202
1
STATE OF FLORIDA
2 DIVISION OF ADMINISTRATIVE HEARINGS
VOLUME 3
3 PAGES 202 - 306
4
SUGAR CANE GROWERS COOPERATIVE
5 OF FLORIDA, a Florida Agricultural CASE NOS. 92-3038
Cooperative Marketing Association; 92-3039
6 ROTH FARMS, INC.; and WEDGWORTH 92-3040
FARMS, INC.,
7 and
FLORIDA SUGAR CANE LEAGUE, INC.;
8 UNITED STATES SUGAR CORPORATION,
and
9 FLORIDA FRUIT AND VEGETABLE
ASSOCIATION; LEWIS POPE FARMS;
10 W.E. SCHLECHTER & SONS, INC.;
and HUNDLEY FARMS, INC.,
11 Petitioners,
12 vs.
13 SOUTH FLORIDA WATER MANAGEMENT
DISTRICT, an Agency of the State
14 of Florida,
Respondent,
15
and
16
THE UNITED STATES OF AMERICA;
17 MICCOSUKEE TRIBE OF INDIANS;
THE FLORIDA DEPARTMENT OF
18 ENVIRONMENTAL PROTECTION;
THE FLORIDA WILDLIFE FEDERATION;
19 THE FLORIDA AUDUBON SOCIETY,
and THE SIERRA CLUB,
20 Respondent-Intervenors.
__________________________________/
21
DEPOSITION OF RONALD T. LUKE, Ph.D.
22
23
ACCURATE STENOTYPE REPORTERS, INC.
24 100 Salem Court
Tallahassee, Florida 32301
25 (904) 878-2221
1-800-934-9090
203
1 ___________________________________________________________
2 DEPOSITION OF: RONALD T. LUKE, Ph.D.
3 TAKEN AT THE INSTANCE OF: Respondent-Intervenor USA
4 DATE: Friday, March 4, 1994
5 TIME: Commenced at 8:30 a.m.
Concluded at 4:15 p.m.
6
LOCATION: 315 South Calhoun
7 Tallahassee, Florida
8 REPORTED BY: TERRY WILHELMI, CSR
Notary Public in and for the
9 State of Florida at Large
___________________________________________________________
10
11 APPEARANCES
12 REPRESENTING THE SUGAR CANE GROWERS COOPERATIVE,
ROTH FARMS, and WEDGWORTH FARMS:
13
CAROLYN S. RAEPPLE, ESQUIRE
14 Hopping, Boyd, Green & Sams
123 South Calhoun
15 Tallahassee, Florida 32301
16 REPRESENTING THE UNITED STATES OF AMERICA:
17 KEITH E. SAXE, ESQUIRE
United States Department of Justice
18 601 Pennsylvania Avenue, N.W.
Room 879
19 Washington, D.C. 20004
20 REPRESENTING THE DEPARTMENT OF
ENVIRONMENTAL PROTECTION:
21
GARY SMALLRIDGE, ESQUIRE
22 Florida Dept. of Environmental Protection
2600 Blair Stone Road
23 Tallahassee, Florida 32399-2400
24 ALSO APPEARING:
25 Professor Lonnie Jones
Ronald Lacewell
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3 I N D E X
4
WITNESS PAGE
5
RONALD T. LUKE, Ph.D.
6
Continued Direct Examination by Mr. Saxe 205
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E X H I B I T S
11
12 (No exhibits marked in this volume.)
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20
21 CERTIFICATE OF REPORTER 306
22
23
24
25
205
1 PROCEEDINGS
2 The following deposition of RONALD T. LUKE, Ph.D.
3 was taken on oral examination, pursuant to notice, for
4 purposes of discovery, and for use as evidence, and for
5 other uses and purposes as may be permitted by the
6 applicable and governing rules. Reading and signing is
7 waived.
8 * * *
9 Thereupon,
10 RONALD T. LUKE, Ph.D.
11 was called as a witness, having been previously duly sworn,
12 was examined and testified as follows:
13 CONTINUED DIRECT EXAMINATION
14 BY MR. SAXE:
15 Q Good morning, Dr. Luke. We're continuing your
16 deposition today, I remind you that the same rules and
17 requirements apply as to yesterday. Do you understand
18 that?
19 A Yes.
20 Q I would like to talk first about your analysis
21 of the direct economic impacts of the SWIM plan. My first
22 question is I would like to know how did you calculate the
23 direct sales loss from a lost acre of production?
24 A Well, basically the work we have got is a -- the
25 sales actually are occurring at the mill and we are
206
1 assuming that a lost acre results in reduced raw sugar and
2 that the raw sugar is the product. I don't believe the
3 reductions are ever sufficient that the refineries in the
4 EAA would themselves not produce up to whatever historic
5 capacity they had.
6 Q So the actual calculation of the direct sales
7 loss number would be the product of the change in raw sugar
8 output times the --
9 A Times the price.
10 Q -- times the price?
11 A Right.
12 Q What raw sugar price did you use in your
13 calculations?
14 A I believe it's the 21.6 plus the cent for the
15 molasses and the other byproducts.
16 Q And you derived that figure the same way that
17 Hazen and Sawyer did?
18 A The contract price, yeah.
19 Q What yield figure would you use for calculating
20 direct sales loss for a given acreage in production?
21 A Because of the trends that are built in, it
22 would vary by year.
23 Q And those -- what was the -- strike that.
24 What was the starting figure for a given acre in
25 1994 that you would use or what was the source of those
207
1 figures?
2 A We're using the same things that are in the
3 contract completion report, the Hazen and Sawyer report.
4 Q Were the yield figures for lost acreage in any
5 given year stratified by yield belt?
6 A They are actually identified by model farm, just
7 in the same fashion that you see in the Hazen and Sawyer
8 report.
9 Q Exhibit 2 should be right in front of you.
10 A Okay. I have my copy.
11 Q Would you look at page 4 of that?
12 A All right.
13 Q The title on this page that I'm looking at is
14 "Comparison of Scenario Runs Change in EAA Earnings and
15 Profits Versus No Action." Could you describe to me what
16 these numbers are?
17 A You mean more than what the title tells you? I
18 don't understand.
19 Q Okay, let me clarify the question. What is
20 meant by the reference to earnings, EAA earnings?
21 A This would be the salaries and wages and then
22 the profits, the residual returns in effect.
23 Q So earnings refers to salaries and wages and the
24 word profits refers to residual returns?
25 A Right.
208
1 Q Are those broken out in these figures, are they
2 differentiated or are they summed?
3 A They are summed.
4 Q Were they derived separately in the calculation
5 of these figures?
6 A Yes. The residual returns comes from the
7 summing across the farm level models and the earnings piece
8 of it comes from the RIMS two coefficients.
9 Q Let's leave this page for now and I want to ask
10 you some questions about BMP's and the way you treated
11 BMP's in your analysis.
12 A Okay.
13 Q Where did you get your BMP costs?
14 A It's the Burns and is it McConnell in this case?
15 Q Do you have a copy of the first volume of --
16 actually it's Exhibit 3, the first volume of the contract
17 completion report?
18 A Okay.
19 Q Would you turn to page 9-1, please?
20 A Okay.
21 Q On pages 9-1 and 9-2, there are a series of
22 tabular displays of different values for BMP costs per
23 acre.
24 A Right.
25 Q The first one is attributed to Brown &
209
1 Caldwell's draft report that's at the bottom of page 9-1.
2 A Yes.
3 Q On the top of page 9-2 is a set of figures
4 attributed to the Hazen and Sawyer 1992 economic impact
5 study.
6 A Right.
7 Q And then beneath that is a display of figures
8 attributed to Hazen and Sawyer's 20 year report. Did you
9 use any of these figures?
10 A We're using Brown & Caldwell.
11 Q Could you explain to me, Dr. Luke, why you
12 chose the Brown & Caldwell figures for the BMP costs in
13 your analysis?
14 A It's an engineering study done by the District's
15 consultant, it was reviewed by the Co-op and they said they
16 thought that would be reasonable to use.
17 Q Do you know whether the Co-op considered the BMP
18 costs that had been used by Hazen and Sawyer in the 20 year
19 report?
20 A When you say considered them, I don't
21 understand.
22 Q Do you know whether they reviewed the costs that
23 Hazen and Sawyer has used to determine or to form an
24 opinion about whether they were appropriate BMP costs?
25 A I don't know whether they separately reviewed
210
1 them. My question to them was really as to Brown &
2 Caldwell and the continued reasonableness of those and they
3 said they thought they were reasonable to use.
4 Q Did you have discussions with somebody at the
5 Co-op about the Brown & Caldwell BMP costs figures?
6 A Not a detailed discussion. I in effect
7 submitted the question to Mr. Ward and he came back to me
8 and said that those looked okay to them, so that I don't --
9 I didn't really go behind his checking of that.
10 Q Did you, in your question to Mr. Ward, did you
11 ask him -- did you make any reference to different figures
12 being used for BMP costs in any other context?
13 A No. My question was pretty much what I have
14 told you it was.
15 Q Did you ask him if the Hazen and Sawyer costs
16 would be more accurate or less accurate?
17 A No.
18 Q Did you refer in any way to any of the BMP costs
19 that you had seen?
20 A I don't recall that I did.
21 Q Was this an oral communication with Mr. Ward?
22 A To the best of my recollection, it was.
23 Q Do you recall whether you made any notes or
24 anyone working for or with you made any notes --
25 A No.
211
1 Q -- about this conversation?
2 Can you tell me, to the best of your
3 recollection, just what you asked Mr. Ward and just what he
4 said?
5 A As I recall, and this has been long enough ago
6 that I am certainly -- this is a loose reconstruction, we
7 were trying to determine if the Co-op had a different view
8 of BMP costs based upon any additional experience or
9 information that they or their members had and I think he
10 said he would check, and I don't believe he said with whom
11 he would check, and get back to me. He did and he said the
12 Brown & Caldwell costs still seemed fine.
13 Q So at the time when you asked him about whether
14 the Co-op had a different interpretation, the reference --
15 the only reference being made was to the Brown & Caldwell
16 costs figures?
17 A Yeah. I don't know what you mean by a different
18 interpretation, but I mean, I just asked him if those
19 figures, as the engineering figures, still seemed to be the
20 ones. I think I should add that we're talking about BMP's
21 for a 25 percent reduction.
22 Q So that would be the figures that are shown on
23 the 25 percent fee reduction line on this table?
24 A That's correct.
25 Q Do you recall about when this conversation would
212
1 have taken place?
2 A Not specifically, but my guess is August,
3 September.
4 Q Of '93?
5 A Right.
6 Q So it was after the 10 year Hazen and Sawyer
7 report had been produced?
8 A Well, I mean, by these dates it was after the 20
9 year report had been produced.
10 Q Do you know whether Mr. Ward was aware of the
11 BMP costs figures that had been used by Hazen and Sawyer in
12 any of its economic impact analyses?
13 A No, I really don't. I mean, I considered that
14 Brown & Caldwell is the primary source here, they are the
15 engineering study, and I'm not aware that Hazen and Sawyer
16 has done any additional engineering work as a basis for its
17 numbers.
18 Q Do you know whether the Brown & Caldwell values
19 include a water table management cost?
20 A Yes, I believe they do.
21 Q Did you add the Brown & Caldwell BMP costs value
22 for each given crop to Hazen and Sawyer's variable costs of
23 production in your baseline?
24 A Hazen and Sawyer had put some subsidence control
25 costs in their baseline and so I think that what we would
213
1 be talking about here is a net addition.
2 Q Could you tell me how you went about calculating
3 that?
4 A I think it's a matter of taking the, again,
5 since we are going back to the Brown & Caldwell work, it
6 would just be doing a calculation in a way to make sure
7 that there wasn't any double counting.
8 Q Would you have then -- if I understand
9 correctly, you would have subtracted something from the
10 Brown & Caldwell BMP costs before you added it to the
11 variable production costs that Hazen and Sawyer used?
12 A Yes. The specific work on that was done by Dr.
13 Schubert, so that if you are asking me to recall numbers,
14 I'm telling you that I would not have done that calculation
15 personally, but the instruction to him was to assume that
16 the Brown & Caldwell numbers were still reasonable
17 estimates of the overall BMP costs.
18 Q Do you know whether the Brown & Caldwell
19 information that Dr. Schubert was referring to broke it --
20 not broke out, but differentiated or separately identified
21 component costs of BMP's in the same way that Hazen and
22 Sawyer did?
23 A No, I don't.
24 Q Do you know whether the BMP costs figures that
25 were used in your analysis were stratified over model
214
1 farms?
2 A We maintain the, I believe it's 52 model farms,
3 so that there are separate cost files, if you will, for
4 each of those farms for any crops produced, for each crop
5 produced.
6 Q In your analysis, do you know whether a separate
7 charge or cost was included for water table management for
8 managing soil subsidence?
9 A I believe that that's included as part of the
10 best management practice.
11 Q So it would have been included in the value that
12 was used for BMP costs, would that be correct?
13 A That's correct.
14 Q Do you know whether Dr. Schubert's analysis and
15 development of BMP costs is documented in your production?
16 A It's documented in the data files on the disks
17 that we gave you with the model. I don't recall a separate
18 memo that summarizes the analysis.
19 Q Does your production include all responsive
20 documents that were in Dr. Schubert's possession when you
21 responded to the request?
22 A To the best of my knowledge.
23 Q Dr. Luke, just going back for a minute to the
24 questions on Exhibit 2, page 4.
25 A Okay.
215
1 Q Is my understanding correct that earnings for
2 purposes of this page of the report would have been
3 calculated by multiplying direct sales times the RIMS two
4 multiplier and then adding the sum of the residual returns
5 across the model farms?
6 A Yes.
7 Q Dr. Luke, if we were to compare the earnings
8 table in Exhibit 2, earnings and profits table in Exhibit
9 2, with the sales table and acreage tables in the
10 appropriate detail reports of data that were used in this
11 calculation, would there -- should they be consistent?
12 A Yes.
13 Q I would like to ask you some questions now about
14 how you handled impacts of STA's for purposes of direct
15 economic impact calculations. The question is how did you
16 calculate direct economic impacts of STA land conversion,
17 and by that I mean just those acres presently in
18 agricultural production that will be converted to STA use
19 under the SWIM plan?
20 A Basically whatever production in the baseline
21 was assumed to occur on those lands was subtracted out. It
22 represented a reduction in cultivated acreage, if you will,
23 by crop.
24 Q Did you analyze the direct economic impacts of
25 just that change in land use without including any impacts
216
1 for or impacts of the STA's?
2 A In effect, what you are asking is with the
3 assessment part set to zero?
4 Q If -- well, let me ask you, would setting the
5 assessment part to zero and I assume you mean in your
6 model?
7 A Yes.
8 Q Setting the assessment parameter to zero, would
9 that have provided an analysis of the direct economic
10 impacts of just the STA land conversion without the
11 impacts, including impacts of financing or otherwise paying
12 for the STA's?
13 A Okay, well, I guess there are three things
14 here. One is the subtraction of land from agricultural
15 production. The second thing is the construction and
16 operating expenditures relating to the STA's. And the
17 third is the tax of paying for them. I don't think that
18 any of the -- I know that we did not do a scenario where we
19 in effect take the land out of production, but don't build
20 the STA's, if you see what I mean, so that as an analyzed
21 scenario, I don't think there is any analysis of just
22 converting the land out of agriculture and nothing else.
23 Q Is it true that the impacts from building the
24 STA's and operating them, as you put it, depend entirely
25 upon who pays for those processes, namely the building of
217
1 the STA's and the operating of them?
2 A I apologize, I missed part of your question.
3 Q Is it the case that the economic impacts of
4 building STA's and operating them result solely from the
5 economic burden of paying for those operations and
6 construction?
7 A No.
8 Q What is it about building STA's and operating
9 them, independent of the cost of doing so, that you
10 analyzed economic impacts of?
11 A Well, let's remember, first of all, impact is a
12 neutral word, you can have a positive or a negative impact,
13 okay, so that let's say for the sake of argument that the
14 STA's operation and construction were paid for entirely out
15 of federal general revenue or state general revenue and
16 there was no discernable bump in federal or state tax rates
17 because of that, then there will still be economic impacts
18 from the STA's, because you will have a reduction in
19 agricultural production and you will have construction and
20 operation activity, which will have its own economic
21 consequences, even if we assume there is no payment,
22 identifiable payment for those activities coming from the
23 EAA.
24 Q By what mechanism would there be a reduction in
25 agricultural production from construction and operation of
218
1 the STA's if that construction and operation were entirely
2 paid for by other than the agricultural industry in the
3 study area?
4 A Unless I'm misunderstanding your question, the
5 answer is real simple. It would still take 35 acres out of
6 production.
7 Q So are there any other aspects of construction
8 and operation of the STA's besides the conversion of those
9 acres out of agricultural land use that would have economic
10 impact on the agricultural industry in the study area?
11 A Well, under the analysis that the mills are
12 paying economically the maximum price to the grower, taking
13 those 35,000 acres out would also affect the amount that
14 can be paid to other farmers for sugar cane, it wouldn't
15 affect sod or vegetables.
16 Q But those impacts would result from taking the
17 acres out of production, is that correct?
18 A Yeah.
19 Q Even if you then built no STA's and operated no
20 STA's, there would still be the same impacts from taking
21 the land out of production, is that correct?
22 A On the agricultural sector, yes.
23 Q Did you then, going back to my beginning
24 question, maybe restating it in context, did you separately
25 analyze the direct economic impacts just of taking the STA
219
1 lands out of production?
2 A No, I haven't. That would sort of look like the
3 1990 draft final SWIM plan where you had, it's a different
4 acreage number, but in effect they were going to proceed to
5 buy the land, but as part of that SWIM plan, they weren't
6 going to do anything with it except perhaps lease it back
7 for temporary agricultural use, and we did not analyze
8 that.
9 Q Could you have analyzed that using your model?
10 A Yes.
11 Q Would that have been done by setting the, I
12 believe you said you referred to it as the finance or
13 funding variable to zero?
14 A No, it would be an entirely different
15 alternative, because in effect you would -- if you think
16 about it as let's call it a land banking scenario, okay,
17 what you would have is you would have land acquisition
18 costs and then you would have to tell me whether you
19 intended to do a lease back for agricultural use, because
20 just the acquisition itself might not take -- change in
21 ownership to public ownership might not take any land out
22 of production, I mean, there is cultivation on state owned
23 lease back land now.
24 Q That's not the question I'm asking, though, I'm
25 asking how, using your model, could you analyze direct
220
1 economic impacts of taking that land out of production
2 only, without including in that analysis any impacts from
3 building STA's, operating STA's, or paying for the building
4 and operating of STA's?
5 A Right. In effect, you define a new scenario
6 that would have those acreages coming out of production and
7 then you would have payments to landowners. You would have
8 reductions and that would flow on through the model and if
9 you set the financing, the EAA burden of financing to zero,
10 then I think, if I have understood or if you have specified
11 all of the details of your scenario, I think that that
12 would properly analyze it.
13 Q Did Hazen and Sawyer attempt to analyze the
14 direct economic impacts of taking the STA land out of
15 agricultural production and not include within that
16 particular portion of their analysis any additional impacts
17 from building STA's, operating STA's, or paying for STA's?
18 A If you're asking me did they do that, the answer
19 is I don't know. I don't recall that that has ever been a
20 separate scenario that they have included in any of their
21 reports.
22 Q If we could look at Exhibit 3 for a moment, look
23 at page ES-2 in the Executive Summary?
24 A Okay.
25 Q The methodology section has a listing of two
221
1 columns of information, a table of sorts, and it describes
2 the types of economic projections that were analyzed and
3 the definitions, for Hazen and Sawyer's purposes, of what
4 those involved. If you look at Number 2, it says, "STA
5 economic projection." Then under the definition it says,
6 "STA's built only, no other district action." Do you know
7 whether -- are you familiar with that aspect of the Hazen
8 and Sawyer analysis?
9 A Yes.
10 Q Do you know whether that analysis analyzed the
11 direct economic impacts of taking the STA designated land
12 out of agricultural production?
13 A That's certainly a part of that scenario, but as
14 I understand that scenario, STA's built means that you have
15 the additional economic impacts of the construction and
16 operation of the STA's, you don't just have land removal.
17 Q Do you know whether Hazen and Sawyer included in
18 that particular economic projection, any economic impacts
19 for or of paying for STA construction and operation?
20 A Yes, they did.
21 Q Do you know what the finance assumptions were
22 that were used in that particular economic projection?
23 A Effectively it assumes that none of the
24 acquisition or construction or operation is paid for by
25 assessments on EAA properties.
222
1 Q Did you do an analysis using the same projection
2 criteria as the STA economic projection performed by Hazen
3 and Sawyer, in that you also analyzed the change in land
4 use resulting from conversion of ag land to STA land and
5 the direct economic impacts of construction and operation,
6 without any economic impacts of paying for those
7 operations?
8 A No, I have not made that a separate scenario.
9 Q Could that scenario -- excuse me, could that
10 analysis be performed using your model, by setting the
11 finance burden to the EAA value to zero in the run of the
12 model?
13 A Yes.
14 Q Would it be correct to say that Hazen and Sawyer
15 has performed its economic impact analysis on at least one
16 scenario where there is no assumption that the agricultural
17 industry is going to be taxed or assessed to pay for STA
18 construction and operation?
19 A Yes.
20 Q Would it also be correct to say that in your
21 analysis no such scenario was included?
22 A Right.
23 Q Can you tell me why?
24 A Yes. I don't see any other identified major
25 funding sources on the 300 million plus that's related to
223
1 that. I have not seen a specific financing plan, so
2 lacking in the information of who else was going to pay, in
3 effect, I just set that variable for purposes of all of my
4 technical alternatives to 100 percent being paid by the
5 agricultural interests. At such point as a funding plan is
6 offered that would tell me how much the agricultural
7 interests were going to be responsible for, it would be a
8 straightforward matter to insert that information into the
9 model that we prepared and to run it with that information.
10 Q In your opinion, does the SWIM plan propose that
11 the agricultural industry in the EAA will be required to
12 pay for all the costs of STA construction and operation?
13 A I think the SWIM plan as adopted very carefully
14 avoids addressing the question of who pays and very
15 intentionally avoids it.
16 Q So would it be fair to say that the SWIM plan
17 does not propose that any particular portion of the cost of
18 construction and operation of STA's be borne by the
19 agricultural industry and the EAA?
20 A I think that they have omitted any funding plan
21 and have avoided raising the issue of who pays.
22 Q In your opinion, was the District legally
23 required to include within the SWIM plan an allocation of,
24 or as I think you put it, a funding plan of specific
25 amounts of the cost of STA construction and operation to be
224
1 borne by different sources, potential sources of funding?
2 A I believe --
3 MS. RAEPPLE: Objection to form.
4 MR. SAXE: Grounds?
5 MS. RAEPPLE: You are asking him for a legal
6 conclusion, he has not been tendered as an expert in
7 legal interpretations.
8 MR. SAXE: It seems to me that Dr. Luke has
9 testified he will be presenting legal opinions at
10 trial, Counsel, their was extended testimony yesterday
11 about what's legally required under the Marjory
12 Stoneman Douglas Act and the SWIM Act and the DEP
13 regulations concerning the performance of the economic
14 impact analysis and cost/benefit analysis for the
15 project.
16 MS. RAEPPLE: Perhaps there is some confusion.
17 He will be testifying as to the common accepted
18 definition of certain terms that are used in those
19 acts, however, he is not going to be offered an expert
20 on legal interpretations. I don't think that would be
21 proper.
22 MR. SAXE: I agree with you that it wouldn't be
23 proper, but I also would have to say it's very
24 inconsistent with Dr. Luke's testimony yesterday.
25 MS. RAEPPLE: No, Dr. Luke will be offered to
225
1 provide testimony as to the plain language, what is
2 the interpretation or what is the definition of terms
3 that are commonly -- what are the common definitions
4 given to terms that are utilized in the act.
5 MR. SAXE: Terms in the laws?
6 MS. RAEPPLE: Terms in the Marjory Stoneman
7 Douglas, that's correct, such as public interest. That
8 is a term that is used in the act and how is that term
9 commonly utilized, but that is --
10 MR. SAXE: Counsel, let me suggest, let me ask
11 the witness some questions going to the subject matter
12 rather than having your descriptions of his
13 understanding of what his testimony will be, before he
14 answers the question. If you want to give me the same
15 comments afterwards, that maybe would be fine.
16 MS. RAEPPLE: I'm simply trying to respond to
17 your question addressed to me as to the basis for the
18 objection to the form of the question.
19 MR. SAXE: Let me ask some clarifying questions
20 of Dr. Luke and see if maybe we can't clear it up.
21 MS. RAEPPLE: That will be fine.
22 BY MR. SAXE:
23 Q Dr. Luke, you have testified here that in your
24 opinion, the District was legally required to do more than
25 it did in analyzing economic impacts and cost/benefit
226
1 relationships for the SWIM plan and alternatives, is that
2 correct?
3 A Yes.
4 Q Is that a legal opinion?
5 A I suppose to the extent that looking at a
6 statute or a rule and interpreting it is construed as
7 offering a legal opinion, I might do that, I guess. I
8 don't know how you do a public policy analysis without
9 interpreting statutes and rules, so I mean, it falls into
10 an area where the purpose is for the purpose of public
11 policy analysis. Whether I am ultimately asked to assume
12 by counsel that the law requires certain things or whether
13 I render that as an independent opinion, I guess would
14 depend on the questions that I was asked at the time of the
15 hearing, but what I am attempting to give you is a policy
16 analysis of what is required for sound planning in the
17 public interest and of what is required, in my opinion, to
18 properly implement the Douglas Act.
19 Q If I recall your testimony correctly from
20 yesterday, you indicated that the requirements for economic
21 impact analysis and cost/benefit analysis, that in your
22 opinion applied to the SWIM plan, flowed from the public
23 interest requirement?
24 A That's correct.
25 Q And that was the public interest requirement in
227
1 the SWIM Act?
2 A Yes.
3 Q Is it your testimony that the words public
4 interest have a commonly accepted meaning among lay, and by
5 that I mean non-lawyers, that applies to the SWIM plan?
6 A I think the community for whom it would have a
7 common meaning would be the community of water resources
8 planners and people that have done public policy planning
9 as to the logical requirements of any planning that was
10 going to follow the public interest.
11 Q So then would it be fair to say that it has a
12 commonly accepted -- that public interest has a commonly
13 accepted meaning among resource economists?
14 A Probably. I mean, I can think of some areas of
15 resource economics that might not have ever addressed the
16 issue of government planning, but for those that have dealt
17 with water resources or other types of government program
18 planning, I would think that planning in the public
19 interest would be consistent with what I have said.
20 Q So then would it be fair to say that your
21 interpretation of what's required under the SWIM act flows
22 from the plain -- the ordinary meaning of the plain terms
23 public interest?
24 A The plain meaning to the community that is
25 concerned with surface water improvement and management,
228
1 yes, but not to the desk clerk at the Sheraton, I don't
2 know that they would give you that interpretation, but I
3 think for the types of professionals that would be expected
4 to be involved in preparing a SWIM plan, that that would --
5 the concepts that are contained in Principles and
6 Guidelines would be basic and generally understood.
7 Q In your opinion, was the District required to
8 perform this analysis before it promulgated the SWIM plan?
9 A Yes. I think that it is -- in conducting a
10 reasonable and rational planning process, that it should
11 have conducted a process which led to a proper comparison
12 of alternatives and selection of plan elements. I think to
13 have proceeded as it did, to in effect adopt an externally
14 imposed settlement agreement and then later on go back and
15 try to rationalize that on a post hoc basis, would be
16 entirely inappropriate. It would call into question the
17 good faith of their later efforts.
18 Q When you say entirely inappropriate, I guess my
19 question was would it be inappropriate because it's
20 inconsistent with the law governing the District's
21 promulgation of the SWIM plan or would it be inappropriate
22 for some reason unrelated to the law?
23 A I think that as the policy goes, I would think
24 that the later work could very well be characterized as a
25 sham that is directed to justify predetermined outcome
229
1 rather than an independent objective analysis.
2 Q I don't believe you answered my question, Dr.
3 Luke.
4 A I tried to, tell me again.
5 Q Let me rephrase the question. Was the District
6 legally required to perform this analysis before it
7 promulgated the SWIM plan?
8 A Yes.
9 MS. RAEPPLE: Objection to form.
10 MR. SAXE: So noted. Would you read back the
11 answer, please.
12 (Requested portion read.)
13 BY MR. SAXE:
14 Q Dr. Luke, what language in what law, in your
15 opinion, gives rise to the requirement that this analysis
16 be performed before the promulgation of the SWIM plan?
17 A It is my understanding as a general matter of
18 administrative law, that orders issued by administrative
19 agencies are supposed to have a reasonable and rational
20 basis based upon properly arrived at findings of fact and
21 conclusions of law and I believe that in order to have the
22 findings of fact that would be necessary to support
23 adoption of the plan elements, that one would have had to
24 have gone through the process that is substantially the
25 process that is stated in Principles and Guidelines and
230
1 it's my belief that they did not go through any such
2 process.
3 Q When you say that in your understanding --
4 strike that. If I understand you correctly, that in your
5 understanding of the laws that apply to the Water
6 Management District, they require the District to have such
7 a reasonable basis as you said. Can you tell me which laws
8 and which words in those laws require the District to have
9 this reasonable basis?
10 A I think it goes all the way back to issues of
11 constitutional due process. I certainly think that in
12 terms of the Administrative Procedures Act, that agencies
13 are expected to act based upon reasonable findings of fact
14 and not upon arbitrary and capricious -- make arbitrary and
15 capricious decisions.
16 Q Have you reviewed the -- when you say
17 Administrative Procedures Act, you mean the Florida
18 Administrative Procedures Act?
19 A Yes.
20 Q Have you reviewed the Florida Administrative
21 Procedures Act?
22 A Not recently.
23 Q Have you reviewed the U.S. Constitution in
24 preparing for this case?
25 A No.
231
1 Q What is the basis for your opinion that those
2 laws require the District to have a reasonable basis?
3 A I think that government actions, particularly
4 those which lead to conversions of property, to additional
5 regulation taxation, have to have some reasonable basis.
6 The constitution of the SWIM plan as an order rather than a
7 rule imposes, as I understand Federal law -- excuse me, as
8 I understand Florida law, imposes additional burdens upon
9 the agency in that they are acting not in a quasi
10 legislative fashion, but they are acting more in a quasi
11 judicial fashion, that requires them to have a reasonable
12 basis for the elements in the order.
13 Q You expressed the qualifier in your answer, as
14 you understand Florida law, my question is, what is your
15 basis for that understanding of Florida law?
16 A I have been working in various Florida
17 Administrative law processes where orders are being tested
18 in administrative hearings, Section 120 hearings, since
19 1983, and in the course of that I have necessarily been
20 exposed to a fair amount of argument in terms of what is
21 being tested in a Section 120 hearing, which is what I
22 understand we are engaged in here.
23 Q Anything else besides your experience in other
24 120 hearings?
25 A No.
232
1 Q Are you basing your understanding of Florida law
2 to any extent on memoranda of counsel in this case?
3 A I have read a number of the pleadings and
4 statements of fact and without being able to cite you to
5 specific ones, certainly there are some statements in there
6 that are consistent, I believe, with what I have just
7 testified to, and I suppose those would constitute an
8 additional basis, if I was being asked to go back and
9 justify that opinion.
10 Q Can you point me to any particularly significant
11 pleadings or memoranda that you have reviewed on the issue
12 of what's required under Florida law for purposes of
13 economic impact analysis or cost/benefit analysis of SWIM
14 plan alternatives?
15 A I think the most recent statement of the Co-op's
16 position in the case, which either has a January or
17 February 1994 date on it, is probably helpful in that
18 regard. There is also an older memorandum on the
19 requirement of economic -- or the role of economics under
20 the water quality regulations and the SWIM regulations or
21 SWIM statutes in Florida law that I think would also be
22 relevant here. I don't profess to have seen every pleading
23 that has been filed in this case, so that answer is not
24 meant to suggest those are the only ones that may have
25 relevant information.
233
1 Q Have you reviewed a memorandum of law in this
2 case concerning the moderating provisions of Florida law,
3 so-called?
4 A Again, I don't know what all the pleadings are.
5 I believe the memorandum on the relevance of economics to
6 the case dealt with that in part.
7 Q So that would be the memorandum that you
8 referred to in your previous answer as an older memorandum
9 dealing with those issues?
10 A Yes.
11 Q Do you know whether that was a memorandum by
12 counsel for the Co-op, William Green?
13 A I believe it was.
14 Q Have you reviewed any other judicial opinions --
15 strike that.
16 Have you reviewed any judicial opinions in
17 forming your opinion about what Florida law requires in way
18 of economic impact or cost/benefit analysis for the SWIM
19 plan?
20 A No.
21 Q Any other statutes?
22 A Well, I think we discussed the review of the '87
23 and '89 SWIM statutes and then Marjory Stoneman Douglas and
24 I mentioned today the APA. In the memorandum, earlier
25 memorandum, I believe there is some discussion about the
234
1 basic water quality regulatory statutes in Florida law,
2 which I'm sorry I couldn't give you the citation or short
3 title for, but I guess those would also be relevant. I
4 believe that's where the actual moderating provisions,
5 mixing zone considerations occur.
6 Q Dr. Luke, you testified earlier, actually in
7 your previous deposition, I believe, that you hold a juris
8 doctor, is that correct?
9 A Right.
10 Q Are you relying on your qualifications as a
11 lawyer in forming your opinion about what Florida law
12 requires for economic impact analysis and cost/benefit
13 analysis of the SWIM plan?
14 A Certainly some of my legal training is the
15 source of some of my understanding about ideas of due
16 process and arbitrary and capricious and the requirement
17 that an agency consider -- make all required considerations
18 in arriving at a decision. I was certainly exposed to
19 similar kind of concepts in my public policy training, I
20 mean, again, they overlap. I have been exposed to those
21 concepts in being responsible for developing a coastal
22 management program for the state of Texas. I mean, it's
23 kind of an area of commonality between at least the public
24 policy analysis training I have had and the legal training
25 I have had.
235
1 Q When you talk about an overlap between your
2 public policy analysis training and your legal training, in
3 your public policy analysis training, did you have any
4 course work that dealt in the requirements under Florida
5 law for SWIM plan promulgation?
6 A I was in public policy school in 1972 and there
7 may have been a SWIM plan requirement back then, but I
8 don't think we used that as a case study.
9 Q Did you have any course work that dealt with
10 what was meant by the words public interest in a statute?
11 A Yes. In fact, I have even helped teach a course
12 in interpreting public interest and public policy
13 development at the Lyndon Johnson School in Austin.
14 Q Tell me more about that.
15 A Sure. When I was in Austin, I was a -- I had
16 gotten my master's degree and was attending law school and
17 there was a course on planning, gosh, it's been a long time
18 ago, I think the title was something like Planning in the
19 Public Interest, taught by Dr. Jared Hazelton, and I
20 assisted him in that course and was responsible for
21 teaching certain sections of it.
22 Q Dr. Luke, are you involved in development of
23 coastal management plans for Texas at the present time?
24 A No.
25 Q Have you been in the past?
236
1 A My involvement with that went through the change
2 of gubernatorial administrations in 1979 and I have not
3 really had any direct involvement, that was when the direct
4 involvement ended and there are some follow up projects
5 which were not part of the coastal management project, but
6 were part of the work done for the General Land Office,
7 which concerned management coastal resources that would
8 have extended to 1991, 1992.
9 Q Do you know whether economic analysis is
10 required for coastal management plan development in Texas?
11 A Yes, it is.
12 Q Is cost/benefit analysis required?
13 A Yes.
14 Q Is economic impact analysis required?
15 A Yes.
16 Q Do the requirements that you have testified to
17 as described in guidance and guidelines of the Principles
18 and Guidelines apply to coastal management plan development
19 in Texas?
20 A The water resources planning, Federal Water
21 Resources Planning Act does not specifically make
22 Principles and Guidelines applicable to coastal management
23 programs, however, the terms of the Coastal Zone Management
24 Act require a planning process that is substantively the
25 same as that and require an environmental impact statement
237
1 prior to federal certification of programs submitted by the
2 states.
3 Q Is a socioeconomic impact analysis required
4 under the Coastal Zone Management Act?
5 A As part of the environmental impact statement,
6 yes.
7 Q Would it include the elements that in your
8 opinion are missing from -- improperly missing from the
9 District's analysis?
10 A I don't understand the question.
11 Q You identified a number of elements that in your
12 opinion should have been studied, but were not, by the
13 District, are those elements also required to be included
14 in the socioeconomic impact analysis applicable under the
15 Coastal Zone Management Act?
16 A Depending upon the issues that arose in coastal
17 zone management in specific states and the scoping process
18 that had occurred, those specific impacts that I named
19 might or might not be considered to be sufficiently
20 affected by any of the actions that were to be elements of
21 the coastal zone management program to require an explicit
22 analysis, so as I said, the scoping process would determine
23 whether or not each and every one of those, and perhaps
24 some others I haven't mentioned that would be relevant in a
25 certain state, should be included.
238
1 Q Would population migration effects be required
2 to be analyzed?
3 A They could be, it would depend again upon the
4 problems and issues that a specific state was addressing in
5 its coastal management program.
6 Q How about effects on self-esteem?
7 A Yes, it could be.
8 Q Do you know of any analyses done in the coastal
9 zone management process under the Coastal Zone Management
10 Act that have included those elements?
11 A I haven't reviewed or had any need to review all
12 of the state coastal zone plans, so I don't.
13 Q Do you know of any that include those elements?
14 A Having not reviewed them, I have no way to know,
15 so my saying I don't know doesn't imply anything other than
16 I haven't read them.
17 Q Okay, thank you. In your opinion -- strike
18 that.
19 You have also testified that in your opinion
20 guidelines or general guidance for the District on how to
21 comply with the requirements under Florida law to analyze
22 economic impacts and cost/benefit relationships for the
23 SWIM plan is contained in the Federal Principles and
24 Guidelines, is that correct?
25 A Yes.
239
1 Q Is that a legal opinion?
2 A Again, I have told you that I believe it is not
3 something that is directly applied as a matter of law, but
4 that it is a rather complete and well accepted statement of
5 the steps and considerations in water resources planning
6 and it serves as a useful yardstick, so I guess you would
7 call that a public policy judgment as to whether that
8 document is a useful yardstick. I guess you could say that
9 in interpreting the public interest in water resources
10 planning, it is that yardstick or a yardstick that is
11 functionally equivalent that would have to be met in order
12 to have done water resources planning in the public
13 interest.
14 Q Is it your opinion that any government agency
15 action which is required -- strike that.
16 Is it your opinion that any government agency
17 action involving a water resources project such as the SWIM
18 plan that is required by law to be conducted in the public
19 interest, requires economic impact analysis and
20 cost/benefit analysis of the type and extent that you have
21 testified is required of the District for this SWIM plan?
22 A I think that again this goes to the question of
23 scoping. One can envision something that could be called a
24 water resources project or plan, which is so minor in its
25 scale, that in scoping, what was needed in order to do a
240
1 rational plan in the public interest, that it would not be
2 necessary to do the same range of formal studies that is
3 required if you are doing the Surface Water Improvement and
4 Management plan for the entire Everglades lower east coast
5 area. The scale of the area, the scale of the plan, the
6 scale of the financial obligations being created certainly
7 dictate the amount of formal study and analysis that is
8 appropriate in a given case.
9 Q So then would it be fair to say that in your
10 opinion the District was required to do more than it did in
11 this case because of the scope of the SWIM plan?
12 A Because of both the statutory requirements and
13 the scope, yes.
14 Q Do you know whether any other SWIM plan in
15 Florida has -- strike that.
16 Do you know whether any other Water Management
17 District in Florida has promulgated a SWIM plan? That's
18 the question.
19 A I haven't looked.
20 Q Do you know whether the South Florida Water
21 Management District has promulgated any other SWIM plans?
22 A I have seen their draft final in '90, but I
23 don't believe that was adopted and I don't believe there is
24 anything prior to that, but I haven't gone back before 1990
25 to check.
241
1 Q I asked you a question like this yesterday
2 concerning just cost/benefit analysis, but my question
3 today is more inclusive. Are you aware of any studies that
4 have been done by or on behalf of any non-federal agency in
5 the state of Florida for a water resources project that do
6 comply with the requirements for economic impact analysis
7 or cost/benefit analysis?
8 A I haven't looked and so I couldn't name it for
9 you.
10 MR. SAXE: Okay, Counsel, I have finished that
11 line of questioning, if you want to finish your
12 comments about the nature of Dr. Luke's proffer as an
13 expert.
14 MS. RAEPPLE: My comments were complete.
15 MR. SAXE: Okay, thanks.
16 BY MR. SAXE:
17 Q Dr. Luke, going back to the direct economic
18 impact analysis of STA's, what multipliers did you use for
19 STA construction impacts for the EAA or on the EAA and on
20 Florida?
21 A The Hendry County multipliers.
22 Q Those would be the Hendry County RIMS
23 multipliers?
24 A Right.
25 Q Any particular -- are there industrial
242
1 classifications in the RIMS multipliers?
2 A There are, and I believe we're talking about the
3 same ones, same sectors for which Hazen and Sawyer used the
4 Palm Beach County multipliers.
5 Q With respect to employment impacts from STA
6 construction, in your analysis, did you make any assumption
7 about the distribution of impact between local versus non-
8 local workers?
9 A Yes. We assumed that approximately 50 percent
10 of the jobs would go to EAA residents and about 50 percent
11 wouldn't.
12 Q Can you tell me why you made that assumption?
13 A This is a judgment that I relied on Dr.
14 Leistritz for and it was based upon his analysis of the
15 labor force composition in the EAA and his previous
16 experience with large projects, construction projects in
17 rural communities.
18 Q Now, did you handle, in your analysis, the
19 change in the price paid by the mill for cane when STA land
20 came out of production?
21 A There are equations in the model that in effect
22 look at what the profit, if you will, of the mill would be
23 and allocate that back to the farms.
24 Q Did you use the Hazen and Sawyer equation?
25 A No.
243
1 Q Do you know what the -- can you tell me more
2 about the equation, either can you tell me what the
3 equation is or can you point me to where I would find the
4 equation specifically in your production?
5 A You would find it in the spread sheet.
6 Q Can you tell me how that equation was derived?
7 A Well, I mean, basically it's an accounting
8 relationship. You have got the, for the amount of cane
9 that's being processed in any given year, what you have got
10 is the profit, if you will, to the mills, that then can be
11 allocated back to the individual model farms on a per acre
12 basis, so that as the -- given that the price is a
13 constant, as the other variables change, the amount of
14 implied subsidy that's available to bid for the -- I don't
15 want to say subsidy, but the implied amount of money that's
16 available to bid for the cane while leaving the mills in an
17 economically solvent position will change.
18 Q When you say the equation reflects an accounting
19 relationship, I think you said?
20 A Right.
21 Q Concerning the profit at the mills that can be
22 allocated back, what are the criteria for how much can be
23 allocated back?
24 A Well, you have got in effect the profit from the
25 mills, I mean revenues minus expenses, in that that's the
244
1 amount that's available to be allocated back to bid for
2 cane supplies, if necessary.
3 Q And again, the revenue -- the derivation of the
4 revenue side of that equation was done how?
5 A You basically got the amount of raw sugar that's
6 being produced times the price of raw sugar plus the amount
7 for byproducts.
8 Q And what figures were used for those variables?
9 A It's the 21.6 plus the penny on the byproducts.
10 Q How about the expenses side, what figures were
11 used for the expenses side of the revenues minus expenses?
12 A You have got the numbers that were derived from
13 the USDA survey of the mills.
14 Q Those are the same numbers that Hazen and Sawyer
15 used?
16 A Yes.
17 Q Was there any adjustment in mill configuration
18 due to land going out of production?
19 A I don't know what you mean by configuration. We
20 assumed that all seven mills stayed in operation throughout
21 the period, if that's your question.
22 Q Did you make any changes in the expenses side or
23 the revenues variable in the equation as land went out of
24 production?
25 A Well, it's not land going out of production
245
1 that's the issue, it's how much cane is the mill processing
2 and, in that case, yes, there's certainly some variable
3 costs.
4 Q What was the basis for varying those costs?
5 A There is an analysis in the USDA numbers, I
6 believe, of the cost structure of the mills.
7 Q Is that the same -- was the same methodology
8 used as Hazen and Sawyer used?
9 A Let me say we were able to replicate their
10 results, which is different than saying that we used
11 exactly the same equations.
12 Q Do you know whether there were different
13 equations used?
14 A I don't know, I don't have their spread sheets.
15 Q Did you do these calculations personally?
16 A They were done under my supervision.
17 Q Who under your supervision worked on this?
18 A Ed Warren and Eric Schubert.
19 Q Do you know whether these variations in costs of
20 production with the changing supply of cane were also
21 factored in when land went out of production due to
22 subsidence?
23 A Yes, they were.
24 Q And when land went out of production due to your
25 land use change criteria involving returns to land?
246
1 A Yes, they were.
2 Q Dr. Luke, you made a reference just a moment ago
3 to the Hazen and Sawyer spread sheets, do you or RPC or
4 subcontractors have any of the Hazen and Sawyer's spread
5 sheets?
6 A Not for the contract completion report.
7 Q Do you have them for the draft final report?
8 A I don't think so. I think the last ones we have
9 were whatever they produced shortly after the 10 year
10 report, I don't think they had even issued a 20 year
11 report. This has been over a year ago, so I'm not certain,
12 but I know that since we have not -- at least to my
13 knowledge there has been no deposition or no production
14 directly related to contract completion report, we don't
15 have that.
16 Q Going back for a minute to the employment impact
17 area, do you know if Dr. Leistritz used any Florida
18 communities in his job distribution work?
19 A I don't understand the question.
20 Q Did he draw any inferences from data from
21 Florida communities as opposed to communities that might
22 have been studied elsewhere in the country?
23 A We looked specifically at the composition of the
24 labor force in the communities in the EAA in terms of what
25 labor skills and what types of laborers were there, based
247
1 upon the BLS and the census data and observation in the
2 study area, so I mean, he has made some trips and visits
3 there, so he has used that information about the specific
4 Florida communities that we're examining.
5 Q In arriving at the 50/50 ratio of distribution
6 of impact between local and non-local workers from STA
7 construction, did he draw any inferences from Florida
8 community information?
9 A I don't know what I can add to the answer I just
10 gave you.
11 Q Do you know if Dr. Leistritz used any previous
12 studies from the University of Florida or any other
13 institutions that had done studies concerning employment in
14 the EAA?
15 A We have certainly had available a number of the
16 IFAS and the extension service studies and those sorts of
17 things and I know he has looked at many of those. In terms
18 of giving you a schematic of his decision process, I
19 suggest you ask him that when you depose him. I really
20 couldn't tell you precisely what he thinks he considered in
21 reaching this particular judgment.
22 Q Okay, thank you, Dr. Luke.
23 Again talking about the economic impacts of
24 STA's, in your analysis, where did you get the costs to be
25 used for cost of construction?
248
1 A We have used the information that I guess
2 originates with the District's engineering consultant, I
3 believe it's Burns & McDonnell, a different firm than the
4 BMP's, and carries forward from there.
5 Q Was it the same information that Hazen and
6 Sawyer used in the 20 year report?
7 A I believe it's the same.
8 Q Same question concerning the cost of operation,
9 what was the source of the values for the operation costs?
10 A I believe the answer is the same. We asked if
11 there had been any updated general design memoranda or cost
12 estimates and asked counsel that and the indication we got
13 is there had not been any published update on that
14 material.
15 Q I'm sorry, I might have missed it, who did you
16 ask?
17 A We asked Ms. Raepple and Mr. Perko, I think.
18 Q Okay, fine.
19 In your analysis, did you reduce cost of
20 construction and cost of operation to present value?
21 A I'm not sure I understand your question.
22 Q Let me break that up, let me rephrase it. Did
23 you reduce cost of operation to present value?
24 A No. We have done annual projections and so we
25 have not brought those annual projections back to a single
249
1 number, which I am interpreting your question to mean, I
2 mean, one could do that by applying some discount rate in
3 the usual manner.
4 Q That would be the same for operating costs, I
5 take it, you dealt with operating costs as they arose in a
6 given projection year as opposed to bringing them up front,
7 I think you said, and using a discount rate?
8 A Right, right.
9 Q What was the basis for your scheduling of the
10 incurring of the operation costs and the construction
11 costs, the timing?
12 A The timing is based upon, I think, the SWIM plan
13 itself and I think is consistent with what Hazen and Sawyer
14 did on the SWIM plan alternative and the operating costs I
15 believe are level annual costs, so I mean they recur.
16 Q Dr. Luke, if you would look at Exhibit 2 for a
17 moment, please. On the eighth page, it says Calculation of
18 Annual Total Financing Requirement for Four Phosphorus
19 Reduction Alternatives.
20 A Does it have a page number on it?
21 Q A very faint 7.
22 A All right, got it.
23 Q I'm going to strike that, you can ignore Exhibit
24 2 for the time being.
25 A Okay.
250
1 Q I would like to talk some about your analysis of
2 the direct economic impacts of alternatives to the SWIM
3 plan. You have indicated that you analyzed a number of
4 alternatives to the STA's proposed in the SWIM plan. I
5 believe there was a microfiltration alternative, a direct
6 filtration alternative, an STA's outside the EAA
7 alternative. What am I forgetting?
8 A You are forgetting the no action alternative,
9 which translates really to a mixing zone alternative.
10 Q Other than the no action alternative, how did
11 you arrive at the criteria or the characteristics of the
12 alternatives that I have just described?
13 A I'm not sure I understand.
14 Q Let me rephrase the question. Where did you get
15 the alternatives?
16 A The direct filtration alternative is one that
17 the District's consultants, engineering consultants, have
18 studied after the adoption of the SWIM plan, or at least
19 all the materials on it I have seen are post-'92.
20 Q This is the direct filtration?
21 A Yes.
22 Q When you say District consultants?
23 A I believe I am talking about Burns & McDonnell.
24 The microfiltration was brought to my attention
25 by Mr. Green and information on that has been supplied by
251
1 Dr. Shannon.
2 Q And the STA's outside of the EAA, was that your
3 own -- let me rephrase that. Did somebody suggest that as
4 an alternative to you?
5 A I guess not as a specific alternative, I mean, I
6 had asked the question early on if you want to have these
7 managed marshes, why put them in the EAA as opposed to
8 putting them in the WCA, and nobody had a technical reason
9 why that wasn't possible and it clearly is a distinct
10 economic alternative, so I formulated that I guess myself.
11 Q So as far as you know, for your purposes, that
12 was your idea?
13 A Right, although I would be amazed if somebody
14 hadn't mentioned it somewhere along the line previously.
15 Q What were the criteria that you used in
16 selecting these alternatives, other than the no action
17 alternative, as appropriate alternatives to be the subject
18 of economic impact analysis and cost/benefit analysis?
19 A Well, as I understand the Douglas Act, the
20 agricultural interests are responsible for the cost of
21 water quality measures, but not for the cost of hydroperiod
22 restoration measures in terms of what you can use an
23 assessment, storm water utility district assessment for, so
24 it is necessary, in my view, to determine what the actual
25 cost of efficient achievement of water quality standards
252
1 are, because that really, I think, poses a ceiling on what
2 you can assess against the EAA farm lands, so that there
3 are really two issues. One, what should you do as the
4 appropriate alternative from a -- if your sole objective
5 was phosphorus removal, if that's the main alleged problem
6 in the water quality, and then if you are a multi-objective
7 project and your alternative is going to serve both water
8 quality and hydroperiod restoration objectives, then the
9 pure phosphorous removal alternative provides us with a
10 basis for saying how those costs should be allocated
11 between water quality and other objectives. So even if you
12 sort of said, well, gee, I don't really like direct
13 filtration because it doesn't allow me to control the
14 timing of flows of water to the WCA's and so even if direct
15 filtration is more efficient as a water quality measure, I
16 still want to do something else, that may be a perfectly
17 valid decision by the District. But what we would then say
18 is okay, to the extent that it costs more to do it with an
19 STA than it would cost if you built a direct filtration
20 plan, then the difference in those costs obviously is not
21 attributable to water quality improvement, it's
22 attributable to your other objectives.
23 So it's important to understand some of the
24 other water quality management technologies, both because
25 they may be just better overall, superior given all
253
1 objectives, and also they will provide us with some
2 benchmarks in terms of what is a reasonable allocation of
3 costs to the storm water assessments.
4 MR. SAXE: Could you mark that answer, please?
5 (Discussion off the record.)
6 (Brief recess taken.)
7 BY MR. SAXE:
8 Q Before when we were talking about the
9 alternatives analyzed, I asked you where you got the other
10 alternatives that you analyzed and you told me that the
11 direct filtration alternative was based on work by Burns &
12 McDonnell, I believe, the microfiltration alternative was
13 based on work by Dr. Shannon, and it had been, to some
14 extent, your idea concerning the STA's in the water
15 conservation areas.
16 Starting with the direct filtration, can you
17 describe for me just what it is that you have -- what kind
18 of materials or information -- strike that. What
19 information you have received about the direct filtration
20 alternative that you have considered in formulating your
21 analysis?
22 A Right. We produced -- I have seen a feasibility
23 study design memorandum document and I believe we produced
24 to you a technical appendix, which is the thing that
25 actually contains the operation and construction costs of
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1 it, and I have talked with Dr. Shannon just in terms of,
2 okay, educate me about kind of technically what the process
3 looks like, and that's at this point what I know about it.
4 Q Did you see the design memorandum?
5 A Yeah, I held it in my hands and scanned through
6 it.
7 Q And you produced the appendix?
8 A Yes.
9 Q The design memorandum is probably listed in one
10 of your letters maybe?
11 MS. RAEPPLE: If it wasn't listed, you are now
12 aware of it and if you need a copy of it, we can
13 provide it.
14 MR. SAXE: That's fine.
15 THE WITNESS: It's something the District
16 produced.
17 BY MR. SAXE:
18 Q As far as the microfiltration, again same
19 question, what information have you received and reviewed
20 in analyzing this alternative?
21 A That's in the production, it's in that stack, I
22 believe. It is information that Dr. Shannon supplied to
23 Dr. Schubert within the last month or so, I guess,
24 concerning microfiltration. I have also had the
25 opportunity to go over the concept and some of the issues
255
1 in the microfiltration alternative with Dr. Shannon and I
2 think I understand basically how it works and how it
3 differs from direct filtration.
4 Q With respect to the STA's in the water
5 conservation areas, based on your earlier testimony, this
6 is somewhat more of an abstract alternative in that it
7 involves just changing some of the assumptions in your
8 existing analysis concerning STA's, would that be correct?
9 A I don't know if it's any more or less abstract
10 than any of the rest of these. What I have assumed for
11 purposes of this analysis is that the STA's would be of the
12 same area and effectiveness, whatever that is, and that in
13 effect they would be moved south so that instead of being
14 for the most part immediately north of WCA's, they would be
15 in WCA's.
16 Q So were there any other sources of information
17 that you had recourse to in formulating the characteristics
18 of this alternative for purposes of your analysis?
19 A I have held the construction and the operation
20 costs constant, so I have just really moved it and
21 eliminated the land costs. I --
22 Q When you say moved it -- excuse me.
23 A I haven't specified a location, if that's your
24 question.
25 Q That's helpful, so you haven't located
256
1 alternative STA spots on a map?
2 A No.
3 Q When did you first become aware of the direct
4 filtration alternative?
5 A I think I became aware of the direct and the
6 microfiltration, it's been in 1994, and I believe it's in a
7 conversation with Mr. Green. I don't know the exact date.
8 Q It's been in 1994, you said?
9 A Correct.
10 Q How about microfiltration?
11 A Same.
12 Q The alternative of STA location in the water
13 conservation areas?
14 A I mean, I have been aware of that since we
15 started looking at this in '92, that there was nothing
16 inherent in the STA technology, which is in effect a
17 managed marsh, that required that it be on EAA land as
18 opposed to WCA land.
19 Q So that would be basically when you started
20 working, when you were first retained by the Cooperative?
21 A If the question is was I aware of the possible
22 alternative, I mean, you know, I can't tell you the moment
23 that it dawned on me, but I mean, it --
24 Q It was very early in your work on the case?
25 A Yes, when I started looking at STA's.
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1 MR. SAXE: Court Reporter, would you please now
2 read back the question I had asked before the break?
3 (Requested portion read as follows: Question,
4 "What were the criteria that you used in selecting
5 these alternatives, other than the no action
6 alternative, as appropriate alternatives to be the
7 subject of economic impact analysis and cost/benefit
8 analysis?")
9 MR. SAXE: Now would you read back the beginning
10 of Dr. Luke's answer?
11 (Requested portion read as follows: Answer,
12 "Well, as I understand the Douglas Act, the
13 agricultural interests are responsible for the cost of
14 the water quality measures, but not for the cost of
15 hydroperiod restoration measures" --
16 MR. SAXE: Okay, that's all I need, thank you.
17 BY MR. SAXE:
18 Q Dr. Luke, what do you mean when you say ag is,
19 as you understand it under the Marjory Stoneman Douglas
20 Act, responsible for water quality measures?
21 A I'm trying to find the Douglas Act. If you look
22 at the Douglas Act, and I'm looking at it as it is
23 published in the March 12, '92 appendices to the SWIM plan,
24 it identifies storm water -- one of the provisions of storm
25 water funding, dedicated funds for storm water management,
258
1 and it talks about different kinds of assessments and fees
2 and I'm sure you are very familiar with that. If you go
3 over to paragraph -- or section (d) of section 5, it says,
4 "In no event shall the amount of funds collected for storm
5 water management facilities pursuant to paragraphs (a) or
6 (c) or any combination thereof, exceed the cost of
7 providing water management attributable to water quality
8 treatment resulting from the operation of the storm water
9 management systems to the landowners to be charged." And
10 then later on it talks about making a fair and reasonable
11 determination of the estimated costs of water management
12 attributable to the water quality treatment and then it
13 goes on and later talks about water quality problems that
14 may not originate within the EAA.
15 So it is talking here about the ceiling in
16 effect, or the cost allocation method would be another way
17 to say it, permissible cost allocations between different
18 types of assessments and fees and so forth, and my
19 shorthand for that is to say that the legislature has said
20 that you can charge the EAA agricultural interests for the
21 cost of improving the quality of their discharge waters to
22 meet some standard, but that you are not to use those sorts
23 of targeted assessments, targeted taxes, to pay for --
24 against the EAA lands to pay for hydroperiod management or
25 to pay for say the cleanup of water discharge from Lake
259
1 Okeechobee that happens to flow through the EAA.
2 Q So when you say ag is responsible for certain
3 water quality measures, if I understand your answer, you
4 are saying that ag can be charged for certain water quality
5 measures under the Douglas Act, is that correct?
6 A That's right. There is nothing that I can see
7 that necessarily prohibits some sort of funding from other
8 sources. I don't read anything that says that water
9 quality structures shall only be paid for from fees
10 assessed against EAA lands.
11 Q So in your opinion, the Douglas Act doesn't
12 require that ag be charged for or assessed or allocated, as
13 you put it, the costs associated with the water quality
14 measures which they could under the law be assessed, would
15 that be correct?
16 A That's my read. I'm sure you will not rely on
17 that solely for your interpretation.
18 Q So when you say ag is responsible for the water
19 quality measures under the Marjory Stoneman Douglas Act,
20 would it more accurate to say that ag may be responsible
21 for water quality measures?
22 A I guess that in a pure legal interpretation,
23 that that would be correct. My interpretation of what I
24 have seen and heard and read is that there seems to be a
25 political conviction, at least on the part of some groups,
260
1 that ag should pay the full costs of any water quality
2 improvement.
3 Q Just so I understand your answer, though, that
4 I'm seeking clarification of, which was your answer before
5 the break, you said ag is responsible for water quality
6 measures under the Marjory Stoneman Douglas Act?
7 A Right.
8 Q That's what I'm asking about now, not what some
9 groups might think ag is responsible for or what some
10 politicians might think ag is responsible for.
11 A Right.
12 Q And if I understand your testimony correctly, it
13 is not your opinion that the Marjory Stoneman Douglas Act
14 requires that ag be assessed the full cost of or in fact
15 any portion of the cost of the water quality measures which
16 under the act they could be assessed, is that correct?
17 A I think that's right, is that there is a ceiling
18 put on it, but that there is -- I don't find a floor.
19 Q Is this opinion about what's required under the
20 Marjory Stoneman Douglas Act based again entirely on -- not
21 again, excuse me, is it based entirely on your own
22 expertise as an expert policy analyst?
23 A It's based on my interpretation of the act,
24 which I have checked with Florida counsel and they seem to
25 tell me that that's how they read it, too.
261
1 Q But it is your own opinion, you are not relying
2 upon the opinion of counsel for that decision?
3 A Of course I am relying in part on their opinion.
4 If I had said, gee, I interpret it this way and they said,
5 no, you are all wrong, it's something else, I would not
6 have maintained that interpretation.
7 MR. SAXE: Going back to the question that I
8 asked before the break, would you read that back one
9 more time, please?
10 (Requested portion read as follows: Question,
11 "What were the criteria that you used in selecting
12 these alternatives, other than the no action
13 alternative, as appropriate alternatives to be the
14 subject of economic impact analysis and cost/benefit
15 analysis?")
16 MR. SAXE:
17 Q Dr. Luke, I would like you to take a run at
18 answering that question again, but before you do so, if you
19 could tell me in your own words what the criteria are,
20 rather than giving me examples of how criteria might be
21 applied? That is what I'm looking for in this particular
22 question.
23 A All right, well, let me see if I can reshape it
24 that way.
25 First of all, you need to understand that the
262
1 specification of alternatives is an iterative process, it
2 is not a one time through process, and so at different
3 points in the planning process, you may return to the
4 question of alternatives either to add to or to take away
5 from ones that you have previously identified.
6 Q But when you do, notwithstanding whether it's an
7 iterative process and how many times you do it, what
8 criteria would apply?
9 A And I'm going to tell you about that.
10 So that the criteria you apply is that, first of
11 all, the alternatives correspond to your objectives. You
12 obviously have to have some belief that the alternative
13 that you're proposing will achieve some desired outcome or
14 at least move you closer to that desired outcome and you
15 have to have therefore some understanding of what your
16 desired outcome is, so the criteria is this is something I
17 have some reason to believe will move me closer to a
18 previously specified desired outcome.
19 Q Okay, so that's one criteria?
20 A Right. And in water resources planning, it is
21 axiomatic that it is often a multi-objective situation, so
22 that you could refine that to say one or more of my
23 objectives.
24 Q Okay, it doesn't have to -- the alternative need
25 not correspond, as you use the word, to all of the
263
1 objectives, but simply one or more of the objectives?
2 A That's right, because you can have elements in a
3 plan that you can link together and a plan is not a single
4 unitary element.
5 Q When you say that the alternative must
6 correspond to one or more of the objectives, by correspond,
7 do you mean that it must promote?
8 A Further would maybe be a good word. Help you to
9 achieve would be another way to say it.
10 Q Do alternatives have to help you to achieve one
11 or more of the objectives to the same degree to be
12 appropriately considered as alternatives to be studied?
13 A No. In fact, by their very nature, alternatives
14 will differ in the degree to which they may help you obtain
15 different objectives. You may have one that only gets you
16 50 percent of the way, but it may only cost 10 percent as
17 much as one that gets you 70 percent of the way. So that
18 you can have a variety of degrees and of course that's one
19 reason that we talked about yesterday that you need to have
20 some indication of indicators of levels of achievement of
21 an objective. Objectives are not normally all or nothing
22 matters. You can have partial achievement.
23 Q Are there any parameters, lower or upper bounds
24 for the degree to which alternatives further objectives for
25 them to be considered appropriate alternatives?
264
1 A Well, again, because you will have cost
2 tradeoffs and because you will have interactions and
3 because often when you specify the objective -- excuse me,
4 when you specify the alternative, you may not have the data
5 you need to determine how far along it will get you in
6 achieving the objective in this specific case. Maybe it
7 worked somewhere else and so somebody thinks it will work
8 in the current situation, but we don't know that.
9 I would not say to nominate an alternative that
10 you have to have a lower bound. Now, I guess the upper
11 bound is 100 percent, but I don't think that's --
12 Q So if I understand your answer correctly, there
13 is nothing requiring that any given alternative be excluded
14 from consideration because it falls far short in the degree
15 it promotes any particular objective relative to another
16 alternative?
17 A That's right, because it might be used in
18 conjunction with other alternatives, other elements, to put
19 together a strategy which taken together would either
20 represent substantial progress towards your objectives or
21 it might represent achievement of your objectives.
22 Q Are there any other criteria?
23 A Yes.
24 Q Could you give me one other criteria?
25 A I think I would go back to Deposition Exhibit 1
265
1 and it would be on page 5 as we have numbered it and I
2 would point out that the alternatives should be
3 significantly different from each other.
4 Q Again, we are now referring to your discussion
5 of the Federal Principles and Guidelines?
6 A That's correct.
7 Q And these Federal Principles and Guidelines
8 provide guidance for the selection of alternatives to be
9 studied by an entity like the Water Management District in
10 proposing an action like those proposed in the SWIM plan,
11 is that correct?
12 A That is correct. We also say that the range of
13 alternatives selected should cover all of the reasonable
14 alternatives and those would be all the reasonable
15 technological alternatives, all the reasonable economic and
16 political alternatives.
17 Q I'm sorry, would you direct me to where you are
18 referring?
19 A See the bracketed 1.6.1 (a)?
20 Q Yes.
21 A Read the sentence after that.
22 Q This sentence reads, "Alternative plans should
23 be formulated in a systematic manner to insure that all
24 reasonable alternatives are evaluated," is that correct?
25 A Yes.
266
1 Q How does one insure that all reasonable
2 alternatives have been evaluated?
3 A One involves all of the affected interest groups
4 and an interdisciplinary team knowledgeable in the various
5 disciplines applicable to water resources planning in the
6 scoping of the planning effort and one does not prematurely
7 discard alternatives that one or more of the disciplines or
8 affected groups believes is worthy of studying.
9 Q So is it your opinion that the District was
10 required to constitute an interdisciplinary group of all
11 the affected interests for purposes of determining what
12 alternatives were reasonable to be analyzed?
13 A Right. So that could be done through, I mean,
14 there are different institutional structures for getting
15 that input. They include committees, hearings, symposia, I
16 mean, there are any number of means of public input, public
17 participation that have been developed over the years.