Dave Spreen
Enterprises, Inc.
707.445.2244, fax
707.445.1024
26 January 2009
Deborah
Harmon, Senior Environmental Planner
CA
Department of Transportation
RE: Richardson Grove Operational Improvement Project
DISTRICT 1 – HUM – 101, PM
1.1/2.2
464800
Draft Environmental Impact Report/Environmental
Assessment and Programmatic Section 4 (f) Evaluation
Dear
Ms Harmon:
I
have reviewed the above-referenced Project DEIR, giving special attention to
the information provided concerning the proposed project’s economic
justification and economic impacts.
Those
are my areas of special interest and expertise.
The
information concerning Caltrans’ proposed project’s economic justification and
economic impacts appears to be drawn exclusively from the March, 2008 report
“Realigning Highway 101 at Richardson Grove: The Economic Impact on Humboldt
and Del Norte Counties” prepared by Dr David Gallo of Chico State University’s
Center for Economic Development under a contract with your department in
support of the proposed project.
Dr Gallo’s analysis is not
based upon statistically significant sampling
In
order for Dr Gallo to arrive at the conclusions that he presents in his report,
the data that he has applied to his analysis would have to be drawn from
statistically significant sampling. The data upon which Dr Gallo’s
conclusions are based were not drawn from statistically significant sampling.
Dr Gallo’s conclusions are not valid. They do not represent a valid rationale
for the department’s proposed realignment of Highway 101 through
By
way of background concerning my qualifications for critiquing Dr Gallo’s
Humboldt and Del Norte work for your department, I hold a degree in mathematics
from
Caltrans’
DEIR asserts ("Purpose and Need", Section 1.2, page 2) that “As these
STAA vehicles have become the “national standard,” areas that do not have
access for these trucks are at an economic disadvantage because truck cargos
must be unloaded and transferred to shorter trucks coming into and out of the
county, which results in making goods movement more expensive and less timely.”
Both of these premises – that 1-
STAA-limited areas such as ours are at an economic disadvantage and that 2-
moving goods in and out of our area on STAA trucks would be less expensive and
more timely than our current trucking services – need to be examined in
relation to Humboldt and Del Norte counties’ business demographics and
particular logistics situation.
The Gallo Report attempted to do
this, but its assessment is based almost entirely on the Humboldt County Economic
Development Division's online survey (Gallo Report, page 1) which was
inadequately designed and poorly implemented by any acceptable standards of
sampling.
For example, on page 3, you will
find that conclusions concerning the “Effect on Annual Truck Traffic” are based
on only 14 responses.
The "Categories of Costs"
(Gallo Report page 4) is a one-sided list of unsupported economic
arguments and green-washing claims. The public has been misled to believe that
large trucks must somehow stop south of Richardson Grove to reload onto smaller
trucks in order to continue on up Highway 101.
95
percent of
How many trucking firms, local or
non-local, actually ship more than one 53-foot truckload in general now? In my
experience 95 percent of the businesses in
We could put eight traffic lanes
through
Shipping delays could actually
increase as carriers seek to fill larger trucks.
Competition could decrease as weaker carriers are pushed out of the market.
Private carriers do not combine
freight. The reductions in traffic projected in the report and DEIR are,
therefore, over-estimated. Freight movements in and out of
There is nothing terribly “green”
about larger trucks with under-utilized capacity, but they certainly would be a
possibility with the fleet conversion contemplated in the Gallo report – and
their effect on the environment needs to be factored into the Richardson Grove
project as well.
Larger businesses will have greater
access to fully-loaded STAA trucks, putting the area’s small and medium
businesses at further competitive disadvantage.
We see nowhere in the DEIR nor Gallo
report where increased road maintenance costs attributable to damage caused by
full STAA truckloads is included among the economic impacts of Caltrans’
proposed project. There is an abundant literature on the subject. We don’t
understand why it has been omitted here.
The "Quantifying Impacts"
(Gallo report, page 6) attempt to justify the survey results, but acknowledge
that they are limited to only a few sectors. Footnote 1 on page 1 states that
the survey was confidential and that "none of the responses can be
released to the public", thereby making further scrutiny of the data
impossible. Related to exporters’ ability to pass along higher freight costs,
however, footnote 3 on page 5 singles out the Easter lilies operations at
The report’s reasoning is hard to
follow from that point, but the footnote then goes on to say that the report
thus assumes 100% of higher freight costs are "absorbed by local firms,
workers, and input suppliers". Is this really a valid assumption?
Is this statement equally true for both locally owned businesses and the local branches of businesses
based outside of the two counties?
On page 5, Gallo asserts that it is
"impossible" to identify any particulars, but that "economic
theory does tell us that all of the increase in the cost of truck
transportation is borne by the local economy".
Really? And even if that were so,
will the proposed project through
At
least 95 percent of the cost of shipping in/out of our area is distance.
Period.
When it comes to increased truck
freight costs in and out of our area, the biggest factor (at least 95
percent) is distance. The Gallo Report claims on page 2 that the "survey
results indicate that RG STAA restrictions" increase costs for the
"affected sectors" by 16.9 percent.
So what is the effect when spread
across all of the sectors?
I question any direct relation
between freight cost and local area wages as implied in "Local vs.
Non-Local" truck services (Gallo report, page 7). Unless I missed it,
there is no calculation on what the expected reduction in common carrier rates
would be after the project is completed.
Where is the survey of common
carriers asking what this will mean to them; if they will need to buy new
trucks; if
they will be forced to lay off drivers, but increase wages; and by what
percentage will their overall freight rates be reduced, if any?
Page 9 "Annual Impacts"
admits to being weighted. Lost sales potential is not included. The last
paragraph states that costs are based on only 19 online responses. Then, on
page 10, there is an attempt to quantify lost sales within the IMPLAN model
utilizing the very limited survey data.
Was
the pulp mill included among the responses/Gallo report analysis?
It is likely the pulp mill was a
survey respondent. If so, and if the now-closed mill is not reopened, how does
its loss affect the economic impacts projected in the Gallo report?
It is within the realm of
possibility that the pulp mill accounted for up to 50 percent of the total
shipping represented in the HCEDD’s limited survey data. Consequently, the
Annual Economic Impact (Gallo report, page 9) of lost income would be cut in
half.
What about the multiplier effect for
local compared to out of area businesses? If the Richardson Grove State Park
project results in greater cost savings for “big box stores” on the incoming
side, then the 20 percent multiplier for dollars spent at local businesses will
decrease, while the six percent community multiplier for out of area
corporations will increase. However, since there are only so many retail
dollars to be spent, the net result over the long term could be a significant
reduction in local economic activity over the "no project"
alternative.
Why isn’t that range of possibility
included in the "Multiplier Impacts" on page 10 of the Gallo Report?
The "Conclusions" Table 4
impacts (Gallo report, page 12), in addition to the wide degree of uncertainty
due to the limited survey sampling and data gathering method, already need a
major downward adjustment given the current recession. Also, page 12 footnote 5
is not specifically referenced, nor is the footnote's assertion that no new
small, efficient freight trucks will come on the market in the future.
Please provide references for this,
so far as we know, totally unsupportable statement.
Conclusions
and recommendations
The Confusion Hill Bypass project is
a good example of a Caltrans project that makes a lot of sense: benefits go to
all users, carriers and businesses equally. In addition, significant economic
and environmental gains are evident and can be tracked. There was nothing but
support for that project.
Based on my analysis of the Gallo
report and the DEIS sections that depend on it, I would recommend that Caltrans
initiate an independent assessment of the statistical validity of the HCEDD
Survey; the effect of that validity – or the lack of it – on the Gallo report’s
conclusions; and the implications, therefore, for the rationale of Caltrans’
proposal to widen Highway 101 through Richardson Grove State Park.
Based
upon my considerable experience with shipping costs in and out of our region,
and the role that shipping costs play in business profitably in our region, I
conclude that if a more accurate range of future economic impacts were
calculated, the cost of the Richardson Grove Operational Improvement Project
could not be justified.
Safety
issues at Richardson Grove can be more effectively and economically addressed
by other methods.
At
this point in time I would recommend that Caltrans adhere to the “No Project”
alternative.
Sincerely,
David M. Spreen, President
Dave Spreen Enterprises, Inc.