Free Response to Motion - District Court of Federal Claims - federal

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00001 1 IN THE: 2

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

3 CAROL AND ROBERT TESTWUIDE, * 4 et al., 5 6 7 8 vs. Plaintiffs, * * No. 01-201L * * *

9 THE UNITED STATES OF AMERICA, * 10 Defendant. *

11 * * * * * * * * * * * * * * * * * 12 13 The deposition of JON P. NELSON was taken

14 on Wednesday, December 21, 2005, commencing at 9:30 15 a.m., at Quinn Gordon & Wolf, 102 West Pennsylvania 16 Avenue, Suite 402, Towson, Maryland, before Alfred 17 A. Betz, Court Reporter and Notary Public. 18 19 * * * * * * * * * * * * * * * * * 20 Reported by: 21 Alfred A. Betz, Certified LiveNote Reporter

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00003 1 Whereupon -2 JON P. NELSON,

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3 a witness, called for examination, having been 4 first duly sworn, was examined and testified as 5 follows: 6 7 EXAMINATION BY MR. BRYANT: Q. Good morning, Dr. Nelson. My name is

8 Steve Bryant from the Department of Justice and I'm 9 representing the defendant in this case. If you 10 could please first state your name and address, 11 full name and address? 12 A. My name is Jon middle initial P Nelson.

13 First name is spelled J-O-N. I live at 642 Glenn 14 Road, State College, Pennsylvania. 15 Q. I assume you've been deposed before; is

16 that correct? 17 18 A. Yes. Q. So I don't need to go through the sort of

19 general instructions on depositions and that kind 20 of thing? 21 A. I leave that up to you.

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00004 1 Q. Okay. I think we're comfortable with it. 2 If at any time you don't understand a question or 3 you need a break or something of that nature just 4 say the word. We can certainly accommodate that. 5 First I'd like to turn to your CV that you 6 submitted with your report on September 26, I 7 believe the date was, of this year. Is that CV 8 updated? Has anything happened since you submitted 9 that with your report? 10 A. I don't believe so. I may have attended

11 a conference that's not on there but I believe it's 12 up to date. 13 Q. Okay. And it says here that you're a

14 professor emeritus of economics at Penn State 15 University starting July of '04. What is the 16 status of professor emeritus? What does that mean 17 exactly? 18 A. That means I'm retired from the

19 university. I retain an academic title. I have 20 access to the campus library, computer, that sort 21 of material.

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00005 1 Q. Okay. And how long were you a professor 2 at Penn State? 3 4 A. 35 years. I started in August of 1969. Q. And if you could just sort of go through

5 what you did there, the positions that you held, 6 the areas that you taught and actually how you -7 sort of go through the progress of the positions 8 that you held at Penn State. 9 A. Well, my initial appointment was at the

10 instructor level. I hadn't completed my 11 dissertation. It took me another six months to do 12 that. So I then attained the rank of assistant 13 professor. I was promoted to associate level in I 14 believe 1975 and full professor in I believe it was 15 1978. My major teaching duties were in the areas 16 of industrial organization, microeconomic theory, 17 environmental economics. I taught a variety of 18 other courses both at the graduate and 19 undergraduate level. Antitrust economics and 20 regulation, an honors course, a course in policy 21 analysis, various things like that. The major

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00006 1 focus of my research was regulation of business in 2 a variety of contexts, antitrust and regulation, 3 environmental controls, a little bit on taxation. 4 So I would say the general thrust of my work was 5 applied, empirical and focused on regulation of 6 business. 7 Q. Okay. What is the title Faculty Marshal?

8 What is that? 9 A. Oh! I was selected by a student who was

10 the top student in the college that year to 11 accompany him at graduation. So he was the top, he 12 was selected as the top student in the college, I 13 was one of his faculty, I was an instructor of his 14 and he picked me to accompany him at graduation. 15 Q. Was that sort of a personal thing as well

16 as, was there anything sort of associated with -- I 17 mean, is there anything other than as a faculty 18 marshal having to do with dealing with the faculty, 19 or appointing positions or anything of that nature 20 or is it just with him selecting you as an honor to 21 join him at his graduation?

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00007 1 A. It was just that. 2 3 Q. Okay.

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A. He was a straight A student going on to

4 Harvard Law. He picked me as a result of being in 5 my class. 6 7 Q. Okay. A. I left out that I was also a Director of

8 Graduate Studies in my department so I did that 9 position from 1986 to I believe 1993. 10 11 Q. And what does that entail? A. That means that I do the recruitment of

12 graduate students, I sometimes bring them to campus 13 for interviews, I make appointments for graduate 14 students as teaching assistants. I would be the 15 person who would organize the comprehensive exams 16 and pick faculty to administer the exams. So it 17 would be all the kind of administrative duties that 18 go along with the graduate program. I would have a 19 secretary that I work with and appoint various 20 other committees for things like admissions and 21 honors, awards and so forth.

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00008 1 Q. You mentioned your dissertation. What 2 was your dissertation in? 3 A. My dissertation? My dissertation was on

4 the steel industry. 5 Q. And what specifically about the steel

6 industry? 7 A. I was interested in issues primarily of

8 investment and location and I would say 9 technological change in the industry. 10 Q. And your undergraduate degree was in

11 economics at the University of Wisconsin? 12 13 A. That's correct. Q. Did you also obtain a masters at any

14 point? 15 A. Yes. At Wisconsin once you pass

16 comprehensive exams they awarded you a masters 17 degree. So it wasn't anything more than that. 18 Q. Okay. Turning to your other experience

19 that you have listed on your CV it says 20 Pennsylvania Office of the Attorney General from 21 1985 to 2005. Are you still serving with them

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A. I have been working on a case for them.

3 I haven't heard anything from them about it in the 4 last several months but I have an issue I'm working 5 on for them right now, yes. 6 Q. Have you worked with them on several

7 cases or just -8 A. Yes. They've all been -- well, I

9 shouldn't say all. I guess most of them have been 10 antitrust cases, price fixing cases, merger cases, 11 resale price maintenance case, that kind of case. 12 Q. What is the current case you're working

13 on? 14 A. Current case I'm working on concerns the

15 Harrisburg airport. The airport authority wants to 16 condemn some property that's currently being used 17 for a private parking lot so that the airport 18 authority would be the only provider of parking 19 within the immediate vicinity of the airport. 20 21 Q. What is your role in that case? A. Typically they retain me to define the

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00010 1 market area and to determine any damages associated 2 with the action. 3 Q. Is that a direct condemnation case? Do

4 you know what that means when I say that? 5 A. I'm not sure I'm using the correct legal

6 language in this case, exactly what the airport 7 authority wants to do in this case. 8 Q. And your role is evaluating the -- what

9 exactly are you doing in terms of evaluating 10 damages? What do you mean by that? 11 A. I've proposed to them that we do a

12 survey. Whether or not they'll go through with it 13 depends upon how the airport authority reacts to 14 the Complaint that the Attorney General's Office 15 has filed. But they have had me look at what's the 16 market area, the relevant market for this, for 17 airport parking in Harrisburg. I have proposed 18 that we conduct a survey, the formal title would be 19 a cojoint analysis, C-O-J-O-I-N-T would be the 20 spelling for cojoint, as a way of determining 21 whether, how individuals make their decisions with

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00011 1 regard to their use of parking their airports. 2 3 Q. What kind of survey would this be? A. It would be a survey of individuals who

4 park at various airports -- what I proposed, I 5 don't know if they'll do this, what I proposed is 6 that we would survey individuals parking at several 7 airports in Pennsylvania, since the airport 8 authority in Harrisburg is not likely to allow the 9 Attorney General's Office to do it on their 10 property. So we would interview individuals at 11 several airports who would use either short term or 12 long term parking. The issue at Harrisburg is 13 largely one of long term parking. 14 Q. So this is an issue of it's currently a

15 private parking lot and the Pennsylvania airport or 16 Harrisburg Airport Authority wants to convert it 17 into a public parking lot for the purposes of owned 18 by the -19 A. No. They want to get rid of the parking

20 and have the parking only be their short term and 21 long term parking on airport property.

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00012 1 Q. What do they want to do with that 2 property? Do you know? 3 4 A. I don't know. Q. That case has nothing to do with jet

5 noise or anything of that nature, I assume? 6 A. No. It has no environmental aspect that

7 I'm aware of currently. 8 Q. Okay. You did three research grants for

9 the Department of Transportation; is that right? 10 11 A. That's correct. Q. And can you tell me about a quick

12 synopsis of each of those? 13 A. Okay. Sometime in 1972 a colleague of

14 mine was contacted by a person in the Department of 15 Transportation and we were asked to survey the 16 literature on aircraft noise impacts and to think 17 about the issue of how you would evaluate aircraft 18 noise impacts. 19 Q. Impacts on residential property values or

20 something in addition to that? 21 A. As I recall, the focus was by and large

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00013 1 residential property values. And so there wasn't 2 very much literature at that time. There was a 3 little bit of literature on an airport in England, 4 Roskil Commission, I think it was, and the 5 airports. I don't believe it was called Roskil. 6 And so we did a report for them, presented it to an 7 office in DOT, did an oral presentation and 8 submitted a written report giving our overview and 9 evaluation of the literature at that point in time. 10 So this would have been the very early 1970s, '72, 11 '73, the report was submitted sometime in '73. 12 Q. And the literature that you reviewed were

13 those hedonic studies or something else? 14 A. I didn't look at that report in preparing

15 for this deposition so I don't recall how many of 16 them were hedonic studies and how many of them 17 might have been other kinds of studies. I just 18 don't recall the exact studies we examined. 19 Q. But you do recall that some of them were

20 hedonic studies that you evaluated at the time? 21 A. Yes. I certainly recall that a study by

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00022 1 example of a question where they would be tied 2 together and you would have expertise in answering 3 that question? 4 5 6 MR. QUINN: Objection. Q. You can answer the question. A. All right. I could imagine a question

7 asking about the effects of aircraft noise and so 8 I've, I have professional expertise in examining 9 the effects of aircraft noise that would involve 10 again the use of those measures. 11 Q. When you say the effects of the noise

12 what type of effects are you talking about? 13 14 A. Property value effects. Q. Property values. Are you talking about

15 also effects on humans, sort of sensitivity to 16 noise and that kind of thing? 17 A. I have not done original studies in that

18 area. I have used and have read various literature 19 on the effects of aircraft noise so that I have to 20 have some background knowledge of what noise, how 21 noise is measured, what people in acoustics do in

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00023 1 examining people's annoyance due to noise. I think 2 that kind of background knowledge is necessary for 3 many economic studies. In examining the steel 4 industry I had to read a lot of literature, a lot 5 of engineering literature on the steel industry. I 6 had to have access to a book called The Making, 7 Shaping and Treating of Steel. And so when I do an 8 economic study I do not confine myself solely to 9 the economics literature. 10 Q. So would you consider yourself an expert

11 in the effect of noise on people? 12 A. No. I'm not an expert in that. What

13 I've stated is that I have to have background 14 knowledge of the literature in that area. I 15 certainly do not do original studies of that issue. 16 Q. Now I'd like to turn to some experience

17 you've had in litigation. You have been involved 18 with Mr. Quinn in another case; is that right? 19 20 A. That's correct. Q. How many cases have you been contracted

21 by this law office?

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00024 1 A. Just the one other case. 2 3 Q. What was that case about?

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A. It was a case involving the pricing and

4 sale of automobiles. New automobiles. 5 Q. And can you tell me a little more about

6 that? 7 A. Yes. The auto dealership in question

8 would include on the sales, the window sticker of 9 the automobile would include, I'm going to use the 10 term protection package but I don't recall if that 11 is exactly the title that was used by the 12 dealership, that would lead the individual to 13 believe that this was a part of the invoice, the 14 manufacturer's suggested retail price, the MSRP 15 would lead the individual to believe that this was 16 a part of the MSRP rather than a dealer add-on. 17 And so the case was to bring this issue as a legal 18 matter so that individuals could recover damages 19 for overcharges. 20 21 Q. Did you testify at trial in that case? A. No, I didn't. My work was limited to

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00047 1 report examine the effect of the addition of 2 aircraft and/or military personnel on property 3 values around a military air station? 4 A. No. All of the studies are concerned

5 with civilian airports. 6 Q. Civilian airports, as you said. Are you

7 aware of any published or unpublished studies that 8 examine the effect of the addition of aircraft 9 and/or military personnel on property values around 10 a military air station? 11 A. The only studies I can recall are the

12 ones we've been discussing, Fidel's study of two 13 air bases and the, I again have looked at the web 14 site and may have a paper dealing with the -15 16 17 Q. El Toro? A. -- El Toro airport. Q. Okay. What have you been asked to do in

18 connection with this litigation? 19 A. I was asked back in 2000 to examine the

20 effects on property values of the realignment of 21 F/A18 C/D aircraft to Oceana and Fentress. I was

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00048 1 not asked to do an original study of the issue. 2 Rather, I was asked to give my professional 3 judgment as to, based on analysis, as to what would 4 be the impact on property values from this 5 realignment. I did not do an original study in my 6 first report in 2001. I relied on my earlier 7 survey of the literature. And also examined, as 8 one should, what were the special features that 9 might distinguish Oceana and Virginia Beach from 10 the set of studies that I looked at at that time. 11 In my second report of September 2005 I

12 then added the additional information from my meta 13 analysis which had been contained in my rebuttal 14 back in 2002 and used that as the basis for my 15 evaluation. 16 Q. You said you didn't do an original study.

17 I take that to mean that you didn't do a hedonic 18 study of the community surrounding the naval air 19 stations Oceana and Chesapeake; is that what you're 20 saying? 21 A. That's correct.

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00049 1 Q. Do you think it is better to have more 2 reliable, I should say, to have studied the 3 empirical data at Virginia Beach as opposed to 4 relying on your meta analysis that's contained in 5 your article and your reports in this case? 6 7 MR. QUINN: Objection. Better for what? Q. I said more reliable for the impact on

8 property values surrounding Oceana. 9 A. I could see doing a study of Virginia

10 Beach using hedonic methodology that would contain 11 information about what's special or unique in terms 12 of the Virginia Beach environment and Oceana and 13 Fentress as naval air bases. However, in both 14 cases we're talking about residential properties 15 and I have in front of me 20 studies all of which 16 find negative impacts of noise. And so the kind of 17 study I've conducted is sometimes referred to as a 18 benefits transfer. 19 Housing is somewhat unique in that it's

20 traded infrequently. And so one can use external 21 information to try to evaluate the impacts rather

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00050 1 than relying solely on a study which might contain 2 incomplete information, it might contain 3 information that changes over time as has tended to 4 occur in this case. It might be information which 5 is subject to revision. So I can see that there is 6 value in both kinds of studies, both those that 7 examine the, quote, impact area directly and those 8 that provide information about other areas subject 9 to a similar set of forces. 10 Q. I'll go back to my question. Which would

11 be more reliable in your opinion, a hedonic study 12 of Virginia Beach to estimate the noise 13 depreciation index as you have done in other 14 locations, or relying on your meta analysis of the 15 various studies that you just mentioned? 16 MR. QUINN: Objection. Asked and

17 answered. 18 Q. You can answer the question. Which do

19 you believe is more reliable? 20 A. Reliable is a broad term. Someone in

21 econometrics might use it differently than you are

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00051 1 perhaps using it. I have already stated that I 2 believe there are flaws in the methodology used by 3 Dr. Fidel and so if it was Dr. Fidel's methodology 4 being applied in, quote, a hedonic study I do not 5 think that would be reliable as compared to the 6 studies that have been done previous on other 7 residential environments. We're again talking 8 about a residential environment and that's the 9 basic impact area. So it would depend upon in part 10 on how that study was conducted. 11 Q. I'm talking about not a study that would

12 be done by Dr. Fidel or anybody else for that 13 matter. I mean a hedonic study, a hedonic model 14 that you would design yourself which would you view 15 as more reliable, that hedonic study or your meta 16 analysis estimated noise depreciation index? 17 That's the question I'm asking. 18 A. If I had access to adequate data on both

19 properties and noise I could do a study that I 20 think would follow the same methodology I have laid 21 out in previous papers and would rely more heavily

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00052 1 on that analysis than on a pure meta analysis. The 2 meta analysis, however, is now the way in which the 3 literature has been tending in terms of summarizing 4 information about empirical results and so it's not 5 information which is separate and apart from the 6 hedonic study I might conduct. 7 Q. So you're saying, then, that you would

8 view a hedonic study that you modeled and performed 9 with data that you could obtain from Virginia Beach 10 to be more reliable the noise depreciation index 11 you would estimate from that study as opposed to 12 your meta analysis; is that correct? 13 MR. QUINN: Objection. Asked and

14 answered, and that's a mischaracterization of the 15 answer. 16 17 Q. Is that correct or no? A. Well, I would conduct a study using the

18 same methodology that I have carried out. But I'll 19 point out in responding to your question that 20 there's 20 studies on the page in front of me. 21 Q. You did --

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00053 1 A. All of them -2 3

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MR. QUINN: Please don't interrupt. A. -- showing a negative impact. So I would

4 think that a study done for Virginia Beach would 5 come up with the same basic conclusion. There's a 6 negative effect of noise on residential property 7 values. 8 Q. Okay. So you think the meta analysis is

9 equally reliable as an actual hedonic study of 10 Virginia Beach itself; is that what you're saying? 11 A. I don't know the precise meaning of

12 "equal." 13 Q. If you had to choose between two noise

14 depreciation indexes, one that you obtained 15 estimated from a study of the data from Virginia 16 Beach or the noise depreciation index you would 17 have gathered from your studies in your meta 18 analysis, which would you select? 19 A. Well, this I believe is a hypothetical

20 question because I don't believe that you're going 21 to provide me with the data to do this study. But

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00054 1 I would use the two sets of information together, 2 one to guide the analysis and the other one to come 3 up with what I believe would be a negative impact 4 for Virginia Beach. 5 6 Q. What do you mean "guide the analysis"? A. That I've said that there are, there is a

7 procedure which I've tried to spell out both in my 8 reports and in my previous publications as to how I 9 would begin examining this issue. 10 Q. In other words, a methodology of creating

11 that hedonic model for Virginia Beach; is that what 12 you mean? 13 14 A. Yes. Q. So the procedures for identifying such a

15 model would coincide with what you've said in your 16 meta analysis and some of your other hedonic 17 studies. I understand that. But what I'm trying 18 to find an answer to is whether you would, let's 19 assume, for example, that the hedonic study that 20 you produced for Virginia Beach came out with a 21 noise appreciation index of .2 percent per dB as

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00055 1 opposed to your -- is that possible that that could 2 happen? 3 A. Yes, it's possible that that could

4 happen. 5 Q. Is it possible that it could come back

6 with a .01 percent noise appreciation index 7 estimated? 8 A. It's a hypothetical question so let me

9 give you a hypothetical answer. It could come back 10 with a noise depreciation of minus 1 percent at 11 equally -- equally as well in terms of a 12 hypothetical. 13 Q. So my question is if you had a result

14 that came back with, let's say, the .2 percent NDI 15 would you rely on that as being the noise 16 appreciation index for Virginia Beach or your meta 17 analysis estimate of .7 percent? 18 A. As a hypothetical, it's a negative number

19 and it's from a valid hedonic study of Virginia 20 Beach and so I would rely on that number as a 21 hypothetical.

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00056 1 Q. I want to step back for -- well, you 2 mentioned various potential problems with the 3 hedonic study that could be conducted at Virginia 4 Beach. Measurement issues, revisions of data, 5 those kinds of things. Is it possible that one or 6 more or all of those types of problems affect every 7 one of the 20 studies that you cite in your meta 8 analysis? 9 A. Yes. All empirical studies have problems

10 that can be pointed out in terms of the quality of 11 the data, the econometric procedures and other 12 kinds of concerns. When I say something is a 13 problem, however, it doesn't mean that it changes 14 the results in a dramatic way. And so some of the 15 studies that are listed in my report will look at 16 the same airport but with somewhat different data 17 or with different data and with somewhat different 18 procedures and so you can examine the same airport 19 more than once, which has been done. So one of the 20 advantages of doing a meta analysis as a way of 21 summarizing a body of empirical results is that

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00057 1 biases always can go in both directions. You can 2 have a positive bias to a number as well as a 3 negative bias to a number, not as though it pushes 4 the results in only one direction. A value of 5 minus .28 might be biased downward for various 6 reasons. A value of minus 1.49 might be biased 7 upward for various reasons. And so the advantage 8 of the meta analysis is it gives you more reliable 9 indication of the central tendency of a set of 10 empirical results rather than relying on either 11 judgment as to the best number or relying only on 12 one study for the best number. 13 14 I'm sorry, I've forgotten your question. Q. The question was you mentioned the

15 various potential problems with the hedonic study 16 if it were to be done at Virginia Beach. You were 17 asked not to do one but if you were to do one you 18 sort of laid out some problems with a study there. 19 The question was is it possible that one or more or 20 all of the problems you have exist in the studies 21 that you're citing?

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00058 1 A. As a hypothetical, yes, it's possible. 2 Some studies are conducted more adequately than 3 other studies. In doing the meta analysis I tried 4 to take account of some of the problems in some 5 studies. 6 Q. So is it sort of your opinion that

7 throwing all these in together sort of in the wash 8 together that the problems with each of them will 9 be negated by putting them all, averaging them out; 10 is that what you're saying? 11 A. Not entirely. One of the things, one of

12 the issues in a hedonic study is what numerical 13 values to include. And so in my meta analysis I 14 tried to evaluate each study individually and I put 15 a lot of weight on what the author said about his 16 or her conclusions. So I try to start with the 17 author's judgment about the quality of different 18 estimates in selecting a value to include in the 19 meta analysis. 20 The second thing that's done in my meta

21 analysis is that the observations are weighted by

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00059 1 their standard error. And so more precise 2 estimates are given greater weight in the summary 3 measures as compared to less precise measurements. 4 Both of these, especially the second one, are a 5 more formal methodology than what you're suggesting 6 which is that studies are included if they're 7 available without any regard to their strengths or 8 weaknesses as econometric studies. 9 Q. Is it possible that the variability

10 you're finding in your studies, and I think it is 11 pretty significant, the range is from .28 percent 12 per dB all the way up to 1.49 percent, is it 13 possible that the variability in those noise 14 appreciation index estimates is due to real 15 differences among the market study rather than some 16 kind of bias that you're inferring? 17 18 A. Yes. That's possible. Q. Several of these -- would you like a

19 break? 20 21 A. I'm okay for another half hour. Q. Okay.

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00122 1 the data they employed. 2

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Q. Is there any reason why you didn't cite

3 them in your report that was filed just a couple 4 months ago? 5 A. Well, they are not in the meta analysis

6 and so I relied on the meta analysis results and 7 the meta analysis is drawn from my published 8 article which has gone through peer review. At the 9 time neither of these articles was published. I 10 didn't know about them when I did the meta 11 analysis. So I didn't then go ahead and mention 12 them in my report. I could mention lots of studies 13 I guess in their report but I relied on the meta 14 analysis results. 15 Q. Just asking the question, not implying

16 anything. 17 18 A. Okay. Sorry. Q. We talked earlier about whether you

19 recommended that a hedonic model of Virginia Beach 20 be done, hedonic study be performed in this case, 21 that you do it. You indicated that it wasn't

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00123 1 required, that your piece of this part of the 2 litigation is to show noise impact occurs 3 associated with airports. My first question, 4 though, is did you recommend, though, that a 5 hedonic model, hedonic study be done for Virginia 6 Beach? 7 A. I didn't recommend it. We may have

8 discussed back in 2000 whether or not it would be a 9 requirement that I do such a study, that being that 10 I couldn't do anything without doing such a study 11 and I said I thought I could rely on my published 12 results from 1980 plus additional information on 13 Oceana and Virginia Beach. 14 15 16 Q. Who are those discussions with? A. Mr. Quinn. Q. And tell me about those discussions, if

17 you would. What did you, what was said between the 18 two of you? 19 A. I think he asked me would it be possible

20 to evaluate the impact of noise in lieu of doing a 21 study of the area, of just that area, and I

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00145 1 they look at property values and noise exposure at 2 one point in time or at least for a short duration 3 of time, maybe two years. There's one exception to 4 that which is the Reno airport study or one of the 5 Reno airport studies. 6 7 8 9 Q. Do you know which one it is, Myles or -A. It's the other one. Q. Espey and Lopez. So that's a change. A. No, they're not looking at changes, they

10 just have, because Reno is a fairly small airport 11 and I suppose a small residential area, they 12 collected property value data over a longer period 13 of time to increase their sample size. 14 15 16 17 Q. '91 to '95? A. Yes. Q. Okay. A. So the other studies are what is referred

18 to as cross-sectional studies. They more or less 19 pick one point in time and measure the variation 20 and noise across geographic space rather than over 21 time.

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00146 1 Q. And for that study you mentioned -2 3 4 A. So if I could finish. Q. I'm sorry. A. If I could finish my point. The change

5 in noise is still present. It's just a change over 6 geographic space rather than a change over time. 7 Q. So the Espey and Lopez Reno one where

8 they gathered data from '91 to '95 do you know if 9 that was, if within that '91 to '95 timeframe if 10 there was an expansion of the airport or increase 11 in operations or some sort of increase in the noise 12 exposure on those properties or was it viewed as 13 being roughly the same throughout? 14 A. I don't recall the exact setting in the

15 Reno airport. There may have been some changes 16 proposed or going on that they were concerned 17 about. But I'd have to look back at the study to 18 see the details. 19 Q. Did any of the studies you cited in your

20 report and article analyze potential noise impacts 21 based on a prediction of what noise would be in the

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00147 1 future as measured by the DNL metric? 2 A. None of the studies that are used in my

3 meta analysis, to the best of my recollection, are 4 concerned with that issue. The change or variation 5 in noise again is present is just a variation 6 across geographic space rather than over time or an 7 anticipated impact of one sort or another. 8 Q. Do all of the studies use a retrospective

9 analysis of what noise as measured by the DNL 10 metric was at some time in the past? 11 A. Well, there's probably some variation in

12 this. Most studies are trying to match up the 13 noise measurement as close as they can with the 14 rest of the sample data. But they're not -- and 15 I'm certain there's some variation on that. The 16 noise data might be for, I don't know, the year 17 prior to the collection of the data on property 18 values, to cite a hypothetical case. But I would 19 say that most studies the attempt is to match the 20 noise measurement as close as possible to the data 21 on the properties.

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00148 1 Q. Okay. So the airport's there, the houses 2 are there, and based on that noise depreciation 3 index is determined based on which contour you're 4 in and exposure you're experiencing. 5 A. But let me, if I could correct that, the

6 noise depreciation index applies to a range of 7 noise outcomes, roughly 65 to 79.9 dB. It doesn't 8 depend on which noise contour you're in. It is a 9 value expressed per decibel of noise exposure. 10 11 Q. Okay. A. There's probably some variation that over

12 the studies because people have tried to do things 13 like investigating the effects of accessibility as 14 you're closer or further away from the airport. 15 But the values I have recorded are not tied to a 16 particular noise contour. 17 Q. And when someone buys a property at

18 whatever one dB increment is within one of those 19 contours they, according to your theory, would be 20 buying it at a discount depending on whether it was 21 65, 70, or 75 one dB per, I guess one dB increase

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00149 1 from -- what would be the threshold, the beginning 2 of that, where the NDI would begin? 3 A. Well, I'll stick to 65 because that's the

4 basis for the complaint and I think that the 55 to 5 60 is background noise levels in most areas. The 6 upper limit that I have applied the values in these 7 tables to, with some modification, would be 79.9 dB 8 if I can use that fineness of measurement. For 9 reasons I tried to indicate in my reports there's 10 just a lack of abundant data on 80 decibels and 11 above. 12 Q. So someone buys a property in this 70

13 contour, at 70 we'll say, so that's 5 whatever the 14 NDI is, let's say it's one percent per dB, so they 15 get a 5 percent discount on their house of what it 16 would be outside of the contours or, you know, on 17 the 55 to 60 as you said. None of these studies, 18 is it correct to say none of these studies are 19 measuring okay, then the airport expands over the 20 next year, new airplanes come in and the noise 21 exposure changes, that house that was at 70 is now

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00150 1 75. None of your studies evaluate a previously 2 discounted house and how it changes if there is, if 3 the discount would be increased or anything, they 4 just don't study that, do they? 5 A. The variation in noise is captured by

6 variation cross-sectionally, that is, over space. 7 So one's attempting to remove the time element. I 8 think there are a lot of advantages to doing that 9 for just the kinds of reasons you're pointing out, 10 that there is a lot more things you'd have to 11 control for if you were to include variation over 12 time as well as variation cross-sectionally. 13 Exactly the sorts of criticisms that I have found 14 are applied to Dr. Dale-Johnson's report using a 15 different procedure. 16 Q. Isn't change in noise over space as you

17 called it also accompanied by change in 18 neighborhood and other property characteristics 19 while a change in noise over time can be measured 20 in the same neighborhood for houses with the same 21 or similar characteristics?

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00201 1 A. The change over time is limited to I 2 believe Dale-Johnson's study and a dissertation 3 done at the University of Maryland by Nancy 4 Knickerbocker who also did a repeat sales analysis 5 although I believe she also includes some hedonic 6 analysis as well. So I'm only aware of two studies 7 that I can think of that have used a repeat sales 8 analysis and I'm not certain that Knickerbocker's 9 study includes a change in noise level. I believe 10 it does not, which means we're only talking about 11 Dale-Johnson's study as pursuing that methodology. 12 Q. Shift gears yet again. The meta analysis

13 produced a, or you came up with a .7 percent 14 estimated NDI. 15 16 A. Yes. Q. And you then looked at an FAA study and

17 then increased it to .1 percent. Is that across 18 the board or just for Oceana? 19 A. That's for Oceana. Once I summarize the

20 existing set of studies, then I'm engaged in what's 21 called a benefits transfer analysis. So I'm

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00202 1 attempting to tailor the value I use as the NDI to 2 any special circumstances associated with the 3 impact airport or in this case to Oceana. And so I 4 discuss in my reports the special features of naval 5 aircraft to the extent that I was aware of them and 6 their operation and the special features of 7 Virginia Beach and Chesapeake that I thought would 8 be important in coming up with a final value. 9 In this case I am employing professional

10 judgment. I've been working on this issue off and 11 on as we indicated earlier since 1972. I have 12 conducted several studies, several hedonic studies 13 of other airports and so when I say judgment I mean 14 a professional judgment, not a flip of the coin. I 15 wrote out in enough detail I think exactly what was 16 my thinking in going from .7 to .1. 17 18 Q. Now -A. Or excuse me, not from .7 to .1 but from

19 .7 to 1. 20 Q. I'm with you. That professional judgment

21 that you're relying on does not include any studies

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