Document 219
Filed 10/05/2006
Page 1 of 14
IN THE UNITED STATES COURT OF FEDERAL CLAIMS ) ) ) ) ) ) ) ) ) ) )
CAROL AND ROBERT TESTWUIDE, et al., Plaintiffs, v. THE UNITED STATES OF AMERICA, Defendant.
No.: 01-201L (Honorable Victor J. Wolski)
MEMORANDUM IN OPPOSITION TO DEFENDANT'S MOTION IN LIMINE TO EXCLUDE REPORTS AND TESTIMONY OF DR. JON P NELSON. INTRODUCTION On September 20, 2006, Defendant, United States of America ("Defendant"), filed a Motion in Limine and Memorandum1 to exclude from the upcoming trial expert reports and testimony by one of Plaintiff's integral expert witnesses, Dr. Jon P. Nelson ("Dr. Nelson"). Defendant claims, without reason, that the Court should grant its motion pursuant to Daubert v. Merrell Pharm., Inc., 509 U.S. 579 (1993), Rule 702 of the Federal Rules of Evidence ("FRE") and related case law. The Court should deny Defendant's Motion because 1) Dr. Nelson, one of the foremost experts in his field, is amply qualified to offer expert opinion on a seminal issue in the case, the deleterious effect of jet noise on residential property values; 2) Dr. Nelson's reports and testimony are well-grounded in factual support and based on reliable principles and methodology; 3) exclusion of the disputed evidence and testimony would contravene the plain language of Daubert, FRE 702 and related case law, all of which are designed to promote broad admissibility of scientific and expert testimony which is relevant and helpful to the trier of fact; and 4) the erroneous doubts raised by Defendant
1
Plaintiffs will refer to this pleading herein as Def. Mem. at ____.
-1-
Case 1:01-cv-00201-VJW
Document 219
Filed 10/05/2006
Page 2 of 14
about Dr. Nelson's expertise should be resolved through the crucible of trial, and not by way of exclusion of important, reliable, germane evidence. Accordingly, the Court should deny Defendant's meritless Daubert motion. I. BACKGROUND Dr. Nelson has prepared four reports2, all of which assert that the arrival of the F/A 18 C/D squadrons in Virginia Beach culminating in the alleged date of taking in this case, July 1, 1999, had a measurable, negative effect on the value of Plaintiffs' property. Dr. Nelson's initial expert opinion in the test-case portion of this litigation is dated September 26, 2005. A copy of this report is attached as Exhibit A. Dr. Nelson also prepared and submitted a rebuttal report dated December 12, 2005. A copy of this report is attached as Exhibit B. Dr. Nelson's initial report was based, inter alia, on a published, peer-review tested article entitled "Meta Analysis of Airport Noise and Hedonic Property Values." A copy of this article, published in January 2004, is attached as Exhibit C. In his article and initial report, Dr.Nelson conducted a meta-analysis of 20 hedonic3 studies covering 31 estimates of the Noise Depreciation Index ("NDI4") for 23 airports in the United States and Canada. Exh. C at 21. During his deposition, Dr. Nelson explained the virtues of a meta-analysis, or statistical synthesis of all existing literature. Relevant portions of Dr. Nelson's deposition transcript are attached as Exhibit D. According to his deposition testimony, a meta-analysis provides a "more reliable indication of the central tendency of a set of empirical results." Exh. D at 57. The chief virtue of a meta2
The first two reports were submitted as part of the class certification phase of this litigation.
The term "hedonic" in this context, connotes "econometric studies that investigate the determinants of residential property values." Exh. A at 12. In this case, hedonic studies seek to isolate the effect of a controlled for variable, in this case jet noise, on the value of real estate located in noise contours exposed to noise above 65 dB. Plaintiffs concur in Defendant's definition of NDI as "the percentage depreciation in property value per decibel of increased jet noise as measured by the Day-Night Average Sound Level ("DNL") metric." Def. Mem. at 2 n 2.
4
3
-2-
Case 1:01-cv-00201-VJW
Document 219
Filed 10/05/2006
Page 3 of 14
analysis is that it is used to measure the systemic effect of jet noise on property values. Dr. Nelson's report indicates that meta-analysis was developed in the early 1980's and is now "widely applied in the physical sciences and other areas of social sciences." Exh. A at 16. In the field of economics, meta-analysis has been applied in numerous published studies. Exh. A at 16, 18. In Dr. Nelson's view, a meta-analysis of hedonic studies by way of a temporal snapshot is a more accurate measurement of the effect of jet noise on residential property values than the methodology employed by Defendant's expert Dr. Dale-Johnson. Dr. Dale-Johnson used a "repeat sales model" which seeks to measure over time the effect of jet noise on residential property values. Exh. B at 16. In Dr. Nelson's view, this methodology is inferior for at least two reasons: 1) it "has not been applied in other studies of aircraft noise and residential property values"; and 2) it is "untested and too speculative to serve as an econometric basis for litigation purposes." Exh. B at 16. Equally important, there are so few studies which employ temporal comparisons because it is much more difficult to control for all factors other than jet noise. Exh. D at 150. Finally, Defendant has
provided no evidence that a variation in noise at a given point in time has an impact on property values that is any different than a change in noise over time at the same location. During the class certification phase of this litigation, Defendant criticized Plaintiffs precisely for failing to offer a systematic analysis of existing hedonic studies. Dr. Nelson's meta-analysis and report were prompted in part to address this critique. Applying this rigorous meta-analysis carefully to the existing studies on the effect of noise on residential property values, Dr. Nelson concluded that the studies yielded a simple mean NDI of .75%. Exh. A at 16. Dr. Nelson, who prepared a similar study in 1980 which reached similar conclusions, will opine at trial that the overwhelming scientific evidence on the subject demonstrates a measurable significant negative NDI for residential properties exposed to jet noise above 65 dB. Exh. A at 17-18. It is also important to note that Dr. Nelson's
-3-
Case 1:01-cv-00201-VJW
Document 219
Filed 10/05/2006
Page 4 of 14
analysis revealed that all of the NDI values gleaned from the previous studies except four were within the 95% confidence interval. In light of this, Defendant misses the point when it criticizes Dr. Nelson's finding because "only 9 (NDI's) fall within" the range estimated in his report. Dr. Nelson's meta-analysis article published in January 2004 restricted itself to an attempt to measure the systematic NDI reduction as reflected in the existing literature. Dr. Nelson's September 26, 2005 report sought to particularize his synthesized conclusions by adding in factors unique to Virginia Beach. Exh. D at 48. Defendant erroneously suggests that Dr. Nelson did this arbitrarily by adjusting his proposed NDI upward based solely on a purportedly antiquated FAA study.
5
Dr.
Nelson did rely, in part, on the 1985 FAA study to arrive at his scientific judgment that the negative NDI for Virginia Beach was -1.0% for properties in the 65 to 79 dB noise contours and -1.5% for properties in noise contours above 79 dB. The 1985 FAA study is attached as Exhibit E. The FAA study is significant for several reasons. First, it is a government document which acknowledges that that "studies have shown that aircraft noise does decrease the value of residential property located around airports." Exh. E at 98-99. Equally significant, the FAA study concluded that "all research conducted in this area found negative effects from aviation noise with effects ranging from .6 to 2.3 percent decrease in property value per decibel increase in cumulative noise exposure." Id. Finally, the FAA study cited Dr. Nelson's work in this area, underlining his reputation as a leading expert on this subject. Id. Dr. Nelson, however, did not rely exclusively on the 1985 FAA study to arrive at his final NDI calculations. As revealed in Dr. Nelson's deposition, he relied on a scientific method known as a "benefits transfer analysis" which involved his "professional judgment" as to how to adjust the
5
Defendant provides no reasons why a study published by a fellow governmental agency is unreliable simply because it was published in 1985. Defendant has provided no evidence in its Memorandum, by affidavit or otherwise, to bolster its purely conclusory logic.
-4-
Case 1:01-cv-00201-VJW
Document 219
Filed 10/05/2006
Page 5 of 14
NDI to reflect factors specific to Virginia Beach based on his having worked on this issue "on and off since 1972." Exh. D at 48, 201-202. Indeed, in his September 2005 report, Dr. Nelson emphasized that there were several reasons for the upward adjustment of NDI including 1) "Navy aircraft have unique operating and safety features that will exacerbate the effects of noise on the exposed population", Exh. A at 25-26; and 2) Virginia Beach residents may suffer greater negative effects from jet noise because of the warm climate and the increased outdoor living activities associated with being in such a community. Id. at 26. Finally, it is important to note that Dr. Nelson is the leading authority on the effects of jet noise on the value of residential properties.6 In fact, the expert retained by Defendant to counter the expert opinions prepared by Dr. Nelson, Dr. Dale-Johnson, testified at his deposition that Dr. Nelson "certainly is an expert" evaluator of the impact of noise on property values. A copy of pertinent excerpts of Dr. Dale-Johnson's deposition testimony is attached as Exhibit G. Exh. G at 100-101. At his deposition, Dr. Dale Johnson was asked if he could name "some folks that deserve to be placed in the same category" as Dr. Nelson. Exh. G at 101. His response was "Not offhand, no." Exh. G at 101. In his deposition testimony, Dr. Dale-Johnson also acknowledged that he cited Dr. Nelson's work five times in a 2002 study, but omitted any reference to Dr. Nelson in the study he prepared for the Government in the test-case litigation. Exh. G at 101. In addition to explicit admissions by their own witness and the FAA relative to Dr. Nelson's credentials and the soundness of his methodology, Dr. Nelson's report also spelled out in extensive detail his academic and professional qualifications to render an expert opinion on the effect of jet noise on the value of residential property values. Dr. Nelson was a professor of economics for 35
6
See Declaration of Raymond Palmquist which Plaintiff used in the class-action phase of the litigation. A copy of relevant portions of this declaration is attached as Exhibit F. Dr. Palmquist concluded that Dr. Nelson "has provided a careful report" and that "the quality of the report was to be expected since he has been the leading researcher on
-5-
Case 1:01-cv-00201-VJW
Document 219
Filed 10/05/2006
Page 6 of 14
years at Penn State University, has written three books and more than 70 articles, including articles on the effects of jet noise on residential property values, and has had numerous peer-reviewed articles appear in a variety of scholarly journals. Exh. A at 1. Dr. Nelson has written one book and nine articles on "the evaluation of transportation noise and its control" and his work has been cited more than 300 times. Exh. A at 1-2. A list of sources which have cited Dr. Nelson's work on noise abatement is attached as Exhibit H. Yet another governmental study was performed by the Federal Reserve in 2005. It sought to assess the affect of jet noise on properties in the vicinity of the Atlanta airport. A copy of this report is attached as Exhibit I. The Federal Reserve report cited Dr. Nelson's work ten times. Dr. Nelson has extensive experience analyzing the empirical relationship between aircraft noise and residential property values. Id. Finally, Dr. Nelson has "extensively reviewed the academic literatures in economics and real estate that deal with the effects of noise on residential property values" including peer-reviewed studies published in 1978, 1980, 1982 and 2004. Id. Thus, Dr. Nelson is eminently well-qualified to offer an opinion on the negative correlation between jet noise and residential property values in the context of the transfer of the F/A 18 C-D squadrons to Virginia Beach from Cecil Field in Florida in 1998-1999 and the proper measure of that negative impact. II. ARGUMENT A. ADMISSIBILITY OF EXPERT TESTIMONY UNDER FRE 702 AND DAUBERT. FRE 702 provides that "[i]f scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert
this topic for years." Exh. F at 3.
-6-
Case 1:01-cv-00201-VJW
Document 219
Filed 10/05/2006
Page 7 of 14
by knowledge, skill, experience, training or education, may testify thereto ..." According to FRE 702, such testimony is admissible provided that the proponent demonstrates that three tests are met: "(1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles reliably to the facts of the case." Prior to Daubert and adoption of FRE 702, the "dominant standard" for admissibility of scientific evidence at trial was the "general acceptance" test first articulated in Frye v. United States, 293 F. 1013, 1014 (D. C. Cir. 1923) Frye held that expert scientific evidence was admissible only if "generally accepted" within the relevant scientific community. See Daubert v. Merrill Dow Pharm., 509 U.S. at 585. The Court in Daubert ruled that this test was too restrictive and, thus, "superceded by the adoption of the Federal Rules of Evidence." Id. at 587. The Court emphasized that the "rigid general acceptance requirement would be at odds with the liberal thrust of the federal rules." Id. While there was a need to impose some limitations by requiring relevance and reliability, an expert should be "permitted wide latitude to offer opinions including those that are not based on first hand knowledge or observation." Id. at 592 (emphasis added). The Daubert Court set out a non-exhaustive list of factors for trial courts to consider when weighing the admissibility of scientific opinion.7 Those four factors, all of which have been met in this case, are: 1) testability; 2) peer review and publication; 3) known rate of error; and 4) general acceptance. Id. at 593-95. In addition, the Court in Daubert underlined that the trial court's focus in weighing admissibility must be "solely on principles and methodology not on the conclusions they generate." Id. Finally, because the federal rules presuppose broad admissibility of such testimony,
7
In Kumho Tire Co., LTD. v. Carmichael, 526 U.S. 137, 149 (1999), the Court extended its holding in Daubert beyond the realm of purely scientific testimony and held that the gatekeeping function required by FRE 702 applies to "all expert testimony."
-7-
Case 1:01-cv-00201-VJW
Document 219
Filed 10/05/2006
Page 8 of 14
the best forum for adjudicating the strengths and weaknesses of a particular expert's testimony is not by way of excluding that evidence pre-trial, but by having the trier of fact weigh the evidence at trial: Vigorous cross-examination, presentation of contrary evidence and careful instructions on burden of proof8 are the traditional and appropriate means of attacking shaky but admissible evidence. Id. at 596. Thus, Defendant's Memorandum requests the Court to apply an overly cramped interpretation of FRE 702, one that is squarely at odds with the plain language of both Daubert and FRE 702. The Advisory Notes to the 2000 amendments to Rule 702 reflect this by concluding that "a review of the case law after Daubert shows that the rejection of expert testimony is the exception rather than the rule." This Court and the Federal Circuit have similarly declined to exclude reliable, relevant scientific or expert testimony based on conclusory allegations that the expert's reports or testimony derive from unsound methodology or unsupported facts. In fact, this Court in G & C Enters v. United States, 55 Fed. Cl. 424, 428, 429 (2003) declined a Daubert challenge to expert testimony purportedly based on unsound facts and methodology. In the case, the Court emphasized that "[t]he Daubert requirements are derived primarily from FRE 702" and Daubert's "holding that trial courts are gatekeepers in determining the fitness of scientific expert testimony for admissibility at trial." Id. This Court noted that the "Federal Circuit recently held that a trial court should not
exclude an expert witness' testimony on the basis of facts relied on by the expert witness." Id. Instead, the trial court should focus solely on "whether the expert has shown a `reliable foundation in principles and method' for the sponsored opinion." Id., quoting Micro Chem., Inc. v. Lextron, Inc., 317 F. 3d 1387, 1392 (Fed. Cir. 2003).
8
Of course, jury instructions on the burden of proof are a moot issue in a bench trial.
-8-
Case 1:01-cv-00201-VJW
Document 219
Filed 10/05/2006
Page 9 of 14
In G & C Enters, this Court went on to hold that an expert's testimony is not even "precluded because his analysis is based on assumptions that may be contrary to fact." G & C Enters, 55 Fed. Cl at 429. Rather, these factors, if proven, "affect the weight the court will accord his testimony at trial." Id. In Micro Chem., the Federal Circuit upheld the trial court's denial of a Daubert motion to exclude expert testimony. Like Defendant in the instant case, the party challenging admissibility argued that the expert's opinion was not supported factually and was the product of flawed methodology. Micro Chem., 317 F. 3d at 1392-93. The Federal Circuit declined to disturb the trial court's ruling on either grounds. The Court first emphasized that where the "parties' experts rely on conflicting sets of facts, it is not the role of the trial court to evaluate the correctness of facts underlying one expert's testimony." Id. The Court quoted with approval language from the Advisory Committee's notes to the effect that "the trial court's role as gatekeeper is not intended to serve as a replacement for the adversary system." Id. The Court found it significant that defendants had "ample opportunity to rebut (the expert's) damages theory during cross-examination" and "presented their competing theory through the testimony of their own witness."9 Similarly, this Court rejected a Daubert challenge to the admissibility of an economist's expert testimony and underlying reports in Okerlund v. United States, 53 Fed. Cl. 341, 346-347 (2002), aff'd, 365 F. 3rd 1044 (Fed. Cir. 2004). Once again, the Court emphasized that expert opinion is admissible so long as it is relevant and reliable. Id. When assessing an expert's reliability, "the use of data and methodology similar to those used by other experts is suggestive of reliability and relevance." Id. Moreover, it is "well-settled" that an expert may offer an opinion "on
The Court allowed the fact finder, a jury, to resolve the dispute in competing damages theories. Resolution by the fact finder at trial, as opposed to a blanket pretrial exclusion via a motion in limine , is even more apropos in the instant case since it will be a bench trial. Some courts have even held that the gatekeeper function imposed by Daubert is "largely irrelevant in the context of a bench trial." Deal v. Hamilton County Bd. Of Educ., 392 F. 3d 840, 851, 852 (6th Cir. 2004)
9
-9-
Case 1:01-cv-00201-VJW
Document 219
Filed 10/05/2006
Page 10 of 14
hypothetical questions" and his testimony "need not be based on personal knowledge." Where experts disagree on valuation, but the "valuation methods have enjoyed a general acceptance within the valuation community, these approaches satisfy the Daubert and Kumho Tire standard for admissible expert testimony." Id.10 II. DR. NELSON'S TESTIMONY AND REPORTS ARE CLEARLY ADMISSIBLE PURSUANT TO DAUBERT, RULE 702 AND APPLICABLE PRECEDENTS. Applying these precedents to Dr. Nelson's reports and expected testimony, it is clear that there is no justification for excluding his testimony and reports pursuant to Daubert and FRE 702. Clearly, Dr. Nelson's well-grounded opinions on the negative effects of jet noise on residential real estate "will assist the trier of fact to understand the evidence or determine a fact in issue", namely whether the transfer of the F/A 18 C/D squadrons to Virginia Beach in 1998 and 1999 had a negative impact on the value of Plaintiffs' property. Defendant suggests that Dr. Nelson's testimony is somehow irrelevant because he did not conduct a hedonic study of Virginia Beach and because his analysis rested on no studies relating to military airbases, as opposed to civilian airports. Def. Mem. at 809. However, nothing in Rule 702 requires this degree of specificity of expertise as a precondition for testifying at trial. Dr. Nelson's reports, articles, training and expertise, as well as two separate government published reports which cite Dr. Nelson, and virtually every scientific study conducted in the last 30 years, all establish that there is an indisputable link between certain levels of jet noise and a reduction in property values. Dr. Nelson's opinion, therefore, will be extremely relevant and helpful to the trier of fact. If the Court accepts Defendant's overly circumscribed
10
Tellingly, in its Memorandum, Defendant has not challenged the methodology of Dr. Nelson's meta-analysis or his use of NDI. Instead, they assert that he relies on "insufficient and irrelevant data", that his methodology was flawed because none of the studies he relied on analyzed data from Virginia Beach, and that no studies analyzed noise from military bases. Def. Mem. at 8-9. Additionally, Defendant claims that Dr. Nelson's reports are "completely devoid of any independent investigation" regarding aircraft noise in Virginia Beach. Here again, Defendant ignores compelling precedent permitting an expert to testify beyond "facts and data perceived by him." Okerlund v. United States, 53 Fed. Cl. at 346.
- 10 -
Case 1:01-cv-00201-VJW
Document 219
Filed 10/05/2006
Page 11 of 14
definition of relevance, it would conflict with the holding in Daubert that an expert should be "permitted wide latitude to offer opinions including those that are not based on first hand knowledge or observation." Daubert, 509 U.S. at 585.11 In addition to attacking the relevance of Dr. Nelson's testimony and reports, Defendant argues that his testimony satisfies no part of the three-prong test prescribed by Rule 702. Here again, Defendant is mistaken. Dr. Nelson's testimony and reports fully comply with Daubert and FRE 702 for several reasons. First, Dr. Nelson's testimony satisfies all of the factors established by Daubert to weigh the admissibility of expert opinion. First, Dr. Nelson's meta-analysis of existing literature on the effects of jet noise on residential property values is fully testable by other economists and social scientists. Second, Dr. Nelson's report is based on the meta-analysis contained in the article published in 2004 which was subject to peer review. Indeed, many of the studies which comprised the meta-analysis were also published and peer reviewed. Third, in his report Dr. Nelson established margins of error and weighted his findings to reflect perceived errors in the underlying studies. Finally, Dr. Nelson's use of meta-analysis is widely accepted in the social sciences in general, and in the field of economics in particular. More important, both the 1985 FAA study and Dr. DaleJohnson's deposition testimony demonstrate that Dr. Nelson is generally accepted as a leading commentator on the effect of jet noise on residential real estate. Thus, based on the plain language of Daubert and Rule 702, Dr. Nelson's opinions are well-grounded in fact, based on reliable methodology and fulfill each of the four factors delineated in Daubert. It is apparent that Defendant
Defendant carries this illogic to the point of absurdity when it challenges Dr. Nelson's meta-analysis because none of the underlying studies "examined a possible change, either positive or negative, in the value of property purchased at a discount due to the presence of aircraft noise that subsequently experienced a change in noise." Def. Memo at 8. Defendant's misinterpretation of Rule 702, if accepted, would eviscerate the important role played by expert witnesses in complex cases.
11
- 11 -
Case 1:01-cv-00201-VJW
Document 219
Filed 10/05/2006
Page 12 of 14
raises no meritorious objections12 to Dr. Nelson's factual foundations and methodology, but instead objects to the "the conclusions they generate." Daubert, 509 U.S. at 594-95. Daubert and its progeny proscribe exclusion of an expert's testimony and reports based on disagreements with the expert's conclusions. Second, the Court should deny Defendant's motion because exclusion under the circumstances of this case would conflict with the interpretation favored by the Federal Rules and case law interpreting Daubert. This court in G & C Enters held that "a trial court should not exclude an expert witness' testimony on the basis of facts relied on by the expert witness"; nor is expert testimony precluded even if the expert's "analysis is based on assumptions that may be contrary to fact." 55 Fed. Cl. at 428-29. Denial of a Daubert motion is mandated, where, as here, the expert has used "data and methodology similar to those used by other experts." Okerlund, 53 Fed. Cl at 346-47. Thus, it is immaterial that many of the studies relied on by Dr. Nelson predated this litigation. It could hardly be otherwise. This is buttressed by the fact that the Government made no effort to show that more recent studies have been performed which disprove Dr. Nelson's central thesis that airplane noise above 65 dB has a negative impact on property values. Finally, applicable case law shows that exclusion of Dr. Nelson's testimony is an inappropriate remedy. Daubert made clear that "vigorous cross-examination" and "presentation of contrary evidence" are the traditional and appropriate means of attacking evidence. The Advisory Committee reiterated this point in their notes to the 2000 amendments to Rule 702 when it stated that the trial court's gate keeping function should not supplant the adversarial system. Defendant's Memo is precisely an effort to sidestep the adversarial process which is the best forum for resolving
Defendant seeks to distract the Court's attention by arguing that Dr. Nelson is not an expert on the effects of noise on human health. This is a classic red herring because he Nelson offers no opinions on the relationship between noise and health. Dr. Nelson relies on reputable sources and refers to these to provide context for his findings.
12
- 12 -
Case 1:01-cv-00201-VJW
Document 219
Filed 10/05/2006
Page 13 of 14
disputes among experts. Similarly, Defendant's motion cannot be squared with the holding in Micro Chem.. In that case, the Court held that Daubert exclusion was not proper where defendants had "ample opportunity to rebut (the expert's) damages theory during cross-examination" and "presented their competing theory through testimony of their own witness." Micro Chem., 317 F. 3d at 1392-33. By the same token, the Court should decline to exclude Dr. Nelson's testimony because Defendant will have ample opportunity to cross-examine him and present a competing theory of damages. In sum, Defendant's Daubert motion to exclude Dr. Nelson's reports and testimony lacks foundation. Dr. Nelson's expected testimony and reports are admissible because 1) they rely on ample, relevant facts; 2) they derive from reliable principles and methods; and 3) they rigorously apply that methodology to the factual underpinnings of Dr. Nelson's opinions. CONCLUSION For the foregoing reasons, Plaintiffs respectfully request the Court to deny Defendant's Motion in Limine to exclude the testimony and reports of Dr. Nelson. Dated: October 5, 2006 Respectfully submitted,
/s/ Jack E. Ferrebee Jack E. Ferrebee Hofheimer/Ferrebee, P.C. 1060 Laskin Road, Suite 12-B Virginia Beach, Virginia 23451 (757) 425-5200 [email protected] Counsel of Record for Plaintiffs
- 13 -
Case 1:01-cv-00201-VJW
Document 219
Filed 10/05/2006
Page 14 of 14
Of Counsel: Kieron F. Quinn Martin E. Wolf Quinn, Gordon & Wolf, Chtd. 102 W. Pennsylvania Avenue Suite 402 Towson, Maryland 21204 (410) 825-2300 [email protected] [email protected] Charles R. Hofheimer Kristen D. Hofheimer Hofheimer/Ferrebee, P.C. 1060 Laskin Road, Suite 12-B Virginia Beach, Virginia 23451 (757) 425-5200 [email protected] [email protected] Thomas Shuttleworth Stephen C. Swain Lawrence Woodward Charles B. Lustig Shuttleworth, Ruloff, Swain Haddad & Morecock 4525 South Blvd., Suite 300 Virginia Beach, Virginia 23452 (757) 671-6000 [email protected] [email protected] [email protected] [email protected]
- 14 -
Case 1:01-cv-00201-VJW
Document 219-2
Filed 10/05/2006
Page 1 of 45
EFFECTS OF AIRCRAFT NOISE ON RESIDENTIAL PROPERTY VALUES:
NAVAL AIR STATION (NAS) OCEANA and NAVAL AUXILIARY LANDING FIELD (NALF) FENTRESS
______________________________________________________________________________ EXPERT REPORT OF JON P. NELSON, Ph.D.
September 26, 2005 ______________________________________________________________________________
Case 1:01-cv-00201-VJW
Document 219-2
Filed 10/05/2006
Page 2 of 45
I. INTRODUCTION AND QUALIFICATIONS 1. My name is Jon P. Nelson. I reside at 642 Glenn Road, State College, PA 16803. I was employed by the Pennsylvania State University from August 1969 to June 30, 2004. I was promoted to the academic rank of Professor of Economics in 1978 and retired in June 2004 with the rank of Professor Emeritus of Economics. I am presently engaged in private consulting and economic research. My research expertise is the areas of organization of industry, public policy toward business, economics of regulation, applied microeconomic analysis, and environmental economics. During my academic career, I regularly taught courses on industrial organization, antitrust and regulatory economics, microeconomic theory, and environmental economics. From 1986 to 1993, I was director of graduate studies in my department. My curriculum vita is attached to this report. 2. I received my Ph.D. degree in Economics in 1970 from the University of Wisconsin. My major fields of concentration during graduate study were industrial organization and econometrics. Industrial organization is the sub-field of economics that studies markets and industries, and evaluates the extent to which they are functioning in an economically efficient manner. Economics of regulated industries, which includes air transportation, is one of the topical areas of industrial organization. Econometrics is the sub-field of economics that studies the application of statistical methods to economic data and mathematical models. 3. During the past 35 years, the focus of my research has been industry and market regulation, including environmental regulation and policy. I have written three books and more than 70 articles on these topics, including articles on the effects of aircraft noise on residential property values. My peerreviewed articles have appeared regularly in scholarly journals such as the Journal of Econometrics, Review of Economics and Statistics, Journal of Law and Economics, Journal of Regulation, Journal of Regional Science, Quarterly Review of Economics and Business, Southern Economic Journal, Empirical Economics, Contemporary Economic Policy, Applied Economics, Antitrust Bulletin, Journal of Environment and Development, and other peer-reviewed journals and collected volumes. 4. My research expertise includes the evaluation of transportation noise and its control. I have published one book and nine articles and chapters on this topic. My book is entitled Economic Analysis of Transportation Noise Abatement (Ballinger 1978). My articles and chapters have appeared in Noise Abatement: Policy Alternatives for Transportation (National Academy of Sciences 1977); Journal of Environmental Economics and Management (1979, 1985); Journal of Transport Economics and Policy (1980, 1982, 2004); Advances in Applied Microeconomics (JAI Press 1981); Resource Management and Environmental Planning (Wiley 1983); and Interagency Symposium on Research in Transportation Noise Proceedings (Stanford 1973). As a mark of importance, these writings have been cited more than
Case 1:01-cv-00201-VJW
Document 219-2
Filed 10/05/2006
Page 3 of 45
2
300 times by other researchers in economics, transportation, and real estate. Two of my articles have been reprinted in collected volumes, which is another mark of their importance. The 1979 article was reprinted in The Environment and Transport (Hayashi et al. 1999) and the 1980 article was reprinted in Classics in Transport Analysis: Air Transport (Forsyth et al. 2002). In January 2004, I published a peerreviewed meta-analysis of airport noise and property values, which was the lead article in the Journal of Transport Economics and Policy (Nelson 2004; attachment 2). 5. During 1976-77, I was a member of the Committee on Appraisal of Societal Consequences of Transportation Noise Abatement, National Academy of Sciences, and I contributed to two chapters in the Committee's final report (DeVany et al. 1977a, 1977b). I received three research grants from the U.S. Department of Transportation to investigate the effects of mobile-source pollution on residential property values, including aircraft noise (1972-73, 1974-75, and 1977-78). I have published several other articles that examine adverse effects of pollution on residential property values, including peer-reviewed articles appearing in the Southern Economic Journal (1977); Journal of Urban Economics (1978); and Land Economics (1981). I have acted as a technical consultant to several organizations concerned with noise and other pollutants, including the Pennsylvania Low-Emissions Vehicle Commission (1993). 6. I have experience with the collection of data on residential property values and the measurement of aircraft noise levels for economic studies; I have performed several econometric analyses of the empirical relationship between aircraft noise and residential property values; I have examined the costs and benefits of aircraft noise abatement policies; and I have extensively reviewed the academic literatures in economics and real estate that deal with the effects of noise on residential property values in the United States, Canada, and other countries (Nelson 1978, 1980, 1982, 2004). 7. This report contains my evaluation of the effects on residential property values resulting from aircraft noise exposure, including the impact of the realignment of F/A-18 C/D fleet squadrons and fleet replacement squadrons (FRS) to Naval Air Station (NAS) Oceana, Virginia, and Naval Auxiliary Landing Field (NALF) Fentress, Virginia. This decision was effective during 1998-1999. The Navy's realignment decision was followed by the publication of additional environmental policies, including a revised AICUZ map for Oceana and Fentress (1999); a draft EIS for the basing of F/A-18 E/F (Super Hornet) aircraft at these fields (July 2002); revised land use compatibility guidelines for Navy installations (December 2002); and a Joint Land Use Study for the Hampton Roads area (Hampton Roads PDC, April 2005). In September 2003, the Navy announced its intentions to homebase eight F-18 E/F fleet squadrons (96 aircraft) and the FRS (24 aircraft) at NAS Oceana. 8. My rate of compensation as an expert is $200 per hour, and my compensation is not dependent on my method of evaluation or the conclusions researched from my evaluation. My opinions
Case 1:01-cv-00201-VJW
Document 219-2
Filed 10/05/2006
Page 4 of 45
3
and conclusions are solely my own. During 1998-2000, I was retained by the plaintiffs in three cases involving restrictions on commercial speech. I have not testified in other cases in the past five years. I have been swore in and accepted as an expert witness by federal and state courts and state regulatory agencies. 9. For this report, I reviewed academic and government studies that analyze aircraft noise control, including many studies of the effects of aircraft noise on residential property values. I also collected basic data on the economies of Virginia Beach and Chesapeake, Virginia. As part of my evaluation, I was provided with copies of (1) Wyle Laboratories, Aircraft Noise Study for the 1995 BRAC Realignment of Navy F/A-18 Aircraft, WR 97-10 (September 1997, February 1998); (2) Wyle Laboratories, Aircraft Noise Study for Naval Air Station Oceana and Auxiliary Landing Field Fentress, WR 94-18 (July 1994); (3) U.S. Department of the Navy, Final Environmental Impact Statement: Realignment of F/A-18 Aircraft and Operational Functions from Naval Air Station Cecil Field, Florida, to Other East Coast Installations (March 1998a); (4) U.S. Department of the Navy, Record of Decision and General Conformity Determination for Realignment of F/A-18 Aircraft and Operational Functions from Naval Air Station (NAS) Cecil Field, Florida, to other East Coast Installations (May 18, 1998b); (5) U.S. Department of the Navy, AICUZ Program Procedures and Guidelines for Department of the Navy Air Installations, OPNAVINST 11010.36A (April 1988) and OPNAVINST 11010.36B (December 2002); (6) U.S. Department of the Navy, Final Environmental Impact Statement (FEIS) for the Introduction of F/A-18 E/F (Super Hornet) Aircraft to the East Coast of the United States (July 2003); and (7) Wyle Laboratories, Noise Study for the Introduction of F/A-18 E/F to the East Coast, Vol. 1, WR 02-08 (April 2003). I examined the web site for NAS Oceana,
II. NOISE EXPOSURE DUE TO ARS-2 ARS-2 substantially increased aircraft operations at NAS Oceana and NALF Fentress, including touch-and-go, FCLP, and nighttime operations. 10. The 1993 and 1995 Defense Base Closure and Realignment Commissions (BRAC) directed the closure of NAS Cecil Field, Florida. During 1998-99, the Department of the Navy (DoN) realigned
Case 1:01-cv-00201-VJW
Document 219-2
Filed 10/05/2006
Page 5 of 45
4
its aircraft and personnel to NAS Oceana, Virginia (156 aircraft) and Marine Corps Air Station Beaufort, South Carolina (24 aircraft). This realignment scenario is ARS-2 among the five alternative scenarios considered for transfer of the F/A-18 aircraft. NAS Oceana is located approximately 12 miles southeast of Norfolk, Virginia, in the City of Virginia Beach. NAS Oceana has two sets of crossing parallel runways three measuring 8,000 feet in length and one measuring 12,000 feet. NALF Fentress is about 7 miles southwest of NAS Oceana in the City of Chesapeake, Virginia, and is used primary by aircraft based at NAS Oceana for Field Carrier Landing Practice (FCLP) patterns. NALF Fentress has one 8,000 foot runway equipped to simulate an aircraft carrier flight deck (Wyle, 1998 at 2-1). Aircraft operations at NALF Fentress normally occur at a pattern altitude of 800 feet (Hampton Roads PDC, 2005 at 2-8). Some of the analysis treats the two airfields together because NALF Fentress is located close to NAS Oceana, and it is used primarily as a practice field for aircraft based at NAS Oceana (Wyle, 1998 at 3-1). NAS Oceana occupies 5,331 acres of land, which increases to 6,820 acres with the Dam Neck Annex. Obstruction clearances and flight easements add an additional 3,680 acres (DoN, 2003 at 3-16; http://www.globalsecurity.org). NALF Fentress occupies a total of 2,560 acres. 11. Wyle Labs defined the 1997 baseline scenario for the ARS-2 analysis as a single-siting of eleven Atlantic Fleet F-14 squadrons (150 aircraft), one FRS, and one Navy F/A-18 adversary squadron at NAS Oceana (Wyle, 1998 at 3-1). The aircraft mix for the baseline included 198 aircraft (Wyle, 1998 at 3-4). Baseline and projected annual operations were computed using the Naval Aviation Simulation Model (NASMOD). Calendar year 1997 (CY97) was the time period for the baseline analysis and CY99 was used for the ARS-2 analysis. However, in the Navy's most recent EIS report (DoN, 2003 at 3-9), the baseline was updated to CY00 in anticipation of the arrival of F/A-18 E/F aircraft. Separate operational data were identified for each airfield in CY97 and CY00. While the projected data in the most recent EIS report are tentative, I have compared the CY00 operational data to the projected CY99 data used in the earlier reports by Wyle. The differences are modest. The Navy claims that noise exposed areas and populations changed as a result of operational changes that occurred after the arrival in 1998-99 of the F/A-18 C/D aircraft (DoN, 2003 at 3-9). However, following the analysis in the Hampton Roads Joint Land Use Study (2005), I use the 1999 AICUZ noise zones for areas and populations. 12. Baseline operations in 1997 at NAS Oceana were about 109,000 annual flight operations (Wyle, 1998 at Table 3-1). F-14 fleet and FRS aircraft accounted for 86% of NAS Oceana baseline operations, including 49,000 touch-and-go operations. NALF Fentress had about 105,000 annual flight operations in 1997 (Wyle, 1998 at Table 3-2). F-14 fleet and FRS aircraft accounted for 59% of NALF Fentress operations, including 55,000 FCLP operations. In 1997, about 7% of NAS Oceana operations (7,000) and 33% of NALF Fentress operations (35,000) occurred at night.
Case 1:01-cv-00201-VJW
Document 219-2
Filed 10/05/2006
Page 6 of 45
5
13. ARS-2 substantially increased aircraft operations at NAS Oceana from the CY97 baseline value of 109,000 (Wyle, 1998 at Tables E-1 and 4-16). The total number of operations in CY00 was 207,722, including 25,294 operations (12.2%) during the nighttime hours (DoN, 2003 at 3-4). The realignment of F/A-18 fleet and FRS aircraft accounted for more than 98,000 new operations in CY00, including FCLP and touch-and-go operations. Total nighttime operations at NAS Oceana rose dramatically to 25,000 annually, or about 68 operations per night. 14. ARS-2 substantially increased aircraft operations at NALF Fentress from the CY97 baseline of 105,000 (Wyle, 1998 at Tables E-1 and 4-17). The total number of operations in CY00 was 135,190, including 54,850 operations (40.6%) at night (DoN, 2003 at 3-4). The realignment of F/A-18 fleet and FRS aircraft accounted for more than 30,000 new operations in CY00, including FCLP and touch-and-go operations. Total nighttime operations at NALF Fentress rose dramatically to 55,000 annually, or more than 150 operations per night.1 The increase in airfield operations from ARS-2 dramatically increased the residential populations exposed to noise levels of 65 dB or greater. More than 23,000 people are exposed to noise levels of 80 dB or more, which is a level of exposure with the potential for serious adverse health and welfare consequences. 15. Wyle Labs computed baseline and ARS-2 noise exposures using the NOISEMAP 6.5 computer program (Wyle, 1998 at 4-34). At a minimum, NOISEMAP has the capability to compute noise levels in 5 decibel increments, referred to as "noise zones" or "noise intervals." The noise metric used for assessing noise exposure in the vicinity of airfields and airports is the Day-Night Average Sound Level (DNL or Ldn), expressed in A-weighted decibels (dB). DNL is an average sound level generated by all aircraft and aviation-related operations during an average 24-hour period, with a 10 dB penalty for nighttime noise events.2 Several other noise metrics are computed that capture special features of
A comparison of projected operations for CY99 and updated values for CY00 indicates that the earlier EIS reports (DoN 1998a, b; Wyle 1998) contained a slight overestimate of total operations at Oceana, and an underestimate of nighttime operations. At Oceana, the CY99 estimate was 219,000 operations compared to a CY00 value of 208,000 (Wyle, 1998 at 4-16). CY99 nighttime operations were estimated at 18,000 annually compared to CY00 operations of 25,000. At Fentress, total operations were 144,000 for CY99 and 135,000 for CY00. Due to capacity constraints at Fentress, nighttime operations were 55,000 for both CY99 and CY00. The DNL is the Equivalent Sound Level (Leq), with a 10 dB penalty for nighttime noise. The Leq is the energy-averaged sound level integrated over a specified time period. Leq provides a single number measure of sound averaged over a time period, where "equivalent" means that the acoustical energy of the steady state sound equals the energy associated with an actual varying sound level. DNL was selected by the EPA as the uniform descriptor of cumulative sound energy that best correlates with health and welfare effects of noise, including annoyance, community noise exposure, and land use compatibility (FICON, 1992b at B-16).
2
1
Case 1:01-cv-00201-VJW
Document 219-2
Filed 10/05/2006
Page 7 of 45
6
military aircraft operations, such as sporadic operations, low altitude flights, high speeds, and the "surprise" effect resulting from high-speed low-altitude operations (Wyle, 1998 at 1-3). 16. Typical background noise levels in urban areas are in the interval 50-60 dB during daytime hours and 40 dB during nighttime (Nelson, 1978 at 22). A 50-60 dB sound corresponds to the noise level from light traffic at 100 feet or an air conditioner at 100 feet. A food blender or garbage disposal at three feet produces a sound level of about 80 dB. Because the ear's pattern of response is more nearly logarithmic in nature, decibels are measured on a logarithmic scale. The psychological perception of loudness roughly doubles with each 10 dB increase (Nelson, 1978 at 16). A 90 dB sound is perceived to be twice as loud as an 80 dB sound, four times louder than a 70 dB sound, and eight times louder than a 60 dB sound. At 1,000 feet, F-14 arrivals or departures produce maximum sounds of 83 and 97 dB, respectively. F-18 arrivals or departures produce maximum sounds of 104 dB and 108 dB, respectively, at 1,000 feet (DoN, 1998a at Figure 3.1-21). Hence, F-18 aircraft are four times as loud as F-14 aircraft on arrival and twice as loud on departure. 17. Human annoyance due to noise is generally taken to be a function of both the overall soundintensity level and fluctuations in the level produced by significant intrusive sounds (EPA, 1971 at 113; Nelson, 1978 at 18). A 3 dB change in sound level represents a doubling of the sound energy. Changes in DNL greater than 3 dB are regarded as an indicator of the need for further analysis of noise impacts (FICON, 1992b at 3-15; DoN, 2003 at 4-43). At noise levels above 65 dB, changes as small as 1.5 dB may be significant due to the effects on human annoyance (FICON, 1992a at 1-4). ARS-2 increased the outdoor noise exposure in the vicinity of the two airfields by 8 to 20 dB (Wyle, 1998 at 4-37; DoN, 1998b at 11). Considerable economic evidence exists that demonstrates that this change in exposure produces damages that will be reflected in residential property values. 18. The 1997 baseline noise contours show two distinct regions of noise exposure one for each airfield (Wyle, 1998 at Figure 3-16). At NAS Oceana, the 65 DNL contour extends about 1.5 miles to the east and west of the NAS boundary at the widest points. At NALF Fentress, the 65 DNL contour extends about 1.5 miles to the west and 3 miles to the east of the NALF boundary at the widest points (Wyle, 1998 at 3-2). Under baseline conditions, 14,300 acres of land are in the DNL 65+ zone. As a consequence of ARS-2, the land area enclosed by DNL 65+ increases to more than 58,000 acres (Wyle, 1998 at Table 4-20). 19. There is a dramatic increase in the number of people exposed to unacceptably high levels of aircraft noise in the vicinity of Oceana and Fentress. About 23,000 people are exposed to noise levels of DNL 80 and above (DNL 80+), which is a severe level of noise exposure with the potential for temporary hearing loss and substantial adverse effects on the community environment (FICON, 1992b at 3-8). An
Case 1:01-cv-00201-VJW
Document 219-2
Filed 10/05/2006
Page 8 of 45
7
additional 97,000 people are exposed to noise levels in the 65 to 79 dB zone, which is a substantial level of noise that interferes with speech, concentration, learning, sleep, and tranquility. A noise level of 65 dB has been accepted by the Navy and other organizations as the maximum noise level at which interference with residential activities and land use normally occurs (DoN, 2002 at 8). 20. Table 1 shows the effects of ARS-2 on off-base land areas and populations. Due to ARS-2, the population within DNL 65+ rose from 28,000 in 1997 to more than 120,000 people in 1999. Table 1 also shows two separate populations that will be the subject of the property value analysis below. First, the population within the DNL 65-79 zone, which rose from 28,000 people in 1997 to 97,000 people in 1999. Second, the population within the DNL 80+ zone that rose to 23,000 people in 1999, compared to only four people in 1997.
Table 1. Noise-Exposed Land Acres and Population near NAS Oceana and NALF Fentress under ARS-2 Baseline Acres (CY97) 9,217 4,428 618 35 0 ARS-2 Acres (CY99) 18,933 13,209 10,817 8,901 6,510 Baseline Population (CY97) 19,823 7,837 366 4 0 ARS-2 Population (CY99) 40,877 32,635 23,732 13,607 9,812 Pop. Change, 97-99 21,054 24,798 23,366 13,603 9,812 Pop. Percent Change 106.2 316.4 not calc. not calc. not calc.
Noise Zone (dB) DNL 65-70 DNL 70-75 DNL 75-80 DNL 80-85 DNL 85+ Totals by Zone: Total: DNL 65-79 Total: DNL 80+
14,263 35
42,959 15,411
28,026 4
97,244 23,419
69,218 23,415
247.0 not calc.
14,298 58,370 28,030 120,663 92,633 330.5 Total: DNL 65+ Source: Wyle (1998 at Table 4-20). Acres are off-station and exclude other military and water areas. Population estimates are based on 1990 Census population densities of about 1.5-2.0 people per acre. The recent EIS report used 2000 Census population densities of about 2.0-2.5 people per acres. Much of the available residential land areas around Oceana are developed, but this is less true at Fentress (Hampton Roads PDC, 2005 at 2-9).
Land use compatibility guidelines adopted by several federal agencies, including the FAA and Department of the Navy, indicate that noise levels above DNL 75 are clearly unacceptable for residential purposes, and levels of DNL 65-75 are normally unacceptable. 21. The realignment of aircraft under ARS-2 substantially increased noise exposure levels in the vicinity of NAS Oceana and NALF Fentress. When noise exposure rises above DNL 65, there is a
Case 1:01-cv-00201-VJW
Document 219-2 8
Filed 10/05/2006
Page 9 of 45
noticeable increase in individual annoyance and community complaints.3 With this in mind, guidelines for compatible residential land use have been established by several federal agencies, including the U.S. Navy (1978, 1988, 2002). The U.S. Department of Housing and Urban Development (HUD) has guidelines for safe noise environments within a building. HUD's "Site Acceptability Standards" show that exterior noise in the 65-75 dB zone is normally unacceptable for guaranteed loans, and 75 dB and higher levels are clearly unacceptable (24 Code of Federal Regulations, Part 51, "Environmental Criteria and Standards," at 340). The Federal Aviation Administration (FAA) has regulations that identify land uses that are normally incompatible with various levels of noise exposure. The FAA's "Land Use Compatibility" standard shows that noise levels of 65-75 dB are incompatible with residential land uses (other than mobile homes), unless noise attenuation measures are used (14 Code of Federal Regulations, Part 150, "Airport Noise Compatibility Planning," at 87). Above 75 dB, residential land use is considered unacceptable due to interference with normal activities, even with the application of noise mitigation measures (GAO, 2000a at 23). The U.S. Department of Defense (DoD) and U.S. Department of the Navy (DoN) have a long-standing program for land use compatibility around military airfields, labeled the Air Installation Compatible Use Zones (AICUZ) program (DoN 1978, 1988, 2002). The Navy's guidelines indicate that residential housing is "discouraged" at 65-69 dB, "strongly discouraged" at 70-74 dB, and "incompatible" with 75 dB and above (DoN, 2002 at 20 and Table 2). 22. In June 1980, the U.S. Federal Interagency Committee on Urban Noise (FICUN) published the Guidelines for Considering Noise in Land Use Planning and Control (FICUN 1980). The FICUN guidelines adopted DNL as the standard noise metric. These guidelines indicate that residential land use is discouraged at DNL 65-69; strongly discouraged at DNL 70-74; and incompatible with DNL 75 and above (FICUN, 1980 at 6). The 1990 U.S. Federal Interagency Committee on Noise (FICON), which included the DoN and FAA, recommended continued use of the DNL metric and the compatibility guidelines. As a consequence, land use compatibility criteria used by the HUD, FAA, DoD, and DoN are similar (FICON, 1992b at 3-21; EPA, 1982b at ii). However, outdoor noise exposure due to lifestyle differences is not directly accounted for by these criteria, which is important for the residential areas that surround the two Naval airfields. 23. An American National Standard for land use compatibility has been established by the S12 (Noise) Accredited Standards Committee of the Acoustical Society of America (ASA), which included
The modified "Schultz curve" displays the percent of exposed persons highly annoyed as a function of DNL (Schultz 1978). It is widely recognized that annoyance due to aircraft noise and community reaction can occur at noise levels that are below 65 dB (FICON, 1992b at 3-17; DoN, 2002 at 8). About 6-14% of the population will be highly annoyed by noise levels in the 60-65 dB zone (FICON, 1992b at 3-6). There is evidence that aircraft noise is more annoying than other transportation noises (Finegold et al., 1994 at 27).
3
Case 1:01-cv-00201-VJW
Document 219-2
Filed 10/05/2006
Page 10 of 45
9
the Department of Transportation and Department of the Navy. The 1998 revision of these guidelines is the Sound Level Descriptors for Determination of Compatible Land Use, ANSI S12.9-1998/Part 5 (ASA 1998). The guidelines were approved by the American National Standards Institute, Inc. (ANSI). For single-family residential land that involves extensive outdoor use, the Standards Committee recommends that DNL 55-65 is marginally compatible and DNL 65+ is incompatible (ASA, 1998 at 3). As indicated above, ARS-2 exposes more than 120,000 people to DNL levels of 65 dB and greater, compared to 28,000 people prior to the realignment of F-18 C/D aircraft to NAS Oceana. 24. Table 2 summarizes the federal agency and ASA guidelines. Federal agencies have established a uniform standard for compatibility of noise levels and residential land use. These agencies, including the FAA and U.S. Navy, regard noise exposure in excess of 65 dB as an environment that is normally unsuitable for residential use. Above 75 dB, the environment is clearly unsuitable for residential use. The ANSI standard of the Acoustical Society of America, which incorporates lifestyle factors, uses 65 dB as the upper limit for extensive outdoor residential living. The ASA standard shows the importance of accounting for lifestyle factors as part of the evaluation of the effects of noise exposure, which is critical for the land areas near the two Naval airfields. As shown below, economic studies of the effects of aircraft noise on residential property values demonstrate a negative effect of noise exposure above a background noise level of 55-60 dB.
Table 2. Residential Land Use: Federal Compatibility Guidelines, Day-Night Sound Level (DNL) Agency HUD: 24 CFR Part 51 FAA: 14 CFR Part 150 DoN: AICUZ (2) FICUN & FICON 65-70 dB 70-75 dB 75-80 dB 80-85 dB Unacceptable No No No No No No No No No 85+ dB
Normally Unacceptable No (1) No (1) No (1) No (1) No (1) No (1)
Residential Use is Incompatible at 65 dB and above ASA: Residential, Extensive Outdoor Use Guideline Notes: (1) Marginally compatible if indoor noise attenuation is used. "No" means non-compatible or not suitable (DoN, 1978 at 4-25). (2) DoN (2002 at Table 2); Web site for NAS Oceana at http://www.nasoceana.navy.mil. The Navy's revised AICUZ guidelines include a broad provision for protection of public welfare (DoN, 2002 at 13).
25. The guidelines for the Navy's AICUZ program clearly recognize the significance of noise exposures beginning at 65 dB and the critical nature of noise exposures of 75 dB or greater. The revised program guidelines (DoN 2002) include a new requirement for long-term analysis of aircraft operations. The Navy's revised guidelines also emphasize protection of general welfare of the community, which is a broader goal than health and safety considerations:
Case 1:01-cv-00201-VJW
Document 219-2
Filed 10/05/2006
Page 11 of 45
10
The study recommendations shall be based on current operations and the best available (5- to 10year) projections of operations that best support long-range planning controls to protect the health, safety and welfare of the community and the future operational integrity of the air installation (DoN, 2002 at 13; emphasis added). 26. Because noisy environments are undesirable to many individuals, existing single-family and other residences in the vicinity of a noisy airfield will be less valuable; that is, the adverse effects of noise will be (negatively) capitalized into the value of residential properties and registered in marketdetermined housing prices and rents. This effect can be measured using econometric methods and economic data on residential values at differing noise exposure levels. The measurement of these adverse effects is part of a large empirical literature on pollution and property values. The next section of this report reviews selected aspects of this literature and develops the general model of the effects of aircraft noise on property values. This is followed by a meta-analysis of the empirical evidence on the effects of aircraft noise on property values, which is used to derive monetary measures of the adverse and lasting effects of noise. Meta-analysis is a quantitative technique used to synthesize a comparable set of empirical results. Lastly, I discuss special features of ARS-2, including the unique operational features of Navy aircraft and the mild climate that affect residential living and lifestyles in Virginia Beach and Chesapeake, Virginia.
III. AIRCRAFT NOISE AND PROPERTY VALUES Economic studies of residential property values have examined the adverse effects on values of numerous pollutants, including aircraft noise. 27. Noise is unwanted or unpleasant sound. At 65 dB and above, the most common human effects associated with aircraft noise are annoyance, speech and learning interference, and sleep disturbance. In turn, these effects disrupt normal daily activities, such as conversation, television viewing, school work, productivity, outdoor recreation and living, and family activities. Annoyance is the adverse psychological response to a given noise exposure, including the anxiety or apprehension that the noise may cause (FICON, 1992b at 3-4). At noise levels above 75 dB, the Environmental Protection Agency (EPA, 1982a at 12) cautions that severe health effects may occur for some portion of the population, including temporary hearing loss. Those persons who are frequently outdoors are of greatest concern, including young children, retired people in warm climates, and persons in certain outdoor occupations (EPA, 1982a at 55; Suter, 1991 at 14). ARS-2 resulted in more than 23,000 people being exposed to severe noise levels of 80+ dB in CY99, compared to only four people in CY97.
Case 1:01-cv-00201-VJW
Document 219-2
Filed 10/05/2006
Page 12 of 45
11
28. Economists regard pollution as a negative "external cost" (externality) of production and consumption activities an uncompensated third-party effect whereby the polluter causes harm, inconvenience, annoyance, and other damages to the polluted. Aircraft noise is a classic example of an external social cost. Because market prices do not directly reflect these damages, the economic activities in question (e.g., aircraft operations) are subject to "market failure." This term means that the level of the economic activity fails to achieve an efficient allocation of resources as measured by the sum of the transaction surplus in the market less the amount of the uncompensated third-party damage costs. In general, market failures are not self-correcting due to costs of transaction and the public-good nature of pollution abatement efforts. 29. "Market failure" therefore reflects the absence of an explicit market for corrective actions that could reduce or avoid third-party damages the market for tranquility is missing.4 This means that direct estimation of demand schedules for tranquility (or externality avoidance) is not possible. As a consequence, economists resort to a variety of methods direct and indirect to measure the uncompensated costs of externalities. These methods include studies using surveys, political referendums, expenditures on mitigation (e.g., soundproofing), impacts on wages, and effects on residential property values (Freeman 1993; Palmquist 1991). Evaluation of the effects of pollution on property values using regression analysis the "hedonic property value" method is discussed in undergraduate and graduate textbooks in environmental economics (Tietenberg, 2000 at 41; Kolstad, 2000 at 313); urban economics (O'Sullivan, 2000 at 368; DiPasquale and Wheaton, 1996 at 189); costbenefit analysis (Boardman, 1996 at 459; Gramlich, 1990 at 71); and real estate valuation (Chinloy, 1988 at 40; Lusht, 1997 at 139). A recent EPA report, Guidelines for Preparing Economic Analyses, also contains a discussion of this method (EPA, 2000 at 77). 30. Consider two residential properties that are identical in all respects, except that the first house is located close to an airfield and the other is not (Nelson 1981). A but for analysis establishes that the adverse environment will result in a market value for the first house that is lower than the market value of the second house. This occurs because potential buyers reduce their demand for the first house relative to the second house, reflecting the discounted present value of the costs of future annoyance,
Airport noise problems have been dealt with by purchase of residential properties. Under the FAA's Part 150 Noise Compatibility Program, 240 airports received over $2.7 billion in AIP-grants for noise-related projects (GAO, 2000b at 80). Many of these projects are directed at noise levels of 75 dB and above. A GAO study of eight airports in 1989 found that $94 million had been spent in Atlanta on purchase of residential properties; $144 million in Los Angeles; and $100 million in Memphis (GAO 1989). The Seattle-Tacoma Airport spent over $260 million acquiring homes and land and insulating homes (GAO, 1998 at 3). The Navy's AICUZ program also provides for the acquisition of land or restrictive easements (DoN, 2002 at 33; EPA 1977b).
4
Case 1:01-cv-00201-VJW
Document 219-2
Filed 10/05/2006
Page 13 of 45
12
speech and learning interference, sleep disturbance, reductions in the quality of outdoor living, and loss of tranquility. A measure of these noise-induced damages is the difference between the marketdetermined value of the first house as compared to the second house. The but for analysis can be extended to analyze different levels of noise exposure (above background), since it has been established that annoyance and other adverse effects of noise rise predictably with increased exposure levels (EPA 1982a; FAA 1985; FICON 1992a, 1992b). Although there is a missing market for tranquility, there is a complementary market wherein individuals register their willingness to pay to avoid different levels of aircraft noise exposure. Hence, consumers reveal the implicit value that they place on tranquility by the explicit choices that they make in the housing market. The willingness to pay for tranquility is a part of the asset price of the "housing bundle," and econometric techniques (regression analysis) are available that unbundle complex products and thereby reveal the implicit or "hedoni
United States Free Forms
Canada Free Forms
United Kingdom Free Forms
Australia Free Forms