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 be testifying on that.
18 Q. "It is only possible to make a hypothetical
19 analysis of the probable costs and benefits by assuming
20 the undefined portions of the plan."
21 Would you be testifying on that?
22 A. Probably not. No.
23 Q. "Partial assumptions have been made by Hazen and
24 Sawyer and by Richardson and Polopolus in their
25 presentations to the district. RPC has utilized these
0315
01 partial studies as a partial basis for opinions regarding
02 the economic costs and benefits of enactment of the SWIM
03 plan."
04 Would you be testifying as to that?
05 A. I could be testifying as to the -- to our
06 opinions based on the -- based on those studies as
07 indicated, yes.
08 Q. What would your testimony be?
09 A. Well, to -- again, we've commented before that
10 we're still involved in analysis. But certainly I could
11 be testifying to some of the economic and demographic
12 effects as outlined later in this memo which represent our
13 preliminary analysis, our preliminary opinions as of a few
14 months ago.
15 Q. So you would be testifying as to the demographic
16 effects and socioeconomic effects?
17 A. Uh-huh.
18 Q. But not necessarily to direct, indirect or
19 induced effects as specified by Hazen and Sawyer?
20 A. Not -- the indirect and induced effects would be
21 part of what we have been involved in analyzing, yes.
22 Q. You would be taking those to a separate level,
23 though, the socioeconomic level?
24 A. Yes. But our analysis included calculation of
25 indirect and induced effects based on the direct effects
0316
01 that Hazen and Sawyer had calculated.
02 Q. Okay. Do you have an opinion on whether their
03 calculation of direct effects was proper or improper?
04 A. We have earlier noted concerns -- some of the
05 concerns that we just spent some time talking about
06 relative to capital replacement, residual returns and
07 that whole --
08 Q. That was Paragraph 2 of page two?
09 A. Yes.
10 Q. You have already expressed those concerns?
11 A. Right.
12 Q. We've already discussed it.
13 Nothing in addition to that; am I correct?
14 A. Not that comes to mind at this time.
15 Q. Now, regarding the indirect effects, do you have
16 an opinion whether the indirect effects assessed by Hazen
17 and Sawyer were correct or incorrect?
18 A. Okay. This relates to our earlier discussion
19 about the appropriate multipliers to use. We had
20 expressed concern, for instance, that the use of Palm
21 Beach County multipliers would perhaps overstate the
22 impact at the level of the EAA, and so that discussion is
23 relevant in this context.
24 Q. Is there anything beyond that discussion?
25 A. Again, that's the major -- those are the major
0317
01 issues that come to mind at this time.
02 Q. Are there any other issues regarding indirect
03 effects other than multiplier and geographic area?
04 A. Yes. For instance, the whole question about the
05 impacts of construction of the STAs including questions
06 about the origin of the workers. For instance, are the
07 workers -- what portion of the workers might reside in the
08 EAA versus commuting from outside the EAA. So there are
09 questions that require a better definition of the effects
10 of the STAs.
11 Q. What is your precise criticism of Hazen and
12 Sawyer here?
13 A. Well, some of the concern would be that --
14 Q. I want a precise criticism. Direct it to that,
15 not just a concern.
16 A. Okay. As I recall the Hazen and Sawyer report,
17 they did not, for instance, specify -- specify their
18 assumptions with regard to place of residence of STA
19 construction workers. That would be one precise
20 criticism.
21 Q. What other precise criticisms are there
22 regarding indirect effects as found by Hazen and Sawyer
23 other than what we've talked about?
24 A. Okay. Related to the STA construction would be
25 lack of precision in assumptions about STA-related
0318
01 expenditures that would occur within the EAA versus those
02 that would be to entities outside the EAA.
03 Q. What is your precise criticism there?
04 A. Well, the issue is that the extent of the
05 secondary impacts from STA construction, which would be
06 essentially positive impacts -- the extent of the impacts
07 that would be felt within the EAA would be determined by
08 the expenditures that actually go to entities within the
09 EAA.
10 If almost all of the expenditures or a very
11 high proportion of the expenditures go to suppliers and so
12 on located outside the EAA, then it's quite possible that
13 the -- it's possible the Hazen and Sawyer report may
14 overstate the positive impacts within the EAA of the STA
15 construction.
16 Q. Have you done work in this area?
17 A. Have we done work in this area?
18 Q. Right. Have you focused on the problem -- focus
19 on the problem now which is the subject of your criticism
20 of Hazen and Sawyer. And do you have a statement which
21 would be the correct assessment?
22 A. We do not have that assessment completed as yet.
23 Q. So you have a criticism of Hazen and Sawyer, but
24 not a corrective assessment?
25 A. We're seeking the information that would be
0319
01 needed to provide that assessment.
02 Q. What information are you seeking?
03 A. More precise information about the employment
04 and expenditures associated with STA construction.
05 Q. Specifically what and from whom?
06 A. Okay. From whom -- I'm not prepared to answer
07 from whom. What is basically the expected labor force by
08 year and what proportion of those would be expected to
09 reside within the EAA versus those that would be expected
10 to reside outside the EAA. And then the anticipated
11 expenditures by major sector, receiving sector by year,
12 and the proportion of those expenditures that would be
13 anticipated to go to entities within the EAA as opposed to
14 outside the EAA.
15 Q. Do you have a tentative opinion on that?
16 A. No. We're still seeking the information on
17 which to base an opinion.
18 Q. When do you expect that you will be able to form
19 an opinion on that?
20 A. I guess the best answer is I don't know because
21 it's contingent on information to be obtained from other
22 parties.
23 Q. When do you expect that information process, the
24 hunting and gathering process to be completed? Do you
25 have any fix on that?
0320
01 A. I would like to hope that it could be completed
02 within the next, say, two months.
03 Q. Okay. Do you have any other criticism of the
04 assessment of indirect impacts by Hazen and Sawyer other
05 than what you have already told us?
06 A. These would be the major ones that come to my
07 mind at this point.
08 Q. Are there any minor ones?
09 A. None that come to mind at this point.
10 Q. What are your criticisms of the assessment of
11 induced impacts --
12 A. Okay.
13 Q. -- as found by Hazen and Sawyer?
14 A. I guess my previous remarks can be interpreted
15 to include the indirect and induced impacts together.
16 Q. Okay. Now, earlier you said that you would be
17 prepared to testify regarding the -- tell me if I have it
18 right.
19 A. Yes.
20 Q. The analysis to the costs and benefits to local
21 communities and to the regional economy?
22 A. Yes.
23 Q. What is your testimony here? What would your
24 testimony be here?
25 A. Okay. I would be potentially testifying
0321
01 relative to the methods employed to estimate the economic
02 and demographic effects and possibly also then public
03 service effects. My major testimony on the cost/benefit
04 side I would say would be in estimating the -- both the
05 economic and demographic dimensions of the future without
06 project or the baseline scenario and the economic and
07 demographic impacts of the proposed action or the
08 different scenarios.
09 Q. Do you have an opinion regarding this testimony?
10 A. Not as yet.
11 Q. Do you have a tentative opinion regarding any of
12 the subject matters that come within the proposed area of
13 testimony?
14 A. Some of our -- some of our preliminary opinions
15 are outlined in subsequent sections of this paper.
16 Q. What are your preliminary opinions regarding
17 those matters?
18 A. Should I paraphrase from what we have included
19 here?
20 Q. Just tell me what your opinions are and what you
21 would be testifying to as your opinion.
22 A. Well, again, since we haven't completed our
23 analysis, I'm not -- I think it's fair to say that our
24 opinion at this time is that the SWIM plan -- the SWIM
25 plan, at least some of the alternatives for implementing
0322
01 it, could have substantial effects on employment in the
02 EAA. We would -- potential loss of jobs running into the
03 thousands and perhaps tens of thousands.
04 Q. You used the term again "we".
05 Do you yourself have any tentative opinions
06 regarding employment --
07 A. Okay.
08 Q. -- and loss of employment?
09 A. Change we to I.
10 Q. What are your opinions regarding employment?
11 A. Okay. I think -- didn't I just say that it
12 would be my opinion that the SWIM plan could have
13 substantial effects on employment in the EAA?
14 Q. Okay. What do you mean by "substantial"?
15 A. Okay. Including at least in some scenarios job
16 losses that could be projected into the thousands and
17 perhaps tens of thousands.
18 Q. How many people would lose their jobs, in your
19 opinion?
20 A. I think it's probably an appropriate -- as I
21 say, we haven't completed our analysis. So I guess I
22 don't feel that I should offer a precise number at this
23 point.
24 Q. How many people are employed in the EAA?
25 A. To the best of my recollection, one of our --
0323
01 one of our -- we had an estimate based on job service data
02 of -- I believe it was the labor -- I forget if it's the
03 employment or labor force within the EAA of 38,000 and
04 some odd.
05 Q. Of those 38,000, given the worst case scenario,
06 how many people would lose their jobs?
07 A. We haven't completed that analysis.
08 Q. So you are not prepared to testify on that?
09 A. Not today.
10 Q. Are you prepared to testify on any employment
11 loss issues today?
12 A. In terms of providing a final number --
13 Q. Or a range of numbers?
14 A. -- saying that this is the end product of our
15 analysis, the answer would be no. Our analysis is not yet
16 complete.
17 Q. So would it be fair to say that you are not
18 prepared today to testify regarding costs and benefits to
19 local communities and the regional economy?
20 A. No.
21 Q. Is my statement --
22 A. Yes, your statement would be correct. I'm not
23 prepared today to testify in terms of specific numbers
24 regarding any of those matters.
25 Q. Other than to say that possibly there might be a
0324
01 substantial effect, beyond that you are not prepared to
02 testify?
03 A. Today. That's right.
04 Q. Without defining the term "substantial"?
05 A. Right.
06 Q. Would you look at Paragraph Roman IV.
07 A. Roman IV. Okay.
08 Q. Are you prepared to testify on the subject
09 matter encompassed by Roman IV?
10 A. Yes.
11 Q. What specifically are you prepared to testify on
12 today?
13 A. Well, Subitem A, impacts on communities and
14 population.
15 Q. I didn't get there yet. I'm just talking about
16 what is in Roman IV.
17 A. In Roman IV -- Roman IV says, "Based on partial
18 and preliminary analysis, RPC expresses the following
19 opinions regarding the economic impacts on the EAA of
20 adoption," et cetera. So I guess that's what I would be
21 prepared to testify on would be economic impacts on the
22 EAA of adoption, et cetera.
23 Q. What are those specific opinions?
24 A. Okay.
25 MS. STINSON: Excuse me. For
0325
01 clarification, again, just in the interest of hurrying
02 things along, it appears to me that that comment refers to
03 the Subparts A, et cetera.
04 THE WITNESS: Yes.
05 QUESTIONS BY MR. ROSENBERG:
06 Q. Are you prepared to testify regarding a
07 deregulation scenario?
08 A. That is one of the things that we're analyzing
09 at this time, so --
10 Q. Do you --
11 A. When our analysis is completed, I will be
12 prepared to testify on that issue.
13 Q. But you don't have testimony today --
14 A. Today.
15 Q. -- on a deregulation scenario, do you?
16 A. Right.
17 Q. I think we already covered this, but Paragraph
18 A-1 -- my understanding was you are not prepared to
19 testify on the subject matter covered by Paragraph A-1
20 today.
21 A. Not in terms of final numbers.
22 Q. In terms of having a tentative opinion?
23 A. I guess Paragraph A-1 represents our preliminary
24 opinion but subject to revision based on the analysis that
25 we're undertaking at this time.
0326
01 Q. Okay. How did you calculate that the area could
02 lose up to 15,400 FTEs, full-time equivalents?
03 A. Basically by applying multipliers from the RIMS
04 model to the estimates of direct impacts from Hazen and
05 Sawyer and from Polopolus and Richardson.
06 Q. What information did you get from Polopolus and
07 Richardson that would support a loss of 15,400 FTEs?
08 A. Okay. Basically the summary information from
09 Polopolus and Richardson was the summary of their
10 presentation -- of presentations that they had made to, I
11 believe, the water management district. I can't -- I
12 can't say for certain to whom their information had been
13 presented. We received a copy of it.
14 Q. I don't care who it was presented to.
15 Is your opinion premised on Polopolus' and
16 Richardson's information?
17 A. And the Hazen and Sawyer. We took those then
18 -- those two sets of estimates as basically a range of
19 potential impacts in terms of direct effects.
20 Q. Can you tell me if this 15,400 FTE figure is
21 merely an adoption of the Polopolus and Richardson figure
22 or if RPC has done additional work to determine this
23 figure?
24 A. Okay. My understanding is this would be -- this
25 would be based on our additional analysis taking direct
0327
01 impacts from Polopolus and Richardson, but applying --
02 then applying RIMS multipliers to estimate indirect
03 impacts.
04 Q. What was that analysis? Can you give me the
05 formula that you used specifically to get 15,400 FTEs?
06 A. Yes, I can. Not off the top of my head, but the
07 -- those calculations were summarized in a memo from me to
08 Dr. Luke on or about October 20th, which I presume is
09 within the stack of documents somewhere.
10 Q. What are the factors that led you to conclude
11 that 15,400 FTEs would be lost?
12 A. Okay. As I think I have previously stated, that
13 would -- the statement is up to 15,400. And so this
14 represented the highest impact scenario I think from
15 Polopolus and Richardson. And then applying RIMS -- then
16 we had applied the RIMS multipliers to estimate secondary
17 effects.
18 Q. What factors did you use, other than applying a
19 RIMS multiplier, to come to a figure that there could be a
20 loss up to 15,400?
21 A. Well, the RIMS multipliers would be the primary
22 factor, I guess --
23 Q. What did you --
24 A. -- coupled with --
25 Q. -- multiply them against?
0328
01 A. The direct job loss that we had taken from the
02 Hazen and Sawyer and Polopolus and Richardson work.
03 Q. Well, was it Hazen and Sawyer's work or was it
04 Richardson and Polopolus' work?
05 A. Again, our specific analysis is documented in a
06 memo, but my recollection would be that this being the
07 highest of the impact scenarios was undoubtedly coming
08 from Richardson and Polopolus' work.
09 Q. Okay. You say, "Within the EAA, as many as
10 30,000 workers could be displaced as a result of the
11 adoption of the plan."
12 How did you come to that figure?
13 A. Okay. The issue here is converting from numbers
14 of FTEs, full-time -- FTE is full-time equivalent jobs
15 essentially, so going from numbers of full-time equivalent
16 jobs to numbers of total people that might be affected,
17 understanding that many of the agricultural workers, for
18 instance, are employed on a seasonal basis. And what we
19 -- the answer, after that preamble, is that we essentially
20 used the -- Polopolus and Richardson had developed a
21 factor which they used to convert FTEs to numbers of
22 people. For this preliminary work, we had adopted their
23 factors.
24 Q. Okay. So you adopted Polopolus and Richardson.
25 Did you study their assumptions when you
0329
01 adopted their factors, their figures?
02 A. To the maximum extent possible.
03 Q. Did you study their data?
04 A. To the extent that the data was available to me,
05 yes.
06 Q. Did you study their baselines?
07 A. I studied everything that was available to me
08 summarizing Polopolus' and Richardson's work.
09 Q. That would include assumptions, data, baseline
10 scenarios and methodology?
11 A. To the extent that that was available, yes.
12 Q. Having studied all of that, you then concluded
13 that you were going to adopt their figure as correct and
14 as your opinion?
15 A. Yes, for our preliminary analysis because we did
16 not -- I did not have access to -- I did not feel I had
17 access to better information on that particular -- that
18 particular topic or issue.
19 Q. So would it be true then if Polopolus and
20 Richardson have used a faulty assumption, then you would
21 have adopted that faulty assumption? Your figure -- your
22 analysis would be flawed by any flaw in Polopolus or
23 Richardson's methodology and assumptions?
24 A. With respect to this issue of full-time
25 equivalent employment versus numbers of people, that would
0330
01 be a correct statement.
02 Q. So of the 38,000 people now employed in the EAA,
03 it's your opinion that if the SWIM plan were adopted,
04 30,000 of those people could be displaced?
05 A. That is -- that is consistent with what we --
06 what we have expressed in our document here. Clearly that
07 would represent a very high side -- very high side
08 estimate. But that is -- you know, with a range of
09 scenarios then, this is the maximum -- this was the
10 maximum impact.
11 Q. Now, to the extent that any of your testimony or
12 opinion concerns Polopolus and Richardson, if they have a
13 flawed assumption, then that would -- to the extent that
14 you have relied on Polopolus and Richardson and adopted
15 their methodology and assumptions, to the extent that they
16 have a flaw, you would have adopted that flaw?
17 A. Yes.
18 Q. Okay.
19 A. I can't disagree with that. What --
20 Q. There is no question before you.
21 (At this time there was a brief discussion
22 off the record.)
23 QUESTIONS BY MR. ROSENBERG:
24 Q. I'm going to tidy up a couple of matters and talk
25 about continuing this thing if that will be okay.
0331
01 A. Okay.
02 Q. So let me depart from your opinion statement for
03 a minute so I can tidy up some other matters if that would
04 be okay, Exhibit 24.
05 Professor Leistritz, in the witness list
06 that we were provided, that called for the party that was
07 proposing to use you as a witness to tell us what the
08 subject matter of your expected testimony would be, the
09 substance of your facts and opinions and a summary of the
10 grounds for your opinions.
11 In the subject matter of expected
12 testimony, there were -- there was this statement that you
13 were going to testify -- and it's unclear because you are
14 lumped with Dr. Luke here.
15 A. Yes.
16 Q. So I want to see what is what and separate that
17 if I can with you.
18 It says, "Subject matter of expected
19 testimony: Socioeconomic impacts of the SWIM plan and
20 alternatives to the SWIM plan; federally accepted
21 principles and standard for water resource projects; and
22 State law requirements for analysis of socioeconomic
23 impacts of major developments."
24 A. Yes.
25 Q. Okay. Do you yourself plan on testifying
0332
01 regarding State law requirements for analysis of
02 socioeconomic impacts of major developments?
03 A. I would think that would probably be something
04 that Dr. Luke would testify on.
05 Q. And not you?
06 A. Probably, yes.
07 Q. Would you be testifying regarding federally
08 accepted principles and standards for resource projects --
09 excuse me -- standards for water resource projects?
10 A. That's certainly a possibility.
11 Q. And what federally accepted principles would you
12 be discussing and where would those be found?
13 A. Okay. We've identified, for instance, the
14 guidelines for water resource projects from the Corps of
15 Engineers. We have also --
16 (At this time there was a brief discussion
17 off the record.)
18 QUESTIONS BY MR. ROSENBERG:
19 Q. My question was: What were the federally
20 accepted principles and standards for water resources
21 projects that you would be testifying about and where
22 would they be found?
23 A. Okay. And I think that's included -- some
24 citations are, I believe, included in the documents that
25 have been provided. We have identified, for instance, the
0333
01 applicable regulations or standards that govern Corps of
02 Engineers, the U.S. Army Corps of Engineers projects. I
03 guess others that might be relevant here might include the
04 Bureau of -- guidelines or standards used by the Bureau of
05 Reclamation in their projects.
06 Q. Any other federally accepted principles or
07 standards for water resources projects that you would be
08 looking to other than Corps of Engineers manuals and
09 Bureau of Reclamation manuals?
10 A. Those would be the two major ones that come to
11 my mind.
12 Q. Do you have any specific citations of any
13 statutes or regulations?
14 A. Okay. Not at my fingertips. As I say, in some
15 of our work back last fall, we had identified the Corps --
16 the applicable Corps regulations. And I believe probably
17 a copy of that correspondence is part of -- somewhere as
18 part of those documents that have been delivered to you.
19 Q. Now, can you tell me me what relationship or
20 connection the district's SWIM plan has to the Corps of
21 Engineers projects manual or the Bureau of Reclamation
22 projects manual? What's the connection there?
23 A. I'm not able to tell you.
24 Q. When do you believe you will be able to give us
25 an opinion on that?
0334
01 A. In terms of that dimension, per se, I would say
02 that's more likely to be something that Dr. Luke would
03 testify about. He may be -- he may be quite prepared to
04 do that at this point. I'm not.
05 Q. Do you understand that you will be testifying
06 regarding that when this matter comes to trial regarding
07 the relationship between the Corps of Engineers manual and
08 the Bureau of Reclamation manual and the district's SWIM
09 plan?
10 A. That is not an issue that's been specifically
11 discussed with me.
12 Q. Okay. And would you expect your testimony to be
13 in what I would call Area 1 here, socioeconomic impacts of
14 the SWIM plan and alternatives to the SWIM plan?
15 A. That would certainly -- I think that would be my
16 primary area.
17 Q. Under B, substance of facts and opinions --
18 A. Yes.
19 Q. Point 2. We've covered some of this, but it
20 says, "In its current incomplete form, the SWIM plan has
21 not determined the plan's probable costs and benefits."
22 I think you told me you weren't prepared to
23 testify to that.
24 A. Not at this point.
25 Q. "And therefore does not comply with federally
0335
01 accepted standards and principles for water resources
02 projects."
03 I think you just told me you are not going
04 to testify to that.
05 A. Probably not.
06 Q. "Or State law requirements for analysis of
07 socioeconomic impacts of major developments."
08 I think you just told me you are not going
09 to testify to that.
10 A. Uh-huh.
11 Q. Will you be testifying on whether the SWIM plan
12 has significant socio impacts that would be felt in the
13 areas of crime, domestic violence, drug use, diminished
14 self-esteem and family disintegration?
15 A. While that's -- that I think remains a
16 possibility. That would not be my -- what I consider my
17 major area of expertise.
18 Q. Do you now contemplate that you would be
19 testifying in that area or not as best you can determine
20 now?
21 A. At this point I don't know. We have not
22 discussed the details of who might testify on what
23 dimensions.
24 Q. Would you be testifying on whether
25 implementation of the current SWIM plan could increase
0336
01 demand for public services at the same time that state and
02 local government revenues are decreased?
03 A. Yes. I might very well testify in that area.
04 Q. That's an area that you will be testifying to?
05 A. Could very well, yes.
06 Q. You would anticipate that now?
07 A. Yes.
08 Q. But you are not prepared to answer questions on
09 that now?
10 A. No. We haven't completed our analysis.
11 Q. Okay. And would you also be testifying on
12 implementation of the SWIM plan as currently drafted would
13 have significant socioeconomic impacts on the region
14 including but not limited to substantial increases of
15 unemployment and population migration as well as
16 substantial reductions in personal income and tax
17 revenues?
18 A. Yes. I will be testifying in those areas.
19 Q. Would you be testifying regarding the area of
20 personal income and tax revenue effect of the SWIM plan?
21 A. Sure.
22 Q. And you would be testifying regarding increases
23 of unemployment and population migration?
24 A. Yes.
25 Q. And you would be testifying regarding other
0337
01 socioeconomic impacts of the region?
02 A. Potentially, yes.
03 Q. None of those studies have been completed?
04 A. Those have not been completed.
05 Q. In terms of alternatives to the SWIM plan, have
06 you considered at this point any alternatives to the SWIM
07 plan?
08 A. I'm not aware that those have been defined as
09 yet.
10 Q. Okay.
11 MR. ROSENBERG: I'm going to suggest that
12 we break this off. I'm at a natural breaking point. It's
13 almost 1:00 o'clock. And maybe you and Keith can get
14 together and we'll convene another time to take his
15 deposition down the road because we have all sorts of
16 other questions on opinions, some of which apparently
17 can't be answered even at this point. There is work yet
18 to be done. So we're going to reconvene this thing.
19 I promised you that I would read something
20 into the record at the end of the deposition. I'm going
21 to read that into the record. That was page three and
22 Paragraph C-1 and 2 and that's this:
23 C: "The district has made no attempt to
24 assess the costs and benefits of the SWIM plan for the
25 urban coastal areas of South Florida."
0338
01 1: "Reduced water flows from the EAA may
02 substantially reduce water flows from the WCAs to ENP.
03 In order to prevent damage to the ENP, State and Federal
04 governments may have to substantially reduce allowable
05 pumping from wells supplying water to South Florida
06 coastal communities."
07 2: "Replacement of water supplies from
08 wells through conservation or development of alternative
09 supplies, such as treatment of seawater, will impose
10 substantial economic costs on residents of urban coastal
11 communities."
12 MS. STINSON: For the record, is that where
13 we got on this document?
14 MR. ROSENBERG: We are approximately on
15 page four, the bottom of page four. That's why I sort of
16 went through his proposed testimony when you declared him
17 as an expert to see what areas we could carve out and what
18 areas remain.
19 MS. STINSON: With the understanding that
20 the deposition is to be completed in a different -- at a
21 later time, we can go off the record.
22 (At this time the deposition was recessed
23 until a later date.)
24 **********************************************************
0339
01 CORRECTIONS TO THE DEPOSITION OF
01
02 F. LARRY LEISTRITZ
02 VOLUME II
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0340
01 I, F. LARRY LEISTRITZ, hereby
01
02 certify that I have read the foregoing deposition
02
03 and that this deposition, together with my corrections, is
03
04 a true record of my testimony given at this deposition.
04
05
05
06
06
07
07 _________________________________
08 F. LARRY LEISTRITZ
08
09
09
10
10 Subscribed and sworn to before me
11
11 on this the _________day of ____________________,
12
12 A.D., 1993.
13
13
14 ________________________________
14 Notary Public in and for
15 the State of _____________
15 Expiration Date: _______________
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16
17
17
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0341
01 STATE OF TEXAS
02 COUNTY OF TRAVIS
03 I, DOTTIE NORMAN, a Certified Shorthand
04 Reporter in and for the State of Texas, hereby certify
05 that the matters set forth in the caption to the foregoing
06 deposition are true and correct; that the witness,
07 F. LARRY LEISTRITZ, appeared before me at the time and
08 place set forth; that said witness was first duly sworn
09 by me to tell the truth, the whole truth and nothing but
10 the truth, and thereupon proceeded to testify in said
11 cause; that the questions of counsel and the answers of
12 said witness were taken down in shorthand by me and
13 thereafter reduced to typewriting under my direction, and
14 the foregoing pages comprise a true, complete and correct
15 transcript of the testimony given and the proceedings had
16 during the taking of said deposition.
17 WITNESS MY HAND AND SEAL of office, this
18 the 18th day of February, A.D., 1993.
19
20
21
21
22
22 1806 Toro Canyon ____________________________
23 Austin, Texas 78746 DOTTIE NORMAN
23 Job #495 CSR No. 2283
24 Expiration Date: 12-31-94
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