212
1
2 STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
3
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 2
OF ENVIRONMENTAL REGULATION, and PAGES 212 - 399
19 the FLORIDA WILDLIFE FEDERATION,
20 Intervenors.
__________________________________/
21
22 DEPOSITION OF RONALD T. LUKE, PhD
23
24 ACCURATE STENOTYPE REPORTERS, INC.
100 Salem Court
25 Tallahassee, Florida 32301
904/878-2221
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___________________________________________________________
7
DEPOSITION OF: RONALD T. LUKE, PhD
8
9 TAKEN AT THE INSTANCE OF: Intervenor USA
10
DATE: Friday, March 12, 1993
11
12 TIME: Commenced at 8:00 a.m.
Concluded at 4:00 p.m.
13
14 LOCATION: Accurate Stenotype Reporters
100 Salem Court
15 Tallahassee, Florida
16
REPORTED BY: TERRY WILHELMI, CSR
17 Notary Public in and for the
State of Florida at Large
18 ___________________________________________________________
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2 APPEARANCES:
3
REPRESENTING THE FLORIDA SUGAR CANE GROWERS
4 COOPERATIVE OF FLORIDA:
5 DONNA H. STINSON, ESQUIRE
CAROLYN S. RAEPPLE, ESQUIRE
6 Hopping, Boyd, Green & Sams
123 South Calhoun
7 Tallahassee, Florida 32301
8
REPRESENTING THE SOUTH FLORIDA WATER
9 MANAGEMENT DISTRICT:
10 PATRICK S. COUSINS, ESQUIRE
Popham, Haik, Schnobrich & Kaufman, Ltd.
11 4100 One Centrust Financial Center
100 S.E. Second Street
12 P.O. Box 019101
Miami, Florida 33l3l
13
14 REPRESENTING THE UNITED STATES OF AMERICA:
15 KEITH E. SAXE, ESQUIRE
U.S. Department of Justice
16 60l Pennsylvania Avenue N.W.
Room 879
17 Washington, D.C. 20004
18
ALSO APPEARING: Professor Lonnie Jones
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215
1 I N D E X
2 WITNESS PAGE
3 RONALD T. LUKE, PhD
4 Continued Direct Examination by Mr. Saxe 216
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6
7
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9 E X H I B I T S
10
NUMBER DESCRIPTION PAGE
11
Luke Exhibit 4 Memo to File from Tomlinson 3/3/93 269
12 Luke Exhibit 5 Memo 274
Luke Exhibit 6 Letter from Tomlinson 2/23/93 276
13 Luke Exhibit 7 Letter from Leistritz 10/9/92 279
Luke Exhibit 8 Memo from Leistritz 10/20/92 290
14 Luke Exhibit 9 Memo from Luke 11/5/92 294
Luke Exhibit 10 Letter from Green 11/9/92 296
15 Luke Exhibit 11 Letter from Luke 11/16/92 297
Luke Exhibit 12 Letter from Wedgworth 11/18/92 300
16 Luke Exhibit 13 Memo from Luke 11/25/92 312
Luke Exhibit 14 Key for Equations by Schubert 332
17 Luke Exhibit 15 Memo to File from Schubert 2/15/93 341
Luke Exhibit 16 Call report 2/18/93 345
18 Luke Exhibit 17 Memo to File from Schubert 3/1/93 351
Luke Exhibit 18 Memo to File from Luke 2/11/93 353
19 Luke Exhibit 19 Economic Impacts 20 Year Analysis 359
Luke Exhibit 20 Effects of Prior Rice Culture 364
20 Luke Exhibit 21 Memo from Leistritz 2/16/93 367
Luke Exhibit 22 Response to Hazen and Sawyer report 374
21 Luke Exhibit 23 EEA area definitions 380
22
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CERTIFICATE OF REPORTER 399
216
1 VOLUME 2
2 STIPULATIONS
3 The following deposition of RONALD T. LUKE, PhD,
4 was taken on oral examination, pursuant to notice, for
5 purposes of discovery, and for use as evidence, and for
6 other uses and purposes as may be permitted by the
7 applicable and governing rules. All objections, except as
8 to the form of the question, are reserved until final
9 hearing in this cause; and reading and signing is not
10 waived.
11 * * *
12 Thereupon,
13 RONALD T. LUKE, PhD
14 was called as a witness, having been previously duly sworn,
15 was examined and testified as follows:
16 CONTINUED DIRECT EXAMINATION
17 BY MR. SAXE:
18 Q Good morning, Dr. Luke. I would like to start
19 out this morning by taking a look at the Hazen and Sawyer
20 contract completion report for their economic impact
21 analysis one more time. In the forward of the document,
22 Hazen and Sawyer reported, "This evaluation focused on the
23 potential change in land use likely to occur under the
24 STA's, the BMP's, and the assessments, given the available
25 information from public and private sources." I'll show
217
1 you that statement, it's the statement that I put a number
2 1 next to.
3 In your opinion, was it a sound approach for
4 Hazen and Sawyer to focus on changes in land use?
5 A That's certainly one variable to focus on.
6 Q What would other variables be?
7 A I think we have listed a number in our
8 conversation yesterday. The impacts that flow from that. I
9 do think the change in ownership structure is something
10 that deserves to be addressed.
11 Q So change in ownership structure would be
12 relevant then in an economic impact analysis, independent
13 of any associated change in land use?
14 A That's right.
15 Q Is that the same for a socioeconomic impact
16 analysis?
17 A Yes.
18 Q Would you give me a comparitive definition of
19 economic impact analysis and socioeconomic impact analysis?
20 A I think both terms can be used in various
21 contexts.
22 An economic impact analysis, in my experience,
23 can be used to study the possible economic effects of a
24 change, such as a project, such as some other proposed
25 action. Economic impact analysis is also used to describe
218
1 a study that looks at, for lack of a better term, the
2 contribution that an industry or an activity is making to
3 an area. For instance, there is a series of reports that
4 IFAS does called the economic impact of the blank
5 agricultural industry on an area. There is no change
6 proposed there, but that they are attempting to measure
7 what the contribution -- economic contribution gives to the
8 economy, so there are at least two kinds of economic impact
9 analysis. A socioeconomic -- an economic impact analysis
10 typically focuses on output, employment, may focus on the
11 structural change in the sectors, number of establishments,
12 that kind of thing. Again, depending upon its purpose, it
13 may get into greater detail on various issues.
14 Socioeconomic analysis, in addition to looking
15 at economics, would also look at -- I say would, but could
16 look at demographic, labor market, public facilities and
17 service, land use, housing, fiscal and social variables and
18 dynamics that might flow from a proposed project. I
19 suppose it's possible one could do a full blown
20 socioeconomic impact analysis of an existing industry. I
21 don't know that I have ever really seen one, but
22 conceptually there is no reason you couldn't.
23 Q You included in your list of relevant topics for
24 socioeconomic impact analysis, land use, is that in some
25 way distinguishable from the relevance of land use to an
219
1 economic impact analysis?
2 A It is. One of the things that has been
3 sensitive in some areas is that if you have let's say
4 development of a new large factory that brings a lot of
5 people into the area, that you will have then a demand for
6 addition housing and retail and commercial studies which
7 may result in conversion of land from say an existing
8 agricultural use, and if this is an area that has prime
9 farmland, that may be a policy issue for some folks.
10 Q When you mentioned earlier that land use is one
11 variable in response to this statement in the forward of
12 the Hazen and Sawyer report, in deriving direct and
13 secondary economic impacts, are there any other variables,
14 if you will, that can cause such impacts, other than the
15 change in ownership structure that you have mentioned?
16 A Sure. If you change the production function by
17 changing the inputs, cost of inputs, and where the money
18 that the enterprise takes in is spent, you can certainly
19 change the impacts if you change the revenues of the
20 enterprise. Either through changes in its productivity or
21 changes in the price it receives for its product, you would
22 also change the economic impacts.
23 Q What is the relationship between the change in
24 production function and a change in ownership structure?
25 A Well, there might or might not be one.
220
1 Q Can you give me an example of a change in
2 production function that might be applicable in the EAA?
3 A The BMP's are a change in the production
4 function and the money that previously was -- let's just
5 assume for the sake of this example that we're talking
6 about BMP's which increase operating costs in ways that are
7 not generating additional revenue, in other words, it
8 doesn't generate an increase in productivity, then that's
9 money that otherwise would have been available to the owner
10 of the enterprise, and as to how that would affect the
11 multipliers, we would need to know where the money that was
12 spent on those BMP's was spent. Was it to buy a piece of
13 equipment from Ohio that then was installed on the farm or
14 was it spent on additional labor in the local study area,
15 for a more labor intensive production process. We would
16 need to know kind of where the -- what the feedback now is
17 of kind of the payments to the owners, to know whether on
18 net we had any significant change in the multipliers and,
19 if so, whether they went up or down.
20 Q If one is using an existing multiplier, rather
21 than generating one from raw data, if you select the
22 multiplier that's applicable to the particular industry,
23 would that multiplier still be applicable despite a
24 production -- a change in a production function like you
25 just mentioned of BMP implementation?
221
1 A It's an empirical question. It would depend
2 upon, first of all, how broad the sector definition is that
3 you're using as a multiplier for that sector. It may very
4 well be that it's already averaging a lot of fairly
5 different activities in there and even if you had very
6 precise information on the changes in the EAA, it wouldn't
7 move that multiplier very much. On the other hand, if you
8 had a fairly specific multiplier and you were dealing with
9 fairly major changes in the production function, then it
10 might become undescriptive.
11 An example would be that if you were dealing
12 with a steel manufacturing sector and you went from old
13 technologies to one of the new mini-mill technologies, you
14 may have a very different production function and hence a
15 very different multiplier.
16 Q In the example that you used earlier of BMP's in
17 the EAA, if one were using the RIMS multiplier applicable
18 to the sugar cane industry or sugar production and the
19 relevant jurisdiction, would a change in production
20 function entailed by BMP implementation, cause that
21 multiplier to be no longer applicable?
22 A Well, your phrase no longer applicable, I don't
23 think is appropriate here. Any multiplier that you would
24 use out of a RIMS model and apply it to a very specific
25 activity in the county, it does not precisely describe that
222
1 activity. I mean, because it is inherently an average
2 across a range of activities that are grouped into that
3 sector, okay. So there's nothing to say that you could not
4 continue to use it, what you would be looking at would be,
5 you know, is it a less precise estimate than it was before
6 of what the multiplier effects would be, because all you
7 can possibly get out of RIMS for a specific activity in a
8 county, a specific business, is an estimate, because the
9 multipliers are average relationships, not precise to the
10 ABC Hardware Store.
11 Q In your opinion, is the use of multipliers such
12 as the RIMS multipliers, less desirable in doing economic
13 or socioeconomic impact analysis than creating multipliers
14 from raw data?
15 A It depends. There is no universal answer to
16 that question.
17 Q In a situation where there may be changes in
18 production functions as a result of the proposed action,
19 would it be the case, in your opinion, that the study
20 should be based on a generated multiplier from raw data
21 rather than a multiplier such as RIMS?
22 A I don't think that I really have an opinion on
23 that, because I haven't studied the impact of BMP's or the
24 other proposed actions on the production function of the
25 enterprise enough to form an opinion on whether there would
223
1 be a significant enough change in the cost structure to
2 make one want to go do that.
3 I think on the multipliers, the big issue to me
4 is whether we're going to use multipliers that are
5 appropriate to the economy of the EAA versus multipliers
6 that are appropriate to the economy of Palm Beach County
7 taken as a whole.
8 Q In RPC's discussions with the Co-op thus far
9 about the work RPC might do in preparation for this case,
10 have you proposed to build a multiplier from raw data?
11 A No. That's sometimes referred to as a primary
12 data I.O. model, I have done that, but I have not proposed
13 it here. What has been proposed is to select or create an
14 appropriate multiplier for the EAA, using some combination
15 of the available published secondary data I.O. tables'
16 knowledge about the area and the professional judgment of
17 Larry Leistritz and others.
18 Q In selecting a representative multiplier, could
19 Hazen and Sawyer's use of the Palm Beach sugar multiplier
20 be better than your agricultural multiplier from Okeechobee
21 County?
22 A Could it be better, do you want to define
23 better?
24 Q More accurate in providing an estimate of
25 indirect and induced impacts from the relevant direct
224
1 economic impacts in the area.
2 A I'm not prepared to tell you that it couldn't
3 be. I would tell you that Dr. Leistritz had those both
4 available and based upon his review of the situation and
5 his knowledge of input/output analysis, he felt like of
6 those two alternatives, that he was more comfortable in
7 that October estimate using the Okeechobee County
8 multiplier and, I mean, I defer to his judgment on that.
9 Q You describe some differences between economic
10 impact assessment and socioeconomic impact assessment,
11 would it be correct to say that what Hazen and Sawyer has
12 undertaken in the 10 year study is not a socioeconomic
13 impact assessment?
14 A It would be correct to say it is not a complete
15 socioeconomic impact assessment. What it has undertaken by
16 subject matter certainly would be part of a socioeconomic
17 impact assessment.
18 Q Did Hazen and Sawyer analyze demographic
19 impacts?
20 A Not really. There may be some descriptive
21 information in there about the size of the populations, but
22 there's no demographic forecast.
23 Q As you use public service impacts in your
24 description of socioeconomic impact analysis, did Hazen and
25 Sawyer undertake a public service impact assessment as part
225
1 of this project?
2 A No, I don't think so. There is a little
3 discussion about job training programs, at least in the
4 draft final, but not any kind of comprehensive review.
5 Q As use the term social impacts in describing
6 what distinguishes a socioeconomic impact analysis from
7 economic impact analysis, did Hazen and Sawyer undertake to
8 analyze the social impacts in this project?
9 A I don't think they did, no.
10 Q As you use the term land use effects as
11 distinguishable in a socioeconomic impact analysis from its
12 use in an economic impact analysis, did Hazen and Sawyer
13 undertake to analyze those effects in this project?
14 A Apart from the direct land use effects, I don't
15 think they did. I would add that in this particular case,
16 since we are dealing with more an economic shrinkage than
17 an economic expansion, I personally would not have gone
18 into any great detail on secondary land use impacts,
19 because I wouldn't really expect to find any. That's
20 typically something we have done more in economic growth,
21 economic development scenarios.
22 Q So then would I be correct in understanding you
23 to say that of your list of types of impacts or effects
24 that are analyzed in a socioeconomic impact analysis but
25 generally not in an economic impact analysis, Hazen and
226
1 Sawyer made no significant analysis of any of those
2 elements in this project?
3 A I'm not sure I can diagram that sentence very
4 well.
5 Q I'll restate it. Would I be correct in
6 restating or summarizing your testimony this morning that
7 none of the elements that distinguishes socioeconomic
8 impact analysis from an economic impact analysis, have been
9 analyzed in any depth in the Hazen and Sawyer 10 year
10 project?
11 A I could agree to that.
12 Q You testified earlier that this Hazen and Sawyer
13 work could be called an incomplete economic impact analysis
14 and this morning you are indicating it could be called an
15 incomplete socioeconomic impact analysis as well?
16 A I don't think I'm saying that. I think it's --
17 there is a difference. I mean, when I say it's an
18 incomplete economic analysis, I'm saying there are things
19 that one should have done, even if one limits one's scope
20 to economic analysis, that they didn't do. I mean, the
21 total absence of most of the other elements of
22 socioeconomic impact analysis, it's like taking a hubcap
23 and saying it's an incomplete car, I mean, it's not a
24 useful description.
25 Q Well, to use your analogy -- strike that.
227
1 In your opinion, was the omission of analysis on
2 the elements that distinguish a socioeconomic impact
3 analysis from an economic impact analysis, a defect in
4 Hazen and Sawyer's work product?
5 A Well, that would depend upon what Hazen and
6 Sawyer was asked to do. I think that the lack of, for a
7 project of this magnitude, the lack of -- a project and
8 program of this magnitude -- the lack of a socioeconomic
9 impact analysis is a deficiency in the District's decision
10 making process.
11 Q So if I understand you correctly, the District
12 should have requested a socioeconomic impact analysis as
13 opposed to an economic impact analysis that omits analysis
14 of demographic impacts, labor impacts, public service
15 impacts, fiscal impacts, social impacts, and secondary land
16 use impacts?
17 A That's right, if they are going to have a sound
18 basis for their decision about adoption of the SWIM plan.
19 Q In your discussions with the Cooperative thus
20 far about the work RPC might do in preparing for this
21 trial, have you proposed that a socioeconomic impact
22 analysis, including the missing elements in the Hazen and
23 Sawyer work, be undertaken?
24 A We have had a discussion with them about that.
25 The time limitations that I understand exist prior to this
228
1 make me doubt that one could do a complete study in that
2 time and so I really, because of that, have not proposed to
3 them that it be as complete as I think it would be if it
4 were to be made in the proper sequence in the planning
5 process.
6 Q Have you offered to prepare an analysis for this
7 case for the Cooperative, that includes demographic, public
8 service, fiscal and social effects of the SWIM plan?
9 A That includes some of them, yes, subject to time
10 limitations.
11 Q Does RPC have a publication or document
12 describing what constitutes a complete economic or
13 socioeconomic impact statement?
14 A We have a, I guess, a series of methodology
15 papers that have been done in the course of projects for
16 clients in the past, where it was important to them to
17 prepare a written methodology and circulate it for comment,
18 and I would point to those as kind of the best statement of
19 what our methodology has been in the past. Dr. Leistritz,
20 of course has, as you have seen, a fairly extensive
21 bibliography on socioeconomic impact assessment
22 methodology.
23 One of the things that is important is what is
24 called scoping, which is kind of a recognized part of
25 impact assessment and that means that after doing some
229
1 preliminary work, that one attempts to get agreement from
2 the relevant parties on what issues, what study area, so
3 forth, are significant in the specific instance. So I
4 would tell you that those reports and the methodologies
5 recommended or proposed in those reports are specific to
6 those projects and in some cases on other projects you
7 might do more in an area, in other cases you might do less,
8 because of what you had learned in the scoping process.
9 So I would stand behind those for the projects
10 that we were being asked to assess there, but I would tell
11 you that those are not immutable, they are project
12 specific.
13 Q The guidelines that you referred to that RPC
14 has, have you produced a copy of those with your document
15 production?
16 A I'm sure we haven't, because they concern past
17 projects. They are not anything that was done for this
18 enterprise.
19 Q As I understand it, those guidelines fairly
20 accurately reflect your views on what constitutes a proper
21 or complete socioeconomic impact analysis?
22 A I must not have spoken clearly if that's what
23 you understood.
24 Q I may have misunderstood you.
25 A I said they were for the projects for which they
230
1 were developed, but that you really have to scope each
2 project separately as to what's required to address the
3 relevant issues, but not waste time on things that really
4 are not matters of concern with that specific project.
5 MR. SAXE: Counsel, it sounds to me like the
6 guidelines Dr. Luke is describing are within the
7 request for production that accompanied our notice of
8 deposition. I understand that you raised objections
9 to the request for material that pertained to previous
10 projects. I believe they were based primarily on
11 grounds of burden, because of over-breadth, and
12 without waiving any objection to that objection, I
13 would like to request that this specific set of
14 documents be produced as responsive documents.
15 MS. STINSON: Let me talk to Dr. Luke off the
16 record and see if I can get a better feel for actually
17 what we're talking about.
18 (Brief recess taken.)
19 MS. STINSON: On the record, I have discussed
20 the documents with Dr. Luke and as I understand them,
21 they are sort of -- they are project specific
22 guidelines as to what's going to be looked at in that
23 project. They are not in any particular format, it
24 varies by project, but he indicates that those are
25 available so, again, as discussed yesterday, if you
231
1 could put that request in a letter or something, we
2 will respond.
3 A Just for clarification, there have been certain
4 projects that were major enough that there are methodology
5 papers that address the various aspects of that specific
6 study and that's what I'm thinking of. I'm not
7 representing to you that a formal methodology paper has
8 been prepared every time we have been asked to do a
9 project, so my intention would be to, as I understand your
10 request now, would be to look through our library of past
11 reports for projects where we have done those types of
12 methodology papers and to provide you with copies, but that
13 you shouldn't expect that there will be one for every last
14 project that RPC has ever done, because in many cases no
15 such paper was created.
16 BY MR. SAXE:
17 Q When you say major projects, we discussed
18 yesterday about nine or so projects that you identified for
19 me from your curriculum vitae that had to do with economic
20 impacts or socioeconomic impacts of actions proposed to
21 remedy environmental problems. There was the Browning-
22 Ferris waste disposal project, the Department of Energy
23 nuclear waste project, Louisiana natural gas project, I can
24 enumerate them, but would you characterize those as major
25 projects for which there might be such methodology papers?
232
1 A It might come as no surprise to you that some
2 are, some aren't.
3 Q Well, perhaps we can -- we may be able to
4 identify sufficiently a large set from this set to make it
5 a reasonable request that you can comply with.
6 A The other thing is that you seem to be trying to
7 draw a distinction between how one would do a socioeconomic
8 impact assessment of an environmental protection project
9 versus a new mine or new power plant and there is no
10 distinction. I suppose the most complete set of
11 methodology papers concerns a surface mining project in
12 Wisconsin and also concerns a project in Texas, so those
13 were among the ones that I had in mind to produce.
14 Q Thank you, I'll correspond through counsel and
15 we can work that out.
16 You referred to the publications that Dr.
17 Leistritz provided as describing a set of criteria for
18 constructing a complete socioeconomic impact analysis?
19 A No, I didn't.
20 Q Okay, what would be the basis in publication for
21 your opinions concerning what would be a complete
22 socioeconomic impact analysis in any given instance?
23 A What I told you was that his bibliography
24 includes a number of publications that address the issue of
25 methodology in socioeconomic assessments, okay, and what I
233
1 have also told you is that the way you determine the scope
2 of a socioeconomic assessment is through a scoping process,
3 which gives both professionals, policy makers, and the
4 general public, an opportunity to raise issues with which
5 they are concerned.
6 Q When you do scoping, are there criteria that you
7 apply to determine whether or not a given element should be
8 included in a complete socioeconomic impact analysis?
9 A There is some guidance. I don't want to give
10 you the impression that there is some sort of bright line
11 yes/no test.
12 Q What is the basis of the judgments that you as
13 an economist make when you are determining in a scoping
14 analysis, whether or not an element needs to be included?
15 A Well, there are some, I think, fairly basic
16 elements that there would be a general consensus among
17 people that do this kind of work that if you were going to
18 have a complete one you would presume are going to be in
19 there and then what you are looking for are things that are
20 unique to a specific project, that may generate impacts
21 that would be special to that project.
22 For instance, in the high level radioactive
23 waste repository, the impact of transportation of the waste
24 to the site along rail or road corridors was of interest,
25 because of the possible perception that could cause that to
234
1 affect property values, could cause it to have some impact,
2 and that would not normally be something you would worry
3 about if you were transporting -- if you had an automobile
4 factory and you were transporting auto parts to and from a
5 plant.
6 Q But nevertheless, would the criteria for
7 determining that in that instance those effects would be
8 relevant for a socioeconomic impact analysis, would those
9 criteria be described anywhere in any publication or any
10 scholarly literature or textbook or paper?
11 A I'm not going to tell you they aren't, I'm going
12 to tell you that there is some literature about what
13 constitutes an adequate scoping process.
14 Q What literature would that be?
15 A I know that the Corps and the other federal
16 agencies have some guidance on that. I know there have
17 been some court cases on it. I would strongly suspect that
18 there is some scholarly literature that springs out of
19 that.
20 Q Would that be the literature upon which you
21 would be relying in formulating opinions about whether or
22 not elements had to be included in a complete socioeconomic
23 impact analysis for the Everglades?
24 A I think that literature would be helpful. I
25 think I have done enough of these that I have sort of
235
1 internalized how you carry out a scoping process.
2 Q But you would say that you have internalized it
3 from this basic set of literature?
4 A No, I wouldn't say that. I would say that I
5 guess I have been doing these since about 1976 and I have
6 sat through an awful lot of public hearings and gone
7 through review of methodology papers and --
8 Q Dr. Luke, I'm asking a pretty straightforward
9 question, I'm asking --
10 A No, you are interrupting my answer and I would
11 appreciate it if you wouldn't.
12 -- and I think in that course of time I have
13 accumulated some experience. Over those years I have
14 probably looked at a part of that literature, but I do not
15 want to tell you today that I would necessarily be relying
16 upon it.
17 Q What literature supports the judgment you would
18 exercise in determining whether elements needed to be
19 included in the complete socioeconomic impact analysis for
20 the Everglades?
21 A I can't answer your question.
22 Q There's no particular publications that contain
23 what you describe as the fairly basic elements that there
24 is consensus about in doing socioeconomic impact analysis?
25 A Again, I have done it enough that I don't know
236
1 that -- I could go find you some literature that would
2 support it, but it's not like that given this project, I
3 would sort of have to go to a book first before I would
4 know what I wanted to do.
5 Q I'm not asking you if you would have to have
6 recourse to it first, I'm asking what literature would
7 describe these fairly basic elements?
8 A I can't, sitting here, cite you to a book.
9 There are certainly some methodology documents in
10 Leistritz' literature that I would think would be
11 consistent with my judgment.
12 Q Well, since we don't all have the benefit of the
13 20 years of experience you do to have internalized, as you
14 put it, this set of criteria, do you think you could look
15 through your library and identify that literature which
16 would describe the fairly basic elements regarding which
17 there is consensus in performing scoping analyses for
18 socioeconomic impact assessments, and provide us with a
19 list of those publications so that we can request them as
20 part of the request for production?
21 A If counsel instructs me to, I'll do that.
22 Certainly in Dr. Jones you have someone with a similar
23 length of experience that would already be familiar with
24 those documents.
25 Q I'm not interested in Dr. Jones' opinions about
237
1 the fairly basic elements, at this time and in this
2 context, I'm trying to discover your opinions.
3 MR. SAXE: Yes, Counsel, we would ask that --
4 MS. STINSON: I have to object to that request.
5 I think you have asked him what he has relied upon or
6 what he is relying on and he has indicated to you that
7 there is no particular literature that he is relying
8 on. To ask him what he may have, in his educational
9 process over the last 20 years, reviewed, I don't
10 think is an appropriate discovery request.
11 MR. SAXE: I asked him what he had internalized,
12 effectively.
13 MS. STINSON: I take that to mean what have you
14 learned in educating yourself and doing work over the
15 last 20 years.
16 MR. SAXE: It's a proper request, Counsel, I am
17 entitled to an identification of publications that
18 describe the basis for the views that the expert is
19 presenting in a case.
20 MS. STINSON: You are entitled to them if he is
21 relying on them. I don't think you are entitled to
22 ask him to do research.
23 MR. SAXE: I'm not asking him to do research,
24 I'm asking him to identify those publications of which
25 he is aware that describe the fairly basic elements
238
1 regarding which there is consensus.
2 MS. STINSON: Well, you have asked him and he
3 has indicated that he can't tell you the names. I
4 don't think it's appropriate to ask him to go through
5 the library and find some that might support what he
6 has said and I would have to object, I think, to that
7 discovery request.
8 MR. SAXE: All right, we will take it up in the
9 course of discovery.
10 BY MR. SAXE:
11 Q Dr. Luke, going back for a minute to the issue
12 of the modifying multipliers, in general would you prefer a
13 multiplier from the county and for the sector for which the
14 underlying economic impacts, direct economic impacts
15 pertained, or from another county and another sector?
16 A I really think it's a case specific sort of
17 determination. You're looking for the multiplier you think
18 will best describe the impacts -- in this case I'm looking
19 for the multiplier that will best describe the impacts on
20 the other businesses and households in the EAA and it
21 wouldn't necessarily be one or the other in all cases.
22 Q The second sentence that I have highlighted in
23 the paragraph in the Hazen and Sawyer report, says, "A
24 change in land ownership does not necessarily imply a
25 change in land use or a change in sales and employment in
239
1 the EAA."
2 Would you agree with that statement?
3 A Yes, I would.
4 Q As I understand your testimony, in your opinion,
5 a change in land ownership might imply a change in land
6 use?
7 A Yes.
8 Q Dr. Luke, as I understand it, in Hazen and
9 Sawyer's methodology in the 10 year economic impact
10 assessment that we have been discussing, Hazen and Sawyer
11 followed the criteria for determining impacts such that if
12 a farm fails but land remains productive in the sense that
13 returns to lands exceed zero, the land stays in production,
14 there are no direct impacts and no secondary impacts, is
15 that correct, as you understand Hazen and Sawyer's
16 methodology?
17 A I think that's what they did.
18 Q We talked yesterday about what I believe you
19 referred to as economic friction, in that view would it be
20 correct to say that if a farm fails but the land remains
21 productive in the sense that returns to land exceed zero,
22 there might nevertheless be circumstances in which
23 perceived risk exceeds the perceived benefit of keeping the
24 land in production and that would be loosely referred to as
25 economic friction and it could cause the land to go out of
240
1 production and it could cause corresponding direct impacts
2 and consequent secondary impacts, would that be correct?
3 A I think that's a possibility.
4 Q This economic friction, would it be correct to
5 call it a theory?
6 A Theory? It would be --
7 Q How should I refer to it?
8 A It's a concept, I mean, the notion of friction
9 as a difference between what theoretically should happen in
10 a market and what does happen is, I think, a pretty common
11 economic concept.
12 Q The concept then of economic friction in the
13 context of economic or socioeconomic impact analysis, is
14 this a firm specific phenomenon?
15 A I don't understand the question.
16 Q Is this something that can be generalized,
17 averaged for an entire industry, or is it something that
18 has to be calculated on a firm specific basis?
19 A I don't know about a firm specific basis in this
20 case where you're dealing with acreage, I would more look
21 at it across a sector as to what the conditions are likely
22 to be.
23 Q Sector by sector, you mean?
24 A For the farm sector in the EAA, I would look at
25 it for this specific set of circumstances.
241
1 Q Can you elaborate what set of circumstances
2 would define an identifiable group of similarly situated
3 farms, if you will?
4 A I mean, in this case I would be looking at
5 things like would there be any -- where would the needs for
6 additional infusion of capital occur, what would be the
7 perceived risks, who would be likely to end up as the owner
8 or as -- and as possible operators, and I might find that
9 this was a significant concern, I might find on
10 investigation that it was not a significant concern.
11 Q So then would it be correct to say it's not
12 constant across firms within an industry?
13 A Right, it would. I also think it's situational
14 in terms of where things are in the banking and credit
15 system and it's who the -- it is the ownership structure of
16 the remaining firms in the industry and what their sources
17 of capital are. I mean, it's a very situation specific
18 thing and it's a concept that ought to be looked at and one
19 make a decision about whether it appears to be material in
20 the analysis of this situation or not.
21 Q Would it be the same for owner operators versus
22 corporations?
23 A I don't understand the question.
24 Q Would the ownership structure be relevant, one
25 of the relevant circumstances in determining whether or not
242
1 economic friction applied in a given instance?
2 A I think the ownership structure of the remaining
3 firms in the area and the ownership structure of whoever
4 would end up owning the land if existing operations failed,
5 would both be relevant.
6 Q So whether the land was owned or leased, would
7 that be relevant?
8 A I'm sorry?
9 Q Whether the land was owned or leased, would that
10 be relevant?
11 A Are you talking about the land where the
12 enterprise fails?
13 Q Yes.
14 A Yes, that would be relevant.
15 Q What other land would it be relevant to talk
16 about in this context?
17 A The remaining firms that stay in operation in
18 the area. I'm just trying to clarify your question.
19 Q Can you give me a list of, to the best of your
20 ability now extemporaneously to do so, of what the relevant
21 factors or elements would be, data elements if you were, in
22 analyzing the applicability of economic friction in any
23 given instance?
24 A Do you mean whether it would exist or what its
25 impacts would be if it did exist?
243
1 Q Whether it would exist and quantifying it.
2 A I would be concerned here with the difference
3 between some costs and needs for new investment. If the
4 operations can proceed and the land can be kept in
5 production over a period of time with no new capital
6 investments, operating off the costs or the capital already
7 invested, that would tell me that it was less likely to be
8 a problem. Converse, if at a point where significant
9 additional investment is required, then what we have to
10 look at is where would the funds for that investment come
11 from, what is likely to be the perceived risks, how sunk is
12 that investment versus portability or reusability somewhere
13 else in terms of the risks, and what are the sources of
14 credit or of capital that the operators might draw upon,
15 and what are the restrictions upon those capital sources
16 as, for instance, criterion for which the bank can make a
17 loan.
18 Out of that I would think we would be able to
19 reach a judgment about whether or not that was likely to be
20 an important element in explaining the likely response in
21 the EAA to specific farms going out of business.
22 Q Any others?
23 A Not that I think of right now.
24 Q Did historic events like bankruptcies, farm
25 failures, average expansion -- or rather, acreage expansion
244
1 or contraction, have any role in that determination?
2 A I would say that would be useful to look at and
3 what I think you would have to do to factor those in, would
4 be to say okay, what were the economic conditions in terms
5 of risk, profitability, availability of capital, when those
6 historical events occurred, and how does that differ either
7 because of the proposed SWIM plan or because of external
8 factors that may be changing in the future, but those could
9 be useful guides to making an analysis.
10 Q Are there any others that you can think of that
11 would be useful in making such an analysis?
12 A Not at this time.
13 Q During Dr. Leistritz' deposition, he gave some
14 testimony concerning the likely events when there's
15 succession of ownership because of a failure of the
16 previous farm owner. He referred to the farm crisis period
17 in the midwest and some others historically that he used
18 for purposes of illustration. He testified, as I
19 understood it, that a new owner usually gets a certain
20 advantage in buying the failed farm, the advantage is
21 usually in the form of reduced land prices and cheaper
22 equipment as that machinery is sold from the failed farm
23 operation. Generally, do you agree with that position?
24 A I think that's what happened in the upper
25 midwest.
245
1 Q Would you call it a general rule or rule that's
2 generally applicable when there is a succession of
3 ownership from farm failure?
4 A I'm sure not prepared to say that that would
5 occur in every case. I can certainly see that it would be
6 one scenario. You could have a farm failure because -- in
7 that case you had a situation where you had a fairly
8 substantial drop in property values that was a drop in
9 collateral that caused a whole bunch of loans to be called
10 and the value of the land had indeed declined. I can
11 envision farm failures that were not based on general
12 declines in property value and collateral value, but were
13 based upon bankruptcy of an enterprise because they made
14 some bad stock market investments --
15 Q Would the latter be relevant for purposes of
16 economic impact analysis?
17 A Again, if you wouldn't mind me finishing my
18 answer.
19 -- and in that case there wouldn't be any reason
20 to think that the land value in the next owner's hands
21 would be any less than it was before.
22 Q So the latter set of circumstances are, so to
23 speak, idiosyncratic farm failures as opposed to farm
24 failures because of generalizable conditions in an industry
25 and an area?
246
1 A I don't know about idiosyncratic, but would not
2 be related to the -- let's say are not related to the
3 economics of the farm itself, but more to the economics of
4 the owner.
5 Q When you might look at, attempt to analyze the
6 role of economic friction in the economic impacts of the
7 implementation of the SWIM plan, would you be concerned
8 with the former set of circumstances or the latter or both?
9 A I think I would be concerned primarily with the
10 former.
11 Q So in the context of the former as it would be
12 relevant to the analysis of economic friction in the EAA,
13 would it then be safe to say that as a general rule it
14 would be more likely than not that the successive owners
15 would enjoy the advantage of cheaper land and cheaper
16 equipment?
17 A I would think that the land value is definitely
18 going down as a result of the SWIM plan, so I would say
19 yes. As to the equipment, you know, less certain, but
20 probably if it's bought as used equipment and the current
21 owner bought it as new equipment, then the new owner's cost
22 basis in it is going to be less.
23 Q Do you know how the machinery and equipment of a
24 failed farm enterprise generally is disposed?
25 A Well, in the upper midwest, you basically had
247
1 the bank auctioning things off and I don't know that that's
2 universal or would apply here.
3 Q Do you have any reason to believe that's not
4 what would happen in the EAA?
5 A In this case, we're not talking about a
6 foreclosure action, we're talking about people deciding to
7 exit, so I think that you would be much more likely to have
8 privately negotiated sales than sort of courthouse square
9 auctions like in a lot of cases.
10 Q As a general phenomenon, as an industry-wide
11 phenomenon, if that were to take place, these people
12 electing to leave production, would that more likely than
13 not be associated with some diminution in the market value
14 of the used machinery and equipment that those owners were
15 putting on the market?
16 A I don't understand the question.
17 Q Would you expect that the prices of machinery
18 and equipment would drop if there were an industry-wide
19 trend in the EAA of owners wanting to get out and sell?
20 A To some extent, yes.
21 Q At this point do you have any estimate of what
22 the friction factor might be in the EAA, quantification of
23 it?
24 A No.
25 Q Roughly, ball park?
248
1 A No.
2 Q It would, if I understand it correctly, though,
3 have the effect of bumping up the value of returns to land,
4 the minimum returns to land that would be required for an
5 owner to elect to continue in production? Do you
6 understand that question or should I rephrase it?
7 A Maybe you should try again.
8 Q Okay. Hazen and Sawyer assumed that land would
9 stay in production if returns to land exceeded zero, would
10 the effect of economic friction be to raise that number, by
11 your criteria, by some fixed dollar amount, so that it
12 would be meaningful to say that the land would stay in
13 production if returns to land exceeded zero plus X, where X
14 was the friction factor?
15 A Yeah, I think that's what it would do.
16 Q At the risk of returning to a type of question
17 that we had some difficulty with before, can you point me
18 to any publications that describe the role of this economic
19 friction in an economic or socioeconomic impact analysis?
20 A No, not from memory.
21 Q Are there any economic impact analyses or
22 socioeconomic impact analyses that you have performed that
23 have analyzed economic friction?
24 A No, none of the cases have addressed this
25 particular kind of failing firm issue that I have done.
249
1 Q Are you aware of any that you haven't done that
2 have addressed the economic friction factor in an economic
3 impact analysis or socioeconomic impact analysis?
4 A No.
5 Q What kind of -- strike that.
6 Earlier you explained to me that in explaining a
7 likely response to economic friction in the context of SWIM
8 plan implementation, you would be looking at the relevance
9 of some costs versus the need for new investment;
10 specifically what kinds of data elements would be relevant
11 in such an analysis?
12 A You would want to know kind of the extent to
13 which there was existing capacity in the cultivation
14 equipment, the useful life left in structures, to where one
15 can proceed without making a new capital investment and how
16 long you could without making a new capital investment.
17 Q If we could take them one at a time, I think it
18 would be easier. What kind of data would you seek in
19 attempting to analyze that element in this context?
20 A You know, I would want to know something about
21 the average useful life of the equipment and the average
22 age of the existing equipment that's out there and also
23 whether there is excess capacity or, under-utilization is
24 probably the wrong term, but whether in effect you could
25 use other equipment. Let's say an existing operator took
250
1 over a piece of land and he has three machines and there's
2 one machine that comes with the land. Is there reserve
3 capacity, so to speak, in the three machines, such that
4 even if the one machine that's on the land goes obsolete or
5 wears out, that he can continue to cultivate that land with
6 his three machines.
7 MR. COUSINS: Could I interject, what factors
8 are we discussing now? I sort of got off track. Are
9 we discussing friction factor factors?
10 BY MR. SAXE:
11 Q Dr. Luke, which factors are we discussing right
12 now?
13 A I believe your question was what kinds of data
14 would I try to look at in order to decide if I thought that
15 land might go out of production because of economic
16 friction. That's what I think I'm talking about.
17 MR. COUSINS: Okay, thanks.
18 BY MR. SAXE:
19 Q These elements, the average useful life, the
20 average age and excess capacity or reserve capacity, these
21 are relevant to the issue of is there existing capacity in
22 equipment and structures. What I need to know is where
23 would you go to get that information, from whom would you
24 seek it?
25 A I would talk to the agricultural extension
251
1 agents, I would interview probably some of the agricultural
2 interests, I might talk to the equipment dealers, might
3 talk to the bankers, might look at some appraisal district
4 data.
5 Q What data specifically would you be looking at
6 in those sources?
7 A I paused. I might also look at USDA data.
8 The information that we just talked about,
9 whatever those sources could tell me about the factors that
10 we just discussed.
11 Q What information on average useful life of
12 equipment and structures, average age or excess capacity,
13 do you believe the agricultural extension agents would be
14 able to provide?
15 A They would be able to provide both specific and
16 general information on conditions in the EAA.
17 Q In what form?
18 A Verbal.
19 Q Based on?
20 A Their experience.
21 Q Collecting data from whom? Maybe you don't
22 understand. I'm asking for specific data sources and
23 specific data elements. I appreciate we are narrowing the
24 focus, but in the interest of saving time, since you
25 understand what it is, I think, that I'm asking, perhaps
252
1 you can just answer that question.
2 A Well, I'm doing the best I can. I would go and
3 interview them, tell them the kind of concern that I had,
4 talk to them about what they knew about the situation in
5 the field, and try to make a judgment about whether or not
6 this is a significant issue.
7 Q So you would be, if I understand it correctly,
8 you would be just relying on anecdotal reports that
9 agricultural extension agents, based on their generalized
10 feeling or experience about what the average useful life
11 and age of equipment was?
12 A I don't know that I would characterize it as
13 anecdotal.
14 Q How would you characterize it?
15 A I would characterize it as practical field
16 experience, folks that are out there talking to the farmers
17 and looking at the land on a long term, continuous basis.
18 Alvarez and Schunamen have been around here quite awhile.
19 Q So it would be based on conversations with
20 farmers by people like Alvarez and Schunamen over time, not
21 data collection in any methodological or formal sense?
22 A If they have some quantitative data, I would be
23 real interested in it, but I certainly wouldn't limit
24 myself to quantitative data in trying to assess the
25 importance of the issue.
253
1 Q Do you understand that they do have quantified
2 data?
3 A I don't have knowledge about whether they do or
4 not.
5 Q In your opinion, this information based on
6 conversations by Alvarez and Schunamen would be a
7 sufficient source of data for your analysis of the existing
8 capacity in equipment and structures?
9 A I didn't say that. I said they would be one of
10 the sources.
11 Q The other sources you mentioned were the owners,
12 equipment dealers, bankers and USDA. Go through each one
13 of those for me, if you would, and tell me specifically
14 what the sources of data would be and what the form of the
15 data would be that you would need to be able to analyze the
16 existing capacity in equipment and structures?
17 A I think that it would be very similar to the
18 answers I have given to you for the extension folks. If
19 they have quantitative data, that's very desirable; if not,
20 I would be interested in their qualitative data, in their
21 opinions and their judgments as to what would happen if
22 certain enterprises were to fail.
23 Q Would you say that the -- you don't like the
24 word anecdotal, I'm sorry, what term did you use to refer
25 to the kinds of data you would get from conversations with
254
1 Alvarez and Schunamen? I'm looking for a shorthand way of
2 referring to it just to save time, verbal, did you say
3 verbal data?
4 A Verbal sounds good, let's do that.
5 Q Okay, verbal data. Would this verbal data that
6 -- strike that.
7 In your opinion, if you were able to obtain only
8 such verbal data from the sources you have mentioned here,
9 would you be able to reliably estimate the role of existing
10 capacity in equipment and structures and the effects of
11 economic friction in implementing the SWIM plan?
12 A I think I would be able to come up with a
13 reasonable estimate that I would be comfortable in having
14 people rely upon.
15 Q Would the verbal data that you have received
16 from the sources in turn -- strike that.
17 What would you expect the verbal data that you
18 might receive from these sources to be based on by the
19 sources from whom you had received it?
20 A I think in some cases it would be their personal
21 observations and other cases it would be information that
22 they had either collected or had been allowed access to.
23 In other cases it would be their knowledge of the
24 specifications of useful life of various equipment.
25 Q When you said information that they had access
255
1 to, would that be published information?
2 A In some cases yes, in some cases no.
3 Q Would it be publicly available information?
4 A I would think in some cases yes, in some cases
5 no.
6 Q If it were published and publicly available,
7 would you seek recourse to it yourself, rather than relying
8 on the verbal data from, for instance, Alvarez and
9 Schunamen?
10 A In some cases yes and some cases no, depending
11 on how difficult it would be to access and how important it
12 was to the overall analysis.
13 Q Do you believe that Alvarez and Schunamen have
14 had access to unpublished, non-publicly available
15 information in forming the verbal data that you would seek
16 from them?
17 A Probably.
18 Q Would that be the case for the owners that you
19 would interview? I guess that's a self evident
20 proposition. Would the owners have access to unpublished,
21 non-publicly available information about their own
22 operations?
23 A Probably.
24 Q How about the equipment dealers?
25 A Yes.
256
1 Q And the bankers?
2 A Yes.
3 Q And USDA?
4 A Yes.
5 Q So then as I understand it, the verbal data that
6 you might rely upon solely if you had no access to other
7 published, publicly available information about existing
8 capacity in equipment and structure, would likely to some
9 extent be informed by the unpublished, non-publicly
10 available information that these respective sources had
11 access to?
12 A Right, because in turn, some of the information
13 would be their conversations with other knowledgeable
14 people in the area. I mean, for instance, the equipment
15 dealer trying to sell the farmer a new piece of gear and
16 the farmer saying, no, I think I can use this one three or
17 four more years, it's only X-years old. I'm not suggesting
18 that there is some spread sheet or data sheet that they are
19 accessing, I'm talking about their knowledge of the
20 business and the industry, which is typically the kind of
21 interview information that you rely upon in trying to get a
22 feel for the behavioral dynamics of the business.
23 MR. SAXE: Would you mark that section of the
24 tape?
25 THE REPORTER: Yes.
257
1 BY MR. SAXE:
2 Q Thank you, Dr. Luke.
3 Dr. Luke, returning for a moment to what I
4 believe was Exhibit 3 yesterday -- no, excuse me, it was
5 Exhibit 2. Would you look at Bates page 185?
6 A Okay.
7 Q Before I ask that brief set of questions, I do
8 have one additional question on the topic we were just on,
9 again on economic friction, I'm sorry. How would economic
10 friction be expressed in terms of units of measure, would
11 it be dollars and cents, dollars per acre, dollars per
12 pound of sugar, how?
13 A I guess there are different ways one could
14 express it. I think that your earlier question about would
15 it raise the threshold return at which people would
16 continue the enterprise above zero, might be a useful way
17 to look at what's the threshold return which you would have
18 to have before you would make new investments in the
19 operation.
20 Q So it would be returns to land and dollars per
21 acre?
22 A I would think it would be a return on --
23 expressed as return on investment, because that's the
24 issue. If you don't have to invest anything additional in
25 it, unless we're talking about just really trivial returns,
258
1 then I would think that you would wouldn't experience a
2 friction.
3 Q That would be in what units of measure?
4 A It's usually expressed as a percentage.
5 Q Okay, back to the Bates page 185, the last full
6 paragraph on that page, the second sentence says, "Recent
7 research on farms experiencing economic stress in both the
8 upper midwest region and Texas has indicated that debt
9 level was the major determining factor farm financial
10 viability."
11 Do the farmers in the upper midwest region and
12 Texas have the same debt level as farmers in the EAA, as
13 far as you know?
14 A I don't know.
15 Q In addition to the -- strike that.
16 Talking about farm financial viability and its
17 relevance in the socioeconomic impact analysis as you
18 believe it should be performed in this context, you have
19 spoken about the phenomenon -- or excuse me, the concept of
20 economic friction where although land remains productive in
21 the sense that returns to land exceed zero, the land
22 nevertheless goes out of production because of economic
23 friction. Dr. Leistritz, in his deposition, spoke about
24 what I believe was another effect where a farm fails and
25 land remains productive in the sense of returns to land
259
1 exceeding zero, I believe it was a different one that you
2 have described today and yesterday concerning economic
3 friction. As I understood Dr. Leistritz' testimony, he was
4 talking about a set of circumstances in which a farm fails,
5 land remains productive, the land stays in production and
6 there are no direct impacts, but because of production
7 organizational changes, there are nevertheless secondary
8 impacts. Would you agree with that view of possible
9 secondary impacts in implementing the SWIM plan?
10 A I would have to review the testimony you're
11 referring to before I could answer that question.
12 Q Okay, let's take a quick look at the testimony.
13 Why don't you take a look at these two pages, it shouldn't
14 take but a minute or so.
15 MS. STINSON: On the record, Dr. Luke is looking
16 at pages 66 and the next couple of pages in Dr.
17 Leistritz' deposition.
18 A Okay, I have reviewed those two pages and I
19 agree with what he says on those two pages.
20 BY MR. SAXE:
21 Q Let me see if I understand what it is that you
22 are agreeing with.
23 A I'm agreeing with every word on the page, sir.
24 Q Let me see if I can understand what that
25 imports. Do you understand that Dr. Leistritz testified
260
1 effectively that where a farm fails and land remains
2 productive in the sense that returns to land exceed zero,
3 the land might stay in production, but because of
4 production organizational changes, there might nevertheless
5 be secondary impacts from that farm failure?
6 MS. STINSON: Object to form.
7 MR. SAXE: Grounds?
8 MS. STINSON: I don't think it's appropriate to
9 ask what he understands somebody else to have said.
10 MR. SAXE: All right, I'll rephrase the
11 question.
12 BY MR. SAXE:
13 Q Dr. Luke, in your opinion, where a farm fails
14 and land stays productive in the sense that returns to land
15 exceed zero, might there nevertheless be secondary impacts
16 if there are production organizational changes entailed in
17 the succession of ownership?
18 A Certainly possible.
19 Q Are these secondary impacts the same secondary
20 impacts that we discussed earlier in the context of
21 economic friction?
22 A No.
23 Q In this case, is it correct that land would stay
24 in production, but there would nevertheless be impacts,
25 whereas in economic friction cases, the land would go out
261
1 of production and there would be secondary impacts?
2 A Well, in the hypothetical you were asking about,
3 you assumed the land would stay in production, so I don't
4 understand your question.
5 Q Isn't it true that secondary impacts result in
6 the case of economic friction where land goes out of
7 production, but in the case of production organizational
8 changes, secondary impacts result without land going out of
9 production?
10 A Well, if the land stays in production and there
11 are secondary impacts, that must be true.
12 Q To analyze -- strike that.
13 Is there a shorthand we can use that you are
14 comfortable with to refer to the phenomenon of land staying
15 in production, but there being production organizational
16 changes from a succession of ownership and the resulting
17 secondary impact, would this be called farm financial
18 viability or how could we describe this accurately?
19 A As I read Dr. Leistritz' testimony, he is saying
20 that if you had a change in the production function under
21 the new operator or if you had a change in the geographic
22 pattern of the purchases under the new operator, that that
23 would be the source of the secondary impacts attributable
24 to the change in management.
25 Q Are those both production organizational
262
1 changes?
2 A You know, I don't know that there is any label
3 that you can apply to it. It's changes in production
4 function or changes in the geographic pattern of purchases.
5 Q That's a mouthful, let me write it down so we
6 know what we are referring to whenever I ask you a
7 question. Changes in production function or changes in
8 geographical?
9 A Pattern of purchases.
10 Q What kind of data would one need to analyze to
11 evaluate the effect of changes in production function or
12 changes in geographical pattern of purchase?
13 A Well, I suppose you would need to look at the
14 way the hypothetical new operator did business versus the
15 way the hypothetical old operator did business.
16 Q And what data would one look at to make that
17 determination?
18 A You would look at where they buy certain inputs
19 from.
20 Q Where would you go to get that information?
21 A You could either go to the purchasers or the
22 sellers.
23 Q Interviews?
24 A Yes.
25 Q Is that what you would propose to do in
263
1 analyzing this in a socioeconomic impact analysis
2 concerning the implementation of the SWIM plan?
3 A If I thought it was a significant issue.
4 Q Do you think it is a significant issue?
5 A I don't know.
6 Q How would you make that determination?
7 A Probably through some initial interviews.
8 Q With?
9 A With farmers and with dealers of agricultural
10 inputs.
11 Q Are you planning on conducting such interviews?
12 A Right now I don't have any such plans.
13 Q If the Cooperative elects to go forward with
14 what you have proposed to do in preparation for this trial,
15 would you conduct such interviews?
16 A That's not an explicit part of any current
17 proposal that we have before you.
18 Q Would you expect to be analyzing the effects of
19 changes in production function or changes in geographical
20 pattern of purchase?
21 A Again, it's kind of a scoping issue. I might do
22 some -- assuming I was doing the direct farm impacts
23 analysis, I might ask about that and see if there was any
24 reason to think that it was a material factor.
25 Q Up to this point, has RPC undertaken to get
264
1 access to any data that would be relevant to analyzing
2 changes in production function or changes in geographical
3 pattern of purchase?
4 A Not to my knowledge.
5 Q I believe you testified earlier that you agreed
6 with every word on those two pages?
7 A Dr. Leistritz' words. I wasn't necessarily
8 adopting yours.
9 Q Dr. Luke, if you would review pages 86 and 87
10 from the transcript of the deposition of Dr. Larry
11 Leistritz on February 8, 1993.
12 A All right, I have read it.
13 Q May I have the transcript back?
14 A Um-hum.
15 Q Has RPC endeavored to collect data on
16 expenditure patterns or labor use or basic production
17 practices that would be relevant to analyzing the effects
18 of changes in production function or changes in
19 geographical pattern of purchase?
20 A We have collected data such as the IFAS budgets
21 and this sort of thing that generally describe current
22 production practices. We have not collected any such
23 information from individual farms or farmers.
24 Q Is the IFAS information collected from
25 individual farms or farmers?
265
1 A That's my understanding.
2 Q To analyze the differences in ways of doing
3 business, as you testified earlier, where they buy, what
4 other elements would be analyzed to determine the impacts
5 of changes in production function or changes in
6 geographical pattern of purchase?
7 A I don't understand the question.
8 Q To analyze the effects of changes in production
9 function or changes in geographical pattern of purchase,
10 you testified earlier you'd be concerned with or interested
11 in differences in the ways of doing business between
12 previous and successive owners. You indicated you would be
13 interested in where they bought, that you would interview
14 farmers and sellers to get that information, if it were
15 deemed relevant to the analysis. I'm asking what other
16 data you would seek to quantify the impacts of changes in
17 production function or changes in geographic pattern of
18 purchase?
19 A I don't know of any other that I would seek.
20 Q Could you be more specific about those that are
21 relevant to assessing the differences in ways of doing
22 business?
23 A No.
24 Q Would hiring changes be relevant?
25 A I don't understand what you're asking me.
266
1 Q What business practices besides buying practices
2 would be relevant changes in production function or changes
3 in the geographical pattern of purchase?
4 A An example would be the extent of mechanical
5 versus hand harvesting that a given operator employed.
6 Q Any others?
7 A I am not sure that I could -- I mean, that's one
8 I have heard about, there may be other alternative
9 cultivation or processing techniques that I'm not familiar
10 with, but that are recognized as sort of management,
11 reasonable management choices that some operators go one
12 way, some the other, but I couldn't enumerate or list them
13 for you.
14 Q Would local versus out of area hiring be a
15 relevant change in the way of doing business, relevant to a
16 change in production function or geographical pattern of
17 purchase?
18 A Other than that that's a component of mechanical
19 versus hand harvesting, I really am not sure why there
20 would -- what the opportunities for non-local hiring would
21 be. I don't understand that there is a management option
22 there.
23 Q In analyzing the effects of change in production
24 function or change in geographical pattern of purchase,
25 would it be relevant to analyze differences in ownership
267
1 structure?
2 A Maybe you could tell me what you mean by
3 ownership structure.
4 Q What does it mean to you?
5 A Sir, you asked me a question, I asked you to
6 define a term in the question, it's your question, what are
7 you asking me?
8 Q Dr. Luke, what does ownership structure mean to
9 you, if anything?
10 A I have heard it used to mean different degrees
11 of integration. I have heard it used to mean sole
12 proprietorship versus partnership versus corporation. I
13 suppose there are probably some other dimensions as well
14 that that could be used to refer to.
15 Q Any others that come to mind?
16 A No.
17 Q Would changes in organizational structure and
18 succession of ownership in terms of the degree of
19 integration, sole proprietorships versus corporate versus
20 other forms of ownership, have relevance in quantifying the
21 impacts of the changes in production function or changes in
22 geographical pattern of purchase?
23 A I don't know that the legal form of organization
24 would in and of itself have any relevance. The size and
25 degree of integration could.
268
1 Q How would one go about collecting data on the
2 size and degree of integration?
3 A I would think one would do it through
4 interviews, through a review of the USDA data on number of
5 operations and their relative size. Some of that
6 information is available by looking at appraisal records to
7 get a feel for size. A number of different sources could
8 be consulted.
9 Q Have you consulted, or RPC, have you or RPC
10 consulted any of those sources for data on the size and
11 degree of integration thus far?
12 A Yes, I would say so.
13 Q Which data have you consulted?
14 A Certainly there have been some interviews. I
15 believe some of the USDA data looks at size of operations.
16 Some of the appraisal district data, some of the Hazen and
17 Sawyer looks at size of operations. There may be some
18 reference as to that in some of the IFAS publications and
19 the USDA publications on the Florida sugar industry.
20 Q Is this information, other than the interviews,
21 published, publicly available information?
22 A Yes.
23 Q Who has been interviewed for information on data
24 -- excuse me, information on size and degree of
25 integration?
269
1 A I have had conversations with George Wedgworth,
2 Jeff Ward, the Cooperative's marketing person whose name
3 I'm sorry I can't recall. I have had conversations with
4 Tom Schunamen. Some of my staff may have talked to other
5 people and their conversations touched on this issue, but
6 I'm not aware of it.
7 Q With respect, though, jumping back to our
8 earlier question about purchasing, interviews with farmers
9 and sellers, there have been no such interviews?
10 A Not that I'm aware of.
11 MR. SAXE: This is a good place for a break.
12 (Brief recess taken.)
13 (Luke Exhibit 4 marked for identification.)
14 BY MR. SAXE:
15 Q Dr. Luke, do you recognize this document?
16 A Only in the sense that I glanced at it in going
17 through the supplemental production that we did.
18 Q Can you identify it for me?
19 A It appears to be a memo to file that one of my
20 staff members, Jeff Tomlinson, wrote based upon a telephone
21 conversation he had.
22 Q What does this document concern, the telephone
23 conversation, what -- strike that.
24 What did the telephone conversation pertain to?
25 A It appears he was asking about the relationship
270
1 between yield belts, yield, and assessments, and data that
2 the appraisal district had collected on that topic.
3 Q Is this data that RPC has sought from the
4 appraiser's office?
5 A We have asked them for it. It was information
6 that was referenced by Grace Johns that she had and was
7 using to analyze yields and so forth, and when I heard
8 about it at the meeting, I thought that we probably ought
9 to get a set of that data as well.
10 Q So then you were only looking for the exact same
11 data that Hazen and Sawyer had analyzed?
12 A The category of data. I hesitate to tell you I
13 know precisely what they have got or what the appraisal
14 district would supply.
15 Q If you would turn your attention to the second
16 block paragraph for me and read those first three
17 sentences. I'll read them into the record. "Approximately
18 120, forty plus acre sample blocks are evaluated each year
19 for assessment purposes. Data regarding tons of sugar or
20 sucrose is recorded for each block. The data for all
21 blocks in a yield belt is then averaged."
22 Do you know whether RPC was interested in the
23 average values or the individual data collected for the
24 120, forty plus acre sample blocks?
25 A I was interested in having the data on hand so
271
1 that when I saw what use Grace made of it, I would be able
2 to, if I chose, conduct an independent analysis of the
3 data. I don't know -- I don't really know much more about
4 it, so I'm just simply trying to shorten my response time
5 once I see her report.
6 Q Do you know whether Hazen and Sawyer used
7 average values or whether they used the individual data
8 values for the 120 sample blocks?
9 A No, I don't know.
10 Q A little bit further down under the section
11 titled Obtaining Sample Data, it says, "The survey has the
12 following information: one, Plantation I.D."
13 Do you know what that plantation I.D. would be?
14 A Some identification of the location, you know,
15 that's all I would know about it.
16 Q A little bit further down, the block after the
17 indented material, it says, "The data received by the
18 appraiser's office is considered confidential."
19 Do you understand this to be correct?
20 A I understand it to be -- it depends on who you
21 ask. For some reason the appraisal office considers it
22 confidential. I asked Rick Burgess about it and he says as
23 far as he is concerned, his opinion is that it's public, so
24 it depends who you ask.
25 Q Did you request the information from the
272
1 appraiser's office?
2 A I believe Jeff Tomlinson did, yes.
3 Q When I say you, I'm referring to you or RPC,
4 somebody in RPC in that instance.
5 A Okay.
6 Q The next sentence, "It is provided by the
7 Florida Sugar Cane League, and can only be provided to
8 other parties with the written approval of the vice
9 president and general manager, Andy Rackley, of the
10 League."
11 Based on your previous testimony, am I correct
12 that you believe this is subject to debate?
13 A The League's attorney tells me that he doesn't
14 believe that it's subject to any privilege under the,
15 whatever Florida calls an Open Records Act, and that the
16 appraisal district people are in error in treating it as
17 confidential data.
18 Q At the bottom of the document it says, "I will
19 fax a letter with specifications to Jeff Ward of the Co-op
20 to request the data and approval from the League."
21 So far as you know, was a request made to the
22 League to authorize release of the data, by Jeff Tomlinson
23 or somebody else in RPC?
24 A I know that we did send a letter to Jeff Ward.
25 Whether he forwarded it on to anybody at the League, I
273
1 don't know.
2 Q When did this letter go to Jeff Ward, do you
3 recall?
4 A Sometime on or after March 3, 1993.
5 Q Who sent that letter, when you say we?
6 A Jeff Tomlinson.
7 Q Do you know whether, if the letter has not been
8 sent or forwarded or a request based on the letter
9 forwarded to the League, do you know whether -- excuse me,
10 by the League to the appraiser's office, do you know
11 whether they intend to do so?
12 A No.
13 Q Do you know whether they intend to authorize the
14 release of the data?
15 A No.
16 Q Has anyone in RPC or on behalf of the Co-op had
17 discussions of which you are aware, after this date,
18 concerning this issue?
19 A I just told you I talked to Rick Burgess.
20 Q Other than that conversation?
21 A Not to my knowledge.
22 Q Did Rick Burgess indicate that the League would
23 take any follow up action on the request for authorization?
24 A He may have indicated that he would be talking
25 with Andy Rackley but, I mean, it was a passing
274
1 conversation and, you know, I didn't try to pin him down.
2 (Luke Exhibit 5 marked for identification.)
3 BY MR. SAXE:
4 Q Dr. Luke, this is possibly another page of this
5 same document or a loose page, do you recognize it?
6 A Not specifically.
7 Q Can you identify it?
8 A In what way?
9 Q Who wrote it, when, what context?
10 A My speculation is that it's a continuation of
11 Jeff's conversation on this issue, so that probably Jeff
12 wrote it, Jeff Tomlinson.
13 Q For the record, on this exhibit there is a
14 yellow highlighting mark on the text that is not part of
15 the original document, I added that mark.
16 Dr. Luke, the paragraph concludes, "The data
17 cannot be released because of confidentiality unless okayed
18 by the League. I will forward a list of data
19 specifications to Jeff, who will intervene on our behalf to
20 the League. We will follow up on Friday."
21 Do you know what basis there might have been for
22 the representation that Jeff will intervene on our behalf
23 to the League?
24 A I can only speculate there had been some
25 telephone conversation.
275
1 Q Have you had any conversations with Jeff
2 Tomlinson about this matter?
3 A Well, yes, but not that would add additional
4 information to what you have got in these two documents.
5 Q What did Jeff tell you about Jeff Ward's
6 willingness to intervene?
7 A I haven't -- I don't recall speaking with him
8 about that. The conversations we had were pretty much a
9 verbal communication of the information that's on the table
10 in these two exhibits.
11 Q The final sentence, "We will follow up on
12 Firday," do you know what that relates to?
13 A No.
14 Q Do you know what Friday that might refer to?
15 A No.
16 Q Were any meetings scheduled between League staff
17 and RPC staff on a Friday after March 3rd, to your
18 knowledge?
19 A Not to my knowledge.
20 Q Were any conversations scheduled, as far as you
21 are aware?
22 A No.
23 Q So it's basically your testimony that you really
24 have no idea what this sentence is in reference to when it
25 says, "We will follow up on Friday."?
276
1 A That's right, I don't.
2 (Luke Exhibit 6 marked for identification.)
3 BY MR. SAXE:
4 Q Dr. Luke, do you recognize that document that
5 has been marked for identification as Exhibit 6?
6 A Let's see, generally it would appear to be the
7 letter that Jeff Tomlinson said that he was going to write
8 to Jeff Ward.
9 Q So this is a draft of that letter, I take it?
10 A I don't know if it's the draft or the final
11 form.
12 Q Under Data Specifications, it says, "RPC
13 requests data for the 120 sample blocks for by year for as
14 many years as possible. The data, if available, should
15 include: Number one, Plantation I.D. (used to track block
16 over time, information is not requested to identify any
17 individual block)."
18 Can you explain that to me?
19 A No.
20 Q Do you have any understanding of what the author
21 meant when he said, "Information is not requested to
22 identify any individual block?"
23 A I can speculate, do you want me to speculate?
24 Q No, I don't want you to speculate.
25 A Okay.
277
1 Q Have you had any conversations with Jeff Ward
2 concerning the purpose of the information request?
3 A No, I haven't.
4 Q What is Jeff Ward's role with respect to this
5 correspondence in the project?
6 A Jeff is the in-house counsel for the Sugar
7 Growers Cooperative and he has been one of our contact
8 folks on various data requests and interfacing with the
9 League.
10 Q What's Jeff Tomlinson's role with respect to
11 this correspondence and the project?
12 A Well, he wrote it.
13 Q Does this forward then a general area of the
14 project that Jeff Tomlinson is responsible for?
15 A As I think I told you yesterday, he is in a
16 project management, project coordination role, in addition
17 to doing some analysis and I guess this particular request
18 that I made, he decided to keep and do himself.
19 Q I'm sorry, request that you made?
20 A Remember, I told you I came back from the
21 meeting with Grace Johns and she indicated that she had
22 obtained this information from the appraisal district and I
23 asked him to get the data files for us so that if we wanted
24 to analyze them, we would have them.
25 Q Is anybody supervising Jeff Tomlinson's work on
278
1 this project?
2 A I am.
3 Q Is Jeff Tomlinson making any other
4 determinations independently, of what data to collect for
5 purposes of the project?
6 A I'm sure he is.
7 Q Do you have any idea what data he might be
8 seeking that we have not discussed so far in your
9 testimony?
10 A No. In answering your previous question, what
11 I'm trying to convey to you is I consider him to be a
12 professional and my directions to him are of a general
13 rather than a detail nature in some cases and I rely on his
14 professional experience as to how he carries out some of
15 those requests.
16 Q Do you know why he might have indicated that the
17 information is not requested to identify any individual
18 block?
19 A Not specifically.
20 Q Can you speculate?
21 A I can.
22 Q Would you, please?
23 A Sure. That we were -- if he is saying that he
24 is not trying to tie a block back to a spot on the map, but
25 just to look at variation within a block over time, that
279
1 would be a reason to say that.
2 Q Why would he not be looking to tie data back to
3 a particular block?
4 A If he was operating under the impression in his
5 memo that this is somehow confidential data, he might be
6 trying to frame the request in a way that would reduce the
7 sensitivity of it.
8 Q As you understand this data element plantation
9 I.D., would this enable the data to be linked with a
10 specific farm?
11 A I don't know that it does, but it certainly may
12 be a parcel number type that could be related to a map and
13 hence to a farm.
14 (Luke Exhibit 7 marked for identification.)
15 BY MR. SAXE:
16 Q Dr. Luke, do you recognize that document?
17 A It appears to be a letter -- or memo, I should
18 say, to me from Larry Leistritz.
19 Q Dated October 9, 1992?
20 A Yes.
21 Q The second paragraph, the second sentence says,
22 "Annette explained how the data were collected (in Florida,
23 the USDA accountant has gone directly to the books of the
24 growers and processors to extract the data)." Further
25 down in the third paragraph, the second sentence says, "On
280
1 October 7th, I talked with Ms. Clauson again to explore the
2 possibility of her group providing some summary data on
3 costs by size and balance sheet ratios by size. She was
4 not interested in providing this type of data (or any
5 information that they have not formally published)."
6 So far as you are aware, is this data linked to
7 individual farms?
8 A What data?
9 Q The data that's being referred to in the
10 sentences I have just read.
11 A Are you speaking of the data that USDA collected
12 or are you speaking of the data summaries that we were
13 requesting?
14 Q Why don't you tell me about both.
15 A Well, the data that USDA collected was collected
16 from individual farms. We were not requesting data that
17 could be tied to individual farms, we were requesting
18 summaries that would be -- could be released without
19 violating the confidentiality provisions of the study that
20 USDA conducted.
21 Q Can you tell me something about your efforts to
22 obtain that summarized data, starting with your initial
23 efforts and taking us through the present, what did you do
24 first to obtain this information?
25 A There have been -- in terms of chronology, I
281
1 don't represent that I can present you with an accurate
2 chronology. There were a series of conversations that were
3 held with Annette Clauson and other folks such as Leistritz
4 references here in Deposition Exhibit 7, to determine what
5 USDA had. Then once we had determined that, there were
6 discussions about their willingness to produce it and what
7 they would do in order to produce the summaries or
8 determine their willingness to produce the summaries.
9 Q What would the summaries be used for?
10 A If we wanted to look at the economies of scale
11 issue, they would be helpful for that purpose. If we
12 wanted to look at the balance sheet, representative balance
13 sheets or range of balance sheets, they would be useful for
14 that purpose.
15 Q You say if we wanted to, in your opinion, will
16 it be necessary to look at economies of scale issues and
17 balance sheet issues in order to perform the socioeconomic
18 impact analysis of SWIM implementation?
19 A Both of those are relevant to some of the direct
20 impacts and those have been raised as issues, I know, by
21 Polopolus and Richardson, and they may well be matters that
22 would be useful to look at.
23 Q Would they be relevant to quantifying economic
24 friction?
25 A I don't know directly that they would be. The
282
1 economy of scale material could be relevant to determining
2 what kind of a return a different operator or larger
3 operator might expect to get from a certain parcel of land
4 compared to an existing operator.
5 Q Would they be relevant to quantifying the
6 effects of changes in the production function or changes in
7 the geographical pattern of purchase?
8 A Could be helpful on some of those questions,
9 yes.
10 Q Would this be among those data that you
11 testified earlier might be obtained from the USDA as
12 relevant to determining existing capacity in equipment and
13 structures?
14 A I don't know that their data questionnaires, as
15 I have seen them, provide much information on that through
16 this survey. I don't have a good recall of every last item
17 on that questionnaire, but I'm thinking this is more
18 financial data is what we were after here.
19 Q Is the balance sheet information relevant to
20 economic friction?
21 A It would be relevant to farms going out of
22 business, going bankrupt perhaps, so that in that sense it
23 would be relevant to the question of those enterprises
24 which have a change in ownership and that would feed into
25 the economic friction discussion, but I think that would be
283
1 relevance.
2 Q Would it be relevant to the issues of farm firm
3 survivability?
4 A I think it would have some relevance there, yes.
5 Q Would it be relevant to economic impact
6 analysis? I believe you testified earlier it's relevant to
7 direct impact, so presumably it's relevant to the economic
8 impact analysis in the larger sense?
9 A Presumably.
10 Q Would you agree with that proposition that it's
11 relevant to the economic impact analysis of the SWIM
12 implementation?
13 A It is relevant to certain issues that are part
14 or should be part of the economic analysis, yes.
15 Q Will RPC be able to evaluate farm firm
16 survivability without balance sheet information such as
17 this?
18 A I think that if you approach it in the method
19 that FLIPSIM does where you're using sort of a Monte Carlo
20 simulation, that you have to make some assumptions about
21 the debt levels and debt service levels of the enterprises
22 that you are modeling. This type of -- this would be one
23 source of information that would be useful in making
24 assumptions.
25 Q What other sources of information would be
284
1 useful in making such assumptions?
2 A Well, any other source that would give you some
3 sense about the shape of the balance sheets of enterprises
4 in the area, which could come from bankers, could come from
5 other studies that had access to such data.
6 Q Are there any such sources that you are aware
7 of?
8 A Well, there's a new round of USDA studies that
9 are going on now that will produce published data on some
10 of the balance sheet issues.
11 Q Can you be more specific?
12 A No.
13 Q When will this information be published? What
14 will be published? You can answer when first.
15 A Thank you. My understanding is this fall.
16 Q What specifically will this involve?
17 A I don't understand the question.
18 Q What specific information is USDA going to
19 include in this new round of data?
20 A I have glanced briefly at the questionnaire and
21 my understanding is that they are now looking at the
22 Florida sugar cane industry and collecting data that will
23 enable them to publish statistics that are similar to those
24 they publish on other agricultural sectors, which would
25 include some of the economy of scale and balance sheet
285
1 profile data.
2 Q Are there presently any published sources of
3 balance sheet information?
4 A Published sources?
5 Q Yes. Well, let me strike the question and
6 reframe it.
7 Presently are there any published, publicly
8 available sources of this balance sheet type information?
9 A I'm not aware of any that would contain the same
10 data that's available here that are published, no.
11 Q Are you aware of any that contain other balance
12 sheet information sufficient to enable one to address the
13 issue of farm financial viability from SWIM implementation?
14 A Oh, I think there is information, again, whether
15 it's published or whether it's interview data, about what
16 the top side limits on lending are, the underwriting
17 criteria that the banks use, that would give you a sense
18 about what the maximum extent of debt is likely to be, and
19 I think that one can get a pretty good feel from
20 interviewing the IFAS and the USDA folks about what kind of
21 range.
22 Q Again, is that verbal data, as you referred to
23 it earlier?
24 A Right.
25 Q This data on the maximum extent of debt, would
286
1 that be sufficient balance sheet information to permit a
2 quantification of the farm financial viability effects of
3 implementing the SWIM plan?
4 A I think you could use that as a basis for
5 arriving at assumptions on the balance sheets of these
6 enterprises. One of the things you need to understand is
7 that this is not a fixed set of data, because you have
8 changes as normal market transactions occur, you have
9 changes as you have inter-generational transfers of
10 operations, and so it's not like this is a constant.
11 Production functions are unlikely to change radically,
12 whereas the balance sheet of any individual enterprise from
13 year to year can change very radically.
14 Q If the Cooperative elects to proceed with a
15 socioeconomic impact analysis and requests RPC to do that
16 analysis and there's no other publicly available, published
17 balance sheet data, will you rely solely on the interview
18 data that you have described in your testimony?
19 A I will rely on the best data that is available
20 to me, whatever that happens to be.
21 Q Well, that's what I'm trying to determine. You
22 said, if I recall, that you weren't aware of other publicly
23 available, published balance sheet data, that the USDA may
24 be coming out with some this fall, that one could rely on
25 interview data with certain knowledgeable individuals
287
1 concerning the industry, and what I'm asking is if there
2 are no other publicly available, published sources of such
3 balance sheet data, before the USDA release their data this
4 fall, if they do, will you rely solely on the interview
5 data that you have described?
6 A The other thing that your question does not
7 cover are unpublished, but publicly available data, and I
8 might seek further access to such data if I was not
9 comfortable with the interview data or what I was otherwise
10 able to obtain.
11 Q If it's not published, but it's publicly
12 available, is it not interview data?
13 A No.
14 Q What other forms of data would that include
15 then?
16 A Well, the data we're talking about here off of
17 the last USDA survey is an unpublished, but in my view
18 publicly available data.
19 Q You're talking -- I'm not sure I am following
20 just what it is that you are referring to. Are you
21 referring to the data referenced in this memo?
22 A That's correct.
23 Q Data collected by USDA accountants going
24 directly to the books of growers and processors?
25 A Right.
288
1 Q There is such data from last year?
2 A No, from this study, which as I recall is a
3 1986, '87 study.
4 Q So are we back to seeking this data from USDA,
5 is that what you're saying, rather than relying exclusively
6 on the interview data, you would seek to supplement it by
7 securing the release from the USDA of the data referenced
8 in this memorandum?
9 A Summaries of the data, data summaries that would
10 not violate the confidentiality provisions of the study I
11 might, yes.
12 Q If you are unable to get those data summaries,
13 will you rely solely on the interview data?
14 A I will rely on the best available data that is
15 available to me and I am unable to sit here and predict
16 with precision what the extent of that data will be. It
17 would be at least the interview data.
18 Q Do you have any tentative opinion now whether
19 the interview data would be sufficient from a scientific
20 standpoint?
21 A I don't know what body of science you are
22 referring to. I believe it would be sufficient to make as
23 a basis for reasonable assumptions for use in this type of
24 economic analysis.
25 Q As an economist?
289
1 A Yes, I think so. And I am protected by the fact
2 that if other parties in this litigation believe those
3 assumptions to be unreasonable, then they can suggest the
4 range of reason they believe is there and we and others
5 would probably perform sensitivity analysis to see if there
6 were different effects based upon where in that range you
7 believe things really are.
8 Q Getting back to the effort to secure the summary
9 data from USDA, were any efforts made at any point to
10 secure unsummarized data?
11 A Never.
12 Q Who made the decision to pursue the summarized
13 data?
14 A I suppose I did.
15 Q And what was your rationale for pursuing the
16 summarized data?
17 A That it would be helpful in making the
18 assumptions necessary for a farm local impact study.
19 Q Did you decide not to pursue the individual data
20 from which the summaries might be generated?
21 A You need to understand, the individual data is
22 protected by federal law from disclosure. Nobody ever
23 believed that that data was going to be released by USDA,
24 nor should have been.
25 Q Okay, thank you. Dr. Luke, would the USDA
290
1 summarized data show where farmers purchase inputs?
2 A I don't think so. I don't have any expectation
3 that it would.
4 Q What, if anything, would it show that would be
5 relevant to changes in the production function?
6 A Well, to the extent it provided some grouping by
7 size and that we would see the pattern of expenditures and
8 the margins of larger versus smaller operations, that in
9 effect would indicate some changes in production function
10 that might occur as a result of consolidations.
11 Q What information might it include that would be
12 relevant, if any, to the changes in the geographical
13 pattern of purchasing?
14 A I would not expect it would include anything
15 useful there.
16 (Luke Exhibit 8 marked for identification.)
17 BY MR. SAXE:
18 Q Dr. Luke, do you recognize that document?
19 A Yes. This is a memorandum that I wrote to Larry
20 Leistritz in October concerning an information request to
21 Annette Clauson.
22 Q If you would turn, please, to Bates page 70.
23 A Okay.
24 Q Is this a letter you sent?
25 A A letter -- either this letter or an evolution
291
1 from this letter I believe was eventually sent to Ms.
2 Clauson.
3 Q So you are not sure that this specific draft is
4 the one that went to Ms. Clauson, but some draft of this
5 letter went to Ms. Clauson, is that correct?
6 A I believe so.
7 Q The letter states, "Dear Ms. Clauson: This
8 letter will confirm our telephone conversation. I would
9 appreciate receiving the following information from your
10 office regarding your 1988 and 1983 surveys of South
11 Florida sugar cane growers and sugar cane mills:", then
12 there are a number of dot points after the colon. If you
13 would go to the second dot point, it reads, "A tabulation
14 of all production, revenue, expense, asset and liability
15 data from each survey for all respondents."
16 What is a tabulation as you were using it in
17 this sentence?
18 A A summation.
19 Q A summary?
20 A Yes.
21 Q So this would not be then an itemization of all
22 production, revenue, expense, asset and liability data from
23 each survey for all respondents?
24 A If you're asking me was I asking her for the
25 data on the individual farms, no, I was not.
292
1 Q Why did you say from each survey?
2 A Because we were talking about two different
3 surveys, the 1988 and the 1983 surveys.
4 Q In the second section of the letter, the
5 sentence reads, "Assuming your office would be willing to
6 make a special tabulation of the data from one or both
7 surveys of growers by size of farm in acres, please provide
8 the following information:", would this special tabulation
9 be something that's not generally publicly available?
10 A I would like to distinguish between published
11 and publicly available. There is a good deal of data
12 compiled by federal agencies that they have not published
13 the specific table, but they are either prepared to make
14 special tabulations or to otherwise be helpful to folks
15 that need that data and it is available upon request to
16 members of the public.
17 Q The third dot point underneath this heading
18 sentence says, "Could tabulations of each group be provided
19 without violating any confidentiality rules or statutes?
20 If not, how could the groupings be redefined to prevent any
21 violation?"
22 Did you receive an answer to either of those
23 questions?
24 A I think that the answer that I received in a
25 subsequent conversation was that those groupings would not
293
1 violate confidentiality, meaning that there are enough
2 observations in each of those groupings that it would
3 protect the confidentiality of any individual enterprise.
4 Q Is that true, not only of the groupings, but of
5 the tabulations?
6 A Pardon me?
7 Q Are the tabulations and the groupings the same
8 thing?
9 A What you do is you tabulate a grouping.
10 Q By tabulating a grouping, do you mean that you
11 collect individual data values and report them separately
12 by groups?
13 A What I mean is that we have outlined three size
14 groups. Let's take less than 2,000 acres, let's say that
15 they found, in looking back, that they had observations on
16 10 enterprises that were less than 2,000 acres. We would
17 be asking them to take those 10 questionnaires and total or
18 average them, depending upon the type of statistic, and
19 provide us with that printout.
20 Q That total or average, depending on the type of
21 statistic, is that what you mean by tabulation?
22 A Right.
23 Q Does tabulation have any other meaning that you
24 are aware of generally in social science when one is
25 dealing with data?
294
1 A Gosh, I guess we could get a dictionary and
2 check it out. I know how I'm using it here.
3 Q Generally when you use tabulation, you mean
4 summaries averaging -- totalling or averaging, depending on
5 type of statistic?
6 A That's correct.
7 (Luke Exhibit 9 marked for identification.)
8 BY MR. SAXE:
9 Q Dr. Luke, I'm handing you a document marked for
10 identification as Exhibit Number 9, do you recognize this
11 document?
12 A It looks like a memorandum from me to Bill Green
13 on the possibility of an FOIA, Freedom of Information Act,
14 request to Annette Clauson.
15 Q The second page, if you will turn to Bates page
16 1026, could you identify that attachment for me?
17 A It's a letter from Annette Clauson to me.
18 Q Was that letter in response to a FOIA request?
19 A No.
20 Q What did it respond to, if anything?
21 A I asked her to provide me with copies of the
22 blank forms that they had used in collecting the data.
23 Q Did you discuss with her making -- the prospect
24 of making a FOIA request for information?
25 A Yes.
295
1 Q What information was that?
2 A Well, part of the reason for getting the forms
3 was so that we could phrase the correct -- the request
4 correctly. The general answer to your question would be
5 information for the purposes that are, the type of
6 information that's indicated in your Bates page 70.
7 Q That would be in Exhibit 8?
8 A Yes.
9 Q So it's your testimony that the type of data you
10 were considering seeking through a FOIA request at this
11 time was the totalled or averaged, depending on type of
12 statistic information, that we discussed in the context of
13 Exhibit 8?
14 A That's correct.
15 Q I'm sorry, I don't recall whether you testified
16 to this issue, has a FOIA request been made?
17 A No.
18 Q Do you presently plan to make a FOIA request?
19 A I don't know.
20 Q You don't know whether you presently plan to
21 make a FOIA request?
22 A Right.
23 Q Does that mean you may make a FOIA request and
24 you have not decided whether you will?
25 A That's a fact.
296
1 Q If you secure this data by a FOIA request, would
2 this be the type of process that you would, as an
3 economist, consider applicable to receive publicly
4 available information?
5 A Pardon me, I don't understand your question.
6 Q If you do make a FOIA request for this
7 information -- strike that.
8 Would making a FOIA request for this information
9 be the type of method that you would consider appropriate,
10 as an economist, for seeking publicly available
11 information?
12 A Yes.
13 Q Is it standard practice, as far as you know,
14 when gathering information for economic impact analyses, to
15 utilize FOIA requests?
16 A Where you have a government agency that wants
17 you to make the request in that way, yes.
18 (Luke Exhibit 10 marked for identification.)
19 BY MR. SAXE:
20 Q Dr. Luke, I'm handing you Exhibit 10, do you
21 recognize that document?
22 A Yes. This is a letter from Bill Green to me
23 responding to my memorandum and providing me with the form
24 in which to use in drafting a FOIA request.
25 Q This would be the same FOIA request we discussed
297
1 just a moment ago, I take it?
2 A Yes.
3 (Luke Exhibit 11 marked for identification.)
4 BY MR. SAXE:
5 Q Dr. Luke, I'm handing you Exhibit 11, do you
6 recognize this document?
7 A Yes. This is a letter that I wrote to Annette
8 Clauson.
9 Q What was the purpose for this letter to Annette
10 Clauson?
11 A I think the letter speaks for itself.
12 Q Well, if you would like to read it before
13 answering the question, you may do so, but I would like an
14 answer to the question.
15 A The answer is the letter requests information
16 from her prior to framing the FOIA request.
17 Q In the second sentence in the letter it says,
18 "Having reviewed the five exhibits you sent me, I need to
19 ask a few questions before framing my information request."
20 There are some attachments to this document, i
21 think they may be over-inclusive, are these the five
22 exhibits you are referring to?
23 A Yes.
24 Q If you would turn please to Bates page 994,
25 going back to the letter, paragraph number 9, "Concerning
298
1 respondents who are growers only, for which rows do you
2 believe release of aggregated data would violate a federal
3 confidentiality statute or a federal rule published in the
4 Federal Register."
5 Can you explain this to me?
6 A Explain what?
7 Q What you meant with this question.
8 A If there are some items for which only a limited
9 number of folks filled out the questionnaire, it might be
10 that that particular statistic would have too few -- would
11 have so few observations in it, that release of that number
12 would violate a confidentiality statute, even though others
13 would not, other numbers could be released without
14 violating the confidentiality statute, and so that I do not
15 inadvertently ask for data that is protected as
16 confidential by the privacy regulations, I asked her to
17 identify those.
18 Q How would release of data for which too few
19 respondents responded violate the confidentiality
20 requirements?
21 A On economic surveys, there is a rule and it
22 varies from survey to survey, about how many observations
23 you have to have before aggregating them provides
24 sufficient protection of privacy for each of the individual
25 respondents and if they don't have that many observations,
299
1 then either they don't release information or they
2 aggregate it into a broader category where they do have
3 sufficient numbers of respondents.
4 Q What's the source of that rule, do you know?
5 A It varies by survey, but it is -- there are some
6 federal privacy acts and some of those are in statute
7 summary rule. It's really the same as census data. If you
8 had too few respondents in a category in the census block,
9 they might aggregate the data or not make a separate
10 release of it.
11 Q Are the identities of respondents released when
12 the data is released, not necessarily tied to individual
13 values, but just a list of respondents?
14 A I don't know whether that is obtainable or not,
15 but it is -- because I haven't requested it, but I have not
16 seen that published in any of their published statistics.
17 Q How would the release of data aggregated from a
18 few respondents violate an interest in confidentiality, if
19 the identities of the respondents were not released along
20 with that aggregated data?
21 A Whether it would or not, I'm not offering you an
22 opinion, I'm telling you that's the federal confidentiality
23 law.
24 Q Do you have any understanding of how that might
25 violate a confidentiality interest?
300
1 A I suppose it would be that through detailed
2 knowledge of the respondents in a geographic area and maybe
3 informal knowledge about who was and who wasn't surveyed,
4 that a competitor could, by knowing their own data, then
5 back that out and have a pretty good idea of information
6 about a specific respondent. I couldn't, but a competitor
7 that had access to their own data might be able to do that.
8 Q In this sentence it says, "Considering
9 respondents who are growers only, for which rows do you
10 believe," had Annette Clauson indicated to you that she
11 believed release of certain data might violate
12 confidentiality statutes or rules?
13 A I think at that point she was saying that since
14 parts of the exhibits had been filled out for all
15 respondents and parts of the exhibits had been filled out
16 only for some respondents, that the possibility existed,
17 but I do not believe she had gone back into the data at
18 that point and had been able to say, you know, row 7 has a
19 problem.
20 (Luke Exhibit 12 marked for identification.)
21 BY MR. SAXE:
22 Q Dr. Luke, I'm showing you a document that's been
23 marked as Exhibit 12, do you recognize this document?
24 A This appears to be a letter written by George
25 Wedgworth to his congressman, advising him of the
301
1 information request that we might be making to USDA and
2 soliciting his assistance in getting to a constructive
3 working relationship.
4 Q Do you know anything about the genesis of this
5 letter?
6 A I think Mr. Wedgworth thought it might be a
7 helpful thing to do in getting the information.
8 Q Did you have any conversations with either Mr.
9 Wedgworth or anybody else in the Cooperative or on behalf
10 of the Cooperative concerning this issue before the letter
11 was sent?
12 A I believe that in a conversation that he
13 indicated he was going to send it, that I was party to that
14 conversation.
15 Q When did that conversation take place?
16 A Sometime before November 18th.
17 Q Was it at any meeting that you had with --
18 A I recall it being a telephone conversation. I'm
19 not saying there wasn't a meeting at which the subject
20 could have come up, but I recall this being a telephone
21 conversation.
22 Q A telephone conversation between you and Mr.
23 Wedgworth?
24 A I believe that, yes, although I think there may
25 have been other people on the line, perhaps including Mr.
302
1 Green.
2 Q A conference call perhaps?
3 A Yes.
4 Q You don't recall when that call took place,
5 except before November 18th?
6 A Not precisely.
7 Q Was it a month before November 18th?
8 A Probably not.
9 Q What was the purpose of the conference call?
10 MS. STINSON: Object and instruct the witness
11 not to answer anything that may relate to
12 attorney-client privilege or trial strategy.
13 BY MR. SAXE:
14 Q Was any part of the purpose of the conference
15 call, as you understood it, pertaining to your provision of
16 expert testimony in this case?
17 A That's pretty broad.
18 MS. STINSON: Objection, same response, without
19 revealing any attorney-client or privileged
20 information, he can answer.
21 MR. SAXE: Well, Counsel, the fact that Dr. Luke
22 has a law degree is immaterial to the conduct of this
23 deposition. He is not in a position to determine what
24 material is attorney-client privileged and what
25 material is work product, for him not to answer. I'm
303
1 trying to frame a question that excludes by its nature
2 any privileged information and I think that's the way
3 we have to proceed. If we can't get it to a point
4 that I can ask a question that you don't object to,
5 then we have a problem.
6 MS. STINSON: I don't think the question you
7 asked is exclusive of anything that counsel may have
8 indicated, so I would continue my objection.
9 MR. SAXE: Let me try to restate it, reframe the
10 question.
11 BY MR. SAXE:
12 Q Dr. Luke, do you know why -- do you have an
13 understanding of why you were included in this telephone
14 call?
15 A I think probably I initiated the call to report
16 on our discussions with Ms. Clauson and to get the input of
17 the group on where they wanted to go from there.
18 Q Returning to the letter for a moment, on Bates
19 page 988 --
20 A Yes.
21 Q -- starting at the top, the first full sentence,
22 "The information for this study was voluntarily provided by
23 EAA mills and growers to USDA staff. Some detailed
24 information on revenues and expenses has not been published
25 and none of the aggregated data on assets and liabilities
304
1 has been published. We are seeking access to the entire
2 data base, in aggregated form, for use by our economic
3 consultants in preparation for the April administrative
4 hearing."
5 Dr. Luke, did you have any involvement in the
6 drafting of this letter?
7 A Involvement is pretty broad. I did not, to my
8 recollection, provide any preliminary draft but, I mean,
9 this is part of the subject matter that I discussed with
10 George Wedgworth in this call and probably several other
11 occasions.
12 Q Did you propose the language in the last
13 sentence in this paragraph, namely "We are seeking access
14 to the entire data base, in aggregated form, for use by our
15 economic consultants in preparation for the April
16 administrative hearing."?
17 A I don't recall providing those exact words but,
18 I mean, that's the sense of what we had been discussing all
19 along.
20 Q Did the data exist in the data base in
21 aggregated form?
22 A Well, by its nature, assuming that this was in
23 some sort of a spread sheet or other data file, there are
24 going to be individual records that correspond to
25 individual --
305
1 Q Respondents?
2 A -- questionnaires. That's why we said in
3 aggregated form, so it's clear we are not asking for the
4 individual records, but for totals, averages, as I said
5 before.
6 Q So effectively what you were asking for is for
7 USDA, specifically the specialty agriculture branch of the
8 economic research service, to aggregate the data and then
9 provide it to you?
10 A That's correct.
11 Q So when it says, "We are seeking access to the
12 entire data base, in aggregated form," the data base, as
13 you understand it, wasn't in aggregated form?
14 A The term entire refers to the asset and
15 liability portions, which had not previously been published
16 and also refers to the subtotals by size of operation that
17 are discussed in some of the previous exhibits.
18 Q In the third paragraph on this page it says, "We
19 understand the Department's reasons for not publishing data
20 for use by the general public which does not meet their
21 statistical standards."
22 What does that mean? Excuse me, let me clarify
23 that. What does it mean, "reasons for not publishing data
24 for use by the general public which does not meet their
25 statistical standards?"
306
1 A One of the problems that Annette Clauson had
2 indicated with release of the data, and this is in the
3 letter from her to me, October 23rd, which was attached, in
4 the third paragraph on the first page of her letter, on
5 your Bates page 990, has to do with their standards for
6 publication of a statistic as sample data and she explains,
7 and I believe the explanation continues over into the next
8 page, that the reason, one reason anyway, they had not
9 published this data was because they did not feel that they
10 had in some cases a sufficient number of observations to
11 meet their public release standards. Then coming back to
12 the George Wedgworth letter, what he is expressing is the
13 statement that while no quarrel with the sort of general
14 publication, that the use that we had in mind, which was to
15 provide further input to enable us to make a reasonable
16 range of assumptions about debt structure, that that was
17 probably not a reason under federal Freedom of Information
18 Acts to refuse to do a release.
19 Q The next sentence says, "However, we do not
20 believe the USDA's opinion that aggregated data is not
21 suitable for publication should be grounds to withhold data
22 from us and our economic consultants who understand the
23 limitations of the data USDA does not want to release."
24 How does releasing confidential information to
25 economists who understand the limitations of the data,
307
1 address the confidentiality interests or concerns that
2 Annette Clauson raised?
3 MS. STINSON: Objection to form.
4 MR. SAXE: Grounds?
5 MS. STINSON: If your question is referring to
6 what you just read, I did not hear any discussion of
7 confidentiality.
8 BY MR. SAXE:
9 Q Dr. Luke, did I understand you to be testifying
10 that the department's reasons for not publishing data for
11 use by the general public which does not meet their
12 statistical standards pertains to the concern that data,
13 aggregated data collected from a set of too few respondents
14 would violate confidentiality requirements if released?
15 A I don't know what you understood, but that was
16 not my testimony.
17 Q I'm sorry.
18 A There are two separate issues here. One is that
19 you could have a set of data that had so few observations
20 in it that it would violate confidentiality regulations. I
21 don't think there is any confusion between me and Ms.
22 Clauson or anyone else, we are well aware of that and there
23 has never been any request or suggestion of a request that
24 they make any release of data in violation of
25 confidentiality regulations.
308
1 There is an entirely separate set of concerns
2 that she has expressed and I pointed you to the paragraphs
3 in her letter where she expresses them, which says that
4 even for data over which no confidential -- aggregations of
5 data over which no confidentiality issue exists, they have
6 a separate concern about publishing data which they feel
7 doesn't meet certain standards of statistical reliability
8 to make it suitable for use by the general public. What is
9 being expressed in Mr. Wedgworth's letter, as I understand
10 it, is that that may be a perfectly good reason for not
11 publishing it, but that is not necessarily a sufficient
12 reason not to release it in response to a request.
13 Q Dr. Luke, I think you referred to Annette
14 Clauson's October 23rd letter?
15 A Yes.
16 MS. STINSON: It's attached to Exhibit 12.
17 MR. SAXE: Thank you.
18 BY MR. SAXE:
19 Q That would be Bates pages 990 through 992?
20 A Yes.
21 Q The final paragraph in this letter on page 998?
22 A Pardon me?
23 Q The final paragraph in the letter to Congressman
24 Lewis from George Wedgworth, on page 988?
25 A All right.
309
1 Q The paragraph reads, "We are seeking your
2 assistance in helping us and USDA arrive at a constructive
3 working relationship on this data. While we could proceed
4 slowly through a Freedom of Information Act request, this
5 is undesirable. Until we know more about the data, it will
6 be difficult to make precisely the right FOIA request."
7 Do you agree with the statement that until we
8 know more about the data, it will be difficult to make
9 precisely the right FOIA request?
10 A Yes. That's why I had written the letter asking
11 her to clarify the definitions of some of the terms in my
12 letter of November 16th.
13 Q The next sentence, "There may be some requests
14 for aggregated data which would require USDA staff to make
15 new calculations with unaggregated data and reaggregate
16 it."
17 Do you agree with that statement?
18 A Yes.
19 Q In your understanding, is a data collection
20 process in which a federal agency is requested through a
21 FOIA request to reaggregate unpublished data, is that the
22 kind of method that is generally used to seek what you
23 would consider to be publicly available information?
24 A If the agency -- agencies often, in matters that
25 are subjects of controversy, do not want to appear to be
310
1 siding with any interests and I have in many occasions run
2 into situations where an agency basically takes the
3 position and says look, I need for you to make a formal
4 request for this and I can then respond to that. At the
5 state level sometimes it's called an Open Records Act; at
6 the federal level it's called FOIA. I don't consider it to
7 be a nuclear option, I consider it to be a method in making
8 a formal request on an agency and if that's the way the
9 agency wants to proceed because of whatever they feel the
10 circumstances are, I have no problem with it. It's not an
11 unusual request.
12 Q In your opinion, is information that has to be
13 calculated specially by a public agency at the specific
14 request of a private party, publicly available information?
15 A Yes. The federal government, the last time I
16 checked, exists to serve its citizens, who are the public.
17 Asking them to provide information that has been collected
18 at the taxpayer's expense, falls within the range of
19 publicly available information.
20 Q Do you know whether information that has to be
21 specially calculated by a federal agency upon receipt of a
22 FOIA request from a private party, is considered publicly
23 available information?
24 A By who?
25 Q By you, would you consider that publicly
311
1 available information?
2 A Yes, I do.
3 To give you another example, the RIMS numbers
4 are calculated specially by the BEA every time you make a
5 request, because they are constantly updating the data
6 base, they are not numbers that are sitting there that they
7 just make a Xerox, they have to run a calculation. That's
8 why typically it takes several weeks to get a new number,
9 it did in the case of our request for the Florida counties.
10 Q That calculated information is sought and
11 received by FOIA request?
12 A That is a kind of a routine recalculation that
13 they -- there is no controversy with that data and they
14 don't require a FOIA request.
15 Q So it's not generally sought and received by a
16 FOIA request?
17 A Not a RIMS multiplier, no.
18 Q Do you know whether information that has to be
19 specially calculated by the federal agency and is not
20 generally calculated in such form in the ordinary course of
21 that agency's business, is available under a FOIA request?
22 A I think that I would defer to Mr. Green on that.
23 That's why I asked him for how exactly to frame it. The
24 agency may have some discretion in how far they have to go.
25 Q But you do believe it's "publicly available"
312
1 information, from your standpoint as an economist?
2 A That's correct.
3 Q And you believe it's publicly available
4 information, even when it has to be sought through a FOIA
5 request?
6 A That's correct.
7 Q When you testified earlier in this case at a
8 hearing, an administrative hearing in this case, that the
9 economic impact analysis could be done using macro regional
10 data available to the public, is this the kind of
11 information that you meant?
12 A This would be one of many data elements that
13 would be behind that statement, yes.
14 (Luke Exhibit 13 marked for identification.)
15 BY MR. SAXE:
16 Q Dr. Luke, I'm showing you Exhibit Number 13, do
17 you recognize this document?
18 A Yes. This is a November 25th memo from me to
19 several folks, concerning a refined request to Annette
20 Clauson.
21 Q Was this -- strike that.
22 Do you know whether this request or some form of
23 it was subsequently made to Annette Clauson?
24 A Yes, I believe it was.
25 Q Can you tell me approximately when?
313
1 A I would assume pretty contemporaneously with
2 this, so late November, early December.
3 Q Who was the request made by?
4 A Pardon me?
5 Q By whom was the request made?
6 A The request to Annette Clauson?
7 Q Yes.
8 A It was made by me.
9 Q In what form?
10 A In what form?
11 Q Did you send a letter, did you make a telephone
12 call, did you use a FOIA request?
13 A I believe that this letter or one very much like
14 it probably was faxed to Ms. Clauson and there may or may
15 not have been a telephone call that was made
16 contemporaneously to confirm receipt or to discuss it.
17 Q The letter attached to your memo, Bates pages
18 981 to 982, says Draft on both pages, it's not a signed
19 copy. Is it your testimony that there was a signed copy of
20 this letter that was sent?
21 A I don't know whether there would be a signed
22 copy or not. If it was faxed, there's one way we would
23 have faxed it and it might not have been signed.
24 Q I'm not trying to be cute, I did not notice
25 another version of this letter in the documents that were
314
1 produced for you that didn't say Draft, so if you can take
2 a look at this and tell me whether this is in the same form
3 as the letter that was faxed to Annette Clauson?
4 A I'm not real sure what you mean by same form.
5 Q Let me clarify it. Was the letter that was
6 faxed to Annette Clauson different in any respect to this
7 draft, except for the presentation of the word Draft on the
8 top of the pages?
9 A Mr. Saxe, I can't tell you that there were no
10 editorial changes in it. I think substantially it was the
11 same.
12 Q Have you reviewed the draft for me right now,
13 just quickly take a look at it?
14 A I have.
15 Q You don't see anything that you remember either
16 eliminating or modifying in the final version of this
17 letter?
18 A No, I don't.
19 Q You don't recall any specific additions that you
20 made to the letter?
21 A No, I don't.
22 Q That's fine.
23 Turning to the letter for a minute, starting
24 from the beginning of the letter, "As we discussed in our
25 telephone conversation of November 20th, this letter will
315
1 restate the data we are requesting from your most recent
2 survey of Florida sugar cane growers in terms of the
3 variables used in the FLIPSIM model. I have listed the
4 variables below." There follows a list of variables.
5 Taking the first variable listed, "Book value of
6 owned land," what form of data was being requested with
7 this element?
8 A Pardon me?
9 Q What form of data was being requested?
10 A I don't understand your question.
11 Q Were you requesting summarized aggregated data
12 of the book value of owned land?
13 A Yes.
14 Q Where would that data exist and in what form?
15 A All of this data exists in USDA files related to
16 the surveys that they did.
17 Q These would be the annual updates of the five
18 year audited surveys?
19 A I believe that the reference here was to
20 something they did in '86-'87.
21 Q Is that specified in the letter?
22 A No. It's in the previous correspondence. I
23 think by this point we had talked about it enough that
24 there was an understanding of which survey we were
25 discussing.
316
1 Q Was that the audited grower information from
2 growers' books collected by USDA accountants?
3 A Right.
4 Q Does that exist in aggregated form at USDA?
5 A I don't know whether the sum is something that
6 they would have to compute or whether they already have it
7 in a form where it's in a spread sheet and here is the
8 total column.
9 Q Were you asking for one lump sum aggregated
10 total for the entire EAA of the book value of owned land?
11 A Yes.
12 Q Were you asking for any breakdown of that
13 information?
14 A Not in this letter.
15 Q Have you asked for any such breakdown hence?
16 A Hence, no.
17 Q Previously?
18 A You will recall we had talked about getting a
19 subtotal by size of operation, in one of the earlier
20 letters.
21 Q But this does not seek any allocation or
22 subtotalling of data by any particular classification?
23 A I think the letter speaks for itself and, no, it
24 doesn't.
25 Q So number one, if I understand it correctly, you
317
1 were seeking one value, the book value of all owned land
2 from the Florida sugar cane growers survey of '86-'87, one
3 figure, one number?
4 A That's correct.
5 Q Would that also be true for the second data
6 element?
7 A It's true for all of them.
8 Q At the bottom of the second paragraph, after
9 the indented list of data elements, variables, the last
10 sentence in that paragraph says, "For each data item
11 provided, please indicate the number of observations and
12 the acreage or milling capacity covered by the data point."
13 Does this refer only to the mill data that's
14 being addressed in that second paragraph or to all the
15 data?
16 A All 16.
17 Q So to go back to item number one then, when it
18 says, "Book value of owned land," you are asking for one
19 dollar figure, plus a number representing the number of
20 observations and then another number for the acreage it
21 pertained to or the milling capacity covered by that data
22 point?
23 A In this case it would be the acreage that it
24 pertained to.
25 Q So there would be three values reported for each
318
1 one of these?
2 A Well, there would be one value for a variable,
3 but there would be three variables reported, yes.
4 Q For each one of the elements in this list of 16?
5 A That's right.
6 Q The next paragraph says, "Once your colleague
7 has an opportunity to review the raw data, I would like the
8 opportunity to discuss what descriptive statistics can be
9 made available without violating the confidentiality of
10 individual respondents."
11 What did you mean by a colleague having an
12 opportunity to review the raw data?
13 A There's a fellow that actually did the survey
14 and I'm sorry I don't remember his name, he is either an
15 accountant or accounting type person who had retired from
16 USDA, and Ms. Clauson indicated that he was going to -- I
17 think it became pretty clear that she was not -- didn't
18 have hands-on knowledge of this data, I think she
19 administers a number of surveys. This gentleman is the one
20 that had actually collected most of the data or had worked
21 most closely with the data and that he was going to be in
22 in late December or early January for some period on a
23 contract basis and that she would have him look at it and
24 that he was actually going to be the person that was going
25 to be assisting her in responding to our request.
319
1 Q So this colleague would have been the person who
2 would have reviewed the raw data and then done the
3 summation or aggregation to provide you the one total
4 dollar amount that you were seeking for each of the
5 elements?
6 A You know, I suppose so.
7 Q What did you mean by descriptive statistics?
8 A Any other kinds of means, medians, standard
9 deviations, ranges that might be able to be computed
10 without violation of confidentiality.
11 Q Did you get a response to this letter?
12 A I think there was a response and I don't
13 remember the date, but I think there was a response.
14 Q Can you tell me more about it?
15 A To the best of my recollection, this sort of
16 came after the colleague had been in and, as I recall, the
17 substance of it was that Ms. Clauson had decided that she
18 didn't want to provide anything and went back to, I think
19 specifically their notion of standards for publication as
20 the justification for that.
21 Q So I take it that no data has been provided in
22 response to this request?
23 A That's correct.
24 Q Are there presently any plans to pursue this
25 data further, this data request further?
320
1 A I would say that the request has been suspended
2 at this point.
3 Q You testified earlier that no FOIA request has
4 been sent as far as you are aware?
5 A Not by me anyway.
6 Q Has any FOIA request been sent as far as you are
7 aware?
8 A I am not aware of one.
9 Q Has anybody told you whether a FOIA request has
10 been sent?
11 A I guess if they had, I would be aware of it,
12 wouldn't I? No, they haven't told me.
13 Q Thank you. Do you know what the reason is why
14 the request for information from USDA is on hold, as you
15 put it, presently?
16 A Because in part we are waiting to see the
17 revised district report, to determine whether it's worth
18 the effort to pursue the request.
19 MR. SAXE: Why don't we break for lunch.
20 (Luncheon recess taken.)
21 BY MR. SAXE:
22 Q Dr. Luke, if you would please refer to Exhibit 2
23 on Bates page 186.
24 A Okay.
25 Q The section entitled Seasonal and Temporary
321
1 Populations, this document again, if I recall your
2 testimony, includes or contains the comments that were
3 transmitted initially concerning the Hazen and Sawyer 10
4 year draft final report. The sentence in the first
5 paragraph, "If out of area contractors are awarded the
6 bids, most of the skilled workers, supervisors, managers
7 and professionals may reside outside the area."
8 Do you have an opinion as to how much STA
9 construction work would be likely awarded to out of area
10 contractors?
11 A I suppose, first of all, we have to define
12 area. I'm not aware that there are any contractors in the
13 EAA that are capable of doing the work and I have not
14 looked at whether there are any in Palm Beach County, so I
15 don't have a way to give you a probability on that.
16 Q As you use the word area in this sentence, how
17 did you mean it?
18 A I'm using it to mean EAA.
19 Q The preceding -- maybe it would be helpful if we
20 put this in context. The preceding two sentences say, "The
21 construction of STA's will involve a large temporary work
22 force. Many of these workers are unlikely to move to the
23 EAA or even to Palm Beach County with their families. If
24 out of area contractors are awarded the bids, most of the
25 skilled workers, supervisors, managers and professionals
322
1 may reside outside the area."
2 By out of area contractors then, were you
3 referring to those that were not in either the EAA or Palm
4 Beach County and would therefore have to move to those
5 locations?
6 A I stand by my earlier answer, when I talk about
7 the area, I'm talking about the EAA.
8 Q Do you know what Hazen and Sawyer did in the
9 local/non-local split with workers and materials?
10 A I could probably look it up for you, I don't
11 have it by memory.
12 Q Do you know whether there are suitable
13 contractors for STA construction located within Palm Beach
14 County?
15 A I said a couple of minutes ago, sir, that I did
16 not.
17 Q I'm sorry, I thought you were referring to the
18 EAA.
19 Going down to the next paragraph, "Neither the
20 impact of these populations nor the impact of the plan and
21 agreement on these populations is specifically addressed in
22 the economic impacts report. There is no analysis of the
23 seasonal agricultural population. The analysis of the
24 construction phase population assumes all workers and their
25 families are permanent residents of the study area for
323
1 purposes of computing multiplier effects."
2 Is there any evidence that STA construction
3 workers and their families would not be permanent residents
4 of the study area?
5 A It's not a question about which you could have
6 evidence at this point. You would have to make an
7 assumption one way or the other.
8 Q Do you have any basis for believing that STA
9 construction workers and their families would not be
10 permanent residents of the study area?
11 A Yes.
12 Q What would that be?
13 A These things have to be put out for public bid.
14 It's not at all uncommon for out of area contractors to bid
15 on these types of jobs and come in with a low bid.
16 Further, if you define the area, as I am, as the EAA, you
17 are talking about a whole bunch of skilled trades and heavy
18 equipment operators for which I am not aware that you have
19 any current employment, so it would be kind of unlikely to
20 find them as residents of the EAA. If they were to say
21 live in West Palm Beach or live in Broward, I doubt they
22 would relocate their residence for purposes of working on
23 this project.
24 Q If the contractors and their families did reside
25 within Palm Beach County, outside of the EAA, would the
324
1 award of contracts to such contractors involve a shift of
2 economic activity outside of what you would consider to be
3 the local area?
4 A I don't understand your question.
5 Q Let me see if I can rephrase it.
6 Assuming there are contractors in the Palm Beach
7 County area and they are awarded a significant percentage
8 of the contracts for STA construction, would those awards
9 entail a shift of economic activity outside of what you
10 would consider the local area?
11 A Well, that would depend upon, when you talk
12 about a shift, that would be additional economic activity
13 and I suspect much of it would occur outside the local
14 area. Whether it would shift would depend upon whether
15 there was a decrease in agricultural activity as a result
16 of the project. I guess we know that there will be 35,000
17 acres worth and so to the extent that would decrease
18 agricultural jobs, I suppose you could refer to it as a
19 shift.
20 Q Shift out of the local area, okay.
21 Do you know who has the construction contract
22 for the Everglades nutrient removal project?
23 A No.
24 Q If you would turn to the next page, Bates page
25 187, the top sentence, "The mitigation analysis should also
325
1 provide a labor market analysis of the EAA and Palm Beach
2 County."
3 Have you conducted a labor market analysis of
4 the EAA and Palm Beach County?
5 A Portions of one.
6 Q Can you tell me what portions of one you have
7 conducted?
8 A I have assembled some data from the census and
9 from the job service and the Chamber of Commerce on
10 employee/employment characteristics. I guess there are
11 probably some other incidental sources that we have. I
12 have looked at the economic development plan that Palm
13 Beach County Chamber of Commerce has prepared, spoken with
14 some of their staff, spoken with people at the Belle Glade
15 Chamber. Jean Werner has done some analysis of the
16 seasonal patterns of employment of residents of the EAA.
17 Q At this time do you have any sense of what the
18 annual net change in employment is in Palm Beach County?
19 A The annual net change of employment, I don't
20 understand.
21 Q Growth, shrinkage on a net basis in the county
22 in terms of the number of jobs?
23 A Well, as a matter of fact I do, let's see. In
24 terms of employment in Palm Beach County as a whole, the
25 latest data that I have is 1991, I have several years
326
1 before that, round numbers there are about 400,000 jobs in
2 the types of employment covered by these statistics in Palm
3 Beach County. From 1990 to 1991, there was a shrinkage of
4 about 6,000 jobs.
5 Q How far back does the data that you are looking
6 at now go?
7 A This particular table goes back to 1987.
8 Q May I see that, please?
9 A Sure. These were previously produced to you.
10 Q Thank you, Dr. Luke.
11 A Sure.
12 Q Dr. Luke, over the period of record in the data
13 that you have just referred to, can you tell me what the
14 change in employment is from the start to the end of the
15 period?
16 A For Palm Beach County?
17 Q Yes.
18 A This shows it as having gone from 370,000, round
19 numbers in 1987, to 396,000 in 1991.
20 Q How many of the years in the period of record
21 show a decrease in the number of employed civilians?
22 A The last year is the one that shows the
23 decrease. In effect, it went up to about 300 -- another
24 way to look at this data is that from '87 to '89 it went up
25 from 370,000 to 396,000 and it's been essentially stagnant
327
1 there from 1989 through 1991.
2 Q Thank you. If you would turn to page Bates page
3 189 in Exhibit 2.
4 A Okay.
5 Q The section entitled Conclusion, this paragraph
6 begins, "These comments assume there is no disagreement
7 over the many assumptions regarding crop prices, yields,
8 expenses and other factors which Hazen and Sawyer has made
9 in its studies. Brief discussions with representatives of
10 the Cooperative suggest there are in fact many questions
11 and disagreements regarding these assumptions which must be
12 addressed."
13 Can you tell me which assumptions there are
14 questions and disagreements about?
15 A Crop yields -- crop prices, yields, expenses,
16 costs of the BMP's. I mean, there were questions raised, I
17 know, about a number of factors after this document was
18 prepared. Polopolus and Richardson I know questioned some.
19 There have been others that there have been questions. I
20 have a little trouble separating in my memory which I knew
21 about at the time this was drafted and which I have since
22 heard about, so probably your safest bet is to assume that
23 the items I have listed there are the main ones that I knew
24 about at the time this was written.
25 Q The sentence also refers to brief discussions
328
1 with representatives of the Cooperative as the basis for
2 your observation. Can you tell me with whom these brief
3 discussions occurred?
4 A Probably George Wedgworth, Jeff Ward, and the
5 marketing person for the Cooperative.
6 Q Can you tell me what some of the disagreements
7 are concerning crop prices?
8 A I believe the feeling at that time was that the
9 price that was reflected for payments to growers in the
10 Hazen and Sawyer report was too high.
11 Q Was any elaboration given in these brief
12 discussions about the basis for that conclusion?
13 A I believe it related to their personal
14 experience.
15 Q So in other words, the Co-op representatives you
16 spoke with said things to the effect that those prices were
17 more than they as growers received for their cane?
18 A Well, I think that was part of it, but remember
19 also, since they are a mill, they are making payments to
20 growers, so I think it reflected knowledge of both sides of
21 that transaction.
22 Q So that would mean that they would also have
23 indicated that the Hazen and Sawyer prize reflected more
24 than they as mill owners and cooperative paid themselves as
25 growers?
329
1 A Or and paid other folks for whom they did
2 milling. Again, I was not at that point trying to do an
3 alternative analysis, I was just trying to identify the
4 fact that in this conclusion that most of what has been
5 pointed out here are what I would consider methodological
6 problems and what I'm trying to say here is that I am not
7 accepting the assumptions that have been input into the
8 methodology and I know that there is a range of opinion
9 regarding some of those assumptions.
10 Q Were there any other significant disagreements
11 you recall concerning crop prices?
12 A I think what I have already told you describes
13 the issue.
14 Q How about yields, what were the disagreements
15 concerning yields?
16 A It seems to me that there is a projection of an
17 upward trend in at least yields of sugar per acre and that
18 there was some question as to whether that really existed.
19 Q Have you done any follow up on that controversy,
20 investigating any other sources of data and analyzing it to
21 determine whether there is in fact a trend as Hazen and
22 Sawyer determined?
23 A No, I haven't.
24 Q The next element, expenses, do you recall what
25 the disagreements concerning expenses was?
330
1 A I think in some cases that they had questions
2 about the validity of some of the numbers that were shown
3 as expense numbers in the report. I'm pretty sure there
4 were, at that time, disagreements expressed with the cost
5 of BMP estimates that were used in the report.
6 Q Was there any indication what those
7 disagreements were based upon with respect to the cost of
8 BMP's?
9 A It seems to me that some of the implementation
10 of BMP's had already begun at that time and so they were
11 actually in the process of trying to do some of these
12 things and so it reflected personal experience.
13 Q Were their positions generally that the costs
14 reported by Hazen and Sawyer or the costs utilized by Hazen
15 and Sawyer were too low?
16 A I think that was the general thrust of it. I'm
17 not saying that there weren't some where maybe the real
18 costs were lower than what was used, but the general thrust
19 was that the numbers that Hazen and Sawyer was using
20 understated the costs.
21 Q Which BMP's were being implemented at that time?
22 A I really don't remember.
23 Q The next paragraph on this page, the third
24 sentence reads, "The SFWMD's next step should be to have
25 Hazen and Sawyer make all work papers, computer programs,
331
1 data files and spread sheets available for public
2 inspection."
3 Do you know whether Hazen and Sawyer was asked
4 to make any of these materials available for inspection?
5 A By the District?
6 Q No, by anyone.
7 A Well, I think in the discovery request pursuant
8 to Grace Johns' deposition, they have been asked to.
9 Q Any other requests that you are aware of?
10 A Not that I'm personally aware of, no.
11 Q Had the discovery request concerning Grace
12 Johns' deposition been made at the point in time when you
13 prepared these comments?
14 A I don't believe so.
15 Q So as far as you know, at that time there had
16 been no request by any member of the Cooperative or people
17 working for the Cooperative, to have access to these
18 materials?
19 A I'm not aware of any.
20 Q Have you or RPC ever done work under contract
21 similar to that done by Hazen and Sawyer in this context?
22 A Yes.
23 Q Do you recall, did you make all work papers,
24 computer programs, data files and spread sheets available
25 for public inspection when you worked on similar contracts?
332
1 A We were required to.
2 Q Were you requested to?
3 A Pardon?
4 Q When you say you were required to, can you
5 elaborate?
6 A It was a term of the contract that we would.
7 Q And were those contracts with government
8 entities?
9 A Yes.
10 Q I would like to move on to another document --
11 well, one follow up question. Do you know whether this was
12 a term of Hazen and Sawyer's contract?
13 A I have not seen their contract.
14 (Luke Exhibit 14 marked for identification.)
15 BY MR. SAXE:
16 Q Dr. Luke, I'm showing you a document that's been
17 marked as Exhibit 14, do you recognize this document?
18 A Generally, yes.
19 Q Could you explain to me generally what this
20 document is?
21 A Um-hum. I asked my staff to in effect prepare a
22 spread sheet model that could replicate the tables in the
23 Hazen and Sawyer report and this is part of the
24 documentation or it may be all the documentation of that
25 model.
333
1 Q What is the RPC sugar cane model?
2 A It is a spread sheet model that replicates the
3 tables in the Hazen and Sawyer report.
4 Q Why have you created a model to replicate those
5 tables?
6 A We were interested in testing whether we could
7 replicate it or if there were any discrepancies in the
8 report that we needed to tie down. We were interested in
9 being able to, at the appropriate time, do some sensitivity
10 analysis. We were also interested in deciding whether or
11 not if we were to do a direct farm impacts report that was
12 not looking at changes in farm ownership, that we would
13 need to use FLIPSIM or whether we would be able to proceed
14 with a spread sheet model.
15 Q Did you make such a determination?
16 A We did.
17 Q What was it?
18 A Based on our current level of understanding, if
19 we are not interested in the financial viability of
20 individual farms, then we would not have any particular
21 need to use FLIPSIM.
22 Q If you were interested in the financial
23 viability of individual farms, what would be the outcome of
24 the determination concerning the decision to use FLIPSIM or
25 the decision to use another spread sheet or other product?
334
1 A I don't know that we had made that
2 determination. My sense is that on the financial viability
3 of individual farms, probably the most efficient way to do
4 that would be to use FLIPSIM. There are certainly other
5 simulation products out there but, I mean, I don't know of
6 any reason that I would want to duplicate the work that
7 Richardson has already done.
8 Q The purpose of the RPC sugar cane model was
9 solely to attempt to replicate the Hazen and Sawyer direct
10 farm analysis?
11 A I think I outlined two or three different
12 purposes, so the answer to that question would be no.
13 Q The other purposes would be if you made a
14 decision to adopt that methodology and not do a farm
15 survival analysis, to use it for a socio -- the economic
16 impact portion of the socioeconomic analysis?
17 A That's one.
18 Q What was the third one?
19 A The third one was to give us a way to do some
20 sensitivity analysis, if we chose to do that.
21 Q Could you elaborate on the purpose of doing the
22 sensitivity analysis?
23 A Well, the purpose of doing a sensitivity
24 analysis would be if somebody said, gee, I think the
25 expenses ought to be 10 percent higher, to be able to plug
335
1 that in and see what effect that had on other variables.
2 Q The equations that are described in this
3 document, as far as you are aware, reflect Hazen and
4 Sawyer's methodology?
5 A No, sir, I can't say that, because they used
6 FLIPSIM.
7 Q Let's take an example of the first equation, net
8 tons per gross acre of sugar cane land, regardless of the
9 computer tool that was used, would this reflect the
10 equation that you understand Hazen and Sawyer used to
11 derive net tons per gross acre of sugar cane land?
12 A I'm not prepared to say that we have replicated
13 their equations. I'm prepared to say that we have
14 replicated their results. I do not know, of my own
15 knowledge, if in replicating those results, my staff may
16 have written the equations in a different fashion.
17 Q In order to replicate the results, is it true
18 then you would have to follow Hazen and Sawyer's
19 assumptions exactly?
20 A No.
21 Q Would it be merely fortuitous if you succeeded
22 in replicating the results without following their
23 assumptions exactly?
24 A No.
25 Q How would you replicate their results without
336
1 following their assumptions?
2 A Some of their assumptions may not tie directly
3 into their quantitative results.
4 Q In the equation that I just referred to, what's
5 the difference between the element yield belt productivity
6 and yield loss resulting from soil subsidence?
7 A One of those I believe to be a current figure
8 and the other I believe to be a vector that changes over
9 time.
10 Q Do you understand that Hazen and Sawyer
11 projected a yield loss resulting from soil subsidence over
12 time, in the 10 year analysis?
13 A I don't recall whether they did or not.
14 Q What was the basis for the selection of this
15 variable, yield loss resulting from soil subsidence?
16 A There are two possibilities, either because it
17 was mentioned in the Hazen and Sawyer report or because my
18 staff person thought it would be a good one to put in.
19 Q Do you agree with the propriety of these
20 equations for the purposes of the RPC sugar cane model?
21 A I have not reviewed them or attempted to
22 validate them. I asked a person to who is a staff worker.
23 Q Did you re-estimate Hazen and Sawyer's
24 estimates?
25 A Excuse me?
337
1 Q Did you re-calculate or re-estimate Hazen and
2 Sawyer's estimates?
3 A I don't know what you're asking me.
4 Q Did you re-run this model to get a comparitive
5 estimate to the Hazen and Sawyer results?
6 A It's my understanding that this has been
7 compared to their results and that it can replicate the
8 tables that are in the report.
9 Q When you say it can replicate the tables that
10 are in the report, am I to understand that it was run and
11 did succeed at replicating those tables?
12 A That's what I have been told.
13 Q So as you understand it, the estimates from that
14 run or the output from those runs were the same effectively
15 as the Hazen and Sawyer results?
16 A Yes. I'm not going to say how many decimal
17 places, but as far as there weren't any material
18 differences.
19 Q Under equation number 2, the value P (sc), price
20 of raw sugar, can you tell me what the source of this data
21 element would be?
22 A It looks to me like it would be the 1990 Farm
23 Bill.
24 Q Is the price specified in the 1990 Farm Bill, as
25 far as you know?
338
1 A I don't know.
2 Q So do you know where the number would be
3 obtained to plug into this value in running the model?
4 A Judging from the data sources listed on the
5 second page, it would be the IFAS publication by Alvarez
6 and Schunamen.
7 Q Do you know whether this would use an average
8 value?
9 A No, I don't.
10 Q Do you know whether it would be trended?
11 A No, I don't.
12 Q For the next variable, Q (rs), quantity of raw
13 sugar milled per net ton of sugar cane, do you know what
14 the source of this variable would be, the source of data
15 for this variable?
16 A If you look on the next page, it identifies the
17 data source as the IFAS publication and I would assume that
18 that is true for all the variables that are on here.
19 Q Do you know whether this is an average value?
20 A No.
21 Q Or whether it's trended?
22 A No.
23 Q Do you know whether you or Dr. Leistritz would
24 be testifying as to the construction of this model, the
25 sources of each of the variables in the equations, whether
339
1 they are average variables -- or rather average values or
2 not, whether they are trended, and those related questions
3 about the calculation of results with the model?
4 A One of us would, I don't know which one.
5 Q We may not want to linger too much on this
6 document, but let me ask just a couple of questions. On
7 this same element where it says, "Recovery rate of sucrose
8 from sugar cane adjusted for assumed productivity
9 increase."
10 A Where are you?
11 Q Okay, on Q (rs), the same value -- the same
12 variable, "Quantity of raw sugar milled per net ton of
13 sugar cane."
14 A Right.
15 Q The following text, there is a statement, one of
16 the subvariables, "Recovery rate of sucrose from sugar cane
17 adjusted for assumed productivity increase."
18 Do you know what that means?
19 A Yes.
20 Q What does that mean?
21 A There is an assumption in the Hazen and Sawyer
22 report concerning a productivity increase in the milling of
23 sugar cane and in replicating their results, that that same
24 productivity increase would be factored in in this
25 variable.
340
1 Q Is this the same as a yield trend?
2 A Could be, as long as the yield you are talking
3 about is sugar per acre and not cane per acre.
4 Q Is it your understanding that this productivity
5 increase was assumed by Hazen and Sawyer?
6 A Yes.
7 Q Do you know what Hazen and Sawyer's basis for
8 that assumption was?
9 A I believe they had looked at some data and done
10 some linear regression analysis that convinced them that
11 there was such a trend.
12 Q Do you know if the Alvarez and Schunamen
13 publication out of IFAS was the source of data for each of
14 these variables in Hazen and Sawyer's analysis?
15 A Not without reviewing their report, I don't.
16 Q Would you have any explanation for why the
17 results of the attempts to replicate the Hazen and Sawyer
18 values would have been successful, if different sources of
19 data were used?
20 A Sometimes you have got two different
21 publications that go back to the same primary data.
22 Q On the next page under Notes, the last sentence
23 says, "The inflation rate for milling costs was 2.8
24 percent."
25 Is that correct as you understand it?
341
1 A I have no independent knowledge of what was
2 used.
3 Q Under the next block of Notes, it says, "Costs
4 of production are inflated based on the cost of production
5 indices as reported in the USDA's Agricultural Prices
6 publication."
7 Do you know whether those are national values or
8 values for Florida or what area they are derived for?
9 A No, I don't.
10 Q If they are national values, do you know how
11 they might relate to the EAA?
12 A No.
13 Q Dr. Luke, who would be the appropriate person
14 to direct these questions to on the present project
15 effort?
16 A Well, the person that did the work is Eric
17 Schubert.
18 Q Dr. Luke, referring to the last page of this
19 document, there is a table titled "Itemized Receipts and
20 Costs: Sugar Cane Production, Dollars per Gross Acre in
21 1994, Scenario One." Do you know whether each of these
22 variables was trended independently in the replication
23 effort using the RPC sugar cane model?
24 A No.
25 (Luke Exhibit 15 marked for identification.)
342
1 BY MR. SAXE:
2 Q Dr. Luke, I'm showing you Exhibit 15, do you
3 recognize that document?
4 A I have seen that, yes.
5 Q Could you identify it for me, please?
6 A It's a memorandum that Eric Schubert prepared in
7 response to a request that I made that he determine the
8 feasibility of using the LOTUS spread sheet model instead
9 of FLIPSIM in doing direct farm analysis.
10 Q And it's dated February 15, 1993?
11 A That's correct.
12 Q On the second page, the first paragraph under
13 the heading starting with Feasibility, the paragraph reads,
14 "FLIPSIM is a tool that does not exactly fit the needs of
15 the sugar cane analysis. The model has more breadth and
16 features than we need because of its focus of the economic
17 viability of farms as opposed to the viability of keeping
18 farmland in production without regard to the land's
19 ownership. In addition, the RPC analysis will require none
20 of the programming functions or the stochastic simulations
21 available in FLIPSIM."
22 Do you agree with these statements?
23 A Not necessarily. The instructions that I gave
24 him were, assuming that we were only interested in if the
25 land stayed in production, but weren't interested in farm
343
1 ownership, what would be our need for FLIPSIM, and he has
2 given me the analysis that I asked for there. Some of his
3 statements sort of go beyond his knowledge of the broader
4 issues in the case.
5 Q The last sentence, "In addition, the RPC
6 analysis will require none of the programming functions or
7 the stochastic simulations available in FLIPSIM."
8 With respect to the stochastic simulations
9 available in FLIPSIM, would you agree that even if farm
10 financial viability is an issue that you will be analyzing,
11 you would not require the stochastic simulations available
12 in FLIPSIM?
13 A No, I wouldn't agree with that.
14 Q Would you say at this time that there is a
15 possibility you will use FLIPSIM in a stochastic mode, if
16 you undertake to analyze farm financial viability in the
17 context of a socioeconomic impact assessment for the SWIM
18 plan?
19 A Yes.
20 Q Are there other tools that you might use?
21 A Do you mean other computer programs?
22 Q Any other methods, whether computer or
23 otherwise.
24 A It's conceivable that if we needed to do any
25 substantial modifications, that we might find it more
344
1 efficient to use either a spread sheet or a data base type
2 program rather than trying to modify the FORTRAN code in
3 FLIPSIM.
4 Q At this juncture would you say that it's most
5 likely that you will use FLIPSIM in the stochastic mode,
6 should you undertake to analyze farm financial viability?
7 A Knowing what I know now, I guess I could answer
8 your question yes, but I really would regard that as a very
9 preliminary answer.
10 Q The next paragraph, "The alternative - spread
11 sheet analysis using LOTUS 1-2-3 3.1 - appears workable,"
12 and the sentence continues. Would you agree with that
13 portion of the sentence?
14 A As it applies to the type of analysis that Eric
15 is discussing here, yes, and again, I'm relying upon his
16 analysis, I haven't done an independent one, but nobody has
17 shown me any problem with doing it.
18 Q Is it your opinion that you could use LOTUS
19 1-2-3 3.1, even if you elected to analyze farm financial
20 viability as an alternative to FLIPSIM in a stochastic
21 mode?
22 A It could probably be done. I'm not certain that
23 it would be a very efficient way to do it if you are going
24 to run a hundred innerations on a Monte Carlo type
25 simulation and I kind of doubt that I would choose to do it
345
1 with LOTUS.
2 Q Is the RPC analysis that's referenced in this
3 document the same analysis at issue in the previous
4 document, namely Exhibit 14?
5 A I would read that as an analysis which may be
6 performed by RPC. There is no current analysis that's
7 sitting out there that's been done.
8 Q You're talking about Exhibit 15, the analysis
9 referenced in Exhibit 15?
10 A Right.
11 Q Besides the difference of one having been done
12 and one not having been done, would they be for the same
13 purpose?
14 A I don't understand the question.
15 Q What would be the purpose of the analysis
16 referenced in Exhibit 15?
17 A To look at the amount of farmland that would be
18 likely to be withdrawn from production under various
19 scenarios.
20 Q Direct economic impacts only?
21 A Well, that would be part of it. I mean, we
22 would also be looking maybe at several baseline or no-
23 action scenarios to see what the future of farmland is in
24 the EAA, even if the SWIM plan went away.
25 (Luke Exhibit 16 marked for identification.)
346
1 BY MR. SAXE:
2 Q Dr. Luke, I'm showing you Exhibit Number 16,
3 have you seen that document before?
4 A Yes.
5 Q Can you identify it for me, please?
6 A It is a memorandum, I believe it was prepared by
7 Jeff Tomlinson, that reports the results of a telephone
8 interview that he had with Jose Alvarez.
9 Q The first paragraph or the paragraph numbered 1,
10 "Professor Alvarez doesn't know the relationship between
11 soil subsidence/oxidation and sugar cane yield. No
12 experiments have been successfully completed on the issue."
13 Do you have any other information concerning the
14 relationship between soil subsidence and oxidation and
15 sugar cane yield?
16 A No.
17 Q As far as you are aware, is there any other
18 information available?
19 A I understand from the meeting that Grace Johns
20 held a few weeks ago, that Dr. Snyder, who is mentioned
21 here, may have some information, but I have not seen it.
22 Q Would that be George Snyder, an economist at the
23 Belle Glade Research Station?
24 A Could be, I don't know that it's George Snyder.
25 Q Are you contemplating analyzing a scenario in
347
1 which yield per acre is a function of soil subsidence?
2 A No. I'm contemplating finding out whether or
3 not there is any basis for believing that it might be.
4 Q Would that apply also to depth of soil?
5 A Would what apply to depth of soil?
6 Q That you are contemplating analyzing whether it
7 would be meaningful to run a scenario in which yield per
8 acre is a function of depth of soil.
9 A That's sort of another way of saying the same
10 thing, since the way depth of soil seems to change in the
11 EAA is through this oxidation process.
12 Q Paragraph number 2, the statement, "The sandy
13 soil farmland is too far away for the mills to expand
14 production."
15 Do you agree with that statement?
16 A I have no independent basis for an opinion.
17 That's why we called Alvarez, because we wanted to get some
18 information.
19 Q Paragraph number 3 -- well, strike that.
20 As you understand it, this statement merely
21 reports Professor Alvarez' statement in the conversation?
22 A Yes.
23 Q So it doesn't represent the opinion of Jeff
24 Tomlinson?
25 A I sure hope not.
348
1 Q Paragraph 3, the statement, "Some recent
2 increase in harvested acreage has come from farmers not
3 leaving as much land fallow (successive planting)."
4 Do you have any opinion concerning future
5 practices as regards successive planting?
6 A No.
7 Q Are you aware of the present percentage of
8 harvested to planted acres in the EAA for sugar cane?
9 A I have seen the number in some publications, I
10 certainly don't have it from memory.
11 Q Do you know how far sandy soils, sandy soiled
12 lands are from the nearest mill in the EAA?
13 A You mean that have not already been planted?
14 Q Yes.
15 A No.
16 Q Paragraph 4, subpoint (b) states, "Recovery
17 rates of sugar from sugar cane have increased, but
18 Professor Alvarez can't project future trends."
19 Have you or RPC done any analysis of the future
20 trends and recovery rates of sugar from sugar cane?
21 A No.
22 Q Have you looked at any of the data
23 independently? I believe you mentioned earlier reviewing
24 the Hazen and Sawyer methodology of establishing a trend,
25 but have you or RPC done any work?
349
1 A We haven't attempted to validate that
2 information in the Hazen and Sawyer report.
3 Q Have you attempted to estimate any trends on
4 your own?
5 A No.
6 Q Are you going to use any such trend in your
7 analysis?
8 A I think that that's the kind of thing where you
9 would want to utilize it in some scenarios and not in
10 others. It's more of a sensitivity analysis issue. I
11 mean, even if there were very strong past trends, that
12 would be no guarantee of a continuation of that trend 20
13 years into the future.
14 Q Generally speaking, how does one project future
15 events in an instance where there has been a statistically
16 significant trend for the historic period?
17 A Well, one way is certainly to continue that
18 trend. Another way -- another thing, though, is that to
19 the best of my knowledge, no trend goes on forever and so
20 one would -- if this were important to the analysis, one
21 would typically want to look at the information available
22 concerning the reasons for that trend and see whether it
23 appeared that they would be sustained or whether they were
24 dampening out or, gosh, perhaps accelerated, and out of
25 that, you have to come up with a range of reasonable
350
1 projections about how such trends might go in the future.
2 Q Where decision makers have an interest in
3 predicting whether a trend is going to continue or not and
4 there is a trend -- statistically significant trend for the
5 historical period, is there a general rule what the better
6 prediction is, that the trend will continue or that it
7 won't?
8 A No. Look on any stock market ad and mutual
9 funds and they will say that past performance is no
10 guarantee of the future performance and the same is true
11 for any other statistical trend.
12 Q Well, I didn't ask about a guarantee, I asked
13 about whether there was a best guess?
14 A There is no mathematical or statistical basis
15 for calling that a best guess, without looking at the
16 underlying factors that account for the trend to date and
17 in analyzing what the state of those factors is likely to
18 be in the future.
19 Q Have you looked at any sugar cane breeding
20 research?
21 A No.
22 Q Will you or RPC look at any sugar cane breeding
23 research if a socioeconomic impact analysis is performed?
24 A It's possible.
25 Q Do you have any plans to do so?
351
1 A No specific plans.
2 Q The paragraph numbered 7, the statement, "The
3 overall acreage for planting sugar cane can't increase."
4 Do you agree with that statement?
5 A I have no independent knowledge. I understand
6 that to be Dr. Alvarez' opinion.
7 Q Do you know what the minimum muck depth is for
8 growing cane?
9 A Gosh, I heard it at the meeting Grace Johns held
10 and I don't recall what it was.
11 (Luke Exhibit 17 marked for identification.)
12 BY MR. SAXE:
13 Q Dr. Luke, I'm showing you Exhibit 17, have you
14 seen that document before?
15 A Yes.
16 Q Can you identify it for me, please?
17 A Appears to be a deposition summary of Bruce
18 Gardner's deposition, which Eric Schubert prepared.
19 Q At the bottom of the first page, the last
20 paragraph, it says, "While the sugar industry faces some
21 uncertainties about NAFTA's effect on current U.S. farm
22 programs, increased imports of sugar from Mexico that might
23 arise from NAFTA can be offset by reduced quotas from other
24 countries."
25 Do you agree with that statement?
352
1 A It seems to me to be a plausible statement. I
2 haven't researched it to see whether it is accurate or not.
3 Q The next page, the first full sentence, "For
4 Mexico to export much more sugar to the U.S. through NAFTA
5 provisions, Mexico must show that it possesses a
6 comparitive advantage in growing sugar cane."
7 Do you have an opinion about whether Mexico is
8 likely to become a net exporter of sugar in the next 10
9 years?
10 A I have seen statements that it is plausible that
11 they could do so. I have seen other statements that it is
12 not. I don't think that is something that is knowable. I
13 think that if it is -- the question is how does that
14 reflect in the analysis and would it affect either acreage
15 or price of sugar in the EAA. I think that the way that I
16 intend to deal with that is to factor that into definition
17 of scenarios and this is just one of several things that
18 might affect price or acreage, so it will kind of be
19 subsumed in the definition of scenarios on those factors.
20 Q If Mexico were to become a net exporter of sugar
21 and quotas for the importation of Mexican sugar were to be
22 substantially dropped or reduced, would other sugar
23 producing regions of the United States likely absorb
24 impacts before the EAA industry did?
25 A I think if we get into something like that where
353
1 it results in a lower price, that there are areas of the
2 United States that are considerably higher cost producers
3 per ton of raw sugar than the EAA and to the extent that
4 the price was driven down far enough, certainly I would
5 expect some of those folks to be knocked out of the sugar
6 beat business or the sugar cane business before production
7 became unprofitable in the EAA, but to the extent what
8 we're talking about is a decrease in price, then it would
9 affect sort of all producers sort of the same dollar loss
10 of revenue per ton of sugar and the effect would be
11 simultaneous.
12 Q The next sentence, "He believes that NAFTA will
13 not have a significant effect on the sugar cane industry in
14 Florida or on the U.S. sugar program of tariffs, import
15 quotas, and price supports."
16 Do you agree with that statement?
17 A Do I agree he believes that?
18 Q No. Do you agree with the underlying position
19 that NAFTA will not have a significant effect on the sugar
20 cane industry in Florida or on the U.S. sugar program of
21 tariffs, import quotas, and price supports?
22 A I don't have an opinion.
23 (Luke Exhibit 18 marked for identification.)
24 BY MR. SAXE:
25 Q Dr. Luke, I have handed you Exhibit 18, have you
354
1 seen that document before?
2 A Yes.
3 Q Would you identify it for me, please?
4 A Yes. This is a memo to file that I prepared
5 summarizing the meeting of economsts that Grace Johns
6 convened.
7 Q The statement at the bottom of the page, "More
8 than six inches soil depth required for sugar and
9 vegetables. Six inches okay for sod. Alvarez says one
10 vegetable farm converted to sod about 10 years ago at eight
11 inches and still in business."
12 Do you agree that more than six inches of soil
13 depth is required for sugar and vegetables?
14 A I have no opinion.
15 Q Do you expect to be developing an opinion on
16 that for purposes of your analysis?
17 A I think on a 20 year analysis that includes
18 potential effects of subsidence, one will have to plug in a
19 number as to where cane and vegetable production would
20 cease, yes.
21 Q With respect to the statement, "Six inches okay
22 for sod," do you agree with that?
23 A I have no opinion.
24 Q Again, do you expect to formulate an opinion for
25 purposes of conducting a socioeconomic analysis, should you
355
1 undertake one?
2 A I think that will be necessary for the same
3 reasons, yes.
4 Q Do you know what alternative crops might be
5 grown at depths of less than six to eight inches of muck
6 soil?
7 A The discussion that I heard at that meeting was
8 that there really were not a lot of economic alternatives.
9 Somebody mentioned cow/calf operations, which would mean
10 that you would just be using the land for pasture, and
11 there was some question about given the cattle removal up
12 in Okeechobee, whether that was going to be environmentally
13 -- consistent with environmental regulations.
14 Q Do you have an opinion how cow/calf operations
15 compare on a per acre basis to dairy operations with
16 respect to nutrient loads?
17 A My sense is they would be less intensive, but I
18 have not studied Florida cow/calf operations, so maybe they
19 use more of a feed lock approach than I am used to seeing
20 in Texas.
21 Q At the top of the second page, the statement,
22 "Limestone underlying EAA can't be "plowed" or farmed on."
23 Do you agree with that statement?
24 A That's what was said, I have no independent
25 knowledge.
356
1 Q Further down, about six blocks down, there is a
2 statement, "Luke: Since no one knows about subsidence (one
3 inch per year) need two scenarios even in baseline."
4 What scenarios would those be?
5 A One in which you have this one inch per year
6 subsidence and that you check that in terms of land going
7 out of production or changing crops. And another one in
8 which you use some other what I'll call more optimistic
9 scenario about possibly a diminishing rate of subsidence as
10 the non-organic percentage of the soil material increases.
11 Q Would a no subsidence alternative be an
12 appropriate scenario to run in the baseline?
13 A Not on the basis of the information that I have
14 seen so far, however, in effect you would have a no
15 subsidence alternative if you had scientific data that said
16 that the rate of subsidence was going to taper off to zero
17 at depths which were in excess of what you needed for cane
18 and vegetables and if there were scientific evidence to
19 suggest that there was no decrease from yield at that
20 stabilizing level. I haven't seen that, but I have
21 certainly heard growers discuss that they believe this sort
22 of diminishing subsidence phenomenon is there.
23 Q If all the variables you have just mentioned
24 were satisfied except the scientific evidence of no
25 diminution in yield at that depth, would it still be
357
1 appropriate to run a baseline scenario under those
2 assumptions, in other words, you had --
3 A What kind of baseline scenario?
4 Q A scenario in which you had subsidence, but the
5 rate of subsidence was tapering off toward zero, that that
6 rate of tapering resulted in an effective stop of
7 subsidence above the minimum threshold depth of soil to
8 grow cane, but there was some loss in yield at that depth
9 of soil. That's my set of values and I'm asking you if --
10 A I think there you would still need to have a
11 separate scenario to capture that.
12 Q Several blocks down it says, "Richardson: GATT
13 study says 14 to 22 percent potential drop in domestic
14 sugar price," and the sentence continues. Do you agree
15 with that statement?
16 A I agree that he said it.
17 Q No, excuse me. Do you agree with the underlying
18 proposition that a 14 to 22 percent potential drop in
19 domestic sugar price would result from GATT implementation?
20 A I don't agree or disagree, I simply note that
21 there appears to be some evidence out there which would
22 make it reasonable to run a scenario in which such price
23 decreases occurred.
24 Q Would you expect to be forming an opinion one
25 way or the other on that or are you going to handle that in
358
1 the sensitivity analysis fashion of multiple scenarios?
2 A At this point, I don't know whether my client
3 will ask me to develop an opinion on that or perhaps
4 whether other people might testify to that. I would
5 certainly expect that in any study that was done, that
6 there would be a low price and a high price baseline
7 scenario.
8 Q Do you know what the aggregate measure of
9 support stands for with respect to GATT?
10 A Pardon me?
11 Q Do you know what the aggregate measure of
12 support stands for with respect to GATT?
13 A Not particularly, no.
14 Q Neither do I. On the next page --
15 MS. STINSON: Apparently Dr. Jones does.
16 BY MR. SAXE:
17 Q Next page, the fourth statement down, "ERS has
18 some write-ups as effect of GATT and NAFTA on vegetables -
19 says no impact."
20 Do you have an opinion concerning the underlying
21 position that GATT and NAFTA will have no impact on
22 vegetables?
23 A I have not seen those papers, just noted that
24 somebody said they existed, I suspect Gardner or
25 Richardson, but I haven't looked at them.
359
1 Q Would you be treating the effects of GATT and
2 NAFTA on vegetables similarly methodologically to the way
3 you would be treating it for sugar cane?
4 A I so far haven't seen anybody say that they will
5 have an impact, so absent that, there wouldn't be a need
6 for two scenarios.
7 Q The last statement on this page, "Assumptions on
8 financing would cow/calf be assessed."
9 Do you have an opinion whether cow/calf is an
10 alternative enterprise to sugar cane in the EAA?
11 A No. All I know is that somebody said that that
12 might be, if all of the cultivation were to stop.
13 (Luke Exhibit 19 marked for identification.)
14 BY MR. SAXE:
15 Q Dr. Luke, I'm handing you Exhibit 19, do you
16 recognize that document?
17 A Yes. This appears to be -- the basic documents
18 are Grace's view graphs from her presentation and this
19 appears to be a copy on which I have made some notes. It's
20 probably the copy I had in front of me at the meeting.
21 Q On the sixth physical page, there are some
22 handwritten notes at the bottom, could you just read those
23 into the record for me, I'm not able to read them?
24 A Let's see, "Don't have to cover each year except
25 interest on operating capital." It's a bad copy, but of
360
1 something covered over time.
2 Q Is that word, "is best covered over time," is
3 that what that says, "is best covered over time"?
4 A I think it looks more like if something.
5 Q Do you remember what you meant by this when you
6 wrote it?
7 A I think I'm writing down here the point she was
8 making, which was that the only -- that you don't have to
9 cover your depreciation, it's a non-cash item, year by
10 year, that you do have to cover your interest on
11 operations. This is her talking about how she is treating
12 different production costs in her revised study.
13 Q Does this implicate the lumpiness problem you
14 testified to earlier?
15 A Does it what?
16 Q Does it implicate the lumpiness problem, does
17 this involve the same variables and treatment that the
18 lumpiness problem does?
19 A I haven't seen how she is going to treat it, but
20 this is where that problem can come up, yes.
21 Q As you understood her presentation and as
22 reflected in the handwritten notes, did you agree with the
23 way she was proposing to handle these elements?
24 A Her discussion of it, as you can see, she went
25 through a pretty large amount of material, was not so
361
1 precise that I really know whether I agree or not. I just
2 marked it as something that I would want to come back and
3 look at when I saw the study that she put out.
4 Q Would an example of the treatment of
5 depreciation returns to non-land capital be where the bank
6 accepts interest and renews a note?
7 A Might be the case of that, yeah.
8 Q On the next page, again the sentence handwritten
9 at the bottom, not the correction on the typo above.
10 A Um-hum.
11 Q Would you read that, please?
12 A "Don't have to cover each year, but have to over
13 time to replace equipment."
14 Q Can you tell me what that means?
15 A She again was discussing -- this is on
16 processing costs, so this is on mill costs -- how she was
17 handling depreciation and I frankly don't remember whether
18 the note here is a point she made or whether it was
19 something that was a comment of mine. I agree with the
20 point that I have written down here, I just don't recall
21 whether it's mine or her's.
22 Q A couple of pages further into the document, a
23 page headed with the heading Soil Subsidence.
24 A Right.
25 Q The secondhand written comment, would you read
362
1 that for me, please?
2 A "P.B. appraisal district data."
3 Q What does that mean?
4 A This is where she talked about having gotten
5 data from the Palm Beach appraisal district from these
6 plots that they have been monitoring over the years. We
7 talked about this earlier.
8 Q Do you know what form she received the data in?
9 A My impression was she had gotten it in some --
10 on some magnetic medium.
11 Q Other than the medium, was the data raw data
12 from the 120 data sets or had it been processed in some
13 way?
14 A My impression was she had gotten something that
15 was either raw data or real close to raw data, but I'm not
16 telling you I can quote what she said.
17 Q On the next page, the handwritten comments at
18 the bottom, would you read the one to the left, please?
19 A "Examples of additional costs per Snyder, but no
20 budgets."
21 Q Could you explain that?
22 A Yes. She was talking about the fact that on
23 this subsidence issue, she had had conversations with this
24 fellow Snyder, I believe you said it was George Snyder, and
25 that he had given her these examples of how as you got
363
1 further down closer to the limestone, that your cost of
2 production would increase and, someone, it might have been
3 me, asked her did he have any estimate of how much. Her
4 answer, as I recall it, was no, that these were just sort
5 of a listing of factors that could be expected to increase,
6 but he didn't have any numbers.
7 Q How would you handle this in your socioeconomic
8 analysis, should you do one?
9 A Well, it goes back to this subsidence analysis
10 and I would have to go out hunting for some assumptions or
11 some actual experience that would tell us how some of these
12 things would go up if we are expecting the subsidence to
13 proceed that far.
14 Q The handwritten comment to the right of that,
15 would you read that for me?
16 A "Need soil maps by type and depth of muck."
17 Q Would this be some of the information you have
18 to go out hunting for to address the --
19 A I think that she said that either Snyder or the
20 district's land department had such maps so, I mean, I
21 think I am making myself a note here that such maps already
22 exist.
23 Q When you say need soil maps by type and depth of
24 muck, why are they needed?
25 A I would think that if we were going to do a
364
1 direct farm impacts analysis, that we would want to know
2 that.
3 Q The next page, would you read your handwritten
4 comment, please?
5 A It says "George Snyder".
6 (Luke Exhibit 20 marked for identification.)
7 BY MR. SAXE:
8 Q Dr. Luke, I'm showing you Luke Exhibit 20, do
9 you recognize that document?
10 A Yes.
11 Q Can you identify it for me?
12 A Yes. This is a document out of our files, the
13 first sheet on here is a Xerox of the file folder.
14 Q Absent the file folder cover page, could you
15 identify the main document?
16 A Sure. It's a -- it looks like an article or a
17 reprint of an article from Field Crops Research, called
18 Effect of Prior Rice Culture on Sugar Cane Yields in
19 Florida, by Jose Alvarez and George Snyder.
20 Q Would you turn to the last page, please. The
21 last paragraph reads, "The cultivation of rice on land that
22 would otherwise be fallowed in the EAA had a positive
23 effect on the subsequent yield of the sugar cane plant
24 crop. This effect could be of major economic importance to
25 the sugar cane industry in south Florida and possibly in
365
1 other areas of the world where rice can be grown in
2 rotation with sugar cane."
3 This statement, "This effect could be of major
4 economic importance to the sugar can industry in south
5 Florida," do you agree with that?
6 A I have no independent opinion on it.
7 Q How do you plan to address this effect, if at
8 all, in your socioeconomic analysis, should you do one?
9 A Well, I know that rice cultivation is one of the
10 BMP's that has been proposed and I know that there is some
11 controversy about the economic feasibility of that
12 activity. If in an overall cycle there would be different
13 productivity on the cane from a rice interval on the land,
14 then certainly I would think that should be incorporated.
15 Q How would you go about making that evaluation?
16 A I don't know what they say the difference is,
17 but if you think about a cycle of three or four year's
18 worth of cane and then a fallow period where you put in
19 rice, I would think that you would have to show a yield
20 increase factor for that cropping pattern versus one that
21 was just a straight sugar cane with a true fallow period in
22 there.
23 It sounds like you have got two or three
24 possibilities. One is the successive planning, one is the
25 more traditional fallow, and then there is using the rice
366
1 as a fallow crop, if that's not a contradiction. Using it
2 in rotation, I guess that's more correct.
3 Q Do you know whether rice may be an alternative
4 crop for sugar cane land?
5 A My understanding is that there are things about
6 the agricultural support program for rice that at least
7 some folks think makes it uneconomical as a straight
8 production crop.
9 Q Does that have something to do with an acreage
10 limitation?
11 A No. I understand from the limited information
12 that I have got right now, that it has to do with the fact
13 that you have got to do it for several years before you can
14 get the support price and get it into the program and that
15 you would incur substantial losses in that entry period.
16 Q Do you know whether rice might be a crop
17 suitable for culture on muck soils of less than six inches
18 depth in the EAA?
19 A That I don't know.
20 Q Do you plan on doing any -- undertaking any
21 further analysis of the economics of rice and the
22 suitability of rice for the EAA, should you undertake a
23 socioeconomic analysis?
24 A It's possible. I think that it depends in part
25 on whether that appears to be a proposed BMP or if we get
367
1 into a subsidence alternative whereas you suggest it may be
2 an alternative. I know at that meeting when this came up,
3 nobody at that table seemed to be advancing the proposition
4 that rice would be an economical substitute crop.
5 Q Thank you, Doctor.
6 MR. SAXE: We can take a few minutes break now,
7 if you want.
8 (Brief recess taken.)
9 (Luke Exhibit 21 marked for identification.)
10 BY MR. SAXE:
11 Q Dr. Luke, I'm showing you Exhibit 21. Other
12 than the file folder marking on the cover page, if you turn
13 to the second page, can you identify this document for me?
14 A Yes. This is a document from Larry Leistritz to
15 me concerning a work plan on the EAA study.
16 Q The first sentence says, "Attached is my first
17 cut at a work plan for the next few months."
18 What was this a work plan for specifically?
19 A This would be a work plan for a direct farm
20 impacts and a community impacts study.
21 Q Would you define community impacts study for me?
22 A Well, it would sort of be the rest of the
23 socioeconomic study as we have scoped it for this project,
24 after you get through with the direct farm impacts.
25 Q Which EAA study are you referring to?
368
1 A I don't know what you mean.
2 Q I think you said the EAA study, you mean the
3 implementation of the SWIM plan?
4 A Yes.
5 Q The reference to work plan for the next few
6 months, this is a January 6, 1993 memo, when did the
7 project get put on hold, as I think you described it
8 earlier?
9 A After the meeting with Grace Johns.
10 Q That was early February, I believe?
11 A Yes.
12 Q Just briefly, could you tell me a little bit
13 more about the mechanics of the decision to put the project
14 on hold, who made that decision?
15 A Donna Stinson.
16 Q The next sentence, "Let me know what needs to be
17 added, expanded or changed."
18 Did you respond to this inquiry?
19 A I think that there were some other documents we
20 produced to you that address kind of the evolution of this
21 work plan.
22 Q That would have been in the supplemental
23 production made within the last several days?
24 A Probably. Could have been -- some of it could
25 have been in the original.
369
1 Q To the best of your recollection, have we
2 reviewed any of those documents during the course of this
3 deposition?
4 A No.
5 Q Do you remember whether you, in your responses
6 to this proposed work plan, did you propose any changes or
7 expansions or additions?
8 A Yes. There was some reordering of tasks in
9 terms of just sort of the project management level. The
10 question of whether we were going to use the FLIPSIM or
11 LOTUS model on the direct impacts came up. There were a
12 number of different things that I would say were modified.
13 Q At the time, had there been an understanding
14 concerning whether you would be including farm financial
15 viability or farm financial survival analysis as part of
16 your direct economic impact analysis?
17 A Really at this stage since we were talking about
18 using FLIPSIM, we assumed we would be looking at both.
19 Q So would it be correct that you were planning on
20 using FLIPSIM in the stochastic mode?
21 A Yes.
22 Q On the next page, on the point labeled Table 1,
23 about the middle of the page, it says, "What has been
24 fueling the population growth in Hendry and Glades
25 Counties? One possibility is retirees."
370
1 Do you have any opinions about what has been
2 fueling the population growth in Hendry and Glades Counties
3 at this point?
4 A No.
5 Q Do you know whether any member of the RPC staff
6 working on this project has developed a tentative opinion
7 on that issue?
8 A No.
9 Q I believe you testified earlier that the EAA is
10 a one industry region, something to that effect, referring
11 to agricultural production?
12 A Yes.
13 Q Do you think that the in-migration of retirees
14 might form a significant component of the economic activity
15 in the EAA?
16 A No. I don't believe there was any thought that
17 this -- that the population growth in Hendry or Glades was
18 occurring in portions of those counties that we had
19 designated as lying in the EAA.
20 Q Might fishing, recreational or commercial,
21 comprise some significant degree of economic activity in
22 the EAA?
23 A At the present time it would be my opinion it
24 does not.
25 Q Would the same be true for tourism?
371
1 A It would be my opinion it does not.
2 Q On the next page, there's a clause in the middle
3 of that top paragraph that says, "We need to determine the
4 likely effects of NAFTA on sugar and vegetables."
5 What's the status presently of this issue?
6 A Of our work on the issue?
7 Q Yes, that's fine.
8 A Really haven't done anything with it.
9 Q Have you reached any tentative conclusions on
10 the issue?
11 A The conclusion is that it is uncertain enough
12 that we need to handle it through a scenario analysis,
13 rather than trying to make a single assumption about that.
14 Q Moving down to the paragraph numbered 2, it
15 says, "Immigrant cane cutters -- it appears that we should
16 assume a phase-out of these workers under either scenario."
17 In your opinion, would such a phase-out have a
18 tendency to reduce the overall economic impacts of the SWIM
19 implementation, other things being equal?
20 A I don't know that it would. It would change who
21 was impacted, but my understanding is that the cost of
22 mechanical harvesting and of the hand harvesting that uses
23 these migrant cane cutters is similar, so that I don't know
24 that it would make a difference.
25 Q If there isn't a periodic in-migration of
372
1 immigrant cane cutters, wouldn't that remove a significant
2 chunk of the possible demographic impacts that would result
3 from implementation -- might result from implementation of
4 the SWIM plan?
5 A My understanding is that the cane cutters are
6 these folks that come in from the Caribbean for a certain
7 number of months a year, live in barracks and leave. I
8 don't really think they are counted in the base population
9 of the EAA.
10 Q That would be the case for the measurement of
11 all aspects of economic impact from the SWIM plan? I
12 believe I mentioned demographic, would that also be the
13 case for employment impacts directly, indirect and induced
14 employment impacts?
15 A The shift is to this mechanical harvesting,
16 which uses less labor, more machines, the workers that are
17 involved are somewhat higher paid. I think the question
18 you asked is one that is worth looking at, but since the
19 baseline data already includes a fairly substantial part of
20 that transition to mechanical harvesting, I don't know how
21 significant the rest of this will be. I mean, we have
22 identified it here as something that we need to take a look
23 at.
24 Q Do you know if they were included in Hazen and
25 Sawyer's baseline?
373
1 A Included as population?
2 Q Yes.
3 A Given the years of data that Hazen and Sawyer
4 used, they would be included to probably a greater extent
5 than they would be if the study were done now.
6 Q Were they included in Polopolus' and
7 Richardson's estimates?
8 A I don't know.
9 Q Were they reflected in the baseline of the
10 analysis that you and RPC performed last year based on the
11 Hazen and Sawyer and direct economic impact figures in the
12 Polopolus-Richardson suggested corrections?
13 A You kind of lost me there, I don't know what
14 you're talking about.
15 Q Going back to the document, the following
16 sentence says, "This may require adjustments in our
17 population and employment projections (but we need to check
18 to make sure how these people are reflected in our baseline
19 figures)."
20 What I'm asking you is how were these people
21 reflected in the baseline figures of what Dr. Leistritz
22 referred to as phase one analysis or analysis that was done
23 last year before any decisions were made to suggest
24 supplementation with a more expansive socioeconomic impact
25 analysis?
374
1 A I believe what he is referring to are the tables
2 that I have used to refresh my memory a couple of times
3 during the deposition and that is census data and I read
4 this that he is saying we need to check and see if these
5 folks would have been picked up in the census counts in
6 that area, because that's what would be in baseline
7 population figures for the current time, not for forecasts.
8 Q Let's move from this document for a moment.
9 (Luke Exhibit 22 marked for identification.)
10 BY MR. SAXE:
11 Q Dr. Luke, I'm showing you Exhibit Number 22, can
12 you identify that document for me?
13 A I'm not sure I can.
14 Q You're not sure whether you have ever seen this
15 before?
16 A Well, I may have seen it before.
17 Q The document describes a significant work effort
18 in some detail, it appears to be correlated with a good
19 number of tables and other data, other result reports that
20 were produced as part of yours and Dr. Leistritz'
21 production. Dr. Leistritz, I believe, indicated that this
22 was either the report on the phase one work or some work
23 done immediately subsequent, but I got the impression that
24 it was the major portion of whatever independent economic
25 analysis RPC has undertaken thus far in preparing for the
375
1 case.
2 If you don't recognize the specific draft of the
3 document, but you recognize the statements and the subject
4 matter and the rest of it, then maybe we will just move
5 into the body of the document, because I do have a
6 significant number of questions I want to ask you about
7 this work.
8 A Okay, I'm not the author of the document. It
9 looks like something that RPC produced. As to when it was
10 produced, I don't know, it doesn't appear to be dated, but
11 it does look like something that we corporately produced.
12 Q Looking at the beginning of the document, Roman
13 Numeral I, about six lines down, part of the sentence
14 reads, "No analysis of community impacts was undertaken by
15 Hazen and Sawyer." Do you see where I'm referring to?
16 A Yes.
17 Q Is that statement correct so far as you know?
18 A As far as I know.
19 Q And that community impact, as you explained
20 earlier, that would be the portion of a socioeconomic
21 impact analysis that picks up where an economic impact
22 analysis -- no, where the direct economic impacts leave off
23 or would it be where the economic impact analysis leaves
24 off?
25 A I think that the statements here are saying that
376
1 even if we're going to limit this to an economic impact
2 analysis, that the study area that they have defined to
3 look at the economic impacts is too broad for the primary
4 area, so this is not the boundary of economic versus
5 boundary of socioeconomic question. This is saying even if
6 you want to define this as a pure economic impact analysis,
7 that it needs to look at the impacts on the EAA and the
8 communities that make up the EAA.
9 Q Does a community impact analysis imply an
10 analysis including public service impacts, demographic
11 impacts, fiscal impacts, social impacts?
12 A Not necessarily. I have used it in working on
13 this project to distinguish direct farm impacts from
14 impacts on the communities in the study area. I don't
15 think that is a standard term in the literature, it's just
16 something I have used as a shorthand to distinguish what I
17 consider the two main pieces of this effort.
18 Q As you have used it then, in a socioeconomic
19 impact analysis, if one were going to identify the
20 community impact component, it would be everything except
21 the direct on farm impacts?
22 A Yes. It would be that whether you were doing an
23 economic or a socioeconomic analysis.
24 Q Okay. The next sentence, "We contend that it is
25 grossly deficient for an economic impact assessment to
377
1 disregard the consequences of an economic shock to a region
2 on that region's communities. In support of our position,
3 we have undertaken a preliminary analysis of the economic
4 impacts of the Surface Water Improvement and Management
5 plan that considers the community impacts associated with
6 the SWIM plan."
7 Do you know what that analysis of economic
8 impacts that has been undertaken by RPC refers to?
9 A The material that's reported in this document, I
10 assume.
11 Q And nothing more?
12 A There would be, I would assume, some
13 calculations and things that would have gone into the
14 preparation of this document.
15 Q Dr. Luke, referring back to the chronology that
16 you helped to outline in the beginning of your testimony
17 yesterday, was there a work effort that was undertaken
18 early on in RPC's involvement in this case, taking direct
19 economic impact values from the Hazen and Sawyer 10 year
20 study and from suggested adjustments made by Polopolus and
21 Richardson in public presentations, and then attempting to
22 derive additional secondary impact information from them,
23 including any or all of the ones you have discussed over
24 the last two days, public service, fiscal, demographic, et
25 cetera?
378
1 A There was some analysis done prior to October
2 23rd.
3 Q I believe that's what Dr. Leistritz was
4 referring to as phase one. If that's not a handy
5 shorthand, I would happily find another one, but were
6 written results produced showing -- quantifying secondary
7 economic impacts from that work effort?
8 A Dr. Leistritz drafted that and did that work in
9 North Dakota. I saw the text that he forwarded to me for
10 inclusion, but in terms of, you know, any supporting
11 documentation that he had for that, I don't recall seeing
12 it.
13 Q When you say inclusion, would that be inclusion
14 in your recommended comments on the Hazen and Sawyer 10
15 year draft that were sent through counsel and publicly
16 delivered?
17 A No. I mean the October 23rd document that we
18 prepared in the belief that it was necessary to make a
19 preliminary statement of opinions.
20 Q Have we reviewed that October 23rd document
21 during the course of this deposition?
22 A No.
23 Q Do you understand that that document was
24 reviewed during the course of Dr. Leistritz' deposition?
25 A Yes.
379
1 Q The last sentence in this paragraph says, "This
2 analysis includes use of the baseline and policy scenarios
3 described in the Hazen and Sawyer final report, as well as
4 adjustments to the scenarios proposed by Richardson and
5 Polopolus."
6 Do you know what the policy scenarios are?
7 A Yes. It refers to the four scenarios used by
8 Hazen and Sawyer in their report.
9 Q Those four scenarios would be the baseline, the
10 STA removal, the BMP implementation, and then which of the
11 three levels of per acre assessment, I'm not sure, I don't
12 count four?
13 A If you look on the second page, your Bates 64,
14 under 1 (a), I think we have a definition of scenarios.
15 Q Those would be the policy scenarios, except for
16 the baseline scenario, or would they all be the policy
17 scenarios?
18 A No. I think you have got the baseline there and
19 four policy scenarios.
20 Q Okay, thank you.
21 The statement that I read a moment ago back
22 on the first page refers to the adjustments to the
23 scenarios proposed by Richardson and Polopolus, you
24 understand those to be the corrections so-called
25 presented by Dr. Polopolus in public presentations
380
1 concerning under-estimation -- alleged under-estimation
2 of impacts by Hazen and Sawyer?
3 A Right, and specifically those that they
4 presented on August 7th. I think they have subsequently
5 presented others.
6 Q Do you have an opinion about whether those
7 adjustments were correct?
8 A No, I haven't reviewed them. We simply have
9 treated them as a range of impact scenarios, direct farm
10 impact scenarios.
11 Q The next paragraph says, "In addition, our
12 preliminary findings are based in part on a re-definition
13 of the EAA study area that includes the municipalities of
14 Moore Haven, Clewiston, Belle Glade, Pahokee, and South
15 Bay."
16 Can you tell me more precisely what the
17 boundaries of the redefined EAA study area were?
18 A I can. Why don't I just give you this as an
19 answer to your question (indicating).
20 Q Thank you.
21 (Luke Exhibit 23 marked for identification.)
22 MR. SAXE: Let the record reflect that Exhibit
23 23 memorializes Dr. Luke's response to the question of
24 the re-definition of the boundaries of the EAA study
25 area.
381
1 BY MR. SAXE:
2 Q Can you explain to me how those boundaries were
3 determined?
4 A Yes. By map analysis and comparing census tract
5 maps to various maps showing the cane production areas, the
6 EAA as it's defined as a regulated area, and coming up with
7 what we felt was a reasonable set of census tracts that
8 cover Clewiston.
9 Q When you've referred to the regulated area, you
10 have, I think, referred to the sugar cane production area;
11 relating it to the Hazen and Sawyer study area, is it the
12 same regulated area that Hazen and Sawyer assumed?
13 A It include -- well, they didn't assume it. The
14 regulated area is a legal definition and these census
15 tracts include that regulated area. They also include some
16 areas that are integrally related to the EAA, such as the
17 city of Clewiston, but which I believe are not, technically
18 speaking, in the regulated area.
19 Q Were they excluded by Hazen and Sawyer from the
20 study area?
21 A Clewiston is actually in Hendry County, if I'm
22 not mistaken, so that it would not be part of Palm Beach
23 County and I believe they looked at a three county area in
24 some of their analysis. There are different areas on
25 different pieces of their analysis and I don't think there
382
1 is any disagreement that Clewiston's economic future would
2 be affected by what happens to agriculture in the EAA.
3 Q So what criteria were used, as far as you know,
4 to select those census tracts that lie outside the
5 regulated area that would be included within the study
6 area, redefined study area?
7 A It would be areas of cane production that go to
8 the mills and it would be areas in which mills are located
9 or like city of Clewiston, in which EAA cane is milled.
10 Q So only cities outside of cane production area
11 -- only cities containing mills would be included in the
12 redefined study area?
13 A Yeah. I would have to look to know if there is
14 actually a mill in Clewiston city limits, but we included
15 Clewiston because of its rather obvious ties to the economy
16 of the EAA.
17 Q The next sentence says, "Demographic projections
18 for the redefined study area were used as inputs for the
19 fiscal model used to estimate the impacts of the baseline
20 and four policy scenarios."
21 Could you explain that briefly to me?
22 A Yes. I believe that using the BEBR county level
23 models, that there was some rather simple demographic
24 projections that were made and these were used in the
25 looking at the tax and public facility and service demands.
383
1 Q Was West Palm Beach included in the redefined
2 study area?
3 A No.
4 Q What would be the basis for including Clewiston,
5 but excluding West Palm Beach from the redefined study
6 area?
7 A Well, it's a concept of dependencies. If we
8 wipe out agriculture in the EAA, my sense is that that will
9 have a very devastating effect on Clewiston. I don't think
10 that it would have a particularly devastating effect on
11 West Palm Beach.
12 Q Do you know where the Cooperative's headquarters
13 are located?
14 A They have a small office with, I think, one
15 full-time employee in West Palm Beach that I have been to.
16 I think for practical purposes their headquarters are at
17 the mill in Belle Glade.
18 Q And how about U.S. Sugar Corporation?
19 A Clewiston. Not to say that they don't have an
20 office in West Palm but, I mean, their headquarters is in
21 Clewiston.
22 Q The next section down, Roman Numeral II,
23 subsection 1, Direct Farm Level Impacts, the second or
24 third, however you count, third line down, the sentence
25 begins, "The RIMS model was used to estimate indirect and
384
1 induced impacts based on direct farm level impact estimates
2 for the scenarios used by Hazen and Sawyer and the
3 corrections recommended by Richardson and Polopolus. The
4 Hazen and Sawyer study under-estimated every measure of
5 economic impact (i.e., acreage in production, employment,
6 sales, and job income) by a factor of three to four, when
7 compared against the corrected model and assumptions
8 suggested by Polopolus."
9 I believe you testified earlier that the use of
10 the words corrected model and assumption suggested by
11 Polopolus is not a characterization that you would adopt?
12 A I -- yeah, I mean, if you wanted to say
13 alternate, I believe he in some of the view graphs and all,
14 it's styled as a corrected, but it's an alternate model and
15 assumptions.
16 Q So the previous statement that Hazen and Sawyer
17 under-estimated every measure of economic impact, is only a
18 statement comparing the estimates to those suggested by
19 Polopolus, but not expressing an opinion that objectively
20 speaking they were under-estimated?
21 A I think the sentence says when compared and I
22 have not made any independent direct farm impacts analysis,
23 so that I can't really tell you which one is the more
24 correct.
25 Q When RPC applied RIMS to the Hazen and Sawyer
385
1 scenarios without adjusting Hazen and Sawyer's direct
2 impact as suggested by Richardson and Polopolus, do you
3 know how the results compared with Hazen and Sawyer's?
4 A When we did what?
5 Q When you applied RIMS to the Hazen and Sawyer's
6 scenarios without adjusting the direct economic impact
7 quantifications as suggested by Polopolus and Richardson,
8 how did the results compare with Hazen and Sawyer's in
9 terms of induced and indirect impacts?
10 A As you can tell here, we used a scaled down set
11 of multipliers, that would mean that the total indirect and
12 induced impacts would be less in absolute terms, however,
13 when applied against the total economy of the EAA as the
14 denominator, the percentage impact would be much greater.
15 Q Why was the scaling undertaken?
16 A We had this discussion earlier. That the size
17 of the EAA economy is such that you would not expect the
18 multipliers to be as large as they would be for the Palm
19 Beach County economy.
20 Q How was this scaling accomplished?
21 MS. STINSON: Objection, asked and answered.
22 MR. SAXE: I believe that testimony was given
23 concerning the use of an Okeechobee County multiplier,
24 not involving sugar production and I don't believe
25 that a significant amount of elaboration was given,
386
1 I'm asking now for some elaboration.
2 A Dr. Leistritz did it and I have not reviewed the
3 exact computations that he went through.
4 BY MR. SAXE:
5 Q Dr. Luke, in the output from this work effort,
6 there were, I believe, four Hazen and Sawyer -- there were
7 four output runs based on the Hazen and Sawyer policy
8 scenarios using an adjusted RIMS multiplier and there were
9 two pertaining to the adjusted Hazen and Sawyer direct
10 economic impact numbers using an adjusted RIMS multiplier.
11 Was there anywhere where the comparison was made between
12 the output of the adjusted run on the Hazen and Sawyer
13 numbers versus the Hazen and Sawyer RIMS output?
14 A I don't know that there would have been. I
15 don't know why we would have done that.
16 Q How did you determine that the results were
17 lower and the degree to which they were lower?
18 A Well, if you hold the direct farm impacts
19 constant and you use smaller multipliers and you multiply
20 them, then the result is going to be smaller.
21 Q Okay, I understand. Would you turn to the next
22 page, Bates page 64.
23 A Okay.
24 Q About four lines down a sentence begins, from
25 the top of the page, "In terms of the numbers of businesses
387
1 estimated to be lost under the study scenarios, the
2 estimates range from seven businesses lost under the
3 baseline to 112 business lost under the scenario that
4 considers development of the STA's, implementation of
5 BMP's, and a $100 per acre assessment, with adjustments
6 made as suggested by Polopolus."
7 Do you know what the estimated business loss was
8 when Hazen and Sawyer's estimates of direct impacts were
9 used without adjustments as suggested by Polopolus and
10 Richardson?
11 A I think it's whatever is in their report.
12 Q Their report refers to whose report, Hazen and
13 Sawyer's report?
14 A Yes. I think this paragraph is just summarizing
15 the range of projections that are in the Hazen and Sawyer
16 and Polopolus materials. I don't think it reflects any
17 additional analysis on RPC's part.
18 Q It does not reflect the effect of the adjusted
19 multipliers?
20 A I don't think so.
21 Q Dr. Luke, if I could refer you back to Exhibit
22 21.
23 A Okay.
24 Q Dr. Luke, on page 2 of this document, the page
25 numbered 2 at the bottom, paragraph number 3 reads, "Loss
388
1 of agricultural land due to oxidation -- need to check with
2 Jeff Ward re. appropriate assumptions."
3 I believe we discussed this earlier, if I recall
4 your testimony, you would propose to handle this in any
5 socioeconomic impact analysis you did using a number of
6 different assumptions -- rather a number of different
7 scenarios based on different assumptions about oxidation,
8 is that correct?
9 A Yes.
10 Q So that's the status presently of the decision
11 on how to proceed with this issue?
12 A Yes.
13 Q The next numbered paragraph, the sentence
14 starts, "What indicators do we need to project?"
15 What is the status of your deliberations
16 concerning the appropriate indicators to be projected in a
17 socioeconomic impact analysis for the SWIM plan
18 implementation?
19 A Well --
20 Q Let me clarify. Have you reached any
21 conclusions about what indicators need to be projected?
22 A I think that certainly the ones listed here
23 would be there, also the school age population, local
24 government costs and revenues. I think there would
25 certainly be some separate analysis of the seasonal and
389
1 migrant population. I think there would be some separate
2 assessment of the changes in ownership that would be
3 expected. Some of the population projections would be some
4 age and sex, some employment, some sectoral, rather than
5 just a total population number. Probably some projections
6 on retail and service businesses. I mean, there's some
7 other things that come up that you project as intermediate
8 results in order to get to one of your major indicators.
9 Q In terms of your ultimate indicators, are there
10 any others that come to mind?
11 A Income would be one, output in terms of sales or
12 revenues for the businesses in the area.
13 Q How about vulnerable populations, as you put it
14 earlier, going beyond those that you have mentioned just
15 now in terms of migrant workers and I believe a few others
16 that you mentioned?
17 A I don't know of a particular indicator that we
18 would be projecting. It seems to me that that's more
19 taking the numbers we project and then trying to do some
20 logical analysis on what that would mean for those
21 vulnerable populations.
22 Q The paragraph immediately following the indented
23 items, "To support projections of agricultural land use, we
24 should probably prepare a table showing current and recent
25 past agricultural land use in the study area counties."
390
1 What is meant by projections of agricultural
2 land use?
3 A Well, acres by crop.
4 Q Acreage going out of production or is this
5 referring to a change in crop mix in the EAA, I'm not sure
6 I'm following you?
7 A Could be either, but what this is saying is in
8 order to have a starting point, we need to assemble that
9 information as it currently is and has been over the last
10 few years.
11 Q So is it contemplated that as part of the
12 analysis that would be done, there would be projections of
13 changing crop mixes in the EAA?
14 A Yes. It says that right up there, "EAA
15 agricultural land use (acres by crop)."
16 Q What's been done thus far on that aspect of the
17 analysis?
18 A We have obtained the appraisal tapes for the
19 three counties and it's my understanding that there is
20 information on those appraisal tapes that will let us
21 assemble that information.
22 Q Two paragraphs down it reads, "My thought
23 regarding total employment and total population is to use
24 the BEBR projections as a point of departure."
25 Do you know what that refers to, BEBR
391
1 projections?
2 A Sure. Those are the official state population
3 projections for Florida.
4 Q What is BEBR an acronym for?
5 A Bureau of Economic and Business Research.
6 Q The bottom of this page says, "The basic
7 procedure will be to use the FLIPSIM model to analyze the
8 farm level or direct impacts of various alternatives
9 (STA's, assessment levels, BMP's) and then use the RIMS
10 model to analyze secondary economic impacts."
11 Does that include the use of FLIPSIM to analyze
12 farm financial survival?
13 A Yes.
14 Q Number 2 beneath that, "Determine how we plug
15 FLIPSIM output into RIMS."
16 Do you know whether any determination has been
17 made on that issue?
18 A Really nothing particular I can tell you.
19 Q Do you know what gets plugged into RIMS, what
20 output from FLIPSIM gets plugged into RIMS?
21 A It's the value output of the farm enterprises.
22 Q Point number 4, "Determine how to handle the
23 sugar mills. What is the effect on their employment, et
24 cetera, of a drop in sugar acres?"
25 What is the status of this issue, the work on
392
1 this issue?
2 A I don't know that Larry has done anything on
3 that.
4 Q Do you know whether anything is contemplated if
5 the analysis should go forward?
6 A Well, I think one question is whether one just
7 goes with the multiplier analysis in RIMS, which you could
8 get an indication of employment drop on that. I would
9 think that one would want to sort of field check that with
10 some of the mill operators to see how in fact they do
11 respond to a lower run of sugar.
12 Q Would that methodology apply also to the
13 refineries and the port facility?
14 A I think you would take a little more direct
15 interviewing in order to get that because, as I said, I
16 think those are -- certainly a port facility is lumped in
17 with a lot of other things and so I don't think that I
18 would be comfortable relying solely on a RIMS analysis to
19 look at change in employment there.
20 Q How about the refineries?
21 A I don't recall which sector they are in and it
22 would be a matter of whether that sector were specific
23 enough to them to feel like you could rely on it. It would
24 also be a matter of whether the drop in output was so great
25 that you wouldn't expect a linear response. There would be
393
1 some sort of interviewing with the refinery operators, in
2 any event. I don't know how much you could rely on RIMS
3 and how much you would have to do a more detailed analysis.
4 Q Would you expect them to be in a different
5 sector than the mills?
6 A Yes.
7 Q Point 5 (b), "Evaluate likely percentage of
8 construction workers that might be hired locally,
9 percentage of materials purchased within EAA, et cetera."
10 Can you tell me what the status of work on this
11 issue is?
12 A We haven't done anything with it.
13 Q The next point, 6, "Determine how to convert FTE
14 employment to number of people (how did Polopolus and
15 Richardson do it?)."
16 Can you tell me why there would be an interest
17 in converting FTE employment to number of people?
18 A Sure. As we have discussed, there are an awful
19 lot of seasonal and migrant workers, agricultural workers
20 in the EAA. From interviews that I have done, I know that
21 the employment on a lot of those people in sugar runs maybe
22 four to six months a year and then they migrate out of the
23 area to do agricultural work during other portions of the
24 year and then show back up in the summer and a lot of them
25 draw unemployment for a couple of months, so that county
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1 FTE's here is going to be misleading in terms of the number
2 of individuals, households affected on those agricultural
3 workers. One of the things I talked to you about a little
4 bit yesterday was the idea that if you take away the sugar
5 job, it sort of cuts these people adrift, in that this is
6 their base, which they then supplement with migrant labor,
7 so it will have a much greater impact. This is not true
8 of, you know, necessarily that it matters whether you use
9 FTE's or people if we are talking about local government
10 employees or utility company employees, but in this
11 agricultural worker area, it appears to be a significant
12 issue.
13 Q How do you keep this consistent with income and
14 output multipliers?
15 A Well, I think that what one would look at here
16 is that you have got income sort of proportionate to -- if
17 the income for an FTE would serve the same as 12 months a
18 year employment, let's say that we determine it's six month
19 per year jobs, so you say one FTE equals two jobs. I think
20 you would also say the income to one FTE is divided in two
21 and is received by the two different workers.
22 Q Do input/output models assume FTE's?
23 A Generally they do and generally in most sectors
24 that's not a bad assumption.
25 Q How would the conversions you are describing be
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1 handled in the analysis?
2 A I think that it would just have to be a series
3 of equations or steps in the analysis where for employees
4 and income in certain sectors, that that was converted into
5 jobs or into people.
6 Q Point number 8 says, "Determine how far we need
7 to go in projecting changes in population, school
8 enrollment, other demands on public services, et cetera."
9 What was meant by how far we need to go?
10 A How much detail, which public facilities and
11 services do we think might be affected enough to go in and
12 make a projection.
13 Q Dr. Polopolus, turning for a minute to --
14 A No, I'm Luke.
15 Q Excuse me, Dr. Luke, I'm sorry.
16 Turning a minute to the 20 year Hazen and Sawyer
17 economic impact study, will you be reviewing that study?
18 A I think so.
19 Q Have you been asked to review it when it's
20 completed?
21 A Yes.
22 Q Have you been asked to advise the Cooperative
23 about the accuracy and correctness of the results of the
24 study?
25 A I think the instruction has been a little more
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1 general than that. To take a look at it, analyze it, and
2 then discuss it with him to determine sort of where we go
3 from there.
4 Q Will you be giving input to the Cooperative that
5 they will be using to determine whether or not to, as you
6 put it, take the project off hold or commission a more full
7 blown socioeconomic analysis?
8 A Yes.
9 Q It's true, isn't it, that RPC is in a position
10 to do the socioeconomic analysis that the Co-op might elect
11 to request based on their evaluation of the Hazen and
12 Sawyer 20 year study?
13 A When you say in a position, I don't understand.
14 Q That you have proposed, either formally or
15 informally, to undertake that socioeconomic analysis for
16 the Cooperative?
17 A RPC and its subcontractors would have the
18 capability to do that, yes.
19 Q Are there subcontractors that we haven't
20 discussed during the course of these last two days?
21 A Well, Leistritz is a subcontractor.
22 Q If your evaluation of the 20 year study
23 determines that there are defects in that study and you
24 advise the Co-op of those opinions and the Co-op elects to
25 proceed with the socioeconomic impact analysis that you are
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1 presently contemplating, in such circumstances, do you have
2 any estimate of how many person hours of work would be
3 required to complete that analysis?
4 A Well, as your question suggests, part of this is
5 dependent upon how much of the Hazen and Sawyer analysis we
6 are comfortable in relying upon. I would say it also
7 depend in part on what role the League chooses to take in
8 this aspect of the case, which is something I don't know.
9 Q Have you prepared any estimates of project
10 costs, the costs for your services to the Co-op for the
11 various different levels of socio and economic impact
12 analysis that might be undertaken after the 20 year study
13 comes out?
14 A Yes.
15 Q Can you give me some ranges of costs for the
16 services that you would provide for the socioeconomic
17 impact analysis from the most expansive, namely a full
18 analysis, using none of Hazen and Sawyer's results,
19 including their direct economic impact, down to the more
20 limited projects using bigger pieces of the Hazen and
21 Sawyer analysis?
22 A Assuming that their community as opposed to
23 their farm impacts aren't any different than they were in
24 the first report, so that we would have to do pretty much a
25 complete community impact analysis, my estimate of that is
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1 it's in the $50,000 to $80,000 range; and my estimate on
2 the direct farm level, if we have to do that and are not
3 able to just take their scenarios and plug them in, is a
4 similar range.
5 MS. STINSON: Keith --
6 MR. SAXE: I just have one or two more questions
7 on this.
8 THE WITNESS: No, I'm out of here.
9 MS. STINSON: There isn't any leeway on it.
10 MR. SAXE: For the record before we adjourn, the
11 deposition is not concluded, it is a continuing
12 deposition and the United States reserves its right to
13 conclude the deposition on a date scheduled in the
14 future.
15 (Deposition adjourned at 4:00 p.m.)
16 * * * * *
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1 CERTIFICATE OF REPORTER
2 STATE OF FLORIDA:
3 COUNTY OF LEON:
4 I, TERRY WILHELMI, Certified Shorthand Reporter
5 and Notary Public in and for the State of Florida at Large:
6 DO HEREBY CERTIFY that the foregoing proceedings
7 were taken before me at the time and place therein
8 designated; that before testimony was taken, the witness
9 was duly sworn; that my shorthand notes were thereafter
10 transcribed under my supervision; and the foregoing pages
11 numbered _______through _______are a true and correct
12 record of the aforesaid proceedings.
13 I FURTHER CERTIFY that I am not a relative,
14 employee, attorney or counsel of any of the parties, nor
15 relative or employee of such attorney or counsel, or
16 financially interested in the foregoing action.
17 WITNESS MY HAND AND SEAL this, the _____day of
18 _________, 1993, IN THE CITY OF TALLAHASSEE, COUNTY OF
19 LEON, STATE OF FLORIDA.
20
21 ________________________
TERRY WILHELMI, CSR
22 100 Salem Court
Tallahassee, Florida 32301
23 (904) 878-2221
24
My Commission Expires: June 13, 1994
25