81 1 STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS 2 SUGAR CANE GROWERS COOPERATIVE OF) 3 FLORIDA, INC., ROTH FARMS, INC., ) and WEDGWORTH FARMS, INC., ) 4 ) and ) 5 ) FLORIDA SUGAR CANE LEAGUE, INC., ) 6 UNITED STATES SUGAR CORPORATION ) and NEW HOPE SOUTH, INC., ) 7 ) and ) 8 ) FLORIDA FRUIT AND VEGETABLE ) 9 ASSOCIATION, LEWIS POPE FARMS ) W.E. SCHLECHTER & SONS, INC., and) 10 HUNDLEY FARMS, INC., ) ) 11 Petitioners, ) ) 12 v. ) ) 13 SOUTH FLORIDA WATER MANAGEMENT ) DISTRICT, ) 14 ) Respondent, ) 15 ) and ) 16 ) MICCOSUKEE TRIBE OF INDIANS OF ) 17 FLORIDA, the UNITED STATES OF ) AMERICA, FLORIDA DEPARTMENT ) 18 OF ENVIRONMENTAL REGULATION, and ) FLORIDA WILDLIFE FEDERATION, ) 19 ) Intervenors. ) 20 21 ---------------------------------------------------- ORAL DEPOSITION OF RONALD D. LACEWELL, Ph.D. 22 VOLUME II TAKEN ON MARCH 2, 1993 23 ---------------------------------------------------- 24 25 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 82 1 A P P E A R A N C E S: 2 MS. DONNA H. STINSON Hopping, Boyd, Green & Sams 3 123 South Calhoun Street P. O. Box 6526 4 Tallahasee, Florida 32301 5 COUNSEL FOR SUGAR CANE GROWERS COOPERATIVE OF FLORIDA, ET AL. 6 7 8 MR. RICK J. BURGESS Peeples, Earl & Blank 9 One Biscayne Tower Suite 3636 10 Two South Biscayne Boulevard Miami, Florida 33131 11 COUNSEL FOR FLORIDA SUGAR CANE 12 LEAGUE, INC. 13 14 MR. KEITH E. SAXE United States Department of Justice 15 Environmental & Natural Resources Division General Litigation Section 16 601 Pennsylvania Avenue NW Room 879 17 Washington, D.C. 20004 18 COUNSEL FOR UNITED STATES OF AMERICA 19 20 ALSO PRESENT: LONNIE L. JONES, Ph.D 21 TEOFILO OZUNA, Ph.D. 22 23 24 25 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 83 1 T A B L E O F C O N T E N T S 2 PAGE 3 AGREEMENTS OF COUNSEL. . . . . . . . . . . . . 85 4 EXAMINATION OF RONALD D. LACEWELL, Ph.D., VOLUME II 5 BY MS. STINSON . . . . . . . . . . . . . . 88 6 BY MR. BURGESS . . . . . . . . . . . . . . 129 7 BY MR. SAXE . . . . . . . . . . . . . . . 288 8 RE-EXAMINATION 9 BY MS. STINSON . . . . . . . . . . . . . . 173 10 BY MR. BURGESS . . . . . . . . . . . . . . 229 11 WITNESS' SIGNATURE PAGE. . . . . . . . . . . . 290 12 CORRECTION SHEET . . . . . . . . . . . . . . . 291 13 REPORTER'S CERTIFICATE . . . . . . . . . . . . 293 14 15 16 17 18 19 20 21 22 23 24 25 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 84 1 E X H I B I T S 2 NO. DESCRIPTION PAGE 3 1 Memorandum to G. Johns from R. Lacewell dtd 5/21/92 . . . . . . . . . . . . . . 36 4 5 2 Memorandum to G. Johns from R. Lacewell, L. Jones and T. Ozuna dtd 6/3/92 . . . . 37 6 3 Letter to G. Johns from Peterson Consulting 7 dtd 7/31/92 . . . . . . . . . . . . . . 47 8 4 Handwritten Notes - 20-Year Analysis . . 59 9 5 Handwritten Notes . . . . . . . . . . . 70 10 6 Memorandum to K. Saxe from L. Jones dtd 10/23/92 . . . . . . . . . . . . . . 90 11 7 Memorandum to K. Saxe from L. Jones and 12 R. Lacewell dtd 8/28/92 . . . . . . . . 91 13 8 Memorandum to K. Saxe from L. Jones dtd 8/4/92 . . . . . . . . . . . . . . . 102 14 8-A Memorandum to K. Saxe from L. Jones. . . 15 9 Handwritten Notes to S. Ponzoli . . . . 112 16 10 Fax to S. Ponzoli dtd 1/22/93 . . . . . 112 17 11 Florida Sugar Cane League Summary of 18 Hazen & Sawyer's Potential Economic Impacts Analysis . . . . . . . . . . . . 164 19 12 Economic Effects of the SWIM Plan on 20 Sugarcane Production in the Everglades Agricultural Area of Florida . . . . . . 174 21 13 Memorandum to K. Saxe from R. Lacewell 22 dtd 6/16/92. . . . . . . . . . . . . . . 284 23 14 Letter to R. Rosenberg from I. Hirschhorn dtd 5/21/92 . . . . . . . . . . . . . . 24 25 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 85 1 E X H I B I T S 2 NO. DESCRIPTION PAGE 3 15 Florida Sugar Cane League Summary of Hazen & Sawyer's Potential . . . . . . . 4 16 Notes . . . . . . . . . . . . . . . . . 5 17 Letter to G. Johns from L. Jones . . . . 6 18 Agricultural Property Tax Assessment in 7 the EAA . . . . . . . . . . . . . . . . 8 19 Review of World Price Situation. . . . . 9 20 Review of World Price Situation. . . . . 10 21 Letter to G. Johns to Peterson Consulting dtd 7/31/92 . . . . . . . . . . . . . . 11 22 Debt . . . . . . . . . . . . . . . . . . 12 23 The Validity of Benefits Transfers: 13 The Case of the Florida Everglades . . . 14 24 Issues Related to the Profitability of Farming in the EAA Draft 6/15/92. . . . . 15 25 Memorandum to K. Saxe from T. Ozuna 16 dtd 7/30/92 . . . . . . . . . . . . . . . 17 18 19 20 21 22 23 24 25 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 86 1 A G R E E M E N T S 2 DEPOSITION AND ANSWERS of RONALD D. LACEWELL, 3 Ph.D., VOLUME II, who resides in Bryan, Brazos 4 County, Texas, taken herein by Counsel for 5 PETITIONERS, before Lori A. Belvin, a Certified 6 Shorthand Reporter and Notary Public in and for the 7 State of Texas, on March 2, 1993, between the hours 8 of 8:30 A.M. to 5:30 P.M. at the Hilton Hotel, Board 9 Room, located at 801 University Drive East, College 10 Station, Brazos County, Texas, pursuant to NOTICE 11 and the following stipulations and agreements: 12 IT WAS AGREED by and between counsel for the 13 Petitioners and Respondent, in the above-numbered 14 and styled cause, that all formalities specifically 15 waived and that the oral deposition of 16 RONALD D. LACEWELL, Ph.D., VOLUME II, may be taken 17 herein forthwith before Lori A. Belvin, a Certified 18 Shorthand Reporter and Notary Public in and for the 19 State of Texas, said deposition being taken with the 20 same force and effect as though all the requirements 21 of the statutes and rules had been fully complied 22 with. 23 IT WAS FURTHER AGREED that no objections need be 24 made by any party at the time of taking said 25 deposition, except objections as to the form of the PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 87 1 question or the responsiveness of the answer, which 2 if not made during the deposition are waived; but if 3 and when said deposition, or any portion thereof, is 4 offered in evidence on the trial of this cause by 5 any party hereto, it shall be subject to any and all 6 other legal objections, such objections to be made 7 at the time of the tender, the same as though the 8 witness were on the stand personally testifying. 9 IT WAS FURTHER AGREED that the witness shall 10 sign the deposition transcript before any notary 11 public or official authorized to administer oaths; 12 and, at such time, the witness has the privilege of 13 reading over said transcript and making any 14 corrections that he finds to be necessary such 15 corrections to be made in accordance with the Rules 16 of Civil Procedure. 17 IT WAS FURTHER AGREED that in the event the 18 original deposition transcript is not signed by the 19 witness within 20 days of receipt and filed at the 20 time of trial or any hearing, that the original or a 21 certified copy of said transcript may be filed in 22 court and used herein as though the witness had 23 signed said original transcript. 24 IT WAS FURTHER AGREED that after said deposition 25 transcript has been returned to the deposition PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 88 1 officer along with changes, if any, made by the 2 witness in accordance with the Rules of Civil 3 Procedure, that the original deposition transcript, 4 together with copies of all exhibits, will be 5 delivered to MS. DONNA H. STINSON for safekeeping 6 and use in trial. 7 IT WAS FURTHER AGREED that after said deposition 8 transcript has been returned to counsel in 9 accordance with these stipulations and agreements, 10 it will be treated by the parties hereto and may be 11 used herein with the same force and effect as though 12 all statutes and rules relating to the taking and 13 returning into court of depositions had been fully 14 complied with. 15 * * * * * 16 17 18 19 20 21 22 23 24 25 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 89 1 P R O C E E D I N G S 2 * * * 3 THE REPORTER: Ladies and gentlemen, 4 we're back on the record. 5 MR. SAXE: We are observing today 6 Professor Lonnie Jones and 7 Teofilo Ozuna. 8 * * * 9 RONALD D. LACEWELL, Ph.D., 10 having been first duly cautioned and sworn upon 11 his oath to tell the truth, the whole truth 12 and nothing but the truth, testified as follows, 13 to wit: 14 * * * 15 E X A M I N A T I O N 16 * * * 17 BY MS. STINSON: 18 Q. Good morning. 19 A. There was a couple of other things that I 20 remembered during the night on your question about 21 different things that I have worked on. 22 Q. Okay. 23 A. This still may not be inclusive, but let me 24 get it on the record that one is a contract of the 25 United States Department of Agriculture, Agriculture PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 90 1 Research Service, in the lower Rio Grande Valley to 2 look at economic implications of alternative farming 3 systems. So I have an employee that's in the Valley 4 doing that work. 5 And another legal activity that I had 6 forgotten about was being retained by Chevron Oil 7 relative to a class-action suit brought on by 8 farmers in New Mexico where the farmers were 9 claiming price-fixing on natural gas, which is used 10 for irrigation. 11 So my objective with Chevron was to look at 12 what the economic impact was on the farmers because 13 they paid a price differential and how that 14 reflected back. 15 Q. Did you testify in that case? 16 A. That was settled out of court. No, I did 17 not. I was thinking about the question that was 18 asked relative to impacts analysis, and let me just 19 clarify on that one. 20 My mind was relative to indirect and 21 induced impacts, and what I do work on is direct 22 impacts. I do have expertise in the area of 23 quantifying direct impacts, which then is used to 24 do, what was in my mind, the indirect induced. 25 Q. Define for me the "direct impacts" that you PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 91 1 do. 2 A. Direct impacts would be change in sales by 3 target industry. 4 Q. Relate that to the sugar industry in this 5 instance. 6 A. In this case what it would be would be what 7 would be the change in gross revenues to agriculture 8 in the EAA. 9 Q. But you would not consider yourself an 10 expert in extrapolating from there to lost jobs and 11 that sort of thing? 12 A. Not an expert. I have worked with 13 Dr. Jones on that, and then I rely upon his 14 expertise at that point. 15 MS. STINSON: Mark this 16 (WHEREUPON, Exhibit No. 6 17 was marked for identification.) 18 Q. (By Ms. Stinson) I show you a document 19 that's marked as Exhibit 6 and ask you to identify 20 it. 21 A. This is a fax that Dr. Lonnie Jones sent to 22 Mr. Keith Saxe on 10/23/92, and the subject of the 23 fax relates to Dr. Jones' analysis of some work that 24 Dr. Polopolus did on estimating secondary impacts. 25 Q. Is that your work or Dr. Jones' work? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 92 1 A. It's Dr. Jones' work. 2 Q. Did you help prepare it? 3 A. I visited with Dr. Jones about it. I 4 didn't make the calculations, but I looked over the 5 work and reacted to it; but it's basically 6 Dr. Jones' work. 7 Q. The table that's on the last page, was that 8 also something that Dr. Jones did? 9 A. Dr. Jones generated this table from work 10 that was in the Hazen & Sawyer Report, and that was 11 recorded by Dr. Polopolus. 12 Q. But he prepared the table? 13 A. Yes. 14 MS. STINSON: Mark this document. 15 (WHEREUPON, Exhibit No. 7 16 was marked for identification.) 17 Q. (By Ms. Stinson) No. 7? 18 A. Okay. This is a communication with 19 Mr. Keith Saxe again from Dr. Jones and myself, and 20 it is a review of comments by Ronald T. Luke 21 regarding, "The Hazen & Sawyer Draft Final Reports 22 on Economic Impact Evaluation of Economic Benefits 23 of the Everglades." The date is August. 24 Q. Did you participate and develop that 25 document? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 93 1 A. I interacted with Dr. Jones on this. 2 Q. Let me ask you some specific questions 3 about it. Point 1 -- and just read it to yourself 4 first, and then I'll ask you a question about it. 5 A. Is there a way we can come up with this -- 6 Is that what you're going to do? 7 (WHEREUPON, there was discussion 8 off the record.) 9 A. Okay. I have read the first part. 10 Q. (By Ms. Stinson) Okay. Would you explain 11 to me the comment, "This is preferable to performing 12 economic analysis on other unknown or hypothetical 13 assumptions relating to nutrient discharge levels," 14 et cetera. 15 A. Let me read it again. As I recall the 16 criticism here, was that there was not an evaluation 17 of the biological and hydrologic viability of the 18 STA's. And the comment here is that the biological 19 and hydrologic viability of STA's is not a valid 20 criticism of the economic procedures that were 21 carried out by Hazen & Sawyer. 22 Q. Okay. 23 A. So they're bringing up criticisms because 24 Hazen & Sawyer didn't do biological and hydrologic 25 analysis, and they weren't asked to do biological PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 94 1 and hydrologic analysis. They were asked to do an 2 economic study. So that's not a criticism of the 3 economic study. 4 Q. Okay. 5 MR. SAXE: Counsel -- excuse me -- do 6 you have the underlying document to 7 which this document refers, the Luke 8 transmission of criticisms concerning 9 the Hazen & Sawyer report? 10 MS. STINSON: It's in my luggage. 11 MR. SAXE: Because this document 12 and a number of others refer to 13 documents, and the witness is without 14 the benefit of the base document to 15 which these refer. So if you have 16 those, it will be a lot -- 17 MS. STINSON: Off the record. 18 (WHEREUPON, there was discussion 19 off the record.) 20 Q. (By Ms. Stinson) I'm handing you a copy of 21 the report that you're analyzing in Exhibit 7. It's 22 actually the second sentence of Point 1 that begins, 23 "this is preferable to," that I'd like you to 24 explain. I'm not sure what's preferable to what. 25 A. Well, Luke, in his letter relative to the PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 95 1 criticisms of the Hazen & Sawyer report, for this 2 particular point have indicated that there was 3 "Failure to address unknowns and uncertainties." 4 He describes several possible unknowns. 5 That means that you would need a different size STA 6 or different type STA or things like that. 7 His comment says that, basically, there are 8 infinite alternatives that exist but there is one 9 plan that has been developed and that Hazen & Sawyer 10 took the right approach to analyze this economic 11 impact under that plan and stick to some basic 12 knowledge rather than drifting off into unknowns. 13 Q. I might as well keep that in front of me. 14 Okay. 15 Let me ask you about Point 4 on your 16 Document 7 here. Just take a look at it, and then 17 let me ask you. 18 A. (Witness complies.) Point 4 relates to a 19 comment by Dr. Jones and I on "short study period," 20 and I've got to see what Dr. Luke said about that. 21 Q. Point 4, not 5. 22 A. I'm sorry. "Jurisdiction, specific 23 impacts." This particular point by Dr. Luke relates 24 to Hazen & Sawyer not doing a study of individual 25 towns, school districts, and other jurisdiction PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 96 1 specific projections in the field of socio-economic 2 impact. 3 And the comment that we have here relative 4 to Luke's comment is that Hazen & Sawyer is not 5 asked to do the socio-economic analysis. They did 6 what was asked for in their report and their 7 contract. 8 Q. You have the comment, "I notice they left 9 out those done in Texas. Oh, well." 10 What studies are you aware of that were 11 left out of the Luke citations? 12 A. That exact wording is not mine. 13 Q. I should ask Dr. Jones about that? 14 A. Yes. 15 Q. On the jurisdiction, would you agree, 16 however, that the primary impacts will be within the 17 EAA not within other parts of Palm Beach County of 18 the proposed SWIM plan projects? 19 A. That's a broad question and requires first 20 an accurate estimate of what the direct impacts are 21 before you can go to the indirect impacts. 22 So I would say that if there are any 23 significant impacts, that probably they would be in 24 the EAA. 25 Q. And Point 5 you make the comment that, "The PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 97 1 implementation of the $100 assessment on agriculture 2 probably would not significantly affect the bond 3 rating of SFWMD." 4 Do you have any expertise in bond issuance? 5 A. No, I don't have expertise in bond 6 issuance. 7 Q. Do you still believe that to be a true 8 statement? 9 A. Yes. 10 Q. By that statement, are you giving me an 11 opinion that a bond could be issued based on a $100 12 assessment on agriculture in the EAA? 13 A. The basis of the statement is that the 14 property values in the EAA comprise less than 15 1 percent of property values in the 16 Palm Beach County area. 17 Q. So you're talking about a bond that would 18 be based on some kind of ad valorem taxation of the 19 whole county? 20 A. Well, I'm talking about what might happen 21 to bond ratings of the South Florida Water 22 Management District; and the specifics of how a bond 23 is put together, I don't know at this point in 24 time. 25 Q. Are you aware of any work the Water PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 98 1 Management District has done or has had done 2 regarding the bond debility of certain assessments? 3 A. No, I'm not aware of specifics. 4 Q. No. 8, "Litigation Analysis." 5 A. This point in the comments by Luke are 6 titled, "Inadequate Mitigation Analysis." 7 He indicates that the Hazen & Sawyer Report 8 has taken measures and a step in the right direction 9 relative to displacing the workers and other 10 mitigation measures, but suggests more work is 11 needed. 12 Some of the things he suggests is, what is 13 the age distribution of those affected, education 14 level, et cetera, and what are some programs that 15 could help assist the different demographics of the 16 people affected. 17 Our comment, relative to that, is that that 18 was not a complete and total detailed analysis in 19 Hazen & Sawyer; but that they -- our impression was 20 in the contract, they weren't asked to do anything 21 along these lines. 22 As we looked at that and based on the 23 information for the Palm Beach economy, relative to 24 the EAA, it is a robust economy. There are jobs 25 being added every year and the nonagriculture part PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 99 1 of that economy is growing each year. So the 2 percent coming from agriculture is declining. 3 Q. Let me ask you on that: What analysis have 4 you done of Palm Beach County, specifically? 5 A. In this case, I was relying upon some work 6 that Dr. Jones had looked at relative to the total 7 economic activity for the county. 8 (WHEREUPON, there was discussion 9 off the record.) 10 Q. (By Ms. Stinson) Are you telling me that I 11 should ask Dr. Jones about the analysis of 12 Palm Beach County? 13 A. You should ask him about the economic 14 activity of the county, yeah. 15 Q. When it says, "I have done enough 16 analysis," that's Dr. Jones? 17 A. Yes. 18 Q. No. 9, you indicated, "They are trying to 19 link SWIM costs to Everglades benefits savings or 20 enhancement as if this were a B/C analysis. It is 21 not. They may or may not know the significance of 22 the difference." 23 Tell me what the difference is between what 24 was done by Hazen & Sawyer. And I take it "BC" is 25 "benefit cost." PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 100 1 A. Yes. 2 Q. Is that correct? 3 A. That's true. 4 Q. What do you mean by that statement? 5 A. Primarily for the Endangered Species Act 6 and for this settlement of the Everglades 7 agriculture area, it doesn't indicate that economics 8 are a significant factor and that you have to do a 9 national benefit cost analysis. Hazen & Sawyer -- 10 Q. Let me stop you there. What doesn't? You 11 said "it doesn't" -- 12 A. The SWIM plan, the settlement agreement. 13 Q. Does not require -- 14 A. -- a B/C ratio. 15 Q. So what is the difference between what is 16 being done or what has been done in a B/C analysis? 17 A. What the board asked for was an estimate of 18 the economic impacts from implementation of the SWIM 19 plan. That is all they asked for basically on that 20 first contract, and that doesn't constitute a 21 benefit cost analysis. It just constitutes what 22 would be expected of economic impacts of 23 implementation of the SWIM plan. 24 Q. There was an analysis done of the benefits 25 of the plan as well; is that correct? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 101 1 A. I would be hard-pressed to say there was an 2 analysis of all the benefits of the plan, but there 3 was a part of the contract that asked for an 4 analysis of other reports that had been done that 5 looked at a similar type issue to see if there was a 6 way to transfer those results back to estimate what 7 the value of the Everglades was. 8 Q. Would you agree, then, that there wasn't, 9 in fact, a thorough analysis done of the benefits of 10 the SWIM plan? 11 A. There was not a separate analysis done. 12 There was an analysis done of other literature that 13 used techniques that you would need to use for 14 primary data-type analysis of the Everglades, but to 15 use other information to relate to the Everglades is 16 probably pretty good. 17 Q. "Probably pretty good," is that what you 18 said? 19 A. Yeah. I'm not an expert relative to 20 nonmarket valuation of transferability of nonmarket 21 valuation studies. 22 Q. You anticipated my next question. 23 Point 10 says, "The experts who selected 24 the analogous studies are more expert than Luke or 25 Liestritz." PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 102 1 You would agree that you, also, are not an 2 expert in that area? 3 A. Yes, I would agree. 4 Q. Yesterday we spoke some about the work done 5 by Craig Diamond. Are you familiar with the report 6 done by Mr. Diamond? 7 A. Is that the Wilderness report? 8 Q. Yes. 9 A. Okay. Yes. 10 Q. You have reviewed that report? 11 A. I read that report. 12 MR. SAXE: Counsel, one moment. There 13 was -- if I recall the testimony 14 yesterday, it wasn't established that 15 the Diamond report and the Wilderness 16 report that Professor Lacewell 17 indicated he'd read were one in the 18 same. 19 Q. (By Ms. Stinson) Let me just ask you to 20 assume that they are one in the same, I think. 21 A. Okay. 22 Q. If we had it here, we could demonstrate 23 that. In your opinion, is that report a fair and 24 unbiased analysis of the economic situation 25 involving the sugar industry? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 103 1 A. I believe that they did use credible 2 economic procedures and that the estimates are 3 reasonable estimates of the situation in the EAA and 4 sugar in the South Florida Flood Control Project, 5 yes. 6 Q. Would you not agree that that report is 7 more in the nature of an attempt to persuade than an 8 unbiased analysis? 9 A. I haven't read it in a long time, so I 10 would not have an opinion relative to that. 11 Q. Okay. 12 MS. STINSON: Let's have this marked. 13 (WHEREUPON, Exhibit No. 8 14 was marked for identification.) 15 Q. (By Ms. Stinson) Would you identify what's 16 been marked as Exhibit 8, please. 17 A. This is a communication between Dr. Jones 18 and Mr. Keith Saxe; and the title of this one is, 19 "Florida Sugarcane, Evidence of a Heavily Subsidized 20 Industry." 21 Q. Did you participate in that work? 22 A. I read that as he was working on it, yeah. 23 Q. There's a comment that, "The Florida sugar 24 industry has expanded its acreage and production 25 since 1960 in the face of a declining national PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 104 1 market for its product." 2 Does the production exceed the national 3 market? Does U.S. production exceed the U.S. 4 market? 5 A. There's more sugar consumed in the 6 United States than is produced in the United States. 7 Q. Would you agree or disagree that the world 8 price is artificially low due to other countries' 9 market practices? 10 A. I haven't studied that enough to have an 11 opinion that it's artificially low. 12 Q. There's a comment that, "The very existence 13 of the Florida sugar industry is dependent upon 14 price supports in come cities." 15 Do you agree with that statement? 16 A. I don't entirely agree with that particular 17 statement. My anticipation is there would be sugar 18 production in the EAA without subsidies. 19 Q. Would you agree that there are other 20 agriculture crops, also, that are dependent upon 21 price supports and subsidies? 22 A. This is a longer-type response. There are 23 other crops that are covered by target prices and 24 support prices in a completely different type 25 program than sugar. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 105 1 There are some recent studies that were 2 done from Auburn in conjunction with Texas A & M 3 that was given at a seminar in Washington. And the 4 analysis indicated that they were going to take the 5 target price away from the commodity crops in the 6 United States, which would be crops like, wheat, 7 cotton, corn, et cetera. 8 As it turned out, when these subsidies were 9 removed from these traditional crops with 10 traditional programs, the equilibrium position was 11 not dramatically different from the position they're 12 in at this point in time. 13 So I'm in the process of trying to 14 determine what that might mean. And one of the 15 things that might mean is that the USDA and farm 16 programs have been through Congress, have had the 17 subsidy decline progressively over time to the point 18 where farmers, without their knowledge, may not be 19 very dependent upon those farm programs. 20 Q. Can you identify the study for me? 21 A. This was an analysis done by Dr. Bob Taylor 22 and Dr. John Penson at A & M with an econometric 23 model, and it was done for the USDA Soil 24 Conservation Service and presented at a seminar in 25 Washington in January. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 106 1 Q. Is this document published somewhere? 2 A. No, it's not. 3 Q. Did that analysis look at sugar or just 4 these other crops? 5 A. No, sugar was not included in that 6 analysis. 7 MR. SAXE: Off the record. 8 (WHEREUPON, there was discussion 9 off the record.) 10 Q. (By Ms. Stinson) You say you were in the 11 process of trying to determine the dependency, I 12 guess. Are you doing some analysis of that issue 13 yourself? 14 A. Not independently, no. 15 Q. Are you working with Drs. Taylor and 16 Penson? 17 A. I interact with them, and I'm interested in 18 any further analysis they do or any other analysis 19 along those same lines. 20 Q. Are you interested, in part, because of 21 your work on this Everglades litigation? 22 A. No. 23 Q. Can you give me source information for the 24 chart that's on Page 5 of Exhibit 8; or, again, do I 25 ask Dr. Jones for that information? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 107 1 A. I would recommend you ask Dr. Jones, but at 2 the bottom it says, "Sources, ERS," which is the 3 Economic Research Service, USDA, which is U.S. 4 Department of Agriculture. "Cost of 5 Production-Major Field Crops, 1990," that would be 6 for cotton, wheat, rice, and corn. 7 "Sugar & Sweetner Situation Outlook Report, 8 March 1992," for sugar. 9 Q. Do you know what year or dates the figures 10 are for? 11 A. I don't know which dates, no. 12 Q. The item that says, "Net Returns from 13 Market Sales ($/acre.)" 14 Is that what I take it to be, either the 15 profit or loss from per acre of product to the 16 producer? 17 A. I'm not sure what all Dr. Jones put in 18 here, but one of the things that I am pretty sure he 19 put in here as a cost, would be a charge against 20 land; and I wouldn't have done that. 21 So I wouldn't have built this table exactly 22 the same because there is a very large discrepancy 23 between what is typically put in as a charge against 24 land and the charge against cotton, wheat, rice, or 25 corn. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 108 1 Q. Explain that to me. I'm sorry. A 2 difference in charge against land between the 3 different crops? 4 A. The others are much less than sugar. 5 Typically, there's $180 charge per acre that's put 6 in as a cost against land for sugar, and for cotton, 7 wheat, rice, and corn. It's significantly less. I 8 don't have the exact numbers, but it can be $30 or 9 $40, maybe $60; but it's not $180. 10 Q. What does that charge represent? 11 A. The charge can represent a return against 12 land which is also a residual. So whenever you 13 begin to make investments, you can make investments 14 in land and then you draw a return from what's left 15 after you have your crop -- you produce a crop, you 16 sell a crop, and you take out for your nitrogen, 17 your fuel, purchase labor, et cetera, et cetera; and 18 you subtract those away from this gross revenue at 19 the top. That would be a return to land. 20 That value can vary as the residual, and so 21 what I'm saying is that is the residual. And rather 22 than inputting the cost to it directly, I would 23 leave it as a residual and would leave it out there 24 where I could see what it's doing and what that 25 residual is. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 109 1 So I would not have buried it just as part 2 of the cost of production. I would have left it as 3 a residual so I could see it. 4 Q. Do you know what figure is used in this 5 chart? 6 A. No. 7 Q. There's a reference in here to Knutson, 8 Schmitz and Earley. Can you tell me what -- 9 MR. BURGESS: What page are you on? 10 MS. STINSON: 3. 11 Q. (By Ms. Stinson) It's at the bottom of the 12 page there. -- (continuing) what study that is or 13 report? 14 A. Knutson, Schmitz & Earley. I didn't read 15 that particular study. But Knutson is the director 16 of the Food and Resource Policy Center at 17 Texas A & M, and he does studies relative to farm 18 policy primarily. 19 This would be a report that was done by 20 these three economists that relates to the sugar 21 program and the policies related to the sugar 22 program. 23 Q. Do you know for whom that report was done? 24 A. No. 25 Q. Let me ask you one more question about this PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 110 1 chart. The deficiency payment listed on Line 2 2 shows, for example, under "Rice" a deficiency 3 payment of a little over $200 per acre. 4 Is that an amount that the government 5 provides or puts into the rice program? 6 A. That's the difference between the market 7 price and the target price or the loan rate if the 8 market price is below the loan rate, but it's the 9 difference between what a farmer receives and the 10 target price on the yield per acre. So it's a 11 direct payment to the farmer. 12 Q. Out of tax dollars? 13 A. That's right. 14 Q. I don't know if we need to put these in or 15 not. These are not stapled, but can you tell me 16 what this document is? It appears to be all but 17 one. 18 MR. SAXE: Counsel, can I see the 19 document from which these might be 20 pages? 21 MS. STINSON: It was like that. 22 MR. SAXE: Can I just take a look 23 at the exhibit pages? 24 MS. STINSON: Off the record. 25 (WHEREUPON, there was discussion PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 111 1 off the record.) 2 MR. SAXE: Counsel, I believe that the 3 staple may have not gone through, but 4 these are sequentially following the 5 last sequence number on the document 6 you've marked as Exhibit 8, and I 7 believe that these are pages of this 8 document. 9 MS. STINSON: Okay. 10 MR. SAXE: Would you like to look 11 at them? 12 MS. STINSON: Yeah. 13 MR. BURGESS: It goes with the 14 sentence on the bottom, "Without these 15 subsidies the recently" -- and then 16 continues -- "observed expansion in 17 the sugar industry." 18 Is that where you are? 19 MS. STINSON: Yeah. 20 MR. BURGESS: And it doesn't 21 follow. 22 MR. SAXE: No, it's not that page 23 you're looking at, Rick. It's page, 24 Bates No. DRL0050048. 25 MR. BURGESS: Is the last page? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 112 1 MR. SAXE: No. That's the first 2 page of the loose pages that Counsel 3 Co-op has handed to Professor 4 Lacewell. 5 The last page on the exhibit is 6 DRL0050047. What I'm saying is I 7 believe that these are pages that 8 belong to that document. 9 Could I take a look at this 10 again? 11 MS. STINSON: (Complies with 12 document.) 13 MR. SAXE: It's a fax stamp on 14 top. In fact, the fax transmission 15 stamp at the top of the pages suggest 16 that they were part of the same 17 document. 18 Would you like to -- 19 MS. STINSON: Let's put them 20 altogether, then, if we could, and 21 make them part of Exhibit 8. 22 MR. SAXE: Counsel, I've just 23 taken a quick look at a copy of the 24 documents that I kept of recent 25 productions; and my copy confirms that PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 113 1 it was all one document. 2 MS. STINSON: Okay. I'll leave 3 that for now. 4 Q. (By Ms. Stinson) Let me show you what's 5 been marked as Exhibit 9 and ask you if those are 6 your notes? 7 A. Yes, they are. 8 Q. And what are they? 9 A. This is a response to Suzanne Ponzoli in 10 Miami where she had provided some information for a 11 reaction, and this was a fast turnaround reaction 12 back to what she had done. 13 Q. What information were you reacting to? 14 Do you know? 15 A. Perhaps what you have in your hands. 16 Q. Well, this is another fax I'll show you to 17 Ms. Ponzoli. 18 A. Yeah. That fax you just showed me was what 19 I was reacting to. 20 (WHEREUPON, Exhibit Nos. 9 and 10 21 were marked for identification.) 22 Q. (By Ms. Stinson) Can you tell me what 23 documents 9 and 10 represent? 24 A. It's good to work with these together. 25 We received a document from the office in PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 114 1 Miami where they were looking at what the cost might 2 be on a per pound of sugar basis or acre basis of 3 the SWIM plan and ask that we react to that. 4 Q. Do you know where that information came 5 from that you were reacting to? 6 A. Sugar & Sweetner Report, SWIM plan, and 7 documents of that nature. This represents our 8 recommendations relative to what they were doing and 9 our reaction to what they had done at that point. 10 Q. Are you essentially, then, in 9 and 10 11 analyzing the cost per pound or per acre of sugar 12 production? 13 A. Yes. 14 Q. Can you walk me through what you have done 15 and give me the numbers? 16 A. What we did was suggested that for sugar 17 not all the sugarcane land is harvested and so the 18 estimates that we provided took the cost of the SWIM 19 plan and said, "We want to take the cost for the 20 SWIM plan that would be allocated to the sugarcane 21 in the EAA on a proportionate basis; and, further, 22 take the total cost against all sugarcane acres but 23 allocate them even further down to adjust the 24 harvested acres because the harvested acres are 25 going to have to pay the assessment for acres. If PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 115 1 they're in canals, roads, ditches, they are not 2 harvested." 3 So we wanted to further refine the 4 estimates to make sure that we got it on a per acre 5 harvested basis to better reflect what a farmer 6 would really have to pay. 7 Q. You're not talking about cost of 8 production? 9 A. No. 10 Q. You're talking about cost of the STA's? 11 A. That's exactly right. 12 Q. Okay. I'm sorry. 13 A. That's exactly right. 14 Q. So what cost did you begin with, I guess? 15 A. The cost that came out of the SWIM plan 16 would be what we began with, which would be the cost 17 for the STA's. 18 Q. And tell me the number you were working 19 with. 20 A. $314 million. 21 MR. BURGESS: Is that on one of the 22 exhibits? 23 THE WITNESS: Yes, it is. 24 MR. SAXE: It's been marked as 25 Exhibit 10. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 116 1 MR. BURGESS: Well, where are 2 you? 3 MR. SAXE: It's Bates 4 No. DRL0050112. 5 Q. (By Ms. Stinson) So you began with that 6 being the overall cost of implementing the 7 SWIM plan? 8 A. Yes, that would be the cost for the STA's. 9 Q. Okay. 10 A. We looked at what that cost would be for 11 20 years at 6.5 percent. 12 Q. Let me stop you a minute. Why 20 years and 13 why 6. -- 14 A. 20-year bond, typical bond period. 15 Q. And why 6.5 percent? 16 A. That's a typical bond rate at this point in 17 time. 18 Q. That would be an insured bond, correct, not 19 a junk bond? 20 A. Not a junk bond, no. 21 Q. Do you know what the rate is for 22 junk bonds? 23 A. No, I don't. 24 Q. Okay. Did you add to that cost any 25 percentage or amount for the cost of financing in PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 117 1 those types of -- 2 A. The 6.5 percent is all we included, was the 3 rate of interest. 4 Q. Okay. Keep walking me through, if you 5 would. 6 A. And that gives you 28.6 million per year as 7 the annual cost for the SWIM -- for the STA's. 8 Q. When you say for the "STA's," are you 9 distinguishing that from other things required by 10 the SWIM plan? 11 A. BMP's, yes, I am distinguishing that. 12 Q. Okay. 13 A. We then took 457,000 acres of cane. 14 Q. And where is that number from? 15 A. I believe that's Hazen & Sawyer's number. 16 Q. Okay. 17 A. 428,000 acres of harvested. 18 Q. Do you mean "harvested per year"? 19 A. Yes, average per year, recent years. 20 Q. Do you know where that number's from? 21 A. And, again, I believe that came from the 22 Sugar & Sweetner Report. But it may have come from 23 Hazen & Sawyer. I don't recall exactly. 24 The cane acres going to an STA is 26,000. 25 We took that from Hazen & Sawyer and the work they PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 118 1 did where they took the STA's and divided it across 2 the EAA for different crops' land uses. 3 Then, using some percentages from 4 Hazen & Sawyer, we took the 26,000 acres of cane and 5 said that represented 24,500 acres of cane that 6 would be harvested. 7 Q. That's basically 428 divided by 457? 8 A. Yes. 9 Q. In that ratio? 10 A. Yes. Yes. Yes. 11 Q. Okay. 12 A. If we're on Exhibit 9, I'm going to jump 13 down to, "New cane acres harvested, 403,500." 14 Q. That's after the STA's? 15 A. After the STA's. 16 Q. "New cane total is 431,000 acres." Tell me 17 again how many harvested new. 18 A. 403,500. 19 Q. Okay. 20 A. That gives us 17,500 acres that are not 21 harvested. 22 Q. Wait a minute. 23 A. If I go to Exhibit 10, the last page, we've 24 got the -- 25 Q. Wait a second, if you would. My brain's PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 119 1 working slowly. Okay. 2 A. What we get on Exhibit 10, the last page, 3 is calculating the acres in the EAA 522,000 crop 4 acres from Hazen & Sawyer. We take out STA acres -- 5 in this case, we have 32,000 -- that we subtract, 6 which gives us a net of 490,000 acres. 7 Q. Why 32,000 acres? 8 A. Those are STA acres without the Everglades 9 Nutrient Removal Project, which has already come 10 out. Approximately. 11 Q. And the 522 already has had the ENR Project 12 acreage subtracted from it? 13 A. Subtracted out. That's my impression from 14 Agent Sawyer, yeah. Because I'm not positive about 15 that. 16 This gives us 490,000 acres. If we took 17 the 490,000 acres, divide that into $28,000,000, 18 that gives us $58.37 per acre after STA's. 19 Q. Now, the 490,000 includes both vegetables 20 and -- 21 A. Yes, and sod. 22 Q. Sod and everything in cane, not just that 23 which is harvested? 24 A. That's true. So the 58.37 would be 25 applicable to the cane acres harvested, not PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 120 1 harvested, et cetera, for the cane acres based on 2 Hazen & Sawyer is BMP cost of $11.50. We add those 3 together, and we get $69.87. 4 Q. Okay. 5 A. Now, if it's $69.87, that's going to be on 6 a per acre of cane basis. 7 Q. Right. 8 A. Gross acre of cane. We took the 69.87, and 9 said, "What we want to do is allocate back to the 10 cane acres and see what we look like on cane 11 acres." 12 We took the 69.87 times the 431,000 acres 13 of total cane; and we got the cost for the SWIM 14 plan, which would include STA's and BMP's of 15 $30.13 million a year. 16 Q. Tell me that number again. 17 A. 30.13 million. 18 Q. Okay. 19 A. And then we took the 30.13 million and 20 said, "That's got to be paid by harvested acres." 21 What were harvested acres? 403,500 is 22 harvested acres. 23 Q. Yes. Okay. 24 A. Dividing 30.13 million by 403,000 acres 25 gives a value of $74.67 per harvested acre for the PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 121 1 SWIM plan. 2 At that point a yield was being used of 3 8,650 pounds of raw sugar per acre. If you divide 4 8,650 pounds of raw sugar into $74.67 cents, you 5 get -- 6 Q. Wait a minute. 7 A. I'm sorry. 8 Q. Too fast. Okay. A yield of 8,650 pounds 9 raw sugar per acre? 10 A. Yes. 11 Q. What next? 12 A. Then you would get a cost per -- cost for 13 the SWIM plan of 87 hundredths of 1 penny. 14 Q. Where did the 8,650 come from? 15 A. That was a yield in 1990 or '91. 16 Q. From Sugar & Sweetner, do you know? 17 A. Sugar & Sweetner. As I recall, the 18 Sugarcane League statistic showed the same thing. 19 Q. The 87 hundredths of 1 cent per pound of 20 raw sugar is simply a function of the $74.67 over 21 8,650 pounds? 22 A. That's correct. 23 Q. Is that the end of your analysis then? 24 A. Primarily. We have a comment that says 25 that if used 8,000 pounds per acre, it goes up PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 122 1 6 one-hundredths of a penny more than that. So it 2 would be 93 hundredths of a cent. 3 Q. Just shy of 1 cent? 4 A. That's true. 5 Q. When did you do this analysis? 6 A. January the 22nd, 1993, is when we sent our 7 comments back to Ms. Ponzoli. 8 Q. Okay. On Exhibit 9 you have "SWIM costs 9 $65; cane, only $11; BMP, $76." That's somewhat 10 different from the numbers you were telling me of 11 58.37 and 11.50. 12 Can you compare Exhibits 9 and 10, and why 13 do you seem to have a 75 or $6 per acre cost of the 14 SWIM plan, and the other, something just shy of $70? 15 A. My recollection of this is that the $65 is 16 on a crop -- on a harvested acre basis, where we 17 went ahead and made the calculation here. We were 18 looking at some approximate values to get ballpark 19 numbers. We refined the numbers more in 20 Exhibit 10. 21 Exhibit 9 is a working paper, and I could 22 classify Exhibit 10 as a working paper. 23 Q. With regard to the BMP cost, do you recall 24 whether that number is, in fact, from the 25 Hazen & Sawyer Report; or is it from some other? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 123 1 A. It's Hazen & Sawyer, and she developed it 2 from some work done by Bocher. 3 Q. The figures you've used to develop the work 4 you did in Exhibits 9 and 10 do not include, do 5 they, the operation and maintenance costs of the 6 STA's or the BMP's? 7 A. They're part of the BMP cost that are 8 included in there; and it, also, has the cost for 9 water table management. So, yes, it does have the 10 cost included by the SWIM plan. 11 MR. SAXE: Would you repeat your 12 question, please. 13 MS. STINSON: I don't think I 14 can. She can read it back. 15 MR. SAXE: Read it back, please. 16 (WHEREUPON, the requested 17 portion of the record was read 18 by the court reporter.) 19 Q. (By Ms. Stinson) Your response is? 20 A. They do. 21 Q. Even of the STA's? 22 A. Yes. 23 Q. How do they include the cost of the STA's? 24 A. The $314 million is an accumulation of the 25 cost of building, operating, and maintaining the PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 124 1 STA's. 2 Q. For 20 years? 3 A. For 20 years. 4 Q. On the cover letter you indicate that, 5 "When we recalculated the bond at 6.5 percent, it 6 resulted in the cost and values," et cetera. 7 Was there a calculation sent to you at some 8 other number? 9 A. We did -- we calculated that at some 10 different values and I can't recall what, but we 11 were looking at one which would have been a bond 12 rate that was effective several months ago of -- I 13 don't recall what -- 7 percent, perhaps. 14 Q. Was the choice of 6.5 percent yours, or was 15 that a number you retained elsewhere? 16 A. That was ours. 17 Q. I don't know if we need this marked at 18 all. I'm handing you a document that contains some 19 information I gathered provided to you by 20 Mr. Hirschhorn. 21 Can you tell me whether you used that 22 information? What is the date of that letter? 23 A. October 3, 1992. 24 Q. Have you used any of that information in 25 any of your work? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 125 1 MR. SAXE: Well, let the record 2 reflect that the document is a letter 3 from Irwin Hirschhorn to 4 Robert Rosenberg, Assistant U.S. 5 Attorney. 6 You're not going to mark this? 7 MS. STINSON: I don't know. 8 Not yet. 9 MR. SAXE: And it has a 10 handwritten chart attached as well as 11 a map. 12 A. There was not any material in this that I 13 used. 14 MS. STINSON: Okay. No, I'm not going 15 to mark it. 16 MR. SAXE: Let's take a break. 17 (WHEREUPON, a recess was taken.) 18 Q. (By Ms. Stinson) Dr. Lacewell, regarding 19 the analysis we were just talking about in 20 Exhibits 9 and 10, have you carried that analysis 21 further to determine whether or not the farmers in 22 the EAA are able to make those kinds of payments to 23 pay for the SWIM plan? 24 A. We've done further analysis on this, yes. 25 Q. And what have you done? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 126 1 A. We refined this analysis that was done here 2 by carrying it on to look at the data from the 3 Sugar & Sweetner Report; and then combined that with 4 the SWIM plan costs to develop estimates of cost per 5 pound of sugar, per acre returns, per acre per pound 6 of sugar to get some of the comparisons. 7 MS. STINSON: Keith, I don't 8 believe -- let me back up. 9 Q. (By Ms. Stinson) Is there a document 10 reflecting that work? 11 A. Yes, there is. 12 MR. SAXE: Yes. Let me take that -- 13 MS. STINSON: We can go off the 14 record if you want. 15 MR. SAXE: No. That's fine. I 16 was going to take this up at the end, 17 but as long as it's come up; the 18 document production was based on a 19 collection done some weeks ago. 20 So, naturally, any documents that 21 were produced subsequently that might 22 be responsive are not included in the 23 production that we've received. Those 24 would have to be addressed in a 25 subsequent production. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 127 1 I was operating under the 2 expectation that there was some 3 likelihood Professor Lacewell would be 4 deposed again; and if that is the 5 case, certainly the production will be 6 updated at that time. 7 MS. STINSON: We can go off the 8 record. 9 (WHEREUPON, there was discussion 10 off the record.) 11 Q. (By Ms. Stinson) Dr. Lacewell, the 12 analysis that you've just referred to, was that 13 presented or were the results of that analysis 14 presented to the South Florida Water Management 15 District in February? 16 A. They were presented in Florida to somebody 17 in February. 18 Q. By Dr. Jones; is that correct? 19 A. By Dr. Jones. 20 Q. Would you have working papers that contain 21 the actual numbers you used in developing the 22 conclusions? 23 A. The working papers are the 24 Sugar & Sweetner Report. 25 There may be -- without looking at it -- PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 128 1 there may be other sources of data that we did use 2 in that. Let me refrain from saying that's the only 3 thing we used. 4 Q. Okay. 5 MR. SAXE: Off the record. 6 (WHEREUPON, there was discussion 7 off the record.) 8 MR. BURGESS: We can go on the 9 record. 10 Counsel for the United States has 11 suggested that since over the lunch 12 hour, Dr. Lacewell will see whether he 13 has any further documents responsive 14 to the duces tecum request; that it 15 might be appropriate for the Co-op to 16 adjourn their questioning for the 17 moment and for me to begin. And I 18 don't have any problem in doing that. 19 What I would propose to do, 20 though, would be to take some time and 21 review questions on documents already 22 in evidence with the witness and then 23 perhaps that would bring us to the 24 lunch hour. 25 If there are any other further PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 129 1 documents, then Donna could begin and 2 conclude her examination after lunch 3 and then I could go. 4 MR. SAXE: That's fine. We have 5 no problem with that. Just that the 6 clarification that any documents we 7 might find at this point would be 8 newly received or created documents. 9 MS. STINSON: Right. Let me 10 request or suggest that with this 11 analysis he bring the source data so 12 that we can -- not that it will go 13 into evidence, but just for ease of 14 questioning and responding -- be able 15 to tell is where numbers came from, 16 you know, The Sugar & Sweetner Report, 17 whatever. 18 MR. SAXE: That sounds like that 19 stuff would be responsive under your 20 original request for documents. 21 So I'll just use the same 22 criteria that we used; and that would 23 include any data that's been 24 considered or relied upon, to the 25 extent that there's such data. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 130 1 And I don't know that there's a 2 lot. 3 MS. STINSON: Off the record. 4 (WHEREUPON, there was discussion 5 off the record.) 6 MR. SAXE: On the record. 7 I'll see what we can find, and we'll 8 take it from there. 9 MS. STINSON: Okay. Thank you. 10 * * * 11 E X A M I N A T I O N 12 * * * 13 BY MR. BURGESS: 14 Q. Dr. Lacewell, my name is Rick Burgess. I 15 represent the Florida Sugarcane League and the 16 United States Sugar Corporation in this litigation. 17 And I would just ask -- similar to 18 Ms. Stinson -- if you don't understand any question 19 that I ask, ask me to rephrase it, so I'm clear that 20 you're answering the question that I've asked you 21 to. 22 To begin with, I'd ask you to refer to 23 Exhibit No. 1. 24 A. Okay. I have Exhibit 1. 25 Q. Thank you. On the second page of that PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 131 1 Exhibit Paragraph G reads, quote, "It is important 2 to emphasize that the BMP's are a higher level of 3 technology; and if applied correctly, there is not 4 expected to be a significant yield of decline." 5 You authored that statement; is that 6 correct? 7 A. Yes. 8 Q. And what is the basis or what was your 9 basis for that statement? 10 A. The basis of this statement is that as we 11 move to higher levels of technology across the 12 United States in agriculture, it's important that we 13 implement the new technologies appropriately. And I 14 would say that the BMP's are the same relative to 15 "You forget to do it correctly." 16 And that's what that means there is that -- 17 in discussions with Dale Bocher, he indicated there 18 would be no yield effect from implementing the new 19 BMP's done correctly. 20 Q. And what BMP's are you referring to in that 21 paragraph? 22 A. The ones developed by Dr. Bocher in the 23 reports he did for the South Florida Water 24 Management District and IFAS. 25 Q. Other than Dr. Bocher, are you aware of any PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 132 1 other studies or reports which deal with potential 2 yield effect or yield effects of implementation of 3 the BMP's? 4 A. No, I'm not. 5 Q. Are you aware of any on farm impacts that 6 any EAA farmers have experienced with respect to 7 implementation of some or all of the BMP's contained 8 in the SWIM plan? 9 A. I would refer to the deposition by 10 Mr. Wedgworth who indicated that the farmers are 11 currently implementing a significant number of the 12 BMP's and that they've been doing this for a fairly 13 long period of time and they've had no yield impact 14 from that. They do it as a matter of course. 15 Q. Are you aware what percentage of the farms 16 in the EAA have implemented the water table or pump 17 BMP as of this point in time? 18 A. I would expect that all the farmers have 19 implemented, to some extent, some part of the BMP's 20 and water table management. 21 The question, "to what extent." 22 Q. The next sentence reads, "Significant yield 23 impacts can be expected to result only if the BMP's 24 are implemented incorrectly." 25 Are you aware of any studies or reports PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 133 1 which have attempted to quantify potential yield 2 impacts from implementation of the BMP's? 3 A. I don't know of any that attempted to 4 quantify yield impacts of implementing BMP's. 5 That would go back to the Bocher study that 6 says, "There would be none if they're done 7 appropriately." 8 Q. And that's what you're relying on for your 9 statement in Exhibit 2? 10 A. Yes. 11 Q. Paragraph E on that same page says, "We 12 need an the alternative," and maybe the "the" there 13 is inappropriate. 14 "We need an alternative crop to sugarcane," 15 is that the way it should read? 16 A. Yes. 17 MR. SAXE: Excuse me. Counsel, where 18 are you? 19 MR. BURGESS: Paragraph E. 20 Q. (By Mr. Burgess) The second sentence says, 21 "The region appears to have been in livestock before 22 crop production." 23 MR. SAXE: For the record, let me just 24 indicate that this is Point E, which 25 is a Subsection of Point 2, titled PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 134 1 "Other Data Sources or Insight into 2 the Analysis." 3 MR. BURGESS: Correct. 4 Q. (By Mr. Burgess) And the witness says the 5 paragraph should read, "We need an alternative crop 6 to sugarcane. The region appears to have been in 7 livestock before crop production." 8 My question is: What is the basis for the 9 statement, "We need an alternative crop to 10 sugarcane"? 11 A. The basis of that statement is that, 12 typically whenever one crop is not produced in a 13 region, an alternative crop is produced. 14 And the question I had is: What are the 15 possible alternative crops to sugarcane for the EAA, 16 if any? 17 Q. And why in this situation would you have, 18 in your words, a crop that wouldn't be produced? 19 A. You'd need to rephrase that one. 20 Q. I'm asking in reference to the specific 21 SWIM plan that we're here discussing, why do we need 22 an alternative crop to sugarcane? 23 You said, "Typically, whenever one crop 24 isn't produced in the region, another one is." 25 Why do we need an alternative? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 135 1 MR. SAXE: Objection to form. 2 I think you misquoted the 3 witness. 4 As I indicated, this is a 5 subpoint under category titled, "Other 6 Data Sources or Insight into the 7 Analysis." 8 I don't think the witness 9 testified that the EAA needs an 10 alternative crop to sugarcane. 11 Q. (By Mr. Burgess) Does the EAA need an 12 alternative crop to sugarcane? 13 A. The basis for this suggestion right here is 14 this is a part of a letter to Grace Johns where I 15 was indicating, "As you do this economic analysis, I 16 would suggest that, as you do the analysis, if your 17 analysis shows that sugarcane becomes uneconomic 18 rather than abandoning the land to no use or idle, 19 it would make economic sense to see if there is some 20 other crop or use that could exist for this land." 21 Q. And in that context, do you know whether, 22 in fact, other uses, other than idling the land or 23 abandoning the land have been examined by 24 Grace Johns? 25 A. Relative to the 10-year study, my PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 136 1 impression is that she did not look at an 2 alternative use; and she idled the land. 3 What she might do on a 20-year analysis, I 4 can't say. 5 Q. Are you aware of any studies, whether 6 ongoing or completed, which have examined 7 alternative crops or land use to sugarcane in the 8 EAA? 9 A. No. 10 Q. The second sentence in that same paragraph 11 says, "The region appears to have been in livestock 12 before crop production." 13 How did you become aware of that? 14 A. That would be from review from the soil 15 survey from Soil Conservation Service, and 16 discussions with a variety of people that are 17 associated with the EAA. 18 Q. Do you know, in fact, how many acres were 19 in livestock in the EAA and during what periods of 20 time? 21 A. No. 22 Q. Do you know whether livestock was 23 profitable in the EAA? 24 A. I would assume it was because they were 25 producing livestock, and they went from livestock to PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 137 1 sugarcane. 2 Q. Do you know why it went from livestock to 3 sugarcane? 4 A. Sugarcane's more profitable. 5 Q. Do you know whether anyone is examining 6 whether, in fact, livestock could replace sugar crop 7 production in the EAA? 8 A. Again, I don't know if Dr. Johns is going 9 to include that in the Hazen & Sawyer study, given 10 factors that might make sugarcane uneconomic, and if 11 she's going to look at livestock as a possible 12 substitute. 13 Q. What factors might make sugarcane 14 uneconomic? 15 A. If the cost of production, out-of-pocket 16 costs, exceed your returns, then it becomes 17 uneconomic to produce a crop. 18 Q. The third page of that same exhibit 19 identifies persons associated, I believe, with 20 either IFAS or the SCS. It simply asks you to 21 review that list. 22 And my question is: Since your retention 23 by the Department of Justice, you have spoken with 24 all of those people on that list? 25 A. This is a list of names and phone numbers PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 138 1 that have expertise in the EAA that I included on 2 this letter to Dr. Johns as potential contacts that 3 she might want to get input data on. 4 Relative to each one of these names -- do 5 you want me to read each one? I have talked to each 6 one of these people. 7 Q. You have? 8 A. Yes. 9 Q. Did you get vegetable budgets from 10 Tim Taylor? 11 A. I got vegetable budgets from somebody, and 12 I think it was Tim Taylor. 13 Q. And do you know whether that information 14 was among the documents that you have produced? 15 A. I believe it was. 16 MR. SAXE: For the record, Counsel, 17 you're probably aware that there was a 18 volume of public-published documents 19 that were identified as responsive 20 documents and producible; but for 21 which, rather than providing copies a 22 list was provided to Counsel with a 23 request that Counsel indicate which 24 documents, if any, they wanted hard 25 copies of. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 139 1 Q. (By Mr. Burgess) Exhibit 2, if you could 2 refer to that one. 3 A. (Witness complies.) 4 Q. What is this, again, for the record, 5 Exhibit 2? 6 A. This is a fax that went to Grace Johns on 7 6/3/92 from me, Dr. Jones and Dr. Ozuna. 8 Q. And the purpose for sending it was? 9 A. We had been visiting with Dr. Jones about 10 her interim reports and progress and indicated a 11 willingness to look at, review, and service peer 12 reviews for the work she had done. 13 She said, "Be specific in what you might be 14 interested in looking at," which was everything; and 15 we wrote them down and faxed them to her. 16 Q. On 6/3/92; is that correct? 17 A. Yes, that would be true. 18 Q. Had you, in fact, reviewed drafts of her 19 report by this date? 20 A. I can't answer with 100 percent assurance, 21 but I do not think we had. 22 Q. But, subsequently, you did review a draft? 23 A. Yes. 24 Q. Do you know when that was? 25 A. No. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 140 1 Q. Subparagraph C under Paragraph 1 talks 2 about, "Alternative assessments for funding the 3 STA's (range in cost of implementing BMP's across 4 farms)." 5 Do you know how Dr. Johns selected her 6 alternative assessment amounts? 7 A. These would be the 10.25 one-hundredths? 8 Q. Yes. 9 A. My impression is that she developed those 10 values with the South Florida Water Management 11 District, or they were in the contract. I can't 12 tell you exactly which. 13 Q. Did you or any of the authors on this memo 14 have input in recommending either of those amounts 15 or other amounts? 16 A. No. 17 Q. What does Paragraph 6 refer to? What 18 strategies are you referring to there? 19 A. "Strategies for reducing the economic 20 impacts as gleaned from other areas." 21 This would relate to the mitigation issue 22 of if there are negative economic impacts, some 23 sectors of the economy would be effected. What has 24 happened in other areas of the United States or in 25 other areas of the world where there were strategies PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 141 1 or programs enacted that could help mitigate those 2 impacts. 3 And that was a question of, what has she 4 done relative to develop and review literature on 5 strategies in other areas where there could have 6 been a negative economic impact. 7 Q. And do you know what she has done in those 8 areas, if anything? 9 A. She developed a review of literature in her 10 completion report that addresses some activities in 11 other parts of the United States. 12 Q. What are you referring to when you say, 13 "her completion report"? 14 A. It was a completion report by 15 Hazen & Sawyer to the South Florida Water Management 16 District, which I don't have the title or the date; 17 but the cover will say "Completion Report." 18 Q. And that's on the impact study as opposed 19 to the benefit study? 20 A. Yes, on the impact study. 21 Q. Other than Dr. Johns' review of the 22 literature, are you aware of any other studies, 23 whether ongoing or completed, which reviews what has 24 happened in other areas of the United States or the 25 world with respect to negative economic impact? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 142 1 A. I don't have any specific references I can 2 give you, but there are activities in the University 3 of California; the University of Colorado; Colorado 4 State University; Washington State University; 5 Idaho, University of Idaho that have people that 6 look at these kinds of issues. 7 Q. Are you aware of anyone looking at these 8 kinds of issues for the SWIM plan? 9 A. No. 10 Q. What does Paragraph No. 7 refer to with 11 respect to "methodology"? 12 A. Again, what we're asking her for is if she 13 has material we can review, then we would be happy 14 to review it; and in this case, it's the 15 "Methodology selected for valuing the Everglades." 16 This has to do with the extension of the 17 contract where she's looking at the issue of the 18 Everglades. 19 Q. What do you understand that she's doing 20 under the extension of the contract? 21 A. That's been completed. That was part of 22 the other contract and that's where she was to look 23 at methodologies and any opportunities for 24 estimating value of the Everglades. 25 Q. Is this the natural resource benefits PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 143 1 analysis? 2 A. I'm not sure. I did not spend a lot of 3 time in this area. 4 Q. You testified either earlier today or 5 yesterday as to Grace Johns having conducted what 6 amounted to a literature research with respect to 7 natural resource benefits. 8 Is that what you're referring to here 9 again? 10 A. I don't recall what the reference was to 11 yesterday, but she did address the benefits of a 12 natural resource or wetlands by subcontracting with 13 some other firm. 14 Q. Are you aware of, other than that study, 15 whether she is doing anything else in this area? 16 A. No, I'm not. 17 Q. Other than that particular study, what 18 studies or reports are you aware of, whether ongoing 19 or completed, that deal with methodologies selected 20 for valuing the Everglades? 21 MR. SAXE: Objection to form. 22 Counsel, are you confusing the 23 benefits or valuation of the 24 Everglades with -- I'm sorry. Excuse 25 me. I'm confusing it. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 144 1 Retract the question. Go ahead. 2 Do you want the question reread 3 to you? 4 THE WITNESS: Yes. 5 (WHEREUPON, the requested 6 portion of the record was read 7 by the court reporter.) 8 A. I'm not aware of other studies that have 9 taken place. 10 Q. (By Mr. Burgess) Paragraph 8 speaks in 11 terms of, "If benefits or value from another study 12 site is used to value the Everglades, what is the 13 other study site or sites?" 14 Given your last answer, am I correct in 15 assuming that other than what is contained in 16 Grace Johns' report done on a subcontract basis, 17 you're not aware of any reports or studies which 18 attempt to extrapolate results from other study 19 sites from valuing the Everglades? 20 A. I'm not following that review literature. 21 This is simply, again, a question to Grace Johns 22 that, "If you have done some work in this area, we 23 would be interested in knowing what the site is that 24 you're using to transfer the data from." 25 Q. And my question is: Other than what PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 145 1 Grace Johns has done in that area, you're not aware 2 of anyone that has attempted to do that; is that 3 correct? 4 MR. SAXE: Objection to form. 5 Counsel, specifically, with respect 6 to the Everglades, transfer of other 7 valuation studies to valuing the 8 Everglades? 9 MR. BURGESS: Right. 10 A. No, I'm not aware of other studies. 11 Q. (By Mr. Burgess) In Paragraph 10, you 12 speak in terms of, "estimation of secondary 13 impact." What secondary impacts are you referring 14 to there? 15 A. In this case, we're looking at how she's 16 going to fulfill the objectives of her study on what 17 are the impacts of economic activity on employment 18 and some of the nontarget sectors of the economy. 19 Q. And in that context, defining "secondary 20 impacts," what would the "primary impacts" be? 21 A. The primary impacts are changing gross 22 revenue to agricultural output. 23 Q. If you could, turn to Exhibit 3. 24 A. (Witness complies.) Okay. 25 Q. On the fourth page of that exhibit I PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 146 1 believe you refer to one of your handwritten notes 2 yesterday during your testimony, towards the bottom 3 which reads, "but all does not have to be paid by 4 farmers." 5 Do you see that? 6 A. Yes. 7 MR. SAXE: Could we stop for a 8 moment. 9 (Brief phone interruption.) 10 MR. BURGESS: Back on the 11 record. 12 Q. (By Mr. Burgess) My question is: What is 13 the basis for that statement? 14 A. The basis on that statement where I 15 indicated that, "but all does not have to be paid by 16 farmers," was a comment that I was making to myself 17 as I read through this, and is it resolved by the 18 South Florida Water Management District by 19 Southern Florida that all the assessment will be 20 placed against agricultural land. 21 So it's more a note to myself or a question 22 or an unresolved issue. 23 Q. Well, it seems to be an affirmative 24 statement, does it not, that all does not have to be 25 paid by the farmer? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 147 1 A. Still, it was a question in a note to 2 myself that, "Does it all have to be paid by the 3 farmers," and I don't have the answer to that and 4 I'm not drawing a conclusion about that. 5 Q. Are you aware of what the basis would be 6 for apportioning, any portion, of the expense 7 between farmers and any other group? 8 A. I would assume this is a decision from the 9 South Florida Water Management District; and how 10 they go about making decisions on assessments and 11 apportioning, I don't know. 12 Q. If we could turn to Exhibit 4. 13 A. Okay. 14 Q. And I believe you testified yesterday that 15 these were some thoughts you were writing down to 16 yourself with respect to the expanded 20-year 17 analysis? 18 A. Yes. 19 Q. In Paragraph No. 2, the second indentation 20 talks about, "trend in costs of production." 21 Have you looked at those trends? 22 A. I have not drawn out the trends and 23 analyzed them, no. 24 Q. Are you aware of anyone that has? 25 A. Not specifically. But it is my impression PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 148 1 that Grace Johns may be looking at that. 2 Q. Do you know over what time period she's 3 examined it? 4 A. No. 5 Q. How would you define the word "trend" for 6 purposes of economic analysis? 7 A. A trend is a fairly consistent change in 8 one direction. 9 Q. Down at the bottom, towards the bottom of 10 that page, the third bullet from the bottom says, 11 "Review sugarcane production in South Florida from 12 1970 to 1990 for trends, adjustments, et cetera." 13 Have you done that? 14 A. No, I have not done that. 15 Q. Are you aware of anyone that has? 16 A. No, I'm not. 17 Q. Do you have an opinion as to whether or not 18 a review of such production -- strike that. 19 Do you have an opinion as to whether or not 20 a review of sugarcane production in South Florida or 21 that 20-year period for trends, adjustments, 22 et cetera, is a necessary component of a 20-year 23 analysis? 24 A. I wouldn't say that it was a necessary 25 component. It could be part of the information used PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 149 1 to try to determine how you're going to project for 2 another 20 years. It can be useful input 3 information. 4 Q. What are you referring to in the last 5 bullet on that page, which reads, "The 'parity' 6 syndrome is a strawman that needs to be laid to 7 rest"? 8 A. This comment relates to the efforts by some 9 that have a tendency to fix yields, fix prices 10 received for a product and then put cost production 11 down and then begin an inflation on cost production 12 and demonstrate how an inflating cost production is 13 going to override your returns and that invariably 14 everyone's going broke. 15 Q. And have you raised that in a context of 16 the EAA? 17 A. Dr. Polopolus had one graph at one point 18 where he drew this phenomenon. 19 Q. And why do you think that it is a strawman? 20 A. I think it is a strawman because we've 21 heard this since 1914 about, "Agriculture deserves 22 the same profit share that they had in every case." 23 And what we see is adjustments that people 24 don't consider, which is input change mix, 25 technological changes; and in some cases, we'll get PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 150 1 an increase in output, or activity increases, 2 changes in efficiency, and adjustments in 3 production. 4 Q. When you say "input change mix," what are 5 you referring to? 6 A. I'm referring to change in the relative 7 amount of fertilizer to water to new varieties, to 8 labor versus machinery. 9 Q. And what are you referring to when you say 10 "technological change"? 11 A. Technological changes can be improved, 12 efficiency-improved or specifically to sugar, 13 improved sugar content in the cane; improved milling 14 efficiency; higher yields, and biomass; improved 15 management practices; substitution of machinery 16 harvesting for labor harvesting as possibilities. 17 Q. And what adjustments in production are you 18 referring to? 19 A. That would be an adjustment in production. 20 Adjustments in production are the same 21 things as adjustments in the input mix. 22 Q. If I can refer you to Paragraph 6A on the 23 same exhibit. 24 A. Okay. 25 Q. How do you define a "price cost squeeze"? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 151 1 A. The "price cost squeeze" would be the 2 phenomenon that would say that cost of production 3 relative to prices received is narrowing. 4 Q. "Cost of production relative to" -- what? 5 I'm sorry. "Prices"? 6 A. Cost of production relative to price 7 received is becoming more narrow. 8 Q. And are you aware of any studies or reports 9 that have examined the price cost squeeze relative 10 to the EAA? 11 A. Nothing beyond what Dr. Polopolus developed 12 and presented to the board. 13 Q. Why, in your opinion, is it not relevant? 14 A. In my opinion, we've had this brought up as 15 a problem since the 1930's, 40's, 50's, 60's and 16 on. And what that ignores, totally, is the input 17 mix, adjustments, the ability of farmers and 18 processors to make adjustments to adopt new 19 technology; and in the cases of the soothsayers that 20 continually forecast the demise of agriculture 21 that's continued as a viable sector. 22 Q. What specific technological improvements 23 can you reliably project for the Florida sugar 24 industry relative to, let's say, production? 25 A. Reliably projecting technologies is PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 152 1 probably a part of the problem. We can go back 2 20 years and do any kind of analysis you want trying 3 to project the future and miss it completely. So 4 you'd be very unreliable in trying to go to the 5 future. 6 But there are shifts that take place, and 7 there are new technologies coming on line, such as, 8 Dr. Polopolus' suggestion in his publication with 9 IFAS that says that, "There are opportunities to 10 improve the processing by several percentage points 11 in the EAA at the mills." 12 So I would rely upon his expertise as -- 13 that's one. Improved water table management, 14 drainage, coming from efforts of IFAS, Soil 15 Conservation Service. Even the League, I believe, 16 is supporting work along those lines in developing 17 technologies. 18 Improve varieties that have higher yield to 19 biomass and/or sugar content, which I believe, also, 20 is being supported by the Sugarcane League. 21 Improve mechanization, Dr. -- 22 Mr. Wedgworth, in his deposition showed 23 innovativeness of sugar by him being one of the 24 pioneers in developing mechanical harvests, which 25 has been improved progressively. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 153 1 Q. Okay. The same Paragraph 6A, the first 2 bullet speaks in terms of, "Trends of yield 3 technology, price input mix will take care of 4 them." 5 I suppose you're referring to, it will take 6 care of what the price cost squeeze or the syndrome 7 of parity or both? 8 A. The price cost squeeze. As farmers reacted 9 to economic incentives, they will make adjustments. 10 And we probably can find some indication of 11 the kind of adjustments they've made in the past by 12 looking at the historical data to see what is 13 happening in, for example, sugarcane production, and 14 what's happening to our input mix, how they produce 15 cane now, relative to how they did 20 years ago and 16 how that's had some evolution of adjustment. 17 Q. Are you aware of any studies, whether 18 ongoing or completed, which have reviewed the trends 19 you speak about in that paragraph, "yield technology 20 price input mix"? 21 A. No, I have not. I assume you mean for 22 the EAA? 23 Q. Yes. What does Paragraph B refer to there 24 with respect to "vegetables," and I believe it 25 reads, "productivity gains are not addressed for" -- PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 154 1 A. 6B, "Sod and Vegetables-productivity gains 2 are not addressed." 3 Q. ("Start from veggies to cane")? 4 A. I'm trying to read that. 5 Q. ("Shift from veggies to cane on some 6 acres")? 7 A. Again, these are comments relative to what 8 we consider on a 20-year analysis, and what are the 9 options. Everything's on the table. Let's think 10 about everything. 11 The concern I've got, particularly in the 12 first Hazen & Sawyer study, when I look at 13 vegetables, what she does is she locks yields, she 14 locks prices, and she begins an inflation against 15 cost production; and the cost production on 16 vegetables are relatively high compared to corn or 17 wheat or other crops. 18 And she has the inevitable happen, which 19 is, in a very few years, the cost overruns the gross 20 revenue. 21 And my impression, my opinion is that needs 22 to be addressed to see if that is a logical outcome, 23 which I don't think it is. 24 Q. And you think there are similar 25 productivity gains that will be made in sod and PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 155 1 vegetables which will prevent that cost price 2 squeeze? 3 A. There may be productivity gains and there 4 may be input mix shifts and there may be adjustments 5 due to the economic incentives. 6 Again, in which case for vegetables, this 7 is a small acreage relative to the world's 21,000 8 acres. The market is one where they hit a market 9 that has a window, and they've got the acreage at a 10 level where the price is responsive to output. And 11 what I'm saying, you can reduce your acreage of 12 vegetables somewhat and get a positive price 13 response to offset this increasing cost. 14 Q. Paragraph 7 speaks in terms of 15 "Harvesting," first bullet entry, "is full 16 conversion to mechanical." 17 Do you have any opinion as to whether a 18 full conversion to mechanical will have a positive 19 or a negative effect on yield in terms of tons per 20 acre? 21 A. I would like to see information on that. I 22 don't really have a real strong opinion about that. 23 Q. Have you heard of any studies or reports 24 that speak in terms of productivity gains or 25 decreases as a result of going from hand harvesting PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 156 1 to mechanical harvesting? 2 A. Again, I can't document the exact 3 references; but in visiting with people and looking 4 at a lot of documents in the Wedgworth deposition, 5 you can get both sides. 6 There are some that say mechanical 7 harvesting of sugarcane on the Muck soils may result 8 in somewhat less cane being harvested. 9 Mr. Wedgworth indicates, "mechanical 10 harvesting has no effect." 11 Q. The same page, Paragraph 8, addresses 12 "BMP's," and -- I'm sorry. It's Paragraph 9, which 13 address "Sensitivity Analysis." 14 Are you aware of any ongoing sensitivity 15 analysis being conducted in relation to this 20-year 16 study? 17 A. My impression is that Dr. Johns plans to do 18 some sensitivity analysis, yes. 19 Q. And what is a "sensitivity analysis"? 20 A. Sensitivity analysis to put it in context, 21 20 years is a long time to project. If we projected 22 20 years -- starting in 1970, projecting where 23 Russia would be, the United Soviet Union in 20 years 24 would have been really out of line because there is 25 no Soviet Union. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 157 1 Nevertheless, sensitivity analysis gives us 2 the option of saying we're going to make the best 3 projection we can; but on some of the factors that 4 we project, "We're going to try to look at some 5 bounds on it to see just how much it changes the 6 projection if you take an optimistic approach at it, 7 if you take a pessimistic approach. And let's try 8 and put some bounds around these estimates." 9 The further you project, the wider those 10 bounds will get. 11 Q. And are you aware of upon what estimate she 12 is conducting sensitivity analysis? 13 A. I don't recall the factors that she is 14 going to do sensitivity analysis on. No, I don't 15 recall those. 16 Q. Do you have an opinion with respect to this 17 particular 20-year study as to what factors would be 18 good candidates for the sensitivity analysis? 19 A. Did I list any on the next page? I'd want 20 to take a little bit of time just to be careful with 21 that. Some of those could be yield sugar 22 concentration, prices paid by farmers relative to 23 fuel, et cetera. 24 Q. Other than Dr. Johns, are you aware of any 25 studies or reports ongoing or completed which PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 158 1 perform sensitivity analyses on factors such that 2 you have just mentioned yielded sugar concentration 3 on prices paid by farmers for fuel? 4 A. It was my impression that ERS was looking 5 at an analysis in the EAA. Whether they will print 6 that, publish that, or it will ever see the light of 7 day, I have no idea. 8 Q. Who is ERS? 9 A. Economic Research Service, 10 U.S. Department Of Agriculture. 11 Q. Where did you gain this understanding that 12 they were looking at this? 13 A. Oh, that's a good question. That could 14 have been in a discussion I had with Ron Lord -- 15 Dr. Ron Lord, Dr. Johns, or Dr. Jones, or a number 16 of other people. 17 Q. Was that being done, to your knowledge, for 18 purposes of the SWIM plan challenge or this hearing? 19 A. No. 20 Q. Do you know whether, in fact, it's ongoing? 21 A. I don't know that it's continued. I don't 22 know that anything was done on it. It was just 23 discussion, rather. 24 Q. The last page of the same exhibit at the 25 top talks in terms of "exercises," which I think you PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 159 1 identified as things which could be done in 2 conjunction with the 20-year analysis; is that 3 correct? 4 A. These were some alternatives that occurred 5 to me that were possibilities for the 20-year 6 analysis that might provide some information. 7 Q. Do you know whether anyone has undertaken 8 that second bullet entry there, "Identified major 9 changes from 1970 to 1990 that have occurred in cane 10 production in EAA"? 11 A. No, I don't know of anyone that's done 12 that. 13 Q. The last bullet reads, "With IFAS budget 14 and Sugar & Sweetner Report, do a simple trend on 15 net returns per acre over 20 years." 16 Are you aware of anyone that has done that 17 with either the IFAS budgets or the Sugar & Sweetner 18 Report or a combination thereof? 19 A. No, I'm not aware of that either. I'm not 20 aware that anyone has done that or is doing that. 21 Q. What does your note over to the side with 22 the arrow refer to there in the context of the 23 bullet entry which we just spoke about? 24 A. The bullet entry, again, was this concept 25 of looking at what information is available to do PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 160 1 some kind of a trend on the net returns per acre 2 over 20 years; and I was -- the note on the side 3 that I've placed is, "One way to proxy input and mix 4 adjustment as well as trends and technology 5 advances." 6 Now, I'm still concerned about this change 7 in mix of inputs and changes in production and 8 changes in management practices and the many other 9 things that we're seeing advance so rapidly; and it 10 occurred to me that this might be some way that we 11 might could proxy in how these adjustments are 12 taking place and what's going on in input mixes and 13 these changes as we try and develop some kind of 14 long-term trend. 15 Q. What are the terms "low confidence" and 16 "high confidence" refer to at the bottom of that 17 page? 18 A. Well, this would be some of the other 19 thoughts I had when we were looking at 20-year 20 analysis; and, again, these are my own personal 21 levels of -- that I could place on a confidence 22 study that was conducted over that long period of 23 time. 24 And whenever you make 8 single point 25 projections or trend projections, the low confidence PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 161 1 are the ones that I will state that I would not -- 2 I'd have less confidence in those than I would in 3 the ones that say high confidence. 4 Q. Meaning you have less confidence in them 5 occurring? 6 A. Less confidence in the trend line, any 7 projections. 8 Q. I'm still -- I'm trying to understand that 9 term. Is there another way you can put that into 10 layman's terms with respect to low confidence? 11 A. Okay. On these, whenever we make a trend 12 line out for any or all of these factors, we have to 13 make estimates for your 2, 3, 4, to the year 20; and 14 this then is the basis of the analysis. 15 And what I'm saying is that, this 20 years 16 of information that you're going to use to base this 17 analysis on can be significantly different on either 18 side of that trend. It can be a much larger level 19 input mix than your trend or maybe less. And so 20 these can vary around a trend line significantly and 21 will change your ultimate results significantly. My 22 level of confidence on those might change if some of 23 the analysis above were done. 24 Q. If some of the analysis -- 25 A. -- above were done, looked at the last PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 162 1 20 years. 2 Q. But you're not aware of anyone that has 3 done that? 4 A. No. 5 Q. That point you just raised, is that what 6 you meant in your final bullet on that page, 7 "20-year analysis of profit/acre trend, good base 8 for the future"? 9 A. Yes. 10 Q. Are you aware of anyone that had been asked 11 to do that, to do such a trend analysis? 12 A. No. 13 Q. If you could, turn to Exhibit 5. 14 A. (Witness complies.) Okay. 15 Q. What did you mean by "hatchet job," as you 16 used that term in the fifth bullet on the first 17 page? 18 A. This refers to the presentation by 19 Dr. Polopolus and consequently some presentations 20 with Dr. Richardson where they allowed Grace Johns 21 to do her study, make her presentation, and then 22 came up with some alternative estimates, a series of 23 fairly serious allegations relative to gross 24 errors. 25 And then they provided alternative numbers PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 163 1 without following through with what's typical 2 agricultural economic professional approach, which 3 is to give everybody every assumption and all the 4 background for how they generated their own numbers 5 and what did they use, just left their analysis 6 partially discussed. 7 Q. Is it your opinion or understanding that 8 Polopolus and Richardson undertook a separate 9 analysis? 10 A. At some point they generated some 11 alternative values. 12 Q. Are you aware of the fact that they have 13 referred to their effort or efforts in connection 14 with the Hazen & Sawyer Report as being a review of 15 that report? 16 A. My impression is they said it as both a 17 review and that they redid the report and the 18 analysis using their own numbers. 19 Q. When you say "their own numbers," what do 20 you refer to? 21 A. I have no idea. We've not been able to get 22 any idea of what the numbers are that they used. 23 We've repeatedly showed an expression of being 24 available and willing to meet with them. 25 Q. That expression manifested itself how, PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 164 1 through Counsel; or have you contacted them 2 individually? 3 MR. SAXE: Objection to form; 4 unclear. 5 Q. (By Mr. Burgess) How has your expression 6 to meet with them manifested itself? 7 A. Through the South Florida Water Management 8 District. 9 Q. Let me show you something which I believe 10 you were shown yesterday, and I'm not sure whether 11 you identified that or not. 12 Do you know what that document is? 13 A. This is a document that's titled, "The 14 Florida Sugarcane League Summary of 15 Hazen & Sawyer's Potential Economic Impact Analysis 16 Settlement Statement and MSD Act Including STA's, 17 BMP's and Alternative Assessments, Sugarcane 18 Vegetables and Sod." And this is a cover page that 19 was given to me by Carl Woelche, as I recall. 20 Q. Did he tell you what it was or where he got 21 it? 22 A. My impression is that this was given to him 23 in a meeting with Dr. Woelche, Dr. Johns and the 24 Sugar League economist, which would be Dr. Polopolus 25 and Dr. Richardson. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 165 1 MR. BURGESS: Can we mark that? 2 (WHEREUPON, Exhibit No. 11 3 was marked for identification.) 4 Q. (By Mr. Burgess) When you testified 5 earlier that you have made repeated expressions of 6 wanting to meet with Dr. Polopolus and Richardson, 7 what is it that you wanted to meet with them about? 8 MR. SAXE: Objection to form. 9 A. We were responding to inquiry by Dr. Johns 10 and Hazen & Sawyer and from the district, relative 11 to, would we be willing to sit down with all the 12 economists involved; and, again, we responded 13 positively in more than one case and opened our 14 calendars for that. 15 Q. (By Mr. Burgess) Well, you also testified, 16 I believe, that in your opinion, they left their 17 analysis partially discussed. 18 What parts are missing in your -- 19 A. I'd go back to the idea of laying out 20 exactly step by step what they did, how they did it, 21 what each and every assumption is, what they 22 compared to what. 23 Q. As you sit here today, do you have any 24 specific questions of them or what they did? 25 A. Yeah. I would be curious about what they PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 166 1 used for debt on land and where they got it, what's 2 the basis of it, what they used for land values for 3 starting, why did they put a 4 percent inflation 4 rate on land, did they use any improved efficiencies 5 in any of the estimates. 6 I would ask for the basic assumptions, 7 methodology, and the results for the different 8 scenarios by year. 9 Q. When you say "basic assumptions and basic 10 methodology in terms of economic analysis," what are 11 you referring to? Are you referring to a baseline 12 scenario or -- 13 A. That's one of the scenarios. What is the 14 baseline? I would like to see the baseline 15 described in detail. That's a baseline scenario. 16 Then, they implement the SWIM plan with different 17 levels of assessment. Then, they make another 18 analysis, which would be scenarios "A,B,C,D." 19 Q. When you say "They make another analysis," 20 are you referring to the analysis in Exhibit 11? 21 A. Well, I'm referring to an analysis whereby 22 they would implement the SWIM plan with different 23 levels of assessment. And there are some values 24 that are reported here, but I don't really know how 25 to interpret those values. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 167 1 Q. Now, you're referring to the values, such 2 as, lost acreage, and remaining acreage, jobs and 3 workers total revenue, and total job earnings 4 appearing on Exhibit 11? 5 A. Yes. 6 Q. And when you said you would like another 7 basic methodology, what are you referring to there? 8 A. Well, you'll have to follow some kind of a 9 procedure that you follow through; and I would like 10 to know what procedure they followed, what specific 11 quantitative model they used, and how they used the 12 model, what assumptions they used to make 13 determinations of land being in production or not in 14 production. 15 Q. So does methodology refer to something like 16 FLIPSIM and basic assumptions refer to something 17 like, when land goes out of production? 18 A. You could do that. Methodology could be 19 more encompassing, but that could be the 20 quantitative technique to follow after the 21 analysis. 22 FLIPSIM is a computerization of a 23 methodology. Methodology is more encompassing than 24 FLIPSIM. FLIPSIM is a quantitative model. 25 Q. Have you heard that Polopolus and PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 168 1 Richardson used FLIPSIM? 2 A. I have heard that. 3 Q. What method did Grace Johns apply? 4 MR. SAXE: Objection to form. It's 5 unclear what -- the question he's 6 asking. 7 In what context, methodology for 8 what? 9 MR. BURGESS: In the context that 10 we're discussing. 11 Q. (By Mr. Burgess) Did Grace Johns use a 12 methodology similar to FLIPSIM as far as you know? 13 A. That would be a quantitative technique. 14 Methodology, again, would be how she did each step; 15 and she listed very carefully how she generated each 16 number and how she made the trend. 17 So that's -- methodology is more 18 encompassing. She used the computer model FLIPSIM, 19 but, basically, it was in a budgeting analysis 20 format. 21 Q. When you say budgeting analysis format, are 22 you talking about input/output format or a 23 profit/loss format or a balance sheet format or none 24 of the above? 25 A. Profit/loss format, where it is a PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 169 1 convenient mechanism for conducting an analysis over 2 time and tracking cost returns. 3 Q. As you sit here today, do any other 4 questions or areas of inquiry come to mind that you 5 would want to discuss with Polopolus and Richardson? 6 MR. SAXE: Objection to form on the 7 characterization, Counsel. 8 If you're trying to ask 9 Professor Lacewell what he might think 10 would be relevant to curing defects, 11 you could frame the question that way; 12 but as you're framing these questions, 13 it sounds like a proposal for meetings 14 as opposed to deposition questions. 15 I'm not sure why you're framing 16 them as questions that the witness is 17 interested in asking Dr. Polopolus or 18 Richardson. 19 MR. BURGESS: Well, his testimony 20 on the record is clear that, "We 21 repeatedly wanted to meet with them." 22 If they wanted to meet with them, 23 I suppose they have something they 24 want to talk to them about. 25 So that's what I'm trying to have PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 170 1 the witness testify here. 2 A. Whether it's a meeting or whether they 3 developed a document, they could satisfy many of our 4 questions by responding to some of the things that 5 we've mentioned here today. 6 Q. (By Mr. Burgess) And that's what I'm 7 trying to do is put some parameters on the things 8 we've mentioned here today. 9 We've mentioned a lot over the last two 10 days, but you certainly have given me a list here of 11 certain questions or areas of inquiry that you had. 12 And I was just wondering whether, if I had 13 cut you off, there was anything else that you might 14 want from them either in documentary form or by way 15 of inquiry? 16 A. I don't think of anything beyond what we've 17 talked about. This doesn't mean that there's not 18 something, though. 19 Q. I understand. On Exhibit 5 there is a 20 bullet entry about halfway down that says, "Is it 21 likely sugarcane acres would increase outside EAA to 22 offset reduction inside, so plant milling efficiency 23 not reduced." 24 Are you aware of any scenarios or studies 25 or reports that deal with the likelihood or lack PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 171 1 thereof of sugarcane acreage increase outside of the 2 EAA? 3 A. I'm aware that sugarcane acreage outside 4 the EAA has increased. Relative to the projection 5 for the future, I am not. 6 Q. And where has that increase taken place? 7 A. West of the EAA. 8 Q. Do you know -- strike that. 9 Do you have any information with respect to 10 whether there are lands west of the EAA which could 11 be placed into sugarcane production? 12 A. It is my impression that there are lands 13 west of the EAA that could come into sugarcane 14 production; but in all fairness, it can also be in 15 citrus production. So it would be unfair to do an 16 analysis of which is most profitable. 17 Q. Do you know, in terms of acreage, how much 18 land is available for expansion? 19 A. No, I do not. 20 MR. BURGESS: Keith, I have more to 21 go, but I think it would take us some 22 time to spend on that one document. 23 So maybe this would be a perfect 24 time to go on a break. 25 MR. SAXE: Well, it's 10 minutes PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 172 1 of noon, so that's a fine lunch break. 2 (WHEREUPON, a lunch recess was 3 taken.) 4 MR. SAXE: During the lunch 5 break, we were not able to undertake a 6 systematic collection of newly 7 produced or received documents; 8 however, I have brought with us the 9 presentation handout that was 10 delivered to the governing board. 11 That would be a copy of it. I have a 12 color copy of it that I'll provide you 13 today. 14 This would be a produced 15 document, but we need to take it back 16 and get the number control on it. 17 So if you want it marked as an 18 exhibit, what we'll have to do is I'll 19 have to take the document back to 20 Washington and then send it back to 21 the court reporter after we put a 22 control number on it. 23 MS. STINSON: That will be fine. 24 MR. SAXE: The only other 25 documents that I've brought are just PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 173 1 for purposes of reference. They're 2 documents that have either already 3 been produced, like the SWIM plan. 4 MS. STINSON: Right. 5 MR. SAXE: Hazen & Sawyer 6 Contract Completion Report, documents 7 that were either produced or made 8 available for production; and these 9 copies should not come into evidence 10 today. 11 They'll be here for our use in 12 reference; and since they're documents 13 that are already of record in the 14 case, I think any references to page 15 numbers will probably be sufficient to 16 reconstruct what was being referred 17 to. 18 MS. STINSON: Okay. 19 MR. SAXE: Here you go, Donna. 20 MS. STINSON: Thank you. 21 Okay. Before we get into 22 documents, let me ask you a follow-up 23 question regarding some testimony this 24 morning. 25 * * * PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 174 1 R E - E X A M I N A T I O N 2 * * * 3 BY MS. STINSON: 4 Q. You were testifying regarding various 5 adjustments that you believe could be made or are 6 normally made in terms of yield or productivity 7 increases or efficiencies. 8 Have you done any quantification of such 9 adjustments that you would expect the sugar industry 10 and the EAA could make? 11 A. For the EAA? 12 Q. Right. 13 A. I haven't done any independent analysis of 14 adjustments that I would expect them to make. 15 What does exist is some of the material 16 like Hazen & Sawyer put together where they did a 17 raw sugar yield trend over time that showed what the 18 expected change might be with changes and whatever 19 went into making those changes. 20 It can be technology. It can be new 21 varieties. It can be improved processing, but that 22 would be the example of the kind of things that you 23 would expect. 24 Q. Are you speaking of the 2 percent per year 25 productivity growth that was in the report? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 175 1 A. Yes. 2 Q. And do you think it was appropriate to use 3 that growth trend? 4 A. Yes, I think the growth trend supported by 5 that period of data would be appropriate. 6 Q. Let me show you a document that I don't 7 think you produced, but ask you if you've seen it 8 anyway. If you would, identify that. 9 A. I have not seen this document, no. 10 Q. I may ask you about it, anyway. Let's 11 see. 12 A. Is there a way to get a copy of it? 13 Q. Sure. In fact, I think your cohort may 14 want a copy of it. 15 MR. SAXE: Yeah, I'd like to have a 16 copy of it. 17 (WHEREUPON, there was discussion 18 off the record.) 19 MS. STINSON: Can we go ahead and put 20 the sticker on this and have it marked. 21 (WHEREUPON, Exhibit No. 12 22 was marked for identification.) 23 Q. (By Ms. Stinson) Would you identify the 24 document that's been marked as Exhibit 12, please. 25 A. Exhibit 12 is a document that is entitled, PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 176 1 "Economic Effects of the SWIM Plan on Sugarcane 2 Production in the Everglades Agricultural Area of 3 Florida," prepared by, "Ron Lacewell and 4 Lonnie Jones." 5 Q. Okay. You were one of the co-authors of 6 this document? 7 A. Yes. 8 Q. Is this a document that you referred to 9 before we took our lunch break that includes your 10 further analysis of the ability of the EAA to afford 11 the SWIM plan basically? 12 A. This is a document that we developed using 13 secondary sources of data to look at cost of the 14 SWIM plan relative to receipts for sugar. 15 Q. Just to be clear, are there any other such 16 documents that you have prepared or assisted in 17 preparing that have not been previously produced, to 18 your knowledge? 19 A. No. 20 Q. And if you recall, we went through 21 Exhibits 9 and 10, and I believe you indicated that 22 what you have there before you as 12 is a further 23 extension of 9 and 10; is that correct? 24 A. That would be true. 25 Q. Well, let me ask you some questions about PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 177 1 it. Were you asked to develop this analysis and 2 prepare this document? 3 MR. BURGESS: I'm sorry to interrupt. 4 Off the record. 5 (WHEREUPON, there was discussion 6 off the record.) 7 Q. (By Ms. Stinson) Let's start with the 8 first line, "Sugarcane Returns in EAA. " 9 The price per pound of sugar you have as 10 22.18? 11 A. Uh-huh. 12 Q. What does that represent, where is that 13 from, et cetera? 14 A. Okay. The 22.18 cents per pound of sugar 15 is given in executive summary is the average from '86 16 through 1990, which is five years from the Sugar & 17 Sweetner Report, which is dated June 1992, less one 18 penny for transportation of the sugar. 19 Q. How did you determine the one penny for 20 transportation? 21 A. The one penny for transportation was a 22 value that was selected in discussions between 23 Dr. Johns and Dr. Lord, where Dr. Lord works for 24 Economic Research Service USDA, and is an author of 25 the Sugar & Sweetner reports. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 178 1 Q. So the 22.18 -- excuse me. 2 The 23.18 cents per pound is a figure for 3 raw sugar? 4 A. Right. 5 Q. Where? 6 A. New York No. 14 market. That will be in 7 the Sugar & Sweetner Report. 8 MR. SAXE: Which is right here. 9 Q. (By Ms. Stinson) Can you tell me in that 10 report what page -- is that the July '92? 11 A. As a matter of fact, he didn't come up with 12 the March. It's in March, and that's July. So I do 13 not have a copy of that report. 14 Q. Does the July report have similar numbers? 15 A. No. 16 Q. So it's in the March report? 17 MR. BURGESS: March '92, Sugar Report. 18 THE WITNESS: Yes. 19 MR. BURGESS: I'm sorry. Did you say 20 average from '86 to '90? 21 THE WITNESS: Yes. 22 Q. (By Ms. Stinson) Was there any trend 23 associated with that? 24 A. I didn't work a trend. I did a simple 25 average. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 179 1 Q. Why did you select New York Market 14? 2 What does that mean? 3 A. Because in the Sugar & Sweetner Report 4 there is a discussion that that is the basis from 5 which sugar in Florida is traded. 6 Q. And the one cent a pound transportation was 7 based on discussions, not some data that you 8 reviewed; is that true? 9 A. That's true. 10 Q. And to get from price per pound to gross 11 returns per acre, what did you do? 12 A. Again, the same five-year average was taken 13 and using sugar production on a per acre basis. 14 We then calculated a simple average to give 15 us yield per acre, multiply the yield per acre times 16 this price per pound. 17 Q. There is a bar graph about the sixth or 18 seventh page called, "Average Yield of Sugar per 19 Harvested Acre, '86 to '90"? 20 A. Yes. 21 Q. Is that the information you used? 22 A. Yes. 23 Q. So you multiplied 22.18 times 7,597; is 24 that correct? 25 A. Yes. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 180 1 Q. Why did you choose a five-year time period 2 for averaging? 3 A. Five years is fairly typical for census of 4 Ag to bring in their information. They do a census 5 every five years. When average yields were being 6 developed for the farm program, they used five-year 7 averages. So five years seemed like a good time. 8 Q. "Costs Associated with Sugarcane in EAA," 9 you have 17.87 cent production in processing costs. 10 Do those figures graphically depicted on a 11 table or graph that's called, "Sugar Production and 12 Processing Cost Per Pound"? 13 A. Yes. 14 Q. And is that further broken down then -- I 15 don't know -- about five pages from the end called, 16 "Sugarcane Production and Processing Costs"? 17 A. Yes. 18 Q. Okay. You say this information is from the 19 Sugar & Sweetner Report '86-'90 average. 20 Is that, again, the March report? 21 A. That's the June report, 1992. 22 Q. Why did you use different reports? 23 A. Because the June report didn't have 24 prices. The June report does have cost production 25 from the USDA reported by year, and it was available PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 181 1 in that report. 2 Q. Can you show me in that June report where 3 you got those numbers. 4 A. Let me remind you, they're a five-year 5 average from 1986 to 1990. 6 Q. Well, let me refer you back to Exhibit 12 7 to the page immediately following that table. 8 Following -- 9 A. Following. 10 MR. SAXE: The pages may be in 11 different order, Counsel. 12 MS. STINSON: They are in 13 different order. 14 Q. (By Ms. Stinson) There's a table called, 15 "Cost of Sugar Production and Processing in the 16 EAA"? 17 A. Uh-huh. 18 Q. It says at the bottom, "Source, 19 Sugar & Sweetner Report Situation and Outlook 20 Report/June '92." 21 Is that the information that's gone into 22 the page that's in bold type called, "Sugarcane 23 Production and Processing Costs"? 24 A. Yes. And these numbers are taken directly 25 out of the June report. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 182 1 Q. Is this the table -- the table that's a 2 half-page table, is the smaller print, is that just 3 a Xerox copy of what is in the June report? 4 A. It's not a Xerox copy. It's in a 5 spreadsheet that I took out so I could let it do the 6 averaging, but it's an exact duplicate for those 7 items that are included here. 8 Q. Are there items of costs of sugar 9 production and/or processing that you have not 10 included? 11 A. I did not include a return to land that is 12 included in the June report. 13 So what I've got here would be a cost 14 production that doesn't include any cost against the 15 land resource. 16 Q. Why did you omit that cost? 17 A. Because returns to land is going to be a 18 residual that is very typical in production 19 economics when you're developing estimates that you 20 work out a return to all the factors of production 21 and come down and this would be the residual that's 22 left after you've paid all of the other factors of 23 production. 24 And it can vary; and it does vary, year by 25 year. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 183 1 MR. SAXE: Off the record. 2 (WHEREUPON, there was discussion 3 off the record; and 4 the requested portion of the 5 record was read by the 6 court reporter.) 7 Q. (By Ms. Stinson) I'm going to ask you to 8 walk me through that perhaps step by step. 9 What do you mean by "a residual"? 10 You're not talking to an economist. 11 A. Land is one of the resources that, of 12 course, we have for the production of agricultural 13 products. Land has a value. 14 So in the work that I have done, what I do 15 is I develop estimates of returns to land; and 16 that's what this process will do. 17 And it's going to take out the cost for the 18 fuel, the cost for the labor, the cost for the 19 fertilizer, the seed, et cetera, et cetera. 20 And you take the gross revenue, you 21 subtract out all these other costs and you subtract 22 those; and what you've got left, will go to factors 23 of production that you've not put a cost for above. 24 And what I leave out is land. 25 So that says I've paid for everything but PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 184 1 this one resource, land. 2 Now, what's left, is the money that will go 3 to land. So land gets to capture everything's 4 that's left and that's the return to that factor of 5 production. And it's calculated as to what's left 6 after you've paid all your cash expenses to all the 7 other things you had to buy. 8 Q. Why is the return to land not relevant in 9 determining your analysis here? Are you telling me 10 that it's not relevant? 11 A. It's relevant, and what I want to know is 12 what it is, exactly. I don't want any estimates. I 13 want to determine exactly what the return to land is 14 so that I know exactly how much money is left that 15 would be rent to that resource. 16 Q. Okay. Let me back up a minute here, too, 17 on the price per pound; and there's a bar graph here 18 "price received per pound of sugar." 19 A. Okay. 20 Q. You have the loan rate as 18 cents, 21 correct? 22 A. Yes. 23 Q. And then you have an additional 2 cents on 24 top of that as price support? 25 A. No. That 2 cents is a part of the PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 185 1 18 cents. 2 Q. Okay. "Supply controlled U.S. price at 3 21.19 cents"? 4 A. That takes the penny off of transportation, 5 yes. 6 There is a correction I need to make as I 7 look at this. The price that's listed in these 8 different places is a price for the raw sugar plus 9 the molasses, Bagass, and other byproducts. 10 So what we have is 21.1 cents for the raw 11 sugar; that is, after you take a penny off of 12 transportation. 13 Q. Okay. And that is a five-year average from 14 the March report? 15 A. Yes. 16 Q. Since that's been found, can you identify 17 for me in that report where that number is? 18 MR. SAXE: Off the record. 19 (WHEREUPON, the witness and 20 counsel conferred.) 21 Q. (By Ms. Stinson) I'm looking at Page 16 of 22 the -- what is it, the June or am I looking at 23 March? Can I look at that page? 24 A. March, March. 25 Q. The March '92 Sugar & Sweetner Report, and PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 186 1 I don't see a 21.19. I see circled a "21.57 2 for '91"? 3 A. The 21.91 is an average over five years. 4 Q. Okay. For the years -- 5 A. -- '86 through '90. 6 Q. Why did you not include '91? 7 A. Because I didn't have production costs data 8 for '91. 9 Q. Those have only been published through '90; 10 is that correct? 11 A. That's correct. The same information is 12 duplicated in the materials that you received from 13 Carl Woelche, also, in that deposition. 14 Q. Okay. 15 A. See, you've got copies of all of this in 16 his material. 17 Q. Okay. And then on top of that you have the 18 figure of 99 one-hundredths of a cent for basically 19 by-products -- 20 A. Yes. 21 Q. -- as I understand it? 22 A. (Witness nods head.) 23 Q. From where is that figure? 24 A. It's from the Sugar & Sweetner Report. 25 Q. Are you talking June or March? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 187 1 A. I believe I got this one from June. I'll 2 have to find it. June. 3 Q. That's -- was that not in the March? 4 A. It's in the June. If it's in the March, it 5 would be identical. 6 Q. Can you tell me what page in June? 7 A. 33. 8 Q. May I take a look at that? 9 A. (Witness complies.) 10 Q. When you used the term "credit" in that 11 instance, can you tell me what that means? 12 Are these products sold by the farmers or 13 the mills? What do you mean by "credit"? 14 A. Credit is what is received for these 15 by-products which will be molasses, Bagass and 16 other -- and in this case, the USDA has broken this 17 back down into a per pound of sugar basis; and it 18 represents an income to sugar. 19 Q. Are these by-products then sold by someone? 20 A. They would be sold by -- probably through 21 the mill level. The truth is, I don't know exactly 22 whether it was sold. 23 So let me just say this: Credit is 24 received to the sugar industry for a product that's 25 sold. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 188 1 Q. Do we know if there should be any discount 2 for transportation costs in that figure? 3 A. If there is supposed to be a discount for 4 transportation costs, it's probably -- I would 5 anticipate that it's part of the audited cost in 6 returns data that's done by Economic Research 7 Service of the USDA. Where it will be captured in 8 either the variable costs or that the -- generally 9 administration or other places. 10 Q. But the transportation costs for the raw 11 sugar is not captured in any of those places, 12 correct? 13 A. Well, it is captured. The transportation 14 cost for the raw sugar, we've already put another 15 penny in there. Plus it is captured in the 16 processing cost as a -- one of the items that's 17 included there. 18 And in the discussion with Ron Lord, he 19 said that -- and let me find my breakdown of 20 processing, and I'll tell you exactly where he is. 21 Fixed expenses, part of -- no, it's in 22 marketing. I know it's in marketing. Part of the 23 marketing expenses that is included has a charge of 24 about -- these are based on a period of time, but 25 there is something less than another -- one penny PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 189 1 more that's included there for transportation 2 costs. 3 Q. Let me get this straight. You're saying 4 that in the line item which you call "variable cash 5 expenses for processing," there is included a 6 transportation cost; is that correct? 7 A. I sure am. It's under the topic 8 "marketing." 9 Q. Let me clarify that. If you look at the 10 bold-type page, that line, the 4.88 cents -- 11 A. Yes. 12 Q. -- it says, "very low cash expenses," and 13 the very first thing listed is transportation? 14 A. Right. 15 Q. And, so, is there transportation and then 16 transportation again within marketing? Is that what 17 you're telling me? 18 A. This would be that part of the marketing 19 and maintenance that is included. Under "variable 20 expenses," you see "marketing, maintenance, labor, 21 transportation." 22 Q. Right. Those are items that will add up to 23 the 4.88. 24 A. Right. Of that 4.88, a part of that is 25 transportation. And so what we've got is -- where PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 190 1 is my processing? 2 Q. Let me ask you another question before we 3 go on. What transportation is that? Does that get 4 it from Florida to New York? Is that what you're 5 telling me. Or does that simply get it to the mills 6 from the fields? 7 A. That gets it from the mills to the 8 processing plants, and that is the audited value -- 9 that's what they actually expense. 10 So that would be a cost that was incurred 11 by the EAA to move mill sugar to processing. 12 Q. But, then, to get it from processing on up 13 to the market in New York is another expense? 14 A. Well, it may not go to the market in 15 New York. What we did was look at the possibility 16 of making sure we covered all these costs. 17 Q. Let me double clarify again. You have 18 under that 4.88 cents, "transportation and 19 marketing"; but you mentioned earlier that there was 20 transportation within marketing? 21 A. We also have to transport the cane. So 22 some of that is cane transportation. 23 Q. To the mill? 24 A. To the mill. And then within the market 25 factor, a component of that is also transportation. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 191 1 And that's to go from the mill to the processor. 2 Q. And you have included in or assumed an 3 additional transportation cost from the processing 4 to the market; is that a fair statement? 5 A. From the mill to the processing. 6 MR. SAXE: Counsel, for clarification, 7 is there a distinction you're trying 8 to get at between processing and 9 refining? The mills are frequently 10 characterized as processors of the raw 11 sugar -- 12 MS. STINSON: Right. 13 MR. SAXE: -- or of the 14 cane-producing raw sugar, refiners 15 turn raw sugar into refined sugar. 16 Maybe if we could stick to that 17 terminology, it will help to clear up 18 this line of questioning. 19 MS. STINSON: Well, I'm not sure. 20 Q. (By Ms. Stinson) You have subtracted a 21 penny off the price that you have in the price 22 component of your cost for transportation, correct? 23 A. We subtracted another penny for 24 transportation from the mill to the refinery. 25 But including in the costs that are already PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 192 1 accumulated, we have a cane transportation cost in 2 the field to the mill. And, in addition, under 3 "marketing," there is a transportation allowance 4 that was actually paid in the EAA to move cane from 5 the mill to the refineries. 6 So, yes, in addition to moving the cane 7 from the field to the mill; and, in addition, to 8 what's already in this report right here of 9 Sugar & Sweetner where they have a market charge 10 under "marketing of transporting the sugar from the 11 mill to the refinery," we've got another penny. 12 Q. And that is for transportation from the 13 mill to the refinery? 14 A. That's where the penny we had was -- is 15 another penny from the mill to the refinery, yes. 16 Q. That you have taken off the price received? 17 A. Yes. 18 Q. All right. Well, let me just ask you 19 then: Why did you take that penny off the price 20 received? 21 A. What we were trying to do; and, again, we 22 were working with Ron Lord -- Dr. Lord at ERS. 23 The New York sugarcane price is the price 24 delivered. So the seller pays the transportation 25 costs, that's if you deliver it to New York. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 193 1 Now, the sugarcane in the EAA goes to 2 processors, refineries in the EAA, 20 percent. Some 3 goes to the terminal; some goes to Savannah, 4 Georgia; some goes to New York. 5 And what we were doing is taking a 6 conservative side of this thing and saying, "We're 7 not sure what kind of prices the mills get." 8 We don't know what all kind of deals are 9 going. So we're going to take our best 10 approximation in conjunction with the advice of 11 Dr. Lord. "What would it take if I did the sugar, 12 if the mill sold sugar in New York and paid the 13 transportation costs?" 14 And that would, then, be an estimate of 15 delivering the cane to New York. 16 Q. That is not hard data maintained by ERS? 17 A. Apparently not. 18 MR. BURGESS: Rather than ask her to 19 read back that question, can I just ask you, 20 you said 20 percent goes where and I 21 didn't catch it? 22 THE WITNESS: 20 percent is 23 refined in the EAA. 24 Q. (By Ms. Stinson) Back under the executive 25 summary to get to the $1,356 costs per acre of PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 194 1 harvested sugarcane, you multiplied 17.87 cents 2 times -- whatever that number was -- the pounds per 3 acre, 7,597 pounds per acre; is that correct? 4 A. Yes. 5 Q. Does your analysis here assume or does it 6 matter that it is an integrated market that the 7 mills and farms are owned by the same entities? 8 A. It doesn't necessarily assume that. What I 9 could say is that that is an important factor, that 10 there is the integration. 11 And what this assumes is that the mills 12 will be paid for the factors of production. Each 13 will get a payment into the factors of production 14 exactly as laid out. 15 In the Sugar & Sweetner Report, once all 16 those factors of production are paid, then that 17 means the mill is economically viable and can 18 continue. However much they want to go ahead and 19 feed back through the land is sort of a decision. 20 If there's an opportunity for them to retain more of 21 the returns at the mill level, they can do that. 22 As returns to sugarcane may be approached 23 at the farm level, there are opportunities, then, 24 for this to be the maximum amount that could be a 25 return to land to keep the land in production to PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 195 1 keep the mills operating, and the mills still would 2 return for their factors of production in 3 agricultural farmland to be returned -- get a return 4 to its factors of production. 5 Q. On the production costs you have "capital 6 replacement." What does that include? 7 A. In this case for the numbers reported in 8 the Sugar & Sweetner Report, June 1992, this would 9 be the amount that is required to replace tractors, 10 equipment, planters, and capital items. 11 So it's a charge or return to those capital 12 items; and that will be, then, the costs for 13 replacement. 14 Q. Okay. I notice on the table that you have 15 from the June report, there are no numbers for that 16 item for '86 and '87? Is that correct, or I just 17 have an incomplete copy? 18 MR. SAXE: Off the record. 19 (WHEREUPON, there was discussion 20 off the record.) 21 A. Oh, '86, '87 reporting that, as a matter of 22 fact -- well, I've got a capital replacement here. 23 Let me look again. 24 MR. SAXE: Professor Lacewell, do 25 you want the use of a calculator? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 196 1 THE WITNESS: No. I've got to 2 take a look at that. 3 A. Page 33. If you'll look at Page 33. 4 Q. (By Ms. Stinson) I don't have it. 5 A. If you'll look at the top. This is where 6 the data is abbreviated down to cost per pound, and 7 they consolidated the production cost and processing 8 costs into fewer number of items. What you're 9 seeing there is what's on this table here. And if 10 you'll notice, there is nothing reported on that 11 line until 1988. 12 Q. Okay. 13 MR. BURGESS: That's Page 33 of what 14 report? 15 THE WITNESS: The June 1992 16 Sugar & Sweetner Report. 17 Q. (By Ms. Stinson) The cost for operating 18 capital, is that the cost of borrowing money 19 basically for day-to-day expenses? 20 A. Yeah, that's a good definition. 21 Q. Operating capital? And what is "nonland 22 capital"? 23 A. This would be more intermediate-type debt, 24 which would be machinery, buildings. 25 Q. So it's debt on those sorts of things? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 197 1 A. I would have to read back again in more 2 detail to see what is included in each one of 3 those. What was the question? 4 Q. What is "return to nonland capital"? Is 5 that debt, or what is it? 6 A. That's a payment for nonland capital, which 7 would be -- it could be a payment against that 8 factor of production. It could be -- it may include 9 depreciation. 10 Q. May I see Page 33 of the report. 11 A. (Witness complies.) 12 Q. Thank you. 13 Okay. There is a line item on Page 33 14 which says "NA" all the way through, but it's called 15 "unpaid labor." 16 Do you know what that is? 17 A. No. 18 Q. There is also a footnote here under "Their 19 Total Economic Costs," which says, "excludes 20 interest, fixed cash expenses." Can you tell me 21 what that means? 22 A. Well, I don't know what fixed cash expenses 23 are offhand as fixed costs and variable costs. And 24 they've got some returns above. What the -- the 25 nonland capital, in economics we want to return to PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 198 1 factors of production. The nonland capital, what 2 you've got is an investment in the machinery. 3 Q. Right. 4 A. And so as economists, we say, "Well, if I 5 didn't have this investment in machinery, I could 6 have it in a CD or bank or something." 7 And so we generate a cost against that, and 8 say, "If this money were in an alternative 9 investment, that's were I would be drawing some kind 10 of payment for it." 11 So the nonland capital and the operating 12 capital both in operating in that context of the 13 opportunity cost to that investment being somewhere 14 else, and we're making that investment get a 15 payment. And that's an economic approach to making 16 your resources get a payment back. 17 In this case, on excluding interest, what 18 you can do is look at it from an opportunity cost 19 standpoint where this money would be drawing me some 20 payment somewhere else, and I don't try to work it 21 into a borrowed capital and an interest payment 22 back, but it would still do the same thing. 23 It's a way of approaching what that would 24 either -- what you could end up paying is interest 25 if you actually borrowed it or if you didn't borrow PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 199 1 it and you just went and bought a tractor or a piece 2 of machinery, but because you put that money into 3 that piece of machinery, that money needs to be 4 making money back. 5 Q. And this footnote means that any return you 6 might otherwise be able to get on that money is not 7 included in these figures? 8 A. I can't say that it means that. I think 9 the nonland capital could be your opportunity cost 10 of that capital being an alternative investment. 11 Q. What's the footnote mean then? 12 A. I can't give you a definitive explanation 13 of what that footnote means. 14 Q. Okay. May I see that again, please. 15 A. (Complies with document.) 16 Q. We have copied and gave to you a document 17 entitled "DF in Settlement Agreement, 20-year 18 Analysis." 19 There is a page entitled, "Calculation of 20 Residual Returns." 21 Let me ask you to assume that this is a 22 document prepared by Hazen & Sawyer -- 23 A. Yeah. 24 Q. -- and recently provided. 25 A. Okay. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 200 1 Q. The calculation of residual returns, if 2 you'd take a minute to review that; and then my 3 question is: Is this calculation consistent with 4 the calculations you have done in Exhibit 12 in 5 terms of the approach? 6 A. If I can't say whether or not they would be 7 in here, how they would be included; but basically 8 this would be a similar or analogous type approach. 9 Q. What items are you -- 10 A. I don't know what she's including or not 11 including. It might be there. If she used an 12 opportunity cost, actual interest, I'm not sure how 13 some items might be taken care of. 14 Q. Okay. But the general categories you 15 would -- in terms of categories, is this an inclusive 16 list? 17 A. Those are broad categories; but, yeah, they 18 would work. 19 Q. And on the next page is entitled, 20 "Production Costs"; and maybe that will help you 21 answer your other question. 22 Can you tell me whether there is anything 23 not in here that you believe should be in here or 24 the converse? 25 A. Let's see. This table says, "production PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 201 1 Costs, include variable costs of planting, 2 cultivation, and harvest should be included." 3 "Management costs," and I would assume 4 there is a manager and payment made to management, 5 "tangibles tax and current EAA assessment, insurance 6 and general farm overhead." 7 These are consistent with what the 8 Sugar & Sweetner Report is gathering cost return 9 data on and, also, I believe it is in the IFAS 10 budgets, "soil subsidence management," as a actual 11 cost that the farmers would incur to try to have 12 water table management, "real estate, federal and 13 state taxes." 14 I don't know what she means by federal 15 taxes. So, I would say, until I get an explanation 16 on what the federal taxes are she's talking about, 17 I'm not sure if that would be included. 18 Q. Tell me what your concern is with that 19 item. 20 A. Is she including income tax; and in what 21 form, how, and how she calculated, and what bearing 22 does it have on it. 23 Q. Do you believe income tax should or should 24 not be included? 25 MR. SAXE: Counsel, just a PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 202 1 limited objection here. 2 It's a irrelevancy objection so 3 it's preserved, but I wanted to point 4 out for the record that 5 Professor Lacewell has never seen this 6 document before. 7 You're asking, basically, him to 8 speculate on what was intended by the 9 author, we've been told was 10 Hazen & Sawyer, with very summary 11 categorical descriptions. 12 And Professor Lacewell indicated, 13 I think several times, that he'd need 14 to know what specific items are 15 included in those before he could say; 16 but if you want to pursue that. 17 MS. STINSON: I understand. 18 MR. SAXE: Okay. 19 Q. (By Ms. Stinson) With respect to whether 20 or not federal income tax expenditures should be 21 included, however, what were you trying to say on 22 that? 23 A. Well, I'd want to have some more insight 24 into how she was going to handle that in the next 25 report in that your federal income taxes are a PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 203 1 function out of your returns above all these cash 2 costs. 3 And as this returns above cost that you can 4 take off of your gross income change, so does your 5 federal income tax. 6 So the question of how she does that and if 7 these are multi-national or integrated corporations, 8 how is she going to get a grip on that? 9 Q. Okay. 10 A. And from an economic standpoint in 11 depreciation of return to nonland capital would be 12 appropriate. 13 Q. Okay. The next the page is -- can you 14 think of anything that you've included or you 15 believe should be included that would not be covered 16 by the categories on her page entitled, "Production 17 Costs Included"? 18 MR. SAXE: Objection. 19 Again, Counsel, Professor 20 Lacewell doesn't know what's included 21 in these categories. 22 MS. STINSON: I understand. 23 Q. (By Ms. Stinson) But I think the general 24 categories are -- 25 A. The general categories look appropriate. I PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 204 1 don't have an itemization, and I'm not -- haven't 2 generated an itemization that I would lay out to 3 compare against this. 4 Q. All right. On processing costs, again, are 5 there things on here that you don't -- that you feel 6 should not be on here, or items you feel should be 7 on here that are not, given limitations expressed by 8 your Counsel? 9 A. Given the limitations of these -- these 10 still could cover a lot of things, but generally 11 they look to me like they cover the items that 12 should be included as processing costs. 13 Q. Given the typo on depreciation? 14 A. On depreciation? 15 Q. Yes. With regard to production and 16 processing costs, are you aware whether or not there 17 is a July USDA publication, I believe, 18 Sugar & Sweetner publication that has a table of 19 costs over a 10-year period? 20 A. That may be June. 21 Q. June. Okay. 22 A. 1992. 23 Q. And that's the information that you have 24 used? 25 A. Sugar & Sweetner Report, yes. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 205 1 Q. This is shooting in the dark. 2 Does this term mean something to you, 3 "WEFA," W-E-F-A? I'm not even sure I have it 4 right. 5 A. What page are you on? 6 Q. It's not on any of this. It was a 7 suggestion made at the meeting about a resource for 8 production and prices and costs, as I understand 9 it. 10 A. WEFA? 11 Q. That's what I heard. 12 A. What's it stand for? 13 Q. I don't know. I'm asking you. 14 A. I don't know what that is. 15 MR. BURGESS: I know. 16 MR. SAXE: No fair. 17 Q. (By Ms. Stinson) That's not something 18 you've used, right? 19 A. Not to my knowledge. 20 (WHEREUPON, there was discussion 21 off the record.) 22 Q. (By Ms. Stinson) Are you aware of a 23 Sugar & Sweetner outlook of July as opposed to June? 24 A. No, I'm not aware of one. 25 Q. Do you believe it important to -- in doing PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 206 1 a 20-year analysis, to look at the effect of soil 2 subsidence on productivity and costs? 3 A. Soil subsidence represents a major issue in 4 the EAA of which I read Mr. Wedgworth's deposition 5 where he says, "It's not a problem and they can grow 6 cane from now into perpetuity." 7 There's a report that's fairly old that 8 shows that had the EAA would have subsided to the 9 point where there's no production by the year 2000. 10 So I think you've got to address soil subsidence and 11 try to get the latest possible information, the best 12 experts that exist to address the issue. 13 I just can't tell you how it shakes out. 14 Q. Okay. Have you or are you undertaking any 15 independent analysis of that issue? 16 A. No, I'm not. 17 Q. Do you believe it important to examine 18 productivity per yield belt? 19 And let me ask you, first, if you know what 20 I'm referring to when I say "yield belt"? 21 A. Yes. If you are referring to the 22 Hazen & Sawyer belts that she built for the EAA. 23 Q. Okay. 24 A. Is that what you're referring to? 25 Q. Yes. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 207 1 A. Yeah, I think it would be a better report 2 with the yield belts in there, yes. 3 Q. Have you looked at the varying returns by 4 yield belts in your analysis? 5 A. No, I have not, other than what she has in 6 the 10-year study. 7 Q. Okay. Is the information regarding yield 8 belts applicable or used at all in Exhibit 12? 9 A. Exhibit 12 is taken directly from the 10 published materials from the Sugar & Sweetner Report 11 and the other documents that we mentioned and would 12 be an average yield across all of the EAA price 13 costs, et cetera. 14 So specifically, no, it is not taken into 15 account differing yield belts. 16 Q. Okay. Let's -- under "Executive Summary" 17 the next heading is "SWIM Plan Costs funded 18 100 Percent in EAA." 19 MR. SAXE: Excuse me. 20 Counsel, if we're going to go 21 back to that document, can we take a 22 real quick break? 23 MS. STINSON: Sure. I don't mind. 24 (WHEREUPON, a recess was taken.) 25 Q. (By Ms. Stinson) Moving right along. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 208 1 "SWIM Plan Costs Funded," I've got to ask 2 you some questions regarding the numbers in that 3 section. 4 "28.5 million per year for 20-year bond 5 amortization." And we may have addressed this 6 somewhat earlier in looking at Exhibits 9 and 10. 7 Let's do that again. 8 There is a bold-type page which says, 9 "STA and BMP costs in EAA," and there is another 10 page, my version, it's two pages later called, 11 "SWIM Plan Costs," subheadings, "STA, BMP's"? 12 A. Yes. 13 Q. Do those pages reflect the information that 14 went into the $28.5 million per year figure under 15 the "Executive Summary"? 16 A. Yes. The SWIM plan costs is 314 million 17 amortized over 20 years at 6.5 percent interest 18 rate. 19 Q. I believe you indicated earlier that the 20 314 is out of the SWIM plan itself; is that correct? 21 A. Yes. 22 Q. Can you find that for me. 23 A. Pieces and parts of it. 24 Q. What pieces and parts you used. You can 25 refer me to page number. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 209 1 A. Page 160. 2 Q. Can I take a look at that, please. 3 A. (Witness complies.) 4 Q. Can you tell me on Page 160 where we looked 5 where the 314 comes from? 6 A. 312 comes design and construction land and 7 O and M. So that gets us through 312. 8 In working with the rest of the 9 information, Page 162 has a cost, and Page 164 has 10 some costs. 11 And this came from here; and, also, from a 12 document that I don't recall the name of, but it was 13 talking about how it funds some of the different 14 options. And there were some other participants in 15 some of the funding of this, which included the 16 electrical power company that had agreed to put 17 various amounts of money into some parts of this 18 program. 19 Q. Okay. On Page 162 there is a chart of 20 costs of monitoring. Is that the number? 21 A. That's another cost. 22 Q. For 2.6 million. Then, Page 164 of a chart 23 of cost of monitoring, EAA district works of 1.5. 24 Are those the costs you're referring to? 25 A. Those would go with the 312. So you add PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 210 1 those together. And then there was some offsetting 2 expenses that would not be against the assessment 3 that the utility company had agreed to pay for some 4 parts of this. 5 Q. Do you recall how much that is? 6 A. I would have to find the document that 7 exactly had that in it. That is a South Florida 8 Water Management District document, but I'd have to 9 go back and find it. 10 Q. You don't recall which document? 11 A. Not exactly, no. 12 Q. Anything other than the utility payment? 13 A. Some of the costs were going to be incurred 14 by the district. That wouldn't be part of the 15 assessment. And I can't be specific; but I was 16 thinking instead of Florida, it had some items in 17 there also. 18 Q. So you added 312 plus 2.6 plus 1.5 from the 19 SWIM plan and subtracted some offsetting payments; 20 is that correct? 21 A. That's correct. 22 Q. But you can't right now tell me what those 23 offsetting payments are? 24 A. Not exactly. I know the electric company 25 and South Florida was one participant. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 211 1 Q. And I believe you told me earlier that the 2 6.5 percent interest was a figure that you 3 determined; is that correct? 4 A. We looked at that and there was an 5 accountant that said that that may even be high, but 6 for current 20-year bonds on a viable entity like 7 that, that that was a value that we selected, yes. 8 Q. What accountant said that might be high? 9 Do you know? 10 A. He is -- yeah. I don't recall his name. 11 THE WITNESS: Keith, you may have to 12 help me with the name of the -- 13 Q. (By Ms. Stinson) Mr. Hirschhorn or 14 something like that? 15 A. Yes. 16 Q. Is that something he told you verbally or 17 in writing? Do you recall? 18 A. On the telephone. 19 Q. That would be assuming, would it not, that 20 these bonds would have as collateral the assessments 21 on the EAA land? 22 MR. SAXE: I'm going to object on 23 asked and answered grounds. I think 24 we covered this ground yesterday. 25 Q. (By Ms. Stinson) Or this morning. Can you PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 212 1 answer my question? 2 A. No. I'm not a bond expert. So I really 3 can't tell you what it would take to get that 4 rated. 5 Q. Okay. Now, the BMP's for sugarcane land, 6 you have here at 86 cents per acre; and I believe 7 this morning when we were looking at 8 Exhibits 9 and 10, you told me something in the 9 nature of $11.50 per acre. 10 A. Yes. 11 Q. Can you tell me the source of the 86 cents 12 per acre? 13 A. The 86 cents is the figure developed from 14 the contract let by the South Florida Water District 15 to Brown & Caldwell to develop estimates of least 16 cost BMP procedures. 17 Q. Do you have that here? Can you tell me 18 exactly where that figure came from. 19 A. It came from the report that 20 Brown & Caldwell has submitted to the 21 South Florida Water Management District on 22 January 5th, 1993. 23 Q. Can you locate in that document where that 24 number is? 25 A. I don't know what page that is, but it's PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 213 1 that table right there. 2 Q. Table B2. Is it your understanding that 3 Table B2 in the Brown & Caldwell Report is the cost 4 for BMP's to remove 25 percent or to reduce 5 phosphorus discharges by 25 percent? 6 A. It is my understanding that that would be 7 the cost per acre in sugarcane to reduce phosphorus 8 discharges by a high level of confidence of 9 25 percent, yes. 10 Q. Okay. I don't see the figure of 11 86-cent per acre. Can you tell me where that comes 12 from? 13 A. As a matter of fact, it's 83 cents. 14 Q. That figure does not include the operation 15 of maintenance; is that correct? 16 A. I'm going to tell you what I think because 17 we don't have a complete copy of this report and 18 what we've got is a partial copy. 19 And the back of the report is missing, 20 perhaps. 21 MR. SAXE: Counsel, I have a copy 22 of that. It's got some marks on it, 23 but it may be more complete. 24 THE WITNESS: Just a minute. 25 MR. SAXE: Okay. Never mind. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 214 1 MS. STINSON: Give him a chance. 2 A. Let me refer you, again, to Brown & 3 Caldwell Consultants, January 5th, 1993. This is a 4 report submitted by them to the South Florida Water 5 Management District, "Table 15 has least cost BMP's 6 to achieve target phosphorus low reductions of sugar 7 for 25 percent." 8 They list the best management practices 9 that could be followed and they give a net cost per 10 acre of what it would take to achieve 11 25 percent reduction in phosphorus discharge. 12 Q. (By Ms. Stinson) Okay. Do you know 13 whether that figure includes both capital 14 expenditures and operation and maintenance? 15 A. My impression is that it does include 16 capital expenditures and operation and maintenance. 17 Q. In the analysis you've done here, you have 18 held costs as well as revenues constant over the 19 20 years; is that correct? 20 A. Yes. But that's not a 20-year analysis, 21 Counselor. This is an analysis done based on five 22 years of average data from '86 to 1990 and 23 everything is held constant. 24 Q. Okay. But what you are saying is that 25 these will be the costs, to both the costs and the PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 215 1 revenues, to per acre of sugarcane over the period 2 of the bond which is 20 years, correct? 3 A. I didn't draw that conclusion or make that 4 statement. It's a view of what it looks like 5 today. If revenues go up faster than cost, they 6 could more than pay for the residual. There's more 7 residual there to take care of these kind of 8 things. 9 If alternative costs go up faster than 10 revenues, the alternative could occur. This is a 11 snapshot of database for five years. 12 Q. Okay. Then you get -- you look at the 13 number 465,341 acres. That's all acres, whether 14 harvested or not, and whether cane or other types of 15 agriculture, correct? 16 A. What page are you on? 17 Q. We'll have to number these next time. 18 A. What's at the top? 19 Q. Two pages, one that says, "STA and BMP Cost 20 in the EAA," and the other says, "STA and EAA Cost." 21 A. Okay. I'm looking at "STA and EAA Acres." 22 Q. Okay. If you would, also find the one that 23 says, "STA and BMP Costs." In my version it comes 24 about five pages later. 25 A. (Witness complies.) Okay. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 216 1 Q. What you've done to get the 61.25, you have 2 allocated to every acre of agriculture in the EAA? 3 A. That's true. 4 Q. Regardless of what type of crop or whether 5 it's actually harvested, correct? 6 A. That would be total extra cropland in the 7 EAA after the STA's, yes. 8 Q. Where did that number come from, 465,341? 9 MR. SAXE: I'm going to object. I 10 believe these questions have been 11 asked and answered. 12 MR. BURGESS: It's a different 13 number. 14 MS. STINSON: It's a different 15 number for what we did on 16 Exhibits 9 and 10. 17 MR. SAXE: Right. Different 18 because it's in this document; is that 19 your position? 20 MS. STINSON: No. I mean, the 21 actual numbers are different, I 22 believe. 23 MR. SAXE: Okay. 24 A. If you'll go toward the end of this report, 25 there is a set of tables; and what we did is we PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 217 1 started with the 456,6 -- let me get you on the 2 right page. "The Procedures for Estimating Cost in 3 Returns in the EAA." 4 Q. (By Ms. Stinson) Right. I see that. 5 A. If we come down to base acres, these were 6 taken from surveys Hazen & Sawyer did, 456,641 7 acres. This is total acres of cane production. 8 Skip one, two, three numbers, and you'll find 9 43,400 acres. That's acres and vegetables -- typo -- 10 and sod before STA's. 11 We add the 456,641 to the 43,400, which 12 both came from Hazen & Sawyer based on their survey 13 data, and we get 500,041, total acres of cropland in 14 the EAA before STA's are calculated and that's a sum 15 by taking the total cane acres, gross acres, and 16 total vegetable and sod acres. And that will agree 17 back with your STA and EAA acres earlier. 18 Q. Okay. Well, earlier when we were looking 19 at Exhibits 9 and 10, you used, as I recall, 20 somewhat different numbers. I have written down the 21 figure of 522,000 acres total. 22 A. Exhibits 9 and 10? 23 MR. BURGESS: It's the last page of 24 Exhibit 10. 25 A. I'm not sure of the source of 522,000 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 218 1 acres, to tell you the truth -- and this was working 2 papers. And what we did is went back to where we 3 could get a grip on some numbers that we could trace 4 all the way through. And so that's what we did on 5 this report that was put together, where we knew 6 where every number came from. 7 Q. (By Ms. Stinson) Well, can you find it in 8 the Hazen & Sawyer Report for me, though, the 456 9 and the 434? 10 A. As a matter of fact, this shows the 11 522,000 acres in Hazen & Sawyer. These are not 12 exact numbers, but they'll -- I will get you the 13 exact numbers. If you'll look at that table right 14 there. 15 Q. (By Ms. Stinson) 21 in Hazen & Sawyer has 16 the 522? 17 A. And from the 522, they then have sugarcane 18 at 457,000 acres, which is rounded from 456,641; 19 vegetables are 21,000 acres; sod is 23,000 acres. 20 There's also 11,000 acres of pasture; and 21 10,000 acres of other Ag uses of which I took out of 22 the cropland sector. 23 Q. Okay. You have allocated the 61.25 of the 24 total STA annual cost among all the crop acres; is 25 that correct? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 219 1 A. Yes. What I've allocated is 28.5 million 2 across the 465,341 cropland acres after STA's are 3 built. 4 Q. Okay. 5 A. The result of that is a per cropland acre 6 appropriation or allocation of $61.25. 7 Q. Okay. To which you add 86 cents an acre 8 for the BMP's? 9 A. For sugarcane. 10 Q. For sugarcane? 11 A. Yes. 12 Q. And you have not added the cost of BM -- 13 you have not analyzed the cost to the vegetable 14 producers, correct? 15 A. We didn't address vegetables or sod. 16 Q. Or sod. Why not? 17 A. Because the majority of the acres are in 18 sugarcane. We may do that at a later date. No 19 particular reason. 20 Q. Have you made a determination as to whether 21 the vegetable or sod acres can support the cost of 22 STA plus BMP costs in the EAA? 23 A. We have done analyses. We haven't made a 24 budgeting analysis similar to this, and all we'd 25 have to go on is the IFAS crop budgets for PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 220 1 vegetables. 2 By looking at those, you can make a 3 determination of if there is enough residual there 4 to cover some costs. 5 Q. And you haven't done that? 6 A. I haven't done that, specifically. 7 Q. The 62.11 says, "per cane acre with STA and 8 BMP if allocated uniformly across EAA." 9 What does that mean, "if allocated 10 uniformly across the EAA"? 11 MR. BURGESS: Where are you? 12 A. Well, mine says -- 13 Q. I'm looking at a different page. 14 A. Are you? "STA and BMP costs in EAA." 15 Q. Well, maybe yours is just a different 16 type. Okay. 17 A. "$62.11 per cane acre for STA and BMP." 18 Q. Right. 19 A. That's what I've got. 20 MR. BURGESS: "If allocated 21 uniformly across EAA"? 22 MS. STINSON: Yours has been 23 edited. 24 A. That just says if you took every cane acre 25 and divided the total number of cane acres by the -- PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 221 1 if you added the 61.25, which is all cropland acres, 2 says everybody gets to pay 61.25 or 61.25 would be 3 the 28.5 million allocated across 465,000 acres. 4 MR. BURGESS: Would he -- 5 A. And then just for cane, if we added 6 86 cents, we would get $62.11 that are applicable to 7 gross cane acres. 8 Q. (By Ms. Stinson) Okay. Gross cane acres, 9 not harvested cane acres? 10 A. That's right. 11 MR. SAXE: One moment please. 12 (WHEREUPON, there was discussion 13 off the record.) 14 A. I made the statement that it would be 62.25 15 per cropland acre for the STA's, and it would be 16 61.25 per cropland acre for STA's. 17 Q. (By Ms. Stinson) Okay. And that is for 18 all crops? 19 A. Yes. 20 Q. And the 62.11 is the cost per gross cane 21 acre assuming that vegetables and sod pay their 22 61.25 plus BMP costs, correct, whatever that may be? 23 A. Yeah. 24 Q. And then you have that after the STA's of 25 that 465,341 cropland acres 435,033 will be our PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 222 1 gross cane acres, correct? 2 A. Yes. 3 Q. So you multiply those gross acres times the 4 62.11 to get $26.7 million allocated of STA cost 5 allocated to the sugar producers, correct? 6 A. If you're going to multiply 62.11 times 7 430,533 gross acres of cane, you get $26.7 million 8 of annual cost for STA's and BMP's against an acre 9 of cane land. 10 Q. Okay. Which you then divide by the number 11 of acres you would anticipate actually being 12 harvested? 13 A. Yes. 14 Q. Of 322,900; is that correct? 15 A. Yes. 16 Q. For an assessment per harvested acre of 17 $82.82; is that correct? 18 A. That would give you a cost per harvested 19 acre for STA's and BMP's, and it's per harvested 20 acre of cane. 21 Q. And, again, that is assuming that the 22 vegetable and sod people pay their share? 23 A. That's equally apportioning the cost of 24 STA's across the entire cropland in EAA. 25 Q. Per acre? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 223 1 A. Per acre. 2 Q. But you have not determined whether the sod 3 and vegetable producers essentially can afford to 4 pay their share? 5 A. We have. 6 MR. SAXE: Objection to form. 7 Q. (By Ms. Stinson) You can answer anyway. 8 A. We haven't pulled the crop and livestock 9 for the crop budgets up to do an analogous study for 10 vegetables or sod. 11 Q. Then back on the "Executive Summary," you 12 have a figure of, well, $83 SWIM cost. I presume 13 that's just the rounding of the $82.82 cents? 14 A. Yes. 15 Q. Calculated as 1.09 cents SWIM cost per 16 pound of sugar? 17 A. That would be the $82.82 divided by yield. 18 Q. By yield, that's the 7,597 pounds per acre? 19 A. 7,597, yes. 20 MR. BURGESS: Where is that figure 21 from? 22 MR. SAXE: Excuse me, Counsel, 23 are you asking on what date? 24 MR. BURGESS: In this document. 25 MS. STINSON: Right there. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 224 1 MR. SAXE: Which figure? 2 MR. BURGESS: The 7,597. 3 MR. SAXE: That's on the table 4 average yield of sugar per harvested 5 acre 1986 to '90. 6 MR. SAXE: Off the record. 7 (WHEREUPON, there was discussion 8 off the record.) 9 Q. (By Ms. Stinson) Based on your analysis of 10 the returns and costs associated with sugarcane, is 11 your conclusion that the returns to the grower are 12 $327 per acre? 13 A. This analysis looks at what can be returned 14 to the grower if needed. So in all cases, not all 15 the 327 is returned to the grower. In those cases 16 where it's integrated, where you have the 17 cooperative or where you have a company that has 18 both the production and the milling, they can 19 allocate it anywhere they want; but it's equivalent 20 to $327 per acre of land. 21 Q. Again, that's an average across all yield 22 belts, correct? 23 A. That's generated from the Sugar & Sweetner 24 Report's statistics that are published from '86 25 through 1990. So it would be all of the EAA. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 225 1 Q. The returns per acre used in the 2 Hazen & Sawyer Report are significantly different 3 from the returns you have used in your analysis; is 4 that correct? 5 A. She gets lower returns, yeah. 6 Q. Can you explain the discrepancy. 7 A. Not all the discrepancy, but some of the 8 discrepancy is attributable to the way she begins 9 inflating costs and handling costs and returns and 10 what she has is, for several of the cases, the costs 11 are increasing faster than returns. So they begin 12 to collapse on each other. 13 Q. What costs are inflated by Hazen & Sawyer, 14 the production -- I mean, generally those within the 15 production and processing categories? 16 A. Yes. 17 Q. Can you tell me how those are inflated? Is 18 there an across-the-board percentage, or does it 19 vary by labor and other components? 20 A. I can tell you when I look at this. 21 Q. Okay. 22 A. Costs for milling were inflated by 23 2.8 percent per year, and inflation in the cost of 24 increasing productivity is estimated 10-year average 25 produced here. Prices -- this is coming off of PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 226 1 Page 4-11, Page 4-12. 2 Q. Of what version of the report? 3 A. The "Contract Completion Report," dated 4 October 1992. The costs of production are inflated 5 based on the cost of the production indices reported 6 by USDA and the "Agricultural Prices Publication." 7 Q. What is the inflation rate there? 8 A. She doesn't give it, and my recollection -- 9 I recall it to be 3 percent. I don't see the exact 10 value she used, but I recall it as 3 percent. 11 Q. Essentially, then, is what you're saying is 12 that she inflated the processing costs 2.8 and the 13 production cost 3 percent, as you recall? 14 A. What did I say? 15 Q. You said, "cost of milling." Does that 16 mean processing? 17 A. Yeah, milling. 18 Q. Are you saying that it is inappropriate to 19 inflate these costs in a projection or simply that 20 you have not done a projection but a snapshot view 21 which is a different approach? 22 A. When you do the inflation, you've got to be 23 careful that you don't throw a bias into this that 24 can bias it either direction. So that's what I'm 25 saying about using rates of inflation. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 227 1 What we see is that with inflating costs, 2 we have a reduction in per acre profits over time. 3 Whether or not that's appropriate or not depends 4 upon whether your efficiencies, production prices, 5 and other things are moving the same direction. 6 And to use just straight rates of 7 inflation, just on the input mix you have, allows 8 for absolutely no adjustments in the production 9 process. There will be no changes. It assumes 10 there will be no changes in any of your inputs or 11 input mixes or anything like that. And that locks 12 in a fixed input/output ratio. 13 Q. Hazen & Sawyer also inflated productivity 14 by 2 percent, correct? 15 A. They had raw sugar and per ton of sugarcane 16 increasing it 2 percent. 17 Q. Do you think it's similarly inappropriate 18 to increase productivity by a straight line rate 19 inflation rate? 20 A. Well, I didn't say it was inappropriate. I 21 said it needs to be done in a consistent and 22 defendable method; and I would say that it's not 23 inappropriate to use improved efficiency, changes in 24 input mix, increasing costs, as long as you have an 25 opportunity to make some adjustments or give the PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 228 1 producer the opportunity to make adjustments. 2 Q. Do you have any opinion as to whether the 3 inflation of costs used by Hazen & Sawyer are 4 appropriate or inappropriate? 5 Have you analyzed those? 6 A. I haven't analyzed those in detail. I 7 think it's important to look at for a 20-year 8 analysis whether this is done like you mentioned 9 before, for all products just in gross or if she's 10 going to do it by each production item and try to do 11 it separately for each production item. 12 Q. The categories of data, for example, with 13 regard to costs which you used in your analysis, 14 variable cash expenses, et cetera, capital 15 replacement, are you saying that it would be -- 16 rather than inflating the bottom line, it would be 17 better to look at each of those line items 18 individually? 19 A. It very well could be because energy's 20 declining. That mix that you get when you take 21 prices paid index from USDA, which is prices paid by 22 farmers for all inputs is a conglomerate of all 23 kinds of different things that may have absolutely 24 no relationship to the mix of inputs used by the 25 EAA. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 229 1 So you need to come back in and see what 2 the EAA is doing. And I still would want to look at 3 the same time at what's happened over time with some 4 of the data that's in the Sugar & Sweetner Report 5 where they have graphed the actual data by year. 6 When you start working with this, they 7 have, also, graphed the cost per pound of sugar and 8 the cost per pound of sugar has declined in the EAA, 9 if you look at the graph in the Sugar & Sweetner 10 Report just as cost of a pound of sugar. 11 Q. But that would account for increase in 12 productivity, would it not? 13 A. Yes, it would. 14 Q. You may have answered this, but let me make 15 sure. Have you analyzed or formed an opinion as to 16 what rate of inflation, if any, should be applied to 17 the cost of milling and production in the EAA if 18 you're doing a future projection? 19 A. I've not locked into a hard opinion on 20 that. No, I have not formed an opinion. I would 21 like to see information on that and I'm interested 22 in looking at the data that's put in front of me and 23 this could very well be a different rate of 24 inflation for each of the inputs, but it still 25 leaves unresolved the question of how does one take PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 230 1 care of input mix. 2 Q. You have not independently looked at that? 3 A. No, I have not. 4 Q. But in your analysis, you did not attempt 5 to do that as you said; you simply took a snapshot 6 of data? 7 A. That's right. We didn't have a reducing 8 cost of production or reducing cost per pound of 9 sugar or increasing yields or increasing costs or 10 anything. It's a snapshot. 11 Q. Do you consider yourself at all an expert 12 in the effects -- possible effects of GATT and/or 13 NAFTA on the sugar industry? 14 A. No. I'm relying upon other people that 15 have worked very close with it, no. 16 MS. STINSON: I don't have any other 17 questions. 18 MR. SAXE: Let's just take a real 19 quick break. 20 (WHEREUPON, a recess was taken.) 21 * * * 22 R E - E X A M I N A T I O N 23 * * * 24 BY MR. Burgess: 25 Q. Dr. Lacewell, prior to your retention by PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 231 1 the Justice Department, have you had any prior 2 research experience with the Florida sugar industry? 3 A. No. 4 Q. How about with the production or sod 5 industries in Florida? 6 A. Not in Florida, no. 7 Q. Sugar industry any place else? 8 A. I worked with the Lower Rio Grande Valley 9 which has both sugar and vegetables. 10 Q. How much do they have in sugar? 11 A. I don't remember the acres, but it's a 12 smidgen of what Florida has. 13 Q. And what was the issue or issues in that 14 study again? 15 A. We were doing analysis of the 16 Lower Rio Grande Valley relative to cropping 17 patterns and formal renovations. 18 Q. Is there anything from that study that 19 you've drawn upon for any opinions, or conclusions 20 that you've rendered so far in your deposition? 21 A. No. 22 Q. Other than the comments that you have 23 provided to Hazen & Sawyer with respect to their 24 draft and/or final reports, have you provided any 25 original pieces of research to them? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 232 1 A. No, I haven't. 2 Q. Has Dr. Johns or Dr. Jones or Dr. Ozuna to 3 your knowledge? 4 A. They'll have to answer themselves. 5 Q. To your knowledge, you don't know? 6 A. No. 7 Q. Could you look at Exhibit 11, please. 8 A. Okay. 9 Q. Are you familiar with the assertions that 10 appear after the first bar graph on that page, 11 starting with, "No income taxes paid by growers"? 12 A. I see that, yeah. 13 Q. Have you reviewed these before? 14 A. We've seen these comments before, yes. 15 Q. Take the first one, for example, "No income 16 taxes paid by growers." Is that an accurate 17 statement, to your knowledge, with respect to 18 Grace Johns' 10-year study? 19 A. To my knowledge, she did not include income 20 tax by growers, yes. 21 Q. And do you know why she didn't consider 22 that? 23 A. The reason she didn't consider that is her 24 study was based on whether land would be in 25 production or not in production; and as your PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 233 1 returns, your taxable returns decline, your taxes 2 return. 3 So this is a flexible value here that will 4 go down as your returns, taxable returns, go down 5 and you'd have to incorporate that; but by the time 6 your returns get to where there's no taxable 7 returns, there's no income tax. 8 Q. So, in essence, does it matter at the point 9 where land is not yielding any of the returns? 10 A. It's not going to be a significant factor 11 in determining whether land is in production or not 12 in production. 13 Q. And that is because? 14 A. As your returns to land are declining, your 15 income taxes are declining. That's a cost. It's a 16 function of the net. 17 Q. Do you know whether Grace Johns did a cash 18 flow statement or a balance sheet? 19 A. What Dr. Johns did was an analysis that 20 looked at it year by year that calculated the 21 returns to land. And so she did this on an annual 22 basis, from 1994, for a 10-year period. And it 23 looked at the returns to land for sugarcane, 24 vegetables, and sod over that period of time. 25 Q. And is a return to land study a classic PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 234 1 economic analysis? 2 A. It's a typical economical analysis to see 3 if land's going to be in production or not in 4 production. 5 Q. And would you say that, typically, 6 consideration of income taxes is or is not included 7 in the returns to land analysis? 8 A. Typically is not included in a returns to 9 land analysis. 10 Q. Have you seen it both ways, if you will? 11 A. I have never seen it included in a returns 12 to land analysis. 13 Q. Is there a role for income taxes in 14 economic analysis? 15 A. Income taxes could play a role in farm 16 survival, and its objective is to do an analysis of 17 a unique farm firm and with the specific 18 characteristics of that farm firm, evaluate the firm 19 and its survivability, then income taxes could play 20 a role. But I am not sure that it even plays a role 21 in that. 22 Q. Why is that? 23 A. Well, again, if you're in such a position 24 that you're about to become insolvent, I'd say 25 there's a probability that you're not paying any PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 235 1 income tax. 2 Q. The second point on Exhibit 11 reads, 3 "No debt carried by growers." 4 Do you know whether or not Grace Johns 5 assumed any debt carried by growers for her 10-year 6 analysis? 7 A. She put in an interest on operating 8 capital, which you could assume she borrowed 9 operating capital, short-term debt. She also 10 amortized the machinery, which assumes that she 11 borrowed all the money that was used for the purpose 12 of the machinery, which would be intermediate debt. 13 She had debt as "debt," yes. 14 Q. Did she have any long-term debt? 15 A. She did not have any land debt. 16 Q. Is there other long-term besides the land 17 debt? 18 A. That would be the most logical that I can 19 think of unless you want to mortgage your land to 20 take the money to buy something else completely 21 unrelated to the operation. You could still 22 mortgage the land, so it's still land debt. 23 Q. And why didn't she include land debt? 24 A. Because land debt, again, will not be a 25 determining factor of whether or not a piece of land PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 236 1 is used to produce a crop. Land debt would be 2 important in farm firm survival. 3 Q. Have you ever seen land debt considered in 4 a returns to lands analysis? 5 A. No, I haven't. 6 Q. What's your definition of farm firm? 7 What does that connote? 8 A. A farm firm would be an individual farm 9 operation that's operated as a separate entity and 10 is engaged in production of agricultural products. 11 Q. Are you aware of any farm firm analyses 12 that have been conducted with respect to the EAA in 13 connection with the SWIM plan challenge? 14 A. Not beyond the work that is carried out by 15 Dr. Johns in the Hazen & Sawyer Report or whatever. 16 Q. Do you consider her work or any portion of 17 her work to be farm firm analysis? 18 A. She used many of the principles you used in 19 production economics and farm management analysis to 20 evaluate land in production. She did not evaluate 21 whether a farm would survive specifically or not 22 survive specifically. 23 Her analysis was directed to determining 24 when land would go out of production. 25 Q. And when, if you recall, did she say land PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 237 1 would go out of production? At what economic point? 2 A. The point land goes out of production is 3 when the returns to land is zero. 4 Q. So it's your testimony that long-term debt 5 or land debt was not an important factor for 6 Grace Johns to consider in her analysis? 7 A. I would say that land debt, long-term debt 8 was not an important factor for her to consider in 9 determining whether land in EAA would be in 10 production or not in production. 11 Q. The third entity there on Exhibit 11 12 states, "All machinery is purchased new in 1994 for 13 cash and without any debt." 14 Do you know whether that's an accurate 15 statement of an assumption in Grace Johns' 10-year 16 study? 17 A. All machinery was purchased in 1994, except 18 something -- and it was in 1981. I don't recall 19 what, but, nevertheless, she purchased all machinery 20 new in 1994 and she borrowed all the money to 21 purchase machinery and paid it off over a planning 22 period. 23 Q. Do you know how long the planning period 24 was? 25 A. I can look it up. I don't recall it PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 238 1 exactly. 2 Q. So that would not be an accurate statement; 3 is that correct? 4 A. That's not an accurate statement. 5 Q. If you wouldn't mind taking a look to see 6 where that might be in that report. 7 A. 8 percent annual interest over 12 years. 8 Q. Do you know how much of the money was 9 borrowed, how much was put in this machinery? 10 A. The total amount. 11 Q. For what percentage? 12 A. Well, she says depreciation returns in 13 investment is a 1994 purchase price of the farm 14 machinery complement amortized at 8 percent annual 15 interest over the estimated economic life of 16 machinery, which says that she borrowed in her 17 analysis every penny of it. 18 Q. What page is that? 19 A. It's 4-11, second paragraph. 20 MR. SAXE: To clarify, that's 4-11. 21 Q. (By Mr. Burgess) The next entry on 22 Exhibit 11 states, "Improper use of model technique 23 (FLIPSIM)." 24 What is your understanding as to whether 25 and to what extent Grace Johns employed FLIPSIM? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 239 1 A. She used FLIPSIM as a method to make 2 calculations so that she could determine and 3 estimate through time the returns to land so that 4 she could track to see whether it was a positive 5 returns to land. 6 So FLIPSIM provided a convenient tool to 7 keep a count of cost and returns and the returns to 8 land. 9 Q. Are you familiar with FLIPSIM? 10 A. Somewhat. 11 Q. Is it a methodology for studying impact of 12 policy changes on farm level behavior? 13 A. That's what it says in the documentation, 14 yes. 15 Q. Have you ever utilized it? 16 A. I have not utilized it myself, no. 17 Q. Do you have any opinion as to whether 18 FLIPSIM could be used to analyze the impact of 19 federal sugar program policy changes? 20 A. To evaluate the impact of federal sugar 21 policies changes of what? 22 Q. Well, the program changes, assume -- 23 A. On what? What do you want to evaluate? 24 Q. Production. Changes in production. 25 A. Okay. He's got a static model, and he's PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 240 1 got a stochastic model. 2 If you ran it the way that Grace ran it, 3 you could probably get some estimates of what 4 changes in sugar production -- sugar policy would do 5 to production of sugar. 6 Q. How did Grace run it? 7 A. She ran it as a static model to keep the 8 calculation straight for her. It's convenient 9 because it's programmed and tested and keeps all 10 your items in the right place and moves from year to 11 year. 12 Q. What does "stochastic" mean? 13 A. Stochastic means, random chance -- 14 probabilities. Stochastic is another word for 15 probability. 16 Q. Going back to the debt item just for a 17 moment. Other than the new machinery purchased 18 complement, was there any other intermediate debt 19 that Grace Johns considered for her 10-year 20 analysis? 21 A. Not that I recall at this point. 22 Q. What other type of intermediate debt might 23 a farm have? 24 A. That would be the most logical. 25 Q. Equipment complement? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 241 1 A. Yes. 2 Q. Do you have an opinion as to whether or not 3 Grace Johns improperly used FLIPSIM? 4 A. My opinion is she did not improperly use 5 FLIPSIM. 6 Q. The next item states on Exhibit 11, "No 7 risk in the sugarcane yield of model farm." 8 Do you know whether or not Grace Johns 9 considered risks in her model farms? 10 A. She didn't consider risks, no. 11 Q. Do you know why not? 12 A. When you look at the EAA and you look at 13 the program for sugar policy and you look at the 14 yields, it's not a terribly risky business. 15 So she did review the materials, and you 16 take the 5-year averages, the yields have been 17 reasonably consistent. If you look at the prices, 18 the prices over the last few years have been 19 reasonably consistent. 20 What you've got is an industry that's got 21 technology improving faster than cost production is 22 increasing, so average cost per pound of sugar is 23 actually going down. 24 And another way to consider this is land 25 values, and we hear from Richardson land value PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 242 1 2,500 or 3,000. Mr. Wedgworth said something 3,000 2 or 4,000. 3 If you look at what the returns to land 4 have to be to get that kind of value, then risk 5 would already be incorporated in those land values; 6 and when you back out of this and get your annual 7 returns to land, that's got to be pretty high to 8 justify that. 9 Q. I'm sorry. Backed by something? 10 A. You better repeat it. 11 MR. BURGESS: Would you read it 12 back, please. 13 (WHEREUPON, the requested 14 portion of the record was read 15 by the court reporter.) 16 Q. (By Mr. Burgess) And your basis for saying 17 that the sugar farming in the EAA is not a terribly 18 risky business is what? 19 A. Data in the Sugar & Sweetner Report. 20 Q. Over what period of time do the averages 21 show that the yields have been reasonably 22 consistent? 23 MR. SAXE: Objection to form. 24 If you're attempting to restate 25 what Professor Lacewell said about PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 243 1 yields, I don't think he said that it 2 shows that yields have been fairly -- 3 quote, "fairly consistent." 4 MR. BURGESS: Whatever he said 5 with respect to yields. 6 Q. (By Mr. Burgess) Over what period of time 7 were you basing that statement? 8 A. Those would be over 20 to 30 years that the 9 gross tons do not change much. The amount of sugar 10 from each pound, from each ton of sugar has gone 11 up. So we have an increasing output of sugar per 12 ton of cane, but we don't see a lot of variability 13 in output and risks or in price. 14 Q. And your testimony with respect to prices 15 was that they had been reasonably consistent. 16 For what period of time have they been 17 reasonably consistent? 18 A. Do you have March? 19 (Dr. L. Jones complies with 20 document.) 21 A. The date of that in front of me right now 22 is '85 to '91. 23 Q. (By. Ms. Stinson) And what does that show? 24 A. It shows the price is over 20, but in the 25 20-cent bracket, 20, 23 cents. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 244 1 Q. Are you aware of any studies which address 2 the likely price of sugar over the next, say, to two 3 to three to five years? 4 A. There is a study that was in one of the -- 5 that's in the handout that you gave me, which is 6 Exhibit 11, that talks about implications of GATT 7 agreement for world commodity prices that I would 8 assume addresses that. I haven't read it. 9 And there's some material Dr. Polopolus has 10 put together that I also have not reviewed that 11 addresses sugar price. 12 Q. Do you have an opinion as to what the 13 likely price of sugar will be over the next two to 14 three to five years? 15 A. The next two to three to five years, my 16 opinion of that would be that if we don't have a new 17 farm bill by 1995, the current farm bill's in place 18 and that there will be no dramatic changes. 19 Q. What role, if any, does yield risks 20 normally play in a returns to land analysis? 21 A. Normally no role in the returns to land. 22 Yield risks can be important in looking at farm firm 23 survivability, to repay notes, and can be important 24 in looking at cropping patterns within a single farm 25 firm with unique characteristics. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 245 1 Q. What is your definition of "yield risk"? 2 A. Yield risks is the variability of yield 3 across several years. 4 Q. And, if I recall your testimony correctly, 5 you don't expect any increase or change in yield 6 risk as a result of implementation of the BMP's as 7 long as they're implemented, quote, unquote, 8 "correctly"? 9 A. That's true. 10 Q. With respect to sugarcane production in the 11 EAA, is there a probability distribution of yields 12 for each season? 13 A. Across seasons? 14 Q. Yes, from season to season. 15 A. You can develop a probability of 16 distribution of yield, yeah. 17 Q. Do you know whether anyone has done that 18 with respect to the SWIM plan challenge? 19 A. I don't know whether that's been done or 20 not, no. 21 Q. The next entry on Exhibit 11 speaks in 22 terms of, "mill efficiency trend overstated." 23 And what is your understanding regarding 24 the level of mill efficiency in the Florida 25 sugarcane production? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 246 1 A. My understanding is what's in the 2 Sugar & Sweetner Report which gives the pounds of 3 sugar per ton of cane. 4 Q. What does "mill efficiency" refer to? 5 A. Mill efficiency would be the pounds of cane 6 per ton of cane -- 7 MS. STINSON: Excuse me? 8 A. -- pounds of sugar per ton of cane. 9 MS. STINSON: Thank you. 10 Q. (By Mr. Burgess) Do you believe that's a 11 correct or incorrect statement that Grace Johns 12 overstated the mill efficiency term? 13 MR. SAXE: Counsel, I just wanted to 14 point out, this is not 15 Professor Lacewell's document. 16 MR. BURGESS: I understand. 17 MR. SAXE: So when you ask him 18 what a given term means -- 19 MR. BURGESS: Right. 20 MR. SAXE: -- he doesn't know 21 what the author intended the term to 22 mean. 23 MR. BURGESS: Okay. 24 Q. (By Mr. Burgess) Well, assuming that the 25 author intended the terms to mean pounds of sugar PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 247 1 per ton of cane -- strike the question. 2 What did Grace Johns say with respect to 3 mill efficiency trends, if you recall? 4 A. She had mill efficiencies increasing over 5 time derived -- she derived that from looking at the 6 historical data that was in the 7 Sugar & Sweetner Report. 8 Q. And at what percentage did she have them 9 increasing over time, if you know? 10 A. 2 percent is the number she used. 11 Q. Are you aware of any other studies or 12 estimates of mill efficiency in the EAA other than 13 Grace Johns' 2 percent? 14 A. It's the only one that I'm aware of. The 15 data's in the Sugar & Sweetner Report. So it's 16 published information. 17 Q. Did she use a regression equation to 18 generate that 2 percent? 19 A. That's my impression. 20 Q. Did you check her regression equation in 21 her report? 22 A. I looked at it. I didn't check her 23 statistics or look back on it. She indicated it was 24 significant, had a high "R" squared. I don't know 25 what the "R" squared was. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 248 1 Q. You didn't check her computations, then? 2 A. No, I did not. 3 Q. Do you know, in fact, whether she even used 4 that regression equation in her analysis? 5 A. I would assume she did, but I don't know, 6 in fact, that she absolutely did. 7 Q. Does the concept of mill efficiency have a 8 tendency to increase the prices paid to the growers? 9 A. Because you take production costs and 10 processing costs and take out for all the factors of 11 production from each of them and leave the residual 12 as what could be returns to land, then if you have 13 increasing efficiency at the mill, so that the 14 increasing efficiency is greater than your regular 15 increasing cost production, that means the 16 processing cost per pound of sugar is going down and 17 it would leave more that could be paid to the land. 18 Q. The next entry on Exhibit 11 states, 19 "Improperly combining mill and grower return." 20 Do you know whether Grace Johns combined 21 mill and grower returns in your 10-year analysis? 22 A. What Grace Johns did was take out a cost 23 for each of the factors of production. She did 24 that, also, at the mill. So she paid for each of 25 the factors of production which is typical PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 249 1 economical analysis. 2 She then said, what's not gone to pay all 3 the different factors of production could be 4 available to pay the landowner to keep land in 5 production. That was her estimate of what could be 6 paid. 7 Q. The next item speaks in terms of, "No 8 machinery will require replacement during the 9 10-year study period." 10 Do you know whether she, in fact, made that 11 assumption? 12 A. She bought the machinery in 1994 with the 13 12-year life. So, no, there would not be a need to 14 do that; but she's making a payment against the 15 machinery every year. 16 Q. Next assumption reads, "Land values 17 increase at a constant 4 percent without concern for 18 net cash return." 19 Do you know whether or not Grace Johns' 20 study had land values increasing at 4 percent per 21 year? 22 A. I don't recall Grace Johns having land 23 value estimates in her study. I can't tell you the 24 source of that comment or what it refers to or what 25 it means. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 250 1 Q. The next item reads, "Farms leave 2 production as soon as cash costs exceed cash 3 returns." 4 Do you know whether or not that was an 5 assumption Grace Johns made? 6 A. Oh, I don't know what that particularly 7 might mean. Again, what Grace Johns did, she paid 8 all of her factors of production; and she left 9 residual that could be paid to land once this 10 residual that could be available to be as a payment 11 to land reads zero, that's when she quit 12 production. She said, "There's not anything left to 13 pay land. There's no economic incentive to stay in 14 production. If that point is hit in this analysis, 15 that's when I'll take land out of production." 16 Q. Is that the same as marginal costs 17 exceeding marginal revenues? 18 A. Well, marginal costs exceeding marginal 19 revenues refers to how much you put on a specific 20 input. And so you're making decisions about your 21 input mix, and that's when marginal revenue or 22 marginal cost or marginal value of product equal 23 marginal factor, cost becomes an important 24 consideration. 25 She didn't change her input mix one bit, so PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 251 1 all she did was pay each of the factors of 2 production for the processing, for the production, 3 generate a residual that could be paid to land; and 4 when that reached zero, she quit. 5 MR. SAXE: Could we take just a 6 one-second break? 7 (WHEREUPON, the witness and 8 counsel conferred and 9 there was discussion 10 off the record.) 11 Q. (By Mr. Burgess) In response to one of 12 Ms. Stinson's questions, I think you said that you 13 would rely on others with respect to issues of GATT, 14 NAFTA. Who were you referring to? 15 A. Primarily Dr. Bruce Gardner. 16 Q. How about with respect to the federal sugar 17 program, do you consider yourself an expert in that 18 area? 19 A. No. I would still rely upon Dr. Gardner. 20 Q. Do you have any opinions as to whether that 21 program should be retained, revised, or abolished? 22 MR. SAXE: Question for 23 clarification. Are you talking 24 about -- your previous question about 25 upon whom would Professor Lacewell PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 252 1 rely concerning the federal sugar 2 program, did you mean the continuation 3 or the future prospects for the 4 federal sugar program? 5 MR. BURGESS: I guess, his expert 6 opinions concerning the federal sugar 7 program. 8 MR. SAXE: The mechanics, the 9 present operation? 10 MR. BURGESS: Yes. 11 MR. SAXE: Okay. Thank you. 12 You can answer the question. 13 A. It still would be Dr. Gardner relative to. 14 Q. (By Mr. Burgess) Do you have any opinion 15 as to whether the loan rate of 18 cents is going to 16 stay the same or go up or go down over the next two 17 to three years? 18 A. If I were projecting, I would project it 19 would probably stay the same. The government 20 programs have been in place for 40 years. So I 21 would expect it to be the same. 22 Q. Do you have an opinion as to whether sugar 23 production costs have trended up or down in Florida 24 over the last five years? 25 I apologize. If you've already voiced the PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 253 1 opinion, I don't recall. 2 A. Based on the information of the 3 Sugar & Sweetner Report, when you look at the costs 4 for production in processing per pound of sugar, 5 that looks like a downward trend to me. 6 Q. Over what period of time? 7 A. In this case, the graph shows from 8 1981 through 1990. 9 Q. In your opinion, the graph shows that costs 10 of processing on per pound of sugar basis is going 11 down? 12 A. Yes. 13 MS. STINSON: Excuse me. 14 May I ask what graph you're 15 looking at? 16 THE WITNESS: This is in the 17 Sugar & Sweetner Report, June 1992; 18 and it's figure A-10, "Florida 19 Sugarcane Production and Processing 20 Costs." 21 MS. STINSON: Thank you. 22 Q. (By Mr. Burgess) To your knowledge, has 23 anyone other than Dr. Johns attempted to analyze how 24 many people are employed in agriculture and 25 agriculturally-related industries within the EAA? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 254 1 A. There is material that Dr. Polopolus 2 presented to the board, but I don't know how he 3 generated or developed the numbers. 4 Q. Other than Johns and Polopolus, are you 5 aware of any other estimate? 6 A. No. 7 Q. What multiplier did Grace Johns use in 8 connection with her determination as to jobs that 9 would be lost in the region? 10 MR. SAXE: Counsel, are you asking for 11 the number or the source of the 12 number? 13 MR. BURGESS: Well, I'm sorry. 14 Q. (By Mr. Burgess) I thought there was some 15 testimony that she used a multiplier abdicated by 16 Mulkey & Clouser. 17 Do you recall that testimony? 18 A. She used the RIMSII, yeah, multipliers. 19 Q. And do you know what the -- I guess you're 20 looking it up. 21 A. Yeah, I'll have to look it up to get 22 exactly what it was. On Page 9-15 of the "Contract 23 Completion Report" of Hazen & Sawyer, the 24 multipliers that I see on this page say, 25 "Palm Beach County milled rice multipliers." These PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 255 1 are for rice. 2 So rice has a different set of multipliers 3 than sugarcane. Output sales, per dollar of direct 4 sales is 1.26; earnings per sales of direct 5 sales, .1936; employment and FTE's per million 6 dollars of direct sales, 9.13. 7 Then there's a set of numbers for the State 8 of Florida, which is output sales per dollar of 9 direct sales, 1.44; earnings per dollar of direct 10 sales, .2523. 11 Q. Is this for -- I'm sorry. 12 Are you reading for rice? 13 A. Rice, still rice. 14 And employment in FTE's per million dollars 15 for direct sales is 14.2. 16 Q. Do you know whether those RIMSII 17 multipliers can be used to reflect number of people 18 employed as opposed to just FTE's? 19 A. They represent FTE's. 20 Q. Are you aware of any simulations which have 21 been run by Dr. Johns or others conducted with 22 respect to people as opposed to FTE's? 23 A. Again, there's some numbers that 24 Dr. Polopolus has generated that show people; but we 25 don't know what procedure he used to do that. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 256 1 Q. Do you know what the moderating provisions 2 of the -- for Florida statutes, in particular, 3 Chapter 17-4 provide for? 4 A. No, I don't. 5 Q. Do you know what a mixing zone is? 6 A. You'd need to read a definition to me. I 7 can't give you a definition. 8 Q. Do you know or have you ever heard of the 9 term SSAC, S-S-A-C, spoken in terms of the Florida 10 Statute for Florida Water Quality Standards? 11 A. No. 12 Q. My notes reflect that in Exhibit 7 you used 13 a term, I believe, that is in context of referring 14 to Dr. Luke's studies as "socio-economic 15 evaluations." What is your experience with respect 16 to socio-economic evaluations? How are they 17 conducted? 18 A. My experience is I have not done a specific 19 socio-economic study. If I was involved in anything 20 that involved that, I would go back with Dr. Jones 21 and ask for his support on that part of the program. 22 Q. Dr. Lonnie Jones? 23 A. Yes. 24 MS. STINSON: Off the record. 25 (WHEREUPON, there was discussion PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 257 1 off the record.) 2 Q. (By Mr. Burgess) Are you aware, 3 Dr. Lacewell, of any studies ongoing which consider 4 the weighing of the social-economic and 5 environmental costs of achieving the levels called 6 for in the SWIM plan versus the social, economic, 7 and environmental benefits that might be gained from 8 reaching those levels? 9 THE WITNESS: Read that back. 10 (WHEREUPON, the requested 11 portion of the record was read 12 by the court reporter.) 13 A. Relative to the first of those comments, 14 whether they would be economic, social, 15 environmental, costs of reaching the discharged 16 levels of the SWIM plan, there's the Hazen & Sawyer 17 Report that was commissioned by the South Florida 18 Water Management District to make some estimates of 19 what could be expected to be the impact in the EAA 20 of satisfying the SWIM plan. This included the 21 direct, indirect and induced impacts which would be 22 economics and economic activity changes in gross 23 output from agriculture, jobs, this sort of thing. 24 Relative to socio-economic impacts, which 25 might include schools, streets, sewers, and other PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 258 1 infrastructure of that nature, it's my impression 2 that Mr. Luke may be doing some work on that in the 3 EAA; but I don't have firsthand knowledge nor can I 4 say what he's going or how he's going to do it or 5 what he's going to do. 6 Q. You're not aware of anyone doing it on the 7 Respondent's side, the District of the DER of the 8 United States? 9 A. I'm not aware, no. There's a SAGE group 10 that are carrying out the studies. So, no, I don't 11 have a complete inventory of what kind of studies 12 the South Florida Water Management District is 13 doing. 14 Q. You're not aware of any benefits, that type 15 study that is being done? 16 A. Beyond the work that Hazen & Sawyer did, 17 no, I'm not aware of anything beyond 18 Hazen & Sawyer's work. 19 Q. Have you reviewed the Marjory Stoneman 20 Douglas Act? 21 A. I read through that sometime ago. 22 Q. Are you aware that under that act the cost 23 of treatment to reach the goals enunciated in the 24 SWIM plan are divisible and are allocatable, if you 25 will, in a proportion to a property owner's PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 259 1 contribution towards the problem? 2 MR. SAXE: Objection to form. 3 Q. (By Mr. Burgess) In the abstract, are you 4 familiar with that? 5 MR. SAXE: I think that assumes 6 material not in evidence, Counsel. 7 It's a legal conclusion, first of 8 all, concerning the Marjory Stoneman 9 Douglas Act. 10 MR. BURGESS: Objection to legal 11 conclusion noted. 12 Q. (By Mr. Burgess) Are you aware of that 13 concept? 14 A. I've heard of it. 15 Q. Have you done any research or studies past 16 what you have testified to so far in attempting to 17 quantify what the farmers share of that program 18 enunciated in the SWIM plan might be? 19 MR. SAXE: Objection to form. 20 Characterization of what I assume 21 you're referring to in Exhibit 12 as 22 an assessment of what the farmers' 23 share of the costs might be, I think 24 is an unfair accusation. 25 Professor Lacewell is describing PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 260 1 what the purpose of that presentation 2 and that analysis was. 3 I'm not sure that you've properly 4 described it. 5 Q. (By Mr. Burgess) You can still answer. 6 A. I have not done any work that would look at 7 rates of discharge and how that might relate back to 8 reinforcing assessments in any other way. 9 Q. Have you done or are you aware of any work 10 that has been done with respect to an examination of 11 whether or not the amounts referenced in Exhibit 12 12 are available to be funded from existing resources, 13 other than what is contained in Exhibit 12? 14 THE WITNESS: Can you repeat that 15 question? 16 (WHEREUPON, the requested 17 portion of the record was read 18 by the court reporter.) 19 MR. SAXE: Objection to form; 20 unclear. 21 A. I can't get a grip on the question. 22 Q. (By Mr. Burgess) Okay. Have you 23 undertaken, yourself, any research to examine 24 whether or not the SWIM plan program can be funded 25 from existing or available resources other than PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 261 1 Exhibit 12 to the extent that you might say that 2 there is such a study? 3 A. I have not done any work beyond 4 Exhibit 12. 5 Q. Are you aware of any other studies that 6 have been done with respect to whether or not the 7 SWIM plan can be funded from available resources? 8 A. I'm not aware of other studies on that 9 topic. 10 Q. Turning to Exhibit 12, did either yourself 11 or Dr. Jones discuss the contents of this with 12 Grace Johns' before the February 11th presentation? 13 A. No. 14 Q. Did Grace Johns review a draft or reports 15 or any of the overheads before that presentation? 16 A. No. 17 Q. Other than Dr. Jones, who else helped in 18 the preparation of this exhibit? 19 A. Just Dr. Jones. 20 Q. The "Executive Summary" page on the bottom 21 in the overview section talks in terms of returns to 22 land for management and risks. 23 How do you define "risks" in the way that 24 you use it in that sentence? 25 A. Earlier, I went through how each of the PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 262 1 factors of -- nitrogen's a factor of production, so 2 you pay 10 cents per pound for nitrogen; you have 3 20 pounds, that would be $2. That's the cost to pay 4 for nitrogen. There is a cost associated with all 5 of the factors of production that we could quantify 6 and clearly enumerate. 7 In this case, this would be those things 8 that do not have a cost associated with them in the 9 values that we worked with. So this is going to be 10 the residual, and this is the correct returns to the 11 land management risks. And that means that it's not 12 enumerated or quantified earlier. 13 Q. On the tenth page there's a bar on the top 14 that says, "STA and BMP costs in the EAA." 15 A. Okay. 16 Q. And the next to last bullet talks in terms 17 of 430,533 times 75 percent. What is the 75 percent 18 figure? 19 A. This figure we took from Hazen & Sawyer, 20 and Hazen & Sawyer worked with a gross acre of cane 21 and from that gross acre of cane, 12.5 percent would 22 be in roads, canals, and ditches; 12.5 percent would 23 be in cane that's not harvested. 24 We did that to get down to harvested 25 acres. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 263 1 Q. If you could, turn to the "Sugarcane 2 Production and Processing Costs Chart," which is 3 some number of pages subsequent. 4 A. Okay. 5 Q. Now, we had a lot of testimony this morning 6 on transportation costs and I made some notes and I 7 just want to make sure that I understand what it is 8 that you have said and then fill in some areas where 9 I think that there has not been testimony. 10 Turning towards the 4.88 figure under 11 "Variable Cash Expenses," do we know how much, in 12 fact, of that 4.88 is for transportation; and I want 13 you to know that my intention is not to repeat and 14 have you repeat testimony, but just to fill in 15 blanks where I think they might exist. 16 A. Okay. The values of 1986 through 1990 as 17 recorded in the Sugar & Sweetner Report of June 1992 18 Appendix Table A-4 are as follows: .832, .779, 19 .8, .909, .841, and this is processing costs per net 20 pound of 96-degree raw sugar for Florida and that is 21 for cane transportation specifically. 22 Q. Those amounts? 23 A. Yes. 24 Q. And is that for transportation from the 25 field to the mills? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 264 1 A. Yes. 2 Q. So the only, then, transportation component 3 of the variable cash expenses would be a 4 transportation component for bringing cane from the 5 field to the mill? 6 A. In this table, yes. 7 MR. SAXE: Counsel, I'd like to show 8 something to Professor Lacewell from 9 the March '92 Sugar & Sweetner Report 10 that he testified earlier he 11 considered in generating these figures 12 in the interest of possibly refreshing 13 recollection. 14 I'm referring to Page 45 of this 15 document. 16 A. There are other transportation costs 17 included in the market and when we get to 18 processing, we haven't gone to that. So this cane 19 transportation is a cost to move the cane from the 20 field to the mill. 21 Q. (By Mr. Burgess) And, now, let's go to 22 marketing. You're talking about the marketing 23 component of variable cash expenses? 24 A. Yes. 25 Q. Okay. And what portion of transportation PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 265 1 costs -- what portion do transportation costs bear 2 in the relation to the total marketing cost? 3 A. In discussions with Dr. Lord on the 4 telephone, he said it would be more than 50 percent, 5 maybe 60 percent. And he quoted a number of 6 eight-tenths of a penny per pound. 7 In the Sugar & Sweetner Report, March 1992, 8 it does say under the variable cost of processing 9 raw sugar in Florida the prices -- no, that's not 10 what I want. 11 Processing includes all expenses necessary 12 to move raw sugar to a refinery and there captured 13 in the marketing cost. 14 Q. I'm sorry. Where does it say that? 15 A. It says that on Page 45 of the March 1992, 16 Sugar & Sweetner Report, beneath Figure B-2. 17 Q. And what does it say there? 18 A. Under "Sugar Processing Costs" it says, 19 "Processing includes all expenses necessary to move 20 raw sugar to a refinery. Processing costs for 21 lowest Florida at 6.31 cents a pound, and highest in 22 Hawaii at 13.01 cents." 23 Q. And is it your understanding that that 24 reference on Page 45 speaks in terms of processing 25 including transportation costs for moving the raw PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 266 1 sugar from the mills to refineries, whether they're 2 located in the EAA in Savannah, Georgia, or in 3 Baltimore or wherever? 4 A. Yes. That's an average cost to move the 5 sugar out of there on a per pound basis. 6 Q. And the average per pound cost, again, is 7 not in that report but you have gleaned that from 8 conversations with Dr. Ron Lord; is that correct? 9 A. That's right. It's not separated out as a 10 separate item. It is a component of what they put 11 in as marketing costs. 12 Q. And he told you that that was approximately 13 eight-tenths of one penny per pound? 14 A. Yes, that's what he said. 15 Q. So it would be your testimony, would it, 16 sir, that with respect to the 17.87 appearing at the 17 bottom of that page that that figure would, in fact, 18 include transportation costs to move that sugar from 19 the field to the mills to all East Coast markets? 20 A. That would include the cost to move the 21 sugar from the field to the mill, and it would 22 include the cost that was actually paid in the EAA 23 to move sugar from the mills to refineries wherever 24 the refinery was. 25 Q. Okay. Four pages from the end of that PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 267 1 exhibit -- 2 MR. SAXE: Counsel, again, you're 3 referring to a scratch copy of that. 4 It may not be paginated. 5 A. Give me the title. 6 Q. (By Mr. Burgess) "The Procedures for 7 Estimating Costs and Returns in EAA." 8 A. Yes, I've got that. 9 Q. The ending figure on that Page $62.11 10 representing, "STA's and BMP's cost per acre of land 11 allocated to cane." 12 What's the difference between that figure 13 and the $82.82 figure appearing as SWIM costs per 14 harvested acre of cane? 15 A. Okay. The $62.11, as we went through 16 earlier, would be the cost per acre of cropland in 17 the EAA which is 28.5 million divided by 465,341 18 acres that would be available for cropland after the 19 STA's. We added 86 cents on, which is the cost for 20 BMP's for sugarcane; add those two up, we get 21 62.11. 22 Now, the 62.11 is a cost that would go 23 against roads, ditches, canals, and unharvested 24 cane. 25 So the harvested cane is going to have to PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 268 1 pay the whole bill. So rather than try to throw 2 62.11 out there, we said, as a farmer, if I were a 3 farmer, I would have to pay all of these costs just 4 on my harvested acres of cane because that's the 5 only place I'm going to make any money. 6 So we took the $62.11 which is applicable 7 across all the acres, and we multiplied it by the 8 acres allocated to cane after STA's which gave us 9 the $26,740. 10 Q. Is that multiplication or computation shown 11 in this exhibit somewhere? 12 A. I hope so. It -- are you on "procedures"? 13 Stay with your "procedures." 14 Q. Okay. 15 A. Turn one page over. 16 Q. Okay. 17 A. So we multiplied it by all the acres of 18 cane including roads, ditches, canals, unharvested 19 cane gave us 26,740,405. 20 Q. Right. Okay. I see where that's at. 21 A. Then we divided by actual acres of cane 22 harvested and said they've got to support the whole 23 thing and that gives us 82.82. 24 Q. Now, are you aware of any economic impact 25 analysis that has been conducted similar to the PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 269 1 Grace Johns' study where this particular figure of 2 $83 an acre is used to determine what lost of jobs 3 or lost of acreage may have resulted from -- 4 A. No. 5 Q. -- imposition of that assessment? 6 A. We generated these numbers. The first time 7 they were made public was when Dr. Jones made the 8 presentation so, no. 9 Q. What was the purpose for generating these 10 numbers? 11 A. Because we did some work with the working 12 papers looking at what we were doing in response to 13 some things that they were doing in Miami, so 14 Dr. Jones and I said, "The best thing we can do is 15 stop and generate our own values. It's time we knew 16 where every number came from. Let's take it from 17 beginning to end, and we'll see if council has any 18 reaction to it." 19 Q. You said earlier in your testimony that 20 your capacity thus far has been to review existing 21 efforts. As you sit here today, do you have any 22 plans for affirmative work efforts, research, or 23 reports? 24 MR. SAXE: Objection to form. Have 25 any plans specific to this case? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 270 1 Q. (By Mr. Burgess) Are you undertaking -- do 2 you have any efforts that you're undertaking now 3 other than what you've testified to with respect to 4 Exhibit 12, which I would couch in terms of an 5 affirmative work effort as opposed to a review of 6 existing work effort? 7 MR. SAXE: I'll interject. 8 Counsel, if you'll restrict the scope 9 of your question to plans relevant to 10 the subject matter regarding which 11 Professor Lacewell might testify as 12 defined by our designation of 13 Professor's Lacewell as a potential 14 expert witness and distinguish work 15 that goes outside the scope of his 16 potential expert testimony and deals 17 with potential litigation consultation 18 that's not within that ambient, then I 19 won't object to the question. 20 I understand that you're asking 21 whether relative to the matters 22 regarding which this deposition is 23 going forward his expert opinions 24 concerning economic impact, 25 et cetera. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 271 1 Whether Professor Lacewell has 2 any plans presently to undertake 3 affirmative research or analysis and 4 if that's correct then, I have no 5 problem with the question. 6 Q. (By Mr. Burgess) Well, answer it given the 7 provisions that Counsel have given. 8 A. Somebody give me the question with 9 provisions and I'll answer it. 10 Q. My question is simply whether your existing 11 testimony has been early on that you were retained 12 to review existing work efforts. And my question to 13 you is: As you sit here today, do you have any 14 plans for affirmative work efforts, which I would 15 classify Exhibit 12 as being an affirmative work 16 effort, preparation of a research report? 17 Do you have any of those plans in the 18 context of the SWIM plan challenge, the issues in 19 the SWIM plan challenge? 20 A. The plans that I have now are to review the 21 20-year study that Hazen & Sawyer's going to do; and 22 if I can interact on that one, I will. I do not 23 have any specific plans for a specific study beyond 24 that at this point. 25 Q. The expert witness designation that your PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 272 1 Counsel referred to says that the subject matter of 2 your expected testimony is, quote, "Direct economic 3 impacts of the Everglades Restoration Program," end 4 quote. 5 Have you formulated any expected testimony 6 other than that which you have given thus far, which 7 is in the nature of reviewing the Hazen & Sawyer 8 study and other studies with respect to direct 9 economic impacts of the Everglades Restoration 10 Program. 11 MR. SAXE: Could you restate the 12 question? It was a long one. 13 Q. (By Mr. Burgess) Have you formulated any 14 testimony other than that which you have given thus 15 far in your deposition with respect to direct 16 economic impacts of the Everglades Restoration 17 Program? 18 A. I would say that I haven't. I have an 19 alternative opinion from what I've represented in 20 the past two days. 21 Q. Are you working on or towards developing 22 direct economic impact testimony regarding the 23 Everglades Restoration Program other than in your 24 capacity as you just testified of reviewing 25 Hazen & Sawyer's 20-year study? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 273 1 MR. SAXE: Counsel, I'm going to 2 object. The question is improper in 3 the context of the unfolding dilemma 4 with the scope of expert testimony by 5 the United States in this case. 6 Presently there's no -- there 7 have been no decisions concerning a 8 scope of an affirmative presentation 9 of expert testimony by 10 Professor Lacewell; and our position 11 has been stated as having listed 12 Professor Lacewell for protective 13 purposes as these issues unfold and 14 primarily contemplating responding to 15 the case that we expect the 16 petitioners to put forward, which case 17 has not yet been articulated through 18 the process of discovery. 19 So, at this point, to ask 20 Professor Lacewell whether there's any 21 other testimony that he expects or 22 intends to present, assumes 23 incorrectly that decisions have been 24 made concerning the scope of the 25 testimony that Professor Lacewell will PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 274 1 be proffered for. 2 MR. BURGESS: I really don't care 3 what decisions have been made or 4 haven't been made. I just care what 5 the man's working on, and I'm just 6 trying to figure out what that might 7 be. 8 This document here, the expert 9 witness disclosure statement, 10 obviously as all of us were 11 constrained to do, says that he's 12 expected to have final opinions on 13 October 26, 1992, and that his 14 testimony is going to concern direct 15 economic impacts of the Everglades 16 Restoration Program. 17 It doesn't say the man's a 18 rebuttal witness. It doesn't say he 19 was only going to stand up if we stand 20 up. 21 I'm trying to find out, other 22 than what we've talked about so far, 23 what he has in the hopper, if you 24 will, with respect to direct impacts 25 of the Everglades Restoration PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 275 1 Program. 2 Q. (By Mr. Burgess) Dr. Lacewell, is there 3 anything that you are working on now that in your 4 opinion with respect to the Everglades Restoration 5 Program will yield testimony, expected testimony 6 concerning the direct economic impacts of the 7 Everglades Restoration Program? 8 A. My interactions with Hazen & Sawyer over 9 the next period of time is going to be important in 10 reviewing what the expected impacts are, according 11 to my opinion. 12 Q. Do you have any plans to meet with 13 Hazen & Sawyer? 14 A. Yes. 15 Q. When? 16 A. Monday. 17 Q. Where? 18 A. There. 19 Q. Who else is going to be there? 20 A. Dr. Jones and Dr. Boggess. 21 Q. And what is the agenda for that meeting? 22 A. The agenda is for Dr. Johns to discuss her 23 approach, methodology, the way she looks at doing 24 this, any data she's generated at this point; and to 25 be in a review mode to offer suggestions if we see PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 276 1 need for her to accept or reject as she sees fit. 2 Q. Who organized that meeting? 3 A. I organized that meeting. 4 Q. Did you ask for it? 5 A. I asked Grace Johns if she'd be willing to 6 meet with us. 7 Q. You did? 8 A. Yes. 9 Q. And what was the purpose of your asking to 10 meet with her? 11 A. So that we could see what she's doing, and 12 have some idea of what kind of methodology she's 13 using, what the data's looking like, how she's going 14 about the 20-year analysis. 15 Q. Are you aware, as you sit here today, of 16 any -- I'll say major differences between her 17 10- and 20-year study, let's say, concerning her 18 assumptions or methodology? 19 A. I don't have a chance to interact with 20 her. Very briefly, I think she's going to try to 21 address soil subsidence difference; but she didn't 22 really give me any real insight as to where that may 23 go. 24 I would answer that by saying, we haven't 25 really talked about it so there may be major PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 277 1 differences and I'm just not aware of them. 2 Q. Have you formulated any final opinions 3 which you anticipate you would render at the time of 4 trial of this matter other than final opinions which 5 concern a review of either the efforts of Polopolus 6 and Richardson or Grace Johns? 7 MR. SAXE: I'm going to object. 8 Again, Counsel, the use of the 9 words "anticipate, anticipated expert 10 testimony, expected expert testimony" 11 are not -- 12 MR. BURGESS: You've already said 13 the decision hasn't been made. 14 MR. SAXE: Correct. So it's 15 unclear to me how any -- there could 16 be anticipated or expected expert 17 testimony. 18 If you want to ask what testimony 19 the deponent might present, given the 20 scope of the designation, the scope of 21 the expertise, the scope of the work 22 he's doing, I have no problem with 23 that. But I don't understand -- 24 MR. BURGESS: You indicated it 25 might mean the same thing so -- PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 278 1 MR. SAXE: No. To me there's the 2 significant question of degree; and 3 one is clearly acceptable and the 4 other one is not answerable. 5 So, again, if you want to 6 rephrase your question. 7 MR. BURGESS: Well, you're not 8 instructing him not to answer, are 9 you? 10 MR. SAXE: Well, if you're going 11 to ask the witness about testimony 12 that he expects, intends, or 13 anticipates giving in light of my 14 objection, I'm just going to put on 15 the record that the objection is as I 16 have just stated, basically. 17 MR. BURGESS: Okay. I note your 18 objection, but the question stands. 19 THE WITNESS: Read the question 20 one more time. 21 (WHEREUPON, the requested 22 portion of the record was read 23 by the court reporter.) 24 A. If I were to answer no, how would you 25 interpret that? You asked it differently. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 279 1 Q. (By Mr. Burgess) I don't think it matters 2 how I would react to it. 3 A. Let me try to respond. Maybe -- 4 MR. BURGESS: You see, Keith, it was a 5 good question. 6 THE WITNESS: It's very elusive. 7 MR. SAXE: I think the witness 8 has made clear that it's a very 9 unclear question. 10 A. The final opinions that I might come to can 11 be affected by the work that Grace Johns is doing or 12 things that evolve, but from what you've deciphered 13 in two days of deposition, you probably have a 14 fairly clear idea of the kinds of opinions I'm 15 evolving toward. 16 Q. (By Mr. Burgess) So at this point, any 17 final opinions that you might render, your 18 understanding is that those are going to be 19 dependent upon the work of others including 20 Grace Johns? 21 A. For the most part, if there is something 22 left unturned that I think that I might could shed 23 more light on, I will certainly undertake an 24 analysis, maybe not totally unlike something like 25 this (indicating Exhibit 12). PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 280 1 Q. And is there anything that you are now 2 working on shedding more light on? 3 A. No. 4 Q. What is Dr. Bromley working on? 5 A. I haven't visited with Dr. Bromley in 6 sometime, so I cannot answer that question. 7 Q. When did you meet with him the last time? 8 A. I don't know. 9 Q. Last year or -- I mean, in connection with 10 this case. 11 A. I believe it was in 1992. 12 Q. And do you know what he was working on then 13 in connection with this case? 14 A. My impression was that he was looking at 15 these tradeable permits for disposal of phosphorus. 16 Q. What is his area of expertise? 17 A. He's a resource economist. 18 Q. Do you know whether he is working on any 19 natural resource benefit analysis with respect to 20 the Everglades? 21 A. I don't know that. It's my impression he's 22 not. 23 Q. What is Dr. Ozuna working on in connection 24 with the SWIM plan challenge? 25 A. Dr. Ozuna is going to be able to answer PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 281 1 that a whole lot better than I can, but his role was 2 primarily one of a reviewer to look at the study of 3 the benefits of the Everglades that was part of the 4 Hazen & Sawyer expanded contract. 5 Q. How about Dr. Gardner? 6 A. Dr. Gardner is a former Secretary of 7 Agriculture, Assistant Secretary of Agriculture, has 8 been involved in policy, policy analysis, policy 9 formulation; and his primary areas, as I understand 10 it, will be to consider policy. 11 Q. And Dr. Jones, is he working on anything 12 other than what he's working on with you in 13 connection with the SWIM plan challenge? 14 A. Not to my knowledge. I don't think so. 15 Q. Who is -- I think there's been some 16 testimony as to Irwin Hirschhorn. What role has he 17 played in connection with the work you have done? 18 A. Mr. Hirschhorn is in South Florida, and the 19 role he played was in the exhibit that shows the 20 information that he sent back relative to -- 21 Q. That would be Exhibit 10? 22 A. 10. Great. Thank you. Oh. That's not 23 the one I'm thinking about. 24 Q. Do you know -- while you're on Exhibit 10, 25 do you know who prepared that analysis that is on PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 282 1 the second page of that fax? Actually it's the 2 first -- not the cover page of the fax, but the -- 3 A. The page just beyond the cover page. 4 Q. Stamped "Confidential" at the top. Do you 5 know who prepared that? 6 A. Well, that was probably -- and I'm not 7 positive, Mr. Hirsch -- 8 Q. Horn. 9 A. -- horn, in Miami was working with this. 10 Q. The paragraph in the cover page of the fax 11 says in the second sentence, "When we recalculated 12 the bond at 6.5 percent, it resulted in the costs 13 and values for the SWIM plan coming back very much 14 into line with your values." 15 Does the word "your" there mean the values 16 reflected on that second page marked "confidential"? 17 A. Before they're scratched out. 18 Q. Okay. 19 A. Or we sent the fax to Suzanne Ponzoli, so I 20 would assume she was involved in that. 21 Q. But do you know the architect of those 22 numbers that appear on that page? 23 A. I don't know who generated each number. 24 No, I don't know that. 25 Q. And that, in any event, wasn't the exhibit PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 283 1 you were looking at or for with respect to 2 Mr. Hirschhorn? 3 MS. STINSON: There was a document we 4 looked at but was not made an exhibit. 5 A. Oh, that's it. That's right. 6 Q. (By Mr. Burgess) You received a notice of 7 taking deposition in this matter asking for you to 8 produce, I believe, it's five categories of 9 documents. Do you recall that? 10 A. Yes. 11 Q. Have any documents been withheld on the 12 basis of privilege or otherwise that would otherwise 13 be responsive to that list of five documents? 14 MR. SAXE: Counsel, I'll have to 15 answer that question. 16 MR. BURGESS: Well, he can answer 17 whether or not documents have not been 18 provided to his knowledge. 19 He can answer. 20 MR. SAXE: You asked whether 21 documents have been withheld on 22 grounds of privilege that might 23 otherwise have been responsive. 24 And Counsel has been the one 25 responsible for determining whether PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 284 1 privilege applies and withholding a 2 document. 3 MR. BURGESS: Okay. 4 MR. SAXE: So if you want to ask 5 the court reporter, I don't object; 6 but I'm telling you -- 7 MR. BURGESS: I'd like to ask the 8 witness whether he has any knowledge 9 as to whether any documents have been 10 withheld that otherwise are 11 responsive. 12 MR. SAXE: Okay. You can answer 13 the question. 14 A. I don't know whether they were responsive, 15 but there are some documents that were withheld by 16 Counsel. 17 MR. BURGESS: And when are we going to 18 get a privileged list, Counsel? 19 MR. SAXE: I can't give you an 20 exact date. It should be quite soon. 21 (WHEREUPON, there was discussion 22 off the record.) 23 Q. (By Mr. Burgess) Let me show you a 24 document dated June 16th and ask you if you can 25 identify that. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 285 1 A. This is a memorandum I sent to 2 Mr. Keith Saxe on June 16th, related to comments on 3 Hazen & Sawyer draft. 4 MR. SAXE: You didn't make an exhibit 5 of this. 6 MR. BURGESS: No, I don't think 7 she did. So if you wouldn't mind, I'd 8 like it the next numbered exhibit. 9 (WHEREUPON, Exhibit No. 13 10 was marked for identification.) 11 MS. STINSON: And what is the date of 12 that document again? 13 THE WITNESS: June the 16th, 1992. 14 Q. (By Mr. Burgess) Do you remember when, in 15 relation to that date, you received a draft copy of 16 the Hazen & Sawyer report? 17 MR. SAXE: Objection; asked and 18 answered, I believe. 19 MR. BURGESS: When? 20 MR. SAXE: Yesterday by -- 21 yesterday by your learned colleague -- 22 MR. BURGESS: I don't think he -- 23 MR. SAXE: -- Ms. Stinson. 24 MR. BURGESS: I don't think he 25 said he could recall when he received PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 286 1 it. I'm asking him when in relation 2 to that date. 3 MR. SAXE: That question is 4 specifically asked. The witness can 5 answer the question. My objection's 6 on the record. 7 A. I don't have the date I received it. It 8 was just before this date because I reviewed it and 9 then sent my ideas to Mr. Saxe. 10 Q. (By Mr. Burgess) And did you send your 11 ideas to Grace Johns, also? 12 A. No, I didn't. 13 Q. Did you talk to her about your ideas? 14 A. We talked on the telephone. It wouldn't be 15 in a specific enumerated concept like this, but we 16 visited about the studies she's doing and editorial 17 comments or misspelled words, yeah. 18 Q. Was it both the impact study and the 19 benefit study that you reviewed draft copies of? 20 A. I did review the benefit study, but I don't 21 think I had any comments. I'd have to look. I 22 don't recall. If they were, they were editorial. 23 MR. BURGESS: I don't have any other 24 questions. Thank you. 25 MR. SAXE: If I could just take a PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 287 1 couple of minutes to review my notes 2 to see whether I have any questions. 3 Basically, if not, we can adjourn. 4 There seems to be an Exhibit 11 -- 5 MR. BURGESS: There is an 6 understanding, Keith, that we're 7 providing privileged lists a week in 8 advance; and I seem to be the only one 9 doing it. 10 So until people start doing it 11 back to me, I'm going to refrain from 12 doing it. 13 MR. SAXE: That's not actually 14 consistent with my understanding. 15 MS. STINSON: It's supposed to be 16 10 days after the documents -- 17 MR. SAXE: Which were produced -- 18 MS. STINSON: -- which would be a 19 week before deposition. 20 MR. SAXE: No. That's -- 21 MR. BURGESS: Documents are due 22 three weeks in advance of deposition; 23 and privileged lists, one week before 24 the deposition. 25 As I've said, I've been the only PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 288 1 one apparently doing that. 2 MR. SAXE: I can't speak to 3 whether you have or have not. 4 You know, as I said before, it is 5 my intent to produce the privileged 6 list or that it be produced as quickly 7 as possible; and I expect it will be 8 produced forthwith. 9 MR. BURGESS: Well, I think the 10 whole purpose of having them produced 11 in advance of the deposition was so 12 that we can inquire as to the extent 13 applicable on the record of the 14 witness with respect to the document. 15 MR. SAXE: Well, I think that 16 certainly any concerns in that regard 17 are diluted substantially by the 18 likelihood that we'll be back on the 19 record again about these documents and 20 about these witnesses. 21 But I understand your point, and 22 I share your interest. 23 I just need five minutes to take 24 a quick look and then we can perhaps 25 adjourn. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 289 1 (WHEREUPON, a recess was taken.). 2 MR. SAXE: I just want to go back on 3 the record for one minute. 4 * * * 5 E X A M I N A T I O N 6 * * * 7 BY MR. SAXE: 8 Q. The exhibit that has been marked as 9 Exhibit 12, Professor Lacewell, if you would look at 10 the page that's entitled "STA and BMP costs in 11 EAA." 12 We've been referring informally to a 13 scratch copy that's not coming into evidence, that 14 is, a copy as it was distributed on the date of 15 Professor's Lacewell's presentation to the Water 16 Management District Board. 17 MS. STINSON: Jones. 18 Q. (By Mr. Saxe) Pardon me, Professor Jones. 19 If you look at the page in the scratch 20 version titled, "STA and BMP costs in EAA," there is 21 some language included in the fifth bullet point 22 down $62.11 and I'm reading now, "$62.11 per cane 23 acre with STA and BMP if allocated uniformly across 24 EAA." 25 The language "if allocated uniformly across PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 290 1 EAA," appears to be omitted from the version that's 2 coming into evidence today. 3 Can you explain for the record how that 4 omission came to be and whether it's inadvertent or 5 intentional? 6 A. Inadvertent omission, and it would be 7 coming from transferring data from disks. 8 MR. SAXE: No further questions. 9 THE REPORTER: Who all needs copies of 10 the transcript? 11 MR. SAXE: I do. 12 MR. BURGESS: Yes. 13 MS. STINSON: Yes. 14 (WHEREUPON, at the hour of 15 5:30 P.M., the deposition was 16 concluded.) 17 * * * 18 19 20 21 22 23 24 25 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 291 1 SIGNATURE OF WITNESS 2 I, RONALD D. LACEWELL, Ph.D., solemnly swear or 3 affirm under the pains and penalties of perjury that 4 the foregoing pages contain a true and correct 5 transcript of the testimony given by me at the time 6 and place stated with the corrections, if any, and 7 the reasons therefor noted on a separate sheet of 8 paper and attached hereto, and that I am signing 9 this before a Notary Public. 10 11 ____________________________ RONALD D. LACEWELL, Ph.D. 12 13 STATE OF T E X A S * 14 COUNTY OF _______________ * 15 SUBSCRIBED AND SWORN TO BEFORE ME by 16 RONALD D. LACEWELL, Ph.D., on this, the 17 _______________ day of ________________, A.D., 18 1993. 19 _____________________________ 20 Notary Public, State of Texas 21 22 23 My Commission Expires: __________________________ 24 25 Job 1SUGA.FLOR00/0385 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 292 1 C O R R E C T I O N S T O T H E 2 D E P O S I T I O N O F 3 RONALD D. LACEWELL, Ph.D. 4 PAGE/LINE ** READS ** SHOULD READ ** REASON 5 __________________________________________________ 6 __________________________________________________ 7 __________________________________________________ 8 __________________________________________________ 9 __________________________________________________ 10 __________________________________________________ 11 __________________________________________________ 12 __________________________________________________ 13 __________________________________________________ 14 __________________________________________________ 15 __________________________________________________ 16 __________________________________________________ 17 __________________________________________________ 18 __________________________________________________ 19 __________________________________________________ 20 __________________________________________________ 21 __________________________________________________ 22 __________________________________________________ 23 __________________________________________________ 24 ___________________________________ RONALD D. LACEWELL, Ph.D. 25 Job 1SUGA.FLOR00/0385 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 293 1 STATE OF TEXAS * 2 COUNTY OF HARRIS * 3 I, LORI A. BELVIN, a Certified Shorthand 4 Reporter in and for the State of Texas, hereby 5 certify pursuant to the Texas Rules of Civil 6 Procedure and/or agreement of the parties present to 7 the following: 8 That this deposition transcript is a true record 9 of the proceedings held and the testimony given by 10 RONALD D. LACEWELL, Ph.D., the witness named herein, 11 on March 2, 1993, after said witness was duly sworn 12 by me. 13 CERTIFIED TO BY me in Houston, Harris County, 14 Texas, on this, the ______ day of ____________, 15 A.D., 1993. 16 17 18 __________________________________ LORI A. BELVIN 19 Certified Shorthand Reporter Notary Public, The State of Texas 20 Cert. No.: 2572 Exp.: 12/31/93 21 LOONEY & COMPANY 8 Greenway Plaza, Suite 920 22 Houston, Texas 77046 (713) 621-8572 23 24 25 Job 1SUGA.FLOR00/0385 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 294 1 STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS 2 SUGAR CANE GROWERS COOPERATIVE OF) 3 FLORIDA, INC., ROTH FARMS, INC., ) and WEDGWORTH FARMS, INC., ) 4 ) and ) 5 ) FLORIDA SUGAR CANE LEAGUE, INC., ) 6 UNITED STATES SUGAR CORPORATION ) and NEW HOPE SOUTH, INC., ) 7 ) and ) 8 ) FLORIDA FRUIT AND VEGETABLE ) 9 ASSOCIATION, LEWIS POPE FARMS ) W.E. SCHLECHTER & SONS, INC., and) 10 HUNDLEY FARMS, INC., ) ) 11 Petitioners, ) ) 12 v. ) ) 13 SOUTH FLORIDA WATER MANAGEMENT ) DISTRICT, ) 14 ) Respondent, ) 15 ) and ) 16 ) MICCOSUKEE TRIBE OF INDIANS OF ) 17 FLORIDA, the UNITED STATES OF ) AMERICA, FLORIDA DEPARTMENT ) 18 OF ENVIRONMENTAL REGULATION, and ) FLORIDA WILDLIFE FEDERATION, ) 19 ) Intervenors. ) 20 21 --------------------------------------------------- REPORTER'S CERTIFICATE/FILING CERTIFICATE 22 DEPOSITION OF RONALD D. LACEWELL, Ph.D. VOLUME II 23 TAKEN ON MARCH 2, 1993 --------------------------------------------------- 24 25 I, Lori A. Belvin, a Certified Shorthand PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 295 1 Reporter in and for the State of Texas, hereby 2 certify pursuant to the Texas Rules of Civil 3 Procedure and/or agreement of the parties present to 4 the following: 5 That the deposition transcript is a 6 true record of the testimony given by RONALD D. 7 LACEWELL, Ph.D., the witness named herein, on 8 March 2, 1993, after said witness was duly 9 sworn/affirmed by me. 10 That $______________ is the charge for 11 the preparation of the completed deposition 12 transcript, and any copies of exhibits charged 13 to MS. DONNA H. STINSON, Attorney for the 14 Petitioners; 15 That the original signature page and 16 correction sheet were sent to MR. KEITH E. SAXE, 17 along with their ordered copy of the deposition 18 transcript, for examination and signature by the 19 witness and return to Looney & Company by 20 ____________________, 19__. 21 That the original transcript 22 ______ was/ ______ was not returned to the 23 deposition officer by the witness. 24 That the original deposition transcript, 25 or a copy thereof, together with copies of all PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 296 1 exhibits, was delivered on _________________ to 2 MS. DONNA H. STINSON, Attorney for the 3 Petitioners; 4 That pursuant to the information made a 5 part of the record at the time said testimony was 6 taken, the following includes all parties of record: 7 8 MS. DONNA H. STINSON, Attorney for SUGAR CANE GROWERS COOPERATIVE OF FLORIDA, INC., ET AL.; 9 MR. RICK J. BURGESS, Attorney for FLORIDA SUGAR 10 CANE LEAGUE, INC., ET AL.; 11 MR. KEITH E. SAXE, Attorney for UNITED STATES OF AMERICA. 12 13 That a copy of this certification was 14 served on all parties shown herein. 15 CERTIFIED TO on this _________ day of 16 ________________, A.D., 1993. 17 18 _______________________________ LORI A. BELVIN 19 Certified Shorthand Reporter The State of Texas 20 Cert. No.: 2572 Exp. Date: 12/31/93 21 LOONEY & COMPANY 8 Greenway Plaza, Suite 920 22 Houston, Texas 77046 (713) 621-8572 23 24 25 Job No. 1SUGA.FLOR00/0385 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 297 1 DELIVERY ACKNOWLEDGMENT JOB NO. 1SUGA.FLOR00/0385 2 STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS 3 SUGAR CANE GROWERS COOPERATIVE OF) 4 FLORIDA, INC., et al. ) Petitioners, ) 5 ) v. ) 6 ) SOUTH FLORIDA WATER MANAGEMENT ) 7 DISTRICT, ) ) 8 Respondent, ) ) 9 and ) ) 10 MICCOSUKEE TRIBE OF INDIANS OF ) FLORIDA, et al. ) 11 ) Intervenors. ) 12 -------------------------------------------------- ORAL DEPOSITION OF RONNIE D. LACEWELL, Ph.D., 13 VOLUME II TAKEN ON MARCH 3, 1993 14 -------------------------------------------------- MS. DONNA H. STINSON MR. KEITH E. SAXE 15 123 South Calhoun St. 601 Pennsylvania NW P. O. Box 6526 Avenue NW 16 Tallahasee, FLA 32301 Room 879 Washington, D.C. 20004 17 MR. RICK J. BURGESS One Biscayne Tower 18 Suite 3636 Two South Biscayne Boulevard 19 Miami, FLA 33131 I hereby acknowledge the receipt of a/an ___ 20 original ___ copy of the following items (s) pertaining to the above numbered and styled cause. 21 ___ Deposition (s) ___ Sworn Statement (s) ___ Certified Questions ___ CNA (s) 22 ___ Affidavit (s) ___ Deposition Summary (s) ___ Exhibits ___ Videotape (s) 23 ___ Ascii Disk (s) ___ Minuscript (s) ___ Signature Pg (s) ___ Correction Sheet (s) 24 ___ Certification Pg (s) ___ Notice of Filing (s) ___ Invoice (s) ___ Other:________________ 25 By:_____________ Date:__________ Time:_________ PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125