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