1

2 STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SUGAR CANE GROWERS COOPERATIVE

4 OF FLORIDA, a Florida Agricultural CASE NOS. 92-3038

Cooperative Marketing Association; 92-3039

5 ROTH FARMS, INC.; and WEDGWORTH 92-3040

FARMS, INC.,

6 and

FLORIDA SUGAR CANE LEAGUE, INC.;

7 UNITED STATES SUGAR CORPORATION;

and NEW HOPE SOUTH, INC.,

8 and

FLORIDA FRUIT AND VEGETABLE

9 ASSOCIATION; LEWIS POPE FARMS;

W.E. SCHLECHTER & SONS, INC.;

10 and HUNDLEY FARMS, INC.,

11 Petitioners,

12 vs.

13 SOUTH FLORIDA WATER MANAGEMENT

DISTRICT, an Agency of the State

14 of Florida,

15 Respondent,

16 and

17 MICCOSUKEE TRIBE OF INDIANS OF

FLORIDA; the UNITED STATES OF

18 AMERICA; and FLORIDA DEPARTMENT VOLUME 1

OF ENVIRONMENTAL REGULATION, and PAGES 1 - 211

19 the FLORIDA WILDLIFE FEDERATION,

20 Intervenors.

__________________________________/

22 DEPOSITION OF RONALD T. LUKE, PhD

24 ACCURATE STENOTYPE REPORTERS, INC.

100 Salem Court

25 Tallahassee, Florida 32301

904/878-2221

6 ___________________________________________________________

7 DEPOSITION OF: RONALD T. LUKE, PhD

TAKEN AT THE INSTANCE OF: Intervenor USA

10 DATE: Thursday, March 11, 1993

TIME: Commenced at 9:00 a.m.

12 Concluded at 6:00 p.m.

LOCATION: Accurate Stenotype Reporters

14 100 Salem Court

Tallahassee, Florida

16 REPORTED BY: TERRY WILHELMI, CSR

Notary Public in and for the

17 State of Florida at Large

___________________________________________________________

2 APPEARANCES:

REPRESENTING THE FLORIDA SUGAR CANE GROWERS

4 COOPERATIVE OF FLORIDA:

5 DONNA H. STINSON, ESQUIRE

Hopping, Boyd, Green & Sams

6 123 South Calhoun

Tallahassee, Florida 32301

8 REPRESENTING THE SOUTH FLORIDA WATER

MANAGEMENT DISTRICT:

PATRICK S. COUSINS, ESQUIRE

10 Popham, Haik, Schnobrich & Kaufman, Ltd.

4100 One Centrust Financial Center

11 100 S.E. Second Street

P.O. Box 019101

12 Miami, Florida 33l3l

REPRESENTING THE UNITED STATES OF AMERICA:

KEITH E. SAXE, ESQUIRE

15 U.S. Department of Justice

60l Pennsylvania Avenue N.W.

16 Room 879

Washington, D.C. 20004

18 ALSO APPEARING: Professor Lonnie Jones

20 * * * * *

2 I N D E X

3 WITNESS PAGE

4 RONALD T. LUKE, PhD

5 Direct Examination by Mr. Saxe 5

10 E X H I B I T S

NUMBER DESCRIPTION PAGE

Luke l Curriculum Vitae 22

13 Luke 2 Comments of Dr. Luke on Draft Final Report 110

Luke 3 Memo to Mr. Green from Dr. Luke 10/2/92 117

20 CERTIFICATE OF REPORTER 211

1 STIPULATIONS

2 The following deposition of RONALD T. LUKE, PhD,

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. All objections, except as

7 to the form of the question, are reserved until final

8 hearing in this cause; and reading and signing is not

9 waived.

10 * * *

11 Thereupon,

12 RONALD T. LUKE, PhD

13 was called as a witness, having been first duly sworn, was

14 examined and testified as follows:

15 DIRECT EXAMINATION

16 BY MR. SAXE:

17 Q Dr. Luke, I'm Keith Saxe, I am an attorney with

18 the U.S. Justice Department and I am here representing the

19 United States in Sugar Cane Growers Cooperative of Florida

20 versus South Florida Water Management District. I will be

21 taking your deposition today in this case for today and

22 tomorrow and, if necessary, some third day to be scheduled

23 for the future. During this deposition, I'll be asking you

24 a series of questions, you are required to give me your

25 complete and honest answer to each question, unless the

1 attorney for the Cooperative, Ms. Stinson, instructs you

2 not to answer a question. If for any reason you don't

3 understand a question, please tell me and I'll try to

4 clarify it for you.

5 Dr. Luke, would you please state your full name

6 and address for the record.

7 A Yes. My name is Ronald Thomas Luke and my

8 business address is 7600 Chevy Chase Drive, Suite 500,

9 Austin, Texas 78752.

10 Q Dr. Luke, you have been designated by the

11 Cooperative to give expert testimony in this case on

12 socioeconomic impacts of the SWIM plan and alternatives to

13 the SWIM plan, federally accepted principles and standards

14 for water resources projects, and state law requirements

15 for analysis of socioeconomic impacts of major

16 developments.

17 Is that consistent with your understanding of

18 the scope of your expert testimony in this case?

19 A Taking those broadly, yes, it is.

20 Q I'm going to hand you, just to make it a little

21 bit easier, a copy of the expert witness designation

22 excerpted from the Cooperative's witness list, so you have

23 those items to refer to. I would like you to just give me

24 some explanation, in your own words, of what each of those

25 three elements encompasses. Starting if you would, please,

1 with the socioeconomic impacts of the SWIM plan and

2 alternatives to the SWIM plan.

3 A I think that -- again, I didn't draft this, but

4 what I would interpret it to mean is that we have a

5 proposed project by the District which has the potential,

6 if implemented, to have an impact on the primary industry,

7 the primary economic activity in the Everglades

8 Agricultural Area, which is of course its agriculture. It

9 also has the potential to provide some new economic

10 activity, which is to say the construction and operation of

11 the storm water treatment areas.

12 Both of those effects have potential to have

13 ripples, if you will, in the sense that they can both

14 create and destroy jobs, not only in the agricultural or

15 the construction sector, but in those sectors that supply

16 the primary sectors and those households that derive their

17 incomes from all the economic activity. Those economic

18 ripples in turn can have an effect on population. If there

19 is not work to do, at least some subset of the population

20 either will want to or will have to leave the area. It

21 will have an impact upon both demands for certain public

22 services and the ability to pay for them. It will have

23 impacts on the ability of some folks to educate their kids.

24 It will potentially have other social impacts that come

25 from either better times or worse times economically and

1 can come from economic dislocations.

2 The alternatives that are referred to, I'm aware

3 from having read some of the literature associated with

4 this case and attended some hearings, viewed some hearings,

5 that their set of best management practices and noticed

6 that a list of those that particularly has to be adopted,

7 there is uncertainty over both the cost and the

8 effectiveness of each of those BMP's and therefore what

9 combination may be necessary to achieve certain results.

10 There is uncertainty over the effectiveness, I

11 guess I would say, of the proposed storm water treatment

12 areas on their phosphorus uptake and whether or not the

13 preliminarily specked acreage would or would not be

14 sufficient to achieve any particular desired biological

15 result. There is also uncertainty about the interaction

16 between the nutrient loadings and the impacts of

17 hydroperiod management. And if you take those things, put

18 them together, there are a lot of different ways that one

19 could fashion a management plan, if you will, for the

20 WCA's, that would each have potentially different costs and

21 different impacts.

22 There is also the question of how any of this is

23 to be paid for. The method of financing in certain

24 projects can be a very important factor in determining its

25 impacts and the distribution of those impacts, which is

1 also important, who is impacted, what groups, so that part

2 of what I have been trying to get a handle on is what is

3 the range of alternatives that might, vis-a-vis the

4 District's response to legislation, settlement agreements,

5 that might be called for. I understand recently there is a

6 new one having to do with a treatment plant that might be

7 used in lieu of or in conjunction with storm water

8 treatment areas.

9 Let's see, it was kind of a general question, so

10 I'm not sure whether I have answered it or not, but that

11 would kind of be my thoughts at the moment.

12 Q That's fine. The next one is federally accepted

13 principles and standards for water resources projects;

14 would you explain that for me in your own words?

15 A Yes. The question of analysis of the impacts of

16 water resources projects is not anything new. In fact, the

17 literature goes back at least into the '50's, I mean, this

18 was one of the first areas that people focused on in terms

19 of systematic policy analysis. The federal government

20 developed a body of procedure that's actually called

21 Principles and Standards for Water Resources Projects. I

22 believe it originally emerged as a document back in the

23 '70's.

24 Each of the agencies that undertakes water

25 resources projects, such as Bureau of Reclamation, Corps of

1 Engineers, has a set of procedures that it follows in

2 assessing a project, not only assessing its impacts, but in

3 measuring its cost benefits and whether or not it appears

4 to be on net, a project that ought to go forward.

5 Q How about the last one, state law requirements

6 for analysis of socioeconomic impacts of major

7 developments; again give me some explanation in your own

8 words?

9 A I have had the opportunity to review a

10 memorandum of law that I believe Bill Green is the

11 principal author of, concerning the interpretation of the

12 Florida water quality regulations that I believe are one of

13 the main bodies of law that underlie this particular

14 proceeding and underlie some of the events leading up to

15 this proceeding. It is my understanding that the Florida

16 water quality laws include a number of balancing

17 provisions, that is they do not require that every instance

18 of pollution be totally eliminated, regardless of the cost

19 of that elimination and regardless of the benefit of that

20 elimination. It provides for agencies to use, and I'm not

21 able to give you the entire list, but examples of that list

22 would be mixing zones, certain variances, and other, in

23 effect, approaches to enforcement that in my view

24 inherently and implicitly require a weighing of costs and

25 benefits of some sort of strict enforcement of a

1 qualitative or quantitative standard. And what I see

2 getting into there is a question of, in order to make a

3 decision which has a reason basis, particularly when such

4 large expenditures are being contemplated, what kinds of

5 analysis are necessary as part of the reasonable adoption

6 of a plan or regulatory scheme.

7 Q Are there any additional areas, additional to

8 the ones that are listed in that designation, in which you

9 might give expert testimony in this case?

10 A I think that there are existing ongoing or

11 planned a number of studies that touch on some of the

12 topics I have just told you about and I think that as part

13 of my work that I may be called upon to analyze those

14 studies and to form opinions about them and I may also be

15 asked to either do sensitivity analysis or independent

16 studies for the purpose of providing opinions and testimony

17 on the socioeconomic cost/benefit areas relevant to the

18 SWIM plan.

19 Q When you say you refer to studies that are

20 planned, can you be more specific?

21 A I can try, I'm not sure I know what they all

22 are.

23 Q To the extent you know.

24 A For instance, there is an ongoing study of

25 economic impacts which Hazen and Sawyer is conducting, I

1 understand we're supposed to get a look at sometime in the

2 next few weeks. At a meeting of economists in West Palm

3 Beach a few weeks ago, I was told by Ms. Johns that their

4 economic benefit study was, I believe her term was on the

5 back burner right now, but once they finish the impact

6 study, that that -- and I don't remember whether she said

7 it would kind of come to the front burner or it might come

8 to the front burner, but in effect I have the impression

9 that there may be additional work done on the economic

10 benefit issue.

11 I understand that there is an engineering

12 alternative that has been advanced by the District's

13 consultant regarding an alternative to STA's for phosphorus

14 removal and if that is considered an alternative by any

15 parties, then that's a whole matter that really either

16 requires additions to studies that have been done or would,

17 you know, you could call it a new study, your choice.

18 As far as the work that the League is doing or

19 the League's consultants, as I have understood their

20 testimony, they are in a role of responding and whether

21 they will do independent studies on either impacts or

22 costs, direct impacts, indirect impacts, I really don't

23 know, but if they did, then I would need to take a look at

24 those.

25 I understand that as to the water supply issue,

1 which is wrapped up with the hydroperiod issue, that there

2 is a planning process that is ongoing, vis-a-vis the lower

3 east coast of Florida, and that is directly intertwined

4 with the issues of hydroperiod management in the WCA's and

5 in the park and that that process really has not produced

6 final planning documents or the kinds of economic or

7 socioeconomic analysis that accompany them, and as those

8 come out, there may be something there that needs to be

9 looked at.

10 Q The water supply and hydroperiod related

11 planning that you are referring to, who is undertaking that

12 planning, as you understand?

13 A My understanding is the District is. I mean,

14 it's a public involvement process and all but, I mean, it's

15 my understanding that they are the responsible state

16 agency.

17 Q And the engineering alternative advanced by a

18 District contractor concerning STA's for phosphorous

19 removal, do you have anymore specific information on which

20 contractor, what alternatives?

21 A There are two that sound kind of similar, I want

22 to say Burns and Macullop.

23 Q There are two, as I understand it, that maybe

24 sound similar.

25 A This is something where they reported to the

1 District that there is a phosphorous removal technology,

2 which if I read it correctly, there are operational plants

3 in Germany and that could be considerably less expensive

4 and consume less land than the current four STA proposal. I

5 read, and I don't recall whether it was a memo or a letter,

6 but I read the communication to the District as suggesting

7 that this was worthy of further investigation.

8 Q Does this involve some kind of structural

9 facility or did you glean anymore?

10 A Yes. I mean, there were no pictures, but the

11 impression that I got from reading this was that it was a

12 waste treatment facility as opposed to another design for a

13 filtration marsh.

14 Q Earlier when you were describing the state law

15 requirements for analysis of socioeconomic impacts of major

16 developments, you indicated that you might be testifying

17 about what kind of analysis are required, you also referred

18 to Florida regulations. Is it your testimony that state

19 law requirements would govern the type of analysis that

20 would have to be done by an agency such as the District in

21 undertaking the SWIM implementation?

22 A I'm not trying to give you a legal opinion, it

23 is -- I think I need to limit what I'm saying to based upon

24 my reading of Mr. Green's memorandum of law, it appears

25 that there are certain mechanisms in the Florida water

1 quality statutes which appear to require weighing and

2 balancing and in effect what I'm saying is in order to do a

3 reasoned weighing and balancing, there will be certain

4 types of analysis on a major project and a major resource

5 management area like this, that would be required.

6 Now, it's my understanding that in effect the

7 Marjory Stoneman Douglas Act is an amplification or an

8 expansion rather than a basic replacement of those water

9 quality statutes. That's based on my reading of Mr.

10 Green's memo, I have not done any independent study of

11 that. But that there may be also federal laws that could

12 certainly apply.

13 Q So when you say that you understand various

14 statutes, state and possibly federal, and regulations,

15 state and federal, require certain analysis, will you be

16 testifying as to what the legal requirements are?

17 A I don't think that's the way it would work. I

18 think basically I would be looking at it from the

19 standpoint of my counsel posing to me the hypothetical or

20 the assumption, assuming that the statutes require certain

21 tests, certain criteria, certain weighing and balancing,

22 what do you believe would be the types of economic and

23 other analysis required in order to provide a reason basis

24 for advancing a plan in satisfaction of those. I think it

25 would be more that I do not think that I am being called to

1 opine as to what the law is, but simply what kinds of fact,

2 what kind of studies would be needed in order to support

3 certain findings or to support the reasonableness of the

4 plan.

5 Q The legal interpretation or position that you

6 would be assuming, as you put it, a basis for a

7 hypothetical or something to that effect, was such a

8 position laid out in the memorandum you referred to that

9 you reviewed authored primarily by the attorney Bill Green,

10 concerning interpretation of Florida regulations?

11 A Let me say yes, I believe it was in the sense

12 that he -- the title of that memorandum, paraphrasing, is

13 something about the relevance of economic analysis to

14 determinations under the Florida water quality statute, and

15 I'm thinking that was submitted to the hearing examiner in

16 this case.

17 MR. SAXE: Counsel, do you know if that would be

18 among the documents that were produced, is that in

19 fact the same document that may have been filed in the

20 case or does it refer to another memorandum?

21 MS. STINSON: I believe it's the memo that was

22 filed, I don't know of any other. In that it was a

23 pleading, I may not have -- he may not have even had a

24 copy, but I think that was included in what was filed.

1 BY MR. SAXE:

2 Q Dr. Luke, when we were talking a moment ago

3 about the studies that might be planned or forthcoming and

4 that you might analyze, you mentioned Hazen and Sawyer, I

5 guess it was the 20 year study on economic impact, I'm not

6 sure if you used that terminology, but is that one and the

7 same, the 10 year extension of the existing 10 year study?

8 A If you want to use that as a shorthand, that's

9 fine, but in listening to Ms. Johns, Dr. Johns' lay out

10 what she was doing, there were quite a bit -- quite a few

11 other extensions, changes, elements, other than just taking

12 and extending the previous work by 10 years, so it sounded

13 like a fairly significant revision of the previous study,

14 to me.

15 Q For purposes of these proceedings today, we can

16 assume that -- we'll use 20 year study just to refer to the

17 time frame of the study, not its relationship to the 10

18 year study.

19 A If you want to use that as just a working title,

20 I have no problem. I just couldn't agree with your

21 statement that that was the only thing she was doing was

22 extending it by 10 years.

23 Q Okay, I didn't mean to imply that.

24 You also referred to the alternative advanced by

25 the District contractor, possible water supply or

1 hydroperiod planning studies that might be done by the

2 District, you indicated that you knew of no studies that

3 were specifically planned at this point by the League. Are

4 there any other planned studies or possible studies that

5 you are aware of that you might be doing sensitivity

6 analysis on or independent analysis or any other kind of

7 analysis?

8 A Not that are specifically like the Hazen and

9 Sawyer study in the sense of an economic study and then you

10 have another economist come in and look at it. There is,

11 as I understand it, and I don't really know the names of

12 all the people doing this, but that there are various,

13 let's call it natural science studies going on, vis-a-vis

14 the effectiveness of the STA's or the BMP's in terms of the

15 issue of are the cattail spreading or is the cattail area

16 stable, in terms of what would be the impacts of the SWIM

17 plan on water flows and hydroperiod and things like that in

18 and of itself, and all of those have the potential to

19 provide information that would affect one's calculation of

20 costs or benefits, so as those become public or whatever,

21 then I could envision looking at those trying to see if

22 they did make a difference and then going back and trying

23 to factor that in to whatever work we had done.

24 Q The second of the three listed areas of

25 potential testimony, federally accepted principles and

1 standards for water resources projects, you referred to the

2 Principles and Standards for Water Resources Projects

3 manual that you said Bureau of Reclamation and Army Corps

4 of Engineers adhere to?

5 A I think what I said was that there is a set of

6 regulations that is called Principles and Standards for

7 Water Resources Projects and, I'm sorry, I don't remember

8 exactly what agency it is formally adopted under, and then

9 what I am suggesting to you is that each of the various

10 federal agencies have developed their own procedures that

11 are consistent with those principles and standards. It's

12 kind of like each agency developed its own procedures to be

13 consistent with NEPA, they all differed a little, but they

14 had to kind of come back to the Corps document.

15 Q Is it the case with these regulations as it was,

16 according to your testimony, with the Florida regulations

17 and statutes governing the analysis necessary for water

18 resources projects, that you will not be giving opinion

19 testimony about what the regulations require, but you will

20 be assuming those legal positions as background for

21 hypothetical testimony?

22 A I think they are a little bit different and here

23 is what I'm talking about there. The requirements for

24 federal agencies to justify water resources projects are

25 probably much more explicit in the various funding acts and

1 everything else than is the requirement in the state,

2 Florida State laws. I guess what I'm suggesting to you is

3 that the federal principles and standards and the

4 procedures that have been developed in response to them,

5 are a reference point as to what type and scope of analysis

6 federal government has required of itself in making recent

7 decisions on which water resources projects could go

8 forward with.

9 Q When you say that the federal regulations are

10 more explicit than the state, does that mean that you will

11 be providing testimony about what's required under law by

12 those federal regulations?

13 A I think for the most part, those documents in

14 terms of the categories of analysis and everything they set

15 up, don't totally, but to a large extent, speak for

16 themselves. I mean, I think that like a lot of those

17 things, they use terms that you might want to explain to a

18 hearing examiner. I think that my testimony would go in

19 some sense to looking at the final studies that the

20 District produces in the planning documents and holding

21 that up as a checklist and saying to what extent has the

22 state agency or the South Florida Water Management District

23 done the kind of analysis that would be expected of a

24 federal agency advancing major water resources projects.

25 Q So then it's fair to say that you would be

1 interpreting what's required under these statutes and

2 regulations?

3 A I think an interpretation is inherent there, but

4 I think that they are fairly explicit in what their

5 requirements and categories are and, again, I think the

6 metaphor I would use is more the checklist concurring what

7 the District has done with the types of analysis that are

8 contemplated in federal.

9 Q It's your opinion that the checklist is fairly

10 clear, as you have put it, self explanatory, but

11 nevertheless, you might be presenting that checklist, if

12 you will, and interpreting it?

13 A Right. Interpreting in the sense of trying to

14 explain what pragmatically is required or what has been

15 required in various federal studies and maybe if there are

16 terms in there that might be technical economic terms

17 given, trying to make those clear to the hearing examiner.

18 Q Would you be making any reference to any

19 judicial decisions interpreting these requirements,

20 regulations, statutes?

21 A In the sense of those as annotations to the

22 rule, I suppose that's possible. I don't have any in mind.

23 Q We'll move to your curriculum vitae in a moment,

24 but before we do, while we're on this topic, I notice that

25 you hold a law degree, a Doctor of Jurisprudence, is that

1 correct?

2 A Yes.

3 Q Are you a practicing attorney?

4 A I'm a licensed attorney and in my conducting my

5 business I suppose I practice upon myself, but I don't hang

6 out a shingle and explicitly sell legal services.

7 Q Okay, thanks very much.

8 Dr. Luke, did you bring a curriculum vitae or

9 resume with you today?

10 A I did.

11 Q May I see it, please.

12 A (Witness complies.)

13 (Luke Exhibit 1 marked for identification.)

14 BY MR. SAXE:

15 Q Dr. Luke, is this curriculum vitae complete?

16 A I think it's reasonably complete. I haven't

17 continuously updated it with every assignment and project

18 that we have done, but I think it gives a fair

19 representation of the type of activities I have been

20 involved in from a consulting standpoint. It does not

21 include on here, I notice, my role in another company which

22 is called Health Benefit Management, and I'll be happy to

23 supplement it, if you wish, on that score.

24 Q Dr. Luke, on page 2 under Professional

25 Experience, the fourth paragraph down, it says, "In 1986

1 Dr. Luke organized Health Benefit Management. " Is that the

2 company that you're referring to?

3 A That's correct.

4 Q Would you describe your educational background

5 for me briefly, starting with high school?

6 A Okay. I went to high school in Dallas, Texas at

7 Sunset High School. I left after my junior year and went

8 to Harvard. I graduated from Harvard with an A.B. degree

9 in social studies. In 1970 I entered the Kennedy School of

10 Government, in the fall of 1970; completed a master's of

11 public policy there in 1972. Took my general examinations

12 and was approved to proceed with a doctoral dissertation.

13 I began law school at the University of Texas at Austin in

14 June of 1972 and went to law school while I was writing my

15 dissertation. I completed law school in August of 1974. I

16 completed my dissertation in the fall of 1974 and was

17 awarded a PhD in public policy in January of 1975.

18 Along in, I guess the second year of graduate

19 school, I was enrolled for limited purposes at Boston

20 College and I don't know whether I was technically enrolled

21 at MIT or not, for purposes of participation in their

22 Reserve Officers Training Program.

23 Q The graduate or advanced degrees that you have

24 in public policy, a master's from JFK School of Government

25 at Harvard and a PhD from that school also, and the J.D.

1 from University of Texas, are there any other advanced,

2 graduate or professional degrees that you hold?

3 A No.

4 Q Would you describe for me what is entailed in

5 the discipline of public policy that you have a master's

6 and PhD in?

7 A Sure. This is a program that was set up, I

8 believe the first class was the fall of 1971. Harvard,

9 since the 30's has had a master's in public administration

10 program through what was then known as the Littower Center,

11 and they decided in the late '60's to organize a -- that

12 was a mid career program -- to organize a regular graduate

13 program that would be devoted to training people for policy

14 analysis and to give them an interdisciplinary basis that

15 would be appropriate to analyzing public policy questions.

16 They developed a core curriculum -- I'm telling you kind of

17 what the program was at the time I was in it, I'm not

18 telling you exactly what it is today, because I don't

19 know. They developed a core curriculum that consisted of

20 graduate level economics, it was taught when I was there by

21 Tom Shelling; graduate level statistics that was taught by

22 Fred Mostelick; analysis of political institutions that was

23 taught by Richard Newstat and Grant Mallison; operations

24 research and decision theory that was taught by Howard

25 Rayfa and Richard Sechauser; and then policy analysis

1 project that was overseen by a number of other faculty

2 members, one that had been an associate director of office

3 of management and budget and was intended to integrate all

4 of this into applied projects. In the second year, they

5 developed a number of electives that carried those things

6 forward. They also allowed cross registration with, for

7 instance, the Harvard Business School, graduate programs at

8 MIT and other Harvard graduate schools, law school and

9 school of design, so forth and I took a mixture of those

10 programs. Did in effect a thesis in the second year, one

11 could then sort of stop with a master's and that was a

12 perfectly good end point, an MPP being thought of as

13 similar to an MBA as an ongoing professional degree, or one

14 could decide to go on and get a doctorate by taking the

15 formal examinations and completing a dissertation, which is

16 what I decided to do.

17 Q What was your dissertation on?

18 A My dissertation was on analysis of the shifts in

19 mental health policy that were occurring in the early '70's

20 in Texas and in three other states.

21 Q Which states were those?

22 A California, Colorado and Wisconsin.

23 Q Did you specialize in any particular aspect of

24 public policy in your education?

25 A I would say basically that I have specialized in

1 the ability to conduct interdisciplinary, multi-

2 disciplinary analyses of fairly complex public policy

3 matters. I have, over the years, done studies and analysis

4 that have covered a wide range of industries, but most of

5 those, if you look at what was done, would involve an

6 application of many of the same types of tools to those

7 different industries, analytical tools, so I think that the

8 specialization, if you will, is more in the tools and in

9 the implementation in multi-disciplinary studies than it is

10 in say a specific industry or a specific policy topic.

11 Q What are those analytical tools?

12 A Well, I think they are pretty much the ones that

13 I laid out, economics, statistics, certain decision theory

14 and analysis of organizations and political institutions. I

15 mean, under each one of those obviously there are whole

16 fields. I have done a lot of work in the area of impact

17 analysis of looking at both very local and regional

18 economies, looking at economic growth issues and

19 alternative sources of growth. I have looked at, in

20 effect, cost/benefit analysis in a variety of settings. I

21 have also looked at how you incorporate natural science

22 type analysis into policy analysis in environmental and

23 other areas.

24 Q With reference to the areas in which you have

25 been listed as an expert witness in this case, which

1 courses did you take that -- or what courses did you take

2 that relate directly to the work you're doing in this case?

3 A That relate directly, well, I would say all of

4 the public policy core curriculum relates quite directly.

5 Going back into undergraduate courses, I have graduate

6 courses in agricultural economics, in analysis of

7 infrastructure projects through transportation, various

8 micro and macro economic courses, public finance.

9 Q In any of those courses, did you deal

10 specifically with the methodologies for performing economic

11 impact analyses?

12 A Yes.

13 Q Which courses would those have been?

14 A The ones that I have just listed, I mean, all of

15 them involve some of those techniques.

16 Q So for instance in your operations research and

17 decision theory course work, you studied about the

18 methodologies for performing economic impact analyses?

19 A Right. One of the specific areas that that

20 dealt with was the whole question of decision making under

21 uncertainty and things like use of decision trees, that's a

22 formal aid to this kind of thinking, but here you have the

23 situation where you have various opinions about what will

24 and won't work in terms of accomplishing whatever water

25 quality goals we have and you have clearly here a situation

1 that is decision making under uncertainty and under

2 substantial uncertainty, so part of the cost/benefit

3 analysis here gets into, should get into looking at the

4 different scenarios about what could happen if various

5 measures were taken and trying to come up with some

6 probability that attaches to those that let's us come away

7 with an expected value, if you will, in terms of either

8 what some of this is going to cost or what the benefits may

9 be.

10 Q Have you received any other training, other than

11 your academic course work, that relates directly to the

12 work you're doing in this case, seminars, clinics?

13 A Well, I feel like I have learned quite a bit in

14 the last 20 years of doing this on a routine basis. I have

15 been involved in a number of studies with a lot of folks

16 working with and for and having them work for me, that may

17 have had more depth in a certain area than I did, were more

18 specialized, and so the work that I have done has allowed

19 me to kind of continue my education on a pretty routine

20 basis in terms of deepening my understanding of the

21 techniques, limitations and where they can be employed.

22 Q Other than work experience, has there been any

23 more formal training?

24 A You know, I have been to professional seminars,

25 but if you are asking me have I taken courses, not that I

1 recall.

2 Q No, I'm not asking about courses exclusively,

3 courses would certainly be responsive, but also any such

4 professional seminars, clinics, colloquiums?

5 A Yes. I mean, over the years I have gone to

6 some.

7 Q Can you describe them for me?

8 A Other than generally, probably not very well. I

9 mean, there have been a number of seminars particularly in

10 the '80's on impact assessment. There have been seminars

11 that I have produced, looking at energy impacts, impacts of

12 energy projects, I mean to say, looking at impacts at

13 various coastal development projects.

14 Q The seminars that you have attended, have they

15 been affiliated with any particular association, has there

16 been any regular meetings or periodic gatherings that come

17 to mind?

18 A Not in particular. I mean, some of them were

19 like the American Economics Association or one I think had

20 to do with -- it was an engineering society, but it was at

21 a time when there was a whole section on analysis of

22 impacts on water scale projects.

23 Q Can you estimate for me the approximate number

24 of seminars on impact assessments that you have attended?

25 A My estimate, and that's all it would be, you

1 know, would be half a dozen over the years.

2 Q How many, again, estimate how many seminars you

3 have produced on economic impacts, you mentioned energy

4 development, coastal development, any others that would

5 fit?

6 A Right. There were two major conferences and

7 then there were, as part of the Texas Coastal Management

8 Program, literally dozens of public meetings and advisory

9 committee meetings and technical work sessions that I was

10 involved in producing.

11 Q What is your occupation, Dr. Luke?

12 A Well, I suppose I have several. I am a business

13 owner and I am certainly responsible on a day to day basis

14 for overseeing the operation of that business. I am a

15 practicing economist and policy analyst and, as I say, I am

16 a licensed attorney, but I certainly don't hold myself out

17 as a practicing attorney. Legal training, though, is in

18 many cases very helpful in understanding how a certain

19 analysis fits into a situation.

20 Q When you say you are a business owner, could you

21 tell me something more about the business or businesses you

22 own?

23 A Sure. I have been employed with Research &

24 Planning Consultants initially while I was in school and

25 then beginning in 1976 on a full-time basis. I purchased

1 that business in 1979 and have owned it since then. It is

2 a consulting firm that has provided economic policy

3 analysis services over the years, based in Austin, Texas.

4 We have done studies and I have been responsible in

5 participating in studies probably about over 20 states.

6 Those studies have been concerning a variety of industries

7 and policy situations, from health care, environmental

8 protection, solid waste management, general business

9 evaluations in a whole number of industries, market

10 research. The work has been from public and private

11 clients. The size of the firm has expanded and contracted

12 over the years, depending upon the type of work that we

13 were doing and whether we were doing it with folks as

14 contractors or whether we were bringing them on as

15 employees.

16 The other business that we referenced earlier is

17 Health Benefit Management. Because of the work in health

18 care consulting, it appeared that there was an opportunity

19 and a need for companies to do medical cost management, by

20 which I mean utilization review, medical case management,

21 medical bill review. In 1986, I hired some folks and using

22 the consulting firm as a base, started a company to do

23 that. It specializes in medical cost management, workers'

24 compensation area. It has grown from one employee to now

25 about 100 that work specifically for that company. That

1 includes quite a few nurses, a full-time medical director.

2 It is run on a day to day basis by a president and has a

3 management structure. My role is CEO and that is one of

4 general direction and goal setting and planning.

5 There is a parent company over those two called

6 Ronald Luke & Associates and it houses the accounting and

7 data processing and so forth for that and there are a

8 couple of people there that report to me.

9 Q Presently how many employees are there at RPC?

10 A If you take RPC by itself, let me count, not

11 counting me, there are about, I guess, about 14.

12 Q I got the impression that Ronald Luke &

13 Associates has approximately four employees?

14 A No. I guess we have 10 people in data

15 processing, we have nine or 10 in accounting, we have three

16 or four more in office services. The total employment is

17 about 150, maybe a little more than that now.

18 Q For clarification, when I say Ronald Luke &

19 Associates, as the parent company, you say there are 150

20 employees?

21 A The total for a consolidated basis is 150.

22 Q Would that include the RPC and HBM employees or

23 exclusive of those?

24 A Yes.

25 Q Excluding RPC and HBM employees, are there any

1 employees that are uniquely associated with Ronald Luke &

2 Associates?

3 A I would say there are between 25 and 30.

4 Q Have you opened any offices in Florida in

5 connection with this case?

6 A For this case, no.

7 Q Have you opened any offices in Florida within

8 the last two years?

9 A I have an employee here who is a chiropractor. I

10 don't have a separate office, he works out of his practice

11 office.

12 Q Would that be an employee of HBM?

13 A Yes.

14 Q Dr. Luke, would you describe for me briefly your

15 employment history in chronological order, starting with

16 your undergraduate years; you have given me, I think, some

17 pieces of it, but maybe if you want to go through it

18 systematically.

19 A You kind of lost me, starting with my

20 undergraduate years?

21 Q Yes, employment during your undergraduate years

22 and subsequent.

23 A Okay. Let's see, while I was an undergraduate,

24 I worked in the dining halls, worked for a student run

25 company doing market research, was a director of something

1 called Harvard Student Agencies, which is relatively large

2 student run corporation at Harvard. I, during the summers,

3 worked for Austin Bridge one summer, worked for Lean,

4 Tempco, Vaughan one summer doing cost analysis.

5 Q What was the name of that company, I'm sorry?

6 A Lean, Tempco, Vaughan.

7 The summer after my junior year, I guess I was

8 technically employed by the social studies department. I

9 did work with the United Nations Development Program and

10 Agency for International Development in Kenya.

11 The summer after my senior year, I was employed

12 by the U.S. Army for some basic training and was also

13 involved with some other students in an enterprise that

14 published a guide book to Boston.

15 Let's see, I was employed after my first year in

16 graduate school by a group called the Alagash Group, which

17 was a, I guess you could say a think tank, in the state of

18 Maine, that was being funded to do policy analysis of

19 alternative futures for the coast of Maine. And I had

20 another opportunity to work for the United States that

21 summer.

22 Q Who for?

23 A The Department of Defense.

24 Q Is that another Army job?

25 A Yes, it was. Let's see --

1 Q Would you describe that for me a little bit

2 more?

3 A Sure.

4 Q Are you being euphemistic?

5 A Not euphemistic at all. I spent six weeks at

6 Fort Knox doing a training stint related to the Reserve

7 Officers Training Corps.

8 Q Thank you.

9 A Let's see, once I finished -- once I moved back

10 to Texas, I did some work for the LBJ School of Public

11 Affairs, helping teach a course. I also began working for

12 Research & Planning Consultants on a part-time basis. I

13 did work for the Regional Mental Health Mental Retardation

14 Center for the Galveston area, which was in conjunction

15 with my dissertation. Then on completion of school, went

16 to work for them as a director of administrative services

17 and had another interval of active military duty.

18 I left the Regional Mental Health Center in 19

19 -- the fall of 1976 and moved back to Austin and went to

20 work for Research & Planning Consultants as vice president

21 of operations and have been there ever since.

22 I guess somewhere in there I also taught a

23 course at University of Houston at Clear Lake City, having

24 to do with public budget analysis. I taught a course for

25 the U.T. School of Accounting, having to do with public

1 finance and budgeting.

2 Q Would those be the courses that are referred or

3 referenced in this resume on page 2, the third paragraph,

4 "He has taught courses on public finance and policy

5 analysis at the University of Texas at Austin and the

6 University of Houston at Clear Lake City?"

7 A That's correct.

8 Q I also see here there is a reference to your

9 employment as a publisher for various periodicals from 1979

10 to the present?

11 A Right. That's one thing that Research &

12 Planning Consultants has done since 1977 is we publish a

13 collection of rules of Texas environmental and natural

14 resource agencies and subsequently we have added a service

15 that covers the public utility agencies and subsequently we

16 added a publication that covers the workers' compensation

17 commission. In addition to just rules, we also provide a

18 newsletter that covered the commission meetings and the

19 activities of those agencies.

20 Q In the course of your employment or education,

21 have you worked on any projects that relate directly to the

22 work you are doing in this case? And I think for purposes

23 of clarity, it might be easiest if you would take these

24 three elements of your expertise described in the witness

25 designation in series. Maybe first address the

1 socioeconomic impacts of the SWIM plan and alternatives, et

2 cetera, then we can move on to the federally accepted

3 standards and the state law requirements.

4 A Okay. I guess you will have to tell me if these

5 are not as specifically related as you had in mind. The

6 undergraduate work that I did, my undergraduate honors

7 thesis is on agricultural economics and impacts of changing

8 patterns of agriculture as they relate to transiamatic

9 pastoral groups in east Africa.

10 Q Would you explain roughly who that group or what

11 that group or characterization refers to?

12 A Transiamatic means basically following the

13 water. What you have is a situation where you're dealing

14 with the interaction of the technology, the natural system,

15 which in that case is a semi-arid area to arid, the social

16 institutions in the way that those three interact.

17 In effect, what you have is a whole series of

18 people, ranging from the Somali, the Masai, Turkana, and

19 other groups who are basically pastoral people in semi-arid

20 areas. They have not historically had an institution of

21 exclusionary land ownership. In effect, what people own

22 were cattle and rights to water sources and as they move,

23 in effect, you can wander where you need to go in order to

24 get to the water source.

25 The problems that occur are that as you produce

1 more long lasting water sources by drilling relatively

2 basic wells, you produce zones of devastation and

3 desertification, I mean, you can see these on aerial photos

4 that in effect concentrate the cattle to get to the water

5 in the period of the year when the natural springs and

6 other what we would call lakes, dry up, and you produce, in

7 effect, a totally devastated zone. I mean, it is not

8 overgrazing, it is denuding the land. You also produce

9 increased disease and disease vector among the livestock

10 herd because instead of being spread out, you have got them

11 altogether, so any sickness is more likely to spread.

12 The conditions are very similar to west Texas

13 and New Mexico, I mean, the semi-arid areas of the United

14 States.

15 Q The natural conditions are similar?

16 A Right. In fact, most of their district range

17 officers in this kind of thing either went to Texas A & M

18 or New Mexico State, some went to U.T., but mainly went to

19 the agricultural, the southwestern agricultural colleges.

20 There is a system for managing livestock on

21 semi-arid areas that is called rest-rotation grazing and it

22 is a way to manage areas of land to in effect favor certain

23 desirable species and to prevent both just total

24 desertification and prevent or at least retard brush

25 encroaches and this kind of thing. We have mesquite, they

1 have something called akasha.

2 The problem is that to do rest-rotation grazing,

3 you have to have exclusionary land use institutions,

4 because part of rest-rotation grazing is the rest part, you

5 have to be able to leave an area of land alone, to keep

6 your cattle off of it and know that nobody else is going to

7 put their cattle on it. It doesn't necessarily require

8 fencing, because these are all herded cattle as opposed to

9 sort of the American west vision of the dogies running

10 around on the prairie, but it does require the ability to

11 reliably exclude people from areas for parts of the year.

12 So what you have is a question about in order to support

13 this population and I mean we're talking about a relatively

14 low standard of material living here, one might say, well,

15 we need to -- the scarce resource is water, so we need to

16 drill more wells.

17 The problem with that approach is that while

18 that will in the short run sustain more cattle and you can

19 drill wells relatively easy in this area, it will produce

20 more of an uncontrolled increase, which leads to

21 desertification, which leads to a cycle, as you get the

22 over-population, so forth, the land doesn't come back. At

23 the same time you are dealing with very basic social

24 institutions of, I mean, of their legal system, but also of

25 their whole social value system as regards this

1 institutions of land ownership.

2 So that the thing I was looking at there was how

3 do you go about doing change in a situation where you have

4 a relatively fragile environment, you have technology in

5 the form of water wells, in the form of vaccinations for

6 cattle, in the form of rest-rotation grazing knowledge that

7 could be applied. You have marketing issues. If you get

8 more cattle, can you move the market and sell them.

9 You had in that case substantial distrust

10 between the governing tribe, which is Kikuyu, and all of

11 the pastoral tribes and that went back hundreds of years.

12 There was some equating of trying to install land ownership

13 as a way to get the land away from them or to tie them down

14 with sort of the image of concentration camps in the

15 background. There had been a recent civil war where the

16 Somalies and Kikuyu wanted to succeed and be part of the

17 Somalies and Somalia. Many trips that I took up in that

18 area were with armed escorts.

19 So it presents some of the same issues that one

20 finds anywhere, of this interaction of natural systems,

21 technology, both technology for protection and technology

22 for development, and various social institutions and those

23 dynamics. Certainly those major elements are present in

24 virtually all of the kinds of environmental policy issues

25 that I have been involved in since.

1 As a graduate student --

2 Q Before you move on, are you moving on past the

3 undergraduate honors thesis?

4 A Yeah.

5 Q Before we do that, let me ask you a few

6 questions, if you don't mind, about this.

7 A Sure.

8 Q Did economic impact analysis or socioeconomic

9 impact analysis or any flavor thereof, play any role in

10 your work in this honors thesis?

11 A Sure.

12 Q What would that have been?

13 A Well, in effect, what I was looking at was the

14 question of the proposed action -- let me just set a stage

15 for you a little bit. In terms of looking at socioeconomic

16 impact analysis, typically you are looking at some proposed

17 change in the status quo that is significant enough that

18 one wants to think real hard about what its future impacts

19 will be. So you have an existing situation, not only at

20 that point in time, but your forecast of what the situation

21 will be in the future if you do not take this action. You

22 have the nature of the proposed action and then you have

23 your forecast of what may occur if you take the action and

24 then you have the comparison of the two and the difference

25 is your impact and you can forecast and calculate

1 differences on a number of different variables.

2 That's in essence what this was about. We had

3 proposals to come, there were proposals to come in and

4 drill lots of wells and the question was what happens if we

5 do that, what happens if we alter the water supply, as

6 opposed to what happens now. So what I did, drawing on a

7 number of range management specialists and husbandry people

8 that were over there with AID and UNDP, was to understand,

9 as best I could, what the natural science dynamics were, to

10 understand the region, and then to basically look at what

11 happens if you put in those wells without reforming --

12 well, reforming has a connotation I don't want to imply --

13 without altering the underlying social institutions that

14 are necessary to do the rest-rotation grazing piece of the

15 change.

16 I looked at that and did some basic modeling,

17 this is 1969, '70 now, 10 years before, 11 years before

18 P.C.'s, so we're talking about FORTRAN programs on main

19 frame computers, so it's basic compared to what we -- and

20 difficult compared to what we could do now, but did some

21 basic modeling and came to the conclusion that if you did

22 put in the additional water, while you would spread out the

23 impact somewhat, that you would produce additional

24 desertification, because one piece of technology without

25 the other was likely to have short term benefits, but long

1 term detriments to that area. I haven't looked at this in

2 awhile, so I'm -- I may be remembering what I would

3 conclude now rather than exactly what I concluded in 1969,

4 but that one ought to condition the additional water

5 resources development on getting agreement from the local

6 structure, try balance structure, to institute these

7 grazing patterns.

8 Q So when you say the question is what happens if

9 we drill wells as opposed to what we do now, what was the

10 what we do now?

11 A That we not drill anymore wells. What that

12 meant was that you, if you just looked at the current

13 cattle stock, that you would continue to concentrate that

14 stock during seasons of the year and you would produce

15 these circles of devastation. I mean, sort of the dynamic

16 here was that if you did increase the number of wells, that

17 you would raise the herd population that could be

18 maintained during the wetter years, but you would then have

19 an even greater problem when you got back into a dry cycle

20 and you are concentrating much larger herds, you end up

21 with an average of more per permanent water source.

22 Q As I understand it, the proposed action in the

23 situation that was the subject of this thesis, was the

24 developmental action, it was to increase the level of water

25 development by drilling more wells and making whatever

1 adjustments might be made through rest-rotation?

2 A No. That was that nobody could -- you can go

3 out and drill the well next week, as I say, there is no --

4 I mean, it's a rig on the back of a truck and you put in a

5 simple casing, I mean, we are not talking about a high tech

6 well here. The action was in the absence of the change in

7 the land ownership and land management institution, should

8 you go out and drill those wells.

9 Q So the proposed action was --

10 A Drilling wells alone.

11 Q That was my question.

12 Are there any projects that you have worked on

13 where the proposed action was not a resource developmental

14 proposal, but rather a resource management action that was

15 proposed to remedy environmental problems?

16 A Well, this was an action that was proposed to

17 remedy environmental problems.

18 Q As I understood it, the proposed action was to

19 drill wells, which would entail environmental problems for

20 which --

21 A No, no, that's what you don't understand. One

22 of the reasons that the central government was looking at

23 drilling these wells, was the idea that by spreading out

24 the herds, that it would reduce the perceived environmental

25 problem of a desertification and so that it was perceived

1 -- and certainly there might be some economic benefit, but

2 part of the reason they are wanting to do this was they

3 were concerned about some of the environmental impacts.

4 There may have been lots of other unstated, or unstated to

5 me, reasons why they wanted to get into this but, I mean,

6 that was part of it and that was one reason that the UNDP

7 and the AID folks were looking at this as possible -- for

8 possible grant funds.

9 Q So then the proposed action was effectively to

10 undertake resource development, i.e. drilling wells for the

11 purpose of securing environmental benefits?

12 A For the purpose of securing that, plus one would

13 assume that it would have some positive economic benefit,

14 if it produced a more stable kind of livestock supply

15 there.

16 Q At that point, was the mission of AID and its

17 involvement in this project, would you characterize

18 primarily as an environmental protective mission or was it

19 a sound resource developmental mission?

20 A Agricultural people, particularly range

21 management people, my experience they have a concept they

22 call sustainable yield, okay, and I don't know that it

23 would be appropriate to characterize sustainable yield as

24 either being a resource development or an environmental

25 position. In effect, what it says is you're interested in

1 long term yield and you only get that if you protect the

2 resource from harm and I think that the people that I

3 interfaced with were people that were from semi-arid areas

4 in the United States and that they understood and took as

5 very important this notion of promoting sustainable yield

6 agriculture in the semi-arid area.

7 Q So then it's your position that the concept of

8 sustainable yield is not a resource development concept or

9 not a resource developmental concept?

10 A No, I didn't say that.

11 Q You said, I believe, it was neither resource

12 development nor environmental protection?

13 A I think I said, and if I didn't, I meant to say

14 that it cannot be characterized as solely one or the other

15 because by the notion that you are interested in the yield,

16 you are interested in, I suppose what you could consider

17 resource development, by the fact that you are interested

18 in that yield being sustainable, you have to be interested

19 in both the continuability to get a yield from the

20 resource, but you also have to be concerned with the long

21 term viability of the resource, so I don't see those as an

22 either/or dichotomy, I mean, you really have to have both.

23 Q Are the environmental values that propel the

24 sustainable yield approach, strictly relating to continuing

25 production with the resource or are there values that don't

1 have some underlying economic element?

2 A Well, now you are asking me to get into the mind

3 of a whole bunch of farmers and ranchers, I don't know that

4 I can do that. I would say it this way, sustainable yield

5 is a management philosophy, you are managing the land in

6 this case to produce and to favor production of certain

7 types of plant and in some cases animal species. I mean,

8 it is a concept of managing the resource to get to achieve

9 certain outcomes and, presumably, those outcomes, if you

10 are willing to devote management enterprise efforts to it,

11 have some benefit.

12 Now, when you say economic benefit, certainly in

13 most cases that means cash, but it can also mean other

14 non-market benefits.

15 Q Do you believe that aesthetics is an element of

16 the values in a sustainable yield management philosophy?

17 A Well, you can -- you have multi-use management

18 and this is one of the things that comes up for instance in

19 principles of standards, I mean, it comes up in the

20 original central and south Florida project, okay, and if

21 you wanted to, there is no conceptual reason why you could

22 not define something as being more or less aesthetic in

23 deciding to manage your resource to produce that picture.

24 Q Are multi-use management and sustainable yield

25 synonymous?

1 A Not necessarily.

2 Q So my question was about the sustainable yield

3 management philosophy and whether it included aesthetic

4 elements?

5 A And I'm saying that it's, in my mind, they are

6 on different dimensions. Sustainable yield means I'm going

7 to produce some yield and I'm going to manage my resource

8 in a way that I can do that on a long term basis. Now,

9 long term can be defined differently, depending upon the

10 context, okay.

11 Now, aesthetics can be a yield of resource,

12 let's say that we agree that looking at an uncut forest is

13 more aesthetic than looking at cut forests, we just agree

14 to that, there is nothing written that says that's true,

15 but we take a vote and we agree with that. We can manage a

16 forestry source so that what we get a constant view of

17 uncut trees and our yield from that is our visual enjoyment

18 of looking at those uncut trees, okay. We could also

19 decide we wanted to manage that resource for maximum output

20 of lumber and we would -- they could both be sustainable

21 yield management, but they would be managing for different

22 yield and therefore the actions we would take would be

23 quite different.

24 Q To your knowledge, are there implementations of

25 sustainable yield management philosophy that involve non-

1 consumptive yield as you're theoretically describing it in

2 your hypothetical?

3 A I'm sorry, are there what?

4 Q Are there instances --

5 A Yeah.

6 Q -- of implementing sustainable yield management

7 philosophies, that involve non-consumptive uses as part of

8 the yield that is sought to be sustained?

9 A Could you define what you mean by non-

10 consumptive use?

11 Q What does it mean to you?

12 A You're asking the questions, sir, I'm trying to

13 get a definition of your terms.

14 Q What does non-consumptive use mean to you?

15 A I don't use the term normally so that's why I'm

16 asking for your definition.

17 Q Is non-consumptive use a term you have heard

18 before?

19 A Gosh, I may have, I mean, you asked the question

20 and I said I don't understand the term. That was our deal,

21 that if I didn't understand, I would tell you. I have told

22 you.

23 Q That's fine. I'm asking you if you are familiar

24 with the term non-consumptive use? I'm not interested in

25 my opinion, I'm interested in your opinions.

1 A Well, I would be happy to give you my opinion if

2 you will define the term for me. There may be a term that

3 I sort of on a day to day basis use that may be synonyms

4 that would mean the same thing, but that's not a term that

5 I have used a great deal.

6 Q What term would you use for what you understand

7 to be the use of that term?

8 A I do not understand, I would like you to define

9 it.

10 Q So you are not familiar with the term non-

11 consumptive use?

12 A I may have seen it, I mean, I'm simply asking

13 you for a definition. I don't know that that's an

14 unreasonable request. You asked a question, I would like a

15 definition of the term you used in the question.

16 Q I'm not interested in my definition of the term,

17 Dr. Luke.

18 A Well, it's your question.

19 Q We will avoid the use of the term.

20 You are familiar with the concepts of non-market

21 valuation, is that correct?

22 A Yes.

23 Q What are the types of use values in non-market

24 valuation?

25 A What resource are we talking about?

1 Q Generically, in the abstract.

2 A I can't answer the question. Different

3 resources have different non-use -- non-market valuations.

4 Q You use the term non-use value, can you define

5 that for me?

6 A I misspoke, non-market valuations.

7 Q Okay, maybe we can return to this question.

8 MS. STINSON: Meanwhile could we take a break?

9 MR. SAXE: Sounds good.

10 (Brief recess taken.)

11 BY MR. SAXE:

12 Q Dr. Luke, before the break we were talking about

13 the problem in Africa that was the subject of your

14 undergraduate honors thesis, was that a problem that's

15 known generally as a common property resource problem?

16 A Sometimes called a commons problem, yeah.

17 Q Have, in your list of projects and studies, are

18 there any that you have done that relate to an externality

19 problem?

20 A Oh, in the most generic sense, a goodly number

21 of those projects would have externalities. Now, whether

22 the externality was the focus of the study or not, I'm not

23 saying that it was but, I mean, any of those major projects

24 have externalities.

25 Q In the interest of time, rather than going

1 through the list of projects, it is a substantial list, if

2 you could for me focus in on those projects that have

3 involved economic or socioeconomic impact assessment of

4 resource management actions that are proposed to remedy

5 environmental problems, where the proposed action was a

6 remedial one undertaken for the purpose of remedying an

7 environmental problem?

8 A On page 3, the studies that we have done on

9 solid and hazardous waste disposal facilities.

10 Do you want me to go all the way through or do

11 you want to talk about these as we come to them? I don't

12 understand.

13 Q For right now why don't you go ahead at least

14 through the next page, exhaust this category before you get

15 to Other Economic and Statistical Studies.

16 A Sure.

17 Development of an economic assessment of the

18 impacts of a proposed high level nuclear waste repository.

19 The Louisiana natural gas study.

20 The economic and environmental studies on marine

21 terminals, on page 4.

22 Q I'm sorry, is that the "major Texas ports for

23 the U.S. Maritime Administration" or am I in the wrong

24 place? Oh, I'm sorry, "major marine terminal at Freeport,

25 Texas"?

1 A Right.

2 There are a number of studies that were part of

3 the Texas Coastal Management Program that I believe would

4 fit your category.

5 Q Where is that?

6 A Page 6.

7 Q Under Public Policy Studies?

8 A Right.

9 There would be something of that in the

10 development of land use policies and land use management

11 mechanisms, a 1972 study.

12 Q That is where?

13 A Still on page 6, I'm just going down

14 sequentially.

15 Part of the cost/benefit analysis on the

16 refinery development was a -- there is an environmental

17 issue there.

18 There is another study that was done of the

19 impact of a Superfund site designation on adjacent property

20 values.

21 Q Would that be the one on page 5, "Preparation of

22 an economic studies on the impact of designation of a

23 Superfund site on property values in an adjacent

24 subdivision in Houston, Texas for Ryland Homes?"

25 A Right.

1 Q In each of these projects or studies, you did

2 some either economic impact assessment or socioeconomic

3 impact assessment?

4 A I would say so, yes.

5 Q Did any of these involve surface water

6 management?

7 MS. STINSON: For clarification, do you mean any

8 of the ones he has already --

9 MR. SAXE: That we have presently selected that

10 Dr. Luke has just specified.

11 A Well, several of them involve -- I mean, there

12 is a -- I'm sorry, there's another one that's not on here

13 and that has to do with an analysis of impacts of

14 regulating withdrawals from the Edwards aquifer, it's not

15 in there, which is a recent study.

16 Yeah, I mean, several of them have surface water

17 issues in them.

18 BY MR. SAXE:

19 Q How about ground water management?

20 A Yes, some of them have ground water management.

21 Q Why don't you, going back through the list,

22 identify those for me which have surface water or ground

23 water management issues? Let me strike that question.

24 If you would identify which of these involve a

25 remedy proposed to address an environmental problem with

1 either surface water or ground water, not just some

2 tangential connection to surface water or ground water

3 management.

4 A Well, the solid and hazardous waste facilities

5 are that.

6 Q So that would be the Browning-Ferris solid and

7 hazardous waste facilities on page 3?

8 A Right.

9 Q Was that surface or ground water or both?

10 A It's really both.

11 The kind of a waste nuclear repository addresses

12 both.

13 The Louisiana studies are concerned primarily

14 with surface water issues.

15 The marine terminal is concerned primarily with

16 surface water issues.

17 Q That's the Freeport, Texas marine terminal?

18 A Right. The --

19 Q I'm sorry, that was primarily surface water?

20 A Um-hum.

21 The Coastal Management Program was concerned

22 with both surface water and some subsurface issues.

23 Q I'm sorry, where --

24 A We're on page 6.

25 The state of Maine work is concerned primarily

1 with surface water issues.

2 The Edwards is concerned primarily with

3 underground water issues, although -- well, the two are

4 related, I mean, the actual problem occurs where the

5 underground water becomes surface water again.

6 Q Tell me a little something, you don't have to go

7 into great detail, but tell me a little bit about the DOE

8 nuclear waste repository proposal?

9 A Well, as you know, there are high level

10 radioactive wastes sitting around nuclear power plants all

11 around the country in little concrete swimming pools for

12 the most part and this is not considered to be a stable,

13 reliable long term disposal technique for that, because

14 there's, I mean, it's subject to all sorts of possible

15 problems, human and environmental, and you are talking

16 about very long life materials. So that the high level

17 radioactive waste repository was proposed as an end. Part

18 of that is there would be a release of those materials, it

19 gets into surface water, it gets into ground water and the

20 fun starts. The repository was proposed as a long term

21 solution to the safe storage of those radioactive

22 materials.

23 The one that I did work on is the one that was

24 proposed in the Texas panhandle and we looked at the

25 socioeconomic impacts of the repository.

1 Q Did that project relate in any way or did the

2 proposed project relate in any way to the Ogawala aquifer?

3 A One of the concerns that some people expressed

4 was if indeed this was not a safe storage formation and if

5 waste were to escape from the repository, that it might

6 make its way into the Ogawala.

7 Q So the facility -- strike that.

8 Was the proposed facility to be constructed

9 within the aquifer?

10 A No, I mean, when you say within, it was not to

11 be constructed, as I understand it, within the water

12 bearing strata of the Ogawala aquifer.

13 Q Were there any concerns about -- were there any

14 concerns implicating the aquifer, the water bearing strata

15 of the aquifer --

16 A Yes. That's what I just said.

17 Q Excuse me, let me finish the question.

18 -- in the construction phase of the project?

19 A I'm not aware that there were concerns that the

20 construction of the repository, which is basically a

21 tunneling exercise, was going to do damage to the aquifer.

22 I think the concerns that I recall, and this has been a few

23 years ago, were that if waste were released somehow, that

24 they would migrate to and pollute the aquifer.

25 Q Was construction proposed above or below the

1 aquifer?

2 A Well, the aquifer underlay the area in which the

3 repository would be constructed is my understanding, I

4 don't know how deep, but it was in that same area, yes.

5 Q In the Browning-Ferris waste disposal project,

6 what was the proposed action?

7 A The proposed action was to -- there were several

8 over the years that we have worked with and the proposed

9 action was either to create or expand a municipal landfill

10 or in one case a hazardous waste injection well.

11 Q In the Louisiana natural gas development

12 project, what was the proposed action there?

13 A The proposed action was an action by the state

14 of Louisiana to assess a tax on gas coming ashore from the

15 federal outer continental shelf, upon the justification

16 that a burden was being imposed upon the state by that as

17 interstate commerce, both through the environmental impacts

18 upon their marshes and the impacts upon their

19 infrastructure.

20 Q How would it be a proposal to assess a tax

21 impelled by an interest in remedying an environmental

22 problem?

23 A Well, there logical rationale for the tax was

24 that they were going to use at least part of the money to

25 remedy the adverse impacts that, environmental impacts on

1 their marshes that had been occasioned by the OCS

2 development and production activities.

3 Q In the Freeport, Texas marine terminal project,

4 what was the proposed action there?

5 A The proposed action was to develop a state-of-

6 the-art chemical barge terminal that would be used in both

7 loading and unloading chemicals for the complex that's

8 located in the Freeport and Jackson area on Kretana Island.

9 Q So the purpose there was to permit the loading

10 and unloading of chemicals?

11 A Right, and it's a -- what it is is that right

12 now you have loading and unloading that occurs in

13 relatively unsheltered tie-ups in that harbor and the

14 lower, the mouth of the brasses, and this is a terminal

15 project by Distribution Systems, Inc., which is a chemical

16 transport company, which in effect is a sheltered anchorage

17 with boom controls and the whole bit, that we helped

18 prepare 404 permit applications on, that we prepared the

19 404 permit applications on, including the impacts, and part

20 of the justification for the project was that it would

21 reduce water pollution in the harbor and near shore areas,

22 because of not only the natural design, but also the

23 environmental safeguards that were to be present and we

24 were able to get them their permit.

25 Q The Superfund designation economic study, what

1 was the proposed action in that?

2 A Well, it was not a proposed action, it was an

3 action that occurred and that is that the -- I don't recall

4 whether it was a state designation pursuant to a federal

5 law or whether it was a federal designation, but in any

6 event, there is a solvent recycling plant which a

7 subdivision had been built adjacent to. The solvent

8 recycling plant was there first and it had shut down, but

9 there was a pit that was felt there were hazardous

10 materials in and it was designated as a Superfund site and

11 I -- we believe that the concern with the site was either

12 that there was going to be some release of materials into

13 surface water or ground water from this pit and that action

14 was believed to have precipitated a decline in both

15 property values and decline in the marketability in the

16 homes in the adjacent suburb or subdivision, and I was

17 asked to take a look at that and see whether after

18 controlling for the other factors that in the Houston

19 housing market at that time would have affected value, we

20 could quantify what the impact of the Superfund designation

21 had been.

22 Q So it had been designated as a Superfund site?

23 A Yes.

24 Q So there was no proposed action, there was an

25 action?

1 A Yeah. The action of designation had occurred

2 and that seems to have been what was being complained about

3 by some plaintiffs in a lawsuit. It was not the clean up

4 activity itself, which as I recall at that time had not

5 really commenced.

6 Q In the Texas Coastal Management Program project,

7 what was the proposed action there?

8 A Well, speaking broadly, the proposed action was

9 to adopt a state coastal management plan under the Federal

10 Coastal Zone Management Act.

11 Q The Texas land use policy project, development

12 of Texas land use policies, what was the proposed action

13 there?

14 A The purpose of the study was to examine -- first

15 of all, let me start by saying Texas, this was in 1972, but

16 still largely true today, Texas does not have land use

17 controls of the zoning and subdivision sense, outside its

18 incorporated areas or the extra-territorial jurisdiction of

19 those incorporated areas. In other words, there is no

20 county ordinance power to regulate development and that

21 has, as you can imagine, all sorts of implications in terms

22 of siting of activities and potential control or potential

23 runoff into surface streams or elsewhere.

24 There was interest at that point, under the

25 fellow that was then governor, in looking at whether or not

1 there was a rationale for establishing what I'll just refer

2 to globally as county zoning authority and, if so, what

3 kinds of mechanisms for both planning and regulation might

4 be used and what process might be used for moving to a

5 decision on those. I was involved in studying a number of

6 different states mechanisms and in looking at what some of

7 the problems and issues were that were being raised that

8 various people thought might be solved by a more extensive

9 planning and zoning and then looking toward recommendations

10 on a process for getting to a decision on whether we should

11 have a broad land use planning and management authority in

12 the state.

13 Q So the proposed action was to establish county

14 zoning authority and that encompasses land use management

15 authority?

16 A Well, I mean, I wouldn't want to tell that you

17 it was -- that anybody was proposing at that time a

18 specific action. It was -- I would consider this to have

19 been a piece of consulting work that was both background in

20 nature and was looking at establishment of a process for

21 moving to those policy decisions. It's kind of one step

22 back from the proposed action. The proposed action, if you

23 will, was to try to move to legislation on the matter,

24 there was not a specific legislative proposal that was on

25 the table.

1 Q So what proposed action did you study the

2 economic or socioeconomic impacts of?

3 A Of various alternative forms of land use

4 planning and regulation.

5 Q The Maine oil refinery development project?

6 A Um-hum.

7 Q How about there, what was the proposed action at

8 issue?

9 A The proposed action there was to establish a

10 deep water port and an associated refinery complex on Sears

11 Island in Penobscot Bay on the coast of Maine. One of the

12 issues that was leading to the development of that was the

13 concern with oil pollution at various ports now that oil

14 was coming in to be refined, rather than being piped there

15 from west Texas, and with the oil pollution from open ocean

16 transfer from super tankers to smaller vessels, because the

17 ports where a lot of the refineries were located were not

18 deep water, I mean, they were only 45, 50 foot where this

19 was 70 or 80 feet.

20 Q So again the proposed facility was what kind of

21 a facility?

22 A In effect, a super tanker terminal and there was

23 an associated refinery.

24 Q In the Edwards aquifer withdrawal project, what

25 was the proposed action there?

1 A Well, there are a couple. The proposed action

2 is to restrict pumping of the Edwards aquifer, which is a

3 large aquifer that runs from approximately San Marcos,

4 Texas, which is 30 miles south of Austin, down through San

5 Antonio and then west and south into several farming and

6 ranching counties. It is the sole water supply for the

7 city of San Antonio, as well as for other cities and is

8 used for irrigation.

9 The problem is, is that if we go to the concept

10 of firm yield, that is how much can be withdrawn

11 sustainably, even in the drought record, without

12 overdrafting the aquifer, that the withdrawals presently

13 are about twice that number. The drought record was in the

14 mid '50's. There are two springs which are in effect the

15 downstream outlets of the aquifer, that flow into the

16 Guadalupe and Blanco rivers and form about a third of the

17 water that comes in the Guadalupe and the Blanco rivers.

18 There are some critters that live in and about those

19 springs and in the aquifer which either had been or likely

20 to be classified as endangered species, and if the spring

21 -- in another drought of record there is testimony to the