0225

01 DIVISION OF ADMINISTRATIVE HEARINGS

01 DEPARTMENT OF ADMINISTRATION, STATE OF FLORIDA

02

02 SUGAR CANE GROWERS COOPERATIVE OF )

03 FLORIDA, a Florida agricultural )

03 cooperative marketing association; ROTH )

04 FARMS, INC.; AND WEDGWORTH FARMS, INC., )

04 )

05 and )

05 )

06 FLORIDA SUGAR CANE LEAGUE, INC.; UNITED )

06 STATES SUGAR CORPORATION; AND NEW HOPE )

07 SOUTH, INC., )

07 )

08 and )

08 )

09 FLORIDA FRUIT AND VEGETABLE ASSOCIATION,)

09 LEWIS POPE FARMS, W.E. SCHLECHTER & )

10 SONS, INC., and HUNDLEY FARMS, INC., )

10 Petitioners, )

11 )

11 vs. )CASE NOS. 92-3038

12 ) 92-3039

12 SOUTH FLORIDA WATER MANAGEMENT DISTRICT ) 92-3040

13 an Agency of the State of Florida, )

13 )

14 Respondent, )

14 )

15 and )

15 )

16 THE UNITED STATES OF AMERICA, )

16 MICCOSUKEE TRIBE OF INDIANS, the )

17 FLORIDA DEPARTMENT OF ENVIRONMENTAL )

17 REGULATION, the FLORIDA WILDLIFE )

18 FEDERATION, et al )

18 )

19 Respondent-Intervenors )

19

20

20

21 **************************************

21

22 DEPOSITION OF F. LARRY LEISTRITZ

22

23 **************************************

23

24 VOLUME II

0226

01 On the 9th day of February, A.D., 1993, between

02 the hours of 9:10 A.M. and 1:00 P.M. in the offices of the

03 United States Attorney's Office, 816 Congress Avenue,

04 Suite 650, Austin, Texas, before me, DOTTIE NORMAN, a

05 Certified Shorthand Reporter in and for the State of

06 Texas, appeared F. LARRY LEISTRITZ, who, being by me first

07 duly sworn, gave his oral deposition at the instance of

08 the United States of America in said cause.

09 This deposition is being taken in accordance

10 with the Federal Rules of Civil Procedure.

11 ************

0227

01 APPEARANCES

01

02 For the Sugar Cane Growers Cooperative of Florida,

02 a Florida agricultural cooperative marketing

03 association; Roth Farms, Inc.,; and Wedgworth Farms, Inc.:

03

04 HOPPING, BOYD, GREEN & SAMS

04 By: DONNA STINSON

05 Post Office Box 6526

05 Tallahassee, FL 32314

06

06 For The United States of America:

07 By: ROBERT ROSENBERG

07 Assistant United States Attorney

08 Southern District of Florida

08 155 South Miami Avenue

09 Miami, Florida 33130

09

10 -and-

10

11 KEITH E. SAXE

11 U.S. Department of Justice

12 Environmental and Natural Resources

12 Division

13 P.O. Box 663

13 Washington, D.C. 20044-0663

14

14

15 Also Present: Lonnie Jones

15

16

16

17

17

18 INDEX

18

19 Page

19 Continued Direct Examination by Mr. Rosenberg 229

20

20

21

21

0228

01 EXHIBITS

01

02 Deposition Exhibit No. 24 231

02 Memorandum dated 10-23-92

03 to Green from Luke

03

04 Deposition Exhibit No. 25 252

04 Memorandum dated 10-14-92

05 to Luke and Leistritz from Cox

05

06 Deposition Exhibit No. 26 255

06 Memorandum dated 10-9-92

07 to Luke from Cox

07

08 Deposition Exhibit No. 27 266

08 Conference Call Notes

09

09 Deposition Exhibit No. 28 278

10 Memorandum dated 10-16-92

10 from Pat Fitzgerald (portions redacted)

11

11

12

12

13

13

14

14

15

15

16

16

17

0229

01 F. LARRY LEISTRITZ,

02 the witness hereinbefore named, being previously cautioned

03 and sworn to testify the truth, the whole truth and

04 nothing but the truth, testified as follows:

05 CONTINUED DIRECT EXAMINATION

06 QUESTIONS BY MR. ROSENBERG:

07 Q. Professor Leistritz, you are still under oath.

08 Do you understand that?

09 A. Yes.

10 Q. I just wanted to say one thing to you. A number

11 of the questions I'm going to say are yes and no, can be

12 answered yes and no. I don't want to stop you from giving

13 a complete answer --

14 A. Yes.

15 Q. -- but without wanting to stop you, if you can

16 answer yes or no, that will move things along.

17 A. Okay.

18 Q. Here is Exhibit 23 again. I just want to ask

19 you. Whose notes are those?

20 A. Those are mine.

21 Q. Those are your notes.

22 You don't know when those notes were taken,

23 though, do you?

24 A. Approximately mid October at a meeting held at

25 the RPC offices here in Austin.

0230

01 Q. October 1992?

02 A. Yes.

03 Q. Okay. Who was present at that meeting?

04 A. Primarily myself, Jeanne Werner and Melissa Cox.

05 Q. What was that meeting about?

06 A. Talking about developing the report that we were

07 preparing for delivery at the end of October.

08 Q. Spell Jeanne's name for me.

09 A. I believe it's W-e-r-n-e-r. We might need to

10 check that.

11 Q. And Melissa? What's her full name?

12 A. M-e-l-i-s-s-a, I believe. Last name is C-o-x.

13 Q. Does she have a middle initial? Do you know

14 that?

15 A. I don't know.

16 Q. They are both economists?

17 A. I'm not exactly sure what Jeanne's formal

18 degree title is.

19 Q. What about Melissa? What are her credentials,

20 to the extent you know?

21 A. To the extent I know, I believe she has a

22 Master's degree in either economics or perhaps an MBA. Of

23 course, Melissa is -- was with RPC only a relatively short

24 time.

25 Q. Do you know where her degree is from, by the

0231

01 way?

02 A. No. Dr. Luke would be a much better source for

03 formally giving you her resume.

04 Q. Who called this meeting in October of 1992? Why

05 did the meeting come about?

06 A. It was I guess kind of a joint decision of

07 myself and Dr. Luke. And we felt that with the need to

08 prepare a report by the end of the month it would be a

09 good idea to get the principal workers together to talk

10 about who was going to do what.

11 Q. Okay. So the report you are going to prepare --

12 MR. ROSENBERG: I'll mark this as an exhibit

13 but I'm not going to put it in now.

14 (The instrument referred to was here marked

15 as Deposition Exhibit No. 24 for identification.)

16 QUESTIONS BY MR. ROSENBERG:

17 Q. The report that you were going to prepare is

18 what has been marked Exhibit 24?

19 A. What became Exhibit 24, yes, which is draft

20 statement of opinions for October 26, 1992 to Bill Green

21 from Ron Luke.

22 Q. Was Dr. Luke at this meeting?

23 A. He was at this meeting part of the time.

24 Q. What was the structure? Were different people

25 going to write different parts of this?

0232

01 A. Right. Essentially that was the plan, yes.

02 Q. And then would everybody review the entire

03 project once it was finished?

04 A. Not necessarily. Dr. Luke would certainly

05 review everything -- all of the components because he was

06 -- he would essentially have the final editorial decision

07 on the final report.

08 Q. Who else took notes at this meeting other than

09 you?

10 A. I would say that my notes here were the primary

11 ones taken. The objective was -- what I was trying to

12 create was a very rough first draft of an outline for the

13 report with a view of facilitating the discussion about

14 who is going to do what part. So you see some notes in

15 the margin about Jeanne, Melissa, Larry and so on.

16 Q. Everybody did their part and then funneled that

17 into Luke?

18 A. Yes.

19 Q. And Luke put it all together?

20 A. Uh-huh.

21 Q. Did you see a copy of Exhibit 24 before it was

22 produced in final form?

23 A. Yes.

24 Q. Did you review that copy?

25 A. Yes.

0233

01 Q. And you sent your notes back to Dr. Luke?

02 A. Right. Some of the feedback to Dr. Luke was

03 probably done by telephone.

04 Q. Your notes here say that the study area -- first

05 part is Study Area Profile.

06 A. Uh-huh. Yes.

07 Q. And you were going to define the study area to

08 show it to be a three-county area.

09 A. No. The study area would include parts of -- it

10 was my view that the study area would include parts of

11 three counties, those counties being Palm Beach, Hendry

12 and Glades. I was suggesting here that it would be

13 important for us to develop a map that would show -- that

14 would delineate the study area, show how it related to the

15 boundaries of the three counties, show which communities

16 were included in the study area and so on. It would not

17 include all of the three counties.

18 Q. Next subject matter is employment.

19 A. Uh-huh.

20 Q. And what is that note about?

21 A. Simply indicating that it seemed to me some of

22 the -- some important data that would be important in

23 terms of background on the study area would be the current

24 -- most recent available information and some information

25 about trends in total employment, in labor force, which

0234

01 includes those employed plus those unemployed, and

02 unemployment, those who were not employed, also employment

03 by industry and so on.

04 Q. And those items were going to go into Exhibit

05 24?

06 A. This would be background information for

07 preparing that sort of document. I believe, for instance,

08 somewhere in that document we have a statement the current

09 labor force of the EAA is estimated to be -- I believe

10 it's 38,000 and some individuals. That was the purpose of

11 assembling this kind of information was background for

12 creating that document.

13 Q. That's my question. This information had

14 already been assembled, hadn't it?

15 A. Some of it probably had been assembled. Some

16 was being assembled. Again, the purpose here was to

17 develop an outline of items that I felt should be included

18 as we drafted our report.

19 Q. Item C is population. What is that note about?

20 A. Okay. Similarly, with respect to background on

21 the study area then I thought we should have information

22 on the population of the three counties. Most current

23 would be 1990 and historically 1980 and 1970s so that we

24 could see trends and patterns, also the towns included in

25 the study area and so on. And then there are subsequent

0235

01 items relating to population projections and the like.

02 Q. Let me back up a second.

03 Under B, employment, there is a margin note

04 and it says Jeanne.

05 A. Uh-huh.

06 Q. Does that mean that was Jeanne's segment of

07 this? Jeanne was going to write on this?

08 A. That would be my interpretation. Jeanne was

09 going to take care of pulling together this information.

10 Q. Did she, in fact, do that?

11 A. I believe so.

12 Q. There is a note next to that that says,

13 "Abstract?" What does that mean?

14 A. I can only speculate. My speculation would be

15 that she thought that some of this data could come from

16 the Florida Statistical Abstract.

17 Q. On population -- the margin note here says

18 Melissa.

19 Was this Melissa's subject matter?

20 A. My interpretation of that note would be that

21 Melissa was going to take the lead in drawing together

22 this data.

23 Q. Exhibit 24 was produced October 23rd.

24 A. Yes.

25 Q. This meeting was in mid October.

0236

01 Did Melissa, in her tenure with RPC, stay

02 beyond October 23rd, the production of Exhibit 24?

03 A. I would -- I believe that Melissa left -- my

04 recollection is that Melissa left right around November

05 1. But I -- we would -- again, Dr. Luke would be the

06 definitive source on just exactly when she left.

07 Q. What I'm asking is: Melissa did the write-up on

08 population?

09 A. Melissa was at least -- had been identified as

10 the person who would have initial responsibility for

11 pulling together the data.

12 Q. Now, D is housing.

13 A. Yes.

14 Q. It says Jeanne in the margin.

15 A. Uh-huh.

16 Q. What was significant about D, in your view?

17 A. What was significant about D?

18 Some interest in the type of housing,

19 especially the note in the margin, owned versus rented.

20 There was some thought that as we look at the question of

21 are people likely to leave the study area in response to

22 unemployment or are they likely to remain, we thought the

23 question of how many of the people own their own housing

24 versus renting might be a relevant issue here. Again,

25 this is sort of general background on the study area.

0237

01 Q. Okay. E says business.

02 A. Uh-huh.

03 Q. What is this about? What is your note about

04 here?

05 A. What's the note about?

06 Again, outlining some of the types of data

07 we want to pull together, business units and employment,

08 1980 and 1990 or '91, (County Business Patterns data).

09 County Business Patterns is a publication

10 published by the U.S. Department of Commerce. It provides

11 some of this type of information at a county level. And

12 so it seemed to me that this would be one major source for

13 our business, our data on businesses.

14 Q. Now, again, this is mid October. Hadn't all of

15 this information been pulled together --

16 A. Some of this --

17 Q. -- by this time?

18 A. Some of this information undoubtedly was in our

19 files at this point. Again, part of the purpose of

20 writing this outline was in terms of organizing our

21 information into a coherent report, coherent package.

22 Q. Well, but this doesn't --

23 A. Go ahead. I'm listening.

24 Q. This doesn't put anything in a package. It just

25 points -- has a Point 1 and a Point 2 regarding two

0238

01 sources of information. Am I correct?

02 A. Yeah. This was simply a working outline

03 developed among three people sitting around the table like

04 we're sitting and talking about how are we going to make

05 this report take shape.

06 Q. There is no substance in this regarding subject

07 matter? It's simply reference points?

08 A. Yeah. That's what some would term a bare bones

09 outline.

10 Q. Item F here says Income and Earnings. What is

11 that note about?

12 A. That would be another category of data that we

13 would want to include in our description of the study

14 area. And the subpoint is BEA data - 1980 and 1989,

15 referring to the Bureau of Economic Analysis of the U.S.

16 Department of Commerce which publishes income earnings and

17 employment data at a county level and is -- I guess some

18 would say kind of the standard source for that type of

19 information.

20 1989 was thought to be the most current

21 data that would be available at the time that we were

22 doing this. And so I was saying we would want the data

23 for 1989 and for 1980 to see trends.

24 Q. What are the larger notes?

25 A. It appears to say "Jeanne/Melissa" and "See

0239

01 something report." See something report.

02 Well, obviously the last comment would not

03 be very instructive for me because I can't tell for sure

04 what report she's referring to.

05 Q. Do you know who made that margin note?

06 A. No. It's not -- not my handwriting, so I guess

07 it was one of the other two.

08 Q. Below the margin note it looks like the initials

09 G.F. Any significance to that?

10 A. There must have at least been a contemplation of

11 another item here, but that thought apparently didn't get

12 finished.

13 Q. Page four, Roman II says -- is that Import

14 Analysis?

15 A. Impact.

16 Q. Impact analysis.

17 What is that note about?

18 A. That would be -- that was I guess seen as the

19 second major component of our report. It would be

20 analysis of impacts. Then Item A -- Item A is direct

21 impacts, a note suggesting explain basis for alternative

22 scenarios. B -- Item B is RIMS II model. That is since

23 the RIMS II model is the tool that had been used by Hazen

24 and Sawyer and was also the tool we intended to use, we

25 thought there might be a need for a short background

0240

01 statement about the RIMS II model. And then we would go

02 on down to other items of different impact issues that we

03 would address.

04 Q. The margin note says Larry.

05 A. Uh-huh.

06 Q. Was this your area?

07 A. Yes. The implication of the note is that I was

08 going to be responsible for dealing with Items A, B and C,

09 C being impacts of alternative scenarios on industry

10 output and employment.

11 Q. Did you in fact make a write-up on these areas?

12 A. Yes.

13 Q. Was your write-up incorporated in Exhibit 24?

14 A. Yeah. My write-up as well as material prepared

15 by several other people became the basis for Exhibit 24.

16 Q. But on impact analysis, were you the sole author?

17 A. I think the answer to that is no. Clearly the

18 impact analysis was a product of several people's

19 efforts.

20 Q. Who else was involved in that?

21 A. Okay. Ann Orzech had the primary responsibility

22 for the public service and fiscal analysis. Jeanne Werner

23 was the lead person for displaced worker issues and so

24 on.

25 Q. Let me focus you on Issues A, B and C.

0241

01 Were you the sole author on those issues?

02 A. I would have been the primary author.

03 Q. A again says, "Direct impacts - explain basis

04 for alternative scenarios."

05 What are you talking about?

06 A. Okay. In the event -- what we did was basically

07 examine the Hazen and Sawyer and Polopolus/Richardson

08 analysis. At the time this outline was written it might

09 have been contemplated that we might possibly be analyzing

10 some other scenarios in addition to what they had done.

11 It was ultimately determined not to attempt to do this in

12 the October analysis.

13 Q. So your analysis of direct impacts is an

14 analysis then of Hazen and Sawyer's work on impacts?

15 A. And Polopolus and Richardson.

16 Q. And Richardson and Polopolus?

17 A. Uh-huh.

18 Q. The RIMS II model was used for what? Indirect

19 impacts?

20 A. Yes. That's the basic tool for measuring

21 indirect economic effects.

22 Q. So your task here was to make sure that the RIMS

23 II model was correctly used?

24 A. And -- yes. We also -- we applied the RIMS II

25 model in some ways that were somewhat different than what

0242

01 had been done by Hazen and Sawyer.

02 Q. Like what?

03 A. Specifically, the Hazen and Sawyer apparently

04 had used the multipliers for Palm Beach County. Since

05 Palm Beach County is a major metropolitan area, then it

06 seemed to us that these multipliers would be likely to

07 overstate the impacts at the level of the EAA. And so

08 basically then we used -- we used adjusted multipliers

09 based on comparing multipliers of Palm Beach County with

10 those of a rural agricultural county that we thought to be

11 more analogous to the economic structure of the EAA, in

12 this case Okeechobee County. And this is discussed in

13 Exhibit 24.

14 Q. Have you ever been to Okeechobee County?

15 A. Have I been physically to Okeechobee County?

16 No.

17 Q. C says, "Impacts of alternative scenarios on

18 industry output and employment."

19 Was that ever done?

20 A. Yes. That was the result of our RIMS analysis.

21 Q. What are the alternative scenarios here?

22 A. Those would be the scenarios that had been

23 analyzed by Hazen and Sawyer and by Polopolus/Richardson.

24 Q. That means the scenario without BMPs, with

25 BMPs, with BMPs and STAs at $25?

0243

01 A. Right.

02 Q. At $100?

03 A. Uh-huh.

04 Q. With debt, with taxes?

05 A. Yeah. In those two analyses there were -- it

06 seems to me about four or five basic scenarios. Those

07 were the ones we looked at.

08 Q. In the continuation of your work, will RPC run

09 its own direct effect analysis?

10 A. That is my understanding at this time, but I

11 have -- yeah. To the best of my understanding at this

12 time, the answer is yes, we will.

13 Q. To the best of your knowledge, had anybody in

14 RPC been to Okeechobee County before Okeechobee County was

15 selected?

16 A. No.

17 Q. What other counties did you look at other than

18 Okeechobee for selecting this component of your

19 multiplier?

20 A. Okay. Part of the choice of Okeechobee County

21 was conditioned at the time we were doing our analysis in

22 October by what -- based on what county -- for what

23 counties were multiplier data -- RIMS multiplier data

24 available. Okay. Okeechobee was one of the very few

25 along with Palm Beach County for which multiplier data

0244

01 were available at the county level within the time frame

02 in which we had to do our analysis. Okay.

03 The other criteria for believing that

04 Okeechobee County would be a reasonable analogy basically

05 related to examining the economic base of Okeechobee

06 County versus Hendry, Glades and the EAA and also

07 examining the type of trade centers, basically what kind

08 of trade centers do we have in the EAA, what kind of trade

09 centers do we have in Okeechobee County.

10 Regional economists often talk about

11 classifying trade centers on the basis of the types of

12 goods and services available there, partial shopping

13 centers, complete shopping centers and so on. This was

14 the basis then for selection of Okeechobee County for this

15 early very preliminary analysis, I might add.

16 Q. What was, if anything, defective about RIMS that

17 would not contemplate the EAA being in Palm Beach County?

18 A. Okay. We talked about this issue a bit

19 yesterday. But coming back to this issue, the RIMS model

20 is -- the data is organized on a county basis. Okay. And

21 so Palm Beach County, of course, includes not only the EAA

22 agricultural portion but also then this major metropolitan

23 urban area.

24 If the intent is to attempt to measure

25 multiplier effects within the EAA and the communities

0245

01 immediately surrounding the EAA, using Palm Beach County

02 level multipliers to accomplish this would seem likely to

03 me to result in an overstatement of the impacts because,

04 in fact, there are many kinds of goods and services that

05 are not readily available within the EAA. We used --

06 yesterday talked about the example of apparently most

07 people residing in the EAA, if they wanted to buy a new

08 automobile, would probably go into West Palm Beach, still

09 within Palm Beach County but outside the EAA.

10 So this was basically what was at issue was

11 how best to approximate to measure the impacts within the

12 EAA, realizing that the -- well, realizing that Palm Beach

13 County multipliers and so on would tend to be dominated

14 then by the metropolitan -- metropolitan urbanized area of

15 the eastern part of Palm Beach County.

16 Q. Am I correct in my -- in my understanding that

17 approximately 90 percent of the EAA is within Palm Beach

18 County?

19 A. I believe that's essentially correct.

20 Q. And a smaller percentage is over in Hendry

21 County?

22 A. Hendry and a small portion in Glades.

23 Q. A small portion of the EAA is in Glades? Is

24 that your understanding?

25 A. Well, I would have to look at our map, but our

0246

01 study area would include a portion of Glades County

02 because of the concern about including communities

03 adjacent to the EAA that are economically dependent on the

04 agricultural activity in the EAA.

05 Q. Whether or not they are in the EAA?

06 A. Right.

07 Q. Now, for that portion of the EAA that's in Palm

08 Beach County, that 90 percent, was RIMS effective in

09 contemplating multipliers for that portion of the EAA?

10 A. If you are -- if the intent is simply to -- if

11 the intent is to measure the impacts, the secondary

12 effects that occur within Palm Beach County, no matter

13 where within Palm Beach County they occur, that is whether

14 they occur within the EAA, the immediately adjacent

15 communities or whether they occur in West Palm Beach or

16 one of the communities in that area, then the RIMS county

17 level multipliers for Palm Beach County would seem to be

18 appropriate measures.

19 If, on the other hand, one is trying to

20 approximate or estimate the secondary impacts that would

21 occur within the EAA and the immediately adjacent

22 communities in our study area, then the Palm Beach County

23 level multipliers from RIMS would, in my view, not be

24 appropriate. They would be likely to overstate the

25 impacts at the level of the EAA and immediately adjacent

0247

01 communities.

02 Q. Is there a regional trade center in the EAA

03 other than West Palm Beach or adjacent to the EAA other

04 than West Palm Beach?

05 A. West Palm Beach would be the closest major

06 regional trade center. There would be other trade centers

07 at a greater distance. We could basically take a look at

08 the map to identify which would be the closest ones.

09 Q. Let me go down your list then to D, E and F.

10 Displaced worker issues.

11 Who was going to do the write-up on that?

12 Was that Jeanne?

13 A. Jeanne Werner.

14 Q. And Ann was going to do public --

15 A. Service and fiscal.

16 Q. That was her responsibility? Melissa was going to

17 do what?

18 A. World sugar market is what that note is talking

19 about.

20 Q. In your perhaps projected future work to do a

21 direct analysis, are you going to use FLIPSIM?

22 A. That is my understanding at this time, yes.

23 Q. And in using that model you are going to use the

24 Polopolus/Richardson factors also: debt, income taxes,

25 risk, things like that?

0248

01 A. We would -- I guess a major part of our analysis

02 would be to determine the most appropriate factors to use

03 in things like taxes and so on.

04 Q. Taxes would be an appropriate -- income taxes

05 would be an appropriate factor to use in that model?

06 MS. STINSON: I think -- object to the

07 form. I think it misstates his answer.

08 QUESTIONS BY MR. ROSENBERG:

09 Q. Would income taxes be an appropriate item to be

10 used in that model?

11 A. Okay. As I understand the question, I believe

12 that one of the -- as I understand, one of the points of

13 discussion between the Hazen and Sawyer team and

14 Polopolus/Richardson was with regard to a concern that the

15 Hazen and Sawyer analysis had neglected income taxes as

16 an expense item, and Polopolus/Richardson suggesting that

17 income taxes are a relevant factor that needs to be

18 considered in examining the cash flow of a farming

19 operation.

20 It would be my view at this time that

21 income taxes are indeed a relevant factor that needs to be

22 considered in examining the cash flow situation of a

23 farming operation.

24 Q. So it would be an appropriate item to be used in

25 the FLIPSIM model?

0249

01 A. Yes.

02 Q. Where would you get the income tax factor from?

03 Where would you get that item from?

04 A. Okay. Basically the FLIPSIM model, as I

05 understand it -- and I've only been looking into the

06 details of FLIPSIM very recently. But the FLIPSIM model

07 is fundamentally a "simulation model" which simulates

08 through a system of equations the production process, cash

09 flow and so on of a farming operation. Okay.

10 It's my understanding then the FLIPSIM

11 model would -- indeed has a subcomponent of equations

12 which essentially simulate -- simulate the operation --

13 the application of the tax code to the farm's annual

14 income generation.

15 Again, I have not had the opportunity to

16 examine all of the -- you know, the equations in detail.

17 But essentially that's fundamentally how it works.

18 The farm -- the FLIPSIM model estimates the

19 farm's revenues, the expenses, and then comes up with

20 basically a taxable income figure to which then one would

21 apply the current tax rates to get an estimate of income

22 tax liabilities which becomes a factor, as I say, in

23 calculating cash flow for the farm.

24 Q. Yesterday there were a number of exhibits we

25 went through. And those were impact studies, economic

0250

01 impact studies you did regarding direct impacts, indirect

02 impacts. Most of those were in North Dakota, Nebraska,

03 places like that.

04 A. Yeah.

05 Q. In those studies yesterday that we talked about,

06 did any of them have an income tax component factored in?

07 A. Income tax would be one of the expenditures of

08 the firms that we were -- that we would have been dealing

09 with. So the short answer would be yes. Several of those

10 would have included income tax as a factor, that is as one

11 of the expenditures that a firm makes.

12 Q. Did any of those previous studies have debt as a

13 factor?

14 A. Certainly.

15 Q. Did any of those studies have risk as a factor?

16 A. Certainly, at least indirectly, risk in this

17 case relating to variability of yields, prices received

18 and the like. So the general answer would be yes.

19 Q. So, if I understand you, in economic impact

20 analyses, income taxes is a factor that should be within

21 the model?

22 A. That is -- I think the question is probably

23 phrased relatively broadly. The relevance of income taxes

24 may depend -- the relevance of income taxes is a factor in

25 the model. The use of that factor in a model for an

0251

01 economic impact assessment may depend on the specific

02 questions being posed and so on. But, in general, income

03 taxes would at least in some cases be a relevant factor to

04 be considered. Specifically if one is examining firm cash

05 flow over time, income taxes may be a relevant factor to

06 consider.

07 Q. Tell me if I have it right. There is a cash

08 flow analysis and there is an economic impact analysis.

09 A. Right.

10 Q. And they are different.

11 A. Yes.

12 Q. In the cash flow analysis, income tax is a

13 factor.

14 A. Uh-huh.

15 Q. Am I correct?

16 A. Yes.

17 Q. You are also saying in the economic impact

18 analysis, as opposed to a cash flow analysis, income tax

19 is also a factor there.

20 A. Income tax become a factor in the economic

21 impact analysis if for no other reason than that this is

22 one of the -- this tends to be then -- income tax

23 payments, payment from households within the study area to

24 government outside the study area -- these income tax

25 payments then become one of the leakages of purchasing

0252

01 power from the study area. So in that extent then it is

02 relevant in calculating economic impacts.

03 (An instrument was here marked as

04 Deposition Exhibit No. 25 for identification.)

05 QUESTIONS BY MR. ROSENBERG:

06 Q. Can you identify that document for me, please?

07 A. Okay. Exhibit 25, a memo from Melissa Cox

08 addressed to Ron Luke and Larry Leistritz with CCs to

09 Jeanne Werner and Ann Orzech. Date: October 14, 1992,

10 Subject: Definition of the EAA study area.

11 Q. This is what we were just talking about --

12 A. Yes.

13 Q. -- in your notes, is it not?

14 A. Right.

15 Q. Glades County is not part of the EAA, but your

16 group includes it in your analysis.

17 A. Yes.

18 In the last paragraph, Melissa says, "I

19 will proceed with including the southeast corner of Glades

20 County in the demographic projections unless I hear from

21 either of you that this is not in our best interest in the

22 short term."

23 Q. What does that mean, "is not in our best

24 interest in the short term"?

25 A. It's not -- I cannot say for certain exactly

0253

01 what Ms. Cox had in mind. She could have been thinking in

02 terms of the possible difficulties of obtaining data for

03 three counties rather than two. I can't -- I can't

04 definitively answer the question what she had in mind by

05 that statement.

06 Q. She would be the best one to ask about that?

07 A. Yeah.

08 Q. The document is dated October 14th.

09 A. Yes.

10 Q. Exhibit 24 was produced October 23rd.

11 A. Yes.

12 Q. Would it be fair to conclude after looking at

13 the first paragraph that Jeanne contacted the district on

14 October 13th and at that point she found out that they

15 don't consider Glades to be part of the EAA?

16 A. Okay. That sounds like a reasonable

17 conclusion.

18 Q. And prior to that you had not known that?

19 A. The discussion of what should be of -- what

20 should be the bounds of the study area had been an ongoing

21 -- had been an ongoing discussion.

22 And the paragraph you are quoting from --

23 the first sentence says, "Jeanne contacted the water

24 management district," et cetera, "and found out they do

25 not consider Glades County to be part of the EAA.

0254

01 However, according to the USDA, Glades County does have a

02 small number of growers whose product is used in the

03 Clewiston mill," et cetera.

04 Again, it was part -- this was part of what

05 had been an ongoing process attempting to come up with

06 what would be, in our view, the most -- the most logical

07 definition or delineation of a study area.

08 Q. Well, would you look at the last sentence in

09 that paragraph.

10 A. Uh-huh.

11 Q. "From an agricultural production standpoint, we

12 certainly need to include Glades in our analysis, but it

13 appears that including Glades County in the employment/

14 displaced worker component of the study may not add much

15 weight to the argument."

16 What argument are we talking about here?

17 A. Okay. Again, I guess I would have to say that

18 probably Ms. Cox would be the person to ask about what she

19 -- what she really meant here. I'm not really able to

20 speculate as to exactly what she had in mind.

21 Q. Let me ask you this: When you people were

22 meeting, were you meeting to conduct a study or to

23 construct an argument in favor of a plan?

24 MS. STINSON: Object to form.

25 QUESTIONS BY MR. ROSENBERG:

0255

01 Q. You can answer the question.

02 A. In my view, we were having a meeting to conduct

03 a study similar to many others I've been involved in.

04 (An instrument was here marked as

05 Deposition Exhibit No. 26 for identification.)

06 QUESTIONS BY MR. ROSENBERG:

07 Q. Let me show you Exhibit 26.

08 Can you identify that?

09 A. Okay. Exhibit 26, a memo from Melissa Cox to

10 Ron Luke with CCs to Pat Fitzgerald, Jeanne Werner, Larry

11 Leistritz, Ann Orzech. Date: October 9, 1992. Subject:

12 Sugar cane project status report.

13 Q. Are you familiar with this document?

14 A. Yes.

15 Q. Who is Pat Fitzgerald?

16 A. Pat Fitzgerald is a part-time employee of RPC

17 whom I have not met.

18 Q. Is that a man or a woman?

19 A. A man, to my knowledge.

20 Q. Is Pat Fitzgerald an economist?

21 A. That's my understanding.

22 Q. Did Pat Fitzgerald have any role in this

23 project?

24 A. Not to my -- not to my knowledge. It's also

25 possible that in this early stage it was contemplated that

0256

01 he might have some role. To my knowledge, he had no major

02 role in the project.

03 Q. Okay. When you say "early stage," October 9th

04 is two weeks before your -- the date on Exhibit 24 which

05 is your statement of opinions.

06 A. Uh-huh.

07 Q. Is that an early stage in your view?

08 A. Well, certainly an early stage compared to now

09 at least. At that point in the project -- maybe I should

10 phrase my answer at that point in the project there may

11 have been some thought that Mr. Fitzgerald would -- might

12 be called upon to play some role. Subsequently, I don't

13 believe he is -- I am not aware that he has played a

14 significant role.

15 Q. The first paragraph under General states,

16 "Included in this report is a section of each person's

17 projected time frames for completion and issues relating

18 to their part of the analysis."

19 Is that right?

20 A. That's what it says, yes.

21 Q. Was the intention of this report -- this

22 memorandum, as you understand it, to have this time frame

23 projection of what people were going to do and what their

24 role was?

25 A. That seems to be -- the subsequent sections

0257

01 refer to time frames for completion issues. And then

02 Larry --

03 (At this time there was a brief discussion

04 off the record.)

05 THE WITNESS: Essentially the memo is

06 summarizing then different individuals' responsibilities,

07 their time frames for completing their different tasks

08 with the overall interest, of course, being how do we get

09 -- how do we get everything to come together by the 26th

10 of October.

11 QUESTIONS BY MR. ROSENBERG:

12 Q. Exhibit 26 is dated October 9th. Exhibit 23 is

13 undated, but you told me that was mid October.

14 Is Exhibit 23 subsequent?

15 A. It seems to me that we can probably date that.

16 Q. That being Exhibit 23?

17 A. Exhibit 23 can probably be dated October -- I

18 would have to look at a calendar. But this memo says,

19 "Included as an attachment to this report is a study

20 outline that was developed October 7 between Larry, Jeanne

21 and me."

22 Exhibit 23 would be the study outline.

23 Q. That's October 7?

24 A. So October 7th would be the date that could be

25 attached there.

0258

01 Q. Under time frames for completion, the first

02 paragraph is Larry.

03 A. Uh-huh.

04 Q. That's you, right?

05 A. Yes.

06 Q. "Larry agreed to provide us with a contact report

07 detailing his experience in trying to obtain financial

08 data from the USDA."

09 What is that about?

10 A. What is that about?

11 I had contacted two different groups within

12 the U.S. Department of Agriculture inquiring about the

13 availability of financial -- information on farm financial

14 structure by farm type, by farm size and the like. And I

15 had indicated that I would prepare a short memo indicating

16 what I had -- what I had learned to date about data

17 availability. And I'm sure that -- it's quite likely that

18 my memo on that subject is included as part of the

19 different documents we have.

20 Q. Did you ever obtain that financial data from the

21 USDA?

22 A. We obtained some data from the USDA, yes. We

23 did not obtain the data in the degree of detail that we

24 had perhaps hoped to obtain.

25 Q. What data did you not receive from USDA that you

0259

01 sought from USDA?

02 A. We had been asking specifically if they could

03 provide a summary of information on farm financial

04 structure for sugar cane farms by size of operation. That

05 is to say not data for individual farms which would, of

06 course, be confidential, but if a statistical summary

07 could be provided. And to this point, we have not

08 obtained that particular data.

09 Q. The next sentence says, "Larry feels that having

10 the USDA data is not critical for meeting the October

11 26th, 1992 deadline unless we will be running the FLIPSIM

12 model on scenarios in which cost returns and debt data are

13 required."

14 A. Uh-huh.

15 Q. I want to break that down and ask you about

16 segments of that.

17 You say USDA data is not critical unless

18 you will be running FLIPSIM.

19 A. Uh-huh.

20 Q. What does that mean?

21 A. That is to say in this phase of the project we

22 did not anticipate that we would be conducting analysis of

23 direct impacts, translate running FLIPSIM. Hence, we

24 would not need to be concerned about the kind of data,

25 including this financial structure data, that might be

0260

01 desirable if, in fact, we were doing analysis of direct

02 impacts using a model like FLIPSIM.

03 Q. Would it also mean -- tell me if I have it right

04 -- that the USDA data goes to cost returns and debt data?

05 A. Yes. Uh-huh. The nature of data that we were

06 hoping to obtain from USDA would include information on

07 farm costs, returns and "financial structure" which would

08 include debt.

09 Q. Does cost also include purchasing patterns?

10 A. Yes. Uh-huh.

11 Q. And in the next sentence it says, "In the coming

12 week, Larry plans to examine the suitable of the data

13 presented by Hazen and Sawyer."

14 Did you do that?

15 A. Yes.

16 Q. "As well as Dr. Polopolus."

17 A. Yes.

18 Q. Did you do that, too?

19 A. Uh-huh.

20 Q. "In order to determine the extent to which the

21 data will you useful in conjunction with RIMS."

22 Did you make that determination?

23 A. Uh-huh.

24 Q. What was it?

25 A. Basically we utilized the information from the

0261

01 Hazen and Sawyer analysis and the Polopolus/Richardson

02 analysis in conjunction with the RIMS model in preparing

03 our analysis for the basis for our opinions.

04 Q. The next sentence says, "Larry indicated this

05 morning that he had not contacted Bill Green but planned

06 to do so."

07 A. Uh-huh.

08 Q. Did you ever contact Bill Green?

09 A. Yes.

10 Q. And without at this point telling me

11 specifically what you said, what was the subject matter of

12 that contact?

13 A. Oh, I have had a number of conversations with

14 Bill Green. I'm not -- I'm not clear -- it's not clear,

15 totally clear in my mind what Melissa had in mind in terms

16 of -- about what would I be contacting Bill Green at this

17 point in time, I don't know because obviously I have

18 contacted Bill Green and he's contacted me on several

19 occasions on a variety of subjects including -- okay.

20 Q. You could tell me the subject matter. I'm not

21 asking for the content of the subject matter.

22 A. Okay. I guess a variety of subjects would be a

23 pretty good statement.

24 Q. Well, maybe, but what were those subjects? I'm

25 not asking for the content of the conversation. I want to

0262

01 know about the subject matter of the conversation.

02 MS. STINSON: I object to the form.

03 If by your question you mean was the

04 subject matter the economic impact statement or the

05 weather in Austin, that kind of generalness, I don't have

06 an objection. But any more specific than that, I would

07 instruct the witness not to answer.

08 MR. ROSENBERG: I will tell you what my

09 question is. I want to know whether there was a time

10 pressure from anybody to get this report out as of a

11 certain point in time.

12 MS. STINSON: I would object and instruct

13 him not to answer on that. Whatever the attorney may have

14 communicated regarding trial strategy or trial needs I

15 would object and instruct him not to answer.

16 QUESTIONS BY MR. ROSENBERG:

17 Q. Without telling me what the attorney told you,

18 as a result of any conversation with an attorney, did you

19 understand that you were under time pressure to get a

20 report out?

21 A. No. I guess I understood from early September

22 that we had a -- that we had a major milestone for

23 delivering a report, a summary of opinions, whatever this

24 was going to mean, but we had a major milestone to deliver

25 a report October 26th. So this was -- this had been

0263

01 established very early in our work.

02 There were -- there were not any -- I don't

03 recall any other major communications of time pressure

04 beyond this overall deadline that everything has got to

05 come together by.

06 Q. When was that deadline set?

07 A. It would have been early in September.

08 Q. Who set the deadline?

09 A. That I can't say for sure. I guess it was a

10 product of discussion between Dr. Luke and the client. It

11 was communicated to me by Ron Luke.

12 Q. The next paragraph briefly discusses the

13 definition of what's to be in the EAA that we have talked

14 about here. But the last sentence of that is, "He wanted

15 to know if you had ever discussed this with the client

16 and, if so, what had been agreed upon."

17 Who is having this discussion?

18 A. Okay. My reading of this -- the memo is

19 directed to Ron Luke. So I would identify here that he

20 wanted to know -- he would be Larry, myself, wanted to

21 know if you, Ron Luke, had ever discussed this with the

22 client and, if so, what had been agreed upon. That is to

23 say, again, as we were talking about, what's the most

24 logical, rational study area definition. The question had

25 come up. We should ask Ron what insights he would have

0264

01 based on his conversations with the client that we haven't

02 been in on.

03 Q. Well the note says, "what had been agreed

04 upon." The fact that -- let me ask you: If it had not

05 been agreed upon by somebody -- let me withdraw that and

06 reconstruct it.

07 The term "agreed upon" -- to add something

08 else to your study, was that an economic determination or

09 was that a determination made for another factor?

10 A. Well, at this point I'm not sure I totally

11 understand the question.

12 Q. All right. Let me give you the -- let me

13 package the question a little better.

14 You, as an economist, apparently thought

15 that the municipality outside the EAA should be part of

16 the work program, study program.

17 A. Study area. Uh-huh.

18 Q. But you didn't proceed with that. You wanted to

19 get it agreed upon by somebody else who was not an

20 economist.

21 A. I again -- again, this is someone else writing

22 the memo, Melissa Cox. I think the intent here was simply

23 to try to make sure that we had, as the saying goes,

24 everyone in the loop relative to decisions about study

25 area. Again, this was relatively early in our work. We

0265

01 wanted -- I think she was interested in knowing is there

02 anything that we -- anything else we need to know,

03 anything else that Ron or the client have talked about

04 that we should consider in delineating our study area.

05 Q. Is it common for you to have non-economists

06 approve what your study area is or the extent of an

07 economic area?

08 A. Well, defining a study area with many other

09 decisions regarding sort of framing or scoping a project,

10 I'm typically quite interested in -- certainly in getting

11 the client's approval of what we're doing, of making sure

12 that the client understands what we're doing and agrees

13 with what we're doing rather than to -- than to discover,

14 once much of the analysis has been done, that there maybe

15 are some fundamental disagreements.

16 So, in that sense, certainly. We like to

17 make sure the client and other important actors understand

18 and hopefully agree with what we're doing.

19 Q. I'll take that answer.

20 In the margin notes it says "Yes, include."

21 Who placed that margin note in there?

22 A. I have no idea.

23 Q. On page two there is a margin note in the upper

24 right corner. Can you read that? In fact, can you read

25 any of the margin notes on that page?

0266

01 A. Well, the first one I can get as far as "do

02 tables". Somebody is supposed to do some tables. Okay.

03 Q. What about the next margin note on the left at

04 about the middle of the page? If you can't do it --

05 A. I give up on that one.

06 Q. I can understand.

07 A. Then there is the one at the bottom. The one at

08 the bottom is tell me if -- tell me -- it looks like "Tell

09 me what hardware or software you need." Okay.

10 Certainly the margin notes can only be

11 partially translated.

12 Q. I don't fault you for doing that.

13 (An instrument was here marked as

14 Deposition Exhibit No. 27 for identification.)

15 QUESTIONS BY MR. ROSENBERG:

16 Q. Do you know whose notes these are?

17 A. No, I don't.

18 Q. Exhibit 27. They refer to a conference call on

19 11-17-92.

20 Do you recall a conference call about

21 11-17-92 discussing the subject matter that you see on

22 this page?

23 A. Uh-huh.

24 Q. Were you a party to that conference call?

25 A. I believe so.

0267

01 Q. Who was in that conference call?

02 A. It would have been myself and Dr. Luke and I

03 believe Ann Orzech.

04 Q. Okay. What was the subject matter of that

05 conference call?

06 A. Okay. It's -- well, this appears to be notes

07 taken by one of the parties to the conference call

08 outlining major things that we talked about. Of course,

09 generally the subject of the conference call was what are

10 we going to do next with the project.

11 Q. Would it be fair to conclude that you have

12 finished a phase in the project on October 23rd, 1992?

13 A. Yes.

14 Q. This was a phase of the project already

15 finished?

16 A. Yes.

17 Q. What phase of the project was this? Was this

18 Phase 1 of the project or Phase 2 of the project? I

19 simply want an overview of where we are in this thing.

20 A. Let me say -- I think consistent with what we

21 talked yesterday, we can look at the review of the Hazen

22 and Sawyer documents as sort of Phase 1. Then the

23 preparation of the document you just showed me which was

24 delivered toward the end of October would have been really

25 a Phase 2. And then this conference call was really the

0268

01 initiation of my involvement in the next phase, Phase 3.

02 Q. The note here two-thirds of the way down the

03 page says, "Project completion - early March."

04 A. Uh-huh.

05 Q. Do you expect that this phase will be completed

06 by early March?

07 A. I guess at this point I would say probably we

08 would not be anticipating completing all of the things we

09 have outlined here by early March.

10 Q. When do you think that will happen?

11 A. I don't -- I think I'm not perhaps the best

12 qualified individual to answer that. Probably Dr. Luke

13 would be better qualified to talk about the overall

14 project schedule at this point.

15 Q. When do you think you will finish your role in

16 this phase?

17 A. At this point I'm not sure.

18 Q. What do you have yet to do to complete your role

19 in this phase?

20 A. Okay. Again, I don't -- I'm not sure I can

21 answer that at this point because that's partially a

22 function of what Dr. Luke, acting as project manager, asks

23 me to do.

24 Q. What do you understand your role to be in this

25 phase?

0269

01 A. Okay. I would say that at this point my role in

02 this phase has been only partially defined perhaps as our

03 work has progressed.

04 Q. To the extent that it's been defined, what does

05 it consist of?

06 A. Okay. In general, I have understood that I

07 would have some overall responsibility for projections of

08 without-project futures and also probably some of the

09 analysis of the alternative scenarios.

10 Q. Have you completed those?

11 A. No.

12 Q. What remains to be done on them in order to

13 complete them?

14 A. A number of things including probably analysis

15 of direct impacts and also additional analysis of

16 without-project futures, which is to say basically looking

17 at the future of the world sugar market.

18 Q. When do you anticipate you will finish those

19 defined roles?

20 A. Okay. To some -- we would be looking at

21 probably something over the next two to three months.

22 Q. So instead of early March, you say May perhaps?

23 A. Yeah. That sounds reasonable.

24 Q. Perhaps June?

25 A. Yes. We have worked on work plans and schedules

0270

01 that contemplated completion of much of this work by the

02 end of April, but some of these -- some of these schedules

03 depend on some variables that certainly are not totally

04 within my control, so --

05 Q. Like what?

06 A. Information that we might -- work to be done by

07 others so that something between the end of April and June

08 is probably a reasonable time frame.

09 Q. What information is beyond your control that you

10 will need to complete your portion of this?

11 A. Well, for instance, there would be some issues

12 of defining the without-project future, that is the future

13 of world sugar markets. There would be issues of some of

14 the direct impact analysis and this sort of thing.

15 One of the things that we're frankly

16 waiting on, too, is to see what Hazen and Sawyer are

17 going to be doing in their 20-year analysis so that we

18 don't needlessly duplicate work that they are doing.

19 Q. Aside from Hazen and Sawyer, what other

20 information are you going to need to complete your roles?

21 What specific information are you waiting on?

22 A. I think we have discussed a lot of this before.

23 I don't know if I can identify specific information we're

24 waiting on. Right now we're basically doing --

25 contemplating work on direct impacts, contemplating

0271

01 analysis of without-project futures, that sort of thing.

02 Q. When you say without -- what is the term you

03 just used?

04 A. Without-project future is a --

05 Q. What is that?

06 A. Excuse me. That's probably a -- probably

07 jargon. In impact assessments, there is often discussion

08 of a "baseline scenario" or a "without-project future"

09 which is the analyst's view of the future over the

10 planning horizon absent the project or the action that's

11 the subject of the analysis. Okay?

12 In this case, then, an economic/demographic

13 projection for the study area, absent the various SWIM

14 plan scenarios. Okay. And then this becomes -- as I

15 think we tried to mention yesterday, this without-project

16 future or baseline scenario becomes in a sense the

17 standard by which -- to which we compare then our analysis

18 of the different with-project futures or impact scenarios

19 or alternative scenarios, as it were.

20 Q. I have heard every word of your answer. I'm not

21 sure that I understand it all together.

22 Can you put it in sort of layman's terms

23 for me?

24 A. Okay. Given an effort to do an impact

25 assessment for a particular proposed action, be it a water

0272

01 management plan, or be it a new --

02 Q. Whatever the stimulus is.

03 A. Whatever the stimulus is. Okay.

04 An important early step then is to do -- to

05 prepare a baseline projection for the study area

06 projecting what are seen as some of the key indicators

07 like employment, population and the like for the study

08 area and perhaps for specific jurisdictions within the

09 study area. This is our -- this is our projection, this

10 is our assessment of the future situation over the

11 planning horizon, which might be a 20-year or 30-year

12 period, without the proposed project, proposed action,

13 whatever. This -- the importance --

14 Q. That's just a baseline projection is what you

15 are telling me?

16 A. That's right. Okay?

17 Q. That's what it is? It's just a baseline

18 projection?

19 A. Right.

20 Q. Okay.

21 A. The baseline projection --

22 Q. Over time?

23 A. Yes. We must realize does not necessarily -- is

24 not necessarily the same as saying everything will be just

25 the same as it is right now. Okay?

0273

01 Q. Okay. Can you turn to page two, please, the

02 second paragraph under inventory tax.

03 A. Yeah.

04 Q. Would you read that for a second.

05 A. That's what it seems to say.

06 Q. Would you read that for a second to yourself,

07 please.

08 What is the thought there? Would you

09 explain that to me?

10 A. Well, since I did not write the notes --

11 Q. I'm wondering what the thought behind that is.

12 That's all.

13 A. My interpretation -- the note --

14 Q. It's permissible to say you don't know, by the

15 way.

16 A. I think at this point -- since they are not my

17 notes, I think maybe the appropriate answer might be that

18 I don't -- I don't feel that I know totally what is the

19 thought behind the rather cryptic notes.

20 Q. The note reads, "Sales and income tax not

21 affected much in cities. Devastating impact on purchases

22 in subcounty areas. Hazen and Sawyer missed point

23 because they concentrated on county wide."

24 A. Uh-huh.

25 Q. A number of lines below that it says, "Estimate

0274

01 property" -- what's the next word? Is that values?

02 A. Seems like it should be.

03 Q. "Qualitatively, then quantitatively."

04 I can't figure what that note is. Can

05 you?

06 A. Not -- I can't state with confidence what it

07 is.

08 Q. What similar situations are they looking at in

09 the line below that? Do you know?

10 A. I would -- I would assume situations involving

11 major economic decline.

12 Q. I think 30 to 50 percent of market value for

13 estimating property values. And they are looking at

14 similar situations.

15 Yesterday we talked about a matter that if

16 land was taken out of production that the land value would

17 go to zero.

18 Do you recall that yesterday?

19 A. In general.

20 Q. Okay. If the land value would go to zero and

21 you were using a FLIPSIM model there, how much would you

22 put in the income tax due category in the model?

23 MS. STINSON: Object to form.

24 QUESTIONS BY MR. ROSENBERG:

25 Q. If the value of land would approach zero --

0275

01 A. Well, I'm trying to recall when yesterday we

02 talked about the value of the land -- value of the land

03 going to zero. We talked about a lot of things yesterday,

04 so perhaps we did talk about that.

05 As an economist, I'm used to thinking of

06 the value of a resource like land being basically the

07 result of the net income that can be obtained from using

08 the land in some sort of productive enterprise. I guess

09 then if we talk about the value of the land approaching

10 zero --

11 Q. In the sense of the assessed value by the tax

12 assessor if the land is not being productive.

13 A. Okay. This whole -- the whole topic of assessed

14 values and so on as part of the fiscal analysis which has

15 not been -- for which I have not been primarily

16 responsible, I would -- to complete the thought that I was

17 developing, if we were within a FLIPSIM modeling context

18 talking about the value of the land approaching zero, I

19 would interpret that to be synonymous with the producer's

20 net income from the land approaching zero. That is a

21 situation where returns from producing crops would barely

22 cover what we sometimes refer to as the variable costs.

23 Okay?

24 In that situation, then, to attempt to

25 answer your question about what would be the -- what would

0276

01 be the appropriate value for income taxes due, it would

02 seem to me that the income taxes due would also be

03 approaching zero if the producer net return is approaching

04 zero.

05 Q. On the next page about three-fifths of the way

06 down, it says, "Ann can't wrap it up."

07 Do you know what that refers to?

08 A. My interpretation and based on having been

09 involved in a conference call with Ron and Ann was that

10 this would refer to the portion of the report which we

11 describe as the statement of current conditions or the

12 "area profile".

13 And if you go up about four lines from the

14 comment "Ann can't wrap it up," we have Ann -- something

15 or other of current conditions, outline it, listing of

16 kind of data, and so on.

17 But I believe that Ann was saying that her

18 time availability was limited and that she wouldn't

19 promise to wrap it up and so on.

20 Q. The rest of it says, "Ron or refill of Mel's

21 position."

22 A. I think this Mel's must refer to --

23 Q. Melissa?

24 A. -- Melissa.

25 Q. There was somebody who refilled that position

0277

01 yesterday I think you told us.

02 A. Yes. Uh-huh. This was -- as I understand it,

03 this is the gentleman Jeff that we referred to.

04 Q. Was Melissa's leaving the company a planned

05 event?

06 A. I believe that Melissa was only really with the

07 company for a matter of weeks.

08 Q. Was this known early on that she was going to

09 leave as of a certain date?

10 A. No. I didn't know that. I think it was not

11 known to others.

12 Q. Was she terminated?

13 A. No. At least my understanding is that she

14 returned to the firm that she had been working with before

15 she came to RPC.

16 Q. And that was her own choice?

17 A. That's my understanding.

18 Q. Has she had any subsequent contact with RPC or

19 any subsequent role?

20 A. I don't know. She has not had any subsequent

21 contact with me.

22 MS. STINSON: Can I ask that we take a

23 break?

24 (At this time a brief recess was taken,

25 after which time an instrument was here marked as

0278

01 Deposition Exhibit No. 28 for identification.)

02 QUESTIONS BY MR. ROSENBERG:

03 Q. Let's get to this matter. I want to move on.

04 Let me hand this to your attorney and not to you.

05 MR. ROSENBERG: I've marked it, but I'm not

06 putting it into evidence.

07 MS. STINSON: Okay.

08 MR. ROSENBERG: Okay? I don't want it to

09 go into evidence yet.

10 MS. STINSON: Right. I don't either.

11 MR. ROSENBERG: At this point. Let me give

12 you my other copy. But I want to ask him some questions,

13 if you just want to look at that.

14 MS. STINSON: Do you just want to find out

15 if he's involved in any of the cases listed on here?

16 QUESTIONS BY MR. ROSENBERG:

17 Q. Which of these cases are you working on? What

18 is your task in each case? And then what is that case

19 about?

20 A. Okay.

21 Q. So without saying anything, just review the

22 document.

23 (At this time there was a brief discussion

24 off the record.)

25 QUESTIONS BY MR. ROSENBERG:

0279

01 Q. Have you looked at the document?

02 A. Yes.

03 Q. Which of these cases are you working on, if

04 any?

05 A. No. 7, Sugar Cane Growers, would be the only

06 case that I would be involved in.

07 Q. Okay.

08 MS. STINSON: Excuse me. Just so the

09 record is clear, that's this case?

10 THE WITNESS: Yes.

11 MR. ROSENBERG: I'm going to ask you

12 questions on this case. I'll give you back the document.

13 You can redact the whole thing. I would simply like to

14 get the document back in with just 7 listed here.

15 QUESTIONS BY MR. ROSENBERG:

16 Q. Did you also look at the dormant cases, too?

17 A. Yes.

18 Q. You looked at the entire document?

19 A. Yes.

20 Q. My second question was: What is your task in

21 this case? And that's what we've been discussing here.

22 A. Yes.

23 Q. We have discussed that.

24 MR. ROSENBERG: Donna, I'm going to give

25 these back to you with the understanding that you will

0280

01 redact it and give a copy to the court reporter and a copy

02 to me of what you are going to do. Okay?

03 MS. STINSON: Yes. I will.

04 MR. ROSENBERG: That will be Exhibit 28.

05 Okay?

06 (At this time there was a brief discussion

07 off the record.)

08 QUESTIONS BY MR. ROSENBERG:

09 Q. Look at the note on 7 for a second. I was just

10 going to ask you. It says, "We received approval for

11 Phase 2 of the project," and it's dated October 16th,

12 1992.

13 Is Phase 2 what -- the same as Phase 2

14 we've been discussing here? I just want to make sure

15 we're in sync on what phase we're on.

16 A. I can't say for sure. My references to sort of

17 a Phase 1, Phase 2 and so on were my own creation based on

18 what I had been involved in. How that relates to specific

19 contract phases between Ron and the client, I can't say.

20 Q. What source would you use to get the income tax

21 obligation figure that you would use in a FLIPSIM -- use

22 in your FLIPSIM model?

23 MS. STINSON: I think asked and answered.

24 QUESTIONS BY MR. ROSENBERG:

25 Q. Well, can you answer that?

0281

01 A. As I understand the FLIPSIM model, as we

02 discussed before, it's a simulation, simulation model

03 which then basically would have a component that really

04 simulates the operation of the tax code. So, in a sense,

05 the model would compute the income tax obligation based on

06 the net income that the model estimates and so on.

07 Q. Okay. Which FLIPSIM model would do that?

08 A. Okay. To my -- you are saying which component

09 of the FLIPSIM model?

10 Q. No. Which FLIPSIM model?

11 A. Okay. I'm aware that there are -- there have

12 been several versions of the FLIPSIM model. I am -- the

13 one that RPC -- I'm not cognizant in detail of the

14 different -- you know, Version 1, Version 2, 2.1 or

15 however it would be. I'm not sure which version RPC has

16 obtained at this point.

17 Q. Well, are there separate FLIPSIM models, not

18 necessarily versions? They might be versions. But are

19 there separately designed FLIPSIM models?

20 A. There are, I guess -- I would think that we

21 would term those -- that the FLIPSIM model consists of

22 several modules or components which are activated

23 sequentially to estimate different dimensions. And I have

24 not at this point been asked to study the FLIPSIM model in

25 detail. So the short answer is I can't tell you in detail

0282

01 which component of the model estimates the income taxes.

02 Q. Is there more than one model that you know of?

03 A. Okay. I think that might -- I would interpret

04 that in part a question of semantics. The FLIPSIM model

05 or package, as I understand it, consists of several

06 components which do different things. But, again, I would

07 say I'm not -- I have not been asked to study -- to this

08 point haven't been asked to study the FLIPSIM model in

09 detail. So I'm not really able to answer detailed

10 questions about the structure and functioning of the model

11 at this point.

12 Q. But you did comment on Hazen and Sawyer's work

13 using this model, did you not?

14 A. And I think our comments in that -- yes. The

15 answer is yes.

16 Q. And you did comment on Polopolus and

17 Richardson's work using a FLIPSIM model, did you not?

18 A. I don't think we were asked directly to review

19 the Polopolus and Richardson work. We did make some use

20 of their analysis in our opinion that was delivered in

21 October.

22 Q. Do the terms accounting version and stochastic

23 version mean anything to you?

24 A. I recall those descriptions. And the stochastic

25 version would refer to a version of FLIPSIM which has

0283

01 probabilistic -- well, yields and prices I think are

02 random variables. That is they are chosen from a

03 probability distribution as opposed to an alternative,

04 which I think is probably what the accounting version

05 describes, which essentially takes the -- uses

06 predetermined average yields and prices. So what the

07 stochastic version would be doing is simulating risks or

08 uncertainty in prices and yields.

09 Q. To your understanding, what is the accounting

10 version designed to produce and what is the stochastic

11 version designed to produce?

12 A. I haven't been asked to study the FLIPSIM model

13 in detail as yet.

14 Q. So the answer is you don't know?

15 A. The answer is I don't know.

16 Q. I have handed you --

17 A. Exhibit 24.

18 Q. Exhibit 24. Can you identify it?

19 A. Yes. Exhibit 24, a memorandum from Ron Luke to

20 William Green, labeled Privileged and Confidential

21 Attorney Work Product, dated October 23rd. Subject:

22 Draft statement of opinions for October 26, 1992.

23 Q. Okay. Have you read this document before?

24 A. Yes.

25 Q. Do you agree with this document?

0284

01 A. Yes.

02 Q. Do you adopt this document as your agreement

03 with it?

04 A. Yes.

05 Q. You didn't author the entire document is what

06 I'm saying.

07 A. No, but I was -- I was one of the principal

08 contributors.

09 Q. So would it be fair for me to assume that the

10 opinions expressed in this document are, in fact, your

11 opinions?

12 A. Okay. Yes.

13 Q. Are there any other opinions in this matter

14 beyond the opinions expressed in Document 24 that you

15 have? Do you have any other opinions in this matter

16 beyond those expressed in this document?

17 MS. STINSON: Object to the form. It's

18 overbroad.

19 THE WITNESS: I guess I find it a bit

20 difficult to know how to respond to that question. We

21 have not -- I guess -- I would say I have not finalized --

22 finalized other opinions in this matter beyond those in

23 the document.

24 QUESTIONS BY MR. ROSENBERG:

25 Q. This document encompasses every opinion you have

0285

01 in this case?

02 MS. STINSON: Object to the form.

03 QUESTIONS BY MR. ROSENBERG:

04 Q. Does this document encompass every opinion you

05 have in this case on which you are going to testify or

06 propose to testify as an expert witness?

07 A. I would -- I think the answer has to be no in

08 the context that our analysis is still -- our analysis is

09 still continuing. We have not yet completed our

10 analysis. Therefore, I can't say that this document which

11 was prepared last October would encompass every opinion

12 that I would have about which I might testify.

13 Q. Let me direct you to page one, Roman Numeral I.

14 A. 1, I.

15 Q. It reads, "The Surface Water Improvement and

16 Management (SWIM) Plan does not present a completely

17 defined program that is capable of accomplishing its

18 statutory objectives."

19 What statutory objectives?

20 A. I guess those would be statutory objectives that

21 would be outlined in the legislation defining the purpose

22 of surface water management and improvement plans.

23 Q. Specifically, which statutory objectives are not

24 accomplished by virtue of the SWIM plan?

25 A. Okay. I'm not familiar with that statute in

0286

01 great detail.

02 Q. The next sentence says, "It should not be

03 approved until the missing pieces are presented for public

04 review."

05 What missing pieces are referred to here?

06 A. I believe the Sub Items A and B are then

07 explaining what those missing pieces are.

08 Q. Are there any other missing pieces other than

09 what is in Subparagraphs A and B?

10 A. I don't know. I don't have detailed knowledge

11 of the statute. And my expertise is not legal, so

12 interpreting the statute would not be my area of

13 expertise.

14 Q. Do you know who authored this part of the

15 opinion, Roman I-A and B?

16 A. I don't know who authored it. Within our team,

17 however, Dr. Luke is the gentleman who has the legal

18 credentials and expertise to make these kind of

19 judgments.

20 Q. Do you know what hydroperiod is?

21 A. In general terms, it's my -- in general terms, I

22 think I do.

23 Q. Do you know what the hydroperiod conditions

24 which must be maintained in the EPA are?

25 A. In the E --

0287

01 Q. PA.

02 A. In the EPA, which is the Everglades Protection

03 Area?

04 Q. Yes.

05 A. I am again not a hydrologist to speak of. I

06 speak from a standpoint of professional expertise. I have

07 listened to others discuss the importance of the

08 hydroperiod and how this relates to vegetative changes and

09 so on.

10 Q. Paragraph A talks about hydroperiod. Would it

11 be safe to say that's a paragraph you are not able to

12 testify on?

13 A. Right.

14 Q. Paragraph B states that the plan requires the

15 STAs which may require from $300 million to over one

16 billion dollars.

17 A. Yes.

18 Q. Where did that figure come from? Where did that

19 range of figures come from? Excuse me.

20 A. Okay. I can't -- I can't say for sure exactly

21 the origin. That would have come -- well, I don't know.

22 Q. Do you know what the estimate in the SWIM plan

23 is for the cost of construction?

24 A. No.

25 Q. So would it be safe to say that regarding Roman

0288

01 Item I-A and Paragraph B now, you are not prepared to

02 testify on those matters?

03 A. Right.

04 Q. That's outside of your area of testimony?

05 A. Yeah.

06 Q. You have no opinions on those matters?

07 A. Correct.

08 Q. Okay. Roman II states, "The SWIM plan is

09 required to include a reasoned assessment of probable

10 costs and benefits of the proposed action."

11 What requires the SWIM plan to do that?

12 A. I don't know. I presume this is a statutory

13 requirement. So like our earlier discussion about the

14 statutory basis for the SWIM plan, I can't answer that.

15 Q. Would it be safe to say -- read the rest of

16 Paragraph Roman II for a second.

17 Would it be safe to say that Roman II, that

18 is the three sentences following Roman II, are areas

19 beyond your expertise and areas on which you would not

20 have an opinion, areas which you have no testimony to

21 provide?

22 A. Yes.

23 MS. STINSON: For the record, Bob, to make

24 clear, you are talking about only the text by Roman

25 Numeral II and not the Subparts A --

0289

01 MR. ROSENBERG: That's right. I'll get to

02 the subparts.

03 QUESTIONS BY MR. ROSENBERG:

04 Q. I'll read them into the record.

05 "The SWIM plan is required to include the

06 reasoned assessment of the probable costs and benefits of

07 the proposed action. It provides no such analysis. It

08 should not be approved until the missing cost/benefit

09 analysis has been presented for public review."

10 And on those three sentences, you are not

11 prepared to testify?

12 A. Right.

13 Q. That's outside of your expertise and you don't

14 know where those requirements are or what they are?

15 A. Yes.

16 Q. Am I correct?

17 A. Yes.

18 Q. Now, A under that says, "The Hazen and Sawyer

19 Economic Impact Report is incomplete and unreliable."

20 Is that your view?

21 A. Yes.

22 Q. Why is it incomplete and unreliable?

23 A. Major concerns that I had with the Hazen and

24 Sawyer report in the context of assessing the impacts on

25 the Everglades agriculture area and producers and the

0290

01 communities dependent on that area -- I had major concerns

02 with the lack of jurisdiction-specific projections of

03 impacts in terms of employment change, in terms of

04 population effects, public services, in terms of the issue

05 of displaced workers and this sort of thing.

06 It seemed to me that these issues, in view

07 of the potential magnitude of impacts -- at least under

08 some scenarios, some reasonable assumptions, the magnitude

09 of impacts was such that some jurisdiction-specific

10 projections and some further analysis of displacement

11 issues and so on should have been included.

12 Q. What do you mean by "jurisdiction"?

13 A. That is impact projections at the level of

14 specific communities like Belle Glade or Clewiston, school

15 districts, that sort of thing, subcounty jurisdictional

16 level.

17 Q. You are talking about within the EAA?

18 A. Right.

19 Q. The City of Belle Glade?

20 A. Uh-huh.

21 Q. And the City of Clewiston?

22 A. Uh-huh.

23 Q. You think the report is deficient in its

24 treatment of those two cities?

25 A. Yes. Those and possibly some other communities.

0291

01 Q. What others?

02 A. Okay. Other communities within the study area

03 would include Moore Haven and South Bay, for example.

04 Q. Is Moore Haven within the EAA?

05 A. Okay. I would have to go look at a map to see

06 if it's within the EAA-regulated area. It seems to us

07 that it's one of the communities we need to at least

08 examine to see if its dependence on the agriculture of the

09 EAA is such that we might need to be looking at

10 jurisdiction-specific, community-specific impacts.

11 Q. I'm correct in my understanding that your answer

12 to my question yesterday was you had not read the Request

13 for Proposals that the district issued? Am I correct?

14 A. The Request for Proposal that the district

15 issued when it commissioned the Hazen and Sawyer study.

16 Yes, that's what I had indicated.

17 Q. Okay. Now, when you say it's deficient

18 regarding the jurisdiction of, say, Belle Glade or

19 Clewiston, regarding what specific matter within that

20 jurisdiction are you talking about? School districts?

21 A. Okay. Your question is what analyses, what

22 issues should be examined at the community level that have

23 not been examined?

24 Q. Yes.

25 A. Okay. We would again point -- pointing to the

0292

01 parameters that are very typically examined in

02 community-level socioeconomic impact assessments and just

03 to -- to name a few, but in our paper here we refer to a

04 number of articles, books and the like that lay out the

05 types of indicators that are typically examined.

06 To indicate a few, though, we would

07 normally see -- normally expect an assessment of economic

08 impacts including impacts in terms of employment, income;

09 demographic impacts in terms of changes in the number and

10 makeup of the population. Assessing demographic impacts

11 includes assessment of migration basically as one of the

12 components of population change, that in- or out-migration.

13 Okay.

14 From a public service standpoint, a number

15 of public services may be relevant, including education,

16 but also including law enforcement, social services and

17 the like. In terms of fiscal impacts, typically then

18 examining costs and revenues like the changes in costs and

19 revenues of those jurisdictions which may have significant

20 economic and demographic public service changes as a

21 result of the proposed action, also potentially examining

22 the social impacts that might result from, under some

23 scenarios, potentially massive unemployment.

24 Q. You have listed for me, if I understand you,

25 what would be in a socioeconomic impact study.

0293

01 A. Yes, uh-huh.

02 Q. Do you know whether Hazen and Sawyer was

03 contracted to do a socioeconomic impact study?

04 A. No, I don't. I don't know what their scope of

05 what they were asked to do included.

06 Q. So when you say their report is incomplete, it's

07 incomplete in your view because it's not a socioeconomic

08 impact study?

09 A. Correct.

10 Q. Now, in terms of the task that they took on from

11 the district, do you know whether the report was complete

12 or not complete?

13 A. I don't know the answer to that question.

14 Q. In terms of the tasks they took on from the

15 district, do you know whether their report was reliable or

16 unreliable?

17 A. I think the answer would be the same as to the

18 last question that I don't know in terms of their charge

19 from the district whether their report -- whether their

20 report fulfilled the objectives that the district had

21 asked them to fulfill.

22 I believe, however, that some of the issues

23 that have been pointed out relative to assumptions

24 regarding debt, prices, replacement of capital equipment

25 and so on might -- certainly could be -- certainly could

0294

01 be regarded as throwing the reliability -- casting some

02 question on the reliability.

03 Q. We'll get to that in a minute.

04 A. Okay.

05 Q. But in terms of what the district asked them to

06 do, you have no opinion whether their report is reliable

07 for those purposes?

08 A. Correct, in the sense that I don't have detailed

09 knowledge of what the district had asked them to do.

10 Q. Okay. Have you yourself ever done an economic

11 impact analysis without estimating financial impact --

12 excuse me -- fiscal impacts?

13 A. Certainly.

14 Q. Now, you did that because your purpose was

15 defined by the entity that gave you the contract or the

16 direction?

17 A. Uh-huh.

18 Q. And you tried to comply with their direction,

19 didn't you?

20 A. Uh-huh.

21 Q. And you did what they asked you to do?

22 A. Yes.

23 Q. Do you know if Hazen and Sawyer was asked to do

24 a cost/benefit analysis?

25 A. No, I don't.

0295

01 Q. And you don't know whether that's called for in

02 the SWIM legislation or in the Marjory Stoneman Douglas

03 Act, do you?

04 A. I do not know.

05 Q. On page two, the paragraph at the top starts

06 off, "The report makes unreasonable assumptions regarding

07 farm debt, federal income taxes, cropping and yield

08 patterns, prices, economies of scale, replacement of

09 capital equipment, and residual returns calculations for

10 property valuation."

11 A. Yes.

12 Q. What is the problem with farm debt that you are

13 stating in your opinion?

14 A. Okay. The problem with farm debt basically was

15 the assumption that the farming operations being modeled

16 or simulated had no debt. This would -- this would --

17 okay. Assumptions about the level of debt and hence debt

18 service requirements could affect some phases of the

19 analysis in terms of conclusions about cash flow and the

20 adequacy of cash flow to meet financial obligations and

21 the like.

22 Q. Well, that would affect a farm's survivability,

23 would it not?

24 A. Yeah.

25 Q. Was the task that Hazen and Sawyer was directed

0296

01 to do -- would that concern farm survivability?

02 A. Okay. That's of course -- again goes back to

03 the fact that we don't know -- we don't know precisely the

04 charge that Hazen and Sawyer was given. Certainly the

05 farm -- as we discussed before, the debt issue and income

06 tax issue have perhaps different degrees of relevance

07 depending on whether the question is the survivability of

08 existing farm units versus the question of whether or not

09 the land -- whether farming the land is a viable

10 enterprise.

11 In turn, different individuals might have

12 different opinions about the relevance of those two

13 questions.

14 Q. If we follow that and we have on one hand

15 survivability and the other hand continuing to farm the

16 land, in one instance farm debt and income taxes would be

17 important in survivability.

18 A. Right.

19 Q. But in the second instance, it wouldn't be

20 important in terms of continuing to farm the land. Am I

21 correct?

22 A. In terms of the -- in terms of the very basic

23 question of whether the costs and returns from -- whether

24 returns will cover variable costs and allow the support,

25 the continued production of the land, kind of irrespective

0297

01 of who owns and controls, yes.

02 Q. And if the second task was the task directed to

03 Hazen and Sawyer, not the farm survivability task, would

04 their report still be deficient, in your view?

05 A. I believe part of this goes to deeper questions

06 about what considerations are relevant, what factors

07 should be considered in this kind of a public policy

08 decision as opposed to the question of did Hazen and

09 Sawyer do what they had agreed with the district that

10 they would do.

11 Q. If I understand you then, your criticism then is

12 with what the district directed Hazen and and Sawyer to do

13 as opposed to what Hazen and Sawyer actually did? Am I

14 correct?

15 A. I think that would be -- I would agree with

16 that. That is we're not -- I'm not -- I don't have the

17 information to know -- to really address the issue of did

18 Hazen and Sawyer do what the district asked them to do.

19 But with respect to some of our concerns about the Hazen

20 and Sawyer report, we're saying we think that -- I think

21 that there are issues that are not addressed that should

22 be addressed in a situation -- in this kind of a

23 situation, going back to things like community impacts.

24 While we have certainly undertaken economic

25 impact studies where we did not do community-level

0298

01 projections, fiscal analyses and so on, it would also be

02 my view that when one has a proposed action which -- in

03 which the impacts on specific communities are likely to be

04 -- are likely to be substantial, that would be a situation

05 that would then suggest the importance of doing

06 community-level analysis.

07 Q. So your objection, your problem here deals with

08 what Hazen and Sawyer was directed to do, that the task

09 wasn't broad enough?

10 MS. STINSON: Object to the form. I don't

11 think he can answer that, given that he doesn't know what

12 they were directed to do.

13 QUESTIONS BY MR. ROSENBERG:

14 Q. If Hazen and Sawyer was directed to do an

15 economic impact analysis and not a socioeconomic impact

16 analysis, then your problem would be that they were not

17 directed to do the complete task as you see it; am I

18 correct?

19 A. Correct. Yes, I would agree with that.

20 Q. Is that what you just said?

21 A. I would agree with that, yes.

22 Q. If they had done an economic impact analysis --

23 if that's what they were directed to do and they were

24 directed to do that not from a point of view of farm

25 survivability, did they do their task properly? Is it

0299

01 reliable and complete?

02 A. Again, our comments or our concerns -- our

03 comments or our concerns I think would be related to the

04 issues addressed and so on as opposed to the more narrow

05 questions of what had Hazen and Sawyer been commissioned

06 to do in their contract because we really don't know

07 that. We do feel that in a situation where we have a

08 proposed action that has the kind of potential

09 ramifications that we're talking about here, some of the

10 issues that we -- that we have been talking about should

11 be -- should be addressed in analysis prior to a public

12 policy decision.

13 Q. Now, assuming Hazen and Sawyer was asked to do

14 an economic impact analysis, they don't have to do that

15 with the point of view towards farm survivability, do

16 they? They can do it on land staying in production basis,

17 can't they?

18 A. That would be one stance that could be taken.

19 Q. And it would be a permissible stance, wouldn't

20 it, an economically permissible stance?

21 A. I would say so, yes.

22 Q. So if they were criticized then for not taking

23 into account farm survivability aspects, they would then

24 be criticized for something they weren't directed to do?

25 A. But I believe it would be relevant for

0300

01 commentators to say that the farm -- for reviewers and

02 commentators to say that the farm survivability issue is a

03 relevant issue. But, as you are pointing out, what people

04 would be arguing about then is what are the relevant

05 issues as opposed to did Hazen and Sawyer address the

06 issue that they were asked to address.

07 Q. Now, would you use a different FLIPSIM model to

08 address farm survivability as opposed to land remaining in

09 production?

10 A. It's very possible one might certainly use the

11 FLIPSIM model somewhat differently, depending on whether

12 the question was farm survivability, that is the

13 survivability of an existing farming unit with a

14 particular set of initial conditions, as it were, that is

15 they start in 1990 something with a certain debt load, et

16 cetera, as opposed to the issue of the land staying in

17 production.

18 Q. If we look at the issue of the land staying in

19 production, is there anything you know of that would

20 indicate that Hazen and Sawyer did not use the model

21 correctly?

22 A. I can identify -- I think we can still identify

23 some areas where we would have at least some question or

24 some concern.

25 One of those that comes immediately to mind

0301

01 is replacement of capital equipment. Another one which I

02 am not able to speak with -- speak in detail is the

03 question of residual returns calculations for property

04 valuation. That was part of the fiscal analysis that Ann

05 Orzech and Dr. Luke were involved in. I was not involved

06 in the details --

07 Q. You are not going to testify on that?

08 A. No.

09 But going back to the replacement of

10 capital equipment, that is a relevant issue to the

11 question of the land staying in production. That is in

12 the initial Hazen and Sawyer report that we reviewed, it

13 was assumed, as I read the report anyway -- it was assumed

14 that the farm began the period with new equipment. And

15 given a 10-year planning horizon, then the equipment did

16 not need to be replaced. Okay.

17 If we're looking at the issue of the land

18 staying in production, over a longer planning horizon,

19 replacing capital equipment is a relevant expense that

20 must be covered. You can only live off the -- the

21 expression often used is living off the depreciation. And

22 I think most all economists who deal with these kind of

23 issues would agree that you can only live off the

24 depreciation for so long.

25 Q. With an eye towards which way that issue cuts,

0302

01 does it cut towards keeping the land in production or

02 towards not keeping the land in production, didn't she

03 make an assumption that would cut towards land not being

04 in production in effect? Didn't she -- by using this sort

05 of a system, then it cuts in favor of farmers and really

06 contrary to the land staying in production?

07 A. Okay. Again, I'm going on reading the report

08 which is always a question of trying to interpret what is

09 written -- from what is written what was actually done in

10 the analysis.

11 But my reading was that capital replacement

12 costs were not included in the analysis. If, in fact, the

13 issue -- if we are talking about an issue of the land

14 staying in production, that is will the revenues from

15 production cover all of those costs that need to be

16 covered to justify continuing production, then in a -- in

17 a longer run planning horizon, capital replacement costs,

18 that is replacing -- I'm not talking about land

19 investments now. What we're talking about is the

20 machinery, the depreciable capital.

21 Q. Didn't she amortize that over the period of life

22 of the equipment?

23 A. That's a question that was I guess not totally

24 clear to us from our reading of the report is whether the

25 capital -- whether the capital replacement costs were

0303

01 included or not.

02 Q. If she amortized that, would they not then be

03 included?

04 A. If, in fact, they were amortized, then -- again,

05 it was unclear from our reading of the report whether

06 these -- whether the replacement costs were included or

07 not. But -- amortizing those costs is a typical way of

08 including them. And so that would be -- that would be an

09 appropriate way of including them.

10 Q. Okay. So we have talked about farm debt and

11 income taxes.

12 What about cropping and yield patterns?

13 What is the criticism there?

14 A. Okay. I believe the issue -- well, probably

15 several issues, including assumptions about increasing

16 productivity over time. And apparently this kind of

17 depends on what time period is chosen to try to estimate

18 changes in productivity. I believe Hazen and Sawyer was

19 assuming a two-percent increase in productivity.

20 Polopolus and Richardson I believe were indicating they

21 felt like this was overly optimistic.

22 A second --

23 Q. Which one is consistent with the historical

24 pattern?

25 A. Okay. Again, I have not as yet been asked to

0304

01 really get involved in doing direct effect analysis.

02 Q. So you are not prepared to testify on that?

03 A. At this point, I would not be prepared to

04 testify about appropriate assumptions about cropping and

05 yield patterns.

06 Q. What about prices? What is the criticism

07 there?

08 A. I would not be prepared to testify at this time

09 about the price -- price issues.

10 Q. What about economies of scale? What is the

11 criticism there?

12 A. Okay. I believe that the issue --

13 Q. I'm sorry.

14 A. Go ahead?

15 Q. What is the criticism regarding economies of

16 scale?

17 A. Okay. Again, of course, this relates to the

18 direct effect analysis. As I understand it, the Hazen and

19 Sawyer analysis was really set up using yield belts. And

20 I believe that the -- some of the criticism was that they

21 had not properly considered the economies of scale

22 associated with larger yields. At this point --

23 Q. What are you talking about there? I'm not sure

24 what you mean when you say "economies of scale".

25 A. Economies of scale -- some economists would say

0305

01 the term economies of size is a more appropriate term.

02 But economies of scale or economies of size

03 generally relate to the idea of larger units, at least

04 larger production units, at least up to some point, being

05 able to achieve -- to achieve a lower per-unit production

06 cost. That is in this case being able to produce sugar at

07 a somewhat lower cost per unit -- per pound than a smaller

08 sugar farm could do.

09 Q. Specifically, what did Hazen and Sawyer do that

10 was an unreasonable -- what unreasonable assumptions did

11 Hazen and Sawyer's report make regarding economies of

12 scale?

13 A. I would not be prepared to testify on that topic

14 at this point in time.

15 Q. Okay. So regarding the Statement 2 that the

16 report makes unreasonable assumptions regarding farm debt,

17 federal income taxes, cropping and yield patterns, prices,

18 economies of scale, replacement of capital equipment and

19 residual returns calculations for property valuation, you

20 are not able to testify regarding cropping and yield

21 patterns, prices, economies of scale, and residual returns

22 calculations for property valuation; am I correct?

23 A. At this point in time, that would be correct.

24 Q. And regarding farm debt and income taxes, that

25 testimony would depend on what task was assigned to Hazen

0306

01 and Sawyer?

02 A. That testimony would depend on -- that testimony

03 would depend on whether it is determined that the issue of

04 farm unit viability is relevant.

05 Q. Survivability is my term.

06 A. Survivability as opposed to if it were somehow

07 determined that the only issue is whether the land stays

08 in production because issues of farm debt, income taxes,

09 yield risks and so on are extremely relevant to the issue

10 of farm unit survivability, perhaps less relevant to the

11 question of does the land stay in production.

12 Q. But, in fact, debt and income taxes are

13 irrelevant for land staying in production determination.

14 Am I correct?

15 A. Yeah. I would not disagree with that.

16 Q. Regarding the replacement of capital equipment,

17 your testimony was that if she amortized it, then she had

18 a correct approach. Am I correct?

19 A. I would agree with that, subject to knowing more

20 about the specific approach, assumption or whatever. But

21 as a general statement, amortizing -- amortizing is an

22 appropriate approach for showing the cost of capital

23 replacement.

24 Q. Okay. Let's look at Point 3 now.

25 Is Point 3 a subject that you are prepared

0307

01 to testify on?

02 A. Probably not. No.

03 Q. Let me read that into the record. Point 3 is:

04 "If a majority of the financing for the plan is to be

05 raised by local taxes, the taxes themselves will have

06 major socioeconomic impacts. These impacts cannot be

07 reasonably assessed until a financing component of this

08 plan and of the hydroperiod management plan are presented

09 and integrated. The report makes an inadequate analysis

10 based on incomplete assumptions regarding a financing

11 plan."

12 Is that an area which Ann Orzech was

13 working on?

14 A. Ann Orzech and Ron Luke.

15 Q. Okay. Let's look at Point 4 then. Would you

16 read Point 4?

17 A. Okay. Point 4 --

18 Q. Read it to yourself.

19 Is Point 4 an area in which you would be

20 offering expert testimony?

21 A. No.

22 Q. Point 4 reads, "The report includes no

23 consideration of the impact of the SWIM plan on the cost

24 and supply of water to urban coastal communities if

25 hydroperiod management to maintain current plant

0308

01 communities is enforced."

02 Who would testify regarding Point 4?

03 A. I'm not sure at this point.

04 Q. Read to yourself Point 5.

05 A. Yes.

06 Q. Have you done so?

07 A. Yes.

08 Q. Is that a point on which you would be offering

09 expert testimony?

10 A. I don't believe so.

11 Q. Let me read Point 5 into the report.

12 "The report does not consider the impacts

13 of the SWIM plan on agricultural workers resident in the

14 EAA. These workers have low incomes, low levels of

15 education, and low skill levels. If displaced by a

16 reduction in sugar cane and vegetable acreage, they face

17 severe economic dislocation."

18 Would you testify regarding Point 5?

19 MS. STINSON: Object to the question. It

20 calls for attorney decisions.

21 QUESTIONS BY MR. ROSENBERG:

22 Q. If you know.

23 A. I don't know.

24 Q. In your view, who in your group would be capable

25 of testifying on Point 5 as an expert?

0309

01 A. Either Dr. Luke or Jeanne Werner within the RPC

02 group.

03 Q. Read Point 6.

04 A. Yes. Okay.

05 Q. Okay. Is Point 6 an area where you would be

06 offering expert testimony?

07 A. Quite possibly, yes.

08 Q. Okay. What is the deficiency you are talking

09 about in Point 6?

10 A. Okay. Basically that the analysis, the report,

11 the information presented to date really includes no

12 analysis of the impact of the plan and the different

13 scenarios on community-level services, facilities,

14 revenues or expenses as well as doesn't include

15 community-level population impacts and that sort of thing

16 that would be necessary to reasonably forecast these other

17 items.

18 Q. Does Point 6 cover a subject that would be

19 within a socioeconomic impact analysis?

20 A. Yes.

21 Q. As opposed to an economic impact analysis?

22 A. Yes.

23 Q. Would you read Paragraph B.

24 A. Yes. Okay.

25 Q. Okay. Is that something that you would testify

0310

01 about?

02 A. No.

03 Q. Okay. Paragraph B reads, "The Hazen and Sawyer

04 Economic Benefit Report has never been issued in final

05 form. As presented in draft final form, it did not

06 address any situation relevant to the proposed action.

07 Its methods were inappropriate and unreliable."

08 Would you read Paragraph 1 underneath

09 that.

10 A. Yes. Okay.

11 Q. Is Paragraph 1 a subject that you would be

12 offering expert testimony on?

13 A. No.

14 Q. Paragraph 1 reads, "The scenarios of future

15 developments in the EAA in the absence of the SWIM plan

16 defined by the report are not reasonable. The report

17 discusses 'loss' of wetlands in the absence of the plan.

18 No 'loss' of wetlands has been projected by the State or

19 Federal government. Alteration of sawgrass marsh to

20 cattail marsh is not a loss of wetlands. Thus the

21 avoidance of these scenarios cannot be considered a

22 benefit of enacting the plan."

23 Would you read Paragraph 2 below that.

24 A. Yes. Okay.

25 Q. Is Paragraph 2 a subject matter on which you

0311

01 would be offering expert testimony?

02 A. No.

03 Q. Paragraph 2 reads --

04 MS. STINSON: Excuse me. Just in an

05 interest of saving time, we've got a 13-page memo here.

06 The document will be in the record.

07 Can we not just refer to the paragraphs?

08 MR. ROSENBERG: I think the better

09 procedure is to read it in and eliminate his testimony on

10 that.

11 MS. STINSON: Just trying to save us some

12 time.

13 QUESTIONS BY MR. ROSENBERG:

14 Q. "There has been no scientific showing of how the

15 SWIM plan alone, without any defined hydroperiod

16 management program, will change plant communities and

17 other natural characteristics in the EPA. There is no

18 basis for any comparison of with and without plan

19 conditions, thus there is no basis for calculation of

20 benefits."

21 Would you read Paragraph 3.

22 A. Yes.

23 Q. In fact, why don't you read Paragraphs 3 and 4.

24 A. Okay.

25 Q. Is Paragraph 3 a subject on which you will offer

0312

01 expert testimony?

02 A. No.

03 Q. Is Paragraph 4 a subject on which you will offer

04 expert testimony?

05 A. I would say no.

06 Q. Let me read quicker. I'll quick up my pace.

07 Paragraph 3: "There are wetlands functions

08 which create the economic values usually considered in

09 wetlands valuation studies. There has been no showing

10 that any of these functions would be impaired if the SWIM

11 plan is rejected or enhanced if it is adopted. Without

12 these showings there is no basis for calculation of

13 benefits."

14 Paragraph 4 reads, "The hedonic valuation

15 studies used in the report were not performed for

16 situations comparable to those in the Everglades, and

17 values derived in those studies cannot reasonably be

18 applied to this situation."

19 Would you read Paragraph C.

20 A. Yes. Okay.

21 Q. Would you be testifying to anything in Paragraph

22 C?

23 A. No.

24 Q. Would you read Paragraph 1 and Paragraph 2 under

25 C.

0313

01 A. Okay.

02 Q. Is Paragraph 1 under Paragraph C an area which

03 you would be offering --

04 A. No.

05 Q. -- expert testimony?

06 Is Paragraph 2?

07 A. No.

08 MR. ROSENBERG: Donna, I want to read these

09 into the record. But in an effort to save time, I will

10 read them at the end of the deposition as you are packing

11 up.

12 Is that okay with you?

13 MS. STINSON: That will be fine.

14 MR. ROSENBERG: So they get into the

15 record, the understanding is I will read them into the

16 record later. That is C-1 and 2.

17 QUESTIONS BY MR. ROSENBERG:

18 Q. Roman III. Would you read Roman III for me.

19 A. Yes. Okay.

20 Q. Is Paragraph III -- does that concern the

21 subject on which you will be offering expert testimony?

22 A. Yes.

23 Q. Okay. What will you be offering expert

24 testimony on in terms of Paragraph III?

25 A. We -- in Paragraph III we refer to conducting --

0314

01 RPC conducting its own direct impact analysis and continue

02 this analysis to the costs and benefits to local

03 communities and to the regional economy.

04 I might very well be offering expert

05 testimony on these topics.

06 Q. But as matters sit presently, are you prepared

07 to offer expert testimony on anything encompassed within

08 Paragraph Roman III?

09 A. Yes. I would be prepared to offer testimony on

10 community impacts, regional economic impacts.

11 Q. Is that the last sentence?

12 A. Yes.

13 Q. The first sentence of Paragraph III reads, "In

14 its current incomplete form, it is not possible to

15 determine the SWIM plan's probable costs and benefits."

16 Are you able to testify to that?

17 A. I wouldn't