DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF ADMINISTRATION, STATE OF FLORIDA
SUGAR CANE GROWERS COOPERATIVE OF CASE NOS. 92-3038
FLORIDA, a Florida agricultural 92-3039
cooperative marketing association; ROTH 92-3040
FARMS, INC.; and WEDGWORTH FARMS. INC.,
and
FLORIDA SUGAR CANE LEAGUE, INC.; and
UNITED STATES SUGAR CORPORATION,
and
FLORIDA FRUIT AND VEGETABLE ASSOCIATION,
LEWIS POPE FARMS, W. E. SCHLECHTER &
SONS, INC., and HUNDLEY FARMS, INC.,
Petitioners
vs.
SOUTH FLORIDA WATER MANAGMENT DISTRICT,
an Agency of the State of Florida,
Respondent,
and
THE UNITED STATES OF AMERICA,
MICCOSUKEE TRIBE OF INDIANS, THE
FLORIDA DEPARTMENT OF ENVIRONMENTAL
PROTECTION, THE FLORIDA WILDLIFE
FEDERATION, THE FLORIDA AUDUDON SOCIETY
and THE SIERRA CLUB,
Respondent-Intervenors.
_________________________________________/
DEPOSITION OF: DR. F. LARRY LEISTRITZ
TAKEN: March 15, 1994
VOLUME 1
DEPOSITION OF: DR. F. LARRY LEISTRITZ
TAKEN AT THE INSTANCE OF: United States of America
Respondent-Intervenor
DATE: Tuesday, March 15, 1994
TIME: Commenced at 9:00 a.m.
Concluded at 5:30 p.m.
LOCATION: 315 South Calhoun Street
Tallahassee, Florida
REPORTED BY: ANITA M. PEKEROL, CCR, RPR,
CP, CM. Notary Public in
and for the State of
Florida at Large.
APPEARANCES:
REPRESENTING THE PETITIONERS SUGAR CANE GROWERS
COOPERATIVE OF FLORIDA a Florida agricultural
cooperative marketing association; ROTH FARMS,
INC. and WEDGEWORTH FORMS, INC.:
CAROLYN S. RAEPPLE, ESQUIRE
Hopping, Boyd, Green & Sams
123 South Calhoun Street
Post Office Box 6526
Tallahassee, Florida 32314
REPRESENTING RESPONDENT-INTERVENOR UNITED
STATES OF AMERICA:
KEITH E. SAXE, ESQUIRE
United States Department of Justice
601 Pennsylvania Avenue Northwest
Room 879
Post Office Box 663
Washington, D. C. 20044
ALSO PRESENT:
Lonnie L. Jones, Ph.D.
Ronald D. Lacewell
I_N_D_E_X _ _ _ _ _
WITNESS PAGE _______ ____
DR._F._LARRY_LEISTRITZ ___ __ _____ _________
Direct Examination by Mr. Saxe 5
CERTIFICATE_OF_REPORTER 89 ___________ __ ________
E_X_H_I_B_I_T_S _ _ _ _ _ _ _ _
DEPOSITION_EXHIBITS: __________ ________
NUMBER DESCRIPTION PAGE ______ ___________ ____
1 Memorandum from Eric Schubert to
Larry Leistritz, 2-2-94, and tables 37
2 Memorandum from Larry Leistritz to
Ron Luke, 2-6-94 49
4
1 P_R_O_C_E_E_D_I_N_G_S _ _ _ _ _ _ _ _ _ _ _
2 - - -
3 The following deposition of DR. F. LARRY
4 LEISTRITZ was taken on oral examination, pursuant to
5 notice, for purposes of discovery, for use as evidence,
6 and for such other uses and purposes as may be permitted
7 by the applicable and governing rules. Reading and
8 signing is not waived.
9 - - -
10 COURT REPORTER: Today is Tuesday, March
11 15, 1994. We are here on the case of Sugar Cane
12 Growers Cooperative of Florida, Florida Sugar
13 Cane League, Inc., and Florida Fruit and
14 Vegetable Association vs. South Florida Water
15 Management District and The United States of
16 America, et cetera, Case Nos. 92-3038, 3039 and
17 3040
18 In attendance today are Dr. Lonnie Jones,
19 attorney Keith Saxe, Ronald Lacewell, Dr. Larry
20 Leistritz and Carolyn Raepple, attorney. And
21 Anita Pekerol is the court reporter.
22 Thereupon,
23 DR. F. LARRY LEISTRITZ
24 was called as a witness, having been first duly sworn,
25 was examined and testified as follows:
5
1 DIRECT EXAMINATION
2 BY MR. SAXE:
3 Q Professor Leistritz, I'm Keith Saxe, with
4 the U. S. Department of Justice. I represent the United
5 States in this case. We have met before, of course,
6 when your deposition was taken last year by another
7 Federal attorney. I will be continuing that deposition
8 today. I will be taking your deposition today and
9 tomorrow, and, if necessary, at some future date to be
10 arranged.
11 I will ask you a series of questions. You
12 are under oath, and you are required to give me your
13 complete and honest answer to those questions, unless
14 your attorney instructs you not to answer.
15 If you don't understand a question, please
16 tell me so before you try to give an answer.
17 Do you understand those instructions?
18 A Yes.
19 Q The rules are, basically, the same as they
20 were at the last deposition.
21 A All right.
22 Q Professor Leistritz, have you reviewed the
23 deposition notice and the document production request
24 that was issued by the United States for this
25 deposition?
6
1 A Yes.
2 Q To your knowledge, have all of the
3 responsive documents in your possession been produced in
4 response to that, except for documents that have been
5 listed as privileged by your attorney and withheld?
6 A Yes.
7 Q Professor, by the way, I'll refer,
8 generally, to the Sugar Cane Growers Cooperative, Roth
9 Farms and Wedgworth Farms in this deposition as the
10 Cooperative.
11 Are you familiar with the witness
12 designation, expert witness designation, that has been
13 filed by the Cooperative, in which you are identified as
14 an expert witness in this case?
15 A Yes.
16 Q I'm going to refer you to a page of that
17 expert witness designation. If you would, take a look
18 at it.
19 MR. SAXE: Do you, by any chance, have
20 another copy of the witness designation?
21 MS. RAEPPLE: I might.
22 MR. SAXE: I think I've got copies of every
23 Post-It note, but I don't think I have a copy of
24 this one.
25
7
1 BY MR. SAXE:
2 Q Professor Leistritz, would you describe for
3 me, in your own words, please, what your understanding
4 is of what your role at trial in this case may be, your
5 testimonial role?
6 A It is my understanding, at this time, that
7 I am probably not going to be called as a witness. If I
8 were -- well, no.
9 Q When you say probably not going to be
10 called as a witness, do you understand that there is any
11 issue or topic that you might be called as a witness
12 about?
13 A I am not sure I understand the question.
14 Q Do you understand that you will certainly
15 not be called as a witness in the case?
16 A No. Are you asking if I were to be called,
17 what topics would I be knowledgeable about?
18 Q No. Actually, what I'm asking is, do you
19 understand that you might be called concerning any
20 matters in this case?
21 A Yes, I understand that I might be called.
22 Q I will refer you to paragraph B on your
23 witness designation, substance of facts and opinions.
24 You have reviewed that?
25 A Yes.
8
1 Q Does that describe the facts and opinions
2 regarding which you understand you might be called to
3 testify to at trial?
4 A Yes. That seems reasonable.
5 Q Are there any facts and opinions that you
6 have developed knowledge of, or opinions in this case,
7 that you understand you might be called to testify to
8 that are not listed on this witness list?
9 A I believe that the list covers what I would
10 be testifying about.
11 MS. RAEPPLE: Mr. Saxe, could I see the
12 designation?
13 MR. SAXE: Yes, sure.
14 BY MR. SAXE:
15 Q Professor Leistritz, I'm going to refer you
16 to a pleading in this case titled The Statement of
17 Ultimate Facts, Policy and Law by Petitioners Sugar Cane
18 Growers Cooperative, Roth and Wedgworth, which is dated
19 February 4, 1994. I would like you to look at page 7 of
20 this moving paper.
21 The paragraph at the top, Section 3, titled
22 Reliance of Farmers, would you read those first two
23 boldface paragraphs to yourself?
24 A Okay.
25 Q Can you tell me what facts and/or opinions
9
1 might you testify to at trial in support of the
2 allegations in those two paragraphs?
3 A I think my answer at this point is, I don't
4 know.
5 MR. SAXE: Do you have the witness
6 designation, or did I take it back?
7 MS. RAEPPLE: It is right here.
8 BY MR. SAXE:
9 Q Why don't you take a look at this and, if
10 you could, tell me, in your view, whether any of these
11 facts or opinions that are summarized on the witness
12 designation relate to the allegations in those
13 paragraphs, in your opinion?
14 A I would say that the testimony that I might
15 present, really, I would not anticipate relating very
16 directly to the statements here. I think that's a good
17 way to summarize it.
18 Q If you look at the bottom, there is a
19 paragraph 33-D referred to in Footnote 3. Why don't you
20 take a second and read that?
21 A All right. I think I have a question about
22 that footnote. It appears that perhaps the footnote
23 ends with "state law," although there is no period.
24 Should I understand that "state law" is the end of
25 the --
10
1 Q Why don't you assume, for purposes of my
2 question, that there should be a period after the last
3 word, "law," and that it has just been dropped.
4 Now that you have reviewed that, can you
5 tell me what, if any, facts or opinions you might
6 testify to at trial in support of the allegations in
7 Footnote 3, paragraph 33-D?
8 A I don't believe my testimony would really
9 relate to that statement. That really has not been the
10 thrust of the work that I have been asked to do.
11 Q Referring you, again, to the witness
12 designation, there are three paragraphs, entries, under
13 the subheading Substance of Facts and Opinions. Do you
14 understand that you may be called to testify to facts
15 and/or opinions concerning all of those entries?
16 A I am not quite sure how to respond to the
17 question. I have not really been given any specific
18 direction about my possible testimony.
19 In general, most of the work that I have
20 been involved in would relate to Number 1 at this point.
21 Q Okay. Then we'll save Number 1, and let's
22 focus on Number 2.
23 A All right.
24 Q Would you read that paragraph into the
25 record for me, please?
11
1 A "Number 2: In its current incomplete form,
2 the SWIM Plan does not determine the plan's probable
3 costs and benefits, and, therefore, does not comply with
4 Federally-accepted standards and principles for water
5 resources projects or state law requirements for
6 analysis of socioeconomic impacts of major
7 developments."
8 Q Would you tell me, please, what are
9 referred to by the Federally-accepted standards and
10 principles for water resources projects?
11 A Okay. There is a document, a rather
12 extensive document, with, basically, that title,
13 Principles and Standards for Water Resources Projects.
14 Q Any others?
15 A Other Federal standards and principles
16 would, of course, include, basically, NEPA, National
17 Environmental Policy and related analysis. Those would
18 be the two things that would come to mind immediately.
19 Q How about the phrase "state law
20 requirements for analysis of socioeconomic impacts of
21 major developments"? If you could, explain to me, in
22 your understanding, what those state law requirements
23 are.
24 A Okay. It is my understanding that the
25 State of Florida has some requirements relative to
12
1 economic and fiscal impact analysis for certain kinds of
2 development projects. I have not been asked to analyze
3 or review those in detail, however.
4 Q Have you formulated opinions about what the
5 state law requirements for analysis of socioeconomic
6 impacts of major developments are?
7 A For the State of Florida, no.
8 Q Have you formed opinions about what the
9 Federally-accepted standards and principles for water
10 resources projects are?
11 A Yes.
12 Q I'm going to show you a document that was
13 introduced as an exhibit in the deposition earlier this
14 month of Dr. Luke. It is Exhibit Number 1 to the Luke
15 deposition of March 4th and 5th.
16 Take a minute, if you would, to review the
17 document; especially pages 1 through 8.
18 Before you do that, excuse me and let me
19 interrupt you.
20 Have you seen this document before?
21 A No.
22 Q If you would, go ahead and review pages 1
23 through 8.
24 A All right.
25 (Brief pause.)
13
1 BY MR. SAXE:
2 Q You can stop right before the sentence that
3 says "inadequacies in the proposed SWIM Plan."
4 You indicated earlier that the Federal
5 principles and guidelines and NEPA were the
6 Federally-accepted standards and principles for water
7 resources projects. In your opinion, do the Federal
8 principles and guidelines and NEPA apply to the SWIM
9 Plan?
10 A I don't feel I know the answer to that
11 question, outside the scope of what I have been involved
12 in.
13 Q The document that you have just reviewed,
14 Exhibit 1, pages 1 through the middle of page 8, does
15 that describe, in your view, what is required under the
16 Federal principles and guidelines and NEPA?
17 A The section that you asked me to review,
18 essentially, appears to me to be a summary of the
19 principles and guidelines document.
20 Q Do you know any water resources projects
21 for which analyses have been done that do comply with
22 the Federally-accepted standards and principles for such
23 projects by the South Florida Water Management District?
24 In other words analyses, sufficient analyses, that have
25 been done by the district?
14
1 A I would like to ask you to repeat the
2 question.
3 Q Are you aware of any studies that have been
4 done by the South Florida Water Management District that
5 do, in your opinion, comply with the Federally-accepted
6 standards and principles for water resources projects?
7 A I am really not familiar with other studies
8 by the South Florida Water Management District, besides
9 the ones that we have reviewed relative to the SWIM Plan
10 before us.
11 Q And which studies are those that you have
12 reviewed?
13 A Well, primarily, the Hazen & Sawyer
14 reports.
15 Q And could you describe those, kind of name
16 those, roughly, for me which Hazen & Sawyer reports you
17 have reviewed?
18 A Okay. I believe that, essentially, there
19 was a draft report and a final report. But, basically,
20 Hazen & Sawyer's analysis of the effects of the SWIM
21 Plan on the agriculture in the EAA.
22 Q Would that be a draft and final report of
23 the 10-year evaluation?
24 A Yes.
25 Q And would it, also, be a draft and final
15
1 report of the 20-year evaluation by Hazen & Sawyer?
2 A Yes.
3 Q Are there any others that you have
4 reviewed?
5 A Those were the major documents.
6 Q And I take it, in your opinion, those
7 analyses did not comply with the Federally-accepted
8 standards and principles for water resources projects.
9 A I think my response would be that the Hazen
10 & Sawyer reports did not address the full range of steps
11 that are outlined in the principles and standards. It
12 is probably, also, reasonable to say that the Hazen &
13 Sawyer report was only intended to be one part of the
14 overall planning process. And, essentially, evaluation
15 of the effects of, in this case, basically, a certain
16 set of alternatives.
17 Q Do you know of any analyses of water
18 resources projects that have been done by any other
19 Florida, agency besides the South Florida Water
20 Management District, that do, in your opinion, comply
21 with the Federal principles and standards for water
22 resources projects?
23 A I am not familiar with studies conducted by
24 the Florida agencies.
25 Q Are you aware of any analyses that have
16
1 been performed by any agency in Florida, Federal or
2 State, for water resources projects that have complied
3 with the Federally-accepted standards and principles?
4 A Again, I'm not familiar with studies of
5 other projects.
6 Q Do you know of any analyses performed or
7 prepared by or on behalf of state or local agencies in
8 other states for water resources projects that have
9 complied with the Federally-accepted standards and
10 principles?
11 A Yes.
12 Q Could you identify one for me, please?
13 A Okay. The one that I would be most
14 familiar with is the planning process and series of
15 studies conducted with respect to the Garrison Diversion
16 Irrigation Project in North Dakota.
17 Q I'm sorry, in North Dakota?
18 A In North Dakota.
19 Q Was a formal report produced reflecting
20 that analysis?
21 A Yes. A whole series of reports and
22 planning documents.
23 Q Do you know whether those reports have been
24 produced or identified in your document production?
25 A You asked me if I was familiar with --
17
1 Q Yes, that's right. I am asking you a
2 different question.
3 A I think the answer to that is, no.
4 Q Are there any other analyses performed by
5 state agencies or local agencies, in states other than
6 Florida, for water resources projects that, in your
7 opinion, have complied with the Federally-accepted
8 standards and principles, besides the Garrison Diversion
9 Irrigation Project?
10 A My answer would be, yes.
11 Q Could you name another for me?
12 A Okay. Again, I'm not necessarily familiar
13 with these different projects or studies in great
14 detail. I am aware of a number of studies conducted by
15 the U. S. Bureau of Reclamation in North Dakota and
16 surrounding states for a variety of water development
17 projects.
18 Also, for instance, a whole series of
19 planning studies relative to water resources projects on
20 the Colorado River. Again, I would not profess intimate
21 familiarity with these studies.
22 Q Any others that come to mind?
23 A Those would be the ones that come most
24 immediately to mind.
25 Q The Garrison Diversion Irrigation Project,
18
1 what agency performed the analyses in that case?
2 A The U. S. Bureau of Reclamation, I believe,
3 is the lead agency.
4 Q Do you know of any analyses that have been
5 performed by state or local agencies, as opposed to
6 Federal agencies, for water resources projects outside
7 of Florida that comply with the Federally-accepted
8 standards and principles?
9 A Yes. In general terms, for instance, the
10 North Dakota State Water Commission has conducted a
11 variety of analyses and planning studies over the years.
12 Q Can you specify any of those that you are
13 familiar with, and, in your opinion, have complied with
14 the Federally-accepted standards and principles?
15 A Again, I would not at this point claim
16 detailed familiarity with any of those studies.
17 Q Do you know whether any of those studies
18 have been produced with your documents?
19 A No, I don't believe they have.
20 Q Do you know whether any of those studies
21 have been, specifically, identified in a list in your
22 document production?
23 A I would not think they have.
24 Q In your opinion, are state or local
25 agencies in North Dakota required to comply with the
19
1 Federally-accepted principles and standards for water
2 resources projects?
3 A That's my understanding.
4 Q Do you have an opinion as to why they're
5 required to comply with those Federally-accepted
6 standards and principles?
7 A I think my answer is, no. That is really
8 outside of the scope of my work in this case.
9 Q Are there any other requirements for the
10 analysis of socioeconomic impacts or the relationships
11 of cost and benefits that do apply to the SWIM Plan,
12 except for the Federally-accepted standards and
13 principles, and whatever those state law requirements
14 are that are referred to in this witness designation?
15 A It seems to me that the principles and
16 standards, and NEPA, and the state requirements would
17 pretty well cover it.
18 Q Have you been involved in any of the
19 analyses that have been performed by state or local
20 agencies for water resources projects that, in your
21 opinion, do comply with the Federally-accepted standards
22 and principles; personally involved?
23 A Yes.
24 Q Which ones would those be?
25 A I have been involved in several analyses on
20
1 behalf of the North Dakota State Water Commission.
2 Q Would those be among the North Dakota State
3 Water Commission studies that have been performed over
4 the years that you referred to earlier in your
5 testimony?
6 A Yes.
7 Q You indicated that you didn't really have
8 any specific recollection about the nature of those
9 studies. And I think your words were that you don't
10 presently have detailed knowledge, and that is fine. I
11 mean, I am not asking you to over-tax your powers of
12 recall. But could you tell me what your involvement in
13 those studies involved?
14 A Okay. Yes. Preparation, basically, of
15 socioeconomic impact analyses for various alternatives.
16 Or economic and demographic, what you might call,
17 baseline projections for different parts of the state.
18 Q Did those involve proposed actions by the
19 North Dakota State Water Commission?
20 A Yes.
21 Q Can you tell me what some of those proposed
22 actions were?
23 A Okay. The most recent thing that I was
24 involved in was, basically, a short study for the Water
25 Commission, based on one of their proposals to provide
21
1 municipal and industrial water to communities in the Red
2 River Valley of North Dakota, as part what is known as
3 the Garrison Diversion Project. And as part of that,
4 part of the Water Commission's effort, then we provided
5 economic and demographic projections, primarily,
6 population projections, for a number of communities in
7 the Red River Valley.
8 Q You have indicated that that was a proposal
9 to provide industrial and what other kind of water?
10 A And municipal water.
11 Q And when do you work on this analysis?
12 A As I recall, that would have been in the
13 summer of 1989.
14 Q Were you involved in defining the study
15 area for that analysis?
16 A Actually, the study area had already been
17 defined, so the answer is, no, I was not involved in
18 defining the study area.
19 Q But that analysis, in your view, did comply
20 with the Federal principles and guidelines, correct?
21 A Yes.
22 Q Do you recall whether you were involved in
23 the analysis of alternatives in your work on that
24 project?
25 A On that particular project, no.
22
1 Q Do you know whether alternatives to the
2 proposal to provide industrial and municipal water in
3 the Red River Valley were analyzed by the North Dakota
4 State Water Commission in that project?
5 A It is my understanding they were, yes.
6 Q Did you work with or rely on the services
7 of any demographers in that study?
8 A In that particular study, no.
9 Q Describe for me, in a little bit more
10 detail, if you would, what your socioeconomic impact
11 analysis and baseline analysis in that study involved.
12 A Okay. In that particular study, we were
13 developing population projections for municipalities and
14 I believe, also, counties, in the study area,
15 encompassing several valleys in the Red River Valley.
16 We, basically, used a demographic projection model; a
17 more technical term, "a cohort-survival model."
18 Q I'm sorry?
19 A A cohort, C-O-H-O-R-T, -survival model. We
20 developed projections, I believe, for about a 30-year
21 future projection horizon.
22 Q Did you quantify socioeconomic impacts in
23 that analysis?
24 A No.
25 Q You provided your work on population
23
1 projections to somebody else who was working on that?
2 A Yes.
3 Q Who did you provide it to?
4 A We provided our projections to the State
5 Water Commission.
6 Q Do you know whether the State Water
7 Commission quantified, or somebody else working on their
8 behalf quantified, socioeconomic impacts in that
9 analyses?
10 A I don't, specifically, know the answer to
11 that.
12 Q Are you familiar with any other aspects of
13 the full analysis that was done in that case?
14 A No.
15 Q So, you don't know whether the North Dakota
16 State Water Commission did a benefit cost analysis for
17 that project?
18 A No, not specifically. An answer would be
19 speculative.
20 Q Other than that proposed action involving
21 industrial and municipal water for the Red River Valley,
22 what other North Dakota State Water Commission projects
23 have you been personally involved in doing analysis for?
24 A We have, I have, been requested on a number
25 of occasions to, basically, provide, you know, economic
24
1 impact analyses, economic base data and information of
2 this sort to the Water Commission. In those cases, I
3 was only, generally, familiar with the subsequent use
4 that the Commission might be making of the information.
5 Q Can you name or describe for me one of the
6 proposed actions that was at issue in one of those
7 studies?
8 A Again, in many of these cases, I was not
9 familiar with the details of the analysis that they were
10 doing. They were asking me for very specific things,
11 which we had developed as part of our research program
12 at North Dakota State University. I was providing
13 information, models, multipliers and the like to them,
14 and was not particularly familiar with the specific
15 analyses that they were undertaking.
16 Q So, then, it would be fair to say that your
17 role in those analyses, and your knowledge of the
18 analysis in the total sense, was limited to certain
19 aspects of the analysis?
20 A Yes, that would be very fair.
21 Q We started in this line of questions
22 because I was interested in those analyses that had been
23 performed by the North Dakota Water Resources Commission
24 for water resources projects that, in your view,
25 complied with the Federal principles and guidelines.
25
1 And you have identified for me the one
2 involving the proposed provision of industrial and
3 municipal water to the Red River Valley. But there are
4 no other projects that you can enumerate for me that did
5 comply with the Federal principles and guidelines?
6 A I think I will ask you to restate the
7 question.
8 Q Let me do that for you. I'm sorry, it was
9 a long question.
10 Did the analysis that was performed by the
11 North Dakota State Water Commission for the proposed
12 action involving the provision of industrial and
13 municipal water to the Red River valley, in your view,
14 comply with the Federal principles and guidelines?
15 A To the extent that I am aware of what was
16 done, yes.
17 Q Was a report produced, that you are aware
18 of, that described the analysis performed by the North
19 Dakota Water Resources Commission, State Water
20 Commission?
21 A Yes.
22 Q Did you review that report?
23 A I have read the report, yes.
24 Q And, in your opinion, that report reflected
25 analysis that does comply with the Federal principles
26
1 and guidelines?
2 A Yes.
3 Q Are there any other reports of analysis
4 performed by the North Dakota State Water Commission for
5 proposed actions involving state water resources
6 projects that you have reviewed?
7 A Are there other reports by the State Water
8 Commission involving water resources projects that I
9 have reviewed?
10 Q Yes.
11 A Yes.
12 Q Do you remember whether any of those
13 complied, in your opinion, with the Federal principles
14 and guidelines?
15 A Yes.
16 Q Can you identify those reports for me?
17 A Okay. I would identify, primarily, a
18 series of reports relating to the previously referenced
19 Garrison Diversion Irrigation Project.
20 Q Let me just stop there for a moment. Did
21 the North Dakota State Water Commission perform analysis
22 in the Garrison Diversion Irrigation Project?
23 A That's my understanding.
24 Q You had indicated earlier that that
25 involved the U. S. Bureau of Reclamation; is that
27
1 correct?
2 A Yes.
3 Q The North Dakota State Water Commission
4 was, also, involved?
5 A That's my understanding, yes.
6 Q Did you know whether the North Dakota State
7 Water Commission was the lead agency in that project?
8 A I don't know precisely which agency was the
9 lead agency. Basically, there have been a series of
10 analyses over a span of something in excess of 20 years
11 now.
12 Q I understand. Well, we have the Garrison
13 Diversion and we have the Red River Valley Water
14 Project. Are there any other projects for which reports
15 were produced by the North Dakota State Water Commission
16 that, in your view, comply with the Federal principles
17 and guidelines, that you are aware of?
18 A None that I could describe in detail for
19 you today.
20 Q Referring, again, to paragraph 18-B-2, on
21 page 11 of the expert witness designation for Professor
22 Leistritz, would it be fair to say, in your view, that
23 it describes defects in the SWIM Plan?
24 A Yes.
25 Q I would like to refer you, once again, to
28
1 Exhibit 1 to the deposition of Dr. Ronald Luke. And if
2 you would, look at page 8, from the middle of the page
3 on. Just review that for a moment, please.
4 A Beginning with "inadequacies"?
5 Q Beginning with "inadequacies in the
6 proposed SWIM Plan."
7 MS. RAEPPLE: How many pages do you want
8 him to review?
9 MR. SAXE: Page 8 to the end of the
10 document.
11 MS. RAEPPLE: That is a pretty lengthy
12 document. Could we take a five or 10-minute
13 break while he does that?
14 MR. SAXE: Sure. How about a five-minute
15 break? He is a fast reader.
16 (Brief recess.)
17 BY MR. SAXE:
18 Q In the interest of time, let me revise my
19 previous request to you to review those pages of the
20 document and go at this another way.
21 I am interested in identifying what, in
22 your opinion, are the defects in the SWIM Plan that are
23 referred to in subparagraph B-2 of your witness
24 designation.
25 Now, Dr. Luke, in his deposition, tendered
29
1 this exhibit, tendered this document. He described it
2 as reflecting his opinions about defects in the SWIM
3 Plan, among other things.
4 You haven't reviewed this document before.
5 Is there a document that you have produced that
6 describes the defects in the SWIM Plan that you have
7 formulated opinions on?
8 A I have not been asked to review the SWIM
9 Plan, per se. In the early going of our work, I was
10 involved in reviewing the Hazen & Sawyer report.
11 Q In this statement of the facts and opinions
12 to which you may testify, it says, "In its current
13 incomplete form, the SWIM Plan does not determine the
14 plan's probable cost and benefits," et cetera.
15 Would it be fair to say that, in your
16 opinion, the Hazen & Sawyer report or the Hazen & Sawyer
17 analysis was the analysis that was performed on behalf
18 of the district that you have formulated critical
19 opinions about?
20 A Yes. The Hazen & Sawyer report is the only
21 major document that I have been asked to review.
22 Q Is there a document that you have produced
23 that summarizes the defects in the Hazen & Sawyer
24 report, in your opinion?
25 A I can't tell you a precise date, but,
30
1 basically, Dr. Luke, with the assistance of myself and
2 others, produced a review document some time back, like
3 a year or more ago, basically reviewing, critiquing the
4 Hazen & Sawyer study.
5 Q Do you know whether that referred to the
6 Hazen & Sawyer 10-year study?
7 A A review document was prepared, which I
8 feel comfortable was related to the 10-year study.
9 Whether a document was subsequently prepared relative to
10 the subsequent 20-year study, I am not sure at this
11 point.
12 Q Did the document that was prepared in
13 reference to the 10-year study reflect your opinion
14 about the defects in the Hazen & Sawyer 20-year report?
15 A I am sure one of the criticisms of the
16 10-year study was the short planning horizon, shorter
17 than we thought appropriate. There were, however,
18 others, so that concern would be, to some extent,
19 addressed by a longer planning horizon, a 20-year study.
20 There were other concerns, however, that would not have
21 been reflected in the 20-year study.
22 Q So, so far as you are aware, there has been
23 no document prepared that summarizes the defects in the
24 Hazen & Sawyer 20-year contract completion report
25 prepared by you, or RPC, or Dr. Luke, or others working
31
1 for RPC or with RPC?
2 A I don't know.
3 Q Have you reviewed the Hazen & Sawyer
4 contract completion report for their 20-year analysis?
5 A Yes.
6 Q Let me refer you to paragraph B-1 on your
7 witness designation.
8 A All right.
9 Q It refers to socioeconomic impacts that
10 implementation of the SWIM Plan would result in?
11 A Yes.
12 Q Have you performed any analyses in
13 formulating your opinions that are reflected in this
14 paragraph?
15 A Yes.
16 Q Have you been involved in preparing an
17 economic impact analysis of the SWIM Plan?
18 A Yes.
19 Q I would like to ask you some questions
20 about that analysis.
21 A Okay.
22 Q And to give me a frame of reference, I am
23 going to ask you to refer, as we go over these
24 questions, to the Hazen & Sawyer contract completion
25 report.
32
1 BY MR. SAXE: Do you, by any chance, have a
2 copy handy for Professor Leistritz? I think I
3 can dig up an extra one, but I would have to pull
4 off some Post-It notes and stuff. If it is a
5 hassle, I can readily clean this one up.
6 MS. RAEPPLE: I don't have it with me. I
7 can have it delivered.
8 MR. SAXE: Let me just pull these off.
9 BY MR. SAXE:
10 Q Professor Leistritz, I am showing you the
11 contract completion report for the South Florida Water
12 Management District's 20-year evaluation by Hazen &
13 Sawyer, dated August 1993. I am removing some Post-It
14 notes. Here you go.
15 A Okay.
16 Q Is it fair to say that you, and when I say
17 you, I mean, you and RPC and others working to assist
18 Dr. Luke in the preparation of his opinions for trial,
19 performed an economic impact analysis that was in many
20 ways similar to that performed by Hazen & Sawyer and
21 reported in this contract completion report?
22 A Yes.
23 Q I would like you to turn to Section 7 of
24 this report.
25 A Okay.
33
1 Q Section 7.1, on page 7-1. I think you are
2 probably at Appendix 7.
3 A Okay, okay.
4 Q It is closer to the front of the document.
5 A Yes. Section 7.
6 Q That's correct.
7 A Yes.
8 Q Section 7.1 says there are seven factors
9 that measure the economic contribution of an industry.
10 And then it lists a number of factors for measuring
11 economic contribution. Would you review those briefly,
12 please?
13 A All right.
14 Q Do you agree that these are seven factors
15 that measure the economic contribution of the
16 agricultural industry in South Florida?
17 A Yes.
18 Q Are there any that are missing from this
19 list?
20 A These appear to be some of the very
21 commonly used indicators of economic impact or economic
22 contribution.
23 Q Are there any factors that measure the
24 economic contribution of the agricultural industry in
25 the EAA that you or RPC analyzed that are not listed
34
1 here?
2 A It seems to me that these are probably the
3 major indicators that were analyzed.
4 Q Are there any factors not listed here that,
5 in your opinion, Hazen & Sawyer should have analyzed to
6 comply with the Federal principles and guidelines in the
7 measurement of the economic contribution of the
8 agricultural industry in the EAA?
9 A Again, it seems to me that these are some
10 of the generally accepted major indicators for measuring
11 economic contribution.
12 Q So, would it be fair to say that, in your
13 opinion, there are no missing factors that Hazen &
14 Sawyer should have considered in measuring the economic
15 contribution of the agricultural industry in the EAA?
16 Missing in the sense that they're not listed here?
17 A I don't see any substantial omissions.
18 Q At the bottom of the page, there are two
19 sentences. It says, "The value of sales and earnings
20 are not additive. They represent a different measure of
21 economic contribution."
22 Do you agree with those statements?
23 A Yes.
24 Q On the next page, Section 7.2, methodology
25 for estimating economic impacts. If you would, read the
35
1 first paragraph to yourself.
2 A All right.
3 Q Is there anything in that paragraph that
4 you disagree with?
5 A I guess I would probably not agree with the
6 criteria for land being removed from or going out of
7 agricultural production.
8 Q Is that the sentence, "If the sales of a
9 product could not cover at least the cash cost from
10 producing the product, then production of the product
11 ceases on the model farm"?
12 A Yes.
13 Q In the analysis that RPC, and I use RPC
14 broadly, in the analysis that RPC performed, how was
15 that handled?
16 A Okay. As I understand it, in the analysis
17 that RPC performed, the land would go off production at
18 the point where returns were not covering, basically,
19 the full cost of production, including capital
20 replacement; whereas, Hazen & Sawyer is not taking the
21 land out of production until revenues no longer cover
22 what they call the cash cost. They're saying capital
23 replacement is not a cash cost, as I understand it.
24 Q Is it your opinion that land would go out
25 of production when it could not fully cover capital
36
1 replacement?
2 A Yes.
3 Q And what is the basis for that?
4 A The basis for that is kind of the economic
5 principal that investors, entrepreneurs, managers, would
6 need to recover their full cost of production in order
7 to stay in production, as economists say, in the long
8 run.
9 Q In your view, land would go out of
10 production in the first year when the owner could not
11 fully cover capital replacement?
12 A That's my understanding of how the RPC
13 modeling addressed the issue, yes.
14 Q And, in your opinion, that is the correct
15 way to address the issue?
16 A Yes.
17 Q And that, in your opinion, would be because
18 in that first year when the owner could not fully cover
19 capital replacement costs, the owner would perceive that
20 they would not be able to cover capital replacement
21 costs in the future, as well?
22 A Right.
23 Q What would that perception be based on, in
24 your view?
25 A That would be based on the producer having
37
1 access to the same general type of information that is
2 reflected in the models. Which is to say that the
3 adverse experience that is being experienced in year one
4 is not seen as temporary aberration, but rather a
5 long-term trend.
6 Q Professor Leistritz, let me get this marked
7 as an exhibit.
8 (Deposition Exhibit 1 marked for
9 identification.)
10 BY MR. SAXE:
11 Q Professor Leistritz, I'm handing you what
12 has been marked as Exhibit Number 1. If you would, take
13 a look at that document. You might show it to Ms.
14 Raepple first.
15 A All right.
16 Q If you would, could you identify this
17 document for the record for me?
18 A Yes, this is a memo from Eric Schubert, an
19 RPC employee, to me, copies to Ron Luke and Ed Warren,
20 also, of RPC, dated February 2nd.
21 Q Have you seen this document before,
22 Professor Leistritz?
23 A Yes.
24 Q Would you explain for me what this
25 memorandum was about?
38
1 A Okay. The memorandum, basically, addresses
2 the issue that was addressed in your previous question.
3 That is, the appropriate assumptions for land being
4 removed from agricultural production in the EAA, in the
5 face of declining net returns from agricultural
6 production.
7 Q Does this reflect a request from Eric
8 Schubert to you to answer certain questions?
9 A Yes.
10 Q Are those questions described in the second
11 paragraph, under the heading "The timing and conditions
12 of agricultural land leaving production"?
13 A Yes. Yes.
14 Q Looking at the bottom paragraph on page 1,
15 four lines down there is a question: "Does this reflect
16 the true experience of farmers?"
17 Did you formulate an opinion about the
18 answer to that question?
19 A Yes.
20 Q What was that opinion?
21 A That opinion, in fact, was summarized in a
22 memo to --
23 MR. SAXE: Let me mark another one, and see
24 if this is what you are looking for.
25 Would you mark that, please?
39
1 (Deposition Exhibit 2 marked for
2 identification.)
3 THE WITNESS: That is the one, yes.
4 BY MR. SAXE:
5 Q Professor Leistritz, referring to what has
6 been marked as Exhibit Number 2, would you identify that
7 for the record for me, please?
8 A Yes. This is a memo from myself to Ron
9 Luke, dated February 6, 1994, responding to the memo
10 from Eric Schubert.
11 Q Going back to the question, "Does this
12 reflect the true experience of farmers," did that refer
13 to the preceding sentence, which reads, on Exhibit 1,
14 "Hazen & Sawyer claims that a farm would operate for a
15 number of years when a farm is losing money, but is
16 covering operating costs by eating depreciation on farm
17 equipment." Then it says, "Does this reflect the true
18 experience of farmers?"
19 In your opinion, does that reflect the true
20 experience of farmers?
21 A Yes. The memo of February 6th attempts to
22 address that issue. And, basically, what we're saying
23 is that in order to be economically viable, the revenue
24 must be sufficient to cover all costs of production and
25 provide a positive residual return of the land and risk.
40
1 The costs that must be covered include a capital
2 replacement charge, also often termed depreciation, and
3 it enumerates other costs.
4 Q Can depreciation, also, be considered as a
5 return to investment in machinery?
6 A Not in the usual sense of economic
7 analysis. The depreciation, essentially, can be termed
8 "capital replacement cost."
9 Most investors would want to not only be
10 able to replace their equipment, but, also, in addition,
11 to have some sort of "positive return on their
12 investment." The depreciation is, generally, seen as
13 the cost of replacing the capital goods; the tractors,
14 that sort of thing.
15 Q Do you know how Hazen & Sawyer accounted
16 for depreciation in their analysis? Handled
17 depreciation in their analysis?
18 A Okay. It was my understanding, from
19 reading the report, that they would treat depreciation
20 in the way that I just described. The issue, I think,
21 was the issue of what costs had to be covered in order
22 for the land to stay in production. And they were
23 saying that depreciation did not have to be covered.
24 Did not have to be covered in order for the land to stay
25 in production.
41
1 Q Independent of the land use change criteria
2 and the role of depreciation in it, do you know whether
3 Hazen & Sawyer allowed an expense for depreciation in
4 their analysis?
5 A Yes. It is my understanding that they
6 allowed depreciation as one of the expenses of
7 production.
8 Q And how did they calculate depreciation?
9 A I can't describe it to you in detail,
10 certainly without reference to their report. I guess
11 that's the best answer I can give.
12 Q Did you form an opinion of whether Hazen
13 and Sawyer's calculation of depreciation was defective?
14 A I don't recall, on reviewing the report,
15 having questions or concerns about the way in which they
16 calculated depreciation charges.
17 Q How does a farmer know whether he or she is
18 in an aberrational situation involving an inability to
19 cover capital replacement costs, or a long-term trend?
20 A That is, of course, a very good question.
21 And one could say that is what makes management, in this
22 case farm management, a challenge.
23 Q Other than the challenging nature of making
24 that determination for a farmer, is it fair to say that
25 a farmer's decision to leave production would be based
42
1 on his or her estimation of whether the first year's
2 inability to cover capital replacement was an aberration
3 or a long-term trend?
4 A Yes. It all goes back to the
5 decision-maker, in this case the farm manager's
6 assessment. Their expectation or their assessment of
7 the future. Which, of course, farm operators often have
8 various sources of market outlook information and other
9 kinds of economic information which they consult, to a
10 greater or lesser extent, prior to making decisions.
11 Q In Exhibit 2, the sentence in the bottom
12 paragraph, above the footnotes, four lines down, it
13 says, "If the information embodied in our models is
14 generally available to the industry, then a producer
15 facing such a negative return situation would understand
16 that the outlook was for residual returns to become even
17 more negative in the future."
18 Have I read that correctly?
19 A Yes.
20 Q What is this information embodied in our
21 models? What information?
22 A In other words, the projections of future
23 prices for the product, likely trends in costs, yields
24 and the like.
25 Q When you say "and the like," could you be
43
1 more specific?
2 A Well, all of the various factors that enter
3 into the projections of returns, costs and, hence, net
4 returns from these different agricultural enterprises in
5 the EAA; including prices, yields, major factors in
6 determining gross receipts. A whole array of components
7 on the cost side.
8 Q On the cost side, would that be what you
9 referred to earlier as market outlook information?
10 A The market outlook information would relate
11 to product prices and, hence, to gross revenue. The
12 costs, the whole array of fertilizer, pesticides,
13 herbicides assessments.
14 Q And is that information embodied in the RPC
15 model?
16 A Right.
17 Q Given the historical profit and growth in
18 the EAA for sugar production, would you say that sugar
19 growers should be optimistic or pessimistic about the
20 future outlook?
21 A I guess that would depend on various
22 possible changes in water management, in international
23 sugar policy and the whole array of forces that affect
24 the industry.
25 Q In RPC's analysis, land was taken out of
44
1 production in the first year when the model farm owner
2 was unable to cover capital replacement costs; is that
3 correct?
4 A Yes.
5 Q Would that reflect an assumption that in
6 that first year, when the model farm owner was unable to
7 cover capital replacement costs, he or she would
8 perceive that the future outlook for residual returns
9 was negative?
10 A Yes.
11 Q What was that assumption based on in the
12 analysis? The assumption that in the first year where
13 there were negative residual returns that the perceived
14 outlook would be negative?
15 A It is, I guess, based on going back to the
16 principle that profitable production implies the need to
17 cover full cost of production.
18 And, also, based on the assumption that the
19 farm operators, the decision-makers in this case, have
20 access to information regarding the future outlook for
21 the different factors that are going to affect their
22 returns and their costs; such that at the point where
23 returns are no longer covering the full cost of
24 production, they have information available that allows
25 them to formulate accurate expectations. In this case,
45
1 accurate expectations that the future is only going to
2 have less favorable returns.
3 Q What information did RPC assume would yield
4 the conclusion in the mind of such a farmer that the
5 future outlook was negative, specifically?
6 A Well, basically, the factors that would
7 affect sugar prices, the knowledge, the schedule of
8 assessments, this sort of thing. And a producer's
9 experience relative to the different costs of
10 production.
11 Q So, would it be fair to say that RPC
12 assumed that in the first year where a model farm was
13 unable to cover capital replacement costs, all revenues
14 would be expected to decline in the future?
15 A I think I'll ask you to repeat the
16 question, sir.
17 Q Did RPC assume that in the first year when
18 a model farm was unable to cover capital replacement,
19 that the information would indicate that all revenue
20 would be expected to decline in the future?
21 A I think what the model is indicating is
22 that net revenues are expected to decline in the future.
23 Q Net revenues being revenue minus costs?
24 A Yes.
25 Q So, what I'm asking you is, was there an
46
1 assumption made about the revenue side of that equation?
2 Was there an assumption made about whether revenues
3 would decrease in the future?
4 A I believe the most appropriate way for me
5 to answer the question is to say that I have not been
6 intimately involved in all of the dimensions of the RPC
7 modeling, so I should not speculate on the precise
8 assumptions relative to the revenue and so on.
9 Q So, then, would it be fair to say that you
10 don't have an opinion about whether RPC assumed revenues
11 would decline after the first year in which a model farm
12 was unable to cover capital replacement costs?
13 A I think that is fair, yes.
14 Q Do you have an opinion about whether RPC
15 assumed that costs would increase after the first year
16 in which a model farm became unable to cover capital
17 replacement costs?
18 A Let me respond by saying that, in general,
19 it is my understanding that the model incorporates
20 assumptions of cost, of increasing costs, and I believe
21 revenues that are probably stable in nominal dollars, so
22 that the model definitely embodies assumptions that lead
23 to declining net revenue.
24 Q When you say revenues that are stable in
25 nominal terms, are those revenues declining in real
47
1 terms?
2 A With an assumption of a positive rate of
3 inflation, which I'm sure is still incorporated in the
4 analysis, then if revenue is constant in nominal terms,
5 it would be, by definition, declining in real terms,
6 because real in this case relates to inflation adjusted
7 or deflated dollars.
8 Q Would you be testifying to any opinions
9 about the basis for the assumption on the future trend
10 in revenues being stable in nominal terms, but declining
11 in real terms?
12 A I don't think so.
13 Q Would you have formulated any opinion that
14 you would be testifying to concerning the future trend
15 in costs as increasing?
16 A I don't believe so.
17 Q Do you have opinions about the assumption
18 made in RPC's analysis whereby land is taken out of
19 production as soon as total revenue is less than total
20 cost? Do you have an opinion about the soundness of
21 that assumption?
22 A Yes.
23 Q What is that opinion?
24 A Well, my opinion is that that is a
25 reasonable assumption.
48
1 Q And to the extent that you haven't already
2 indicated, what is that based on?
3 A Again, really based on the economic
4 principle of the need to cover all costs of production.
5 Q Are you familiar with any other areas and
6 instances in the country where farmers have encountered
7 residual returns that render them unable to fully cover
8 capital replacement costs?
9 A Yes.
10 Q In what areas of the country are you
11 familiar with such situations?
12 A In the Northern Great Plains region,
13 basically, North Dakota and adjacent states, there
14 certainly have been years over the last decade when
15 producers have been in that situation.
16 Q Any others, besides the Northern Great
17 Plains, that you are familiar with?
18 A Well, certainly, that would be the area
19 that I would be most familiar with.
20 Q Have you analyzed responses of farmers in
21 the Northern Great Plains to such situations?
22 A Yes.
23 Q In your analysis, have farmers ever
24 continued to farm even though they can't cover all of
25 their fixed costs?
49
1 A Have farmers continued to farm even though,
2 at least in individual years, they were not able to
3 cover their fixed costs? Yes, indeed.
4 Q So, in your analysis, there have been
5 instances where farmers have not taken land out of
6 production in the first year where they were rendered
7 unable to fully cover capital replacement costs?
8 A Yes.
9 Q What differentiated those situations from
10 the situations that farmers in the EAA would be facing,
11 in your opinion?
12 A The expectation that at some time in the
13 foreseeable future, the economic conditions in farming
14 in that region, that is, the Northern Plains, would
15 improve, such that they would be able to cover their
16 costs.
17 Q Why would farmers', in the EAA,
18 expectations not be as optimistic as farmers in the
19 midwest about the future ability to cover capital
20 replacement costs?
21 A The assumption with respect to the EAA is
22 that producers there will be familiar with or will,
23 essentially, have an assessment of future market
24 conditions and cost conditions that are consistent with
25 the assumptions that are built into the model.
50
1 Q Well, would it be fair to say that farmers
2 in the EAA, in RPC's assumption, would have no reason to
3 be optimistic in a way that farmers in the midwest have
4 sometimes had in your analysis?
5 A Yes.
6 Q Is that assumption taken simply as an
7 axiom, or is it based on some rationale, or any other
8 alternative that you might care to supply to that
9 answer?
10 A I guess maybe I'll ask you to restate the
11 question.
12 Q Is there a rationale for the assumption
13 that farmers in the EAA would have reason to be
14 pessimistic about the future trend in residual returns
15 that would explain why they would behave differently
16 than farmers in the midwest facing the same situation?
17 A Probably one thing that I could point to
18 would be the fact that producers in the midwest, dealing
19 in wheat, small grains and feed grains, have
20 traditionally been dealing in commodities, whose prices,
21 at least partially, are determined by international --
22 well, there have, at least at times, seemed to be
23 reasons to think that "international market conditions
24 might improve" and things of that nature. And perhaps
25 the EAA producers are dealing with a situation where
51
1 their product price is more controlled by government
2 policy.
3 Q Okay, let's take that for a moment, and
4 I'll assume that is not an exhaustive list.
5 So, then, would it be fair to say that that
6 rationale involves what you referred to earlier as the
7 stable real price for raw sugar?
8 A Yes.
9 Q If you would, turn to page 4-4 in the
10 contract completion report for the 20-year Hazen &
11 Sawyer study.
12 A All right.
13 (Discussion off the record.)
14 MR. SAXE: Carolyn, the United States would
15 propose a stipulation. Rather than marking three
16 volumes of the Hazen & Sawyer 20-year contract
17 completion report as an exhibit in this case,
18 that it be stipulated that these are the same
19 three volumes as were marked as Exhibits 3, 4 and
20 5 in the Luke deposition of March 4th and 5th.
21 MS. RAEPPLE: That's fine.
22 BY MR. SAXE:
23 Q Professor Leistritz, the second paragraph
24 refers to the sugar program and to the prices supported
25 by the Federal Government. Are these the factors that
52
1 you alluded to earlier in describing the stable real
2 price? Or, excuse me, the stable nominal price of
3 sugar?
4 A Yes.
5 Q There is a sentence at the end of this
6 paragraph, the last sentence in paragraph 2. Would you
7 read that into the record for me, please?
8 A Okay. This is the sentence that begins
9 with "however"?
10 Q Yes, sir.
11 A "However, given that farm programs to
12 support farm income have existed for the past 58 years,
13 and that international trade agreements may not affect
14 sugar prices in the near term, it is not unreasonable to
15 assume that they will continue in their present form
16 through the 1990s."
17 Q Would you agree with that statement?
18 A I guess that they, in this case, refer to
19 farm programs, and, more specifically, to the sugar
20 program. So, yes, I think that is, basically, then what
21 Hazen & Sawyer is assuming, which is, also, consistent
22 with what was assumed in the RPC analysis. That the
23 sugar program, essentially, continues in the present
24 form through the 1990s, as I read it.
25 Q Do you have an opinion on whether the
53
1 current sugar price support program is operated to
2 prevent defaults on non-recourse loans to sugar
3 producers?
4 A I think I would answer by saying that I
5 have not really been asked to formulate opinions about
6 the sugar program, so I think my answer is, I don't
7 know.
8 Q So, then, would it be fair to say that you
9 don't know or you don't have an opinion on whether the
10 assumption about stable nominal price and declining real
11 prices is likely to occur or not likely to occur?
12 A Yes.
13 Q Is it true that North Dakota wheat farmers
14 are replacing wheat with sugar beets?
15 A In the Red River Valley of eastern North
16 Dakota, we produce a substantial acreage of sugar beets.
17 In the area that is suited for sugar beet production,
18 sugar beets, in recent years, have been probably a more
19 profitable crop than wheat.
20 It is my understanding that our acreage in
21 the Red River Valley area is relatively stable. I don't
22 believe we have had any kind of major changes in acreage
23 in recent years. There are year-to-year fluctuations,
24 but in recent years sugar beets have been a more
25 profitable crop than wheat, certainly.
54
1 Q Do you know whether farmers in other areas,
2 wheat farmers in other areas, have been switching to
3 sugar beets?
4 A I guess I don't have an opinion about sugar
5 beet acreage trends in other areas of the country.
6 Q In your opinion, does the switching that
7 has occurred in North Dakota from wheat to sugar beets
8 reflect optimism about the sugar market?
9 A Yes.
10 Q Do you think that a North Dakota farmer
11 would rather have a government price support program
12 like that for sugar or have a government program like
13 that for wheat?
14 A I don't think I have an opinion on that.
15 Q Do you know how many sugar farmers elected
16 to terminate production in 1981 in the EAA?
17 A No.
18 Q Do you know whether sugar farmers in the
19 EAA in 1981 had negative returns, residual returns?
20 A No, I don't.
21 Q Hypothetically, if sugar farmers in the EAA
22 had negative residual returns in 1981, and significant
23 numbers of them did not take land out of sugar
24 production, why might they not have done so, in your
25 view?
55
1 A The reason they would not do so would be
2 that their expectation with regard to future returns was
3 that future returns would be more favorable.
4 Q And what would cause them to have been
5 optimistic in 1981 that, in your opinion, would be
6 different at some point in the next 20 years in a
7 similar circumstance?
8 A I guess I have to say I'm not familiar with
9 the circumstances that were extant in 1981.
10 Q In referring to Exhibit 2, can you give me
11 any real life examples of significant numbers of farms
12 or farmers electing to take land out of production in
13 the first year where they were unable to fully cover
14 capital replacement costs?
15 A In North Dakota, we had, I guess, probably
16 several thousand producers who enrolled part or all of
17 their land into a government program called Conservation
18 Reserve Program. This would be during the period 1986,
19 roughly, through 1990. Something approaching three
20 million acres were then taken out of agricultural
21 production and put into the Conservation Reserve Program
22 during that period.
23 Q Did you say three million acres?
24 A Yes.
25 Q Can you explain why the farmers or owners
56
1 of those three million acres made that election in that
2 circumstance?
3 A Well, yes. Based on a survey of quite a
4 number of these people that we conducted in 1988, I
5 guess it was, basically, these producers were seeing the
6 government Conservation Reserve Program as offering a
7 higher return in net income to them from their land than
8 they had anticipated being able to achieve by farming or
9 renting the land. And/or they, also, saw the
10 Conservation Reserve Program as offering a lower level
11 of risk, compared to continuing to farm the land.
12 Q Did farmers associated with those three
13 million acres have to liquidate the farming operation
14 under that circumstance?
15 A In some cases, as near as we could
16 determine, enrolling land in the Conservation Reserve
17 Program was part of an overall plan to, basically,
18 liquidate the farming operation, get out of farming.
19 In some cases, it was part of a plan to,
20 basically, retire. In other cases, it was part of a
21 plan to get out of farming and look for another
22 occupation. And in many cases, it was a situation where
23 some producers put part of their land into the CRP. And
24 CRP is shorthand for Conservation Reserve Program.
25 In many cases, the producer enrolled part
57
1 of their land in the Conservation Reserve Program and
2 continued to farm the rest.
3 Q What is the relative proportions that
4 you -- did you make any determination, or do you have
5 any basis for --
6 A We do, and I would have to look at the
7 research report that we prepared.
8 Q Well, did the majority liquidate?
9 A I would say, no. The majority were
10 enrolling a portion of their land in Conservation
11 Reserve, and continuing to farm the remainder.
12 Q What happened to the land where the farmers
13 did liquidate?
14 A What happened, the land was placed in the
15 Conservation Reserve Program, and it is, basically, the
16 same, regardless of what the owner-operator chose to do.
17 That is, the land, via the directives of the program, is
18 placed in a permanent cover; basically, grass. And the
19 owner-operator, also, has responsibilities to control
20 weeds and this sort of thing.
21 Q When you say permanent, would that be for
22 the duration of the contract?
23 A Yes, a 10-year contract.
24 Q So, it would actually be a 10-year period,
25 not a permanent period?
58
1 A Right.
2 Q What, in your opinion, will happen to the
3 CRP acreage when the contracts expire?
4 A I think the appropriate answer is, I don't
5 know. I might add that an awful lot of folks up in our
6 part of the country are asking that question these days.
7 Q Let me ask it this way: Is the
8 determination that those folks will have to make, in
9 fact, the same type of determination that the farmers in
10 the EAA have to make when residual returns render them
11 unable to cover capital costs; namely, what the future
12 outlook is for the residual returns?
13 A Yes.
14 Q What would you, as a resource economist,
15 with expertise in that kind of subject matter, think
16 would be likely of those CRP farmers if they are fully
17 rational and have good information?
18 A I would anticipate that the landowners
19 would, basically, take a look at the different
20 alternatives at the point that the contract expires.
21 You know, one alternative is to return the
22 land to crop production. If, in fact, crop prices are
23 high, net returns from crop production are more
24 favorable than from other uses of the land. Much of the
25 land very likely might return to crop production.
59
1 Another factor or another option would be
2 for the producer to leave the land in grass, utilizing
3 it for grazing and/or hay production.
4 So, these choices, I would anticipate,
5 would be really based on the producer's outlook and
6 expectation relative to net returns from different uses
7 at the point in time when they need to make that
8 decision.
9 Q In your opinion, given what you know now
10 about those factors, what would be the rational decision
11 to make if the contract were to expire this year?
12 A It would seem to me, and, again, I'll
13 reflect on the situation of the Conservation Reserve
14 Program acres in North Dakota, which would be the area
15 that I would have some understanding of, it would seem
16 to me that the rational decision is going to depend
17 on -- some will probably put the land back into crop
18 production, others might very well leave it in
19 grassland. But then they would be utilizing it for
20 livestock production in one way or another as pasture or
21 hay land.
22 Q Which would be the sounder decision, in
23 your opinion?
24 A It would depend on the characteristics of
25 the land. It would, also, depend on the situation for
60
1 the farm operator.
2 Q Do you know how much farmers were paid per
3 acre to enroll in the CRP in North Dakota?
4 A Again, those statistics are available in
5 considerable detail. It strikes me that at the time,
6 when much of the land was being signed up, it was
7 perhaps on the order of $40. It strikes me that an
8 awful lot of it was in the range of 35 to $45.
9 Q Do you know how that amount compared with
10 the farmers' net returns to lands at that time?
11 A Well, many of them, at least taking into
12 account the perceptions of the risk and so on, many
13 producers saw this as a better return, a more favorable
14 return, than what they could obtain by farming or
15 renting the land.
16 Q Do you know how that figure, I think you
17 used 35 to $40 an acre, compared with their variable
18 costs at the time?
19 A Not off the cuff, no.
20 Q Fixed costs?
21 A Well, again, that would differ by the part
22 of the state. It would differ by what crops were being
23 produced and so on. But, in general, the CRP payments
24 were often equal or greater than what was being
25 experienced for net returns for the crop production.
61
1 Q Do you know what became of the land placed
2 in the Land Bank of several years ago after contracts
3 expired?
4 A In the Land Bank in North Dakota, we can
5 tell you in general terms. And, in general terms, these
6 contracts were expiring in the early 1970s, I guess. A
7 high percentage of that land went back into crop
8 production. That was a period of relatively high crop
9 prices.
10 That which did not go back into crop
11 production, apparently, was used for hay and
12 pastureland. I have not seen any kind of a statistical
13 study to say what the percentages were in North Dakota,
14 or, for that matter, nationwide. But, in general terms,
15 in North Dakota, a very substantial percentage went back
16 into crop production.
17 Q Going back to Exhibit Number 2, and the
18 sentence, "A reasonable response by the producer would
19 be to liquidate the farming operation under such
20 circumstances," at the bottom of the first page and the
21 top of the second page, I asked you earlier about any
22 real life examples, and you gave me the CRP example in
23 North Dakota.
24 Are there any others, that you are aware
25 of?
62
1 A Okay.
2 Q Would you like me to clarify the question?
3 A Yes.
4 Q Let me do that.
5 Other than land availing itself to the CRP
6 program in North Dakota, are you familiar with any
7 examples, real life examples, where significant acreage
8 has elected to liquidate production in the first year
9 where it is faced with an inability to fully cover
10 capital replacement costs?
11 A I guess the question seems to have two
12 parts. One part is, can we identify major instances
13 where agricultural production was not able to cover full
14 costs and leave a residual return to land and
15 management?
16 And then the second part of that question
17 would be, in those cases are there examples of,
18 basically, people liquidating in the first year?
19 As I read it, again, it is kind of an
20 empirical question, I don't believe that in our major
21 crop producing areas, for instance, in the Northern
22 Great Plains, we have really had extended periods when
23 production would not, basically, cover costs and leave
24 some positive return to land and management.
25 Q When you say extended periods, my question
63
1 is examples of instances where significant acreage left
2 production in the first year, where the farmer or owner
3 was unable to fully cover capital costs. So, I'm not
4 sure, when you say extended periods, if you are
5 answering my question. Would you like me to restate the
6 question?
7 A I guess my answer should be, no, I don't
8 know. That is, I would not be able to demonstrate
9 instances of major amounts of land leaving production
10 after one year of returns inadequate to cover costs.
11 Q How about significant amounts of acreage
12 leaving production. When you say major, I'm not sure if
13 maybe we're getting hung up on the qualifier.
14 Are you aware of any examples where what,
15 in your opinion, would be a significant volume of
16 acreage in production left production in the first year,
17 where there was an inability to fully cover capital
18 replacement costs?
19 A Again, I guess that the answer should be,
20 no, I don't know of specific examples.
21 Q Returning, again, to this Exhibit Number 2,
22 the sentence, "A reasonable response by the producer,"
23 the example that you gave me involved a government
24 program, where the producer was paid to take land out of
25 production.
64
1 A Yes.
2 Q In your opinion, might a reasonable
3 response by a producer to liquidate depend, to some
4 extent, on the availability of a government program such
5 as CRP?
6 A Oh, yes, that would definitely have an
7 effect.
8 Q Might a producer reasonably decide to
9 liquidate even where there were no such government
10 program paying the producer to take land out of
11 production?
12 A In a situation where returns don't cover
13 costs, that remains the rational response.
14 Q In order for a producer's election to
15 liquidate in such circumstances, namely, the first year
16 where they're unable to fully cover capital replacement
17 costs, to reasonably make that election, would it
18 require that there be some market available for the
19 assets that would be liquidated?
20 A Okay. The availability of a market for the
21 assets certainly would have an influence on a decision
22 to liquidate. Yes, machinery and that sort of thing.
23 If there was a "strong market" for those assets, that
24 would be a positive for liquidating, versus if it is
25 perceived that there is very little market. Some
65
1 economists would say, with very little salvage value to
2 some of those investments, that would favor a decision
3 to let's hang in there and see if things get better.
4 Q Which investments would have to be
5 liquidated in the EAA in the instance of sugar
6 production?
7 A Well, the producer's major capital
8 investments would include land, if it is owned. And
9 then the various production equipment, machinery, the
10 different tractors, tillage equipment and so on.
11 Q Did RPC make an assumption about the
12 existence of a market for the land in the first year
13 where a model farm became unable to fully cover capital
14 costs?
15 A I think the appropriate answer is -- maybe
16 the appropriate answer is, I don't know.
17 Q In your view, would RPC have had to make
18 such an assumption in order to soundly handle land going
19 out of production in the way it did? Namely, that it
20 went out of production in the first year, where it was
21 unable to fully cover capital replacement costs?
22 A I think the answer has to be, yes. That
23 is, some kind of assumption has to be made.
24 Q What kind of assumption would have to be
25 made in order for that to be a reasonable treatment of
66
1 the land use change criteria?
2 A You are asking for my opinion of the
3 assumption that one would make about the marketability
4 of the land at a point where the returns from production
5 no longer covered the full cost of production?
6 Q That's right.
7 A It seems to me that the assumption that I
8 would make under those conditions would be that the land
9 would, basically, have a zero value as an agricultural
10 asset, because agricultural production no longer
11 provides any positive return to the land.
12 Q What kind of market would there have to be
13 for land having zero market value?
14 A Again, I guess you are asking for my
15 opinion. It seems to me, logically, that there are two
16 possibilities. One is, the land simply stands idle,
17 because in a situation where agricultural production can
18 no longer cover the cost of production, no one wants to
19 farm it.
20 And we, of course, have had, historically,
21 some examples of that kind of situation in different
22 parts of the country.
23 But the other possibility is that the land
24 goes into some other non-agricultural use, I'm not sure
25 what that is, in the EAA.
67
1 In northern Minnesota, returning to forest
2 was an alternative use that happened to substantial
3 amounts of land a couple of generations ago.
4 Q Would it be correct to say that RPC had to
5 assume, in its treatment of the criterion for land
6 leaving production, based on the inability to fully
7 cover capital replacement costs, that in that first
8 year, where that situation obtained, the land value fell
9 to zero?
10 A I think I'll ask you to restate the
11 question.
12 Q Would it be correct that RPC's treatment of
13 land leaving production in the first year, where there
14 was an inability to fully cover capital replacement
15 costs, included the assumption that in that year the
16 land value fell to zero?
17 A It doesn't seem to me that the assumption
18 of the land value falling to zero is critical to the RPC
19 model. It does, however, seem to me to be a logical
20 conclusion, given a situation of an outlook for returns
21 from production not covering costs.
22 Q With respect to the market for machinery
23 and equipment, in order for a producer to reasonably
24 decide to liquidate in the first year, where he or she
25 was unable to fully cover capital replacement costs,
68
1 would there have to be some market for the equipment and
2 the machinery?
3 A Certainly, some market for the equipment
4 and machinery would be a factor that would certainly
5 favor and encourage liquidating. The lack of a market
6 for the equipment and machinery would work against a
7 decision to liquidate immediately.
8 Q What price would a producer have to be able
9 to obtain for the equipment and machinery in order for
10 it to still be a reasonable decision to leave production
11 in the first year, where he or she was unable to fully
12 cover capital replacement costs?
13 A What price would they need to be able to
14 receive? It seems to me that probably the answer to
15 that should be that they should be able to obtain a
16 price equal to the undepreciated value of the machinery.
17 Q So, then, would it be fair to say that, in
18 your opinion, a producer, faced with zero land value,
19 and a market price reflecting the undepreciated value of
20 the machinery and equipment, would reasonably decide to
21 leave production in the first year, where he or she was
22 unable to fully cover capital replacement costs?
23 A Yes. Given an expectation that if they
24 don't expect things to get significantly better in the
25 foreseeable future, then that would be a very rational
69
1 decision.
2 Q Describe for me, again, in your own words,
3 how you describe the price that a producer would have to
4 be able to obtain for the machinery and equipment in
5 such an instance to reasonably decide to leave
6 production. Was it undepreciated? How did you --
7 A What I said was the undepreciated value.
8 That is, the value at which it is carried on the books,
9 so to speak. Acquisition cost, less previous
10 depreciation.
11 Q If a producer could not get the
12 undepreciated value of machinery and equipment at that
13 instance, might the producer reasonably elect to
14 continue in production, even though it had encountered
15 the first year in which it was unable to fully cover
16 capital replacement costs?
17 A The question is, might it be rational to
18 continue in production, even though not covering capital
19 replacement costs, if, in fact, the machinery assets of
20 this sort have very little "salvage value"?
21 Q Well, not necessarily very little salvage
22 value. Salvage value less than the undepreciated value
23 of the machinery and equipment.
24 A I think the answer probably should be, yes,
25 under some circumstances it might appear reasonable to.
70
1 The answer should be, yes.
2 Q Is there a relationship between the
3 shortfall in the market price for the machinery and
4 equipment and the shortfall in covering capital
5 replacement costs that govern whether it is a reasonable
6 decision to continue to produce or take it out of
7 production?
8 A The basic thing is, as I tried to outline
9 in the memo, is, basically, what costs are seen as fixed
10 and what costs are seen as variable. So that in a
11 short-run situation where we produce, we can cover
12 variable costs. But at some point, with a longer
13 planning horizon, all costs can be seen as variable.
14 Q And what determines the relationship
15 between the length of the planning horizon and whether
16 capital replacement costs are treated as variable or
17 fixed?
18 A Well, basically, the point at which one has
19 to, in fact, make capital replacement decisions. It
20 seems to me that the difficult issue is that while farm
21 machinery has a multiple year, useful life, a typical
22 farm probably does not start at year one with all new
23 machinery, such that nothing needs to be replaced until
24 a year or quite a ways down the road. Rather,
25 typically, some sort of capital replacement decisions
71
1 seem to come up almost annually.
2 Q If a farmer did have all new machinery and
3 equipment, would the farmer still leave production in
4 the first year if they were unable to fully cover
5 capital replacement costs?
6 A I guess that would depend on the question
7 that you previously asked about what are the
8 possibilities for recovering -- what can we obtain by
9 liquidating our assets?
10 Q As increasing numbers of sugar farmers go
11 out of production, do you know what would happen to the
12 price of their used machinery and equipment?
13 A One way to answer would be to say, no, I
14 don't know what would happen.
15 If you are asking for an opinion --
16 Q Yes.
17 A -- then, again, at least two factors would
18 be applicable. One would be how many people are going
19 out of production; hence, how much equipment are they
20 likely to be liquidating?
21 A second factor would be to what extent is
22 this machinery or equipment specialized for sugar
23 production, as opposed to being usable for producing
24 other crops.
25 Some of the equipment used in the sugar
72
1 cane production is, obviously, highly-specialized.
2 Other items of equipment probably can readily be used by
3 other types, you know, vegetable growers, outside of the
4 EAA and so on.
5 Q Do you have an opinion about what would
6 happen in the EAA to the market prices for used sugar
7 machinery and equipment in circumstances where
8 increasing numbers of sugar farmers were liquidating?
9 A If substantial numbers were liquidating,
10 then one would anticipate that prices for the equipment
11 that is highly-specialized for sugar production, my
12 opinion would be that those prices would tend to be
13 depressed; more so than the equipment, tractors and the
14 like, that might be readily used for other kinds of
15 agricultural production.
16 Q Do you have an opinion about the types of
17 machinery and equipment that are used in sugar
18 production with respect to how much of it is
19 highly-specialized and how much of it is transferable to
20 other crop production?
21 A No.
22 Q What would be the effect of that declining
23 market for the used machinery and equipment on the
24 remaining farmers' decisions whether or not to leave
25 production the first year that they were unable to fully
73
1 cover their capital replacement costs?
2 A Well, the depressed market for assets would
3 be a factor that would encourage people to stay in
4 production for a bit longer.
5 Q Do you know whether RPC made any assumption
6 about that effect on the likelihood of land leaving
7 production the first year that it was unable to fully
8 cover replacement costs?
9 A No, I don't know.
10 Q Do you have any reason to believe that they
11 did make any assumption about that relationship?
12 A No.
13 Q Do you know whether RPC is using accounting
14 or economic depreciation for its analysis?
15 A No.
16 Q Are you assuming one or the other in the
17 formulation of the opinions that you have testified to
18 on this issue?
19 A I guess I am assuming economic
20 depreciation.
21 Q What difference would it make if RPC had
22 used accounting depreciation?
23 A I think that I would have to answer that I
24 don't know. I guess the relationship between economic
25 and accounting depreciation is not something that I have
74
1 an opinion on.
2 Q Again, back to Exhibit 2, but on the second
3 page this time, the last paragraph, I want to draw your
4 attention to this paragraph, generally, and the sentence
5 that says, "The potential subsidy would be limited,
6 however, by the cost saving that the mill can achieve by
7 maintaining volume (or the cost penalty associated with
8 loss of volume)."
9 Would a vertically integrated mill operate
10 to maximize the combined profits of the farm and the
11 mill?
12 A I would assume so.
13 Q In your opinion, is the sugar industry and
14 the EAA a vertically integrated industry?
15 A As I understand it, yes, to a large extent.
16 Q Did RPC make an assumption about vertical
17 integration in its analysis?
18 A I believe my answer should be, I don't
19 know.
20 Q For an integrated industry like sugar and
21 the EAA, is it reasonable that the mill might forego
22 some return to investment in the mill in order to
23 maintain cane production?
24 A As we tried to say, yes, that could be a
25 reasonable approach, but only to the extent of the cost
75
1 saving. Well, the cost saving that would be associated
2 with maintaining the volume of production, so that the
3 amount of subsidy that would be rational would be
4 limited by -- certainly not to exceed the savings from
5 maintaining volume. And in some situations, there may
6 be other options available to the mill that may be more
7 attractive.
8 Q Would it be correct to say that the
9 discussion in this paragraph refers to the likely price
10 that a mill would pay for cane?
11 A Yes.
12 Q In that context, would you tell me what you
13 mean by grower's subsidy?
14 A Okay. Well, I guess the "subsidy" in this
15 case would refer to offering the grower a higher price
16 than what the model was originally assuming. Offering
17 the grower an additional price increment to encourage
18 them to keep land in production, I guess.
19 Q When you say a higher price, higher
20 relative to what?
21 A Higher relative to the price that had been
22 assumed was used as the base case in the model.
23 Q And by the model, do you mean the RPC
24 model?
25 A Yes.
76
1 Q How was that price calculated in the RPC
2 model?
3 A I have to say that I don't know, in the
4 sense that I can't describe that to you in any real
5 detail.
6 Q Professor Leistritz, do you know how Hazen
7 & Sawyer, in its analysis, adjusted the maximum price
8 the mill would pay for cane when net returns aggregate
9 for the mill and farm rendered the mill unable to fully
10 cover capital replacement costs if it increased the
11 price paid for cane necessary to keep an acre of land in
12 production?
13 A Okay. I think I'm going to ask you to
14 repeat the question.
15 MR. SAXE: Would you read it back?
16 (Requested portion read.)
17 THE WITNESS: You are asking at the point
18 where returns would no longer cover capital
19 replacement costs for the farm, for the mill, for
20 the two in aggregate? I didn't quite understand
21 that.
22 BY MR. SAXE:
23 Q Yes, correct. It would not fully cover the
24 aggregate capital replacement costs.
25 A Aggregate, okay.
77
1 Q For both.
2 A Okay. It was my understanding, from
3 reading the report that, basically, when the farm
4 operation could no longer cover capital replacement
5 costs, that the mill was assumed to offer additional
6 price increments to the farmers to keep land in
7 production up to 80 percent of the mill depreciation
8 allowance.
9 Q Is that what --
10 A That was what I had understood, from what
11 RPC, I think, had understood, from reading the Hazen &
12 Sawyer report.
13 Q And that is true -- excuse me.
14 A Go ahead.
15 Q And that is true, also, of the contract
16 completion report, the Hazen & Sawyer completion report?
17 A That's my understanding.
18 Q Is that what is referred to in the sentence
19 where it says, "Certainly I don't believe there is any
20 clear justification for assuming that 80 percent of the
21 mill depreciation can be offered as a grower subsidy"?
22 A Yes.
23 Q Do you know how RPC handled in its analysis
24 the determination of a grower's subsidy as you use it in
25 this sentence?
78
1 A I think I should answer that I don't know
2 how RPC chose to handle that.
3 Q If RPC handled it by assuming the mill
4 would give zero percent of its mill depreciation as a
5 grower's subsidy, do you have an opinion on whether that
6 would be the appropriate assumption for the EAA?
7 A I think my answer should be, no, I don't
8 have an opinion.
9 Q Professor Leistritz, does the determination
10 of the grower's subsidy as you use it, the term in this
11 exhibit, play a part in the finding of RPC's criteria
12 for land use change in its analysis?
13 A Does the treatment of the relationship
14 between the grower and the mill have an effect on the
15 analysis of whether land goes out of production?
16 Q Yes.
17 A I think the answer has to be, yes.
18 Q Am I correct in understanding that your
19 testimony is that you have no opinion about how RPC
20 handled the amount or the determination of the price
21 paid by the mill to the farm for a ton of cane?
22 A I have not examined, reviewed, the final
23 completed RPC model, so I cannot say how the farm-mill
24 relationship was handled in that sense.
25 Q When you say the final complete RPC model,
79
1 which model would you be referring to, or which version
2 of the model?
3 A The spread sheet model, which I gather they
4 have delivered to you. I have not seen the model in its
5 entirety.
6 Q Do you have an understanding that there is
7 a final complete version of the RPC model that you have
8 just referred to as your not having reviewed?
9 A Yes.
10 Q And have you reviewed any RPC model in
11 which some treatment was made of the relationship
12 between the mill and the grower with respect to the
13 price the mill would pay for a ton of cane?
14 A No. My role has been, basically,
15 discussing with the RPC staff some of the assumptions,
16 and so on, that they were going to incorporate into
17 their analysis. But I have not seen the analytical
18 model.
19 Q Let me kind of start this over. Do you
20 have an understanding of how RPC is handling the
21 relationship between the mill and the grower in setting
22 the price paid by the mill for a ton of cane?
23 A Okay. I believe I understand, in general
24 terms, what they're doing. But, as I say, I am not in a
25 position to testify about details, because at this point
80
1 I haven't seen the details which represent the
2 culmination of their analysis.
3 Q Well, I'm not necessarily asking for the
4 culmination of their analysis, or whether you have
5 formally reviewed a final version of the model. I'm
6 just asking you, generally, if you have any
7 understanding of how RPC is handling the relationship
8 between the mill and the farm in setting the price paid
9 for cane?
10 A I think I should probably answer, no, that
11 I don't know in detail what they decided to do.
12 Q Have you had any conversations with anybody
13 else in RPC about that issue?
14 A I would say that my memo here sort of
15 represents the culmination of those conversations.
16 Q After this memo, and we are referring to
17 Exhibit 2, did you have any further discussion or
18 correspondence with anybody associated with RPC's effort
19 concerning the issue of mill depreciation?
20 A No.
21 Q Do you know whether, in the case of the
22 cooperative, total mill depreciation is shared
23 proportionally by member owners?
24 A I don't know.
25 Q I now want to refer to this entire section
81
1 of your memo, entitled Agricultural Land, and that's the
2 Exhibit 2 memo. It starts on the first page and goes to
3 the second.
4 We have discussed several issues, one being
5 the reasonable response by a producer in the first year
6 that they were unable to fully cover capital replacement
7 costs. We have, also, discussed the issue of the grower
8 subsidy, as you have put it.
9 Have you had any further discussions or
10 correspondence with anyone associated with the RPC
11 effort about the issue of the reasonable response by
12 producers in the first year?
13 A No.
14 Q Do you have any further understanding of
15 how RPC is handling that issue in its analysis?
16 A No.
17 Q Let's go to the next section of this memo,
18 Local Employment in Construction of STAs.
19 A All right.
20 Q Would you read the first sentence into the
21 record for me, please?
22 A "Based on analysis of secondary data
23 concerning the EAA work force and their skills,
24 supported by interviews conducted in the EAA (by
25 Leistritz in July 1993 and by Luke on several occasions)
82
1 we can conclude that the EAA work force (e.g." -- I
2 think it should be "that is" -- "persons who live in the
3 EAA and are in the labor force) are predominantly
4 unskilled or semi-skilled, and their skills tend to be
5 quite specialized to the agricultural operations of the
6 EAA."
7 Q Thank you.
8 The reference in the beginning of the
9 sentence, "based on analysis of secondary data," could
10 you explain to me what secondary data you are referring
11 to there?
12 A The RPC had collected information from the
13 census, and from the Job Service relative to workers'
14 skills, educational levels and that sort of thing.
15 Q Any other categories, when you say and that
16 sort of thing?
17 A Well, skills, occupations, educational
18 levels would be the primary things that come to mind.
19 Q Skills, occupations and educational levels?
20 A Yes.
21 Q And what is the reference to the analysis
22 of that secondary data? What does that refer to?
23 A Others on the RPC team had, basically, done
24 some interpretation, which I believe generated some
25 memos, basically, reflecting their analysis of what the
83
1 information on education, skills and occupations might
2 mean in terms of potential employability in alternative
3 jobs and so on.
4 Q That analysis that you are referring to, is
5 it your understanding that some analysis of
6 socioeconomic impacts was performed incorporating this
7 material?
8 A Yes.
9 Q Does that analysis that was done by RPC go
10 beyond the economic impact analysis that was done by
11 Hazen & Sawyer in their 20-year contract completion
12 report?
13 A Yes.
14 Q In what ways does it go beyond Hazen &
15 Sawyer's analysis?
16 A Well, some of the things, and again I have
17 not seen the final analysis or materials resulting from
18 it, but the intent was to examine impacts on individual
19 communities, like Belle Glade, Clewiston, and I believe
20 five communities in total. Also, to look at the likely
21 effects on population, numbers of businesses, property
22 values and some of these factors.
23 Q So, once again, those were population
24 impacts?
25 A Yes.
84
1 Q That would mean inmigration and
2 outmigration?
3 A Yes.
4 Q From where to where?
5 A Well, inmigration or outmigration from the
6 EAA and specific communities within the EAA.
7 Q Did you have any involvement in that
8 analysis?
9 A Yes, in terms of general assumptions and
10 parameters.
11 Q I would like you to discuss that
12 involvement. You say general assumptions and
13 parameters, so why don't you start with the first
14 general assumption or parameter that you were involved
15 in analysis of or treatment of?
16 A Well, the local employment and construction
17 of the STAs would be one example.
18 Q Local employment in construction of STAs?
19 A STAs, storm treatment areas. Stormwater
20 treatment areas. That is summarized here in the memo.
21 Essentially, the issue was of the different
22 types of jobs that would arise. Construction of the
23 stormwater treatment areas would require employment of a
24 number of individuals to perform construction tasks.
25 These jobs were categorized into three general
85
1 categories.
2 And then an issue, as always in
3 socioeconomic impact assessments, is what proportion of
4 those jobs can we assume might be filled from residents
5 of the area, versus folks from outside of the area. And
6 so the memo, Exhibit 2, kind of summarizes my
7 suggestions about percentages that one might assume
8 might be filled by local workers.
9 Q Do you know whether Hazen & Sawyer made any
10 analysis of the local versus non-local employment
11 impacts of STA construction in its analysis?
12 A No, I don't.
13 Q So, then, would you say that you don't have
14 any opinion about Hazen & Sawyer's analysis in that
15 regard?
16 A Right.
17 Q What other general assumptions or other
18 aspects of RPC's population impact analysis were you
19 involved in?
20 A Okay. Another aspect was the relationship
21 between job loss and population loss, basically. That
22 is, do we assume proportional changes? Do we assume
23 that population changes are more than or less than
24 proportional to changes in numbers of jobs?
25 Q Do you know whether Hazen & Sawyer analyzed
86
1 the relationship between jobs lost and population loss
2 in its analysis?
3 A I don't believe that they did. The
4 materials that I reviewed did not reflect impacts of
5 population loss at the community level.
6 Q But you don't have any opinion whether they
7 analyzed local employment impacts for STA construction?
8 A I can't say for sure. I would not want to
9 say for sure.
10 Q What other general assumptions or aspects
11 of the RPC population impact analysis have you been
12 involved in?
13 A Another major one was the choice of the
14 RIMS multiplier. The choice of the whole economic
15 impact multipliers to be used.
16 Q Now, the choice of the RIMS multiplier,
17 could you explain to me how the RIMS multiplier was
18 incorporated in RPC's population analysis?
19 A Okay. The RIMS multipliers then provided
20 the estimates of secondary employment changes, income
21 changes. The change in numbers of jobs, direct, plus
22 secondary, then, basically, are used to generate
23 estimates of population change.
24 Q So, the RIMS multipliers were used in
25 forming the basis for part of the jobs population
87
1 function?
2 A Right.
3 Q Any other general assumptions or aspects of
4 the population impact analysis that you were involved
5 in?
6 A Well, those were the major ones, certainly.
7 Q Any other significant ones that you can
8 identify for me?
9 A Those are the salient ones, I guess, that
10 come to mind.
11 MR. SAXE: Let's take a lunch break.
12 MS. RAEPPLE: All right.
13 (Luncheon recess.)
14 (Proceedings continue in Volume 2.)
15
16
17
18
19
20
21
22
23
24
25
88
1 CERTIFICATE_OF_REPORTER ___________ __ ________
2
3 STATE OF FLORIDA:
4 COUNTY OF LEON:
5
6 I, ANITA M. PEKEROL, do hereby certify that the
7 foregoing proceedings were taken before me at the time
8 and place therein designated; that my shorthand notes
9 were thereafter translated under my supervision; and the
10 foregoing pages numbered 1 through 88 are a true and
11 correct record of the aforesaid proceedings.
12
13 I FURTHER CERTIFY that I am not a relative,
14 employee, attorney or counsel of any of the parties, nor
15 relative or employee of such attorney or counsel, or
16 financially interested in the foregoing action.
17
18 DATED THIS 18th day of March, A.D., 1994.
19
20
21
22
23 __________________________________
ANITA M. PEKEROL, CCR, RPR, CP, CM
24 100 Salem Court
Tallahassee, Florida 32301
25 904-878-2221 or 1-800-934-9090
89
1 CERTIFICATE_OF_ADMINISTERING_OATH ___________ __ _____________ ____
2 STATE OF FLORIDA:
COUNTY OF LEON:
3
I, ANITA M. PEKEROL, Registered Professional
4 Reporter and Notary Public in and for the State of
Florida at Large:
5
DO HEREBY CERTIFY that on the date and place
6 indicated on the title page of this transcript, an oath
was duly administered by me to the designated witness(s)
7 before testimony was taken.
8 DATED THIS 18th day of March, 1994.
9
10 __________________________________
ANITA M. PEKEROL, CCR, RPR, CP, CM
11 100 Salem Court
Tallahassee, Florida 32301
12 904-878-2221 or 1-800-934-9090
13 My Commission Expires: February 20, 1995.
14
15
16 SWORN TO AND SUBSCRIBED TO before me, this ______
17 day of ________________, 1994, in the CITY OF
18 TALLAHASSEE, COUNTY OF LEON, STATE OF FLORIDA, by the
19 above person who is personally known by me.
20
21
22
23
24 ___________________________
NOTARY PUBLIC
25 STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF ADMINISTRATION, STATE OF FLORIDA
SUGAR CANE GROWERS COOPERATIVE OF CASE NOS. 92-3038
FLORIDA, a Florida agricultural 92-3039
cooperative marketing association; ROTH 92-3040
FARMS, INC.; and WEDGWORTH FARMS. INC.,
and
FLORIDA SUGAR CANE LEAGUE, INC.; and
UNITED STATES SUGAR CORPORATION,
and
FLORIDA FRUIT AND VEGETABLE ASSOCIATION,
LEWIS POPE FARMS, W. E. SCHLECHTER &
SONS, INC., and HUNDLEY FARMS, INC.,
Petitioners
vs.
SOUTH FLORIDA WATER MANAGMENT DISTRICT,
an Agency of the State of Florida,
Respondent,
and
THE UNITED STATES OF AMERICA,
MICCOSUKEE TRIBE OF INDIANS, THE
FLORIDA DEPARTMENT OF ENVIRONMENTAL
PROTECTION, THE FLORIDA WILDLIFE
FEDERATION, THE FLORIDA AUDUDON SOCIETY
and THE SIERRA CLUB,
Respondent-Intervenors.
_________________________________________/
DEPOSITION OF: DR. F. LARRY LEISTRITZ
TAKEN: March 15, 1994
VOLUME 2
DEPOSITION OF: DR. F. LARRY LEISTRITZ
TAKEN AT THE INSTANCE OF: United States of America
Respondent-Intervenor
DATE: Tuesday, March 15, 1994
TIME: Commenced at 9:00 a.m.
Concluded at 5:30 p.m.
LOCATION: 315 South Calhoun Street
Tallahassee, Florida
REPORTED BY: ANITA M. PEKEROL, CCR, RPR,
CP, CM. Notary Public in
and for the State of
Florida at Large.
APPEARANCES:
REPRESENTING THE PETITIONERS SUGAR CANE GROWERS
COOPERATIVE OF FLORIDA a Florida agricultural
cooperative marketing association; ROTH FARMS,
INC. and WEDGEWORTH FORMS, INC.:
CAROLYN S. RAEPPLE, ESQUIRE
Hopping, Boyd, Green & Sams
123 South Calhoun Street
Post Office Box 6526
Tallahassee, Florida 32314
REPRESENTING RESPONDENT-INTERVENOR UNITED
STATES OF AMERICA:
KEITH E. SAXE, ESQUIRE
United States Department of Justice
601 Pennsylvania Avenue Northwest
Room 879
Post Office Box 663
Washington, D. C. 20044
ALSO PRESENT:
Lonnie L. Jones, Ph.D.
Ronald D. Lacewell
I_N_D_E_X _ _ _ _ _
WITNESS PAGE _______ ____
DR._F._LARRY_LEISTRITZ ___ __ _____ _________
Direct Examination (Cont'd) by Mr. Saxe 93
CERTIFICATE_OF_REPORTER 210 ___________ __ ________
E_X_H_I_B_I_T_S _ _ _ _ _ _ _ _
DEPOSITION_EXHIBITS: __________ ________
NUMBER DESCRIPTION PAGE ______ ___________ ____
3 Letter from Carolyn Raepple to
Keith Saxe, 3-3-94, and documents 97
4 1989 Hendry County Multipliers 131
5 STA Operation Multipliers 135
6 Telephone numbers 136
7 Memorandum from Ann Orzech to
Ron, Larry and Eric, 7-8-93 137
8 Memorandum from Ann Orzech to
Ron, Larry and Eric, 7-10-93 142
9 Memorandum from Eric Schubert to
File (871.1), 7-20-93 149
10 Threshold Population Levels for
Rural Retail Businesses in North
Dakota 160
11 Fax from Larry Leistritz to Ron
Luke, 2-27-94 - Composite 175
12 Composite - Data on sales per
establishment 201
93
1 (VOLUME 2)
2
3 P_R_O_C_E_E_D_I_N_G_S _ _ _ _ _ _ _ _ _ _ _
4 - - -
5 MR. SAXE: Back on the record after lunch.
6 DIRECT EXAMINATION (Continued)
7 BY MR. SAXE:
8 Q Professor Leistritz, before our lunch
9 break, we had been talking about Exhibit Number 2.
10 Referring, again, to the third page of this memo, the
11 top paragraph, back on the issue of the grower's subsidy
12 for just a moment, that last sentence, "Certainly, I
13 don't believe there is any clear justification for
14 assuming that 80 percent of the mill depreciation can be
15 offered as a grower subsidy," did you form an opinion
16 about what percentage of any of mill depreciation could
17 reasonably be offered as a grower's subsidy?
18 A No.
19 Q Hypothetically, if RPC, in its analysis,
20 assumed that zero percent of mill depreciation could be
21 offered as a grower's subsidy, in other words, that no
22 mill depreciation could be offered as a grower's
23 subsidy, do you have any opinion on whether that would
24 be a sound assumption?
25 A No, I don't think I have the basis for an
94
1 opinion as to what percentage might be appropriate.
2 Q Can you tell me whether, in your opinion,
3 there are circumstances in which it would be sound to
4 assume that zero percent of mill depreciation could be
5 offered as a grower's subsidy in a vertically integrated
6 crop like sugar in the EAA?
7 A Yes. It would seem to me that there could
8 be circumstances where that would be a reasonable
9 approach.
10 Q And what would those circumstances be?
11 A I guess to decide what would be the most
12 economically feasible approach for a vertically
13 integrated firm to really respond to the kinds of
14 conditions that are being hypothesized in some of the
15 scenarios, one would need a great deal of information
16 about the firm's structure; the different mills, their
17 cost structure. To just know what the different options
18 are that the firm might have might be.
19 And then one could form an opinion, I
20 guess, about what would be the most logical response;
21 whether it might be, as we said, a grower subsidy,
22 whether it might be taking certain units out of
23 production, certain mills or portions of a mill. And I,
24 clearly, haven't had access to that kind of information
25 to really feel justified to form an opinion.
95
1 Q In the hypothetical, given what you do know
2 about the sugar industry and the EAA, what information
3 would RPC have needed to have reasonably concluded that
4 zero percent of mill depreciation could be offered as a
5 grower's subsidy?
6 A Some of the type --
7 Q Let me clarify. Rather than giving me the
8 type of information, like categories, like the mills,
9 the structure of the mills, if you could tell me,
10 specifically, what structure of mills and what other
11 information would justify the assumption of zero percent
12 grower's subsidy?
13 A Well, in general, as I was indicating, to
14 really -- I don't know if I know the answer to that
15 question.
16 Q Would it be fair to say that you don't have
17 an opinion about what circumstances would justify the
18 assumption that zero percent of mill depreciation could
19 reasonably be offered as a grower's subsidy by the mills
20 in the EAA?
21 A I think I'm going to ask you to repeat the
22 question.
23 MR. SAXE: Sure. Would you please read the
24 question back?
25 (Requested portion read.)
96
1 THE WITNESS: I guess I will say that I
2 don't have an opinion at this point on what that
3 information would be.
4 BY MR. SAXE:
5 Q Going to the next section, Local Employment
6 in Construction of STAs, we had focused on the first six
7 words, "Based on analysis of secondary data," and you
8 had told me what that secondary data was, and told me
9 what the analysis was that you understood RPC had done.
10 Focusing now on the second clause in the
11 sentence, where it says, "Supported by interviews
12 conducted in the EAA" --
13 A Yes.
14 Q -- would it be fair to say that your
15 opinions in this section of this memorandum are based,
16 to some extent, on interviews that were conducted in the
17 EAA?
18 A Yes.
19 Q Do you know whether the information
20 obtained in those interviews has been reduced to writing
21 anywhere?
22 A At least to some extent, yes.
23 Q To some extent, yes. Would you elaborate
24 on that?
25 A I have provided some notes, albeit they
97
1 were my rough notes, from interviews that I conducted in
2 July of 1993.
3 I am, also, reasonably confident that I
4 recall seeing a memo or memos that Dr. Luke had
5 developed based on some of his interviews and study.
6 But one of the documents produced did include a number
7 of pages of my notes from my series of interviews.
8 MR. SAXE: Would you mark this as an
9 exhibit, please?
10 (Deposition Exhibit 3 marked for
11 identification.)
12 (Discussion off the record.)
13 MR. SAXE: Back on the record.
14 BY MR. SAXE:
15 Q Professor Leistritz, handing you what has
16 been marked as Exhibit Number 3, would you turn to the
17 fifth page of that, the one that has the sequence number
18 at the bottom of Number DLL 5601?
19 If you look at those next several pages,
20 are those some of the notes that you were just referring
21 to?
22 A Yes.
23 Q If you would, look through that document,
24 at those notes, sufficiently to tell me whether there
25 appear to be any notes reflecting these interviews that
98
1 are missing from this collection.
2 A I think that is a complete set.
3 Q Is there any interview information that you
4 are relying on for the opinions expressed in this
5 section of the memo that is not included in those
6 handwritten notes?
7 A The interview information that I would be
8 referring to would be from these interviews. Now,
9 realizing, too, that these notes were, basically,
10 prepared -- they were my notes that I took at the time
11 of the interviews. I was not asked to prepare a lengthy
12 narrative report summarizing all items discussed and so
13 on.
14 Q Sure. Well, what I'm trying to formulate
15 is, if there is anything that you learned in those
16 interviews that you are relying on for the conclusions
17 that you have expressed in this memo that is just in
18 your head, rather than written down somewhere, I would
19 like to ask you about it.
20 So, the first thing that I'm asking is
21 whether there is any such information that you derived
22 in those interviews that you are relying on that we
23 can't refer to the documents for?
24 A I would say that I probably didn't try to
25 write down every item that I thought I learned from
99
1 every interview; particularly in the cases where it
2 seemed like a repetition of information that I had,
3 also, learned in previous interviews.
4 The characteristics of the EAA work force
5 was a topic that came up in several interviews.
6 Q Is it fair to say, in looking back at
7 Exhibit 2, at this first paragraph under Local
8 Employment in Construction of STAs that you are
9 expressing a conclusion that the EAA work force is
10 predominantly unskilled or semi-skilled?
11 A Yes.
12 Q Is that conclusion based on anything that
13 you learned in those interviews that is not reflected in
14 those documents?
15 A Well, I would say that it would certainly
16 be reflected, to some extent, in the notes that I took.
17 But I would, also, say that I didn't try to sort of
18 write a verbatim transcript of my interviews.
19 Q Why don't you tell me, if you would, what
20 that conclusion is based on; the conclusion that the EAA
21 work force is predominantly unskilled or semi-skilled?
22 A This characterization certainly came out in
23 a number of the interviews. Are you asking me,
24 basically, to point to which interviews in particular
25 would cover that topic?
100
1 Q Basically, what I'm asking is, if you
2 express an opinion at trial that the EAA work force is
3 predominantly unskilled or semi-skilled, and you are
4 asked what that conclusion is based on, what would you
5 tell the judge?
6 A I would say that that was, basically, the
7 consensus of what I was told by a number of the
8 individuals that I interviewed in this two and a half to
9 three-day stint.
10 Q And those are the interviews that are
11 reflected, to some degree, in these handwritten notes in
12 Exhibit 3?
13 A Yes, exactly.
14 Q Anything else that that conclusion is based
15 on?
16 A In addition to the secondary data that we
17 had talked about before; information about education,
18 occupations and the like.
19 Q Skills, occupations and educational levels?
20 A Yes.
21 Q And that was the information from which
22 sources?
23 A Census --
24 MR. SAXE: Off the record.
25 (Discussion off the record.)
101
1 (Requested portion read.)
2 BY MR. SAXE:
3 Q Would you go ahead and answer that last
4 question?
5 A The question is the sources of the
6 information?
7 Q Yes.
8 A The U. S. census population, 1990. The
9 Florida -- I don't know if you call them Job Service or
10 employment service. The State employment office that
11 serves the EAA. Those would be the two primary sources,
12 I would say.
13 Q Thank you.
14 Anything else that your conclusion would be
15 based on, besides the interviews and that secondary
16 data?
17 A Those would be the major things.
18 Q Is it fair to say, then, that the sentence
19 expresses another conclusion; namely, that the skills of
20 this work force tend to be quite specialized to the
21 agricultural operations of the EAA? Let me rephrase the
22 question for you.
23 The sentence in the first paragraph under
24 local employment goes on to say that, "Their skills tend
25 to be quite specialized to the agricultural operations
102
1 of the EAA."
2 Does that reflect your opinion?
3 A Yes.
4 Q Is that opinion based on the same
5 interviews and analysis of secondary data that you just
6 described?
7 A Yes. Particularly the interviews.
8 Q In the next paragraph, the concluding
9 sentence of the next paragraph, it says, "With these
10 factors in mind, my estimates for the percentage of
11 workers that come from the EAA are as follows," and then
12 you lay out three categories of workers; is that
13 correct?
14 A Yes.
15 Q And for the first category of workers,
16 namely, STA Engineering, Design and Construction
17 management, you have estimated that 10 percent of the
18 workers come from the EAA; is that correct?
19 A Yes.
20 Q And the second category, STA Skilled
21 Construction, you have estimated that 20 percent of the
22 workers come from the EAA?
23 A Yes.
24 Q And for the third category, STA Unskilled
25 Construction, you have estimated that 40 percent come
103
1 from the EAA?
2 A Right.
3 Q What are those estimates based on?
4 A Based, really, on review of the experience
5 of construction, the variety of types of construction
6 projects in different kinds of rural settings, power
7 plant construction projects, water project construction
8 and things of that nature. And some of that information
9 is summarized in the two footnotes that we see down at
10 the bottom of the page.
11 Q So, then, would it be fair to say that your
12 estimates reflect opinions that you had developed in
13 other contexts that are expressed in the two
14 publications listed in the footnotes at the bottom of
15 this page?
16 A Right. Drawing upon experience from other
17 types of construction projects in other settings.
18 Q And can you tell me, generally, what
19 contexts are dealt with in those publications listed in
20 the footnotes to which you have referred?
21 A Yes. For instance, Bureau of Reclamation
22 and Corps of Engineers water projects, power plant
23 construction projects. Those would be the two major
24 types of project construction; water projects and
25 electric power generating plants. Also, pipelines, I
104
1 guess, would be a third type of facility construction.
2 Q Did you talk to any engineering companies
3 or representatives of engineering companies,
4 specifically, with respect to STA engineering, design
5 and construction?
6 A No.
7 Q Would it be possible for sugar companies to
8 build STAs, in your opinion?
9 A I don't know.
10 Q Do you have an opinion about the kinds of
11 skills that are required for STA construction;
12 specifically, the kinds of specific construction skills
13 that are required?
14 A Not the specific skills.
15 Q Do you have any opinion about the specific
16 kinds of skills that are associated with construction
17 for sugar production, such as maintenance of canals?
18 A Not specifically, no.
19 Q Before we move on to the next section of
20 the memo, can you summarize for me what it was that you
21 learned in the interviews in the EAA that you are
22 relying upon in formulating these estimates of the
23 percentage of workers that might come from the EAA?
24 A Okay. The fact that most of the types of
25 construction companies that seemed likely to be involved
105
1 in STA construction would probably be headquartered
2 outside the EAA. Relatively few construction companies
3 have their headquarters within the EAA itself.
4 Also, I guess I had been informed that a
5 substantial part of what we would call the management
6 type people and skilled workers, even in firms within
7 the EAA, like the sugar co-op, often reside in other
8 parts of the country. That is, outside of the EAA
9 proper. And since the estimate here was the EAA work
10 force involvement, people who would actually physically
11 reside within the EAA, then those factors were things
12 that I tried to take into account in coming up with the
13 estimates.
14 Q Do you have any opinions about how many of
15 the non-EAA workers associated with these three
16 categories of function might come from the local area,
17 let's say the Palm Beach County area, outside the EAA?
18 A I guess I was not asked to, basically, try
19 to quantify an opinion on that question.
20 Q So, would it be fair to say that you don't
21 have an opinion about how many might come from Palm
22 Beach County, as opposed to out of state?
23 A No, I have not formed an opinion on that.
24 Q Would you have formed an opinion on non-EAA
25 source workers for these tasks from other counties
106
1 adjacent to the EAA, like Hendry or Glades?
2 A No.
3 Q Referring to the next section of the memo,
4 entitled Selection of Multipliers for EAA Analysis, is
5 this an area of RPC's analysis in which you have been
6 involved?
7 A Yes.
8 Q Would you say that you have had a major
9 role in this issue?
10 A Yes.
11 Q Would you say that you have had a major
12 role in the determination of local employment in
13 construction of STAs, the previous topic in the memo?
14 A Yes.
15 Q Would you similarly say that you had a
16 major role in the formulation of the criteria for land
17 leaving production that are referenced in the first
18 section of the memo?
19 A Yes.
20 Q The text on the next page of this document,
21 and it has a sequence number at the bottom of DLL 5627,
22 the concluding sentence of the last paragraph in the
23 body of the text says, "On this basis, the Hendry County
24 multipliers were chosen for the local impact analysis;"
25 is that correct?
107
1 A Yes.
2 Q Are you familiar with the multipliers that
3 were used by Hazen & Sawyer in their 20-year analysis?
4 A Yes, somewhat.
5 Q Can you tell me what multipliers were used
6 by Hazen & Sawyer in their analysis?
7 A My understanding, from reviewing the Hazen
8 & Sawyer report, was that they used Palm Beach County
9 multipliers.
10 Q But you selected Hendry County multipliers;
11 is that correct?
12 A Yes.
13 Q Can you explain why?
14 A Yes. First, as we go to the first full
15 paragraph on this page, the one that starts, "It was
16 determined," we talk about multiple levels of analysis;
17 the State level using RIMS multipliers for the State of
18 Florida.
19 And then the second, some aspects would be
20 for the EAA region, the EAA and nearby urban areas, such
21 as West Palm Beach.
22 And then, finally, the EAA local impact
23 area, which is, basically, the EAA proper and the
24 communities within the EAA; Belle Glade, Clewiston and
25 so on.
108
1 The question then was choosing what we
2 thought would be the most appropriate multipliers for
3 this local analysis.
4 Using the RIMS system, the choices, RIMS
5 multipliers can be calculated for a county or a group of
6 counties. This poses something of a problem, given that
7 the EAA encompasses just a portion of Palm Beach County.
8 It was our feeling that to use Palm Beach County
9 multipliers for the local EAA level analysis would
10 overstate impacts, because, basically, the Palm Beach
11 urban area then, essentially, would dominate the Palm
12 Beach County statistics, and the multipliers for Palm
13 Beach County would be expected to be larger than what
14 would probably be appropriate for looking at the EAA as
15 a local area, because of the types of firms that are
16 found in the Palm Beach urban area, but not within the
17 EAA.
18 Basically, the table on the next page shows
19 that we, basically, compared -- looking at three
20 alternatives for the local impact analysis, we looked at
21 Glades, Hendry and Palm Beach Counties, and compared
22 their employment structure, essentially, their
23 percentage distribution of employment in those three
24 countries, to the EAA local impact area as approximated
25 from census tracks. And found that Hendry County was by
109
1 far substantially the closest match in terms of
2 employment distribution.
3 So, that was really the basis for using
4 Hendry County multipliers, then, as what we thought to
5 be the best approximation for the EAA.
6 Q Am I correct these would be the RIMS II
7 multipliers?
8 A Right.
9 Q Is there a RIMS II multiplier for the sugar
10 industry, for Palm Beach county?
11 A For Palm Beach County?
12 Q Yes.
13 A Yes, I'm sure there is.
14 Q And is there one for Hendry County, as
15 well?
16 A Yes, I believe there is.
17 Q And the sugar multiplier for Palm Beach
18 County is larger than it is for Hendry County?
19 A I have not compared. I did not compare
20 those two specific multipliers. Really, our analysis
21 here was to try to -- we were, basically, looking at the
22 issue of which set of county multipliers would seem a
23 priori to offer the closer approximation of the EAA
24 area.
25 Q Did you compare multipliers by sector, by
110
1 economic sector, for the two counties, Palm Beach and
2 Hendry?
3 A Not in detail.
4 Q Do you have any opinion about how they
5 compared for sugar? I think I have asked that and you
6 already answered.
7 A I think so.
8 Q If the sugar multiplier was larger for Palm
9 Beach County than Hendry County, assume that for
10 purposes of my question, what would that reflect?
11 A That would reflect that the multipliers are
12 based on interindustry purchases. That is, the
13 purchases by the sugar industry from other firms, other
14 industries, and their purchases, in turn, from the other
15 firms, other sectors. Those multipliers would be
16 expected to be larger for a county like Palm Beach
17 County, with a more diverse economy, than for a county
18 like Hendry, where many of these purchases from other
19 firms, other sectors, are made from firms outside of the
20 county.
21 Q Thank you.
22 A Go ahead.
23 Q Is the goal of your effort, with respect to
24 selecting a multiplier for the local impacts, to select
25 a representative multiplier from the RIMS II multipliers
111
1 that are available?
2 A Yes.
3 Q In selecting a representative multiplier,
4 what criteria would one use?
5 A It seemed to me that probably a logical
6 criteria might be selecting an area which had a economic
7 structure as close, as similar as possible, to that of
8 the EAA.
9 Q And what categories or elements of economic
10 structure would one have to look at?
11 A Given a major consideration here was what
12 elements of economic structure one can readily obtain
13 for an area which is smaller than a county. It seemed
14 like one of the most useful indicators was the
15 employment distribution that we see in this table, which
16 we could construct for the EAA's sub-region.
17 And so, basically, what we did then was
18 compared the implement distribution of the EAA to the
19 three counties that we saw as being possible candidates
20 of multipliers that we could use for a local impact
21 analysis.
22 Q Professor Leistritz, if you compared the
23 total employment by industry at the State level to the
24 employment by industry in the EAA, and the percentages
25 were as close as they are in comparing the EAA to Hendry
112
1 County, would that mean that under your criterion that
2 the State multiplier would be a suitable representative
3 multiplier?
4 A No, that would not be, I think, a
5 reasonable application. I would disagree with that
6 extension.
7 Q Okay. Why?
8 A For the same reason that we would suggest
9 that a Palm Beach County multiplier would overstate the
10 local impacts within the EAA, because many of the
11 transactions would be occurring outside of the EAA, but
12 within the county.
13 Similarly, if we used State level
14 multipliers, we would be -- State level multipliers are
15 the Department of Commerce's best estimate of the
16 impacts that would be generated somewhere within Florida
17 as a result of a change in, say, sugar production. But
18 many of those impacts would logically expected to be
19 generated outside of the EAA, in other parts of the
20 State, in the urban areas and so on.
21 Q So, then, would it be fair to say that the
22 criteria include not only the relative distribution of
23 employment by industry between the study area and the
24 area covered by a given multiplier, but, also, the
25 relationship in the size of the areas covered by the
113
1 multipliers?
2 A Yes, the size of the area, the types of
3 firms that are found within the area, that sort of
4 thing.
5 Q When we say size of the area, are we
6 talking about geographically or --
7 A I am thinking more in terms of employment
8 population, numbers of firms, some of these kinds of
9 indicators, rather than pure geography.
10 Q Would a small county that had an employment
11 population and a number of firms that was very close to
12 the EAA, but had a distribution of employment by
13 industry that was not as close as Hendry County, be more
14 appropriate than the Hendry County multiplier?
15 MS. RAEPPLE: Objection to the form.
16 Definition of small county, that is an ambiguous
17 term.
18 MR. SAXE: I'll restate the question.
19 BY MS. SAXE:
20 Q Would a county with a population size and
21 number of businesses size that was similar or close to
22 the EAA numerically, but whose distribution of
23 employment by industry was not as close as the Hendry
24 County multipliers, be a more suitable representative
25 multiplier?
114
1 A I am not sure I can answer that question,
2 given the information at hand.
3 Q Let me put it this way: If you compare
4 candidates for representative multipliers on the basis
5 of distribution of employment by industry, and you get a
6 certain fit different for each of the candidates, how do
7 you then adjust for the other criteria that you
8 mentioned; namely, population size, number and types of
9 industries, et cetera? Is there an analytical method,
10 or a set of criteria, rules, or principles, or
11 guidelines or any other rationale for doing it?
12 A Okay. The rationale, I guess, was that the
13 three sets of county multipliers that we felt would be
14 logical possibilities for a local area analysis would be
15 the three counties that encompassed the EAA. Hendry
16 County seemed to be a reasonably good fit, based on
17 interviews and observation, in terms of types of
18 businesses similar to those for the EAA as a whole and
19 that sort of thing.
20 So, the employment distribution was just
21 one of the criteria. It was, however, the most readily
22 quantified criteria in terms of looking at the EAA
23 versus the counties.
24 Q Is there a better fit in terms of types of
25 businesses between the EAA and Hendry County than there
115
1 is between the EAA and Palm Beach county?
2 A It would be my opinion that that would be
3 the case. That there would be a better fit between the
4 types of businesses in Hendry County, versus the EAA, as
5 compared to Palm Beach County.
6 Q Do you know whether there are any sugar
7 refineries in Hendry County?
8 A Not without looking at the map. It was my
9 belief that one or more refineries were located in
10 Hendry County, but I would have to look at the map to
11 refresh myself on that point.
12 Q Would it be relevant if there were
13 refineries in Palm Beach County, but not in Hendry
14 County? Would it be relevant to your selection of a
15 representative multiplier?
16 A Yes.
17 Q And what would the relevance be to your
18 analysis?
19 A I haven't really formulated an opinion on
20 that question.
21 Q Would it be safe to say, would it be fair
22 to say, that you believe you recall having considered
23 the presence of a refinery in Hendry County and
24 selecting Hendry County as a representative multiplier?
25 A Yes.
116
1 Q Do you know what percentage of sugar
2 acreage, EAA sugar acreage, is in Hendry county?
3 A I can't quote you a percentage.
4 Q Relative to the percentage of the sugar
5 acreage in Palm Beach County, do you have an estimate of
6 the approximate proportions?
7 A My understanding is that Palm Beach County
8 has substantially the largest number of acres of all of
9 the different counties.
10 Q By a factor of 10?
11 A I would have to look at one of the sources
12 that lists the acreage. I don't remember in a good
13 degree of detail.
14 Q Do you remember, roughly, whether it is
15 more than twice as many acres in Palm Beach than in
16 Hendry?
17 A That sounds reasonable.
18 Q How about percentage of sod in Hendry
19 versus percentage of sod acreage, EAA sod acreage, in
20 Palm Beach County?
21 A I don't remember. I don't recall the
22 percentages at all.
23 Q But would you have considered these
24 percentages in selecting a representative multiplier?
25 A Those would certainly be things that one
117
1 could consider in that decision.
2 Q How about the number of mills in Palm Beach
3 County, as compared to Hendry county?
4 A Again, that would not be an irrelevant
5 fact. But, as I said, there are a number of other
6 things that we felt were important in the decision in
7 terms of choosing a Palm Beach multipliers or Hendry
8 multipliers. But, certainly, numbers of mills, acreages
9 and so on, are all relevant factors to consider in that
10 kind of a decision.
11 Q How about the percentage of inputs that
12 come from each county in terms of skilled labor,
13 unskilled labor? Are those, also, factors?
14 A Yes, those are factors.
15 Q To your recollection, did you consider
16 those factors in selecting a representative multiplier?
17 A I don't believe we attempted to estimate
18 precisely the percentages of labor for each county.
19 Q In choosing a RIMS II multiplier for uses
20 where representative multiplier is needed, does the
21 Bureau of Economic Analysis suggest any conceptual
22 guidelines to guide that kind of selection?
23 A I don't recall specific guidelines from the
24 Bureau of Economic Analysis.
25 Q Does the phrase "central place theory" have
118
1 any meaning to you?
2 A Yes.
3 Q Could you tell me what that is?
4 A Central place theory, basically, relates to
5 the hierarchy of trade centers. And suggests, then,
6 that depending on a community's place or role in the
7 hierarchy of trade centers, it will likely determine the
8 types of businesses that you would find within the
9 community. So that a minimum convenience center might
10 be expected to have certain types of businesses. A
11 complete shopping center has a wider array of
12 businesses, and has some types of businesses that the
13 minimum convenience center would not have.
14 And in terms of choosing multipliers --
15 I'll stop there.
16 Q Well, I'll probably ask you to go on a
17 little more. Does central place theory have any
18 relevance in the selection of a multiplier?
19 A Yes, we felt it did.
20 Q And could you tell me what that is?
21 A Basically, we felt, then, to choose
22 multipliers that might be representative for a local
23 impact analysis for the EAA, it would be reasonable to
24 select a county where perhaps the trade centers were of
25 the same general level as what we would find within the
119
1 EAA local analysis.
2 The concern with the Palm Beach County, of
3 course, is the Palm Beach metro area, which is a much
4 higher level trade center than anything found within the
5 EAA; hence, having a wide variety of business types that
6 we would not find within the EAA local analysis.
7 Q Is the central place a focus for trade of
8 the region?
9 A Yes. That's part of the definition of a
10 central place.
11 Q Could you identify a central place for
12 sugar trade in the EAA?
13 A Well, communities like Belle Glade and
14 Clewiston, depending on how they are classified, they
15 might be full convenience centers, or partial shopping
16 centers, or something of that nature. And then, of
17 course, the Palm Beach metro area would be what I
18 suppose people would call a wholesale-retail center,
19 that, of course, provides higher level services for that
20 whole region.
21 Q Do you know whether those central places
22 are in Palm Beach County or Hendry County?
23 A Well, the ones that we mentioned, Belle
24 Glade would be in Palm Beach County, Clewiston in Hendry
25 County.
120
1 Q Are you familiar with the concept of trade
2 regions?
3 A Yes.
4 Q Is that concept relevant in choosing a
5 representative multiplier?
6 A Yes.
7 Q Could you explain to me what a trade region
8 is, in your opinion?
9 A Well, for a trade center, like any of those
10 that we have defined, it is possible to map their trade
11 region. In fact, some people will map a main trade area
12 and a greater trade area, this sort of thing, so that it
13 would be possible to map a trade area for Clewiston, a
14 trade area for Belle Glade, and both of those trade
15 areas for the smaller places would likely fall within
16 what some people would call the greater trade area or
17 region of influence of Palm Beach metro center.
18 Q Is it, generally, a good idea to define a
19 study area for purposes of impact analysis around a
20 trade center?
21 A Yes.
22 Q Would you call the EAA a trade region, as
23 that term is used in the regional science literature?
24 A I guess within the EAA there would be
25 several centers, Belle Glade and Clewiston come to mind,
121
1 which would have what we might call their own local
2 trade areas. And as I said, probably the whole EAA
3 probably falls, generally, within the trade region of
4 the Palm Beach metro area.
5 Q So, the EAA falls within the Palm Beach
6 trade region?
7 A Yes.
8 Q Would you agree that the EAA is an
9 ill-defined trade region, because in order to isolate
10 it, you have to exclude the major trade center?
11 A If the question is, is the EAA a trade
12 region, the answer is, no. The EAA is an area that is
13 certainly not defined on the basis of trade patterns,
14 but rather on the basis of some other factors, the
15 resource factors.
16 Q Was the ability to show impacts from SWIM,
17 as a significant percentage of total employment earnings
18 and other categories, a factor in RPC's definition of
19 the impact region?
20 A I think I'll ask you to repeat the
21 question.
22 MR. SAXE: Could you read it back, please?
23 (Requested portion read.)
24 THE WITNESS: Let me answer by saying that
25 it seemed important in defining an impact region
122
1 or regions. And, remember, we have talked about
2 three different levels of analysis. But in
3 trying to define the local impact area, there was
4 a desire, certainly, to identify the communities
5 where substantial impacts would occur,
6 substantial sort of direct, first ground impacts.
7 And these seemed to be the communities within the
8 EAA, especially Belle Glade, Clewiston and the
9 other three that were identified for specific
10 analysis.
11 It, also, seemed to us or to me
12 inappropriate to only analyze the impacts at the
13 level of a multi-county region, say, and hence
14 conclude that whatever happened in the EAA would
15 really not have much effect on total employment,
16 total population and the like at the level of
17 Palm Beach County or a three-county area.
18 BY MR. SAXE:
19 Q Would you agree that Hazen & Sawyer
20 attempted to select a representative multiplier from the
21 RIMS II county multipliers?
22 A I guess I would ask you to define the word
23 "representative."
24 Q In an earlier question, I asked you if the
25 purpose of the undertaking reflected in this memorandum,
123
1 namely, comparing different candidates for use in
2 calculating secondary economic impacts, was an effort to
3 select a representative multiplier, and I believe you
4 answered, yes, it is. So, it is in that sense that I am
5 using the term "representative multiplier."
6 A Okay. I think in talking about
7 representativeness, I probably need to relate that to
8 what level of analysis that we're perhaps trying to talk
9 about.
10 My sense was that Hazen & Sawyer were
11 looking at a level of analysis of, basically, a
12 multi-county region, or at least Palm Beach County, plus
13 adjacent portions of the EAA. And with that level of
14 analysis, then I would not argue that they were
15 attempting to select a set of multipliers, in this case
16 Palm Beach County multipliers, that would be
17 representative for that level of analysis.
18 In the RPC work, one of the objectives was
19 to get more locally specific in terms of trying to
20 analyze impacts for the EAA, sort of a local impact
21 area, and more specific communities within the EAA. So,
22 for that level of analysis, we were trying to select
23 multipliers that would be representative for that level
24 of analysis.
25 Q Isn't it true that Hazen & Sawyer's
124
1 selection of the Palm Beach County multipliers, instead
2 of the Hendry County multipliers, resulted in an
3 estimation of greater secondary economic impacts than
4 those that RPC determined?
5 A That is the way it should work out, yes.
6 Q Is that consistent with your understanding
7 of the way it did work out, given the analysis done by
8 RPC and that done by Hazen & Sawyer?
9 A I haven't had a chance to compare the two
10 sets of analyses.
11 Q Is there any risk of error in defining a
12 large area of economy just outside the EAA by selecting
13 the multiplier for Hendry County, instead of Palm Beach
14 County?
15 A My answer would be, yes, there is a problem
16 with ignoring a major trade center adjacent to some area
17 like the EAA. But I would hasten to add, of course,
18 that Palm Beach was not ignored. Rather, as I mentioned
19 in the memo, we were looking at really three levels of
20 analysis; statewide, regional and the local area
21 analysis.
22 Q In your opinion, did RPC quantify secondary
23 economic impacts at those three levels?
24 A I have not seen the final product. As I
25 say, it is my understanding that we were talking about
125
1 three levels. We were planning on three levels of
2 analysis, but not all impacts would necessarily be
3 quantified at all three levels.
4 Q Did Hazen & Sawyer quantify State level
5 impacts?
6 A I could not say with certainty without
7 reviewing their reports.
8 Q But your understanding is that RPC is going
9 to or has analyzed local, regional and State level
10 economic impacts?
11 A That was my understanding of the intention
12 as of some weeks ago.
13 Q And secondary impacts at those levels are
14 derived by using the respective multipliers for those
15 levels?
16 A Right.
17 Q Do the impacts get added together to
18 determine cumulative impact?
19 A No. Essentially, the State level impacts
20 would encompass the regional level impacts, the regional
21 level impacts encompass the local level impacts, so
22 they're not additive.
23 Q Do RIMS II multipliers take into account
24 management living outside the EAA?
25 A I guess I'm not exactly sure what you are
126
1 asking.
2 Q Does the RIMS II multiplier for Palm Beach
3 County reflect management, EAA management, that lives in
4 Palm Beach County, but outside the EAA?
5 A It should, yes.
6 Q Does the Hendry County multiplier reflect
7 EAA management that lives outside of the EAA, but in
8 Hendry County?
9 A The Hendry County multipliers would reflect
10 management -- it would reflect people living in Hendry
11 County.
12 Q Do you know the relative proportions of EAA
13 management that live outside of the EAA in the two
14 counties?
15 A I don't have quantitative information on
16 that, no.
17 Q Would that be a relevant factor in
18 selecting a representative multiplier?
19 A It might be another factor that could be
20 considered, and it could be relevant in that decision,
21 yes.
22 Q Let me ask you a hypothetical. If much
23 more of the EAA management living outside of the EAA
24 lived in Palm Beach County than in Hendry, and if much
25 more of the sugar cane acreage lay in Palm Beach County
127
1 than Hendry County, and much more of the sod acreage lay
2 in Palm Beach than in Hendry County, and much more of
3 the vegetable acreage, and many more of the mills and
4 many more of the refineries, also, were in Palm Beach
5 but not Hendry County, would selecting Hendry county as
6 the representative multiplier, nevertheless, be
7 appropriate if the difference in employment by industry
8 between the two counties was as reflected in this table
9 in Exhibit 2; namely, the difference between .5 percent
10 and 20 percent difference?
11 MS. RAEPPLE: Objection to the form.
12 MR. SAXE: Grounds?
13 MS. RAEPPLE: The use of ambiguous terms,
14 "much more" and "many more."
15 BY MR. SAXE:
16 Q Substitute for much more a five-to-one
17 ratio or greater.
18 A I believe that the choice of the Hendry
19 County multipliers could still be appropriate under the
20 conditions that you have laid out.
21 Q Why would that be?
22 A Given that the thrust of the multipliers is
23 really to estimate the secondary effects of a change in
24 a specific sector like sugar, like sod, then the major
25 factor in determining the size of those multipliers
128
1 would be the pattern of expenditures by the sugar
2 industry to other sectors within the county. So that
3 the absolute magnitude of sugar acres, the absolute
4 number of sugar mills and so on, really, it seems to me,
5 would not be as important a factor as what other sectors
6 exist within the county in question to supply inputs and
7 services to the industry, because it would be that
8 breakdown of local expenditures, expenditures that are
9 made locally, versus expenditures that go out of the
10 county, that really determine the magnitude of the
11 multipliers, in the best of my opinion.
12 Q If there were a county level RIMS II
13 multiplier that had the exact same distribution of
14 employment by industry as the EAA does, but contained
15 none of the inputs to production, to EAA sugar
16 production and processing, would it be a better
17 selection as a representative multiplier than the Hendry
18 County multiplier?
19 A No.
20 Q Do you know which RIMS II sales multiplier
21 was used for the sugar industry?
22 A Not without referring to notes.
23 Q I am going to show you a piece of a
24 printout from the diskettes that were produced with
25 yours and Dr. Luke's document production. It is titled
129
1 STA Operation Multipliers. I would like you to take a
2 look at this, if you would.
3 A All right.
4 Q Do you recognize that data?
5 A Not specifically.
6 Q When you say not specifically, do you
7 recognize, generally, what this is a depiction of or a
8 representation of?
9 A Well, based on the labels, raw sugar sales
10 per acre of sugar cane production, sod acres per acre of
11 sod, raw sugar multipliers, sod multipliers and so on.
12 Output earnings, employment. And it seems to have Hazen
13 & Sawyer values and new values.
14 And, in fact, the new values, generally,
15 are somewhat smaller than the Hazen & Sawyer values,
16 which would be consistent with our rationale about Palm
17 Beach County multipliers likely being larger, for the
18 reasons that we discussed.
19 Q But you don't know whether these represent
20 the multipliers that were used in the RPC analysis, any
21 of these columns, either the Hazen & Sawyer value or the
22 new value?
23 A No. I was not responsible for putting
24 together the RPC spread sheet models, so I am really not
25 today able to testify as to what coefficients ultimately
130
1 have gone into the model. So, I guess the answer is,
2 simply, I don't know.
3 Q Do you know which RIMS II sectors those
4 would be from?
5 A I think I have within my notes a table that
6 would tell us that or would tell me that.
7 Q If you would like to refer to it, that
8 would be fine.
9 A Okay. There is an Appendix 2, which is the
10 appendix, I think, to the most recent RIMS
11 documentation. And it lists industry number and title
12 2.0203 grass seeds. That was sod. 2.0501 vegetables,
13 and so on.
14 Q Do you know whether this was produced with
15 your documents?
16 A It was not produced with my documents. It
17 may well have been produced with Dr. Luke's documents.
18 I would, in fact, have presumed that that would have
19 been produced probably with his documents.
20 Q Is that your only copy?
21 A Yes.
22 Q It is possible that it was, but I don't
23 recognize it. Could we get a copy and mark it as an
24 exhibit?
25 A Sure.
131
1 MR. SAXE: Is that all right?
2 MS. RAEPPLE: We have been going about an
3 hour and a half since lunch. Could we take a
4 short break?
5 MR. SAXE: Sure.
6 (Brief recess.)
7 (Deposition Exhibit 4 marked for
8 identification.)
9 MR. SAXE: Back on the record.
10 BY MR. SAXE:
11 Q Professor Leistritz, as soon as Carolyn
12 gets finished looking at it, if you would, take a look
13 at what has been marked as Exhibit Number 4 for
14 identification. Would you please just identify this for
15 the record for me?
16 A Okay. Exhibit 4, Hendry County RIMS
17 multipliers. And these are, as I understand it, the
18 multipliers that were used by RPC in the local area
19 impact analysis.
20 Q In your opinion, are these the multipliers
21 that RPC should have used in the local impact analysis
22 process?
23 A Yes.
24 Q On the second page of this, the first
25 circled reference for grass seed, is that the RIMS II
132
1 sector multiplier that should have been used for sod, in
2 your opinion?
3 A Yes.
4 Q And the next one down that is circled,
5 2.0501, that is the one that should have been used for
6 vegetables?
7 A Yes.
8 Q On the next column, there is one circled
9 for other conservation and development facilities. Do
10 you know what that should have been used for?
11 A That is new construction. Eleven is new
12 construction. 11.0703 is construction of other
13 conservation and development facilities, so that would
14 be STA construction.
15 Q STA construction?
16 A Yes.
17 Q And on the next page, there is another
18 multiplier. 12.0213 is the reference to it, and it says
19 conservation and development facilities. What would
20 that be for?
21 A That is, basically, STA operation. The
22 master label is maintenance and repair or construction.
23 Q And the last one circled is sugar. I take
24 it that is the RIMS II multiplier that should be used
25 for local sugar impact analysis?
133
1 A Right.
2 Q Is there a RIMS II multiplier associated
3 with each of these sectors for sales, earnings and
4 employment?
5 A Yes.
6 Q And what does each of those include?
7 A What does each of them include?
8 Q Strike that. Let me ask you this: Would
9 the RIMS II earnings multiplier for raw sugar include
10 the income earned by households who work for the target
11 industries, as well as all income earned by household
12 with members who hold the indirect and induced jobs
13 generated by the sugar industry?
14 A Yes.
15 Q If you will refer to the Hazen & Sawyer
16 report, on page 7-1, for a moment.
17 A Yes.
18 Q Of the last three bullet points, except for
19 the last one, the ones right above those, the second and
20 third from the bottom, the RIMS II earnings multiplier
21 would include all of the income that is referenced here?
22 A Yes, that's my understanding.
23 Q And the RIMS II sales multiplier would
24 include all of the sales of both the sugar industry, as
25 well as the target industries that support it?
134
1 A Yes. Output and sales are used,
2 essentially, synonymously.
3 Q Do you know if these are the same sectors
4 that Hazen & Sawyer used?
5 A To the best of my recollection, yes.
6 Q Would you characterize the differences in
7 the actual multipliers, the numbers, the values used,
8 the coefficients, if you will, between RPC and Hazen &
9 Sawyer as significant?
10 A Basically, I think the differences are
11 summarized on that one sheet that you showed to me a few
12 minutes ago. Generally, the models used in the RPC
13 analysis for local area analysis are somewhat smaller
14 than those that have been used by Hazen & Sawyer.
15 Q Look, if you would, at the row for sod
16 multipliers-employment. There is a comparison between a
17 H&S value and a new value. If you can, explain why
18 there is such a difference.
19 A Sod multipliers-employment, there is a
20 substantial difference. And, in fact, the new value is
21 somewhat larger than the Hazen & Sawyer value.
22 Q Is it, in fact, almost virtually double?
23 A Almost virtually double, yes. Well, again,
24 this might be worth checking, just to verify that, in
25 fact, these are the RIMS values and not a typo. But
135
1 sometimes it works out that way.
2 MS. RAEPPLE: Mr. Saxe, for clarity, are
3 you going to make that an exhibit?
4 MR. SAXE: Yes. Would you please mark this
5 for identification?
6 (Deposition Exhibit 5 marked for
7 identification.)
8 BY MR. SAXE:
9 Q Professor Leistritz, I'm showing you what
10 has been marked for identification as Exhibit 5. If you
11 would, I note that there is highlighting and handwriting
12 on that document. Is that highlighting or handwriting
13 that you recognize?
14 A No.
15 Q Those are our annotations. Can you
16 identify that document, for the record?
17 A Yes. The document, on one page the heading
18 is STA Operation Multiplier. Well, now, Wait. I think
19 the heading is supposed to be inputs to the
20 economic/fiscal model. It appears to be a summary of
21 some of the key input values and multiplier values used
22 in, I assume, the RPC spread sheet model.
23 Q This is the document that I referred to
24 earlier as having been produced from a diskette that was
25 provided with the document production made in response
136
1 to yours and Dr. Luke's deposition notice.
2 A Okay.
3 Q Thank you.
4 MR. SAXE: Would you mark this, please?
5 (Deposition Exhibit 6 marked for
6 identification.)
7 BY MR. SAXE:
8 Q Professor Leistritz, I will show you what
9 has been marked for identification as Exhibit Number 6.
10 Could you identify that exhibit for the record for me,
11 please?
12 A It is two pages. It mostly has names and
13 phone numbers, starting with a phone number labeled
14 Department of Econ, Florida State University. And then
15 three phone numbers that seem to correspond to the State
16 of Texas Parks and Wildlife Department.
17 Q If you would, read what it says along the
18 bottom of the document?
19 A "Wetlands phone numbers."
20 Q Do you recognize this document?
21 A No.
22 Q Do you recognize the references to the
23 individuals listed in the middle of the document,
24 starting with Len Shabman?
25 A Len Shabman is a name that I recognize. An
137
1 individual, basically, associated with the agricultural
2 and resource economics department at the Virginia
3 Polytech University, I believe. Well known for his work
4 in, I think, wetland economics, among other things.
5 The other names I do not recognize.
6 Q Have you had any communication with any of
7 these individuals in the course of your work on this
8 case?
9 A No.
10 Q Do you know whether anybody else at RPC
11 has?
12 A No, I don't know.
13 Q Do you recognize the handwriting of these
14 notes?
15 A No.
16 Q Have you had any conversations with Dr.
17 Luke or anybody else associated with Dr. Luke's work in
18 this case concerning a conversation that they might have
19 had with Len Shabman?
20 A Not that I recall.
21 MR. SAXE: Would you mark this, please?
22 (Deposition Exhibit 7 marked for
23 identification.)
24 BY MR. SAXE:
25 Q Professor Leistritz, handing you what has
138
1 been marked as Exhibit Number 7, would you identify that
2 for the record for me, please?
3 A Exhibit 7 is a memo from Ann, who is Ann
4 Orzech, a RPC employee, to Ron, Larry, Eric, dated July
5 8, 1993. Subject, sugar cane PFS and fiscal analysis
6 outline. PFS, I believe, must be public services.
7 Public facilities and services.
8 Q Have you seen this document before?
9 A Yes.
10 Q Can you tell me what it is?
11 A Basically, this was an outline by Ann of
12 the work that she intended to do or felt needed to be
13 done relative to this portion of the analysis, the
14 public facilities and services and fiscal analysis.
15 Q What is encompassed in the public
16 facilities and services and fiscal analysis?
17 A Well, as she says in the memo: "Purpose:
18 Estimate public sector costs and revenues for each city
19 due to changes in population and property values
20 associated with the project."
21 So, that was really the thrust. Costs for
22 major public services, local tax revenues. It is really
23 impact on local government budgets.
24 Q So, it is based on the change in
25 population, property values and local tax revenues?
139
1 A Yes.
2 Q Has RPC analyzed property value impacts --
3 A That's my understanding.
4 Q -- of the SWIM Plan and alternatives?
5 A Yes, that's my understanding.
6 Q And local tax impacts?
7 A Again, to the best of my knowledge, yes.
8 Q Have you had any involvement in the public
9 services and facilities impact analysis that RPC has
10 done?
11 A Not in any major way.
12 Q You had involvement in the population
13 impact analysis, though; is that correct?
14 A Yes.
15 Q And that forms a kind of a predicate part
16 of the public services and facilities?
17 A Yes.
18 Q But beyond that you have not had anything
19 specific?
20 A Right.
21 Q If you would refer to the entry Number 2
22 under community analysis, and if you would, read that
23 first sentence into the record, please.
24 A "Methodology: Estimate all costs and
25 revenues except for revenue from property taxes through
140
1 a simple per capita multiplier model."
2 Q Do you understand that RPC has made such an
3 estimate in its analysis of public facility and services
4 impacts?
5 A I don't know. That, clearly, was the
6 intention at one point in time. I don't, personally,
7 know what ultimately has been done.
8 Q Do you know what the reference to simple
9 per capita multiplier model would mean?
10 A I know what it means to me.
11 Q What does it mean to you?
12 A What it means to me is, basically, looking
13 at the revenues or costs in total or by complement on a
14 per capita basis. Total costs for the police department
15 in Belle Glade are "X" million, dividing by the
16 population, last census or most recent credible
17 estimate, gives a value of so many dollars per capita.
18 And then a common application of the per
19 capita multiplier approach is that if there is a change
20 in population resulting from a project, let's say the
21 estimated change in police costs, it is equal to the
22 change in population times the per capita value.
23 Q Do you know whether per capita costs and
24 revenues are linear?
25 A The use of a per capita approach in a
141
1 fiscal analysis, implicitly or explicitly, assumes a
2 linearity of costs over at least over the range in which
3 the model is being applied.
4 Q Would such a linear function be appropriate
5 if there is a change without the project on the
6 baseline?
7 A I think I'll ask you to repeat the
8 question.
9 Q Would such a linear function be appropriate
10 if there was a change without the project in the
11 baseline?
12 A A change without the project? A change in
13 this case from point A in time to point B in time?
14 Q Yes, in population.
15 A Okay. So, our baseline forecast forecasts
16 a change in population from one point to another point.
17 And the question is, would a per capita multiplier
18 approach be appropriate?
19 My answer is that per capita models are
20 used very frequently in fiscal applications, both in
21 terms of baseline projections and in terms of impacts of
22 specific projects.
23 Q Professor Leistritz, do I understand
24 correctly that you were not involved or have not been
25 involved in RPC's actual analysis of the public
142
1 facilities and services impacts?
2 A Right.
3 Q So, would it be fair to say that you have
4 not formulated any opinion about the correctness of any
5 conclusions that have been drawn through that analysis?
6 A That would be reasonable, yes.
7 Q And would it, also, be fair to say that you
8 don't have any opinions about the methodology that might
9 have been used in such analysis, whether it was correct?
10 A Yes.
11 Q As far as fiscal analysis is concerned in
12 this reference, the fiscal analysis would include
13 business impacts?
14 A Probably so, from the standpoint of tax
15 revenues, yes.
16 Q Would that be part of the local tax impact
17 analysis, then, as opposed to the business impact
18 analysis?
19 A I would think so. That is to say, impacts
20 on businesses would then affect the property values and,
21 hence, the local tax base, the local tax revenues.
22 MR. SAXE: Would you please mark that?
23 (Deposition Exhibit 8 marked for
24 identification.)
25
143
1 BY MR. SAXE:
2 Q Showing you what has been marked as Exhibit
3 Number 8, would you please identify that for the record?
4 A Okay. A memo dated July 10, 1993, from
5 Ann, again, same Ann, to Ron, Larry, Eric. Subject, STA
6 alternatives and other issues.
7 Q Have you seen this document before,
8 Professor Leistritz?
9 A Yes.
10 Q Can you tell me what it is?
11 A Basically, follow-on to the earlier memo.
12 Ann was laying out some data needs and other
13 observations relative to the work that she was going to
14 be involved in, primarily relating to fiscal impact
15 analysis.
16 Q If you would, look at entry Number 2, at
17 the bottom of the first page, paragraph 2-a. If you
18 would, read that to yourself for me.
19 A Okay.
20 Q Did you understand that RPC viewed the
21 Hazen & Sawyer breakdown of impacts between the
22 implementation of BMPs and STAs as being alternatives?
23 A I have to ask you to repeat that.
24 Q Let me try another question.
25 The sentence, "In other words, the impacts
144
1 for the alternatives other than the STA purchase are not
2 total impacts measured from the change from the
3 baseline, but rather are incremental impacts measured
4 from another alternative."
5 Do you know what alternatives are being
6 referred to in that sentence?
7 A Not for sure. Again, this was a component
8 of the analysis that I was not asked to sort of take the
9 primary responsibility for. I remember that there was
10 some question about what is additive, and what isn't and
11 so on.
12 Q You mentioned earlier your belief that this
13 pertained to fiscal impact analysis. Would that have
14 been property value impacts?
15 A Yes. Although, of course, some of this
16 question about what is additive and how do we define our
17 scenarios and so on, would impact, it seems to me, the
18 entire analysis. That is, starting with the economic
19 impacts and tracking right on through.
20 Q There is a question at the end of paragraph
21 2-a. It says, "How are we going to measure and present
22 the impacts?" Do you know how RPC is going to measure
23 and present the impacts?
24 A Well, a rather general question, I guess,
25 and in Ann's memo I think perhaps you can say a
145
1 rhetorical question -- maybe that's not the right
2 terminology -- how is RPC going to measure and present
3 the impacts? Certainly, the spread sheet model that has
4 been referred to previously will be sort of central to
5 the measurement of the impacts.
6 But I do not know precisely what the
7 resolution has been to this general question of what is
8 additive and so on.
9 Q If you would, turn to the next page, the
10 paragraph with the Number 3, Fiscal Analysis
11 Verification. Would you read that paragraph to
12 yourself, please?
13 A Okay.
14 Q Has RPC analyzed changes in county property
15 taxes due to the implementation of the SWIM Plan?
16 A I don't know for sure. It was my
17 understanding that county and local property taxes would
18 be part of the analysis, but I do not know with
19 certainty what has been analyzed at what level.
20 Q How about State corporate taxes?
21 A I don't know.
22 Q Would any analysis of the county property
23 tax changes and the local property tax changes, I think
24 that you may have referred to that was analyzed by RPC,
25 have fallen under the rubric of local tax impact
146
1 analysis?
2 A It sounds like it should.
3 Q Did you have any involvement in that
4 analysis?
5 A Not in any direct way, no.
6 Q Did you work on any of the general
7 assumptions or other factors for that analysis?
8 A Not really.
9 Q How about any property value impact
10 analysis that RPC may have performed?
11 A Basically, my only involvement in that was
12 reviewing their -- they have a function that relates
13 changing jobs to change in population, property values
14 and number of businesses. I reviewed that function, but
15 I did not get involved in any of the subsequent work on
16 property values.
17 MR. SAXE: Would you read that answer back,
18 please?
19 (Requested portion read.)
20 BY MR. SAXE:
21 Q When you say they have a function that
22 relates change in jobs with population, property values
23 and number of businesses, is it correct that that
24 function derives changes in population as a function of
25 change in jobs?
147
1 A Yes.
2 Q Does it, also, derive changes in property
3 value as a function of change in jobs?
4 A Yes.
5 Q And, also, derive a change in number of
6 businesses as a function of change of jobs?
7 A Yes.
8 Q Other than that function, did you have any
9 involvement in property value impact analysis by RPC?
10 A No.
11 Q As far as business impact analysis by RPC,
12 other than that function, did you have any role?
13 A Not in the recent modeling spread sheet
14 analysis. Impacts on businesses were one of the topics
15 that were covered in some of the interviews that I was
16 doing in the EAA last summer.
17 Q Did you provide any comments or memos to
18 RPC concerning business impacts based on those
19 interviews?
20 A Yes. Primarily, verbal comments, plus
21 probably a copy of my interview notes. But I did not
22 write a formal report for RPC.
23 Q Could you tell me who you gave verbal
24 comments to about business impacts based on that?
25 A Ron Luke and Eric Schubert.
148
1 Q And what was the nature of your comments?
2 A The nature of my comments was, basically, I
3 met with Ron and Eric soon after the trip to the EAA and
4 verbally spent, I don't know, 20 minutes or so recapping
5 for them what I thought were some of the highlights of
6 the several days of interviews. And so some of that
7 would be reflected in my notes here. Basically,
8 reporting to them the observations from some of the
9 people that I talked to, covering kind of a broad range
10 of topics, but many relating to potential impacts on
11 businesses.
12 Q Would that have included any other
13 conclusions besides the conclusion that we discussed
14 earlier that is reflected in Exhibit 2; that EAA work
15 force work is predominantly unskilled or semi-skilled,
16 and that the skills of the EAA work force tend to be
17 quite specialized to the agricultural operations in the
18 EAA?
19 A Well, some of the people we talked to, for
20 instance, talked about the recent and projected impacts
21 of mechanization of the cane harvest on local
22 businesses. We talked to one business owner in Belle
23 Glade who talked about his experience. This gentleman,
24 also, had business interests in Okeechobee County, so he
25 talked a little bit about some of the impacts that he
149
1 had experienced in his Okeechobee County businesses as a
2 result of what is affectionately known as the dairy
3 buy-out up in that area.
4 Q Are interview notes of that discussion
5 included in that set of documents?
6 A Yes.
7 MR. SAXE: Would you mark this, please?
8 (Deposition Exhibit 9 marked for
9 identification.)
10 BY MR. SAXE:
11 Q Before we go on to this exhibit, let me
12 just ask you a couple of more questions.
13 A Okay.
14 Q You indicated earlier that you worked out a
15 function for deriving the changes in population,
16 property values and businesses based on changes in jobs?
17 A Yes.
18 Q You, also, testified that the public
19 service and facility impacts is based on the change in
20 population, and property values and the local taxes?
21 A Yes.
22 Q Since population and property value changes
23 or impacts are derived by a function from changes in
24 jobs, is it true that the calculation of public service
25 and facility impacts ultimately is derived entirely from
150
1 changes in employment?
2 A The word "entirely" might be a little too
3 all-encompassing, but --
4 Q What else would -- I'm sorry.
5 A Again, without reviewing the details of the
6 RPC model, clearly, changes in employment is a major
7 driving force behind the fiscal impacts.
8 Q Professor Leistritz, showing you what has
9 been marked as Exhibit Number 9, would you identify that
10 for the record, please?
11 A It is a memo to file from Eric Schubert,
12 S-C-H-U-B-E-R-T, dated July 20, 1993. Subject,
13 literature search, decline in property values.
14 Q Have you seen this document before?
15 A I have seen it.
16 Q Can you describe for me what the
17 significance of this document is?
18 A Mr. Schubert had been engaged in a
19 literature search to try to identify literature that
20 would provide a basis or background for quantifying
21 estimates of changes in property values that might be
22 associated with different scenarios, especially
23 scenarios involving economic and population decline.
24 This memo identifies two references that he
25 had found, that seemed to him that they might have some
151
1 relevance. And the first is written by myself and
2 another individual, entitled Threshold Population Levels
3 in Rural Retail Businesses in North Dakota.
4 The second by a John Bradbury and Isabelle
5 St. Martin. Winding Down in a Quebec Mining Town: A
6 case study of Schefferville.
7 Q Do you know whether any use was made of
8 these publications or articles by RPC in its analysis?
9 A No. I could speculate, but, no, I don't
10 know with certainty what use, if any, was made of these
11 and other references.
12 Q Referring to the reference to your article
13 with Mr. Schuler, the summary indicates that the article
14 presents population levels associated with specific
15 types of businesses in North Dakota communities. Do you
16 have any opinion of how the information in this article
17 might be used in estimating changes in property values?
18 A I would say that that particular article
19 would be relevant, but only kind of tangentially. What
20 Mr. Schuler and I had done was to look at North Dakota
21 communities, starting with very small ones and working
22 our way up. And, basically, trying to identify the
23 presence of different business types, and how many
24 businesses of that type were found in these small
25 communities, so that we might -- for instance, the
152
1 results of that study were summarized in a table that
2 might show that, for instance, on average, it took a
3 town of 300 people to support one gas station. And at a
4 population of 550, on average, you might find two gas
5 stations. But, again, on average, it took a threshold
6 population, community population, of 2300 to support a
7 department store.
8 So, as I say, relative to property value
9 estimates, it would be kind of tangential. It would
10 support the concept that a decrease in population might
11 lead to a community being able to support fewer
12 businesses.
13 Q If I understand you, the basic foundation
14 of this analysis in the article would be just an
15 empirical description of numbers of business by type in
16 small communities, correct?
17 A Yes.
18 Q But is it, also, correct that some
19 inferences were drawn from that kind of data about what
20 the minimum necessary population was to support a given
21 type of business?
22 A In our article, and with a variety of
23 caveats, yes. For instance, as I mentioned, we were
24 presenting this table that said, on average, in North
25 Dakota, at the time we did the study, it seemed to take
153
1 a community of about "X" size to support one business of
2 type "Z", an auto dealership.
3 Q So, for instance, there might have been a
4 statistic or a ratio derived for snowmobile dealers;
5 would that be correct to say?
6 A I don't think that any of our North Dakota
7 thresholds were used in any way directly in the EAA
8 analysis.
9 Q When you say the EAA analysis, what do you
10 mean by that?
11 A RPC's analysis for the EAA.
12 But as you allude, one might take the North
13 Dakota data and conclude that any town with over 1500
14 people ought to have a snowmobile dealership.
15 Q In your opinion, would that be a sound
16 inference?
17 A I suspect in the EAA they might sell jet
18 skis, instead.
19 Q What is meant by threshold population level
20 in the title of the article?
21 A Alluding to the concept of a minimum level
22 of population; population in this case being a
23 surrogate, really, for purchasing power and that sort of
24 thing. But the concept of a minimum level of population
25 necessary to support a certain type of business.
154
1 Q And how would you characterize the basis
2 that your analysis in this article would provide for
3 inferring threshold population levels for a given type
4 of business?
5 A As I mentioned before, a basis that we felt
6 necessary to surround with a variety of caveats. For
7 instance, the fact that a business of a certain type
8 existed in a community did not necessarily mean that it
9 was operating profitably in the community. So, again,
10 just as I say, we attempted in the article to point out
11 some of the cautions for readers and users.
12 Q What were some of the other caveats?
13 A Again, I suspect it is quite possible that
14 this article was one of those requested and produced in
15 our document production. If not, it certainly could be
16 produced.
17 I believe other things that were probably
18 mentioned in the article would be things like population
19 is only one measure, is only one surrogate measure.
20 Probably purchasing power might be more relevant in some
21 respects. Communities will differ in income, in
22 consumer tastes, and needs and all, in addition to
23 population for many types of businesses. How that
24 population is broken down by age and so on may be a
25 relevant factor.
155
1 Q Were those kinds of factors quantified in
2 your analysis in this article?
3 A No. That is why we were mentioning that.
4 Obviously, there were limitations on the analysis based
5 on the data that one had to work with, which was, also,
6 the data available. But it would at least give people
7 who are interested in these issues some benchmarks to
8 look at.
9 Q How would one go about drawing inferences
10 for the EAA from the threshold population levels
11 identified in your article?
12 A Well, I guess I would suggest that it
13 probably would be a pretty long step from that
14 particular article to any sort of quantitative
15 prediction for the EAA.
16 And, in fact, my understanding of the memo
17 was simply that Mr. Schubert was on a mission of
18 identifying literature that might in any way bear upon
19 the topic at hand, and putting together short summaries
20 of what these different things contained. He was in the
21 gathering mode at that point, as I understand it.
22 Q So, would it be fair to say that it would
23 be difficult to draw inferences relevant to the EAA from
24 the analysis presented in this article?
25 A That would be my opinion.
156
1 Q Are you familiar with the other article
2 referenced in this document, the one by Bradbury and St.
3 Martin?
4 A In a general way.
5 Q Do you have an opinion about what relevance
6 the information in this article might have to drawing
7 inferences concerning the EAA?
8 A Essentially, a case study of this
9 mining-based community, a one-industry town, in a
10 relatively remote area in the Province of Quebec. And
11 the author, basically, then discussed, really in a case
12 study mode, the changes in a number of dimensions in the
13 community as the mining operation was phased down and
14 ultimately, I guess, phased out. So, it would seemingly
15 offer an example of a community with really a single,
16 basic industry base and the results of a winding down,
17 phasing down, of that activity.
18 As I recall, probably not a lot of
19 information to lend itself immediately to quantifying a
20 quantitative model of many of the facts.
21 Q Would it be safe to say that the usefulness
22 of this analysis for drawing inferences relevant to the
23 EAA would depend upon the similarity between the EAA and
24 Schefferville?
25 A Yes.
157
1 Q Besides the category of the single-industry
2 base, what other relevant categories would there be for
3 describing the degree of similarity or lack thereof
4 between the EAA and Schefferville?
5 A The question is, what categories or what
6 dimensions should be examined to decide whether
7 Schefferville and the EAA are similar or different?
8 Q For purposes of drawing inferences from the
9 Schefferville study?
10 A Yes. Well, one could start out and
11 probably make a rather lengthy list. Things like how
12 long had this mining thing been in operation, a few
13 years or a few decades? Many would suggest that would
14 say something about people's attachment to the
15 community. To what extent do the residents own the
16 homes, business, property and that sort of thing? What
17 is the age, education levels, skills and so on of the
18 existing population and work force? You know, one could
19 go on.
20 Q In terms of the most significant elements,
21 would there be others, then, that would come to mind?
22 A Well, those seem like some of the
23 significant elements, I guess.
24 Q Okay. Do you know what happened in
25 Schefferville in terms of the overall impact on the
158
1 community of the winding down of that mining industry?
2 A I was not asked to analyze Schefferville
3 and the other literature for purposes of the current
4 work.
5 (Brief recess.)
6 MR. SAXE: Back on the record.
7 BY MR. SAXE:
8 Q Professor Leistritz, we were talking about
9 Exhibit Number 9, I believe.
10 A Yes, the documents, the references.
11 Q You referred to what I understood to be the
12 longevity of an industry or how long it had been
13 associated with a community, and the relationship of
14 that attachment to the community. What did you mean by
15 attachment to the community?
16 A Well, I guess that is, in some ways, more
17 of a concept that sociologists might use. But certainly
18 relating then to, for instance, the presence -- well,
19 long-time residents, a feeling that this place is home,
20 I'm born and raised here, and all that sort of thing.
21 And where it would become relevant for some
22 of the issues that we have been talking about, for
23 instance, would be to the extent that it might affect
24 people's willingness or unwillingness to leave, to
25 migrate, to leave the area to find employment and the
159
1 like.
2 Q So, there would be a relationship such that
3 people with a greater attachment to the community would
4 be less inclined to leave? Would that be fair to say?
5 A I guess that one can say that may be true
6 by definition or something like that.
7 Q Based on your interviews in the EAA, and
8 your other work in this case and otherwise, do you have
9 any opinion about the degree of attachment to the
10 community that inheres in the various population groups
11 in the EAA?
12 A This was a topic that came up in some of
13 the interviews that I conducted in the area. Some of
14 the relevant things that came up were, for instance, a
15 very high percentage of the EAA labor force that live in
16 rental housing, for instance; hence, not having the kind
17 of tie to the area that owning homes and so on often
18 seems to bring.
19 Also, information about a significant
20 portion of the EAA work force that appeared to be
21 relatively recent immigrants, certainly relatively
22 recent residents of the area, but even relatively recent
23 immigrants from outside of the country.
24 And then other factors that came up were
25 the relatively specialized skills, and the perception at
160
1 least that many of the agricultural workers in the EAA
2 had really limited, in many cases, no work experience
3 outside of agriculture and perhaps in many cases even
4 outside of the cane industry.
5 Q And did each of those factors decrease the
6 attachment to the community that the population
7 subgroups involved?
8 A Not owning homes and being relatively
9 recent residents, in any case, would be factors that
10 would make one thing; that there is a segment who might
11 be relatively mobile and able to leave, willing to leave
12 in response to economic stimulus.
13 On the other hand, the skills that might
14 seem quite specialized to agriculture, the lack of work
15 experience outside of agriculture, some of those factors
16 might suggest that some workers would have relatively
17 limited -- well, that would decrease, seemingly
18 decrease, their mobility to other jobs and that sort of
19 thing.
20 MR. SAXE: Would you mark this, please, as
21 an exhibit?
22 (Deposition Exhibit 10 marked for
23 identification.)
24 BY MR. SAXE:
25 Q Professor Leistritz, I'm showing you what
161
1 has been marked as Exhibit Number 10. If you would,
2 identify that for the record for me, please.
3 A Exhibit Number 10 is an article entitled
4 Threshold Population Levels for Rural Retail Businesses
5 in North Dakota.
6 Q All right.
7 A And this is from Economic Development
8 Review, published in 1992. The authors are Leistritz
9 and Schuler, that is Alan Schuler, S-C-H-U-L-E-R. This
10 is the article on threshold population levels that we
11 were talking about earlier.
12 Q If you will forgive me, I have only the one
13 copy here, so we'll trade it back and forth. I should
14 note, for the record, that there is some highlighting by
15 myself on the document, yellow notations, that were not
16 part of the original document that was produced.
17 On the second page, there is a statement
18 that, "Four different functional forms of the
19 population-dependent model were estimated. These were:"
20 and then there are four of what appear to be equations.
21 Each one of them has a label. The first one is
22 exponential, the second is linear, the third is
23 quadratic and the fourth is double log.
24 Could you explain to me, generally, what
25 those equations are for?
162
1 A Okay. These equations or functions would
2 be -- basically, they will give you different -- think
3 about graphing businesses, number of establishments
4 versus population. These four functions or equations
5 will give you different shapes of graphs. The linear,
6 obviously, will be a straight line relationship between
7 population and number of businesses.
8 Quadratic will be a curved type of
9 relationship. The exponential -- anything but linear
10 will be different kinds of curves, which may be
11 increasing at decreasing rates, or increasing at
12 increasing rates. That will depend on the parameters,
13 which, of course, have to be estimated.
14 Q Is the function used to derive businesses
15 as a function of population, or population as a function
16 of businesses?
17 A Essentially, what we're getting at is
18 businesses as a function of population. But, actually,
19 the way that we estimated the model was with population;
20 population being the dependent variable. So, the model
21 is being estimated on population being a function of the
22 number of businesses.
23 Q As a matter of mathematics, does the
24 function work such that one can derive changes in
25 businesses from population changes?
163
1 A Right.
2 Q Just as readily as change in population, it
3 can change in businesses?
4 A Right. That's the idea.
5 Q How did these formulas relate to the
6 function that you testified to earlier concerning the
7 change in population as a function of the change of
8 jobs?
9 A It really doesn't, except in the general
10 sense of supporting a direct relationship. More jobs,
11 generally, meaning a larger population and, hence more
12 businesses. Declining employment usually leading to
13 decline in population and ultimately to fewer
14 businesses. But, basically, it will only be that
15 general kind of a relationship.
16 Q Of the four types of functions, was the
17 function that is being used by RPC to derive changes in
18 population based on changes in jobs an exponential
19 function?
20 A Yes. I believe the RPC function is an
21 exponential function.
22 Q Is that the same function that is being
23 used to derive changes in property values and changes in
24 number of businesses?
25 A Yes.
164
1 Q The article, if you don't mind, let me just
2 grab this back for a moment.
3 A Sure.
4 Q Does the article limit the discussion to
5 different types of functions for deriving population
6 business relationships, or do these, also, apply to
7 employment, property value relationships or employment
8 population relationships?
9 A No. Our article just deals with
10 relationship between population, number of people versus
11 number of businesses, and with all of the various
12 limitations that are inherent therein.
13 Q Did you draw a conclusion in this article
14 about the relative merits of the four different types of
15 functions for relating businesses and population
16 changes?
17 A We selected one. After estimating the four
18 different types of functions, we then selected one of
19 the four as the basis for the subsequent analysis and
20 discussion. We did not suggest that that was
21 necessarily the superior form for all such analysis.
22 Q Would your selection be referenced in the
23 sentence on the third page that says, "Therefore, the
24 quadratic model was employed to develop estimates of
25 threshold populations for the 16 business types?"
165
1 A Yes.
2 Q Why did you select the quadratic model?
3 A We discuss earlier in the paragraph that we
4 estimated the four types of models. And "The relative
5 performance of the models was evaluated on the basis of
6 the frequency with which the mean value of population
7 for cities with N permit holders was observed in the 95
8 confidence range for each model. This evaluation
9 indicated that the quadratic model yielded the most
10 reliable estimates. Therefore, the quadratic model was
11 employed."
12 Q May I?
13 A So, it is, basically, we felt that, again,
14 a priori, any of the four functional forms could be
15 supported as being reasonable or logical. And then we,
16 basically, estimated the four different functional
17 forms, and empirically it seemed that the quadratic
18 model was the most reliable for this application.
19 Q And that latter determination was, in fact,
20 not a priori, but a posteriori; is that true?
21 A Yes, based on the empirical analysis.
22 Q So, would it be fair to say that your
23 identification of the superior function form was done by
24 comparing the performance of the function to known
25 facts?
166
1 A Yes.
2 Q Moving if you would, now, to your work on
3 the function for determining relationship between
4 population property values and businesses to jobs, how
5 was that function derived?
6 A The precise method of derivation, I don't
7 know. That was some of the RPC group in Austin who
8 developed the function.
9 Q What was your role in the development of
10 the function?
11 A I guess my role in that phase of the
12 analysis was really reviewing the function that RPC had
13 developed. And the question to me was, did this seem
14 reasonable in light of the literature, what is known, et
15 cetera, relative to these issues?
16 Q Would it be fair to say that you were asked
17 to determine whether the development of the function was
18 reasonable in light of the literature?
19 A Yes.
20 Q What did that entail?
21 A Well, what did that entail? I guess
22 examining some of the information about the function,
23 and then the estimated change in population associated
24 with different levels of changes in jobs. And I guess
25 attempting to draw on my familiarity with the literature
167
1 on economic growth and decline, as it were, to see if
2 the functions seem to be generally consistent with what
3 seems to be known in the literature on the topic.
4 Q Were you asked to determine whether the
5 function -- I believe you indicated earlier that it is
6 an exponential function?
7 A Yes.
8 Q Were you asked to determine whether the
9 exponential function developed by RPC was superior to a
10 quadratic alternative?
11 A No, I was not, specifically, asked to do
12 that.
13 Q Were you asked to determine whether it was
14 superior to a double log alternative?
15 A No.
16 Q How about a linear alternative?
17 A No.
18 Q Was the thrust of your task to determine
19 whether the function was defensible, given the
20 literature?
21 A That does not seem an unreasonable way of
22 saying it, is the function consistent with the
23 literature, that sort of thing.
24 Q Were you asked to do any empirical
25 verification in the manner that you described earlier
168
1 with reference to the work in Exhibit 10?
2 A No.
3 Q Could you have done some empirical
4 verification?
5 A No.
6 Q Why not?
7 A Certainly not without a major effort of
8 somehow collecting data on community changes in
9 implement population and other variables at a community
10 level. Something that would have involved a major
11 research project in its own right.
12 Q Do you know whether there was data
13 available showing EAA population and EAA employments
14 over time?
15 A Well, there is historical information on
16 EAA population and employment over time, yes. I have
17 seen some of this information that has been drawn
18 together for this project.
19 Q How did RPC derive the function that they
20 asked you to review?
21 A I don't know precisely the method they used
22 to derive the function.
23 Q Do you know who worked on that task for
24 RPC?
25 A It is my understanding that probably Eric
169
1 Schubert and Ed Warren would be the principal people who
2 had worked on that task, as well as many of the other
3 aspects of the model.
4 Q Did you have any conversations with Eric
5 Schubert about the function?
6 A Briefly. And, briefly, he outlined the
7 general nature of the function, and then sent me some
8 material describing the results. Basically, facts based
9 on the material.
10 Q What was the nature of your discussions
11 with Mr. Schubert about the function?
12 A Well, pretty much most of the point of our
13 discussion was the interest that I "take a look at" the
14 function and see if, in my opinion, it was consistent
15 with the literature and that sort of thing.
16 Q Did Mr. Schubert indicate whether it had
17 been his idea to use an exponential function?
18 A I don't remember that topic coming up in
19 terms of whose idea it was.
20 Q Did Mr. Schubert give any indication of how
21 an exponential function was chosen, as opposed to a
22 linear function or a quadratic function?
23 A No.
24 Q Or any other type of function?
25 A I don't recall us really talking about that
170
1 issue.
2 Q So, then, it would be fair to say that in
3 your conversations with Mr. Schubert, you don't recall
4 any reference to either how the function was derived, or
5 why an exponential function was chosen, as opposed to a
6 different form of function?
7 A To the best of my recollection.
8 Q Going back to your exchange with Mr.
9 Schubert, we have been talking about conversations, was
10 there any correspondence exchanged that you have not
11 included in your answers so far in the conversations
12 with Mr. Schubert?
13 A He faxed me, basically, a memo which
14 described the function and the results of population
15 changes associated with different levels of job change,
16 which I presume is part of the documents in your
17 collection.
18 Q Do you by any chance of a copy of it with
19 you?
20 MS. RAEPPLE: Let me see that.
21 (Brief pause.)
22 BY MR. SAXE:
23 Q Professor Leistritz, did you at any point,
24 either in conversation or in writing with Eric Schubert,
25 or Mr. Warren, or anybody else associated with the
171
1 project for RPC, suggest pros and cons of different
2 forms of function for the purpose of relating population
3 with employment in the EAA?
4 A No.
5 Q You indicated earlier that empirical
6 verification of the function would have been, I think it
7 would be fair to say, quite difficult, given the
8 available data?
9 A Yes.
10 Q I asked you whether there was data showing
11 population and employment in the EAA over time, and I
12 think you indicated that there is such data?
13 A Yes.
14 Q In your opinion, could one take a point in
15 a time series, an early point in a time series, or a
16 beginning point in a time series, and establish the
17 ratio of population to employment, and then measure the
18 change of the two variables over time and thereby derive
19 some increased or decreased confidence about the
20 accuracy of the exponential function relating the two
21 variables?
22 A My answer would be that I don't really
23 think an analysis of a time series in population of the
24 EAA would really help us all that much. One of the
25 issues in that kind of analysis is that, okay, for
172
1 instance, talking about this ratio of implement
2 population, that depends on things like the age
3 composition of the population, how many are kind of
4 working age. It, also, depends on factors like the
5 proportion of women who are employed outside the home,
6 which has been prone to change, and in some areas change
7 rather dramatically over time.
8 So, one would definitely have some
9 complicating or, what some people would say, some
10 confounding factors that would enter into the situation.
11 Q Would it be safe to say that those would be
12 categorizations or sub-categorizations of data that was
13 not available to you?
14 A Yes.
15 Q Do you remember who made the request to you
16 to verify the function against the literature, or
17 otherwise review the function in light of the
18 literature?
19 A The memo just went that-a-way, but I
20 believe it was written by Mr. Schubert, Eric Schubert.
21 Q And that was the memo in which the request
22 was made to you?
23 A Yes, I think so.
24 Q We'll have that in a minute and you can
25 refer to it.
173
1 Is it the case that an exponential function
2 will result in increased changes in population faster or
3 to a greater degree as employment changes than will a
4 linear function?
5 A The shape of the function will depend not
6 only on the form, that is, exponential versus quadratic
7 and so on, but, also, on the specific parameters that
8 are estimated for the function.
9 In the case of the function that is
10 incorporated in the RPC analysis, which will be back
11 here in a couple of minutes, the exponential function is
12 of a form such that initial decreases in employment
13 will, as I recall, stimulate greater than proportional
14 reductions in population and similar reductions in
15 property values.
16 As the changes in employment, decreases in
17 employment, become progressively larger, the
18 corresponding population response diminishes.
19 It seemed to me, in reviewing the function,
20 that sort of relationship would be consistent with the
21 observation that, for instance, in response to declining
22 economic opportunities and so on, the more mobile
23 complements of the population, often the people who are
24 younger, have less long-term ties to the area and
25 perhaps, also, have job skills that are more readily
174
1 transferable, will often be the first to leave.
2 The populous in most areas, and probably
3 the EAA would not be an exception, are not homogeneous
4 in their mobility, actual or perceived. And so as
5 additional job losses might occur, one, basically, comes
6 to the situation where the remaining population includes
7 substantial proportions of individuals who are not as
8 inclined to leave the area or not as able to leave the
9 area, and so hence, a proportionately diminished
10 response.
11 Q Does an exponential function fit better
12 where the first displaced employees have better
13 re-employment prospects and the later displaced
14 employees have poor re-employment prospects?
15 A This type of function would seem to be
16 consistent with that type of a situation.
17 Q So in the EAA, which would be the employee
18 groups that would correspond with that more
19 re-employable early impacted set?
20 A As I tried to indicate in this memo of
21 February 27th, it seemed to me the literature would
22 suggest that, for instance, individuals who don't own
23 their homes would probably be more willing, more likely,
24 to leave the area, compared to those who do. That,
25 generally, the migration literature will tell us that
175
1 the people in the younger age brackets, twenties and
2 thirties, are more mobile, more likely to migrate, to
3 move from one county to another, than those in older age
4 brackets.
5 Generally, also, migrants, that is, people
6 who move, by the census definition, people who move from
7 one county to another, tend to be not only younger but,
8 also, tend to have somewhat higher education levels than
9 the individuals who do not migrate.
10 So, those would be some characteristics
11 that one might look at in terms of who is most likely to
12 leave in a downturn.
13 MR. SAXE: Mark this, please.
14 (Deposition Exhibit 11 marked for
15 identification.)
16 MS. RAEPPLE: That is a composite exhibit.
17 MR. SAXE: All right. Could I see the
18 original, please?
19 THE WITNESS: All right.
20 BY MR. SAXE:
21 Q If I understand your previous testimony
22 correctly, is it fair to say that when using an
23 exponential function, population drops faster for the
24 first jobs going out than for the jobs going out later?
25 A Yes.
176
1 Q Do you have any understanding of what
2 rationale RPC may have used or RPC did use in selecting
3 the exponential function?
4 A I was not privy to the discussion that led
5 to the exponential function, as opposed to some other
6 functional form.
7 Q Do you have any understanding of whether
8 there was a rationale for RPC's selection of the
9 exponential function?
10 A I would certainly repeat that I don't know
11 what all was considered in deciding on the exponential
12 versus another kind of functional form.
13 Q Does an exponential function imply that
14 workers leaving first have larger families than those
15 leaving later?
16 A I don't know that it necessarily implies
17 that workers leaving first have larger families. It
18 would not be inconsistent with that interpretation.
19 But, again, one variable here is the decrease in jobs,
20 and then the second one is decrease in population.
21 Because a job disappears in the EAA does
22 not necessarily mean that the worker leaves the area.
23 That is, of course, one of the questions or one of the
24 things. So that the exponential function might suggest
25 that people initially laid off might be more likely to
177
1 leave the area than -- there is more people leaving the
2 area per hundred lay-offs in the early going than there
3 is subsequently.
4 Q I think you have used the term "mobile
5 workers" as those more likely to leave when they lose
6 their jobs; is that correct?
7 A Yes.
8 Q And it is the more mobile workers increased
9 likelihood of leaving when they lose their jobs that is
10 best reflected by an exponential function; is that
11 correct?
12 A That seemed reasonable to me, yes.
13 Q Are the most mobile workers likely to have
14 a large or small family?
15 A One would, I think, generally, see from the
16 literature that probably that those with smaller
17 families, singles and people with fewer children would
18 probably be more mobile, generally speaking, than those
19 with larger families.
20 On the other hand, there is, also, the age
21 factor and some of these things. But all other things
22 held constant, probably the literature would say that
23 individuals with smaller families or single individuals
24 might be more likely to move, more mobile, than those
25 with larger families.
178
1 Q And the small families, rather, I should
2 say the displaced workers with small families, take less
3 population with them when they leave; is that correct?
4 A That's true.
5 Q So, then, wouldn't it be the case that all
6 other things being equal, the function that would best
7 fit the tendencies of smaller families to leave first,
8 would not be an exponential function?
9 A No. As we have been discussing, there is a
10 whole array of potential factors and forces involved in
11 that relationship between number of jobs lost, number of
12 layoffs, in a sense, and decrease in population.
13 For instance, it is not inconceivable that
14 some workers who lost their EAAa jobs, if they felt a
15 very strong attachment to continuing to reside in the
16 EAA, might seek to find employment outside of the EAA
17 while maintaining their residence in the EAA.
18 So, as I say, there is a whole set of
19 factors that are kind of wrapped up in that relationship
20 between job loss and population loss.
21 Q In RPC's analysis, do you know what
22 population characteristics have been correlated with
23 employee groups most likely to be impacted early by
24 implementation of the SWIM Plan?
25 A No.
179
1 Q Have you had any discussions about
2 vulnerable populations with RPC?
3 A We have had general discussions about
4 vulnerable populations, especially in the context of
5 agricultural workers who might seem to have limited
6 ability, limited job skills and experience that might
7 inhibit their transfer to other kinds of occupations in
8 other types of jobs.
9 Q In your opinion, would there be a
10 representative distribution of characteristics that
11 relate to re-employability prospects among the employees
12 who are displaced by the implementation of the SWIM
13 Plan?
14 A I would ask you to repeat the question.
15 Q Let me rephrase it. What kinds of
16 employees would likely be impacted, or rather I should
17 say displaced or unemployed earliest, by implementation
18 of the SWIM Plan?
19 A I'm not sure I have the basis for an
20 opinion to really answer that question.
21 Q Let's take a look at this exhibit.
22 Professor Leistritz, calling your attention to what has
23 been marked as Exhibit 11, could you identify that for
24 the record, please?
25 A Exhibit Nunber 11 is a memo of February 27,
180
1 1994, to Dr. Ron Luke, from Larry Leistritz. Subject,
2 impact of unemployment on five EAA communities.
3 Q As I think your counsel noted earlier, this
4 appears to be a composite document; is that correct?
5 There are other documents stapled together?
6 A Yes.
7 Q Could you tell me which one of these
8 documents in this exhibit is the request that you
9 referred to earlier from RPC for you to review the
10 function?
11 A The third page. And, subsequently, is a
12 memo dated February 22, 1994, to Larry from Eric
13 Schubert. Subject, impact of unemployment on five EAA
14 counties. Communities, I'm sorry.
15 Q The second sentence from the bottom of this
16 memorandum, would you read that into the record, please?
17 A The second sentence from the bottom reads:
18 "We need your opinion, in a memo to file, on the
19 appropriate size, shape and slope of the curve that
20 relates the impact of job losses to losses in population
21 and property values on the five cities in the EAA."
22 And then the subsequent pages there are
23 really his description of the function and, basically,
24 then shows the percent jobs lost and corresponding
25 population, population remaining, assessed valuation
181
1 remaining and businesses remaining.
2 Q So, would it be fair to say that you were
3 asked to recommend the appropriate size, shape and slope
4 of the curve?
5 A That's what the sentence seems to say.
6 Q Would it, also, be fair to say that you
7 were not asked to recommend the appropriate type of
8 function with respect to exponential versus linear, or
9 quadratic, or double log?
10 A Right.
11 Q Would it be fair to say that every aspect
12 or characteristic of the function relating to job
13 changes and population changes had been assigned to you,
14 except the type of the function?
15 A I guess my interpretation was that I was
16 being asked for my opinion about the appropriate size,
17 shape and slope. And I guess my response was that, in
18 my opinion, the function that they had specified seemed
19 consistent with the literature, and what I felt I knew
20 about the area and the work force.
21 Q But you testified earlier that you really
22 didn't take into account any specific characteristics of
23 the area or the work force; isn't that true?
24 A I guess we need to go back to that
25 question. I was not quite sure I was understanding the
182
1 question when you asked it, so we need to revisit that
2 question.
3 Q That's quite possibly the case. Excuse me
4 if I mischaracterized your response.
5 I thought you had indicated that you didn't
6 have any opinions about the types of characteristics or
7 the characteristics of workers who would be displaced
8 earliest because of implementation of the SWIM Plan,
9 versus the characteristics of those who might be
10 unemployed later on; is that not true?
11 A Yes. What I remembered was this question
12 of the workers who are displaced first, versus those
13 that might be displaced later.
14 Q Then wouldn't you have needed to have an
15 opinion about that kind of characteristic in order to
16 have formed an opinion about the appropriateness of the
17 type of function, as opposed to the size, shape and
18 slope; type meaning exponential versus linear, or
19 quadratic, or double log?
20 A I don't see the issue of characteristics of
21 workers that are displaced first, second, third, as
22 being pivotal to the question of the relationship
23 between extent of job loss and extent of population
24 loss.
25 I guess, again, reflecting on what limited
183
1 literature there is that looks at migration response to
2 economic decline, such as what we have seen perhaps in
3 the agricultural midwest and so on, while we don't have
4 detailed information about the characteristics of people
5 that were displaced from employment, in what sequence,
6 we do find a pretty consistent pattern of the counties
7 with high out-migration; basically, having the
8 out-migrant stream being dominated by certain age
9 brackets. Basically, often people in their twenties and
10 thirties.
11 Also, seeing, essentially, what some would
12 say a selectivity of migration, such that those
13 remaining in those areas often have a combination of
14 economic and social characteristics that make them
15 either less willing, or less able, or both, to look to
16 entertain a change in residential location and/or
17 occupation.
18 I don't see the question of what are the
19 characteristics of those who are displaced first versus
20 second as being quite the same as what we are looking at
21 here; what would be the population response to a five
22 percent reduction in jobs, versus say a 10 percent
23 reduction in jobs.
24 Q Is the relative re-employability of
25 displaced workers over time, as they are displaced, in
184
1 your opinion, not a relevant criterion for determining
2 whether an exponential function is better than another
3 form of function or type of function?
4 A I guess I wouldn't say that that is not
5 relevant. I would not say that that is not a relevant
6 factor. I would, however, suggest that it is not the
7 only relevant factor.
8 Q What are the other relevant factors, other
9 things being equal, just in terms of deciding whether to
10 use quadratic, or exponential, or linear, or double log?
11 A Again, if you look at those broad
12 functional forms, each of those functional forms can
13 accommodate a rather wide -- a linear function will
14 always be a straight line. Now, the slope of the State
15 line, you know, is totally a matter of the parameters.
16 Similarly, the quadratic will have certain
17 characteristics. But within a very broad range, then,
18 the parameters will dictate what the function will look
19 like.
20 I guess, based on my opportunity to look at
21 the literature, how does population tend to respond to
22 economic decline, my sense is that there has been
23 sufficiently little empirical analysis that it is a
24 probably limited basis for arguing an exponential
25 function versus a quadratic. There is simply not a lot
185
1 of empirical literature out there that I have been able
2 to identify that can really be said to apply very
3 directly to a situation like the potential winding down
4 of the EAA.
5 Q So, given that, would it be fair to say
6 that you don't, in your opinion, have sufficient
7 information to formulate an opinion about whether the
8 exponential form of equation was the appropriate form?
9 A I guess I would say that it seemed that the
10 function, the equation that the RPC staff had developed,
11 seemed consistent with the literature as I understand
12 it.
13 Q But you did indicate that you didn't have
14 sufficient information to have empirically verified it,
15 if you had chosen to?
16 A Right.
17 Q And you did indicate that you did not have
18 sufficient information about the relative
19 re-employability of employees displaced sooner rather
20 than later in the impact process; is that correct?
21 A Yes.
22 Q You indicated, I believe, in your testimony
23 earlier that you had made a response to this request
24 from Eric Schubert that is on the third page of Exhibit
25 11; is that correct?
186
1 A Yes. Eric's request is February 22nd, and
2 then my memo of February 27th. The first memo was
3 February 22nd, the second one is February 27th. That
4 was, basically, my response to Eric's request.
5 Q That would be this first page of Exhibit
6 Number 11? That is your response?
7 A Yes.
8 Q Professor Leistritz, going back to the
9 equation on, I guess, the fourth page of this exhibit, y
10 equals a plus b times exp(-cx)?
11 A Yes.
12 Q Would it be correct to say that if all of
13 the values assigned to the various coefficients were
14 kept the same, but only the form of this equation were
15 changed from exponential to linear, that the rate of
16 lost population for lost jobs would be lower than it
17 would be with this equation in an exponential form?
18 A Well, if we changed the form to linear,
19 then the question is, what is the slope of the linear
20 function?
21 Q I'm saying if the size and shape -- excuse
22 me, if the slope of the equation remained the same, but
23 only the form had changed?
24 A Which I would interpret to mean that we
25 agree on the two end points, then, the 00 end point and
187
1 then the other end, which is whatever it is, the 29
2 percent job loss and 74.5 percent of population
3 remaining.
4 The difference between a linear function
5 connecting those two points, versus the exponential
6 function, would mean that, yes, the initial job
7 losses -- I'm not sure if it is appropriate to think of
8 these as -- the lower levels of job losses, let's say
9 that a three percent job loss in a linear function would
10 produce less population loss than it does in the
11 exponential function.
12 On the other hand, that is offset when we
13 get down to some of the highest levels of job loss.
14 Q So, the rate would be much faster at first
15 in an exponential, other things being equal?
16 A In this form, the exponential function, the
17 rate of loss of population is higher for the low levels
18 of job loss. Which could, also, I guess, maybe be
19 interpreted as the initial job losses. But then the
20 exponential says that as you get to the higher levels of
21 job loss, there is a lesser population response.
22 You are now getting down to an area which
23 would be consistent with a situation where the remaining
24 EAA workers are the ones that are left are the less
25 mobile ones. They own their homes. They, for various
188
1 reasons, don't want to leave Belle Glade, or don't feel
2 able to leave Belle Glade, Clewiston, et cetera.
3 Q Is this function, percent change in
4 population per percent change in employment, for an
5 exponential function, would the ratio of percent change
6 in population to percent change in employment be
7 constant?
8 A I think I'm going to ask you to repeat the
9 question.
10 Q For an exponential function, would the
11 ratio of percent change in population to percent change
12 in employment be constant?
13 A As we can see from the table, the answer
14 is, no. Because like a four percent drop in employment
15 leads to almost a 7 percent drop in population. When we
16 get down to, say, a 25 percent loss in jobs, that
17 generates only about a 24 percent loss in population.
18 So, the exponential function means that the ratio
19 between job loss and population loss is not constant.
20 In a linear function, on the other hand,
21 each percentage change in employment has an equal --
22 carries with it an equal -- the same movement from four
23 to five percent loss of jobs has the same percentage
24 impact on population as the movement from 24 to 25
25 percent.
189
1 Q In your opinion, is the exponential
2 function that was used for population migration, also,
3 satisfactory for projecting the number of businesses
4 going out?
5 A In my opinion, it would be reasonable to
6 assume a direct relationship between job loss and
7 population loss. Fewer jobs probably means that some
8 people leave. And, also, it is reasonable, I think, to
9 think that there would be a direct relationship between
10 both jobs, and population and number of businesses.
11 That is, with fewer jobs and fewer people, we would
12 expect at some point to have fewer businesses.
13 Q In your opinion, is it appropriate for the
14 function to predict the number of businesses going out
15 to use the same parameters as the function to predict
16 the number of population going out?
17 A It seemed reasonable to me. Again, given
18 little way, that I could see, to really empirically fit
19 functions and that sort of thing, it seemed that similar
20 percentage changes in population and in businesses would
21 be as reasonable an assumption as I could think of.
22 Q And what was that based on?
23 A I don't know what RPC's basis was for the
24 estimate.
25 Q No. Was it your opinion that it was just
190
1 as suitable to use that same function for number of
2 businesses going out as it was to use it for the
3 population going out?
4 A I guess simply the observation from
5 reviewing quite a lot of literature in the area, the
6 literature all supports, essentially, a direct
7 relationship. And I have never really been able to find
8 in the literature very much in the way of quantitative
9 estimates that would really contradict that kind of a
10 relationship.
11 Q Are there any other factors that should be
12 considered in analyzing the business number lost?
13 A The answer, of course, is, yes. There
14 would be an array of factors to consider, including
15 things like the current status of the businesses in the
16 area. Are they prosperous, or are they having a
17 difficult time already? But a whole array of factors
18 certainly would come to mind.
19 Q Are there any other factors that should be
20 considered in analyzing the change or loss in property
21 values?
22 A Again, I think the answer should be, yes.
23 There are other factors, other than just the change in
24 population, that would affect property values, yes.
25 Even as there are factors besides just change in
191
1 population that would affect the likely numbers of
2 businesses that might be lost.
3 Q And what would those factors be?
4 A For instance, with property values, things
5 that come to mind would be possible other uses or
6 demands for some of that property.
7 For instance, is there a potential market
8 for housing in the EAA area? For instance, second home,
9 vacation type property, or whatever. That would be an
10 example of a factor that might be considered in trying
11 to decide what may happen to property values.
12 Q Any other significant factors?
13 A Property value analysis was really not an
14 area where I was assigned a major responsibility.
15 Q I'm not asking about RPC's analysis. I am
16 asking about your opinion about the relevant factors
17 besides population change to be considered in analyzing
18 change in property values.
19 A But other demands to support some of that,
20 housing would be a factor. For that matter, public
21 intervention is often a factor in affecting property
22 values and property value changes.
23 Q Any others?
24 A Those are some of the things that come to
25 mind right off.
192
1 Q How about for analyzing business number
2 loss, what would the other factors be besides population
3 and the ones that you have already mentioned?
4 A Well, for instance, with businesses, other
5 activities, such as recreation, tourism-based trade,
6 that might offset some of the losses from the EAA
7 resident population would be a factor that could affect
8 business losses.
9 Another issue may be the ability of
10 businesses to adjust to reduced business volume by means
11 other than shutting the doors; like down-sizing or
12 whatever. So, those would be some factors that would
13 come to mind relative to the question of changes in
14 numbers of businesses.
15 Q Any other significant factors that come to
16 mind besides those?
17 A Again, those are some of the ones that come
18 first to mind.
19 Q If there were growth in other crops in
20 other areas of Hendry County, would this affect business
21 loss?
22 A Certainly, if those areas were within the
23 trade area of some of the communities that we're looking
24 at, certainly that could have an effect.
25 Q And it would be a mitigating effect that
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1 would reduce the business loss?
2 A You are saying if growth occurred in other
3 crops, in other parts of Hendry County, outside of the
4 EAA, would this potentially have an effect on business
5 loss?
6 And my answer would be that it certainly
7 could, if, in fact, this change in crops and so on led
8 to some additional business volume that, in part or in
9 whole, offset losses associated with the EAA changes.
10 Q So, then, the effect would be to reduce the
11 business loss in the EAA?
12 A Yes.
13 Q And how about property values, a similar
14 effect could be to reduce the loss in property values?
15 A It seems to me that I don't know at what
16 point I'm certainly engaging in speculation. But if we
17 hypothesize a change such as increase in other crops, in
18 other parts of the county, outside the EAA, that
19 provides business volume, potentially provides jobs and
20 so on -- well, potentially provides jobs for some of
21 those displaced workers, then, certainly, that could
22 affect property values. And by definition, the way we
23 have hypothesized it, would tend to offset losses, some
24 of the losses, associated with the EAA changes.
25 Q Do you know whether there are any prospects
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1 for such increased production of crops in Hendry County
2 outside of the EAA that might reduce the business
3 impacts of implementing the SWIM Plan?
4 A That was not one of my assignments, really,
5 to investigate that topic.
6 Q Would it be fair to say that you don't have
7 an opinion on that?
8 A Right.
9 Q Would it, also, be fair to say that you
10 don't have an opinion that there are not such crop
11 opportunities outside of the EAA in Hendry County that
12 might reduce the --
13 A Yes, I would agree with that.
14 Q And the same would be the case, I take it,
15 with respect to property values and population impacts?
16 A I would agree with that.
17 Q Referring back to your threshold population
18 level study, in Exhibit 10, did that study suggest a
19 smooth, continuous, one-to-one relationship between
20 population and business loss?
21 A Well, the study that you are referring to,
22 the threshold study, Exhibit 10, basically, was looking
23 at communities as a cross-section at one point in time.
24 So it was looking at communities of different sizes and
25 how many businesses of different types that they had.
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1 And, of course, a whole host of caveats.
2 But it is not necessarily clear that one
3 can take a function based on a cross-section like that
4 and immediately apply it then to a situation of
5 population change, growth or decline, although these
6 applications are sometimes attempted.
7 But I think my answer to the question is,
8 we weren't really looking here directly at changes in
9 population, and whether they lead to a proportional
10 decrease or increase in number of businesses. We were
11 looking at a cross-section of communities.
12 Q Referring to Exhibit Number 11, if you
13 would, look at the sentence that starts about seven or
14 so lines down, with the words "in particular." Would
15 you read that for the record, please?
16 A "In particular, the model assumptions that
17 job losses initially lead to a greater than proportional
18 loss in population, property value, and businesses are
19 consistent with the observation that a portion of the
20 EAA work force can be expected to be highly mobile and
21 able to respond to a worsening of employment conditions
22 in the EAA (relative to other areas) through migration."
23 Q Would it have to be the case for this
24 statement to be true that that portion of highly mobile
25 employees in the EAA would have to be affected earlier,
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1 rather than later, in the process of displacement
2 because of implementation of the SWIM Plan?
3 A I take it your question is, do the more
4 mobile workers have to be displaced from their jobs
5 earlier? I guess I'm not sure that I know the answer to
6 that question.
7 There is the issue of job displacement.
8 There is, also, the issue of do displaced people leave
9 or not. Also, we're talking about worsening, implement
10 conditions in the EAA relative to other areas. It seems
11 to me to be, at least within the realm of possibility,
12 that some workers, especially more mobile ones, may not
13 wait to be told that they're laid off. Under a scenario
14 where the employment conditions in the area are
15 perceived as worsening relative to other areas, one
16 could at least hypothesize individuals not waiting to
17 get laid off, but, in fact, going to pursue what seemed
18 to be greener pastures somewhere else.
19 Q In a hypothetical circumstance where the
20 more highly re-employable employees were among the last
21 to be displaced, would that statement still be true?
22 A Again, it seems to me that we have a number
23 of relevant factors here, some of which we have talked
24 about.
25 There is the re-employability,
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1 transferability of skills. There is, also, the
2 inclination and willingness to relocate. The question
3 of do individuals attempt to maintain their residence
4 within the EAA while perhaps working outside of the EAA?
5 So, I guess I am not sure I know the answer to that
6 question.
7 Q I notice in your Footnote Number 1 that you
8 have cited a publication, among others, in support of
9 your assertion, in the third sentence of this memo.
10 Would you read the third sentence into the record,
11 please?
12 A "I believe that the model's specification
13 of the relationship between unemployment (job loss) and
14 changes in, (a) population change, (b) property values,
15 and (c) number of businesses is consistent with the
16 literature and professional opinion in the field of
17 regional economics/economic impact analysis."
18 And then the footnote to two sources.
19 Q The first of those sources is an article
20 titled Economic-demographic Projection Models: An
21 Overview of Recent Developments for Infrastructure
22 Analysis?
23 A Yes.
24 Q And the authors listed are Lonnie Jones,
25 Steve Murdock and F. Larry Leistritz; is that correct?
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1 A Yes.
2 Q You co-authored this article with Professor
3 Lonnie Jones; is that correct?
4 A Yes.
5 Q Have you written other articles with
6 Professor Jones?
7 A Yes.
8 Q Do you know approximately how many?
9 A Approximately how many?
10 Q No peeking.
11 A I couldn't say for sure. Maybe four or
12 five, something on that order.
13 Q Are you familiar with Professor Jones'
14 skills and experience in this area of economic impact
15 analysis, theory and regional economics?
16 A Yes.
17 Q Would you consider Professor Jones to be
18 expert in those fields?
19 A Yes.
20 MR. SAXE: Off the record.
21 (Discusssion off the record.)
22 MR. SAXE: Back on the record.
23 BY MR. SAXE:
24 Q Go back, once more, to Exhibit Number 11.
25 Was there any of the literature that you relied on in
199
1 formulating your opinion that the function proposed by
2 RPC was appropriate, besides that referred to in
3 Footnote Number 1?
4 A Footnote Number 1, which references two
5 documents, each of those is, basically, a representative
6 attempt to view rather extensive literature. The
7 article by Jones, Murdock and Leistritz reviewed a
8 significant amount of literature describing economic
9 demographic projection models.
10 The second document, a book by Leistritz
11 and Murdock, was not even perhaps, arguably, a more
12 ambitious attempt to review the literature in the area
13 of socioeconomic impact assessment methods. I don't
14 know if that is responsive to your question or not.
15 Q So, basically, it is those materials
16 referenced in the reference materials?
17 A Right.
18 Q The request on the third page for your
19 opinion on the appropriate size, shape and slope of the
20 curve, did you provide a response concerning the
21 appropriate size, shape and slope of the curve in this
22 first page of Exhibit 11?
23 A Basically, the first page, my memo, is my
24 response to Mr. Schubert's request. What I think the
25 memo says is that the function, as he had specified in
200
1 the tables that he had sent to me, seemed reasonable in
2 light of the literature as I had been able to understand
3 it.
4 Q Would it be correct to say that the size,
5 shape and slope of the curve were, in fact, specified on
6 the attachment to Eric Schubert's request for your
7 opinion, that fourth page of Exhibit Number 11, where
8 the parameters in the equation are given numerical
9 values?
10 A Yes, that specifies the size, shape and
11 slope of the curve. And then the subsequent tables
12 really spell out what that means in terms of the
13 relationship between job loss and population change.
14 Q So, then, if I understand it correctly, Mr.
15 Schubert, in this transmittal, provided the size, shape
16 and slope of the curve, as well as the function --
17 excuse me, the form of the function as exponential, and
18 asked you for your opinion on the appropriate size,
19 shape and slope of the curve, correct?
20 A Correct.
21 Q And you, basically, in your February 27th
22 memo, gave your opinion that the --
23 A The size, shape and slope that he had
24 specified seemed reasonable to me.
25 Q Do you have any understanding of how the
201
1 size, shape and slope of the curve were derived from
2 RPC?
3 A No.
4 MR. SAXE: Would you mark this, please?
5 (Deposition Exhibit 12 marked for
6 identification.)
7 BY MR. SAXE:
8 Q Professor Leistritz, on the fourth page of
9 this Exhibit Number 11, in the second block of
10 information on that page, it lists a number of growth
11 rates in the baseline case. There is growth rate of
12 population in the baseline case of assessed valuation
13 and of number of businesses. The values indicated are
14 zero percent; is that correct?
15 A That's what it looks like.
16 Q What is the meaning of the zero percent
17 growth rate in the baseline for these variables?
18 A My interpretation would be that the
19 baseline forecast, which RPC is using for a comparison
20 to their impact analysis, is a baseline of zero percent
21 change in population, assessed valuation and the number
22 of businesses in the study.
23 Q Do you know what the basis of that would
24 be?
25 A No.
202
1 Q Down below, the listing of parameters and
2 values that define the size, shape and slope of the
3 curve --
4 A Yes.
5 Q -- what considerations would go into
6 determining whether that size, shape and slope were
7 appropriate for the EAA?
8 A In general terms, I guess I would respond
9 that I would be inclined to look at how the changes that
10 this function would predict, or project, or simulate,
11 would correspond with changes that have been noted in
12 other areas with respect to other projects. And
13 particularly other areas that might seem somewhat
14 analogous to the EAA, and which might have undergone
15 changes similar to those that might be expected to be
16 experienced in the EAA.
17 Q Did you compare how the changes in the
18 function corresponded with changes noted for analogous
19 projects in other areas?
20 A In the general sense of my understanding of
21 the literature on those kind of situations, for
22 instance, changes in agriculturally dependent areas in
23 the midwest, mining towns and the like.
24 Generally, my finding has been that the
25 literature is not replete with lots of quantitative
203
1 functions. However, the literature, generally, supports
2 a direct relationship between job loss and population
3 loss, between population loss and business loss, in the
4 sense that these indicators tend to move in the same
5 direction.
6 Q Do they tend to move in the same direction
7 in any other sense? Does it support the size, shape and
8 slope of the curve described by this function, except
9 that they move in the same direction?
10 A Well, I guess some of the other things that
11 we mentioned here in terms of perhaps the selectivity of
12 migration, individuals of certain characteristics being
13 the most likely to migrate.
14 Also, I guess, again, some of the factors
15 that I tried to lay out in the memo were drawn from my
16 understanding of the literature in this area.
17 Q Did the size, shape and slope of this
18 function fit any of the analogous projects that you
19 looked at for other areas?
20 A Most of the literature would not contain
21 data in the detail to allow one to "statistically fit" a
22 function like this. But, in general, the changes that
23 were reported in many of these studies of seemingly
24 somewhat analogous projects in areas seemed, generally,
25 consistent with the function that Eric had given me.
204
1 Q But it would be fair to say that given the
2 information that is available in the literature, you
3 couldn't actually look at how the changes in the
4 function corresponded with changes noted for analogous
5 projects in other areas; is that true?
6 A Right. Not in a rigorous quantitative
7 sense.
8 Q Have you ever used an exponential function
9 such as this one in your socioeconomic impact models?
10 A I don't recall having used a function of
11 exactly this type before.
12 Q Any exponential function with a different
13 size, shape and slope perhaps?
14 A Not that I recall at the moment.
15 Q If the value for (a), the coefficient for
16 impact on property values, and population and number of
17 businesses were .6 instead of .7, what is the likelihood
18 that that would have been a better value or more
19 accurate value for (a)?
20 A I don't know. I have no basis to even
21 speculate.
22 Q Would that be the same with respect to
23 using the value of .8 for (a)?
24 A Yes, I would have to give you the same
25 answer.
205
1 Q The specification of the zero percent
2 growth rates in the baseline for population, assessed
3 valuation and number of businesses, does that assume
4 that current conditions form the baseline?
5 A Yes. Essentially, the zero percent seems
6 to imply that the baseline forecast is for things to
7 stay the same. Current conditions are the baseline.
8 Q In your opinion, based on the information
9 that you have about the EAA, are future conditions
10 likely to stay the same with respect to those values in
11 the EAA?
12 A As I recall from, basically, the interviews
13 that I conducted when I was down there last July, it
14 seemed that much of what I was hearing from those folks
15 would probably support an assessment of relatively
16 little change in population, and perhaps in number of
17 businesses, in the absence of major changes in the EAA
18 related activities.
19 Q Referring back to Exhibit 10, your article
20 with Alan Schuler, the fourth or so sentence says, "As a
21 result, main street merchants in smaller communities
22 often discover that they are receiving a decreasing
23 share of a declining retail sales volume." Then you go
24 on to give a number of examples from North Dakota.
25 Do you know whether merchants in the EAA
206
1 have been receiving a decreasing share of a declining
2 retail sales volume?
3 A I guess that I have not had the opportunity
4 to look at community specific sales data, retail sales
5 data, for those communities.
6 Q Do you have any opinion as to whether any
7 businesses are now having a hard time in the EAA?
8 A In the interviews last summer, we were told
9 some accounts of businesses having a difficult time
10 because of the reduced amount harvest. A frequently
11 stated cause was a reduced amount of harvest labor. I
12 forget the acronym now. H2C, is that right, or
13 something like that. The people coming from the
14 Caribbean for the seasonal cane cutting, the reduction
15 in the seasonal labor, was cited as something that had
16 caused economic distress for some businesses in the EAA.
17 Q That change in influx of H2A workers, do
18 you recall what that was attributed to?
19 A Well, I guess I remember discussion about
20 increased mechanization of the sugar harvest, more
21 mechanical harvesting; hence, less hand-cutting.
22 Q In your opinion, notwithstanding these
23 reported impacts from the loss of H2A workers --
24 A Yes, H2A.
25 Q -- you would still say that it is
207
1 reasonable to assume that there will be a maintenance of
2 the status quo in population, assessed values and number
3 of businesses absent an implementation of the SWIM Plan?
4 A Again, determining the coefficients and the
5 assumptions for this part of the impact analysis was not
6 really my major responsibility. In fact, Eric didn't
7 even ask me to review the baseline assumptions. So, I
8 think I would have to say that I have a very limited
9 basis for an opinion relative to the baseline
10 assumptions.
11 Q Did Eric's request for you to verify the
12 function based on the scholarly literature come in some
13 other form besides this memo that is the third page of
14 Exhibit 11, the February 22nd memo?
15 A Basically, Eric called me and told me that
16 he was going to be sending me a fax, and hoped I could
17 review these assumptions of the models. Essentially,
18 his phone call just alerted me to the impending facts
19 and gave me kind of a synopsis of what he was going to
20 be asking for.
21 Q But he doesn't refer to any verification
22 against the literature in the memo; is that correct?
23 A I guess my references to literature and so
24 on would be described as my interpretation of what I was
25 being asked to do.
208
1 Q Of the phone conversation?
2 A Or my interpretation of the memo, I guess.
3 We need your opinion. So, I guess I am saying my basis
4 for my opinion that I put together in my memo was really
5 the literature of the area.
6 MR. SAXE: It is time for a dinner break.
7 THE WITNESS: Okay.
8 (Proceedings adjourned at 5:30 p.m.)
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1 CERTIFICATE_OF_REPORTER ___________ __ ________
2
3 STATE OF FLORIDA:
4 COUNTY OF LEON:
5
6 I, ANITA M. PEKEROL, do hereby certify that the
7 foregoing proceedings were taken before me at the time
8 and place therein designated; that my shorthand notes
9 were thereafter translated under my supervision; and the
10 foregoing pages numbered 1 through 209 are a true and
11 correct record of the aforesaid proceedings.
12
13 I FURTHER CERTIFY that I am not a relative,
14 employee, attorney or counsel of any of the parties, nor
15 relative or employee of such attorney or counsel, or
16 financially interested in the foregoing action.
17
18 DATED THIS 18th day of March, A.D., 1994.
19
20
21
22
23 __________________________________
ANITA M. PEKEROL, CCR, RPR, CP, CM
24 100 Salem Court
Tallahassee, Florida 32301
25 904-878-2221 or 1-800-934-9090
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1 CERTIFICATE_OF_ADMINISTERING_OATH ___________ __ _____________ ____
2 STATE OF FLORIDA:
COUNTY OF LEON:
3
I, ANITA M. PEKEROL, Registered Professional
4 Reporter and Notary Public in and for the State of
Florida at Large:
5
DO HEREBY CERTIFY that on the date and place
6 indicated on the title page of this transcript, an oath
was duly administered by me to the designated witness(s)
7 before testimony was taken.
8 DATED THIS 18th day of March, 1994.
9
10 __________________________________
ANITA M. PEKEROL, CCR, RPR, CP, CM
11 100 Salem Court
Tallahassee, Florida 32301
12 904-878-2221 or 1-800-934-9090
13 My Commission Expires: February 20, 1995.
14
15
16 SWORN TO AND SUBSCRIBED TO before me, this ______
17 day of ________________, 1994, in the CITY OF
18 TALLAHASSEE, COUNTY OF LEON, STATE OF FLORIDA, by the
19 above person who is personally known by me.
20
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22
23
24 ___________________________
NOTARY PUBLIC
25 STATE OF FLORIDA
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