recall
13    about a 16 cent versus 18 cent level.  That was
14    about the range of discussion.
15      Q.   To analyze the effect of NAFTA on the
16    sugar industry, what additional research or
17    gathering of information do you feel that you
18    would need to do to make a projection of some
19    sort?
20      A.   Well, one could do more of what the
21    Department of Agriculture has already done in
22    their studies of the prospects for Mexico and the
0032
 1    U.S.
 2      Q.   What do you mean by that?
 3      A.   Well, what they have done already is get
 4    some indicators of cost of production in the two
 5    countries, consumption trends, acreage trends,
 6    and those are the kinds of things that you would
 7    have to work with.  The difficulty here is we are
 8    talking about what will happen seven, eight,
 9    nine, ten years down the road so it is not
10    something that you can forecast away the way our
11    crop forecasters do with this year's orange
12    crop.  It is much more conjectural.
13      Q.   Do you have access or have you obtained
14    the information the Department of Agriculture has
15    already put together on cost of production and
16    acreage trends?
17      A.   Only what is in the publications that have
18    been sent.
19      Q.   Do you plan to try to obtain additional
20    information?
21           MR. SAXE:  Objection to form, counsel.  If
22    you are inquiring into what the United States
0033
 1    strategy will be in developing the case or
 2    testimony, I think that is an improper inquiry.
 3    Could you maybe rephrase the question.
 4           MS. STINSON:  I will try.
 5           BY MS. STINSON:
 6      Q.   You indicated, I believe, that one could
 7    obtain additional information on the cost of
 8    production, acreage trends, et cetera, to do a
 9    projection or an analysis of the effect of NAFTA
10    on the sugar industry.  Do you propose to do
11    that?
12           MR. SAXE:  Objection, again.  I think that
13    is the same question.  If we read back Dr.
14    Gardner's answer, I think he indicated that USDA
15    has already done a significant amount of that
16    material and Dr. Gardner indicated that he
17    supposed that kind of analysis was what could be
18    done if one wanted to proceed further.  So I
19    think that answers your question.
20           MS. STINSON:  Well, no.
21           BY MS. STINSON:
22      Q.   Have you at this point sought additional
0034
 1    information beyond that which is obtainable from
 2    the Department of Agriculture?
 3      A.   No, I haven't.
 4      Q.   Do you have information on the actual
 5    amounts of sugar being imported to the U.S. from
 6    Mexico and other foreign countries?
 7      A.   There is a publication called Foreign
 8    Agricultural Trade of the United States, which
 9    lists all of our imports of most of the main
10    tariff lines from every country.
11      Q.   Is this like a reference manual used by
12    folks?
13      A.   It is a monthly -- no, quarterly series.
14    They put some things out monthly, some things
15    quarterly and then they have an annual summary by
16    fiscal year and by calendar year.  That's really
17    the source of detailed import data for the past
18    that -- but that doesn't get you a long ways
19    out.  That's a document that I haven't asked for
20    and haven't looked at, but it is in every
21    library.
22      Q.   Have you reviewed the transcript you
0035
 1    indicated you had of the debate or whatever it
 2    was between somebody from the sugar industry and
 3    somebody from the Department of Agriculture?
 4      A.   I read over it.  I'm not sure that it was
 5    a transcript either.  It might have been two
 6    separate pieces of paper that were just put down
 7    side by side.  Whether that is a transcript of a
 8    debate or a debate in words, if you will, without
 9    interchange, I'm not sure.
10           MR. SAXE:  Off the record.
11           (Discussion off the record.)
12           MR. SAXE:  Donna, Dr. Gardner does have
13    copies here that I have reviewed briefly of late
14    received publications that might be responsive to
15    the document request.  In lieu of our discussion
16    earlier about providing you a list of these
17    documents and then having you select from it, we
18    would agree to just let you review these
19    documents now and you can indicate whether you
20    want any of those produced during the deposition
21    today and will do that after we conclude the
22    deposition.
0036
 1           MS. STINSON:  We can do like we did for
 2    Dr. Boggess and copy the first page.
 3           MR. SAXE:  If you decide that you want
 4    copies of these documents, that would be fine.
 5           BY MS. STINSON:
 6      Q.   Of documents that you've given me there is
 7    one that just says NAFTA Opposing Views and has a
 8    view, I take it, by someone from the sugar
 9    industry and a view of somebody from agriculture
10    which gives opinions of what the effect of NAFTA
11    will be; is that correct?
12      A.   That's my understanding.  I just read that
13    quickly.  That is why I wasn't sure if it was a
14    debate or what it was.
15      Q.   There are two documents from what looks
16    like Agriculture Outlook Conference, Outlook
17     '93.  One is U.S. sugar production and
18    processing statistics.  Do you know, is that
19    basically just graphs and tables without any
20    commentary of what the effect --
21      A.   I don't know.
22      Q.   You don't know.
0037
 1      A.   No, no text.
 2      Q.   Have you reviewed the Outlook '93
 3    publication, U.S. Sweeteners Market Recent
 4    Developments?
 5      A.   No, I haven't read it yet.
 6      Q.   You indicated that you read briefly
 7    through the opposing views publication.  Have you
 8    reviewed it in enough detail to form an opinion
 9    as to basically which side of the commentary you
10    agree with or do a critique of either side?
11      A.   Well, I couldn't do a detailed critique,
12    obviously, but from what I have understood from
13    my prior reading of what is in the NAFTA, it
14    sounds to me that Mr. Sumner is more on track
15    than the sugar industry representative.
16      Q.   Also in the documents that were provided
17    to me is a letter and some information regarding
18    phosphorus reduction credits to be used as a
19    possible alternative or supplement to the
20    proposals in the SWIM plan.  Are you familiar
21    with that proposal?
22      A.   Very vaguely.
0038
 1      Q.   Have you been asked to analyze the use of
 2    some form of market credits as a method for
 3    reducing phosphorus run off?
 4      A.   No, I haven't.
 5           MS. STINSON:  Off the record.
 6           (A brief recess was taken.)
 7           MR. SAXE:  Donna, these are duplicate
 8    copies of the recently produced set of documents
 9    from last Friday down in Tallahassee.
10           (Pause in the proceedings.)
11           BY MS. STINSON:
12      Q.   Dr. Gardner, in reviewing the debate
13    between the U.S. sugar industry and the
14    Department of Agriculture it appears that there
15    is a difference of opinion as to what effect the
16    elimination of tariffs will have on the extent of
17    import or export between the two countries; is
18    that a fair characterization of your reading of
19    this?
20      A.   Well, it is a little more complicated than
21    that in that the issue is not just the removal of
22    tariffs, it is the set of rules that would enter
0039
 1    into play under NAFTA.
 2      Q.   Okay.  Correct me if I'm wrong, but as I
 3    read this briefly, as I understand it the
 4    representative of the Department of Agriculture
 5    believes that the various provisions of NAFTA may
 6    or could result in more sugar being sold to
 7    Mexico rather than the other way around?  Is that
 8    your understanding?
 9      A.   Well, you have read that more recently
10    than I have, but I do recall some such
11    statement.
12      Q.   You do?
13      A.   But I would have to look at it again to be
14    sure.
15      Q.   Why don't you do that.  You indicated that
16    you believe that the Department of Agriculture
17    side was more on point and I would like to know
18    what particulars you believe to be true.
19           MR. SAXE:  Dr. Gardner, why don't you take
20    a moment to read that through.
21           MS. STINSON:  Sure.
22           (Pause in the proceedings.)
0040
 1           BY MS. STINSON:
 2      Q.   Can you answer my question after having
 3    looked through the report?
 4      A.   Yes, in a general sense.  Of course, if
 5    you read the two sides here, it is not so much
 6    that one is saying A and the other is saying B,
 7    or not A, contradicting what the other one says,
 8    it is that they are focusing on different aspects
 9    of what will happen under NAFTA.  I will say that
10    the USDA person is giving more the general thrust
11    of what is expected to be achieved with the NAFTA
12    from both the U.S. and the Mexican point of
13    view.
14           For example, he puts fairly heavy emphasis
15    on the idea that it is going to be good for real
16    income growth in Mexico and, therefore, you will
17    see an increased consumption.  And the level of
18    income that Mexico is at, that sort of increase
19    in the standard of living, usually in fact all of
20    the cases that we have evidences for, sugar is
21    one of those goods that responds to income
22    growth.  That is true across the board, and it is
0041
 1    one of the things that makes free trade
 2    agreements generally good for the countries which
 3    engage in them.
 4           On the other hand, the sugar industry
 5    representative is basically thinking, as
 6    certainly is his job, what could go wrong from
 7    the point of the sugar industry.  And if you
 8    imagine the worst possible set of circumstances
 9    from the point of view of the sugar industry
10    happening, that's a scenario that that person
11    lays out.
12           The reason that I say that USDA is more on
13    track is that I think that they are not thinking
14    about the worst possible case for a particular
15    industry even if it has a very low probability of
16    occurring, which is what I would say are the
17    chances of the scenario that the sugar industry
18    representative is talking about.  It could
19    happen, that Mexico would become a very, very
20    large net exporter say, in two successive years,
21    but I would say that that is quite unlikely.
22           But, I think that is something that --
0042
 1    that is an issue that can be looked at more and
 2    there is possibly more evidence which can be
 3    brought to bear on it.
 4           But the second thing, if Mexico did become
 5    a sugar exporter, it does not necessarily cause
 6    any substantial harm to the sugar program because
 7    the sugar program has features in it that adjust
 8    for different countries sending more or less to
 9    the U.S. as we talked about before.  The
10    importation under the sugar regime can be
11    reallocated from one country to another.
12           It is not sufficient for this agreement to
13    create a problem for sugar that Mexico becomes an
14    exporter, even of course if Mexico hasn't been an
15    exporter, but even if they did, there is room for
16    adjustment in terms of the sugar program.
17           So I guess the reason that I say my
18    reaction is that USDA is more on the right track
19    is that in the sugar industry case they are
20    taking this possibility of what I would say is
21    fairly limited problems and starting off by
22    saying NAFTA is a disaster for the sugar
0043
 1    industry, something like that is the quotation
 2    that I read at the beginning and it seems to me
 3    that is just a case that you can't make.
 4      Q.   What leads you to say that you believe it
 5    could be quite unlikely that Mexico would become
 6    a net exporter of sugar?
 7      A.   Just based on the historical record and
 8    again although this is something that I haven't
 9    looked at the latest elements, the supply and
10    demand internally in the two countries and the
11    cost of production.  But as I understand what I
12    have seen.  The U.S. is quite competitive with
13    sugar and Mexico and is getting more
14    competitive.
15      Q.   In terms of cost of production?
16      A.   Yes.  In fact Florida is relatively
17    competitive in the U.S. industry.
18           So the overview is that it just strikes me
19    that the industry spokesman which is taking a
20    view which is natural for him to take, he is
21    worried for problems in his industry, but he is
22    overstating the problem.
0044
 1      Q.   Let me ask you about some other documents
 2    that you have produced.  One is entitled Comments
 3    of Ron Luke regarding basically the Hazen and
 4    Sawyer report on which there are some handwritten
 5    notes.  Are those your notes?
 6      A.   That's my handwriting, all right.
 7      Q.   Can you read them?
 8      A.   Yes, I can read them.
 9      Q.   Let me ask you, from where did you get
10    this document?
11      A.   I must have gotten this at a meeting in
12    Keith Saxe's office because that's when I made
13    these comments, and -- what I wrote on here is
14    not about the Luke effort.  It was on the top of
15    a pile of papers that I had when I was listening
16    to a discussion when I made some notes.
17      Q.   Have you reviewed the Luke paper?
18      A.   No, I haven't.
19      Q.   I guess that ends that.
20           Have you reviewed the article on sugar and
21    the North American free trade agreement by
22    Polopolus and Alvarez?
0045
 1      A.   There are several pieces there.  There are
 2    several short ones and I have looked through all
 3    of them briefly and read a few paragraphs which
 4    seemed to me -- I see that I checked one here
 5    that I noted when I read through it.
 6      Q.   The check you pointed out to me is next to
 7    a sentence that says, "In a real slipup by the
 8    United States negotiators Mexico will be
 9    permitted an unlimited sugar quota in the U.S.
10    market if they become net exporter for two
11    successive years following the sixth year of the
12    agreement."
13           Can you tell me what it is about that
14    sentence which attracted your attention, whether
15    you agree or disagree?
16      A.   I disagree.  I think that was a very
17    pointed statement of a slipup where there was no
18    slipup.
19      Q.   The last sentence of that article states,
20    "While there are various safeguards and slow
21    down to the full impact of the agreement, it is
22    certain that Florida agriculture will experience
0046
 1    adverse economic situations for sugar among other
 2    commodities."  You have the word "sugar" circled
 3    with a little question mark by it.  Why is that?
 4      A.   Because I was not certain at all that
 5    sugar would have trouble.
 6      Q.   Have you reviewed or analyzed -- strike
 7    that.
 8           The last paper in here has to do with
 9    subsidies to the sugar industry, primarily as I
10    understand it.
11           Have you been asked to look at the issue
12    of the amount of subsidies to the sugar industry
13    in Florida?
14           MR. SAXE:  May I see the article?
15           (Pause in the proceedings.)
16           THE WITNESS:  I haven't been asked
17    anything very specific.
18           BY MS. STINSON:
19      Q.   Have you looked at the issue of subsidies
20    to the sugar industry in Florida?
21      A.   You remember when we went through the
22    curriculum vitae, I have looked at sugar
0047
 1    subsidies and industries and I have looked at
 2    sugar in that context with all of the other
 3    commodities.  I haven't done separate studies of
 4    sugar.  I have mostly used what I saw in some
 5    literature that is referred to in those papers.
 6    Not those papers, but ones that are in my
 7    curriculum vitae.  I sort of used those results.
 8    But I wouldn't say that I have any sort of
 9    assessment of my own and the extent of protection
10    of sugar.
11      Q.   In this last article let me ask you about
12    some handwritten notes.  I presume that they are
13    not and if they are not, please tell me.  On a
14    page summary of estimated annual subsidies you
15    have a figure of 878 circled with a comment by
16    it.  Can you tell me what the comment is and what
17    you meant?
18      A.   I don't remember.  This was done a long
19    time ago.  I'm pretty sure I was asking how this
20    $878 fits in the $53 net return above which must
21    appear somewhere else in the paper.  So what I
22    was asking about to myself and I don't remember
0048
 1    if I asked anyone else, but what was the
 2    relationship between this 878 and that 53.
 3      Q.   Also you have here a copy of the final
 4    report issued by Hazen and Sawyer which I learned
 5    the other day is actually not the final report,
 6    but it contains what I presume are your
 7    handwritten comments on the front.  Are those
 8    comments related to that document or was this the
 9    case of a handy sheet of paper?
10      A.   Yes, these are generic comments.  I see
11    that I have the names here of two people at the
12    Economic Research Service.  These are some
13    instructions, just on the business end of our
14    cooperation, what I would have to do.  It has
15    nothing to do with this paper.
16      Q.   Given that those were taken in a meeting
17    with counsel I will not pursue that.  I presume
18    that those are attorney/client privilege if they
19    are not related to his review of that document.
20      A.   No, they are not.
21      Q.   Have you been in meetings besides meetings
22    with counsel, with other economists working on
0049
 1    this issue with you, or with the water management
 2    district or have you attended any funding council
 3    meetings in Florida?
 4      A.   No, the only meetings have been with
 5    Keith.
 6      Q.   Have you discussed the --
 7           MR. SAXE:  Could you reread the previous
 8    question, please.
 9           (The record was read as requested.)
10           MR. SAXE:  Are you asking whether Dr.
11    Gardner has been in meetings that included
12    counsel and other economists?
13           MS. STINSON:  No, apart from meetings
14    where counsel was present.
15           MR. SAXE:  Thank you.
16           BY MS. STINSON:
17      Q.   Have you spoken to other economists who
18    were working on this matter for the U.S. Justice
19    Department, such as professors at Texas A&M?
20      A.   Yes, I have spoken to them.
21      Q.   What has been the substance of those
22    discussions?
0050
 1      A.   I don't remember that there has been any
 2    real substance to them.  It has been -- I talked
 3    to Ron Lacewell who is one of these other people
 4    last week and the gist of it was he was telling
 5    me about the boxes that he had packed up to send
 6    to Keith of various materials.  I don't think
 7    that we talked anything of substance about the
 8    case.
 9      Q.   Was there anyone else that you have spoken
10    to?
11      A.   Again, I have spoken to Lonnie Jones, but
12    we did not go over any of the pros and cons of
13    what is in any of these papers.
14      Q.   Did you already know Lacewell and Jones
15    prior to this proceeding?
16      A.   Yes.
17      Q.   Have you reviewed analyses of the economic
18    impact or analysis of the Hazen and Sawyer
19    analysis of economic impact done by Dr. Populous
20    or Richardson?
21      A.   If it is not in those Florida state items,
22    I haven't seen it.  I don't believe that they
0051
 1    mention any of this.  That was more generic
 2    material about sugar in those University of
 3    Florida pamphlets.  That's the only thing with
 4    Populous or Richardson.
 5      Q.   In discussing NAFTA earlier you indicated
 6    some hesitancy because it was still preliminary
 7    at this time.  Do you know whether there is a
 8    time frame for final approval?
 9      A.   I don't know the details.  For one thing,
10    NAFTA was to some extent a political issue in the
11    campaign and Governor Clinton at the time said
12    that he would be looking at parts of the NAFTA
13    agreement and perhaps negotiating side
14    agreements.
15           I don't believe that there has been any
16    timetable announced for doing that, but I think
17    that the intention is still there to do that.
18      Q.   There is no time frame within NAFTA itself
19    within which the U.S. must act to ratify the
20    agreement?
21      A.   Not that I know of.  But there are time
22    frames involved.  I just don't know the details
0052
 1    of them.  But there was a signing at some point,
 2    in December, I believe, that triggers some time
 3    path of events.
 4      Q.   But you don't know the details of it?
 5      A.   I don't know the details of it and I don't
 6    know that they are actually irrevocable, that you
 7    couldn't have amendments to change them.
 8           MS. STINSON:  I don't have any other
 9    questions.
10           MR. SAXE:  May I take a look at that top
11    document, please?
12           (Pause in the proceedings.)
13           MR. SAXE:  I have no questions at this
14    time.
15           (Whereupon, at 2:51 p.m., the deposition
16    was concluded.)
17                    -    -    -    -    -
18
19
20
21
22
0053
 1    DISTRICT OF COLUMBIA, to wit:
 2             I, Doreen M. Dotzler, before whom the
 3    foregoing deposition was taken, do hereby certify
 4    that the within-named witness personally appeared
 5    before me at the time and place herein set out,
 6    and after having been duly sworn by me, according
 7    to law, was examined by counsel.
 8             I further certify that the examination
 9    was recorded stenographically by me and this
10    transcript is a true record of the proceedings.
11             I further certify that I am not of
12    counsel to any party, nor an employee of counsel,
13    nor related to any party, nor in any way
14    interested in the outcome of this action.
15             As witness my hand and notarial seal
16    this ________ day of __________________, 1993.
17
18
19                    ___________________________
20                         DOREEN M. DOTZLER
21                           Notary Public
22    MY COMMISSION EXPIRES:    4/14/97
0054
 1                       I N D E X
 2           DEPOSITION OF DR. BRUCE L. GARDNER
 3                   FEBRUARY 1, 1993
 4
 5    EXAMINATION BY:           PAGE
 6    MS. STINSON                 4
 7
 8
 9
10    EXHIBITS:       PAGE MARKED
11    NONE
12
13
14
15
16
17
18
19
20
21
22
0055
 1                  CERTIFICATE OF DEPONENT
 2             I hereby certify that I have read and
 3    examined the foregoing transcript, and the same
 4    is a true and accurate record of the testimony
 5    given by me.
 6             Any additions or corrections that I feel
 7    are necessary, I will attach on a separate sheet
 8    of paper to the original transcript.
 9
10                         _________________________
11                            DR. BRUCE L. GARDNER
12             I hereby certify that the individual
13    representing himself/herself to be the
14    above-named individual, appeared before me this
15    _____________ day of ______________, 1993, and
16    executed the above certificate in my presence.
17
18                         __________________________
19                         NOTARY PUBLIC IN AND FOR
20                         __________________________
21    MY COMMISSION EXPIRES:
22    __________________________
0056
 1    WITNESS:  DR. BRUCE L. GARDNER
 2    DATE:  February 1, 1993
 3    CASE:  Sugar Cane vs. South Florida Water
 4    Please note any errors and the corrections
 5    thereof on this errata sheet.  The rules require
 6    a reason for any change or correction.  It may be
 7    general, such as "To correct stenographic error,"
 8    or "To clarify the record," or "To conform with
 9    the facts."
10    PAGE LINE  CORRECTION     REASON FOR CHANGE
11
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