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HomeMy WebLinkAboutCPRRVOL3.docx 1 CRAIGMONT, IDAHO, MONDAY, JUNE 19, 2000, 9:30 P.M. 2 3 4 COMMISSIONER KJELLANDER: And we're 5 back on the record. We want to thank everybody for 6 their patience. I know it's been a long day for 7 everyone today and we still have some more time in 8 front of us before the day is over, so let's 9 proceed. 10 Mr. Howell, your witness is on the 11 stand. 12 MR. HOWELL: Thank you. Thank you, 13 Mr. Chairman. 14 15 JOSEPH J. PLAISTOW, 16 produced as a witness at the instance of the Staff, 17 having been previously duly sworn, was further 18 examined and testified as follows: 19 20 DIRECT EXAMINATION 21 22 BY MR. HOWELL: 23 Q. Mr. Plaistow, at the time we took our 24 recess, we were discussing the different accounting 25 methodologies used by you and the Railroad, and in 213 HEDRICK COURT REPORTING PLAISTOW (Di) P.O. BOX 578, BOISE, ID 83701 Staff 1 particular, we were discussing maintenance of way 2 and structure avoidable costs. Can you just finish 3 that thought and we can move on? 4 A. I think the only thing I wanted to 5 stress about that is that during the whole time I 6 was talking about maintenance of way, I was -- 7 Is this on? 8 Q. Turn your mike on. The button on the 9 top, up on the top. There you go. 10 A. Now is it on? 11 Q. Yeah. 12 COMMISSIONER KJELLANDER: Yes. 13 THE WITNESS: The whole time I was -- 14 I was talking about that, I was talking about 15 maintenance of way and structures, and when I was 16 referring to the actual amounts in Camas Prairie's 17 accounting system for '98, I was talking about 18 maintenance of way and structures. I wasn't just 19 talking about the track; I was talking about the 20 track and structures. And when I refer to 890,000 21 that they included, I was -- that included for both 22 maintenance of way and structures, not just track. 23 Q. BY MR. HOWELL: Okay. And is it fair 24 to say that your -- characterize your Exhibit 2 as 25 just showing the difference between the Railroad 214 HEDRICK COURT REPORTING PLAISTOW (Di) P.O. BOX 578, BOISE, ID 83701 Staff 1 accounting and the accounting requirements of the 2 Board in 49 CFR 1152.33? 3 A. Yes. 4 Q. And that for purposes of illustration, 5 you have quantified the differences numerically in 6 dollars in your Exhibit 3? 7 A. Yes. 8 Q. All right. Just prior to us going 9 back on the record, I have distributed to the 10 parties Staff Exhibits -- or, what's been marked as 11 Staff Exhibit 6, Staff Exhibit 7, and Staff 12 Exhibit 8, for the purposes of brevity handing all 13 of these out the first time -- or, at one time. 14 Could you turn your attention to 15 Exhibit 6 and explain to the Commission what that 16 shows? 17 A. Okay. The way I like to think about 18 this exhibit is that in discussing revenues, we 19 discussed all the revenues for traffic originated or 20 terminated on the Second Subdivision, and in the 21 first several exhibits, I discussed the calculation 22 of onbranch costs, which is the costs that are 23 incurred from Spalding to Grangeville. Six and 7 24 discuss the calculation of the offbranch costs; that 25 is, portions of traffic movement over the Camas 215 HEDRICK COURT REPORTING PLAISTOW (Di) P.O. BOX 578, BOISE, ID 83701 Staff 1 Prairie Railroad that are still on the Camas Prairie 2 Railroad, are still included in the revenues, and 3 there are costs incurred but they haven't been 4 estimated as yet. 5 I think a good way to summarize the 6 difference between what Camas Prairie said and what 7 we said with regard to offbranch costs is that -- 8 and I want to stress the magnitude of the difference 9 here, because for instance, in Exhibit 6, page 2 of 10 two, line 13, which is the sum total for the 11 offbranch costs for the base year, we estimate those 12 costs at $12,000 and Camas Prairie estimates those 13 costs at $392,000. And almost the total explanation 14 for that is that the way Camas Prairie calculated 15 their onbranch costs, they have already eliminated 16 all the costs as an onbranch cost, so then they 17 turned around and counted those same costs again 18 offbranch. 19 To give an example: In order to 20 estimate the locomotive maintenance of equipment, 21 they estimated first that they would get rid of two 22 locomotives and they took -- so they two-sevenths of 23 the total Camas Prairie locomotive maintenance of 24 equipment and they subtracted it. That's all the -- 25 even under their estimation, that's all the 216 HEDRICK COURT REPORTING PLAISTOW (Di) P.O. BOX 578, BOISE, ID 83701 Staff 1 maintenance of equipment that was incurred by those 2 two locomotives, not just onbranch, but both 3 onbranch and offbranch. So since they have already 4 subtracted those expenses onbranch, they are not 5 permitted to additionally subtract them offbranch. 6 The same thing goes for all the car 7 maintenance costs, same thing goes to labor, because 8 they took off totaled employees, not just during the 9 time that they're on the onbranch. They took 10 them -- they eliminated the total employee, took all 11 his annual costs and eliminated that. 12 Q. So your -- your adjument for offbranch 13 costs merely eliminates the -- what a layman would 14 know as double accounting? 15 A. Right. And the only cost left that 16 isn't already costed by Camas Prairie onbranch is 17 the small amount of maintenance of way, wear and 18 tear on the track off the branch that is caused by 19 the cars going over the track, and that I quantified 20 at $12,000, using standard -- using basically the 21 same procedures that Camas Prairie used for that 22 specific cost item. 23 Q. Turning your attention to Staff 24 Exhibit 7, can you explain to the Commission what 25 that exhibit portrays? 217 HEDRICK COURT REPORTING PLAISTOW (Di) P.O. BOX 578, BOISE, ID 83701 Staff 1 A. Okay. The first two pages of 2 Exhibit 7 list the carloads. Page 2 of five, 3 line 13, shows the total in the base years, and as I 4 said, both parties use the same total for the 1999 5 base year. One of our calculations used Camas 6 Prairie's carloads for the forecast year, and we 7 also had a response from the shippers that indicated 8 on a higher level. 9 And then the last three pages of 10 Exhibit 7 just take those carloads and perform the 11 same calculations that were on Exhibit 6. It 12 performs them on these forecast year carloads, both 13 levels of the forecast year, both Camas Prairie 14 carloads and shippers' forecast, and it's still the 15 same difference. The basic difference is that Camas 16 Prairie has already eliminated all those costs in 17 their onbranch calculation and they are not 18 permitted to again eliminate and double count those 19 same costs offbranch. 20 Q. And do -- do your Exhibit 6 and 7 then 21 feed back into the basic Exhibit No. 1? 22 A. Yes. Basically, all the exhibits feed 23 back into one. The numbers that I just mentioned on 24 Exhibit 6 which contrasted our calculation of the 25 offbranch cost of $12,000 to Camas Prairie's 218 HEDRICK COURT REPORTING PLAISTOW (Di) P.O. BOX 578, BOISE, ID 83701 Staff 1 calculations of a offbranch cost of $392,000 is 2 found in Exhibit 1, page 1 of two, on line 6c in 3 Columns 2 and 3. 4 The other calculations with the other 5 carloads are found in Columns 4, 5, and 6 on 6 Exhibit 1, page 1 of two. 7 And the same thing for the rest of the 8 exhibits that I had previously gone through, like 9 Exhibit 2 and 3. They all carried forward to this 10 Exhibit 1. Exhibit 1 is the summary of all the 11 other calculations. 12 Q. And then, finally, turning your 13 attention to what's been marked for identification 14 as Staff Exhibit 8, page 1 of one, can you explain 15 to the Commission what that is? 16 A. Okay. Exhibit 8 discusses the 17 valuation of the road property. The first section 18 of that is working capital, and basically, working 19 capital is permitting the Railroad to have enough 20 cash on hand to cover 15 days of their cash needs, 21 and this calculates that. The reason for the 22 difference in the required cash is that our estimate 23 of expenses is a lot lower than what Camas Prairie's 24 estimates of expenses are, so you can see that we're 25 less than -- we say that the required working 219 HEDRICK COURT REPORTING PLAISTOW (Di) P.O. BOX 578, BOISE, ID 83701 Staff 1 capital is about 40 percent of what they say it is. 2 Q. And can -- I was just going to have 3 you explain what Section B is. 4 A. Okay. The income tax consequences are 5 calculations that are made to determine what happens 6 when you take care of the net liquidation value. 7 For instance, in Section B, lines 1 and 2, they 8 estimated that the track materials to be sold were 9 1.8 million, with net liquidation value of the land 10 being 758,000. I was told that our preliminary 11 estimate of the track material to be sold is a 12 little bit over 1.2 million. I've done the 13 calculations both ways, using both their estimate of 14 what the track material to be sold is and what ours 15 is. When you carry through the numbers to the end, 16 that has the impact of decreasing our number by 17 $47,641. So it's a significant difference, but 18 whether you use their number or whether you use our 19 number, the Camas Prairie is still profitable in 20 both the forecast year under both the -- their 21 carload forecast and our carload forecast. 22 Q. And -- 23 A. Then, from those net liquidation 24 values of the land and track materials, you subtract 25 the book value of those properties. We have no 220 HEDRICK COURT REPORTING PLAISTOW (Di) P.O. BOX 578, BOISE, ID 83701 Staff 1 basis for estimating what those are, so we took 2 their word for it that they are accurate in 3 representing what's on their books and records. We 4 haven't seen it, we haven't been able to audit their 5 books, we haven't been able to see what their 6 records are based on, or any ability to prove 7 whether or not what they say is true. We've also 8 adopted their net liquidation value of the freight 9 cars, and we've also taken their word for the net 10 book value of the freight cars. 11 And then we calculated the gain on 12 sales and calculated the income tax consequences of 13 what would happen if the Camas Prairie were 14 liquidated. 15 Then, Item C takes and calculates the 16 total net liquidation, which is basically the sum of 17 the track material sold, the net liquidation value 18 of the land, and the net liquidation value of the 19 the freight cars. 20 Q. All right. Just a couple housekeeping 21 questions: 22 In your workup of the financial data, 23 have you been able to determine whether the Railroad 24 has reported the revenue it may have received from 25 the scooter cars? 221 HEDRICK COURT REPORTING PLAISTOW (Di) P.O. BOX 578, BOISE, ID 83701 Staff 1 A. I haven't determined that. 2 Q. All right. Were you able to determine 3 whether the Railroad's revenues has any allocation 4 for revenues they received from movies? 5 A. I haven't determined that. 6 Q. Okay. In summary, is it your 7 testimony that this line shows a potential for 8 profitability? 9 A. Yes. 10 Q. And, again, that is shown on your 11 Exhibit 1, page 2 of two, on line 18? 12 A. Yes. In the forecast year using Camas 13 Prairie's projected carloads, the expected 14 profitability is 232,428; using the shipper 15 forecast, it's 277,630. 16 Q. Any final comments? 17 A. No. 18 MR. HOWELL: All right. I would pass 19 the -- make the witness available for 20 cross-examination, and ask that Exhibits 1, 2, 3, 6, 21 7, and 8 be marked -- or, be admitted. 22 COMMISSIONER KJELLANDER: Will be 23 admitted without objection. 24 (Staff Exhibit Nos. 1 through 3 25 and 6 through 8 were admitted into evidence.) 222 HEDRICK COURT REPORTING PLAISTOW (Di) P.O. BOX 578, BOISE, ID 83701 Staff 1 COMMISSIONER KJELLANDER: Mr. Heffner. 2 MR. HEFFNER: Thank you. I've been 3 waiting patiently for what seems like about ten 4 years for this opportunity, but due to the fact that 5 some of us are tired, I'll try be as brief as I can. 6 7 CROSS-EXAMINATION 8 9 BY MR. HEFFNER: 10 Q. First of all, if I can ask a silly 11 question, what happened to I guess it's Exhibit 4? 12 A. We just feel that most of the 13 calculations are either self-explanatory or 14 explained well enough in the documentation, and we 15 knew everybody wanted to get home. 16 Q. Oh, good. Good. Okay. A few 17 questions: 18 I guess the one that right now has me 19 sitting on the edge of my seat is how did you come 20 up with the track material value of one million, two 21 hundred sixty-four thousand, some odd dollars? 22 A. That is a very precise number and 23 that's why I went into the explanation that whether 24 you use Camas Prairie's number or whether you use 25 our number, the difference is 47,641, and whether 223 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 you use either one, the land is still profitable. 2 I was just given that number because 3 it's in the same kind of state of development as the 4 net liquidation value of the land. 5 Q. Who gave you the number? 6 A. A person at work who's helping me on 7 this. 8 Q. This person have a name? 9 A. Yes. His name is Dick McDonald. 10 Q. Okay. What is the -- all humor aside, 11 what is the basis for this number? You're basing a 12 predilection on whether or not this line is 13 profitable, and you know, as a very experienced and 14 well-respected professional in this field, that the 15 determination of profitable, one of the functions is 16 of the opportunity cost of a Railroad asset, and in 17 order for this Commission to make a finding that the 18 line is or is not profitable, these expenses needs 19 to be pegged down, and I want to get an 20 understanding as to why you say the value is roughly 21 $1.3 million and we say it's $1.8 million. I don't 22 think that's an unfair question. 23 A. Well, you introduced it by saying that 24 I based my judgment on the 1.3, and I did not. I 25 based my judgment on either your number of 1.8 224 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 million or my number of 1.3 million, and I come to 2 the same conclusion: The line is profitable using 3 either your number or mine. 4 Q. What would be the opportunity cost if 5 the correct track NLV is 1,827,000? That's going to 6 be 50 percent more than it would be with your lower 7 figure. 8 A. Right. And when you take into account 9 all the impacts and as they flow down into the 10 calculation of the avoidable loss or profit, that 11 total difference, including all the tax impacts, is 12 that number I've said several times: 47,641. 13 Q. Okay. So what you're saying is that 14 if this -- if you used our figure when you 15 considered these other aspects, it would only 16 decrease the profitability by $47,000? 17 A. Right. 18 Q. Okay. I understand. 19 In your many years of doing economic 20 consulting, how many short line railroad 21 abandonments either for the Applicant or Petitioner 22 or for an adversary like a state or a shipper have 23 you been involved in? 24 A. I guess maybe 15. 25 Q. Okay. How many of them involve the 225 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 use of a formal Application as opposed to an 2 Exemption Filing? 3 A. I don't know. I didn't review that. 4 Q. Could you just identify maybe a 5 handful that were done over, say, the past four 6 years since the STB was created? 7 A. I've done two in the last four years. 8 Q. Okay. Could you identify them by 9 name? 10 A. Yeah, the -- the Arkansas Midland and 11 this one. 12 Q. Was the Arkansas Midland an 13 abandonment or a feeder Application? 14 A. It was a -- the part I was involved in 15 was the feeder line Application. 16 Q. Okay. So that's not an abandonment 17 then? 18 A. It was attempted to be an abandonment, 19 yes. 20 Q. But it -- technically, it was not? 21 A. Right. 22 Q. And then the second one is the very 23 case you're working on? 24 A. Right. 25 Q. So would it be correct then to say 226 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 this is the first time you've actually worked on a 2 short line railroad abandonment filing since the STB 3 came into existence? 4 A. That's true. 5 Q. Okay. With respect to the track 6 maintenance, I know that you probably follow STB and 7 ICC Decisions, do you not? 8 A. Yes. 9 Q. And what is the -- have you ever seen 10 a figure that the STB or the ICC before it has said 11 is a typical number spent by a Railroad to maintain 12 the track to FRA Class 1? 13 A. Yes. 14 Q. What is that? You might want to give 15 a range. 16 A. I think that the numbers in your 17 testimony are in the reasonable range of what 18 normalized maintenance is, and you already have that 19 in your testimony. 20 Q. Yes. 21 A. And, again, I would say that for the 22 base year, actual maintenance is required and not 23 normalized maintenance. Camas Prairie is the only 24 source for the actual maintenance. 25 Q. Would you -- do you think the 227 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 3,000-a-mile figure is on the low side, a 2 conservative side, for Class 1 maintenance? 3 A. I think if a person were trying to 4 guess what the maintenance figures were, it's, you 5 know, within reason if you're trying to calculate 6 normalized maintenance; and if you take that $3,000 7 figure and apply it to the 66.8 miles of Camas 8 Prairie, you come out to a number that's pretty 9 close to what I came out to. It's -- 3,000 times 10 that is 200,400, and my estimate was 171,575. 11 Q. Right. But did your figure also 12 include bridge maintenance or bridge rehabilitation? 13 A. It included -- that's what I stressed 14 when I first got back, that all my discussion, my 15 entire discussion about maintenance of way, was not 16 just of track. It was maintenance of way and 17 structures. 18 Q. And cost -- I'm sorry. 19 A. And Camas Prairie's numbers also in 20 their books for when I cited the fact that in both 21 '98 and '99, they spent about $600,000 for 22 maintenance of way and structures. It was both 23 maintenance of way and structures. And, also, when 24 I said that they claimed that the base year figure 25 in your Application of 890,000, that was also for 228 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 maintenance of way and structures. 2 Q. So if your figure of 171 includes some 3 bridge and structure maintenance, and 4 rehabilitation, then the -- 5 A. There is no rehabilitation required. 6 There is nothing in the record that suggests that 7 any part of the Camas Prairie Second Subdivision is 8 below Class 1 standards. 9 Q. No, sir. This is on the bridge -- the 10 bridges and structures, not the track. 11 A. That's what I said. 12 Q. No, no, you said that the -- 13 Maybe we should have the reporter play 14 it back. 15 (Whereupon, the requested portion 16 of the record was read by the court reporter.) 17 Q. BY MR. HEFFNER: Does the term 18 "Class 1 standard" refer to track maintenance or 19 bridge maintenance? 20 A. There is FRA Class 1 standards for 21 everything. 22 Q. Bridge maintenance? 23 A. Well, for -- it all depends what you 24 call "bridge maintenance," but, yes. 25 Q. So your -- then as I understand it, 229 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 your $171,000 figure includes both track maintenance 2 and bridge maintenance? 3 A. Yes, and so does Camas Prairie's 4 number include both track maintenance and bridge 5 maintenance. 6 Q. And so would it be correct then to say 7 that if we're just looking at track maintenance 8 only, that's going to probably be a figure somewhat 9 less than 171,000? 10 A. Would you repeat that? 11 Q. Okay. If we're looking just at track 12 maintenance, would it be correct to say that the 13 track-maintenance-only figure is probably somewhat 14 less than 171,000? 15 A. Yes. 16 Q. All right. Would it surprise you if I 17 told you that many short lines are spending 18 somewhere around 4- or 5-, sometimes even 6,000 a 19 mile in track maintenance? 20 A. I don't particularly see the relevance 21 of that. You could -- you could -- Railroads vary 22 from Railroad to Railroad. The only thing I have to 23 go on to determine what's reasonable as far as 24 maintenance is, again, the books and records of 25 Camas Prairie. In 1998 and 1999, the number that 230 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 you talk about is not relevant. The only number 2 that's relevant is what Camas Prairie has expended, 3 and if Camas Prairie expended $624,000 in 1999 on 4 the whole Railroad, it makes no sense to claim that 5 Camas Prairie spent 890,000 just on the Second 6 Subdivision. 7 Q. I don't recall, but did you say that 8 you've been on the line and looked at it? 9 A. Yes. 10 Q. Okay. Would it be correct to say that 11 a curvy, mountainous Railroad is more expensive to 12 maintain than a flat Railroad in Iowa? 13 A. As I said before, the Camas Prairie 14 has been curvy and mountainous and it's had 43 15 structures for as long as we all can remember. So 16 the fact that it's curvy and mountainous and has 17 steep grades has already been reflected in Camas 18 Prairie's historical expenditures for those expense 19 items. 20 Q. But to just focus in on the question 21 one more time, do you believe that a mountainous 22 railroad would be more expensive than what I would 23 call the short line industry average in terms of 24 maintenance costs? 25 A. And that's why -- I would agree with 231 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 that, and that's why they are already reflected in 2 Camas Prairie's historical numbers. 3 Q. I assume that you've read the Parsons 4 Brinckerhoff report? 5 A. I've -- I wouldn't say that I've read 6 it and studied it in a lot of detail, but I have 7 seen it. I have looked at it. 8 Q. Have you read the first roughly 15 or 9 16 pages, which are also reproduced in the 10 Application? 11 A. Yes. Yes. 12 Q. Okay. Do you recall who ordered that 13 the report be -- do you remember the name of the 14 client for the report? 15 A. LaSalle National Bank. 16 Q. Correct. Do you know why LaSalle 17 National Bank hired Parsons Brinckerhoff? 18 MR. HOWELL: I'm going to object to 19 the question. Requires speculation on the part of 20 the witness. 21 COMMISSIONER KJELLANDER: Sustained. 22 MR. HEFFNER: I believe it's very 23 relevant, and therefore, you should overrule the 24 objection. 25 COMMISSIONER KJELLANDER: Would you 232 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 like to rephrase your question? 2 MR. HEFFNER: Okay, I will. 3 Q. BY MR. HEFFNER: Mr. Plaistow, in your 4 work, has -- have either you or your firm done what 5 is commonly called due diligence work for looking at 6 transactions? 7 A. I don't particularly see the relevance 8 of that, but, yes. 9 Q. I think relevance is for the 10 Commission to determine rather than the witness, but 11 you have done due diligence work? 12 A. Yes. 13 Q. And who were you usually hired by to 14 do that work? 15 A. Our clients represent a broad range of 16 clients. 17 Q. Would it be -- would it surprise you 18 if I told you that the bank hired Parsons 19 Brinckerhoff to do the due diligence? 20 A. No, it wouldn't at all. 21 Q. Okay. Would you agree with me that 22 the -- a consultant retained by the bank would be 23 objective in its due diligence? 24 MR. HOWELL: I'm going to object. 25 Requires speculation on the part of the witness. 233 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 COMMISSIONER KJELLANDER: I believe 2 that we'll go ahead and sustain that. Is there 3 another way to rephrase the question? 4 MR. HEFFNER: There probably is, but 5 considering I've been up and working on this since 6 about 13 hours straight and operating on Eastern 7 Time Zone time -- 8 COMMISSIONER KJELLANDER: Appreciate 9 that. 10 MR. HEFFNER: Thank you. I appreciate 11 your indulgence. I'll come back to that. 12 Q. BY MR. HEFFNER: With the shipper 13 survey, I assume that you saw the document that -- 14 let me just find it -- 15 Are you familiar with these forms? 16 A. Yes. 17 Q. Okay. And your exhibit I guess it's 18 Exhibit 7 essentially was derived from these forms? 19 A. The carload figures from them, yes. 20 Q. Okay. What I'd like to do is just 21 spend a few minutes going down Exhibit 7. Forgive 22 me for looking for the right piece of paper. 23 What I'd like to do is to ask you what 24 the current level of usage has been in Year 2000 for 25 each of the customers you identified in Exhibit 7, 234 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 starting with Columbia Grain; not what you 2 projected, but rather, the actual rail usage to date 3 in Year 2000. 4 A. I don't have those figures with me. 5 I'm not sure if I have the figures. 6 Q. On the survey forms that were used as 7 the basis for your preparation, let's turn if we 8 can -- 9 MR. HOWELL: Mr. Chairman, I guess 10 just a point of order: I think Mr. Heffner is 11 referring to documents that are not in the record at 12 the time -- at this time. 13 MR. HEFFNER: But they were used as 14 the basis for Mr. Plaistow's exhibit. 15 MR. HOWELL: Well, whether they were 16 used as the basis for Mr. Plaistow's exhibit is 17 beyond the point. I mean, if you want to use those 18 in the Commission's proceeding, then it's incumbent 19 I think to introduce the exhibits. 20 MR. HEFFNER: Seems to me that if 21 these are not introduced, then I wouldn't be the one 22 to introduce them, because the Staff person 23 Ms. (sic) Shawn O'Conner -- O'Connell, I guess, is 24 really the State's witness, then there's no 25 justification for Mr. Plaistow to be testifying 235 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 about those documents and that I would request that 2 they be stricken. 3 COMMISSIONER KJELLANDER: I think, as 4 a Commission, we're going to take just a brief 5 moment to confer on that. Everybody can breathe 6 deeply and we'll recess for just a moment. 7 (Discussion off the record.) 8 COMMISSIONER KJELLANDER: We'll go 9 back on the record. 10 The Commission believes that it's 11 appropriate to continue with the line of questioning 12 based on the document, and there's no need for it to 13 be an exhibit at this time. 14 MR. HEFFNER: Thank you. 15 Q. BY MR. HEFFNER: Referring to the 16 Columbia Grain exhibit, there is a series of pages 17 that look roughly like this. If you need a minute, 18 just let me know and -- 19 A. Okay. 20 Q. Okay. Good. Do you see a piece of 21 paper that has locations like Kennewick and Moscow 22 and Moscow and Pullman and Wilbur, et cetera? It's 23 got dates of 7/99, 8/99, and so forth? 24 A. Yes. 25 Q. Where are those points? 236 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 A. They are not on the Second 2 Subdivision. 3 Q. Would it be correct then to ignore 4 those carloadings? 5 A. Yes, it would. 6 Q. So in other words, this figure, the 7 traffic generated during the 1998 and 1999 time 8 periods that showed traffic moving to or from these 9 points, really should be -- that should be deleted 10 from the traffic statistics, shouldn't it? 11 A. That was my intention. 12 Q. Okay. I realize you didn't prepare 13 it, so it's not your fault. 14 Could you explain to me how the figure 15 of 1,146 cars was developed? What was that based? 16 A. It was the sum of the carloads we were 17 given. 18 Q. Who gave it to you? 19 A. In the survey that you're discussing. 20 Q. And do you know how this survey -- the 21 person that generated the survey determined those 22 car counts? 23 A. No. 24 Q. So basically what you're doing is 25 you're making predictions of profitability based 237 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 upon information that you have no ability to verify? 2 A. No, because as I said, I used both the 3 Camas Prairie's numbers and the forecast numbers, 4 and the conclusion is the same whether you use Camas 5 Prairie's own numbers or whether you use the shipper 6 forecasts that you're referring to. 7 Q. Okay. If we use the 247 -- or, let's 8 assume that we use the Camas Prairie numbers. My 9 recollection is that the profitability is about 10 50,000 less, isn't it? It's in the low 200s? 11 A. It's $45,000 less. 12 Q. Okay. And then if we assume that we 13 use the $1.8 million valuation instead of the 14 $1.2-something million valuation, it goes down 15 another close to 45-, $50,000, doesn't it? 16 A. If you include both of those effects, 17 you're in the neighborhood of $185,000 profit 18 instead of $232,000 profit. 19 Q. Okay. 20 A. If you assume that number, which we 21 don't, and which we will show before the Surface 22 Transportation Board. 23 Q. Okay. And if you have bridge costs 24 that maybe they're not 698 but they're certainly 25 much higher than 171, that's going to cut it some 238 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 more, don't you think? 2 A. Well I would say that I've spent quite 3 a bit of effort to make my estimates, and if you say 4 that if, hypothetically, I buy each one of your 5 estimates one by one, of course it's going to get to 6 your number, but that's a relatively pointless 7 exercise. It makes a lot more sense for me to 8 continue to support the numbers that I've spent a 9 lot of time developing. 10 Q. Okay. With some of the figures on 11 your Exhibit 1, page 1, like -- 12 I understand how you got to 13 maintenance of way and structures -- I don't agree 14 with it, but at least I understand your methodology. 15 How did you derive maintenance of 16 equipment, transportation? Can we go spend just a 17 few minutes going over some of those figures, how 18 they were developed? 19 And so I guess what I'm looking at is 20 Exhibit No. 3, page 1, if you could just where it 21 says Maintenance of Equipment, B, can you explain 22 why your figure is 95,000 and my client's figure is 23 144,000? 24 A. Right. Again, the basic difference is 25 because your client has not provided actual 239 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 information. Instead, they chose to just use their 2 judgment and say that if the Second Subdivision is 3 abandoned, we'll take off two locomotives; and my 4 judgment is that I don't agree with that at all. If 5 that were true and you really could eliminate two 6 locomotives, then I think there would be a lot 7 better support for it than just somebody's claim 8 that you could eliminate two locomotives. 9 You could very easily prove that. You 10 could prove what the actual numbers are by just 11 taking the numbers that Camas Prairie has in its 12 current possession and come up with a lot more 13 reasonable figures; like, for instance, you could 14 easily calculate things like locomotive gross ton 15 miles, you could easily calculate locomotive hours, 16 and you could determine then what the actual 17 percentage of use on the Second Subdivision is 18 compared to on the whole Railroad, and then it makes 19 sense to use those prorations of expenses rather 20 than judgment that too could be eliminated. 21 Q. Can you identify for me a short line 22 Railroad that keeps track of gross ton miles or 23 locomotive hours? 24 A. I can guarantee that if you give me 25 access to the records that Camas Prairie currently 240 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 has, that I could calculate that in a relatively 2 short time. 3 Q. That's not the question I asked. 4 A. My point is that Camas Prairie can 5 easily calculate those actual statistics and they 6 can easily offer them into the record, so I'm saying 7 that Camas Prairie is an example. 8 Q. But do you know any short lines that 9 actually keep that, unlike Class Ones which do, 10 which have to? 11 A. Camas Prairie. 12 Q. No, which make a practice of keeping 13 those types of records. 14 A. I'm saying that I could go into Camas 15 Prairie right now and I could make that 16 calculation. So the answer to your question is -- 17 you asked, Give me an example of a short line that 18 keeps those records, and I'm saying that Camas 19 Prairie keeps those records, they just have not 20 chosen to offer them into the record. 21 Q. Can you just explain how you computed 22 the 95,558? 23 A. The basic logic for saying that one 24 locomotive is eliminated -- again, this is saying, 25 okay, Camas Prairie used logic that two should be 241 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 eliminated, and I'm saying that there's another set 2 of logic that says that -- like, for instance, in 3 Kevin Spradlin's statement, he said that when -- for 4 all the time that Camas Prairie had been operated, 5 it had been basically operated with one trip per 6 week on the Second Subdivision. And basically Camas 7 Prairie then was operating with two locals, with one 8 local that would operate west of Lewiston and one 9 local that would operate east of Lewiston. And on 10 Friday, that local that operated east of the 11 Lewiston would serve the Camas Prairie and go up the 12 Camas Prairie Second Subdivision, and then come back 13 from the Grangeville on Saturday. So in that case, 14 you'd be saying that two-sevenths of the time that 15 Camas -- those locomotives would be being used for 16 Camas Prairie, for the Grangeville Sub. 17 So if we say that you save 18 two-sevenths of a locomotive for one week in order 19 to determine how many locomotives you would save, 20 you multiply two-sevenths times two, which is 21 four-sevenths, which you'd round up to one. 22 So I'm saying that really what Camas 23 Prairie would really save is one locomotive, and 24 that's based on the way Camas Prairie had always 25 been operated until Camas Prairie RailNet took over. 242 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 Q. Do you know the reasons why Camas 2 Prairie changed its mode of operations from the 3 historic BN/UP-owned Camas Prairie? 4 A. I read the Application, yes. 5 Q. And what was that? 6 A. The claim in the Application was that 7 it was to increase the service provided to the 8 shippers. 9 I'm also aware that many shippers have 10 stated that one of the things they would like to do 11 is they like to -- well, all the people here tonight 12 talked about one of the things they want to do is 13 keep the Second Subdivision operating, and one of 14 the things that many of them have suggested in order 15 to keep the Second Subdivision operating is to 16 tailor the service in just the way I was talking 17 about: Instead of providing too much expensive 18 service, just provide what Camas Prairie always 19 provided up until the time that Camas Prairie 20 RailNet took over. 21 Q. What would happen to car hire expenses 22 then with decreased service levels? 23 A. It depends. If it were managed 24 properly and if the shippers were careful about what 25 happened, they would try to minimize the increase in 243 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 car hire. They might have some small increase in 2 car hire expense that might not be able to be 3 avoided, but basically, you could operate it so it 4 would be about the same. 5 Q. Is it likely that car hire expense 6 would increase? 7 A. In order to determine that, you could 8 probably take a look at the historical numbers pre 9 and post the time that Camas Prairie RailNet took 10 over, and I'd be glad to take a look at that if 11 you'd provide the information. 12 Q. Okay. So, as I understand the way you 13 prepared this section called Maintenance of 14 Equipment -- and just correct me if I state it 15 incorrectly -- you're sort of presupposing another 16 way of providing the service which would entail less 17 frequent service, and therefore, a reduction of 18 the -- you'd only be eliminating one engine and one 19 employee instead of two engines and two employees. 20 That's kind of the bottom line? 21 A. I'm struggling with what the Surface 22 Transportation Board requires, which is the actual 23 numbers for the base year, and since I don't have 24 that, I have to make a logical judgment as to how to 25 derive those numbers and I did what you said. 244 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 Q. Okay. The other thing I wanted to ask 2 you about was the Section C called Transportation 3 where your figures were roughly half our figures -- 4 excuse me -- and if you could just explain how you 5 made that calculation? 6 A. Basically, the same, because I'm 7 saying that if the -- if the Grangeville Sub is 8 served by two crew members two days out of a week 9 and you eliminate that service, you don't save two 10 crew members, because those crew members are doing 11 other things besides serving the Grangeville Sub for 12 the other five days out of the week. I'd really say 13 that they'd be -- you'd save four-sevenths of a 14 person, and since you can't really do that, I 15 rounded it up to one. 16 Q. Okay. Refer for a minute or so to 17 your offbranch Exhibit 6 chart. As I understand 18 your testimony earlier, the reason why you feel that 19 Camas Prairie would have only 12,000 in offbranch 20 costs was that there was a lot of double accounting? 21 A. No, I didn't say that I thought that 22 Camas Prairie would have $12,000 worth of offbranch 23 cost. I said that they would have $12,000 worth of 24 offbranch costs that weren't already included in the 25 onbranch costs. 245 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 Q. Okay. I'm trying to grapple with 2 this, and somehow I find it hard to believe that 3 the -- these costs would only be 12,000. 4 A. Again, I'll repeat: I didn't say that 5 the offbranch costs were really $12,000. I said 6 that the offbranch costs that are not already 7 accounted for in the onbranch cost is $12,000. 8 You can't determine the total 9 offbranch cost using the calculations that Camas 10 Prairie has chosen to use, and what I was trying to 11 do was to contrast Camas Prairie's calculations to 12 mine, so I structured them in the same way to make 13 the comparison simpler. 14 Q. How does one go about making the 15 offbranch cost calculations? Isn't there some 16 formula that you use for the computer? 17 A. Well, okay, we weren't provided any of 18 the detail of Camas Prairie's calculations. The 19 Witness Finley said that he used URCS standard, but 20 what we were furnished was what was in the 21 Application, which is no detail at all. But if you 22 take him at his word, and you assume that he's done 23 a proper application of URCS Phase 3, then I would 24 say that that's exactly how you would determine the 25 offbranch cost. And the regulations allow 246 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 nonClass 1 Railroads to use Region 7 unit costs, 2 which is what Witness Finley did. 3 And so although I haven't verified 4 that the offbranch costs calculation are accurate, 5 if you haven't already included them in onbranch, I 6 would -- I would assume that if I had access to the 7 detail, which I want to get, it's probably a 8 reasonable estimate of what the offbranch costs 9 would be. So if you wanted to modify Camas 10 Prairie's numbers, I think it would make sense to 11 take your number of $392,000 and say that that's the 12 offbranch cost, and then, in turn, adjust the 13 onbranch cost downwards by $392,000, because you've 14 already included them in the offbranch costs in that 15 case. 16 Q. I have one last question I think I'd 17 like to ask, and that is about something you said 18 this afternoon and sort of repeated again -- well, 19 at least alluded to -- this evening. 20 As I understand your testimony 21 earlier, under -- I may not have the exact 22 regulation number, but it's the STB's costing 23 regulations, roughly 49 CFR 1152 I want to say point 24 32, maybe it's 34 -- my recollection is they lay out 25 methodology for Class 1 Railroads, do they not? 247 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 A. They lay out the regulations for 2 calculating avoidable costs. 3 Q. Is there another provision that's 4 applicable to Class 2 and 3 Railroads as part of 5 that regulation? 6 A. There's comments in the regulations 7 with regard to Class 2 and 3 Railroads. They 8 primarily relate to the calculation of offbranch 9 cost, not the calculation of onbranch cost. To the 10 extent that they do reference Class 2 and Class 3 11 Railroads as far as calculating onbranch costs, it 12 makes minor modifications and permits the use of 13 statistics such as I was discussing earlier instead 14 of actual costs in order to approximate actual 15 cost. 16 At no point do the regulations ever 17 say that normalized maintenance or normalized cost 18 may be used for the historical year for that 19 estimate. 20 Q. No, I'm referring to things like the 21 allocation of locomotive cost. 22 A. I'm -- I repeat again that the 23 regulations call for splitting those depending on 24 what the expense is, either by locomotive hours or 25 by locomotive gross-ton miles, and if you give me 248 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 access to the records that Camas Prairie currently 2 has in its own possession, I can calculate both of 3 those numbers for you. 4 Q. Okay. Thank you. 5 COMMISSIONER KJELLANDER: Mr. Millward, 6 do you have any questions? 7 MR. MILLWARD: Yes, I do, 8 Mr. Chairman. 9 COMMISSIONER KJELLANDER: Do you 10 contest the findings? 11 MR. MILLWARDS: I have some questions 12 with his findings, yes. 13 COMMISSIONER KJELLANDER: Proceed. 14 MR. MILLWARD: Thank you very much. 15 16 CROSS-EXAMINATION 17 18 BY MR. MILLWARD: 19 Q. Now, Mr. Plaistow, you were drilled 20 with some pretty hefty questions there from 21 Mr. Heffner there. You held up pretty well. 22 A. Thank you. 23 Q. In Mr. Finley's statement in the 24 Application, if you could turn to page 14 of that 25 statement, of his statement? 249 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 A. Yes. 2 Q. The sixth or seventh -- or, excuse me, 3 seventh line from the bottom that begins with For 4 traffic from -- 5 A. Yes. 6 Q. -- do you see that? 7 A. Yes. 8 Q. You understand what Mr. Finley is 9 talking about there with offbranch costs and that 10 kind of thing? 11 A. Yeah, I believe so. What he's saying 12 there is that the distance from -- from the end of 13 the line to air is 93.9 miles. 14 Q. Okay. And then further talks about 15 8.8 miles? 16 A. Right. 17 Q. And then he's got in parentheses? 18 A. Yeah, and that's saying that that 19 distance to Lewiston is 8.8 miles. 20 Q. And in that parentheses it says Where 21 they were transloaded into heavier rail cars for 22 movement to points beyond? 23 A. Yes. 24 Q. In the offbranch cost calculation 25 submitted by the Applicant -- could you turn to 250 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 that, please? 2 MR. HOWELL: Mr. Chairman, I'm going 3 to reluctantly lodge an objection because the 4 cross-examination was based on a document that's not 5 been introduced into evidence. It's not a document 6 that's been prepared by this witness. 7 COMMISSIONER KJELLANDER: So this is 8 not the witness's evidence and it's not evidence 9 that he should be familiar with, is that what you're 10 saying, or should be prepared to support? 11 MR. MILLWARD: Mr. Chairman, 12 Mr. Plaistow has already testified that his off 13 cost -- offbranch costs were different than this 14 Applicant, and the Applicant said their offbranch 15 costs were 392,000 and his offbranch costs were 16 12,000. According to -- and I was just going to 17 point out, ask him if other portions of these off 18 cost -- branch charges even make sense, because they 19 don't make sense, and I was just asking him how he 20 came up with the 12,000 and if I'm missing 21 something. It will just take me one second. 22 MR. HEFFNER: May I comment for a 23 second? 24 COMMISSIONER KJELLANDER: Certainly. 25 MR. HEFFNER: Even though I'm not 251 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 quite sure what my colleague from the UTU is getting 2 at, I would certainly say that the Application is in 3 the record and that Mr. Plaistow -- it is fair game 4 for him to be questioned about it because that is 5 the basis for his own testimony. Were there no 6 Application and he has talked extensively about what 7 Mr. Finley has or has not said, then there would be 8 no need for his own testimony, so certainly, I think 9 it's appropriate for him to be asked about it. 10 COMMISSIONER KJELLANDER: Mr. Howell. 11 MR. HOWELL: Mr. Chairman, maybe we're 12 splitting hairs. No witness who has appeared before 13 this Commission today has introduced the Railroad's 14 Application. They had an opportunity to present a 15 witness, they are the Applicant; they chose not to 16 have any witnesses. 17 I'm not saying that the Commission 18 doesn't have this document in its custody. What I'm 19 saying is that nobody has actually introduced the 20 document in this hearing, and to ask this witness -- 21 Well, I'll just leave it at that. 22 MR. HEFFNER: I think you could take 23 official notice of it. 24 COMMISSIONER KJELLANDER: Overruled. 25 Is the clock still ticking? 252 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 MR. HOWELL: You bet. 2 COMMISSIONER KJELLANDER: Let's 3 continue. 4 Q. BY MR. MILLWARD: Mr. Plaistow, the 5 reason I'm asking this question is because when you 6 came up with your offbranch cost of $12,022 as 7 compared to 392,000 by the Applicant's figures -- 8 A. Yes. 9 Q. -- the Applicant talks about that 10 8.8 miles of cars are transloaded? 11 A. It talks about the 8.8 miles distance 12 between Spalding and Lewiston. 13 Q. That's correct. And in parentheses, 14 did it talk about -- Mr. Finley's statement, it says 15 they go to Lewiston for transloading. Is that 16 correct? 17 A. That's what he states. 18 Q. If you would look at the offbranch 19 cost calculation submitted by the Applicant and duly 20 note all of the 8.8-mile charges that are being 21 charged offbranch and tally those up, I think you 22 will see that comes up to $168,432? 23 A. Could you point me out to where you're 24 talking about? 25 Q. Okay. On the Applicant's offbranch 253 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 cost calculation. 2 A. Okay. Which exhibit is that? 3 Q. It's in the -- it's in the Application 4 itself. It would be Exhibit K. 5 A. Okay. And would you repeat again what 6 you just said? 7 Q. If you'll note on the 8.8 miles you 8 look down from the station with the Lapwai and 9 Sweetwater -- do you see what I'm saying -- it says 10 8.8 miles? 11 A. I see the 8.8 miles. 12 Q. And then if you go over for the 13 forecast year all the way to the right, it gives a 14 figure of offbranch -- offbranch cost calculation -- 15 A. Yes. 16 Q. -- for cars to be transloaded? 17 A. Yes. 18 Q. If you -- and it shows in the forecast 19 year, it says Cars right before cost. 20 Do you see that? 21 A. Yes. 22 Q. And on the very back page of 23 Exhibit K, page 2, it shows a forecast year of 2,621 24 cars. Do you see that? 25 A. Yes. 254 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 Q. Now, of those cars of the 8.8 miles is 2 what I'm getting at, if you add up all of those 3 costs -- forecast costs -- it's $168,432 that 4 they're saying that it's costing them, the 5 Applicant, to transload those cars, which I'm having 6 from the statements that are in this Application, 7 that comes up to over 1,100 cars per year and they 8 only have 58 hoppers, and I'm just -- I was 9 wondering if you had calculated that into your 10 $12,000 difference from their 392,000? 11 A. I didn't look at it the way that you 12 were repeating it, but you raise a good question. 13 Q. The -- in the Applicant statements, it 14 states that they're using unit trains up here of 15 130-ton cars or 100-ton car of material, of 16 commodity, which would not be transloaded? 17 A. Right. 18 Q. And if you look at the cars that are 19 being transloaded, they're 100-ton cars which 20 wouldn't be transloaded, because Camas Prairie has 21 no -- according to their records, they have 22 58 70-ton cars. Is that correct? 23 A. Right. Right. 24 Q. I was -- the point I'm getting at, I 25 can't see where you have used any of that figure to 255 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 come up with your 12,000. And I can't see where 2 Camas Prairie is coming up with any -- any other 3 than their records, which I can't -- that they 4 haven't given to anyone that I can see. 5 A. They have provided no details of their 6 offbranch cost calculations. This is the closest 7 thing that you can say is detailed, and these aren't 8 details, these aren't cost calculations. These 9 aren't showing in any way how these cost 10 calculations were derived. The only thing that's 11 showing is the final answer, so there's no way for 12 me to judge if they even calculated 392,000 13 correctly. 14 Q. So you have been supplied in your 15 investigation with no document at all where these 16 cars are being transloaded in Lewiston, Idaho? 17 A. Right. 18 Q. Okay. And you did not play with 19 $168,000 that they're saying that they are incurring 20 on the offbranch cost. Is that correct? 21 A. Right. But that is something that I 22 will take a look at. I'm going to take a look at 23 the issue raised and see how any adjustments would 24 affect their $392,000. 25 Q. On your Exhibit 3, page 2 of two, you 256 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 talk about locomotives and the elimination of 2 locomotives. Is that correct? 3 A. Yes. 4 Q. In the Applicant's Application, it 5 says Service to industries on the line are provided 6 as an as-needed basis; and it says they operated 7 183 trains in 1999 between -- 8 A. And it doesn't say what that means. 9 Q. -- between Lewiston and Grangeville. 10 Then we get down to Footnote 12 in 11 page 10 of the Applicant's Application. It says By 12 the term of "train origination," Applicant means 13 that a train that begins and ends up on a trip in a 14 calendar year, whether it operates in just one 15 direction or between two points or travels from 16 point of origin to destination in return. 17 A. And it doesn't say what point that 18 is. It doesn't say whether it's one foot into the 19 Second Subdivision, it doesn't say whether it's all 20 the way to Grangeville. It's almost a meaningless 21 term. 22 Q. So if they say they would eliminate 23 two locomotives -- right now they are operating -- 24 in 1999, they operated 183 trains. That means you 25 have 182 days those two locomotives just sat idle. 257 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 Is that correct? 2 A. Or used someplace else. 3 Q. Or used someplace else. That's 4 correct. 5 A. Right. 6 Q. I mean, from that -- from that, is 7 that where you came up with your -- is it a 8 speculation that they would use those locomotives 9 someplace else? 10 A. It's the same type of reasoning. And 11 Mr. Spradlin also mentions that at least once per 12 week the locomotives operate to the end of the 13 branch. And that's the only thing that really has 14 much in the way of meaning, because it says that it 15 went over the whole branch so it would have had to 16 have done like it had done previously, but the other 17 references to train service aren't helpful at all 18 because it doesn't say how much of the Grangeville 19 branch it operated over. 20 Q. So if the train crew went to work on 21 Monday and went from Spalding to Lapwai, a total of 22 six or seven miles -- 23 A. Right, then it would have gone back 24 off the Second Sub and gone on to a different sub, 25 so it's not even a day, maybe it's just an hour, and 258 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 maybe most of the time was really spent on some 2 other subdivision. There's no way of knowing. 3 Q. So on their onbranch cost, these 4 locomotives are not -- or, should not be contributed 5 100 percent to the Grangeville -- to Subdivision 6 Two? 7 A. Right. Right. I think it's a great 8 overestimate to say that two locomotives would have 9 been reduced. 10 Q. You talked about the bridges and the 11 Parsons Brinckerhoff -- I guess you'd say their 12 analysis -- maintenance cost analysis that they 13 performed for LaSalle? 14 A. Yes. 15 Q. Would you turn to page -- 16 A. Of the Parsons report? 17 Q. Of the Parsons report, would you turn 18 to page -- 19 A. I don't have that with me. 20 Q. Oh, excuse me. 21 MR. MILLWARD: Do we have another one 22 that we could share with him, Mr. Chairman? 23 COMMISSIONER KJELLANDER: We're not 24 even sure that we have it, so I don't know that we 25 can share it with someone. 259 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 We have one for the Commission here. 2 MR. HEFFNER: If I can say so, I can 3 address the Commission. 4 The text was provided to everybody. 5 The only difference between the actual report and 6 the part that was included in the Application as 7 Exhibit No. D is pictures, of which there were a 8 lot, and somewhat I guess I'll loosely call tables 9 and sort of like references to the pictures. So 10 their -- the Application does include the report. 11 THE WITNESS: Could you repeat again 12 what page you wanted me to look at? 13 Q. BY MR. MILLWARD: On page 7. 14 A. Okay. 15 Q. Okay. The third paragraph, third 16 line, says Although the rail was more worn than in 17 other areas, it appears that -- it appears to be 18 within FRL standards for acceptable railway. 19 Do you see that? 20 A. I see that, yes. 21 Q. And you go down to the second to the 22 last paragraph where it talks about the Second 23 Subdivision? 24 A. Yes. 25 Q. It talks about what they recommend for 260 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 repair. 2 And if you go to the last paragraph of 3 the Second Subdivision which would be midway through 4 page 8, it says "overall" where it begins? 5 A. Yes. 6 Q. It says Overall, there are 123 bridge 7 ties and 170 crossties that should be replaced? 8 A. Yes. 9 Q. Which makes an average of six bridge 10 ties and six crossties per bridge? 11 A. Right. 12 Q. Don't you think that $890,000 of track 13 maintenance for less than 300 ties is quite 14 excessive for bridge repair? 15 A. Well, that's -- I'm not testifying to 16 that part of it, but it seemed to me to be awfully 17 excessive, especially since they haven't done that 18 in the past. 19 Q. In their report, don't they -- doesn't 20 Parsons state that the line is in very -- very well 21 condition? 22 If you go up to Paragraph 2, it says 23 that for both Class 2 and Class 3 tracks -- this is 24 page 7 again -- that it falls within the FRA 25 standards? 261 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 A. Yes. 2 Q. So this line is, according to Parsons, 3 in very good shape and the bridges are in very good 4 shape? 5 A. According to everything I've heard, 6 and this is -- I've heard it from a number of 7 different sources. That's what I've heard. 8 Q. And that the only thing that they 9 suggest is maybe a lowering of some speed 10 restriction in some curves. Is that correct? 11 A. That's my recollection, yes. 12 Q. Finally, the forecast the Camas 13 Prairie has on the car shippings -- 14 A. Yes. 15 Q. -- shipments of 2,621 cars for this 16 forecast year -- 17 A. Yes. 18 Q. -- is that an excessive amount of 19 cars, in your opinion, to be transported over any 20 rail line? 21 A. No, it's very few cars. Most lines 22 could handle, you know, many times that. So 2,620 23 cars really wouldn't put a lot of wear and tear on 24 the Second Subdivision. 25 Q. So the maintenance cost shouldn't be 262 HEDRICK COURT REPORTING PLAISTOW (X) P.O. BOX 578, BOISE, ID 83701 Staff 1 as high as what the Camas Prairie is saying it could 2 be. Correct? 3 A. Correct. 4 MR. MILLWARD: With that, I have no 5 other questions. 6 COMMISSIONER KJELLANDER: Finished? 7 MR. MILLWARD: Yes. 8 COMMISSIONER KJELLANDER: Oh, good. 9 Thank you very much. 10 Redirect? 11 MR. HOWELL: None. 12 COMMISSIONER KJELLANDER: Didn't think 13 so. 14 Are there any other matters that need 15 to come before this Commission? 16 If not, I want to thank the parties 17 for their participation tonight. 18 And we also need to admit all the 19 exhibits that have been identified. 20 (Staff Exhibit Nos. 11 and 12 were 21 admitted into evidence.) 22 COMMISSIONER KJELLANDER: And also a 23 thank-you to Wendy Murray, our court reporter. 24 While at times we felt like we could doze off, you 25 couldn't, and we appreciate your work this evening. 263 HEDRICK COURT REPORTING COLLOQUY P.O. BOX 578, BOISE, ID 83701 1 And with that, this public hearing is 2 adjourned. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 264 HEDRICK COURT REPORTING COLLOQUY P.O. BOX 578, BOISE, ID 83701 1 AUTHENTICATION 2 3 4 This is to certify that the foregoing 5 is a true and correct transcript to the best of my 6 ability of the proceedings held in the matter of 7 Camas Prairie RailNet's Application to abandon the 8 Spalding-Grangeville branch in Lewis, Idaho, and 9 Nez Perce counties, Case No. CPR-R-00-1, commencing 10 on Monday, June 19, 2000, at the Highland High 11 School, 112 Boulevard Street, Craigmont, Idaho, and 12 the original thereof for the file of the Commission. 13 14 15 16 __________________________________ WENDY J. MURRAY, Notary Public 17 in and for the State of Idaho, residing at Meridian, Idaho. 18 My Commission expires 2-5-2002. Idaho CSR No. 475 19 20 21 22 23 24 25 265 HEDRICK COURT REPORTING AUTHENTICATION P.O. BOX 578, BOISE, ID 83701