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.