Aggregates v. Commissioner of Internal Revenue, No. 31104-21 (2026)

Case details
Full caption
Riddle Aggregates v. Commissioner of Internal Revenue
Country
United States
Jurisdiction
Federal
Decided
2026
IN THE UNITED STATES TAX COURT In the Matter of: RIDDLE AGGREGATES, LLC, ORNSTEIN-SCHULER, LLC, TAX MATTERS PARTNER, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) ) ) ) ) ) ) ) ) ) Docket No. 31104-21 Volume:3 Pages:527 through 761 Place:Atlanta, Georgia Date:March 18, 2026 RECEIVED3/19/26
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 527 IN THE UNITED STATES TAX COURT In the Matter of: RIDDLE AGGREGATES, LLC, ORNSTEIN-SCHULER, LLC, TAX MATTERS PARTNER, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) ) ) ) ) ) ) ) ) ) Docket No. 31104-21 Russell Federal Building & Cthse. 75 Ted Turner Dr., S.W. Room 1136, 11th Floor Atlanta, Georgia 30303 March 18, 2026 The above-entitled matter came on for trial, pursuant to notice at 9:04 a.m. BEFORE: HONORABLE KATHLEEN KERRIGAN Judge APPEARANCES: For the Petitioners: MICHAEL TODD WELTY, ESQ. DANIEL WHARTON, ESQ. ANDREW W. STEIGLEDER, ESQ. MICHAEL B. COVERSTONE, ESQ. MERIMA MAHMUTBEGOVIC, ESQ. MACDONALD A. NORMAN, ESQ. KOSTELANETZ LLP 309 East Paces Ferry Road, NE 4th Floor Atlanta, GA 30305
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 528 APPEARANCES (CONTINUED): For the Petitioners: MAXWELL BROWN, ESQ. DANIEL ROSEN, ESQ. KOSTELANETZ LLP Seven World Trade Center 250 Greenwich Street, 34th Floor New York, NY 10007 For the Respondent: PETER J. KUYLEN, ESQ. INTERNAL REVENUE SERVICE OFFICE OF CHIEF COUNSEL 4050 Alpha Road Room 1331 Dallas, TX 75244 For the Respondent: STEPHEN A. HALLER, ESQ. INTERNAL REVENUE SERVICE ASSOCIATE AREA COUNSEL OFFICE 1222 Spruce Street Stop STL 2000 St. Louis, MO 63103 For the Respondent: H. BARTON THOMAS, JR., ESQ. INTERNAL REVENUE SERVICE OFFICE OF CHIEF COUNSEL 200 West Adams Street Suite 2300 Chicago, IL 60606 For the Respondent: CHRISTOPHER A. PAVILONIS, ESQ. INTERNAL REVENUE SERVICE OFFICE OF CHIEF COUNSEL 400 West Bay Street Suite 240 Jacksonville, FL 32202 For the Respondent: RANDI N. RAJ, ESQ. INTERNAL REVENUE SERVICE OFFICE OF CHIEF COUNSEL 300 North Los Angeles Street Room 3018 Los Angeles, CA 90012
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 529 C O N T E N T S VOIR WITNESSES: DIRECT CROSS REDIRECT RECROSS DIRE FOR THE RESPONDENT: Leslie Sellers 543 531 545 Shannon Rentz 635 640 693 705 619 624 James Freeman, II 686 692 Brian Groff 726 709,716 731,748
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 530 E X H I B I T S EXHIBITS: IDENTIFIED RECEIVED 7297-P 646 -- 7298-P 676 -- 7299-P 721 760 9001-R 726 748 9002-R 726 759 9005-R 629 637 9006-R 543 -- 9007-R 543 --
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 531 P R O C E E D I N G S (9:04 a.m.) THE CLERK: All rise. THE COURT: Please be seated. You may proceed. MR. PAVILONIS: Good morning, Your Honor. Christopher Pavilonis for Respondent. Respondent calls Leslie Sellers. LESLIE SELLERS having been duly sworn, testified as follows: THE CLERK: Please state your name for the record. THE WITNESS: Leslie Sellers. THE CLERK: Thank you. VOIR DIRE BY MR. PAVILONIS: Q Mr. Sellers, what is your occupation? A I'm a real estate appraiser. Q And do you hold any real estate-related designations or certifications? A I'm certified as a general certified appraiser in the state that this case is in. I'm also designated as MAI appraiser to the Appraisal Institute, in addition to that, the SRA designation with the same Appraisal Institute, and the AI-GRS designation from the Appraisal
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 532 Institute. Q So Mr. Sellers, you mentioned three designations to MAI, SRA, AI-GRS. Can you just explain to the Court briefly what each of these means, and what they qualify you to do? A Yes. They're all voluntary designations, from peer-related. And they all begin at the state-certified level. That's the starting point. In order to achieve these, you take additional education, successfully pass the exams. You have peer review of your work product. And you also have tests involved, comprehensive exam that, in the case of MAI is a two-day four-part exam. And your work product is reviewed by your peers. Q And where are you currently employed? A Sellers Realty, LLC, in Clinton, Tennessee. Q And what are your duties and responsibilities at Sellers Realty? A I am the manager of the entity. And I'm a real estate appraiser. Q And what is your formal education? A I have a bachelor's degree in real estate and urban development major from University of Tennessee at Knoxville. And I have successfully achieved all of the education requirements for the MAI, the SRA, and the AI-GRS designations.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 533 Q Have you taken any continuing education courses since you earned your degrees? A Yes. I regularly take continuing education. I'm required by the state to have 28 hours every two years. In addition to that, the MAI and the other designations from the Appraisal Institute require additional continuing education. And some of it is specialized. Q Have you taken any courses specifically related to the valuation of conservation easements? A Yes. I have had the conservation easement valuation course from the Appraisal Institute. I took it as a instructor. I'm one of the faculty of the Appraisal Institute. And the instructors that take it have to pay the higher grade than the normal student does. Q Okay. And do those courses involve the application of USPAP? A Say again. Q Do those courses you have taken involve the application of USPAP, the Uniform Standards of Professional Appraisal Practice? A Yes. I had the original course. Plus every two years, you have to have an update for USPAP. The updates don't have a test. But you have to sit through the update.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 534 Q Okay. And have you held any leadership positions within the Appraisal Institute? A Yes. I was a Tennessee chapter president. I was twice chair of the Southeast Region IX for the Appraisal Institute, which included duties serving on the board of directors. Then, I was elected as an officer. And I served four years as an officer in the National Association, ending with president in 2010. I have twice served as the chair of the Body of Knowledge Committee. And I have once served as the chair of the Professional Standards and Guidance Committee. That committee has responsibilities to advise the appraisal foundation on possible changes to USPAP. Q And have you helped author treatises on valuation? A Yes. I have. Q Can you just briefly give Your Court -- give the Court your role? A I regularly write articles for The Professional (sic) Journal, for Valuation Magazine. I have written education courses, seminars. I regularly review books, contribute to various books for the Appraisal Institute. The two that would most apply in this situation is, I was one of about 48 that contributed to the 14th edition of The Appraisal of Real Estate textbook. I was given
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 535 special recognition in that textbook for one of three people that authored chapter 34, which was about intangible valuation and separation of personal property and intangible business interest from a going concern. That was a new concept that we were adding into the textbook at that time. In the 15th edition, I was also one of about 48 that contributed to the textbook. And I was given special recognition for one of three people that were reviewed the entire manuscript. Q Have you received any awards from the Appraisal Institute? A I have. My chapter has given me two awards. And I've had two president's awards and the Kinnard Award, which was given at the national meeting for contributions to the education process of the profession. Q Have you appraised conservation easements before? A I have. Q And have you reviewed the appraisals of other appraisers? A Yes. Q Can you just explain to the Court your experience reviewing the appraisals of other appraisers? A The legal profession calls it a rebuttal report.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 536 In our profession, we call it a review. And USPAP, several years ago added two standards, Standards 3 and 4. Standards 1 and 2 are; 1 is how you do your work as an appraiser, and 2 is how you write your report as an appraiser. Standard 3 was added for review. It's what you do when you do a review. And Standard 4 is how you write your reports as a review. At that time, the Appraisal Institute got involved in education for a review process, and developed education about specifically doing reviews. And when they did that, I got involved as a instructor. And I teach those courses to appraisers about how to do it. We look at it as a different discipline. Q Okay. And over the past 20 years, can you just give the Court an idea at a high level about how many appraisals you've done, an estimate? A In how long? Q At a high level. Just, you don't have to be specific, just -- A I've been appraising since, full time since 1976 when I graduated from college. And I guess, I'd say that I have to say thousands in that time period. Q And did you actually view the subject property in this case? A I did. Q Okay. Have you been recognized as an expert in
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 537 Federal court before? A Yes. Q And you've been recognized as an expert in Tax Court before? A Yes. Q There's one additional question I want to ask, just to take one step back. Do you have any professional experience dealing with core drilling as part of a real estate project? A Yes. I am also -- I have another company that I own. It's called Sellers Land & Development. And as a part of that, I have both developed for myself and my partner, who's my mother, as well as for a fee for other people. And part of those have involved core drilling, and hiring core drilling, working with engineers on the projects. Q Thank you, Mr. Sellers. MR. PAVILONIS: Your Honor, Respondent offers Mr. Sellers as an expert in real estate property valuation, conservation easements, appraisal review, and real estate valuation methods and techniques. MR. ROSEN: Well, first, good morning, Your Honor. Daniel Rosen, for the Petitioner, stating my appearance at joining today. We have no problem with recognizing Mr. Sellers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 538 as an expert in real property appraisal in Alabama, which is the recognition that was given to Mr. Catlett, who Mr. Sellers is rebutting, at least in part, also Mr. Shea. The proffer by Respondent, beyond the appraisal of real estate, all those other elements that were mentioned are some elements of being an expert in the appraisal of real estate. If you're an expert in the appraisal of real estate, you need to have expertise in appraisal review and professional appraisal standards. So we would object to the broader qualification, but have no objection to recognizing Mr. Sellers as an expert in real property appraisal. MR. PAVILONIS: Your Honor, if I may respond? THE COURT: Yes. MR. PAVILONIS: Mr. Sellers did testify that appraisal review is a separate category from real estate appraisal valuation. And yes, conservation easements is a subset of real property valuation. And if the Court wants to treat it as such, assuming Mr. Sellers is qualified as a real estate appraiser, that that would subsume conservation easements. We would accept that. And Mr. Sellers proffers real estate valuation methods and techniques. If the Court is also assuming that is, it's subsumed within the definition of real estate appraisal or appraiser, we would accept that. But we do think
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 539 appraisal review is a separate category. Mr. Sellers testified he has experience and training in that category, and should be recognized separately in that category. THE COURT: Do you have any response for me? MR. ROSEN: Yes. Again, appraisal practice would include the preparation of appraisal reviews. Review of the Appraisal Institute's Appraisal of Real Estate makes it clear that appraisal review is stock and trade practice of every real estate appraiser. So I don't view that as any special area of expertise, nor do I think that Mr. Sellers has demonstrated in particular expertise in the area of appraisal review above and beyond what anyone who would be qualified as an expert in the appraisal of real estate would have. THE COURT: Mr. Pavilonis, do you want to respond to that he has anything above and beyond? MR. PAVILONIS: Yeah. Well, that'll be an additional voir dire, Your Honor. BY MR. PAVILONIS: Q Mr. Sellers, you testified a little bit earlier that appraisal review is separate from valuation. Could you just expand on that? How your experience in appraisal review is above and beyond what a regular real estate appraiser would do? A Yes. If you're licensed in a state, you're able
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 540 to do both appraisals and appraisal review. However, the voluntary designation, the AI-GRS, is one of two that developed both courses with testing, peer review, and ultimate designation specific to understanding the unique parts of that discipline. One of them is for the commercial general-type of review, which is the one I have, the AI-GRS. They have another one that is specific to just residential. And it's AI-RRS. MR. PAVILONIS: So Your Honor, Respondent would respond that Mr. Sellers carries a separate designation specific to this characterization of appraisal review, and therefore should be recognized above and beyond just real estate appraisal. MR. ROSEN: I will note, Your Honor, that Mr. Catlett had the exact same GRS designation as Mr. Sellers. I think that Respondent's broader proffer is really just trying to bolster perceived credibility of this expert. It's not a separate area of expertise. And if it was subsumed within Mr. Catlett's expertise, it would be identical designation. I don't think in Petitioner's view, the Court should confuse the record by recognizing appraisal experts in subspecialties that are necessarily subsumed within by this designation. MR. PAVILONIS: Very briefly respond, Your Honor?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 541 THE COURT: Well, at first, I think you had a question to the witness before Mr. Rosen -- MR. ROSEN: I apologize. THE COURT: -- objected. And I have forgotten what the -- completely what the question is. So if you could -- Mr. Pavilonis, if you could ask the witness that question again. MR. PAVILONIS: Sure. BY MR. PAVILONIS: Q Mr. Sellers, can you please explain how your background, your experience, credentials makes you qualified to do appraisal review above and beyond just what a normal appraiser who has a state certification to appraise real estate could do? A It speaks to the designation that I have and the additional education and testing and peer review that I have to achieve that designation. It is, again, a specific discipline. USPAP has business valuation standards, personal property standards, real estate standards, and real estate review standards. So it is a completely separate discipline the way it's looked at within the profession. And the education, peer review, and testing that I have is specific to that discipline. MR. PAVILONIS: And Your Honor, just to respond to Mr. Rosen's comments that Mr. Catlett had a similar
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 542 designation. They didn't offer him as an expert in peer review -- I'm sorry, appraisal review. So it's a moot point that he had the designation that this expert is being offered, and that has clear experience and a credential to show that he's gone above and beyond just regular certified appraiser status. MR. ROSEN: And may I respond, Your Honor? THE COURT: Yes. And then -- MR. ROSEN: I would note that that was pursuant to the stipulation of the parties that that was the qualification, Your Honor. MR. PAVILONIS: There was no such stipulation, Your Honor. There was no such stipulation. MR. ROSEN: I don't want to make counsel witnesses, either of us. So I'm representing to you that this was an agreed-upon stipulation. I think it just needlessly complicates the record to take some elements of appraisal practice, and proffer them with some additional areas of expertise. Appraisal review is normal stock and trade in the practice of appraisal in real property. THE COURT: The witness is certified in real property appraisal in Alabama. And the Court recognizes that it includes other things. And from his background, and what can be the testimony, you can understand the experience he has in appraisal review.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 543 MR. ROSEN: Thank you, Your Honor. MR. PAVILONIS: Thank you. DIRECT EXAMINATION BY MR. PAVILONIS: Q All right. Mr. Sellers, were you hired by Respondent to prepare a rebuttal, or prepare a rebuttal reports to the expert reports of Kyle Catlett and Barry Shea? A I was. MR. PAVILONIS: Okay. Your Honor, may I approach the witness? THE COURT: Yes. MR. PAVILONIS: Your Honor, I've handed the witness what has been marked as Exhibits 9006-R and 9007-R. I'm also going to hand a copy of those same exhibits to Petitioner's counsel. MR. ROSEN: Thank you. MR. PAVILONIS: And two copies to the Court. BY MR. PAVILONIS: Q Mr. Sellers, I have handed you two documents that have been marked for identification as Exhibits 9006-R and 9007-R. Do you recognize these documents? A I do. They're my two rebuttal reports in this case. Q Do these reports contain your analysis on the
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 544 reports prepared by Kyle Catlett and Barry Shea? A They do. Q And these reports, are they signed by you? A Yes. Q And are the reasons supporting your opinions reflected in your reports, which have been marked as Exhibits 9006-R and 9007-R? A Yes. MR. PAVILONIS: All right. Your Honor, Respondent offers what is marked for identification as Exhibits 9006-R and 9007-R into evidence. MR. ROSEN: May I voir dire, Your Honor? THE COURT: Yes. MR. ROSEN: Thank you. (Counsel confer.) MR. ROSEN: Your Honor, may we ask the clerk to switch presentation over to Petitioner? Thank you. THE COURT: Yes. MR. ROSEN: Thank you. And just for the Court's benefit, I have a fairly lengthy voir dire for Mr. Sellers on both of these reports. THE COURT: Okay. MR. ROSEN: To the extent that the reports get admitted, that will obviously just carve-out of my cross. I have no intention of covering the same ground twice.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 545 But the voir dire is going strictly to the admissibility of these reports, not to their credibility. MR. PAVILONIS: As long as the questions are about the authorship and the admissibility that doesn't get into the underlying substance within the scope of voir dire, Your Honor. THE COURT: I mean, you may make objections when it's appropriate. MR. PAVILONIS: Yes. MR. ROSEN: Thank you, Your Honor. May I proceed? THE COURT: Yes. MR. ROSEN: Thank you. VOIR DIRE BY MR. ROSEN: Q Good morning, Mr. Sellers. A Good morning. Q This is now, I think, our third time together in these respective positions. I'm going to ask you about the preparation of your reports, your rebuttal to Mr. Catlett's report, which is Exhibit 9006-R, and your rebuttal to Mr. Shea's report, which is Exhibit 907 -- 9007-R. Excuse me. And I believe you have copies of those in front of you? A Yes.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 546 Q And we'll use the projection as appropriate to ask you questions. My questions may be about one of the specific reports, that being Exhibit 9006-R or 9007-R, or my questions may be general to both reports. I'm going to try to remember to be specific, or to be general in my questioning. So feel free, if you're not sure which report we're talking about, or we're talking about both, feel free to let me know. Is that okay? A Yes. Q Okay. So I want to talk generally about these reports. Mr. Sellers, these reports were lodged with the Tax Court in late January of this year; is that right? A I don't remember. Q Feel free to -- I'll represent to you that they were. It's not in dispute. Can you describe the steps that you took before signing the reports and delivering them to Respondent's counsel to make sure that the reports were correct and complete? A I'm not sure I understand. I mean, I read the reports. I reviewed them. I have since reread them again, and produced a errata page for each one, which I intend to handle with the Court before we get here. I have found over the years that no matter how many times I read a report, I always find something else. I found something else since I had the errata sheet prepared.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 547 It's minor. But it is something that I would rather not be in the report. Q I guess, I'll be a little more specific. What type of quality control did you engage in to make sure that references and citations in your reports were accurate and complete before signing your reports and giving them to counsel for Respondent? A Well, most of this, the erratas that I have are related to the citations. And those were reviewed again. And as, again, I prepared the errata sheet for that. Q Before you signed the report, did you engage in any effort to make sure that the citations in your reports were correct and complete? A Other than reading the report, I have a colleague, my son, that works with me. I have him read it to see if he has any issues as well, makes me aware of anything. Q Did he make you aware of anything before you signed the reports, but after the reports were complete regarding citations? A I don't know. I can't recall exactly what those conversations were. But it's a standard process in our office. Q Did you maintain drafts of your report? A Generally, the way I work is through a Word
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 548 document. And it's developed and changed and developed and changed and developed and changed as we move along. Q So in working with your son on the reports -- and by working on it, I'm speaking generally in terms of the process of getting the reports to completion. How do you share the draft and the report with your son? Do you email it, or is it on a shared drive? I'm just trying to understand. Is it on the cloud? A Sometimes -- we do have a shared drive. Sometimes it's, he reads it through that. Sometimes he prints it off and takes it home and reads it. It varies. Q And without getting into the specifics of any communications with Respondent's counsel, what is the process that you followed in preparing your report to get review from Respondent's counsel? Did you use email to share drafts of your reports? A Oh. When I am sending my work product to the Office of Chief Counsel, they use a portal called Kite. Q Right. So you upload. I think it's Kiteworks. Yeah. I know what you're talking about. So that's a file-sharing platform, where you would upload a document, so that Respondent's counsel could get that document securely, correct? A Yes. Q And Respondent's counsel would share documents
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 549 back with you through that same portal; is that correct? A Yes. MR. ROSEN: Okay. If we could bring up PDF page 8 of Exhibit 9006-R. MR. PAVILONIS: Just for clarification, the witness' copy in front of him doesn't have PDF page numbers, so if you -- MR. ROSEN: I'll reference both -- MR. PAVILONIS: Yeah. Appreciate it. MR. ROSEN: -- for the -- so this is page 6 of the report, but it's PDF page 8, and if you could just zoom in on the portion at the bottom that says, "Appraisal review assistance"? BY MR. ROSEN: Q If you could just take a moment and read that to yourself and let me know when you've done so? A Yes. Q So Benjamin Sellers is your son, correct? A Yes. Q And you say that Mr. Sellers assisted you with the research. What particular research did Mr. Sellers assist you with in connection? And again, we're looking at Exhibit 9006-R, which is the Catlett rebuttal, but my question also extends to 9007-R, which is the Shea rebuttal. I'll represent to you, you have the same
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 550 statement in both reports. So what exactly, across the reports, did Mr. -- I'm not going say Mr. Sellers to confuse the record, I will say Benjamin Sellers; what research did he assist you with? A Well, with regard to the Catlett report, we did research for data, looking at deeds, maps, all kinds of things about the subject property before we did the property inspection. I will admit that Ben is younger, and he is probably a little bit more advanced than I am in technological. We do some digitization within my proprietary mapping system that we have. He also looks up deeds. We have access to deeds in the state or the counties by subscription. And then other than that, if I ask for some specifics, for instance, find me this, find me that, he will do that research for me. Q Do you recall any specifics in connection with either your report, your rebuttal report of Ms. Catlett and your rebuttal report of Mr. Shea when you asked him to do those things? A I asked him to take the mine plan that Mr. Gold had produced that was in Mr. Catlett's report and digitize it and put it on our mapping program and then overlay the flood zones and the wetlands over that area so that I could see how they related to each other. And also I wanted to mark the two core drilling holes. I do recall
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 551 asking him to do that. Q And I think -- it's okay if I use Ben, just for the record we're talking about Benjamin Sellers. Was Ben responsible for actually drafting any of the contents of either of these reports? A No. He did prepare some tables for me to look at, at my direction, but he doesn't do anything other than what is under my direction. Q So you are the sole author of your reports; is that correct? A Yes. Q Okay. General questions. Mr. Sellers, when you were talking about your son earlier, I may be paraphrasing, I think you said that he's a -- is it fair to say that he's more computer savvy than you are? A In some parts of it, I'm actually better in some areas than he is. Q And what would those be? A I'm probably better in parts of Excel and parts of Word than he is. Q Are you familiar with artificial intelligence, chatbots? A Chatbox? Q Chatbots, or AI. I'll use AI, not for the Appraisal Institute now, but for artificial intelligence?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 552 A Yes. Q Are you familiar with some of the tools that are available, the artificial intelligence tools from Google or Microsoft, like Copilot or ChatGPT? A Yes. Q And just generally, not necessarily with respect to any of your appraisal practice, have you used any of those artificial intelligence tools? A Yes. I regularly use Grammarly. I've used it for years. Q Have you used ChatGPT? A I've used ChatGPT, and I've used Gemini, I think. Q You used Gemini. Do you have a paid account for any of these, or it's just the free accounts? MR. PAVILONIS: I'm going to object. If there's a specific question about this related to the reports. MR. ROSEN: I'm tying it in, Your Honor. THE COURT: I'm going to allow it, because I think he's laying the foundation. MR. PAVILONIS: Okay. MR. ROSEN: Thank you, Your Honor. BY MR. ROSEN: Q I'll ask again. Can you describe generally your use of artificial intelligence in connection with your
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 553 appraisal practice? A Well, as I used Google before artificial intelligence came in, I would Google and find me the zoning requirements for Pickens County, Georgia, or something of that nature. And I have found that Gemini and Chat, in particular, are better at finding those things than what Google used to do. So I use those, in particular, for that. I use Grammarly regularly. I have attempted to be a very good grammar writer for near 50 years now, and I find that I am not what I want to be. So I've used Grammarly for several years. I usually have it give me ideas about the structure of sentences and things that I write. I do type. I type pretty fast for a two-finger typer. I have for years, but I tend to dictate and then go back and tweak it, and then use Grammarly to give me ideas about restructuring of sentences, or a paragraph to make it more readable. I tend to get a little bit wordy. Q Other than Grammarly, did you use any artificial intelligence tools in connection with your preparation of your rebuttal to Mr. Catlett and/or Mr. Shea? A You mean about Gemini or Chat? Q Yes, sir. A I don't recall specifically. I may have, but I don't recall. I'll typically ask it questions, the same
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 554 as I would with Google. Q Now, you're familiar -- or are you familiar with the difference between open systems and closed systems when we're talking about artificial intelligence? A Generally. Q And what's your understanding of the difference? A When you have the -- I think there's one is called Notebook that is supposedly a closed system, and you can train it to do things that you want it to do, and use only the sources that you want to use. Q Just to confirm we're on the same page. So a closed system would only be looking at data, or have data available to it that you're pointing it to, as opposed to an open system where artificial intelligence may be learning from your queries, like Gemini or ChatGPT? A I'll take your word for it. Q Okay. It's fine. Okay. Do you have accounts with Gemini or ChatGPT, paid accounts? A Yes. Yes. Q And are you aware as to whether or not search histories in either Gemini or ChatGPT, or both, are maintained as part of your subscription, if you wanted to go back and look at what you searched for? A I am aware that it has a list of chats, they call them, where I have asked it to find me something,
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 555 that's the way I understand it. Q Are you familiar with what has been described as artificial intelligence hallucinations? A What's that last word? Q Artificial intelligence hallucinations, have you ever heard that before? A No. Q Have you heard stories about artificial intelligence sending back cases or citations that don't exist, have you heard anything about that? A No. Q And that's what I meant by hallucinations. A I misunderstood you; hallucinations, yes, I've heard of that. Q Have you had any experience in using artificial intelligence in your real estate practice where what was returned to you by AI was in fact a hallucination? A Not that I can recall. MR. ROSEN: I'd like to bring up page 15 of Exhibit 9006-R, and I think that's not PDF 15, but page 15 the report. Yes. Perfect. If you could just zoom in on the bottom half of the page -- I'm sorry -- the top half. My apologies, Ms. Orona. Starting from "my review, analysis, and support". Yeah. A little bit lower. Right there. Perfect.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 556 BY MR. ROSEN: Q And I don't have a question about the substance of what's in this report right now, but I have a question about the way that you've styled this report. And I'm looking at the paragraph that begins, "In fact", and ends with "appraisal" in footnote 33. If I were to call that a block quote, would you understand what I mean? A Yes. Q Okay. Right. So am I correct that your indentation of language in your report like that is to indicate a direct quote from whatever the source is? A It could be a direct quote, or it could be something I'm referring to from the quote that I that I cite at the bottom. Q I'm sorry. I don't understand. So just looking at this paragraph here, in making this paragraph a block quote, this particular one, were you conveying to the reader that this was a verbatim quote from whatever footnote 33 is, and Ms. Orona can bring that up on the bottom if we need to see it. Maybe put them side by side if that'll help Mr. Sellers. Yeah. It's fine. Yeah. BY MR. ROSEN: Q So we have a citation here to Appraisal of Real Estate, 15th Edition, page 357. So with respect to this paragraph here, by making it a block quote, were you
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 557 representing to the reader that this was a direct quote from page 357 of the Appraisal of Real Estate? A That was the intent when I wrote it. I will say, based upon your previous questioning, I have had, when I do a Grammarly check, Grammarly doesn't seem to -- sometimes I've caught it -- where trying to restructure the wording in a sentence that I didn't intend it to. It takes something I've used as a quote, and that possibly could happen. Q Let me ask you about your use of Grammarly. So when you use Grammarly to check your report, you're essentially uploading the draft of the report into Grammarly so that it can check your grammar? A No. It's on your desktop. It's an add-in to Word, or it's in Excel, and other programs too. It does your email as well. And I'm not sure exactly how it works, but it's got two different functions. One is I can highlight a specific paragraph or sentence, and it will give me suggestions. Or I can say read -- I can tell it to rephrase it, and it will rephrase it. And then in addition to that, you can bring up a document, and it will highlight certain things as you go through document for possible rewording or spelling mistakes, commas, that sort of thing, as you go through it. Q But is it fair to say that in these two reports
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 558 that we're talking about here, Exhibits 9006-R and 9007-R, when you had a block quote like the one we're looking at right here on the screen, that your intent is to convey to the reader that this is a quotation from the source that you're citing? A When I have a block quote, the intent was that. Yes. Q Thank you. Mr. Sellers, you would agree that accuracy in citations is important in an expert report? A Yes. Q Okay. And you would also agree that a lack of accuracy in citations in an appraisal assignment, whether it's an expert report, an appraisal, or an appraisal review, could undermine the credibility and reliability of that assignment? A Yes. Q Okay. And you submitted these two reports under oath and under the certifications required by the Tax Court rules, right? A Correct. Q Now, I want to talk about the errata sheets for a few minutes. And if we could pull up first Exhibit 9008-R, which is the errata sheet for the Mr. Sellers' rebuttal to the Catlett report. MR. ROSEN: I don't know, Ms. Orona, if you can
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 559 kind of zoom in on the text a little bit. Just get rid of the white, it may make it a little bit bigger for everyone to see. A little bit bigger. BY MR. ROSEN: Q I want to just talk generally about -- THE COURT: What exhibit number did you say this was? MR. ROSEN: I'm sorry, Your Honor. This is 9008-R. I may have misspoken. This is a stipulated exhibit. THE COURT: Yes. MR. ROSEN: Yes. I was confused too, that the errata has been stipulated, but the reports are obviously still in play. BY MR. ROSEN: Q Mr. Sellers, who prepared this errata sheet? A I did. Q Did Ben Sellers play any role in the preparation of this errata sheet? A I don't recall. I could have asked him to check a specific source. I don't recall. It's been a couple of months. Q Now, this errata sheet, 9008-R, identifies 20 errata. Can you see that? Is that typical or common for you in a similar type engagement for preparing an expert
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 560 report, to have 20 corrections? A What, your question is, is it typical? Q Yeah. Have you had more than 20 errors to be corrected in any expert engagement that you've ever performed prior to your engagement in this particular case? A I don't recall. Q Can you recall how many errors you had in other reports that were prepared and filed here with the Tax Court in prior cases? A I don't recall. Q Do you recall if it was as many as 20 or more? A I don't recall. Q Just generally, again, and these questions apply equally to 9009-R, there are less, I will represent to you, errata meriting correction in your rebuttal to Mr. Shea, but we also have a similar list -- or a list of corrections for that report as well that you prepared. A What is your question? Q My question is whether you prepared a similar errata sheet in connection with your rebuttal to Mr. Shea's report? A I did. Q Okay. And so the errors identified in your errata sheets, Exhibit 9008-R and 9009-R, when did you
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 561 first identify that there were errors in your report that merited corrections? How soon after -- I'll phrase it differently. How soon after you provided your signed reports to counsel for Respondent to lodge with the Court did you discover that you had errors that needed correction? A I don't recall exactly when it was, but it was after the initial report was lodged and before this was lodged, I was asked by my client to do another review and prepare anything that I saw in the errata, and this is what I prepared. Q Can you recall generally how soon after your reports were lodged with the court? And I'll represent to you that was January 23rd of 2026, that you identified the errors set forth in these errata sheets? Was it a week after, a couple of days, several weeks, a month, generally speaking? A But it wasn't a couple of days. It was more than that. Q Yeah? A Beyond that, I can't specify when it was. I just can't recall. But it was more than a few days. Q Given that you created these errata sheets, I assume that you still have electronic versions of these errata sheets saved on your computer system?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 562 A I'm assuming I do. Yes. Q Okay. You would agree that reviewing those electronic files will tell us when they were created, correct, familiar with the concept of metadata? A Yes. It should be dated on my system. Q But sitting here today, you can't tell me when you prepared this? A I mean, other than you said within a few days or a few weeks, I would say that it was not within a few days. It was probably more like a few weeks, but I can't recall specifically. Q Did you identify each and every one of these errors in your report that you say merit correction, or were you informed by someone else that there were errors in your report? A No. I was just told to do a review, and check, and prepare an errata sheet. I found all these errors, or Ben, I asked him to read as well as myself, and see if he can point anything out. Q Do you have an explanation why these errors were not detected before your reports were lodged with the Court as part of your review and finalization of these two expert rebuttal reports? A Well, this is the first time that I've ever done rebuttal reports only in one of these cases.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 563 Q Um-hum. A And in this case, it was over the Christmas and New Year's holiday, and I recall working until about 4 o'clock on New Year's Eve and Christmas Eve. It was a challenge because I recognize many issues with Mr. Catlett's reports that I wanted to include in the rebuttal, and I wanted to try to include as many as I could. As a result, as I probably -- looking back on it, I probably should have narrowed my scope and only covered a few things versus more things. But I tried to expand the report, and as a result, I was turning in a report that I had not apparently done the details of checking my sources, as these 20 items on his report indicate. Q Again, I'll represent to you the reports, your rebuttal reports to Mr. Catlett and Mr. Shea were submitted to the Court on January 23rd of 2026. Do you recall, generally or specifically, how soon before that you completed those reports and provided them to counsel for Respondent? A I can't recall. Q I'll represent to you, just using 9006-R, which is your rebuttal to Mr. Catlett's report, it's dated January 23rd, 2026. Is that the day that you provided that report to the counsel for Respondent? A I can't recall. I produced it before the
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 564 deadline. I know I did that, but I can't tell you sitting here today exactly when I did it. Q If you dated it on January 23rd, 2026, could you have actually signed it and transmitted it to counsel for Respondent either before that date? That is, could you have post-dated the document; is that your practice? MR. PAVILONIS: Your Honor, I'm just going to check that this is getting into draft reports, which are not discoverable in Tax Court. MR. ROSEN: I'm not asking about the draft. I'm asking about the final report, when it was signed and provided to Respondent. MR. PAVILONIS: Well, he asked about the copy that is not signed, he's asking about the one he emailed before he signed it. THE COURT: I'm going to allow the question, but I recommend moving on after this -- MR. ROSEN: Yes. THE COURT: -- question is answered. MR. ROSEN: Yes, Your Honor. BY MR. ROSEN: Q And maybe my question wasn't clear. Your reports are both dated January 23rd, 2026. Would you have provided those reports signed and dated January 23rd, 2026 before January 23rd, 2026? That is, would you have post-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 565 dated these documents? A Not that I recall. No. Q Is it your practice to post-date appraisal documents like appraisals and appraisal reviews? MR. PAVILONIS: I'm going to object to relevance. It's supposed to be the admissibility of these reports. THE COURT: And I recommended that -- MR. ROSEN: I'll move on, Your Honor. I'd like to -- we have it up on the screen, is this 9008-R? Yes, it is. I'd like to blow up number 17 on the errata sheet, if you could blow up entry number 17. BY MR. ROSEN: Q Take a moment to read that, and let me know when you've done so? A Okay. Q Are you familiar with this error -- A No. Q -- meriting correction? A Not specifically. Not right since I sit here today. MR. ROSEN: Well, why don't we turn to page 50 of your rebuttal to Mr. Catlett's report, which is Exhibit 9006-R, it's going to be page 50, or PDF page 52. And if you could blow up the -- it's that block quote that starts
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 566 "For a deposit to have value"? THE WITNESS: Okay. BY MR. ROSEN: Q Is that the block quote that you were seeking to correct with that errata sheet entry number 17? MR. ROSEN: And if it's easier, and it's difficult for Ms. Orona to have two exhibits up at once, I could approach with a copy of the errata sheet if that makes it easier. I think Ms. Orona is going to do it, though. So it's number 17. You can blow up number 17, which is from the errata sheet, and just blow up the bottom half of the page on Exhibit 9008-R -- I'm sorry. 9006-R. You can't do it. Okay. Your Honor, may I approach the witness with a copy of 9008-R? I think it's going to just be easier for him to reference it with a paper copy. THE COURT: Yes. MR. ROSEN: Thank you. Okay. Thank you, Your Honor. BY MR. ROSEN: Q Mr. Sellers, I just handed you a copy of Exhibit 9008-R. I'm going to refer you back to what we were looking at a moment ago, which is entry number 17 on 9008-R. MR. ROSEN: Your Honor, would the Court like a
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 567 paper copy for cross-reference? THE COURT: Sure. MR. ROSEN: Thank you. BY MR. ROSEN: Q So can you tell me, Mr. Sellers, that that item number 17, in Exhibit 9008-R, is that the -- is this the paragraph that you're seeking to correct with this errata sheet, entry number 17? A I believe it is. Q Now, number 17 refers to footnote 135, do you see that? A Yes. But you meant to write 136, right, because that's the footnote that we're looking at here. MR. ROSEN: If we can blow up that paragraph again, Ms. Orona. Okay. It's gigantic. BY MR. ROSEN: Q That's an error in the errata sheet; it should be 136, right? A I'm sorry, I can't hear you. Q I'm sorry. Is that a mistake in your errata sheet when you cite in item 17 to footnote 135, and you meant to refer to 136, correct? A The errata 16 and 17, both relate to 135, and I believe the errata 17 should be 136. Q Thank you.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 568 MR. ROSEN: And if you could you draw up the bottom, Ms. Orona, and I do want to focus on this paragraph from the Yellow Book. BY MR. ROSEN: Q So going back to our earlier discussion, this is a block quote, Mr. Sellers, correct, in your report? A It is. Q Okay. And by making it a block quote, you were conveying to the reader that this was a verbatim recitation of what was actually in the Yellow Book, correct? A In the initial part, I was. In the errata sheet, I was trying to explain that that should be a paraphrased text. Q Okay. So when you write on your errata sheet entry number 17, this is paraphrased from the text on those pages, you're referring to this block quote here, right? A I believe so, yes. Q So this is not a verbatim recitation of the Yellow Book in your report, correct? What we're looking at on the screen? A That is the intent of the errata sheet to explain that it's a paraphrase. Q Do you know why this error occurred? How a
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 569 block quote could actually be a paraphrasing and presented in your report as a block quote? A The only thing I could do is speculate. I don't know. MR. ROSEN: Okay. If we could, let's go to -- I mean, let me -- may I have a moment, Your Honor? THE COURT: Yes. MR. ROSEN: Thank you. I just want to bring back up Exhibit 9006-R -- actually, I'm sorry. Can we go back to 9008-R, where we were in that footnote? I'm sorry, Ms. Orona, we're back to 9008. MS. ORONA: I'm sorry. MR. ROSEN: I'm sorry, 9006. My apologies. There you go. You just blow up the footnotes at the bottom, footnote 135, 136. BY MR. ROSEN: Q So footnote 136 cites to the UASFLA. And if I call that the Yellow Book, you know what I'm talking about, right? A Yes. Q Okay. Now, your report presented footnote 136 as a citation to a block quote from Yellow Book section 4.4.2.1.1; is that correct? A The original report did? Q Yes.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 570 A Yes. Q Mr. Sellers, you consider yourself to be someone who is quite familiar with the Yellow Book; is that fair? A I have had the course and passed the test. Q And you use the Yellow Book in your appraisal practice, right? A I do. Q Okay. But there is no section 4.4.2.1.1 in the Yellow Book, is there? A I don't sit here today and tell you yes or no without the book in front of me. Q Would it refresh your recollection if I gave you a copy of the Yellow Book to take a look at it? A I'd be happy to take a look. MR. ROSEN: May I approach, Your Honor -- THE COURT: Yes. MR. ROSEN: -- with a paper copy for him to take a look at it? THE COURT: Yes. MR. ROSEN: Thank you. It's Exhibit 9029-R. BY MR. ROSEN: Q And I'll leave that up on the screen as a reference for you. And I'll help you so you don't have to page through the whole thing. If you go to page 120 of the Yellow Book, that will bring you to section 4.4.2.1.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 571 A There is a 4.4.2.1. Q Right. And you would agree that on the following page, it goes to 4.4.2.2, correct? A Following that is, yes, that's 4.4.2.2. Q Okay. MR. ROSEN: If we could bring up -- I don't know if you could do this, Ms. Orona, but if you could bring up -- well, we can look at it here, we're citing to page 96 of the Yellow Book. If you could bring up page 96 of the Yellow Book, please, which is Exhibit 9029-R. Let me just blow up the text on the page. I don't know, is it too difficult, Ms. Orona, to also bring up that block quote from 9006-R as a side-by-side? Can you just blow up the block quote. There it is. Just blow it up. Okay. And if you could just blow up the text on the left, if you can also kind of stack them. BY MR. ROSEN: Q So on the top, we have the quote from the report, which is citing to page 96. This is page 96 of the Yellow Book. You could also look at the paper version, Mr. Sellers, which is Exhibit -- oh, got it. It is 9029-R for the record. Mr. Sellers, there's nothing on this page of the Yellow Book, on page 96. The words -- well, let me restate that, the words you used in your report that was
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 572 presented as a block quote from the Yellow Book don't appear in the Yellow Book; do they? A That's the reason I made the errata sheet to explain so there's no misunderstandings that that was a paraphrase. Q Is it your testimony -- A And it changes the page as well. Q Is it your testimony that you knew you were paraphrasing when you presented it as a block quote in your report and you just forgot to say you were paraphrasing, or you only realized that afterwards? A I do, on occasions, paraphrase versus black quote. And then I also have explained to you earlier, I have had a situation in the past where I had Grammarly restructure a paragraph that I didn't intend to. Q So if we go back -- and I know this is getting complicated here, but if we were to look at the errata sheet 9008-R, which I think you have in front of you. Do you have that, sir? A (No audible response.) Q Okay. There's nothing on the pages that you originally cited in your report, and we can pull up that footnote, 136 and 135, there was nothing -- I'm sorry. Let me restate that. When you identified this error in your errata sheet, you couldn't find any supporting
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 573 information on the pages that you originally cited; is that correct? It was page 96? A That's the purpose of the errata sheet. Q So your errata paraphrases a different section of the Yellow Book to support your original point; is that correct? A Say that again? Q What you're describing as a paraphrasing, in paragraph 17, is actually paraphrasing a different section of the Yellow Book? A Yes. MR. ROSEN: If we could bring back up Exhibit 9008-R to clear this off, Ms. Orona, and go to errata number 7, and blow it up, please. BY MR. ROSEN: Q Just take a moment to read that to yourself and refamiliarize yourself with this correction. MR. ROSEN: And Ms. Orona, while Mr. Sellers is looking at that, if you could bring up PDF 21 of Exhibit 9006-R, which is going to take us to the three paragraphs referred to in errata line 7. I don't know if it's possible to blow up the portion of the page that goes from 46 to 48 in terms of the body and the footnotes? Okay. BY MR. ROSEN: Q So here, you quote what you represent the
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 574 Yellow -- let me just -- MR. ROSEN: Is this PDF 21, Ms. Orona? MS. ORONA: Um-hum. MR. ROSEN: I'm sorry. Just one moment, Your Honor. BY MR. ROSEN: Q I refer you to the top, which is the paragraph that begins, "The use of the income capitalization approach"; if you'd just read that to yourself just through the footnote and let me know when you're done? Now, at the end of that apparent quote, you put footnote citation number 46. You see that down the bottom of the page? A Yes. Q And you attribute that quotation to page 135 of the Yellow Book; you see that? A Not in my errata sheet, but in the original report, yes. Q Right. MR. ROSEN: Well, if we could bring up page 135 of Exhibit 9029-R, which is the cited page in the report. If you can blow that up? It's page 135 of the Yellow Book, if you'd just blow the text up there? Thank you. BY MR. ROSEN: Q So just to refresh you, what you cited to on
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 575 page 19 of your report before the errata was, "The use of the income capitalization approach, e.g. a discount cash flow analysis to value a mineral-bearing lands is discouraged, particularly when the mineral interest is undeveloped". Neither that quote nor that concept appears anywhere on this page, does it? A No. That's the reason for the errata sheet. Q How did this mistake happen? A I can't recall. Q Could it be from the use of AI? A Not that I know of. Q What -- A I can speculate, but other than that, I can't. Q You don't recall? A I don't recall. Q Okay. MR. ROSEN: Okay. If we go back to page 19 of Exhibit 9006-R, and I want to go to the next quote that begins, "A DCF analysis"? BY MR. ROSEN: Q Just read that to yourself and let me know when you're done. MR. ROSEN: And if you can bring up the footnote. Thank you, Ms. Orona. If you can now bring up page 137 of the Yellow Book, Exhibit 9029-R. Just block
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 576 the text. BY MR. ROSEN: Q Now, the block quote that we just looked at, at page 19 of your report, doesn't appear anywhere on this page, does it? A I believe I said that's the reason for the errata sheet. MR. ROSEN: If we go back once again to page 19 of Exhibit 9006-R, and I want to blow up the paragraph that says, "The courts have generally been skeptical of the use of the income approach", and if you could get the footnote too, please? And bring back -- I think actually may have it handy, if not, bring back page 137 of the Yellow Book, Exhibit 9029-R. BY MR. ROSEN: Q That quote, once again, doesn't appear anywhere on this page; is that correct? A It does in the errata sheet. It says, "both Federal courts and industrial professionals have criticized valuations of mineral property for just compensation purposes that improperly disregard the sales comparison approach". Q Okay. I was asking, I'm sorry, Mr. Sellers, if I wasn't clear, I'm talking about your report that was lodged with the Court as your direct testimony in this
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 577 case, at Exhibit 9006-R. And to refresh you again, what was presented as a block quote was, "The courts have generally been skeptical of the use of the income approach to value undeveloped mineral deposits, finding that such an approach is often based on speculation and conjecture". Mr. Sellers, was that the result of an AI summary of this page that was put into your report? A The errata was a result of me rereading the report and checking my quotations, and I -- Q Right. I'm talking about the report itself, though. I'm sorry. Before you identified the error and made the correction, what explanation can you give the Court as to why the language that was presented as a direct verbatim quotation from the Yellow Book, appears to address the general tenor or concept of this page, but this language can be found nowhere in the document. Did you paraphrase it, or did AI do it? A I probably dictated it. And again, I can only speculate. As I said, I have had trouble with the paraphrasing issue with Grammarly. And I think maybe, I'm assuming, that that's what happened in this instance, but I don't really know. I can tell you that I did check it. I did find that it was an error, and I wanted to make sure that the Court was provided the errata sheet and the correct information. I prepared that immediately as soon
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 578 as I saw it. MR. ROSEN: If we could bring back Exhibit 9008-R, please, back at entry number 7 again. It's a long one, so if you could blow that up. BY MR. ROSEN: Q Just take a moment to refresh yourself. Are you finished, Mr. Sellers, or you're still reviewing it? A I'm sorry? Q Are you still reviewing this or you finished? A Yes. Q Who originally discovered this error meriting correction? A I did. Q And how did you go about identifying that it was incorrect? What steps did you take that revealed to you that what you were presenting as a block verbatim quote was actually not? A When I was requested by my client to do a preparation of any errata sheets to review the document and prepare that, my first read was to check, read it through once, straightforward and check for any punctuation issues. The second was to go back and recheck every one of the citations, and that's when I found these. Q You have a fair amount of experience using Grammarly, correct, fair amount?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 579 A Uh-huh. I've used it for a few years, yes. Q In your experience using Grammarly, does it ever change citations? A That's one thing I don't like about Grammarly is it doesn't know what to change and what it doesn't. Or if it does, I don't know how to make it do it. Q Did you have any prior experiences prior to using Grammarly for these reports of Grammarly changing citations? A Yes, I have. Q But yet you still relied on Grammarly in preparing your report here. A I still rely on Grammarly, but I use it differently than I used to. I use it now paragraph by paragraph, and I distinctly do not mark anything that's quoted. MR. ROSEN: Let's put aside the errata sheet and turn back to your rebuttal report to Mr. Catlett, which is Exhibit 9006-R. Let's pull up PDF page 32, which is page 30 of your report. And I want to blow up the paragraph that begins -- it starts, "UASFLA section 4.4.4.2, page 103 states", and then the block quote underneath it. BY MR. ROSEN: Q If you just take a moment to read that to yourself.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 580 MR. ROSEN: If we could then go side by side, Ms. Orona, to page 103 of Exhibit 9029-R, the Yellow Book. And if it's possible to blow up the text on the Yellow Book page and the quote that we were just looking at, and stack them or put them side by side so we can compare them. Okay. Well, if you just take a -- put that back up, Ms. Orona, please, from the Yellow Book 9029-R. BY MR. ROSEN: Q If you can just take a moment to review that to yourself, and then we can go back over to Exhibit 9006-R on page 32. Just take a moment to review that and let me know when you're done. A What is it you want me to review? Q I'm asking you to review what's on the screen, Mr. Sellers, which is what you cite as a block quote in your report, which is page 103? A This is a different section than what I had quoted. This is 4.3, and I had quoted 4.4. Q Well, okay, but we could zoom on the bottom of the page, Mr. Sellers, the bottom of the Yellow Book. A Okay. My report says -- refers to section 4.4.4.2. Q So the report says page 103, and it'll represent to you that on the right side of the screen is page 103, it's not coming from that page, is it?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 581 A That could be a mistake on the page number, yes. Q Okay. And let's look at section 4.4.4.2, you have the Yellow Book in front of you, Mr. Sellers. Exhibit 9029-R? Can you find that? MR. ROSEN: If we could bring that up? That's actually on page 140, PDF page 150, of Exhibit 9029-R of the Yellow Book. BY MR. ROSEN: Q I'll refer that to you, Mr. Sellers, that what I handed you, it's page 151 of -- it's 150 of 262, correct. Is it in that section? This section has nothing to do with the development approach, does it? A No. Q How did this -- when you identified this error, what -- let me state that differently. Why did this happen, Mr. Sellers? And I'll represent this is not identified in your errata sheet. A As I sit here today, I can't tell you. Q So you would agree that the quote in your report is about the development approach, right? A Yes. Q So why don't we take a look at the section on that? MR. ROSEN: If you could turn to page 142 of the Yellow Book, and then blow it up for Mr. Sellers to take a
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 582 look at, to clear off the report if it makes it easier. Just blow up the bottom of the page. Maybe bring page 153 over too. No. You've got to go back a page. You've got to go back one page here. Just flip them around here. Your Honor, I think my electronic operator may strangle me at the next break. And I apologize in advance. BY MR. ROSEN: Q The discussion of the development method is section 4.4.5, right? A I'm sorry? Q The section on the development method, right, is in section 4.4.5, correct? Not 4.4.4.2, which we just looked at before. A There's another section about it on page 25. Q What section is that? A 1.5.1.2. MR. ROSEN: Please bring that up, Ms. Orona. It's the bottom of the page there, 1.5.1.2. BY MR. ROSEN: Q This is a discussion of the subdivision development method. Were you intending to either quote or paraphrase from this section in your original report? A I'm reading; just a minute. There's two different sections in the Yellow Book about the
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 583 subdivision method, and I'm trying to find the second one. (Pause.) THE WITNESS: My intent was to quote one of those two sections. One's on page 142, and the other one's on page 25. BY MR. ROSEN: Q None of those pages were cited in your report that was filed with the Court -- A Oh. Q -- to support that. A It could be an error. Q And those sections were not cited in the report either, correct? A As I said, it could be an error. Q And those are errors you would agree that you did not identify in your errata sheet, which is Exhibit 9008-R? A I agree. Q So if you could just bring back up the block quote on page 32 of Exhibit 9006-R that we were just looking at before. This starts "The development" method -- "approach", I'm sorry. Going back to our prior discussion, this is presented as a block quote, correct? A Yes. Q And your intent in making a block quote was to
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 584 convey to the reader that this was a verbatim quotation from the Yellow Book; is that right? A The original intent was, yes. Q Okay. Now, Mr. Sellers, as we discussed, you're quite familiar with the Yellow Book. Can you identify anywhere in the Yellow Book, Exhibit 9029-R, which you have in front of you, where this quotation appears? A Not as I sit here today. Q Well, I think we could actually use a little electronic magic here and bring up -- MR. ROSEN: If possible, Ms. Orona, in Adobe, this Exhibit 9029-R. So I'd like to -- Ms. Orona, if you could go into the find box here, the little search box, and then I'm going to block verbatim from Mr. Sellers' report the phrase "Anticipated use or subdivision approach". BY MR. ROSEN: Q Do you see that on the screen, Mr. Sellers? A Yes. MR. ROSEN: I'm going to ask Ms. Orona to run the search function in the Yellow Book, Exhibit 9029-R. BY MR. ROSEN: Q Can you see, Mr. Sellers, where it says, "Adobe Acrobat has finished searching the document. No matches were found."?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 585 A I see that. MR. ROSEN: So let's look at the next, let's go back, Ms. Orona, to Exhibit 9006-R. BY MR. ROSEN: Q And the very next paragraph of what we were looking at here, and that was page 31. Technology is great until it's not. Okay. So we're going back to page 30 of the report. MR. ROSEN: Back a page. Okay. I want you to blow up the paragraph that says, "Established in The Appraisal of Real Estate". BY MR. ROSEN: Q And just take a moment to read that to yourself. MR. PAVILONIS: I just want to point out that the footnote that's being quoted here is footnote 73, the paragraph -- MR. ROSEN: Yes. MR. PAVILONIS: -- above is 72 and 73. Just how it -- MR. ROSEN: Mr. Pavilonis is correct. If you could bring up footnote 72, please, which is what I'm referring to. You can bring them all up. Let's drop it down a little bit. There. BY MR. ROSEN: Q Now, for this paragraph, Mr. Sellers, your
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 586 footnote 72 cites two sources, The Appraisal of Real Estate, 15th Edition at page 206 and the Yellow Book Section 1.5.2, (the unit rule), page 36; you see that? A Yes. Q Let's take a look at page 206 of The Appraisal of Real Estate, 15th Edition, which is Exhibit 9046-R. Let me just blow that up. MR. ROSEN: Just the text there. Yeah. BY MR. ROSEN: Q So Mr. Sellers, you agree with me that the headings on this page of The Appraisal of Real Estate are framing, insulation, and ventilation, correct? A Correct. Q This is not about the unit rule? This page is not about the unit rule? A The quote -- correct. But the quote is not about the unit rule. It's the quote for The Appraisal of Real Estate is about the preferred method for land valuation is sales comparison. Q Well, the paragraph that we were just looking at in your report on page 30 says, in the second sentence, "UASFLA's strict adherence to the unit rule and its preclusion of the summation method are the benchmarks by which the Tax Court uses to measure the credibility of an expert's report".
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 587 So going back to the Yellow Book, Exhibit 9029-R, this page on framing, insulation, and ventilation, this has absolutely nothing to do with the unit rule, summation method, and what the Tax Court uses; is that correct? A That's correct. Let me -- Q Thank you. A -- let me correct the situation. The first quote -- there's two quotes you're talking about, but they're not quotes. All I'm doing there is referencing the page numbers that The Appraisal of Real Estate -- Q Um-hum. A -- talks about the sales comparison approach being the preferred method, and in the Yellow Book, the description of the unit role. Q But we're looking now first at The Appraisal of Real Estate -- A Yes. Q -- which is the -- A These are not intended to be quotes. Q Well, you're citing them for support. Even though they're not quotations, you're telling the reader of your report that your assertion in this paragraph is supported by what I think we would all regard as a learned treatise, The Appraisal of Real Estate and the Yellow Book, correct?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 588 A Correct. Q But there's nothing on page 206 of The Appraisal of Real Estate, which we're looking at here, framing, insulation, and ventilation that has anything to do with these topics. A That is the incorrect page number. Q Sitting here today, you don't know what the correct page number is? A I have it quoted again in my report later that very likely could have it. Q But you don't know sitting here right now whether there's another error or it's correct over there? A It's in the land valuation chapter. It's in The Appraisal of Real Estate, as I recall, three different times. Q But you would agree it's not here? A I would agree it's not here. Q Okay. MR. ROSEN: If we can now go to the second citation in footnote 72 of Exhibit 9006-R, which is back to the Yellow Book at page 36. 36. (Counsel confer.) MR. ROSEN: You could blow that up. BY MR. ROSEN: Q So we're now looking at page 36 of Exhibit 9029-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 589 R. The sections on this page are about direct capitalization, yield capitalization, discounted cash flow analysis, and the reconciliation process in final opinion of value. A The unit rule is on 1.5.3.1.4 -- Q But that's not what you cited in your -- A -- on page 35. Q -- it's not what you cited in your report, correct? A That's correct. Q Okay. None of these sections have anything to do on page 36 with the unit rule, correct? A I don't know that, but. Q Would you like to take a moment to read it? A What sections are you speaking of? Q I'm asking you to look at the page that we're looking at from the Yellow Book starting at 1.3 -- is it 1.5? -- .4.4, 1.5.4.5, and 1.6. A Oh, on the left-hand side? Q Correct. A Okay. MR. PAVILONIS: And just for clarification, the section he's citing is 1.5.2. It's on the screen as 1.5.4. MR. ROSEN: Precisely my point, Your Honor. I
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 590 can move on. The record will -- the transcript will speak for itself. BY MR. ROSEN: Q Just to make sure, though, if we go flip to the prior page in the Yellow Book, Exhibit 9029-R. A Are you speaking to me? Q Yes, sir. If I could just direct your attention to the left-hand side of the screen, which is Exhibit 9029-R. You can just take a moment, I don't know if Ms. Orona can make it a little bigger for him. But if not, it's exhibit -- you have the Yellow Book in front of you. Now, let's go back to 1 -- what happens to 1 -- I think we need 1.5.2 on page 26, please, of the Yellow Book. A The correct citation should be on page 44, section 1.10.1. Q Mr. Sellers, we've gone through a very large number of these corrections. From my perspective, none of these appear to be typographical errors. Can you explain to the Court how such errors of this nature can happen? A As I sit here today, I can't give you an explanation about how it happened. Q Can you give the Court an explanation as to why you didn't catch the errors we've been talking about that are not reflected on your errata sheet? A No, I can't. I can give you the correct one,
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 591 I'm looking at it on -- in the Yellow Book now. MR. ROSEN: One moment, Your Honor? Let's go to page 19 of Exhibit 9006-R, which is PDF 21. If you could blow up the paragraph that says, "The appraiser must be careful", it's the second to last indented block quote on the page. If you'll bring the footnote up too, Ms. Orona? You're one step ahead of me. Thank you. BY MR. ROSEN: Q Just take a moment, Mr. Sellers, to review that, and let me know when you're done. (Pause.) BY MR. ROSEN: Q Have you finished reading that, Mr. Sellers? A No. I'm looking at it, but hold just a minute. Q Take your time, please. I'm not rushing you. I don't have a question yet. I just want to know if you've read it and you've refamiliarized yourself with this footnote. Have you, sir? A Now, what's your question? Q So you see this is footnote 49. You recall when we were talking about your errata sheet for Mr. Catlett's report that we were talking about footnotes 46, 47, and 48; do you recall that? You could refresh your recollection by looking at Exhibit 9008-R, which is your
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 592 errata sheet for Mr. Catlett's report; do you see that? A Yes. Q So this footnote 49 immediately follows the three that are addressed in your errata sheet, you agree? A So this what? Q This footnote 49 follows after the footnotes 46, 47, and 48, which you did address in your errata sheet, correct? A Correct. Q So your footnote attributes this to the Yellow Book at page 136; you agree with that? A Yes. Q Okay. MR. ROSEN: I don't know if it's possible, Ms. Orona, but if we could bring up page 19 -- keep that up and also open up the Yellow Book to Exhibit 9029-R at page 136. BY MR. ROSEN: Q Just take a moment to review the Yellow Book page, and let me know when you've done so, which is on the right-hand side of the screen. A Okay. Q Now, Mr. Sellers, would agree with me that this page that we're looking at, page 136 of Exhibit 9029-R, does not contain the block quote that we're looking at on
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 593 the left-hand side of the screen that says, "The appraiser must be careful"? A Yes. Q I'm sorry, sir? A I said yes. Q It's not on that page, correct? A Yes. Q Yes -- I'm sorry, just so the record's clear, yes, it is or no, it's not? I'm sorry. A Could you -- Q Does -- A -- rephrase the question? Q Yes. Yes. You would agree with me that the quote doesn't appear on that page? A Correct. Q Okay. Now, Ms. Sellers, if we were to search for that quote in the Yellow Book, Exhibit 9029-R, you would agree with me that we're not going to find it anywhere in the Yellow Book? A I don't know. MR. ROSEN: Ms. Orona -- THE WITNESS: I believe the Yellow -- MR. ROSEN: -- can we go back -- THE WITNESS: -- Book, sitting here looking at it, and it should be in the areas of 4.8 --
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 594 BY MR. ROSEN: Q Oh, okay. A -- because that's where they're talking about the natural -- Q Sorry, Mr. Sellers, I didn't mean to overtalk you. MR. ROSEN: Can we, Ms. Orona, could we please bring up the searchable version of Exhibit 9029-R again, PDF? And I'm giving you a couple of words to search for. We'll take the first words from the block quote, which are "The appraiser must be careful". THE WITNESS: I noticed when she was searching, "The appraiser must be" came up. BY MR. ROSEN: Q Well, let's back it up then. Let's see what we got. MR. ROSEN: Can you blow that up, please? Is that the only hit, Ms. -- well, let's see, there's one hit there. You could probably just zoom it, right? BY MR. ROSEN: Q And that's section 1.5.1.3, which deals with ground leases. This has nothing to do with mineral estates, does it? A No. MR. ROSEN: Can we search and see if there's any
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 595 other hits? BY MR. ROSEN: Q Okay. This is section 4.13.1. Does this have anything at all to do with distinguishing the value of mineral-bearing land and the value of a business enterprise? A No. MR. ROSEN: Keep searching. Is there any more, Ms. Orona? Hopefully not. THE WITNESS: There are not. BY MR. ROSEN: Q Now, to confirm, this error is not listed on your errata sheet from Mr. Catlett's report, Exhibit 9006-R, is it? A Correct. Q Let's stay on page 19 of Exhibit 9006-R, and that's PDF page 21. MR. ROSEN: And if you could blow up the last block quote that starts with "Valuations based on", and then pull up the footnote, which is footnote 50. BY MR. ROSEN: Q And just take a moment to review it to yourself, and let me know when you've done so. Have you finished reviewing that, Mr. Sellers? A Yes.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 596 Q Okay. Footnote 50 attributes this quote to page 135 of the Yellow Book. MR. ROSEN: So if we could bring up Exhibit 9029-R of the Yellow Book at page 135, and if we could keep that quote open, I would appreciate it. BY MR. ROSEN: Q So we're looking at the first block quote, sorry, it's the second to last block quote on the page, "The appraiser must be careful". Mr. Sellers, you would agree with me that that quote appears nowhere on page 135 of the Yellow Book, correct? A I agree. Q In fact, nothing on this page even discusses the concept of valuation by multiplying the estimated minerals in place by price, correct? A Correct. MR. ROSEN: Just to correct the record, I was referring to the last, not the second to the last block paragraph that is valuation on unit times price method. BY MR. ROSEN: Q And that doesn't appear anywhere on page 135 of the Yellow Book, does it? A Correct. MR. ROSEN: Your Honor, I've completed my voir dire on the Catlett rebuttal, which is Exhibit 9006-R. I
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 597 do have some voir dire -- briefer, more brief, I should say, on Mr. Sellers' rebuttal to Shea. May I ask for a very brief recess to just see if I could streamline and clean some of this out and get it done? THE COURT: Yes. Mr. Pavilonis? MR. PAVILONIS: I was just about to recommend since the witness has been on the stand for almost two hours, we take a brief recess. THE COURT: Okay. We will take a brief recess until a little after 11 o'clock. And just let the trial clerk know when you're ready. MR. ROSEN: Thank you, Your Honor. MR. PAVILONIS: If it's possible the witness has to use the restroom, he can use the restroom? You can instruct him not to talk to anybody, obviously. THE COURT: Yes. MR. PAVILONIS: Okay. THE COURT: He's still under -- You are still under oath. MR. ROSEN: Your Honor, Your Honor. THE CLERK: All rise. (Whereupon, a recess was held from 10:53 a.m. until 11:10 a.m.)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 598 THE CLERK: All rise. THE COURT: You may be seated. MR. ROSEN: May I proceed, Your Honor? THE COURT: Yes, you may. MR. ROSEN: Thank you. RESUMED VOIR DIRE BY MR. ROSEN: Q Okay. Mr. Sellers, I now want to talk about your rebuttal report to Mr. Shea, which has been marked as Exhibit 9007-R. So I'm not going to pull that one up quite yet. I want to go first to the errata sheet for Mr. Shae's report, which is Exhibit 9009-R. MR. ROSEN: If you could just blow up the text on the page. BY MR. ROSEN: Q So we have four entries for correction, Mr. Sellers, is that right, on your rebuttal to Mr. Shea's report? A Yes. Q Lot less than Mr. Catlett's report, correct? A Yes. Q Do you know why there's such a disparity in corrections between the two reports in terms of the number of corrections? A It was a much shorter report.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 599 Q Okay. That's fair. Let's look at entry number 2 on your errata sheet, Exhibit 9009-R, refers to page 19, footnote 44, should state section 1.10.3, page 47, see that? A Yes. Q Okay. So let's take a look at your rebuttal report to Mr. Shea's report, Exhibit 9007-R, at PDF page 21. A And what footnote was it? Q It's page 19 of the report, PDF page 21. MR. ROSEN: And if you could just blow up the top of the page, please, Ms. Orona. Yeah. That's good. That's plenty. BY MR. ROSEN: Q I want you to focus on that second sentence that starts "UASFLA states unequivocally", if you could just read that to yourself. Let me know when you're done. A Okay. Q Great. Now, the end of that sentence has a footnote to footnote 44; you see that? MR. ROSEN: And if we could pull up that footnote. BY MR. ROSEN: Q Now, I understand that you corrected this on your errata sheet, Exhibit 9009-R, but I want to take a
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 600 look at the original citation. MR. ROSEN: If we could, Ms. Orona, go to section 1.5.2.3 of the Yellow Book, Exhibit 9029-R, which is page 27? If you can just blow up this, starting at 1.5.2.3? There you go. BY MR. ROSEN: Q Okay. Just take a moment to familiarize yourself with what's on this page and let me know when you've done so. Can you just let me know when you're finished, Mr. Sellers? A Yes. Q Okay. This section deals with the adjustment process under the sales comparison, correct? A Yes. Q It does not state unequivocally, as you said in your report lodged with the Court as your direct testimony, that the value of the business conducted on the property is not a proper element of compensation? A That has been corrected on the errata sheet. Q Understood. But I'm asking, with respect to what was in your report that was lodged with the Court as your direct testimony, this section that you cited does not state what your report lodged with the Court said that it stated? Recognizing that you have since prepared and submitted an errata sheet.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 601 A Yes. I have since corrected it on the errata sheet. Q So if we could also check pages 36 through 38 of the Yellow Book? And I know you have it there in paper form, Exhibit 9029-R, because that was part of your original citation as well. Let me know when you -- you don't have to read it. I was really just going off the topical headings here. These sections deal with direct capitalization, yield capitalization, discounted cash flow analysis, the reconciliation process, and final opinion of value, partial acquisitions, before and after rule, Federal rule, damages, and benefits. You'd agree, correct? A Those titles are correct. Q None of the text on these two pages states unequivocally that the value of the business conducted on the property is not a proper element of compensation; is that correct? These pages. A I'm looking; just a minute. Q Sure. Take your time. A That is correct. MR. ROSEN: Thank you, sir. Let's put the errata sheet away, Exhibit 9007-R (sic), for now. And I want to go to -- I'm sorry; that was 9009-R is the errata sheet.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 602 Let's turn to Exhibit 9007-R, which is your rebuttal report to Mr. Shea. And I want to direct you to page 15 of the report, which is PDF page 17. And I want to block the last paragraph above section D. Thank you. BY MR. ROSEN: Q Can you just take a moment to read that to yourself? And we'll focus in particular on the second sentence, beginning with, "According to UASFLA". You read that? A Yes. Q And you see at the end of that sentence is a footnote, citation number 40? A Yes. Q And that footnote 40 directs the reader to the Yellow Book at pages 135 through 137, correct? A Yes. Q And we see the reference here, again, is to section 4.4.4.2. Do you see that? Sir, do you see it on the screen that the reference here is to the Yellow Book section 4.4.4.2? A Ah, yes. MR. ROSEN: Okay. Well, let's keep up this quote and put up page 135 of Exhibit 9029-R, which is page 135 of the Yellow Book. BY MR. ROSEN:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 603 Q And you could keep -- you can go. I'm going to ask you to basically page through from page 135, 136, 137, which is the page range you cite, and even to go as far as page 138. Let me know when you've done so. A On page 141, it's talking about the unit rule implications. Q Well, my questions are about the pages that you cite in your report that were not corrected in your errata sheet, which are pages 135 through 137. And I'll carry it forward to page 138. Will you let me know? We could go page by page if it's easier for you. On page 135, page 135 doesn't contain section 4.4.4.2, does it? A No. Q And that page also doesn't say if the income capitalization approach is generally not recommended for undeveloped mineral properties, does it? A No. Q Okay. Let's go to the next page, page 136. Same question, there's no section 4.4.4.2 on this page, is there? A I'm not sure I'm following with you. Are you looking at Yellow Book 136? Q Yellow Book, sir. I'm asking about page 136 of the Yellow Book, Exhibit 9029-R.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 604 A Correct. Q And there is no -- this page does not say that the income capitalization approach is generally not recommended for undeveloped mineral properties, does it? A No. Q Well, let's take a look at page 138, one page past your reference. There's no section 4.4.4.2 on page 38 of the Yellow Book, is there? A On what page? Q 138. No section 4.4.4.2? A No. Q And again, this page does not say that the income capitalization approach is generally not recommended for undeveloped mineral properties, does it? A No. MR. ROSEN: Your Honor, at this point, Petitioner objects to the admission of Mr. Sellers' rebuttal reports of Mr. Catlett and Mr. Shea at Exhibits 9006-R and Exhibit 9007-R, respectively. Mr. Sellers clearly, by his testimony, used artificial intelligence in the preparation of his reports, which in and of itself is not necessarily problematic with respect to the admissibility of his reports. But whether the hallucinations in these reports and the substantive changes that have been couched as corrections of errors in
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 605 his errata sheet -- some of them were corrected by errata sheet as we saw here, several of which he did not discover, but which we first uncovered here on voir dire. The admissibility of expert testimony is governed by Tax Court Rule 143(g) as the Court is well aware, and there are very specific requirements of rule 143(g) and consequences for failure to follow the rule. One thing that's clear from 143(g) is that the lodging of the expert report is, if received into evidence, the direct testimony of that expert. And Rule 143(g)(2) says, "an expert witness' testimony will be excluded altogether for failure to comply with the provisions of this paragraph, unless the failure is shown to be due to good cause and unless the failure does not unduly prejudice the opposing party, such as impairing the opposing party's ability to cross-examine the expert witness or by denying the opposing party the reasonable opportunity to obtain evidence in rebuttal to the expert witness' testimony". I want to talk about the elements of 143(g)(2). The first element is good cause. Respondent has made no showing, or Mr. Sellers has made no showing that his failure to comply with the dictates of this Court's rules are due to good cause. We got no explanation whatsoever as to how these errors could have occurred that are
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 606 reflected in the errata sheets, nor do we have any explanation as to why we identified additional hallucinations, for want of a better term, in both the rebuttal to Mr. Catlett's report and Mr. Shea's report. And with respect to unduly prejudicing the opposing party, now, this is written in the conjunctive depiction. An absence of good cause is enough to keep these reports out. But in terms of undue prejudice, Petitioner is prejudiced here. Mr. Sellers' rebuttal reports were lodged with the Court pursuant to the Court's standing Pre-Trial Order on January 23rd of 2026. The errata sheets at Exhibits 9008-R and 9009-R were not exchanged with Petitioner until over one month later, on February 27th of 2026, slightly more than two weeks before the commencement of this trial. And I want to talk now about the failure to comply with Rule 143(g). The question is whether or not Mr. Sellers' reports bear the indicia of sufficient reliability to be accepted by the Court, or whether the Court, in properly exercising its gatekeeping function to keep out expert testimony that doesn't comply not only with the Tax Court rules, but the Supreme Court precedent in Kumho and this Court's precedents dealing with the admissibility of expert testimony. His reports are inherently unreliable. Quotes
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 607 seemingly attributed to the Yellow Book do not exist. Mr. Sellers, in his errata sheet for Mr. Catlett, called that paraphrasing, but Mr. Sellers, he's not paraphrasing anything in his correction, and the block quotes in his report, as Mr. Sellers has testified, were intended to convey to Petitioner and to the Court that this was a verbatim -- or these were verbatim quotations from authoritative sources supporting his assertions. Petitioner was left really on the eve of trial to have to pick apart the entirety of every citation and quotation that Mr. Sellers had in his reports to figure out what was real and what was hallucinated. These reports clearly do not satisfy the Daubert standard contained in Federal Rule of Evidence 702, which requires an expert report and testimony to be based on reliable principles and methods. Now, while the Yellow Book itself is of questionable at best application to this case, given that the Yellow Book, by its terms, is limited to cases involving government acquisitions and not the application of section 170 for a conservation easement, it cannot be disputed any longer that Mr. Sellers has not even reliably represented the true contents of the Yellow Book for the Court's consideration even after the submission of his errata sheets on the eve of trial.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 608 While Petitioner is not aware of a case like this occurring yet in the United States Tax Court, last year, a district court in Minnesota struck an expert declaration that contained hallucinations. In an order in Kohls v. Ellison, case number 24-CV-3754 in the District of Minnesota, dated January 10th, 2025, the district court found that citation to fake AI generated sources in the expert's declaration shattered his credibility with the district court. More importantly, finding that such testimony failed the reliability test of Federal Rule of Evidence 702. In Kohls, the experts report contained three errors, citation to two nonexistent academic articles, and incorrectly citing the authors of a third article. Here, Mr. Sellers has admitted to over 20 errors in total on his errata sheet from Mr. Catlett's report alone, 4 more on his errata sheet from Mr. Shea's report. And while it's unclear exactly what caused these hallucinations, it appears, based on Mr. Sellers' description of his use of artificial intelligence to assist in his preparation of the report, is based not only on his unreliable use of artificial intelligence, but his failure to correct errors before they prejudiced the Petitioner in this case in preparing to try the merits of the issues before the Court.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 609 In sum, Your Honor, it would be a mistake to admit Mr. Sellers' reports into evidence with these hallucinated citations for what they're worth, as is often the case in bench trials. MR. PAVILONIS: May I respond? MR. ROSEN: I'm not finished. I'm sorry. MR. PAVILONIS: Okay. MR. ROSEN: Yeah. Allowing Mr. Sellers to testify allows Respondent to argue on brief that what Mr. Sellers put in his reports -- which again, was his direct testimony, fixed in time at the time that his reports were lodged -- wasn't that wrong or meets the spirit of the Yellow Book. That cannot and should not be the test that the Tax Court applies in exercising its gatekeeper role related to expert testimony. Striking these reports or not admitting these reports today properly puts the onus back on the offering party to make sure that materials presented to the Court as the direct testimony of Respondent's proffered expert witnesses are accurate in the first place. There's been no explanation given to the Court as to why Respondents' counsel didn't catch these before they were lodged, why Mr. Sellers didn't catch them. And then, when Mr. Sellers went back after Respondent's counsel said, hey, you should give your
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 610 report a review, pushing it back onto Mr. Sellers to do it, even then, and with the limited time that we had to go through everything in this report, we've identified other material hallucinations in the report. So for all these reasons, Petitioner objects to the admission of Mr. Sellers' rebuttal reports to Mr. Catlett and Mr. Shea, Exhibits 9006 and 9007-R. THE COURT: Mr. Pavonis? MR. PAVILONIS: Yes. So Your Honor, I would like to point out that the problems that Mr. Rosen identified goes to the weight, not the admissibility of the report. The purpose of an errata sheet is to correct errors in citations or other errors that the expert notices in their reports. In this case, Mr. Sellers did submit two errata sheets as amended by his further testimony to correct the citation errors that Petitioner pointed out during voir dire. They're obviously capable of cross-examining him on any topics within this report because they were able to use Yellow Book if they wanted to show that there was citations to incorrect paragraphs, so they obviously have the ability through using his citations to see if he cites something incorrectly; they can cross-examine him on that. If he says something that contradicts one of the treatises he cites, they can cross-examine him on that as well or
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 611 impeach with it. As far as good cause and undue prejudice, Mr. Sellers explained that he used Grammarly, which does sometimes change the wording on the paragraphs, and that he used dictation when he authored it, which means that he was using his spoken word and that Grammarly may have altered or changed some of the terms, and that not every quotation within his report is a block quote word for word, but some of it is paraphrased. As far as unduly prejudicial, like I said, Petitioner has the opportunity to cross-examine and use the treatises for impeachment as they believe that something he cites to or says contradicts what's in his report. And Petitioner does indicate that on February 27th, we exchanged the errata sheets. But obviously, it was enough time for them to review the errata sheets and point out any inconsistencies that exist. So they had the ability to go through and identify errors. And for the most part, the errata sheet corrected almost all the errors. The focal point was on several errors that still remain, and Mr. Sellers addressed those during his voir dire. So for that reason, like I said, the extent to which the Court has concerns about the reports, that should go to the weight that the Court gives, not the
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 612 admissibility. MR. ROSEN: Briefly, Your Honor? THE COURT: Briefly. MR. ROSEN: Thank you. I don't feel the need to go over good cause and undue prejudice; I think that the record speaks for itself. But Respondents' counsel identifying these as errors meriting correction? That's largely just not true. These are not corrections of errors over in material part, they're attempts to substantively change the direct testimony of Mr. Sellers by use of an errata sheet. Yes, this Court does regularly and properly entertain minor typographical errors in reports because that's just the reality of pencils getting sharper on the edge of trial. But what we have here is just a clear record of, at best, nonchalance about the accuracy of this, of what was put forth to the Court as his direct testimony. Literally, barely two weeks before the commencement of this trial. I mean, there's a reason that the Court requires lodging of the expert reports in advance of trial as the direct testimony that fixes the testimony of the expert. And if parties can, whether using AI or not, exercise this lack of due care in testimony and just come in with an erratic sheet and say, yep, everything's fixed now? And
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 613 it just essentially turns Kumho and Rule 703 and Rule 143(g) on its head. THE COURT: Did you want one further thing? Because I'm ready to make my ruling. MR. PAVILONIS: I'll just be very quick. All I would say is that the erroneous corrected citations; the underlying substance of whether the statements are accurate could be subject to cross-examination and impeachment. And that's all I have to have, which goes to weight. So I'll give that. THE COURT: Okay. The Court is very concerned about what happened here this morning. And I've been reviewing Rule 143(g), too, and I don't think it this situation fits as squarely into it as Mr. Rosen would argue. I'm concerned. The rule talks about excluded from failure to comply with the provisions of this paragraph, and I don't think the language is really fitted to this situation. And why I'm concerned is I don't think this language was imagining an expert report full of mistakes, and I view these -- it's full of mistakes, and they're not just typographical errors. And I feel errata sheets are common in expert reports and I think it's easy to make a mistake, and I also feel Mr. Catlett had a mistake in his expert report
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 614 yesterday that was the calculations in a few places, and that's going to go to my weight when I look at that report, that there was mistakes in those calculations, but the parties worked it out. And so Mr. Pavilonis, I haven't heard here of any concern about Respondents, that I want to be sure you still want this to be the expert report. You want this to be the direct testimony that's on the record for Mr. Silver (sic)? MR. PAVILONIS: Your Honor, can we take a brief recess to discuss amongst Respondent's counsel, then? Unless you've ruled on it. I mean, the position Respondent took is that we acknowledge, obviously, the voir dire pointed out that there errors in the citations. As far as the underlying substance of the report, those things might be correct, but the citations, what they were cited to, apparently are not. And we acknowledge that. So we understand if the Court's concerned about the report and the mistakes. What I'm gathering from what you're saying is that you're not likely to give a lot of weight then, if that's your concern, to the report. THE COURT: That is my concern, because I'm not clear exactly from the witness' answers what he used to write this, and I'm concerned that you can't use any of the USAFLA (sic) cites without double-checking everything.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 615 And I would have just thought a report -- I mean, the Court is very careful in anything it sends out. And also, I think Judge Buch has an opinion, and I can't think of it off the top of my head, warning a party about AI and Pre-Trial Briefs. And I know this is different, this is an expert report, and that is why I asked the question, that Respondent's position is this still should be the direct testimony of Mr. Sellers in this situation? MR. PAVILONIS: May I just briefly confer? THE COURT: Yes. (Counsel confer.) MR. PAVILONIS: Your Honor, we appreciate the Court's concerns, and we think that at the end of the day, it does go to the weight, not necessarily the admissibility of the report. So I mean, the Court may ultimately choose not to give it weight. We do think that there is merits to the arguments Mr. Sellers made, and we will evaluate how we use the report going forward -- or the reports, I should say, there's two of them. THE COURT: Well, this brings me back to 143(g)(2), that I think it's at the discretion of the Court to allow any additional direct. So I'm not going to allow any -- there won't be any additional direct allowed. So anything on recross (sic) would have to be the scope of
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 616 cross. MR. ROSEN: And Your Honor, I have no intention on covering the topics from my voir dire again on cross-examination with Mr. Sellers. So those topics are closed from Petitioner's standpoint. THE COURT: And I just want to make sure I'm understanding Respondent's decision. And I know Mr. Seller (sic) has years of experience, and has testified in court before, and that's another reason why I'm concerned, because I think he should -- I believe he was chair of the appraisal committee and other things, that these standards, he should have been someone familiar with them. And granted, I don't know all the Tax -- I couldn't cite all the Tax Court rules; I pulled it out to look at it. But I feel like you should be pulling out things as you're looking at it. So it makes me think, as to the report, what was he looking at as he was pulling it out? So I have grave concerns about this report and in my opinion I probably will address my -- if I let it in, I will address my grave concerns about it. MR. PAVILONIS: Your Honor, may we have ten minutes as a recess to discuss Respondent's views on how we'll proceed with this? THE COURT: Okay.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 617 MR. PAVILONIS: Appreciate it. THE COURT: We'll take a ten-minute recess. THE CLERK: All rise. (Whereupon, a recess was held from 11:41 a.m. until 11:53 a.m.) THE CLERK: All rise. THE COURT: Please be seated. Before I hear from Mr. Pavilonis, I just want to clarify something. The Court did slightly misspeak when I said Judge Buch had an opinion. It was actually an order. And it was in docket number 10795-22, and it was released in October of 2024. And I know that orders are not precedent, but I'm not using it as precedent, just mentioning this is a situation where the court did talk about AI. And this is slightly different. But the order does quote a case that is precedent that the Court is not really in the business of dictating to parties the process that they should use when responding to discovery. And I know this is a different situation. But with expert report -- so I think I just want Respondent to be clear that the Court's position is if you stand that you still want to offer this as the direct testimony of this witness, the Court will admit it. But I'm just saying that there will be -- have some concerns about -- that probably we'll address concerns about the
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 618 reliability. MR. PAVILONIS: Your Honor, Respondent believes -- oh, I didn't -- are you -- THE COURT: I'm done. MR. PAVILONIS: Okay. Respondent believes the best path forward is going to be to withdraw Exhibits 9006-R and 9007-R in light of the Court's comments. And I think that would conclude that portion of the testimony from Mr. Sellers. THE COURT: Okay. Mr. Sellers, you may step down. Thank you. MR. PAVILONIS: Your Honor, may I retrieve the reports from the witness stand? THE COURT: Yes. MR. PAVILONIS: Thanks. (Pause.) MS. RAJ: Good afternoon, Your Honor. Randi Raj for Respondent. Respondent will call Ms. Rentz as an expert rebuttal witness in geology, mineral resource evaluation, and mineral market analysis. MR. WHARTON: Your Honor, Daniel Wharton for Petitioner. I know Ms. Rentz hasn't been qualified as a witness before this Court before. And I'm not sure if Respondent plans on introducing her qualifications or not. MS. RAJ: Yes, Your Honor. I intend to
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 619 qualify -- MR. WHARTON: Okay. MS. RAJ: -- her as an expert rebuttal witness in geology, mineral resource evaluation, and mineral market analysis, unless Petitioner would like to agree to admit her as an expert in these topics. MR. WHARTON: I think Petitioner would prefer to voir dire after hearing Respondent's questions. So I can wait. I just wanted to make sure that that was what we were doing. When she said, the first time, that she was offering her in advance, I wanted to make sure we were going to get a chance to ask questions about qualifications. Thank you. THE COURT: Okay. You may remain standing and the trial clerk will swear you in. THE CLERK: Please raise your right hand. SHANNON RENTZ having been duly sworn, testified as follows: THE CLERK: Please state your name for the record. THE WITNESS: My name is Shannon Rentz. THE CLERK: Thank you. VOIR DIRE BY MS. RAJ: Q Ms. Rentz, why are you here today?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 620 A Today, I am here to offer testimony in support of the rebuttal report that I submitted to the Court. Q And what is your educational background from college onwards? A In 2015, I graduated from Middle Tennessee State University with a degree in geosciences, with specialization in geology. And in 2017, I graduated from Missouri State University with a Master's of Science in geospatial science with a specialization in geology, as well as with a graduate certificate in geospatial information sciences. Q And what professional licenses or registrations do you have? A I'm a licensed professional geologist. My license was issued by the State of Texas Board of Professional Geoscientists. Q And are you a member of any professional associations? A I am. I'm in the Geological Society of America as well as the Rocky Mountain Association of Geologists. Q And what is your current position and title? A I am currently a geologist in the Division of Minerals Evaluation within the Appraisal and Valuation Services Office in the Department of the Interior. Q And how long have you been in your current
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 621 position? A Since 2018. Q And what do you do for the Appraisal and Valuation Services Office? A As a geologist in the Division of Minerals Evaluation, I provide mineral assessments, market analysis, and financial analysis in support of realty appraisal as well as mineral leasing and disposals across Federal and Indian lands. Q And have you held any other positions during that time frame? A I have. I had an (sic) detail as an acting program lead for the Federal Lands Division. Q And how does your experience as an acting program lead tie into the kind of review that you did here? A Review's a regular function of that position, serving as the primary technical reviewer for my subordinates' reports as well as doing case triage. Q And what experience do you have in preparing mineral property evaluations? A Mineral property evaluations are a regular part of my duties. I would say I work on them on a weekly basis. If I had to estimate, I'd say I've done probably around 150.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 622 Q And what do the mineral property evaluations you have done generally entail? A The evaluations I've done involve looking at the geology of the subject; looking at the geographic market as related to transportation networks; location, as close to population centers; as well as the mineral market analysis, looking at active producers of whatever the mineral in question is; looking at cost, reasonable pricing for the material in question; as well as other factors. Q Have you done any mineral property evaluations similar to the current case? A I have. I've worked on evaluations that were similar in property size, in the type of material produced in aggregate, in the rural location, in the southeast region as well. Q And have any mineral property evaluations you've done involved construction aggregates? A Yes, they have. Q And what experience do you have in reviewing fair market mineral evaluations? A Reviewing fair market mineral evaluations is also a regular part of my duties. I've provided reviews for multiple agencies in the Department of Interior, including the Bureau of Land Management, the Fish &
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 623 Wildlife Service, Bureau of Reclamation, the Bureau of Indian Affairs, as well as, now, the IRS. Q And what is the difference between mineral valuation and mineral evaluation? A Mineral valuation would involve all the same components as an evaluation but then take that analysis to a higher level and put an actual dollar amount, either dollars per net mineral acre or dollars per ton on whatever the property or mineral in question is. Q And what experience do you have preparing mineral evaluation reports? A I would say all of the evaluations that I've done have been in report form. Q And what was the scope of the mineral evaluation reports you have prepared? A I've worked on evaluations ranging from a few acres in property size up to entire reservation-wide or statewide analysis. Q And how many involve geographic and financial market analysis with respect to minerals? A All evaluations would have some component of geographic and mineral market analysis included. Q And who are the clients that you generally prepare reports for? A So my office and I work with bureaus across all
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 624 of the Department of Interior as well as the -- now, for the first time, the IRS, for me. And we do reports and review the same. MS. RAJ: Respondent offers Ms. Rentz as an expert in geology, mineral resource evaluation, and mineral market analysis. MR. WHARTON: One moment, Your Honor, while I write that down. I just want to make sure I have all the proffers right. I would take a moment to voir dire the witness' qualifications. Was the last topic mineral market analysis? MS. RAJ: Yes. MR. WHARTON: Thank you. Yes, Your Honor. May I have a few questions on -- THE COURT: Yes. MR. WHARTON: -- voir dire of the qualifications? Thank you. VOIR DIRE BY MR. WHARTON: Q Good morning, Ms. Rentz. A Good morning. Q Actually, it just turned over from noon. Good afternoon. A Good afternoon. Q My name's Dan Wharton. I'm an attorney for the
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 625 Petitioner. You're a geologist by training, correct? A That's correct. Q And you have a graduate degree in geology? A Yes. Q And you also have advanced coursework, I saw on your resume, in geospatial information science? A That's correct. Q That's often referred to as GIS? A I believe so. Q I enjoy GIS myself. That's a cool field. You're a licensed geologist in the State of Texas? A Yes. Q And you're a member of the Geological Society of America? A Um-hum. Q And the Rocky Association of Geologists? A That's correct. Q I'm not challenging your choice of academic studies, but I just want to confirm, you don't have a degree in economics? A That's correct. Q Or mineral economics? A That's correct. Q You didn't take any coursework at the graduate level in mineral economics?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 626 A I've taken some coursework from the Colorado School of Mines on mineral evaluation. Q On discounted cash flow analysis, right? A Correct. Q I saw that in your resume as well. In fact, you say you're proficient, right, in the following topics: discounted cash flow analysis related to property valuation, and mineral development potential, and due diligence? A Correct. Q In your experience, can you use a discounted cash flow method to value real property with mineral development potential? A I use DCF analyses to evaluate the mineral components of property in support of realty appraisal. Q Thank you. Were you here for Mr. Gold's testimony earlier this week? A I was. Q Okay. He described teaching a class at the University of Utah that he called Aggregates 101. Do you remember that? A I remember him saying that, yes. Q He said it was a class that teaches the distinctions between aggregates and other minerals and metals?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 627 A I believe I heard that. Yes. Q Did you ever take a class like that focusing purely on aggregates in your undergraduate or graduate career? A Not specifically about aggregates. Q Okay. You've never owned your own limestone quarry? A I have not. Q Okay. You've never managed a limestone quarry? A I have not. Q And you've never worked for a limestone quarry in the private practice? A I have not. Q Okay. So any of your experience in mineral resource evaluation or mineral market analysis, that comes from your time working for the Federal government, right? A That's correct. Q Okay. And that consists of approximately seven years, right, at the Department of Interior? A That's correct. Q Okay. And you work for the Appraisal and Valuation Services Office there. And if I call that AVSO, will you agree that that's good? A Yes. Q I don't know what I'd say otherwise. So AVSO --
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 628 A That's all right. Q -- it is. And your work there, would you say it focuses on checking mineral appraisal work done by others, or would you say that more of your work is geared toward conducting your own mineral appraisal work independent of others' reports? A It's a mix of both. Q Okay. Were you in the courtroom yesterday when Mr. Stine testified? A I did. Q Okay. He told the Court that he conducted a market study for the State of Utah on the demand for limestone aggregate covering, like, ten counties? A I heard him say that. Yes. Q Okay. Have you ever conducted a mineral demand study like that? A Yes, I have. Q Okay. What about one for construction aggregates? A As a component of aggregates, yes, construction aggregates were included. Q So multiple minerals were covered in that study? A Yes. Q Okay. Your CV actually discusses two projects I'd like to discuss.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 629 MR. WHARTON: Can we pull up Ms. Rentz's report, which has not been admitted yet, but I just wanted to look at her CV. That's Exhibit 9005-R. And specifically, look at PDF page 27, which I think is the second page of your CV. BY MR. WHARTON: Q I'm looking at two separate items under your select project experience here. A Yes. Q Both of those entries have a common name between them. They're (sic) cover different properties. So the first one I want to look at is area-wide mineral material valuation for select mineral material commodities. Did you understand what I'm saying if I say that? A Yes. Q And one of those on the list is from California, and it's dated 2022. One of them is on the list from Alaska, dated 2024, right? A Correct. Q Okay. Would you agree with me that the purpose of those area-wide mineral material valuations is to set a fair market value price for a unit of certain commodities? A That's one of the purposes of those, yes. Q And when I say, "a unit", I mean, if the Bureau of Land Management manages lands, and they have a ton of
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 630 sand that they want to sell, they have to sell that by the Federal regulation of fair market value, right? A That is my understanding. Q And so the goal of this particular study is to value the unit price of a particular mineral -- and it could be multiple minerals, right -- in that particular market area; is that accurate? A Yeah, generally. Yes. Correct. Q Okay. And those area-wide mineral material valuations, they're conducted pursuant to publications from the Bureau of Land Management, right? A They are to aid the Bureau of Land Management in following their own mineral material handbook. Yes. Q And the Bureau of Land Management, I'll call it BLM. A Sure. Q Okay. BLM has a publication called MS-3630? A I believe you. Q And I don't know; is that the guidelines by which you evaluate these mineral material valuation studies? A I don't know the name of that off the top of my head right now. Q Okay. I just want to confirm, when we're talking about, again, this unit price for material that
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 631 we're pricing in these area-wide mineral and material studies, that's for minerals that have already been extracted from the ground? A Those are, I believe -- I would have to double-check, but I believe that's supposed to be an in-bank value, not including transportation. Q Right. But guess my point gets to those aren't valuing a -- not to put too many words on it -- a resource or reserve that's currently in the ground. What they're doing is saying, for every ton of mineral that somebody brings to us, we're going to pay this fair market value price; is that accurate? A I would say that's accurate. Q Okay. I want to look at two more projects on your resume. There are two reviews here -- and they're both going to start with the word "review" -- but they're reviews of DME Technical Review of BLM Estimate of Mineral Material Fair Market Value. So there's one on here, right, that covers Glass Buttes obsidian in Oregon in 2020? A Correct. Q And one for the Slaughterhouse Canyon, Hanson Aggregate operation in California in 2021? A Yes. Q Okay. This is a different type of report, I'm
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 632 gathering from what you're telling me, right? A This is a review of a valuation. Q Okay. And these are BLM mineral material fair market valuations, not area-wide ones like we talked about a minute ago? A These are both site-specific. Yes. Q And they're conducted pursuant to a different set of standards? A No. Q Oh, okay. These aren't conducted pursuant to H360-1 (sic) from the BLM? A Again, I would need to double-check that. Q Okay. You don't know then. But as you said, these are for generally site-specific projects, right? A Yes. Q And they might be bigger projects than the area-wide mineral ones? A They might be. Yes. Q Okay. Slaughterhouse Canyon and Hanson Aggregate operation. That land was BLM-held land that was next to an existing aggregate operation, right? A Correct. Q Okay. And BLM wanted to know how much it should sell the mineral for collected from that land? A I believe they did. Yes.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 633 Q And so that was my question. Is that mineral material fair market valuation that you reviewed, was that valuing the unit price of that material, like the per ton, or was it valuing the entire real property interest? A I don't recall at this moment. Q Okay. Your resume says you have experience evaluating exploration properties? A That's correct. Q Any aggregates among those that you evaluated on an exploration basis -- exploration stage? A I believe so, yes. Q You believe so. How many would you say exploration stage aggregate properties have you evaluated? A I would estimate five to ten. Q Five to ten. Okay. You've never previously testified at trial as an expert? A No, I have not. Q Okay. You've never been qualified by the Court in any of the areas for which Respondent just proffered here? A No, I have not. MR. WHARTON: At this time, Your Honor, Petitioner has concerns about the valuation experience espoused by Ms. Rentz -- the valuation-specific experiences. Her testimony was that it related to reviews
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 634 of other projects and not independent valuation work that she conducted on her own. Similarly, with the evaluation, it looked like the evaluation work was a evaluation of projects where they were determining a unit price for a material, but they weren't necessarily valuing resources or reserves in the ground like we are in this case. Petitioner doesn't have any objection to proffering Ms. Rentz or qualifying her as an expert in geology. We have concerns about the other two. MS. RAJ: Respondent is not offering Ms. Rentz as an expert in valuation. We're offering Ms. Rentz as an expert in geology, mineral resource evaluation, and mineral market analysis. Your Honor, I'm happy to ask additional questions, if necessary. However, I believe that Ms. Rentz has established her experience and since 2018 with the Division of Minerals Evaluation has given her the background necessary. THE COURT: At this time, Ms. Rentz is certified in the three fields: the geologist, mineral evaluation, and then mineral market -- well, it was mineral market analysis? MS. RAJ: Yes, Your Honor. THE COURT: Yes. MR. WHARTON: Thank you.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 635 DIRECT EXAMINATION (REBUTTAL) BY MS. RAJ: Q Ms. Rentz, did you prepare an expert rebuttal report for this case? A I did. MS. RAJ: Your Honor, may I approach and hand the witness and the Court a copy of the report marked as Exhibit 9005-R? THE COURT: Yes. BY MS. RAJ: Q I've handed you an exhibit marked for identification as Exhibit 9005-R. Will you review it and tell the Court what it is? A This is a copy of the report that I submitted. Q Would you mind being more specific? A This is a copy of the rebuttal report that I wrote. It's a rebuttal of "Riddle Aggregates, LLC, Fair Market Mineral Evaluation", written by Michael Stine of Stantec Consulting Services. MS. RAJ: Mr. Yoshida, can you please go to PDF page 1 of Exhibit 9005-R? To expedite things, I think for this part, we can go ahead and just use the paper copies if that would be okay with all parties? THE COURT: That's fine.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 636 MS. RAJ: Okay. BY MS. RAJ: Q Ms. Rentz, did you prepare this report? A I did. Q Did anyone assist you in preparing this report? A Yes. One of my colleagues, Kelsey Zabrusky, assisted with the layout of figures 2, 3, and 7. And colleagues in my office helped with some proofreading. Q And are the analyses, explanations, and opinions expressed in the rebuttal report your own? A Yes, they are. MS. RAJ: Ms. Yoshida, you just go to PDF page 2 of Exhibit 9005-R? And this will be labeled as page 1 for the hard copies. BY MS. RAJ: Q Ms. Rentz, is that your signature? A That is my digital signature, yes. Q Ms. Rentz, since preparing your report, has anything come to your attention that you would like to share with the Court? A Yes. I'd like to make a few small corrections. On the caption for figure 4, there's a citation and an acronym that -- MS. RAJ: And just for the clarity for the Court, this would be on the report number 13 and PDF page
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 637 14. THE WITNESS: Thank you. Yes. The acronym "USBC" is incorrect. It should be USCB for U.S. Census Bureau. Then, on paragraphs 45 and 46, I think -- MS. RAJ: This would be on page 19 of the printed-out copy and page 20 of the PDF copy. THE WITNESS: There, at the last number in 45, it says, $20.875, and that should be per ton. And in 46, there is a $9.50 for a crusher run. That should be $9.50 per ton. And then, on the last page, I believe it's paragraph number 60, unfortunately, I misspelled Mr. Stine's name. MS. RAJ: And that'd be on page 24 of the printed report and on PDF page 25. Your Honor, Respondent offers Exhibit 9005-R as Ms. Rentz's expert rebuttal report. MR. WHARTON: No objection, Your Honor. THE COURT: 9005-R is admitted. (Whereupon, the Document referred to as Exhibit 9005-R was received into evidence.) MR. WHARTON: Your Honor, I note that it's 12:20. I think the Petitioner might request that we take a break for lunch at this point. And we might have extended cross-examination. It could last an hour or to
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 638 two. That's closer to two hours perhaps. So I think that we're ahead of schedule. So I think that we can make this work. THE COURT: We'll go off the record for a second, because I just want to check with Mr. -- you know what I was going to ask you. MR. PAVILONIS: Yes, Your Honor. We're fine with taking a lunch break now if that's your preference. We're fine continuing on if that's your preference. But Mr. Freeman's expected here between 2 and 2:30, and I was actually going to go and just double-check what his ETA was. MR. WHARTON: I think that if we take a lunch break now, we can complete this by the time Mr. Freeman's here. THE COURT: So that's what the -- UNIDENTIFIED SPEAKER: Oh. We're not -- MR. PAVILONIS: Or no, but we'll take -- yeah. UNIDENTIFIED SPEAKER: We'll take a break. THE COURT: I think you mean take a break -- UNIDENTIFIED SPEAKER: Yeah, yeah. MR. PAVILONIS: We'll take a break. THE COURT: -- because you just said it was going to take -- UNIDENTIFIED SPEAKER: Yes.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 639 MR. PAVILONIS: Yes. THE COURT: -- two hours and my math, that's 45 -- MR. PAVILONIS: Sorry. I might be doing the math wrong in my head, Your Honor. THE COURT: Okay. And I just -- MR. WHARTON: That clock tells me that we have plenty of time. MR. HALLER: That clock does not even move, but it has been throwing me. That clock doesn't operate. UNIDENTIFIED SPEAKER: Yeah. MR. WHARTON: I'm sorry. MR. HALLER: So if Your Honor wanted a briefer lunch, that would be agreeable to us. It's, what, 12:21 right now by my clock. Till 1 then? THE COURT: We can go a few minutes after that. But I just was asking Mr. Haller -- I just didn't know because I was trying to remember from yesterday -- I believe you said you were no longer calling one of your witnesses anymore? MR. HALLER: It's Mr. Reed. And he was proposed for tomorrow. He isn't coming. But Mr. Freeman is coming. He had told us he should be here. He's commuting in a little bit of a distance. 2 to 2:30 is what we're kind of estimating.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 640 THE COURT: I didn't know who you were planning on doing -- what witness was going to be up next after Mr. Freeman. MR. HALLER: It depends, again, on timing -- THE COURT: Yeah. MR. HALLER: -- but we were going to call Mr. Groff if we have time. Even if we don't have time for a full cross, we could qualify him and the report at least. THE COURT: Okay. All right. Why don't we take a recess to ten after 1? THE CLERK: All rise. (Whereupon, a recess was held from 12:20 p.m. until 1:14 p.m.) THE CLERK: All rise. THE COURT: You may be seated. MR. WHARTON: Good afternoon, Your Honor. May I proceed? THE COURT: Yes. MR. WHARTON: Thank you. CROSS-EXAMINATION BY MR. WHARTON: Q Good afternoon, Ms. Rentz. A Mr. Wharton. Q The first thing I'd like to talk about this afternoon is revisiting something that you said during my
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 641 questions on your qualifications on voir dire. You were talking about your resume, and I believe you said that in your experience, you have used DCF analyses to evaluate -- and this is the term that I think you used -- you said the mineral components of the land. And when you talk about the mineral components, if I'm phrasing -- is that what you recall saying? A I don't recall. Q Okay. If you said mineral component, are you referring to the real property interest in the minerals under the ground? A I'm sorry. Could you repeat the question? Q Are you referring -- when you said -- if you used the term mineral component, are you referring to, like, the real property interest in whatever mineral sits on that land? A The discounted cash flow analysis in general? Q When you use the discounted cash flow analysis in your evaluation and valuation work, what interest in real property are you valuing? A To clarify, I would only use a discounted cash flow analysis in valuation. There is no place for a DCF in an evaluation. Q Okay. And if you use it in a valuation, not an evaluation, then what interest would you be valuing?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 642 A It depends on the type of analysis -- if you're valuing the working interest or the nonworking interest of a mineral property deposit, so -- Q Let's talk about working interest. Is that a going concern business? A I'm sorry. I don't understand. Q Okay. It's fine. We can move on. Let's go back to your report, Ms. Rentz. I want to start, actually, at the end. MR. WHARTON: So could we please pull up Exhibit 9005-R? Oh, can we switch control, please? Thank you. And I would like to start at report page 24, which is PDF page 25, if we can get it up. Thank you, Ms. Orona. BY MR. WHARTON: Q Ms. Rentz, looking at this page of your report, I see your conclusions listed. Is that correct? That's correct. The first conclusion that you list is in paragraph 60 of the report. And your conclusion there is that there's a mismatch between reported production quantities as reported by the Alabama Department of Labor, and purported demand as included in Mr. Stine's report and as pulled from the DODGE Construction Network. Is that your conclusion? A I see that in paragraph 60, yes. Q And I believe at the beginning of that
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 643 paragraph, you deem that the most significant conclusion of your report? A Yes. Q So let's start with that one, then. And I'd like to specifically look at the demand side of that mismatch, as you call it. You would agree, Ms. Rentz, that the change in population in a market area is critical to establishing the demand present or forecasted in the area? A I would agree that population change is critical, yes. Q You would also agree that the actual reported county numbers for new housing starts are a more accurate indicator of the market demand for limestone construction aggregates? A A more accurate indicator than what? Q Than, I believe, what you were comparing it to, which was Mr. Stine's method of -- what you deem to be Mr. Stine's method of calculating demand. A So you're asking if the county housing starts are more accurate indicator of demand? Q Than what Mr. Stine used. A I don't know. I haven't looked at those numbers. MR. WHARTON: Ms. Orona, can we turn to PDF page
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 644 14 of Ms. Rentz's report, specifically looking at paragraph 31. BY MR. WHARTON: Q Ms. Rentz, it's on the screen; you're welcome to look at the paper copy. I'm asking you to look at paragraph 31. Please let me -- please review and let me know when you're finished. A Absolutely. I've reviewed it. Q You're finished? A Yes. Q Thank you. Would you agree that your opinion is that the actual reported county numbers for new housing starts are a more accurate indicator of the market demand for limestone construction aggregates than the enigmatic market capture estimate -- and again, that refers to what Mr. Stine calculated in his report? A Yes. That is my opinion. Q Thank you. So may I ask you a hypothetical question about that opinion? If Petitioner or its experts had used new housing starts to estimate demand for limestone aggregate, you would agree that that would have been an accurate way to do so? A I would agree that it would have been more accurate than what was in the report. Q Okay. Have you ever used DODGE Construction
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 645 Network data before, Ms. Rentz? A I have not. Q You're familiar with DODGE Construction Network in general? A The name. Q Just the name. In your reports, you referred to DODGE as a "proprietary service black box". A Correct. Q And I think you used that term because you say it's unknown what factors go into the demand quantities presented. A As explained in Mr. Stine's report, yes. Q Ms. Rentz, are you aware that the parties exchanged work files related to their expert reports? A I assumed so. I did not know specifically. Q Did you collect any files and turn them over to Respondent to exchange to Petitioner's side when you prepared your rebuttal report? A I believe I did. My interview notes and calculation (indiscernible). Q I'll represent to you that Mr. Stine did the same process. He submitted his work file for review by Respondent. Did Respondent's counsel give you the opportunity to examine Mr. Stine's work file as you your rebuttal report?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 646 A I did not see that work file, no. Q Okay. Mr. Stine submitted a document that he relied upon, and I'd like to take a look at it together. MR. WHARTON: I'm holding a document I'd like to mark as next in line for Petitioner's exhibits. The number that I have is 7297-P. Handing a copy to counsel. May I approach? THE COURT: Yes. MR. WHARTON: Ms. Orona, can we display that document on the screen as well? BY MR. WHARTON: Q Ms. Rentz, I've just handed you a document that's been marked for identification as Exhibit 7297-P. Please take a look at this and let me know when you're done. A Okay. Q Ms. Rentz, based on your answers to my questions a minute ago, I assume you've never seen this document before? A That's correct. Q Okay. But I'll represent to you that this was part of Mr. Stine's work file. This is the raw construction starts data provided by DODGE Construction Network to Mr. Stine for use in his report. So can we take a look at the third column that
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 647 goes all the way down over these five Excel pages? The column header on the first page says, "project type header". And you can take a look at all five pages, but what type of project is represented for each of the entries on all five of these pages of Excel data? A It says residential. Q Could you confirm for me that all five pages say that the project type is residential? A Yes. Q So Ms. Rentz, I know that you haven't seen this document before, so I'm not going to ask you to opine on the specific document. But if, as a hypothetical, DODGE Construction Network data was based, in whole or in part, on residential housing starts, would that affect your opinion as to whether Mr. Stine's estimate of total demand for limestone aggregate was more or less accurate? A Without knowing what other aspects go into the DODGE demand number, I really can't speak to that. Q Hypothetically, though, if you did understand that raw housing data was used, it would be more accurate than if raw housing data were not used? A I would say that, yes, adding housing data would increase accuracy. Q Thank you. A Uh-huh.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 648 Q You were talking about DODGE as a proprietary data network, right? And you said that you'd heard of it generally, but you hadn't used it before and weren't fully aware of it; is that right? A Yes. That was -- Q And in your role in the federal government, do you ever come across other proprietary sources of data like that that other agencies might use or rely upon -- A Yes. Q -- that you're not familiar with? A Yes. Q In your role in the federal government, when doing evaluation and valuation work, do you often check the underlying data behind those estimates from networks like DODGE? A As much as possible. Q So if they were provided to you, you would, in the course of your regular practice, review them? A The data sources? Q Correct. A Yes. I would review data sources -- Q Okay. A -- in conjunction with reviews. Q Okay. The next topic I want to talk about is market capture. So can we turn to page 7 of your report,
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 649 which is on PDF 8? MR. WHARTON: Can we blow up paragraph 22? Thank you, Ms. Orona. BY MR. WHARTON: Q Ms. Rentz, can you read paragraph 22 on this page and let me know when you're finished? A Out loud? Q I'm sorry? A Did you want me to read it out loud? Q No. You don't need to read it out loud. A Okay. Q Just let me know when you're when you finish reading it to yourself. A Okay. Q Okay. You would agree, Ms. Rentz, with the proposition that it would be more accurate, in an analysis, to use road miles traveled rather than a flat circle, to measure market distances? A I would agree with that. Q Okay. I want to talk about how you think Mr. Stine calculated market capture. MR. WHARTON: Can we blow up paragraph 23 immediately below this one? BY MR. WHARTON: Q So in paragraph 23, you state that Mr. Stine, to
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 650 calculate the distances between the subject property and market areas, he dropped a pin in the center of the subject property and drew flat circles 25 and 50 miles wide as the crow flies. Is that an accurate representation of your opinion? A Yes. Q And for that, you cite to section 7.3.1 of Mr. Stine's report. A Yes. MR. WHARTON: Ms. Orona, can we leave up this page of Ms. Rentz's report, but also pull up Mr. Stine's report, which is exhibit 7206-P. And I'm looking to go to page 16 of the report, which is PDF page 22. And I know that we're having trouble blowing up, side by side as it is here, but if we could look at the bottom of the page on that page of Mr. Stine's report, that's good enough for me right now. BY MR. WHARTON: Q Ms. Rentz, can you see that on the screen? A I can. Q Okay. I want to look at the first sentence of the narrative under figure 5, starting with "Stantec identified". And if you could read that to yourself and let me when you're done. A I'm done.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 651 Q Okay. Mr. Stine identified the number of existing quarries within 25- and 50-mile radii from the property using satellite mapping tools, correct? A That's what his report states, yes. Q And then based on competitive location analysis and accessibility, the team estimated the percentage of each county's demand that could be realistically served by the quarry; is that accurate? A Yes. Q When we look back at your paragraph 23 on the left-hand side of the screen, your paragraph 23 says that Mr. Stine used 25- and 50-mile circles to calculate distances between the subject property and market areas, correct? A Yes. Q And your contention is that it's more appropriate to do that using road miles? A Yes. Q Let's look again at Mr. Stine's report, immediately below that paragraph we were just looking at. This will be table 2 on page 16 of the report, pdf 22. Can you take a look at table 2, Ms. Rentz, and let me know when you finish looking at it? A I see it. Q Figure 2 is titled "Estimated Market Capture by
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 652 County"? A That's correct. Q And there are four columns in that table? A Yes. Q First one is the state, correct? A Yes. Q Second column is the county? A Yes. Q The third column is the assigned market capture percentage as estimated by Mr. Stine and his team? A Yes. Q And the last column is road miles to county? A Correct. Q The first county on this list is Marshall County, correct? A That's correct. Q Just looking at that last column next to Marshall County, you can see -- it appears that the Riddle property is four road miles from the Marshall County -- from Marshall County, right? A Right. Q Okay. The second county on the list is Morgan County. You're aware, aren't you, Ms. Rentz, that the subject property is located in Morgan County? A I am.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 653 Q Okay. And so the last column says that it is 0 road miles from the property to Morgan County, right? A Correct. Q Okay. In fact -- and you can count this up; I'm doing it right now in my head again -- there are 12 counties listed on table 2; is that accurate? A That is accurate. Q And each county has a road mileage assigned between the Riddle property and the county? A It does. Q And each is also assigned a market capture percentage? A Yes. Q So the counties at the -- in fact, the table is sorted by market capture percentage, right -- if you look at it? A That's correct. Q So at the top of the table, higher market capture -- at the bottom of the table, lower market capture. I want to start at the bottom of the table. I count five counties at the bottom that have been assigned a 0 percent market capture rate. A That appears correct, yes. Q Those are Cherokee County, which is 60 road miles from the Riddle property, correct?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 654 A Yes. Q DeKalb County, which is 41 road miles from the Riddle property? A Yes. Q Etowah County, which is 32 miles from the Riddle property? A Yes. Q Jackson County, which is 36 road miles from the Riddle property? A Yes. Q And St. Clair County, which is 49 road miles from the Riddle property? A Correct. Q The other seven counties on the list are all 35 or less road miles from the Riddle property, correct? A That's correct. Q I want to turn to page 17 of Mr. Stine's report, which is PDF 23. And I just want to look at the paragraph at the top and the map below it if we can. MR. WHARTON: We can blow it up a little bit. We just want to keep the whole map. BY MR. WHARTON: Q Can you see that all right on the screen, Ms. Rentz? A Yes.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 655 MR. WHARTON: Thank you. BY MR. WHARTON: Q The paragraph here at the top of the page starting with "Marshall County" -- could you read that and let me know when you finish reading it to yourself? You're done? A Yes. Q So this paragraph here is a narrative description of the market capture percentages that Mr. Stine used for counties with a nonzero market capture from the table that we just looked at; is that right? A That's correct. Q Mr. Stine modeled a quarry on the Riddle property taking 20 percent of the Marshall County demand. A That's correct. Q And if you look at the map on page 17 of Mr. Stine's report, which is PDF 23, it shows that Marshall County has two black dots; is that right? A That is correct. Q And those black dots represent existing quarries as of the date of valuation. A According to his figure, yes. Q Okay. Mr. Stine modeled the quarry on the Riddle property taking 15 percent of Morgan County demand. A That's correct.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 656 Q And if I'm counting my black dots right again, a quarry on the Riddle property would have been the fifth quarry in Morgan County in 2017. A I believe that -- in Morgan County, you said? Yes. Q Yes. Is that correct? A That's correct. Q Thank you. Mr. Stine modeled a quarry on the Riddle property taking ten percent of demand in Cullman County? A Yes. Q That has one existing quarry as of the date of value; is that right? A Yes. Q And taking ten percent of the demand in Madison County, just north of the subject property? A Yes. Q That has multiple existing quarries; I believe it's four quarries existing as of the date of value. A I believe that's correct. Q Okay. Oh. As noted in the narrative in that paragraph, right, Cullman and Madison Counties have moderate proximity to the subject property? A Yes. That's what the paragraph says. Q 22 road miles to Cullman County?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 657 A I would have to reference the table again, but I believe that's correct. Q I believe it's in the paragraph. A Oh, the parenthetical. Yes, I see. Q And 12 road miles from the subject property to Madison County? A Yes. Q According to the narrative, Cullman and Madison County also had balanced competitive landscapes. A According to his narrative. MS. RAJ: Your Honor, may we ask a clarifying question for the record? THE COURT: Yes. MS. RAJ: Is Ms. Rentz being asked if there's four quarries listed on the map for Madison County on this map that she sees on the exhibit? Just to clarify for the record. MR. WHARTON: Yes. That's the question that I was intending to ask Ms. Rentz. BY MR. WHARTON: Q Ms. Rentz, was that the question that you were intending to answer? A The number of dots on the county on the figure. Q On the figure -- we're looking at this map together, and we each saw four dots on there.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 658 A Yes. Q Okay. Thank you. MR. WHARTON: Does that clarify? Thank you. BY MR. WHARTON: Q I just want to -- last point on this, Mr. Stine modeled a quarry on the Riddle property taking five percent of demand in each of the Blount, Lawrence, Limestone Counties, correct? A Limestone, five percent; Lawrence, five percent -- yes. That's what's listed at the -- Q Okay. A -- figure. Q And that was based on greater distance from the subject property? A I don't know. Q According to Mr. Stine's report? A I believe that -- let's see. Yes. That's what it says. Q Okay. My question for you, Ms. Rentz -- your criticism of Mr. Stine says that he failed to account for the road miles traveled to relevant market centers. We've been talking about road miles for the last ten minutes now, based entirely on Mr. Stine's reference to them. Did Mr. Stine fail to account for road miles from the subject property to other market centers?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 659 A One of the issues that I had with the road mile calculations presented was that they were to the County border, not necessarily to the population centers, and -- Q Each mine within the market area would have to travel the same roads within each of those counties to access the same projects to sell limestone aggregate to, wouldn't they? A Not necessarily, if they were on different sides of the county -- Q Right. A -- or going to different population centers. Q But the distance to the county, right, tells you how far it takes to get there. And then within that county, you might have to travel to certain projects. Correct? A Yes. Q Okay. So did Mr. Stine's analysis fail to account for that? A I believe it could have been more nuanced, yes. Q Okay. Ms. Rentz, I believe your report noted in several locations that the areas of highest population growth in the area surrounding the Riddle property is in Madison County. Would you say that's a fair characterization of your report? A I believe that's correct.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 660 Q Okay. But I would also note that you noted that Limestone County is experiencing a high rate of population growth relative to its prior population, right? A I believe that's correct, yes. Q Okay. And in fact, that characteristic, right, that population growth characteristic -- that gets to the path of development of urban areas like Huntsville as they grow out from the city center toward the suburbs and then the exurbs, right? A Yes. Q And you would expect, in your experience, construction projects to take place more within that path of development than in areas with no growth of population, correct? A Yes. Q Okay. And you would also expect that if a city center itself is not growing, but it's flat -- even with a high population, there's likely to be more projects within higher-growth areas than there are within that stagnant city center, correct? A I'm sorry. Could you -- Q Yeah. A -- rephrase the question? Q So aggregates are used where construction projects are, right?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 661 A Yes. Q Okay. So construction projects happen where people are moving? A Often. Q So you build more roads to get to places? A Generally, yes. Q You build more stores; you build more schools? A There's greater building construction needs, yes. Q You build more parking lots? A Yes. Q All those things use construction aggregate? A Correct. Q Those building activities don't happen as often where growth is flat? A That is correct. Q Okay. I do want to take a step back at this point and just clarify one thing I think we've been talking about. We've talked about, in my mind, two separate issues so far related to the demand estimate from Mr. Stine's report, right? First, we talked about how Mr. Stine calculated the total demand in each of these counties, right? A I believe so, yes. Q We were talking about the housing permit data
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 662 question, right, and that gets to how much limestone is used in each of the specific county areas? A Right. Q Okay. You'd agree with me, Ms. Rentz, though, that the second issue that we were just talking about, this market capture percentage -- that's how a quarry like one that might exist on the Riddle property would capture that total demand, right? A I'm not sure what you mean. Q Well, that market capture percentage -- I think you took issue with that in several places in your report. Is that a fair characterization? A That was one of the issues I identified, yes. Q Correct. So I want to highlight that there's two steps to this, would you agree? The first step is to take the total amount of demand in the area, right? And then the second would be to say how much of that total demand could an operation capture, right -- from the market? A That's one way to do it, yes. Q Yeah. Okay. So again, I just want to be clear -- two parts to this, right? I don't want to mix up that when we talk about, like, the market capture percentage, that that's going to be the total demand for limestone use in the area, right?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 663 A Well, I think my issue was, is that the market capture percentage didn't necessarily or clearly address all of the aspects of demand and what could be expected. Q I would agree with that. And so I want to be clear, though. We're talking about two different analytical framework. We're talking about estimating the total demand in the area, and I think you agreed with that as an initial step. And then also carving off a piece of it, that in market -- or sorry, excuse me -- a quarry might be expected to capture from the market? A That's not the way I would go about it. But yes -- Q Okay. A -- that is one way to do it. Q Let me ask you this. Your report doesn't present an alternative way to calculate demand, that a quarry on the Riddle property would be able to figure out how much demand it can capture? A No. I did not. Q Okay. When you do review work for the appraisal evaluation services office, do you often find that market or demand studies maybe don't pass muster based on the standards you're reviewing them under? A I would always offer critical constructive feedback to anyone who submitted a report to review.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 664 Q Do you offer an alternative way to do it? A Sometimes. Q Okay. Did you do so in this case? A I did not. Q Okay. Let's take a look at table five of your report, which is on page 21, PDF 22. I just want to confirm -- so this is the reported production by quarry for -- production data from 2018 and 2019? A Correct. Q And here, I want to get your thoughts. When we're talking about production from each of these quarries, we're really talking about how many tons of aggregate each quarry sold into the market? A I believe this was the producer reporting their production. Q Right. But if a quarry had stockpiles, right, they wouldn't necessarily get reported onto production if those hadn't been sold into the market yet? A Yes. Q We're really talking here about sales. A You'd have to talk to the quarry owners as to what they report. Q When you view this data, do you use it as a proxy for the supply of limestone aggregate, or as a proxy for the demand of limestone aggregate?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 665 A In this particular case, I would say that I used it for a discussion of how much each quarry was producing and then as a total county production. Q And so if each quarry is producing that much, that's supply, right? A Yes. Q Okay. I think we're on the same page. MR. WHARTON: I want to focus on the 2018 production column here, because I don't want to mess up the numbers and put the wrong things. So if we just focus on that one -- don't worry about the other data at this point. BY MR. WHARTON: Q I'm looking at the top entry, the top row of the table. Madison Materials Summit Quarry, its 2018 production was over 479,000 tons of aggregate, right? A Yes. Q Okay. I don't want or need you to do this calculation, just bear with me. The 19 quarries that are on this table, you can tell -- I mean, several of them sold over a million tons -- they collectively sold millions of tons of limestone in 2018, right? Okay. So collectively, you could say that limestone supplied in the region was several million tons? A Correct.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 666 Q Okay. But Madison Materials Summit, right, they only took a small fraction of that market share. A Of the total production in 2018 for the market area. Q Correct. A Right. Q Yeah. So you'd agree. Some suppliers took more than Madison Materials Summit, right? A They all have different production numbers, yes. Q Yeah. Okay. But they all took a slice of the total demand for aggregate in the region? A They supplied some of the production; that doesn't speak to the demand in this table. Q So again, when we're looking at an analysis, you would agree that determining total market demand in the area is a necessary step in the market analysis, right? A Yes. Q Okay. And you would also agree that determining the share of the market that that entrant would command is also a separate step from that? A Right. Q Okay. But both steps are necessary to determining a credible result if you're going to do the first. A Supply and demand --
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 667 Q Yep. A -- are both critical to the analysis, yes. Q All right. Let's turn to supply now. I think we're on the same page. I want to turn to table three of your report, which is on page 17, PDF 18. We talked about Alabama Department of Labor production data a few minutes ago, but that was separated out by quarry. This is by county, correct? A Yes. Q Okay. A It was a sum of each of those quarry totals in each county. Q Okay. But this data extends from 2014 to 2018? A Yes. Q Okay. And I want to verify with you. The number in each cell, for each year, for each county, right, correspond to how many tons of aggregate were produced in each county in each year. Is that your understanding of the data? A Yes. Q I know you said I had to go back and ask them, but I don't have time to do that, so -- okay. Let's look at Morgan County for 2014. 1,782,621 tons were produced in Morgan County in 2014? A Yes.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 668 Q Okay. This table does not tell us how many tons of aggregate were used in Morgan County in 2014. A No. Q Okay. Limestone is typically used pretty close to where it's produced, though, right? A I believe I discussed that in the transportation section, yes. Q I agree with that, too. I think based on your conversations with multiple producers, the maximum travel distance they usually sell product to is up to 50 miles? A Yes. Q Okay. I want to take a look at, now, your figure 2, which is on page 9, PDF page 10 of your report. We talked about your GIS experience earlier; it looks good on this page. This is a map of the Riddle property shown with travel distances of 25 and 50 road miles. A Correct. Q Okay. The Riddle property here is shown as the purple dot in the middle of the map? A Yes. Q And around that dot, there's light blue shading, right? A Correct. Q And that would be the area within 25 road miles of the Riddle property?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 669 A Correct. Q And then there's a yellow line that extends further than the blue shading, and that would be the line that's 50 road miles from the Riddle property. A Correct. Q That yellow line -- that's what I want to look at first, okay? That line extends way outside Morgan County? A Yes. Q In fact, you can see the Morgan County boundaries drawn in teal around the Riddle property, right? A Correct. Q And the 50-mile road miles doesn't touch any of the boundaries of Morgan County; it goes way beyond them. A It does. Q So if a quarry at the Riddle property could sell within 50 miles, it theoretically could sell to multiple counties, not just one, right? A I'm sorry? Q If a quarry at the Riddle property could sell its product up to 50 miles away, it can sell its product into multiple counties, right -- not just the one that it's in? A If their established producer travel distance
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 670 was -- Q Right. A -- 50 miles. Q If there are competitors, they might have delivered price advantages in different spots, right? A Theoretically. Q Theoretically, right? My broader point is not all aggregate produced in a quarry in a particular county is going to be used in that county. A Correct. Q Okay. A Let's take a look at another of your tables. This is the new building permits table, table 2. It's on page 14 of your report, PDF 15. I want to look at two particular counties on this table, and they're, helpfully, the two counties that you put in bold on the table. Those are Madison County and Morgan County. Madison County -- well, take a look at those numbers, please, and let me know when you're finished comparing them. A Okay. Q I think you'd agree with me that Madison County consistently has more than ten times more housing permits issued than Morgan County, right? A Madison County is the largest population center,
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 671 so -- Q And they're issuing more building permits than Morgan County? A Yes. They are. Q And I think we can compare them up here. In 2014, Madison County issued 1,765 building permits, right? A That's correct. Q Morgan County issued 136? A Yes. Q 1765 is ten times more -- is more than ten times more than 136, right? A It is exponentially larger, yes. Q Okay. So same thing in 2015? A Correct. Q 2016? A Yes. Q 2017? A Yes. Q 2018? A Yes. Q Okay. This table shows that Madison County is issuing more building permits. And as you said earlier, housing permits are correlated with aggregate demand. A Often. Q Okay. So it'd be fair to assume that Madison
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 672 County has a substantially higher demand for construction aggregate than Morgan County? A Per building permit, yes. Q Thank you. Let's take a look at one more table. This is table 3, which is on page 17, PDF 18. We were just on this table, and you bolded the relevant counties to look at again -- Madison and Morgan County, right? Let's compare, between those two counties, the amount of limestone produced by each between 2014 and 2018, and when you're done looking at the numbers let me know. A Yes. Q Okay. Here, do you agree with me that the amount of stone produced in Madison County is generally larger than the amount produced in Morgan County? A Generally. Q But not, like, ten times larger. A No. Q And in fact, in 2016, Morgan County produced more stone than Madison County? A That's what they reported, yes. Q And in 2017, the same thing? A Correct. Q So let me ask a question. If demand for limestone aggregate is ten times higher in two neighboring counties like Madison County and Morgan County, but
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 673 production of limestone in those counties is almost equal, then could you go on and assume that some aggregate produced in Morgan County is getting sold into Madison County? A Yes. That's safe to assume. Q We've talked about demand and supply; let's put them together. I want to look at paragraph 50 of your report, which is on page 20, PDF 21. So take a look at this paragraph and let me know when you're done. You talk about extant operating quarries in 2017. I want to ask a few questions about that. The Stine report had a date of value in December of 2017; is that right? A Correct. Q And your opinion, in paragraph 50, is that extant operating quarries in that year would be able to meet demand at that time? A Based on my analysis, yes. Q I just want to make sure. Because if we Zoom back out from paragraph 50, and look at paragraphs 51 and 52, we start talking about 2018 and 2019 data, right? A Yes. Q I think that's because -- and if you can confirm -- that in Mr. Stine's analysis, a quarry on the Riddle property wouldn't have started producing limestone
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 674 until 2019. A Right. Q Okay. MR. WHARTON: Let's zoom back out. I want to look at paragraph 53, which extends on to the next page, so if we can get all that, that would be good. BY MR. WHARTON: Q Because the beginning of paragraph 53, you're talking about 2018 and 2019 data again. But by the end of paragraph 53, you're talking about 2017 prices and 2017 production, right? A Correct. Q Okay. And in paragraph 53 -- MR. WHARTON: I'm not seeing the end of paragraph 53. There we go. That's it. The top of the page on the right-hand side. BY MR. WHARTON: Q So at the end of that paragraph, you talk about a discussion you had with Scott Langford? A Yes. Q And he's the owner of the CA Langford quarry? A That's my understanding, yes. Q It's located down in Guntersville, Alabama? A Correct. Q And your report, in this -- you say that CA
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 675 Langford quarry -- that Mr. Langford told you that the CA quarry was sitting on inventory in 2017 and had product stockpiled due to greater production than sales demand at that time? A Correct. Q Just want to ask, Ms. Rentz -- in your opinion, is the relevant analysis here to look at what was available in 2017 or 2019? A I think both are relevant. The data evaluation and the report was 2017, looking at the information that would be available to a market analyst in 2017. And then to give context to the production data, I included up through 2019 -- Q Okay. A -- which is when the quarter would begin -- Q If -- A -- reporting production. Q -- if CA Langford had stockpiles in 2017, would those stockpiles be relevant to the production that was taking place in 2019? A I don't know. Q Okay. Two years is a long time. A It is. Q For a stockpile that can just go out the door, right?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 676 A Depends on what's stockpiled, I suppose. Q Yeah. So it's your testimony that Mr. Scott Langford and the CA Langford quarry were sitting on inventory in 2017, that they had product stockpiled due to greater production than sales demand at that time? A Yes. He had indicated that they were still recovering production-wise from the recession and the decrease in building production demand. Q Okay. MR. WHARTON: I'd like to have another exhibit marked as the next in line, which I believe is 7298-P. THE COURT: And before you do that, I don't think you ever offered the other exhibit. MR. WHARTON: I wasn't sure if it was appropriate to offer it, Your Honor, given that it was just documents relied upon by the expert. I can move to have Exhibit 7297 admitted. MS. RAJ: Your Honor, if they move to have that exhibit admitted, I would object as they haven't laid a foundation for it. Ms. Rentz had testified that she had never seen it before. THE COURT: Okay. MR. WHARTON: Yeah. THE COURT: I just wanted to make sure you were not offering it since you didn't clarify --
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 677 MR. WHARTON: I was offering it to impeach her testimony that the data was -- THE COURT: But you didn't say for impeachment purposes -- MR. WHARTON: Yeah. THE COURT: -- so I was just clarifying. Thank you. MR. WHARTON: Understood. Thank you. This one, I think, I will end up moving in. Either way, I'm holding in my hand, but I'd like to have marked for identification as 7298-P. Handing a copy to counsel. May I approach? THE COURT: (No audible response) BY MR. WHARTON: Q Ms. Rentz, I just handed you what's been marked for identification as exhibit 7298-P. Please take a look and let me know when you're ready. A I will. Okay. Q Do you recognize this document? A I do. Q What is it? A It is a copy of the notes that I submitted with my report. Q Did you prepare these notes yourself? A I did.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 678 Q Did you make them immediately after the interview that's reflected in the notes? A I did. Q At the bottom of each of the pages, there's a page number footer. I'm going to direct you to page 3 out of 4. A Yes. Q And at the top of that page, there's a date, August 13, 2025? A Yes. Q The next line says, CA Langford Co., Inc. Quarry? A Yes. Q And then there's a series of bullets. I want to direct you about three-quarters of the way down the page -- there's a bullet that starts "slow business"? A Yes. Q In these notes, didn't you write "slow business from 2011-2013 so Langford was sitting on a lot of produced inventory in 2015"? A Yes. Q And in fact, you didn't write anything about CA Langford sitting on any inventory in 2017? A I did not. MR. WHARTON: Okay. At this point, Your Honor,
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 679 Petitioner moves Exhibit 7298-P into evidence. MS. RAJ: Respondent would not object to admitting it as the fact that these are, Ms. Rentz's notes; however, we do object to this if they're being admitted as to the truth of the matter asserted within the statements regarding conversations in her notes, under hearsay. MR. WHARTON: They meet a hearsay exception for present sense impression under Federal Rule of Evidence 803(1) She testified that they were recorded immediately after her interviews. THE COURT: 7298-P is admitted. MR. WHARTON: Thank you. BY MR. WHARTON: Q I want to talk a little bit more about this Scott Langford interview. Closer to the top of that page, 3 of 4 -- A Yes. Q -- there's a bullet that starts off with "60-mile radius". Can you review that and let me know when you're done? A Yes. Q Also have you take a look at the next bullet; it isn't too hard. It starts with "Majority. A Yes.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 680 Q I want to ask you some questions about these, Ms. Rentz. I know you're not from Alabama, but are you aware that Birmingham is over 70 road miles from CA Langford's Guntersville location? A That was my general sense, yes. Q And Mr. Langford told you, right, that his quarry sometimes gets a little into New Hope? A Yes. Q Okay. And are you aware that New Hope, which you noted is north from the quarry, is still south of Huntsville? A Yes. Q Okay. And in fact, the Riddle property is over 13 road miles closer to Madison County than the CA Langford quarry is? A I believe you that that is correct, yes. Q Let's turn back to reconciling supply and demand. I want to turn to page 22 of your report, which is PDF 23. In paragraphs 55 and 56, -- please review those real quick and let me know when you're finished. A I'm sorry. You said 55 and 56? Q 55 and 56, please. A Okay. Q Thank you. A Yes.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 681 Q Are you done? A Yes. Q Okay. You critique the Stine report for conflating demand with potential market capture? A Yes. Q And you give an example of Marshall County production there in paragraph 55 and ends in paragraph 56. A Correct. Q Here, you compare the 2018 total Marshall County production to the Stantec DODGE report and the calculated market penetration rate quantity, right? A Right. Q But again, I just want to make sure we're making a fair comparison. So like we said before, a county's specific production of limestone doesn't equate to its use or demand for limestone, right? A Not necessarily. Q I think earlier, we were talking about how, in counties like Madison and Morgan County, there's ten times more demand for aggregate in Madison County, but the production is nearly equal, right? A That's what we discussed, yes. Q Okay. And we reconciled that by saying quarries in one county are selling aggregate into another county to satisfy that county's demand. You said it was possible
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 682 because of the 50-road-mile ring, right? A I believe that you pointed out that they could travel -- Q Okay. A -- 50 miles, and I agreed. Q So in these two paragraphs, when you say that Marshall County produced 783,571 tons of aggregate in 2018, we know that not all of that aggregate was used in Marshall County. A I have no idea where that aggregate was used. Q Well, we just talked about the CA Langford interview, right? A Yes. Q Scott Langford told you that the majority of those sales were in Albertville and Boaz, right? A His sales. Q Yeah. And those cities are in Marshall County? A Yes. Q But he also told you that sales went up to New Hope? A Sometimes. Q Which is just inside Madison County? A That's correct. Q And just as far south as Birmingham, right? A Indeed.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 683 Q And that's Jefferson and Shelby counties. A Correct. Q So when Marshall County produces 783,571 tons of aggregate in a year, some of that's getting sold in other counties. A I would assume so. Q Okay. But what Mr. Stine calculated with his total demand in market capture was how much of the demand in Marshall County a mine on Riddle property could capture. A Okay. Q In fact, total demand in Marshall County in 2018 could have been far less than the 783,571 tons of aggregate getting produced in Marshall County, given that some of it was getting exported to other counties. A It's possible. Q Okay. Again, though, your report concludes that in 2017, the market had enough extant quarries to supply any demand that existed with additional supply from those quarries. A Based on the variability in their production reports. Q Okay. If the established producers could already meet all market demand, then why did five new quarries open in that market since 2017?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 684 A I don't know. Q I just want to direct you back to your field notes. MR. WHARTON: Can you pull that back up, Ms. Orona? Oh, and go to, actually, to the first page of this instead of the third page now. And I'm looking at the heading that starts "North Alabama Materials Gurley Quarry". A Yes. Q What date did that open, Ms. Rentz? A They said it opened January 2022. Q Okay. And in your field notes right below that, you have some notes from the Gum Pond Quarry, correct? A Yes. Q Okay. You noted that it signed its lease in August 2021. A That is what the owner said, yes. Q And it started production March of 2023? A That's what they said, yes. Q Gum Pond Quarry's production goal is 60,000 tons per month? A That was what they said, yes. Q And that's 720,000 tons annually, correct? A I believe that's correct, yes. MR. WHARTON: No further questions at this time.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 685 MS. RAJ: Your Honor, Mr. Jim Freeman is here, and when there's appropriate time, can we ask to stop to be able to take his testimony? THE COURT: Well, I think this is perfect timing. MR. HALLER: Should we take about ten minutes? He's down in the cafeteria, Your Honor. THE COURT: Okay. Just let the trial clerk know when you're -- when you're ready. MR. HALLER: Thank you, Your Honor. THE CLERK: All rise. (Whereupon, a recess was held from 2:06 p.m. until 2:17 p.m.) THE CLERK: All rise. THE COURT: Please be seated. MR. PAVILONIS: Christopher Pavilonis for Respondent, Your Honor. Respondent calls James Freeman. THE COURT: If you could come up to the stand and remain standing, and I'll have the trial clerk swear you in. MR. FREEMAN: Okay. Right here? THE COURT: Yep. That's perfect. JAMES FREEMAN, II having been duly sworn, testified as follows: THE CLERK: Please state your name.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 686 THE WITNESS: I'm Jim Freeman. My formal name is James E. Freeman, II. THE CLERK: Thank you. DIRECT EXAMINATION BY MR. PAVILONIS: Q Good afternoon, Mr. Freeman. My name is Chris Pavilonis. I'm just going to be asking you a few questions today, okay? A Okay. Great. Q Could you start by telling the Court just about your educational background? A So I went to high school in Marietta and attended the University of Georgia after I graduated from high school. Q Okay. And what did you major in at the University of Georgia? A Banking and finance. Q And can you please tell the Court what you currently do for a living? A So I'm a tractor dealer. I sell tractors, and we repair them, and provide parts and service and other kind of support for all kinds of equipment. Q And are you familiar with an organization called the Freeman Five, LLC? A Yes, sir.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 687 Q Can you just give us an idea of what that is, the entity -- what it does? A It's a real estate holding LLC that my dad set up. Q And who is your father? A His name was James E. Freeman, I, or just James E. Freeman, I guess, would be the first. Q If I refer to him as Mr. Freeman, Sr., would you -- A Yes, sir. Q -- know that that's who I'm referring to? A Yes, sir. Q And is he still with us? A No, sir. He passed away. Q I'm sorry to hear that. A Me, too. Q Are you the executor of his estate? A Yes, sir. Q While Mr. Freeman, Sr., was alive, did you two do any work together with the Freeman Five organization? A So I mean, he and I did work together, over the years, at all kinds of things, so -- Q Okay. Could you maybe, I guess, elaborate on what his role was in the Freedom Five, LLC? A Well, he was the creator, or the organizer, I
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 688 guess, how you call it, and then he served as manager for it until he passed away. Q And I think you mentioned earlier that it held land? A Yes, sir. Q Who went about locating that land for acquisition? A He did. Q And based just on your observations, how did he go about doing that? A I mean, people just knew my dad, and they would come to him when they kind of were wanting to sell a piece of property, or different real estate people knew that he bought and sold land, so they would come to him as well. Q And could you describe, a little bit, your father's experience in real estate? A So I mean, I was born in 1972, and as far as I know, for all of my life, he owned real estate. Q And could you give, just I guess for the Court, an idea of a range of how many real estate transactions he did over his life? A I don't know exactly how many it would be, but I think it was, say, over 50. Q Okay. All right. A I want to talk a little bit about some property
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 689 that was acquired by the Freeman Five, LLC in Morgan County. The parties have stipulated that on May 8, 2006, Freeman Five acquired about 2744 acres of real property located in Morgan County from an individual named Jeff Banks, III. Let me ask, are you familiar with an entity called Longleaf Ventures? A Yes. Q Okay. And how are you familiar with Longleaf Ventures? A It was on a document that an attorney showed me. Q And I'm also going to tell you that the parties have stipulated that in March of 2016, Longleaf Ventures made an offer to Freeman Five to purchase about 894 acres of the 2,744 acres for approximately 2,500 an acre. Do you remember who handled the negotiations for this offer from Longleaf? A You mean who handled it for us? Q Well, yeah, we'll start with you. Do you know on your end who was engaged in the discussions? A For Freeman five, LLC, I believe it was my father. Q And do you know who handled the discussions for Longleaf? A I think they had a real estate agent involved in it. A guy named David Duke or maybe Will Waller (ph.).
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 690 The two of them were partners that had approached us about it. Q Did you recall if you had any interactions with Mr. Duke? A I met him, sure. Q And do you recall if your father had any interactions with Mr. Duke? A Yeah. Dad was the primary person -- his primary contact. Q And let me ask you, during 2016, to your knowledge, was the Freeman Five entity under any type of financial strain or duress? A No. Q And in 2017, was the Freeman Five, LLC, entity under any type of financial strain or duress? A No. Not that I'm aware of. Q Were the property taxes paid on the land that was owned by Freeman Five, LLC? A I didn't pay the property taxes then personally, but I believe they were all paid. Q And were any of the properties in foreclosure? A No. Not that I'm aware of. Q Speaking to the properties, the 894 acres that I mentioned to you earlier, did Mr. Freeman, Sr., ever visit Morgan County to see those -- to see that property?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 691 A I'm sure he did, yes, sir. Q And was Freeman Five related in any way to Longleaf? A No. Q Are you aware of the structure of the transaction in which the property that was held by Freeman Five eventually ended up with Quorum Holdings? A I don't know exactly what you mean by when you say am I aware of the structure of it. What do you mean? Q I guess, do you know how the sale of the real estate was structured? A Well, based off of the documents that I was shown, it was sold from Freeman Five, LLC, to Longleaf, and then they handled anything else from there as far as I'm aware of. Q And when you say documents you were shown, who showed those documents to you? A Well, some of the attorneys showed them to me when we were looking the other day. Yeah. MR. PAVILONIS: Your Honor, may I have a moment to confer? THE COURT: Yes. MR. PAVILONIS: Your Honor, no further questions. MR. NORMAN: Just a few questions, Your Honor.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 692 CROSS-EXAMINATION BY MR. NORMAN: Q Good afternoon, Mr. Freeman. My name is Mac Norman for the Taxpayer. Just a few questions, and we will get you out of here pretty quickly. Just to confirm, as far as your education experience, you don't have any education or experience related to mining any sort of rock or mineral, correct? A Well, I picked up a lot of rocks as a kid, but other than that, not really. Q Fair enough. Fair enough. When you mentioned earlier that you were shown certain documents by a lawyer, were those documents that were shown to you by anyone at this table here? A Well, it was online, so I don't know who showed them to us, so -- Q Was it recently? A Yes, sir. Q Okay. So you may not have known about these documents back in 2017, perhaps? A No, I mean, they look familiar. Q You mentioned earlier a range of real estate deals that your father might have been engaged in, and you mentioned over 50. That was just a guess, correct? A Well, I had been asked previously if it was a
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 693 number and we kind of come to the number that -- it was at least 50-plus, or more than 50. Q Understood. A So far as I know. MR. NORMAN: Just a moment to confer, Your Honor? No further questions, Your Honor. MR. PAVILONIS: Nothing further from Respondent. We would ask that Mr. Freeman be released from his subpoena. THE COURT: Thank you for your testimony. You're released from your subpoena. THE WITNESS: Thank you very much, Your Honor. THE COURT: We can go off the record for a second. (Off the record, 2:28 p.m. to 2:29 p.m.) THE COURT: Okay. We'll go back on the record. REDIRECT EXAMINATION BY MS. RAJ: Q Okay. Ms. Rentz, they asked you about housing starts. How can you tell us about how you checked housing data? A I'm sorry. I can barely hear you. Q They asked you about housing starts. Can you tell us about how you checked housing data? A Yes. I pulled information about each county and
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 694 the new residential housing permits that were -- excuse me, for each of those counties in that market area. Q And they also asked you about DOGE (sic). What ability do you have to test DOGE (sic)? A I think it's DODGE. Q DODGE. Sorry. A It's a subscription service is my understanding, and we do not have a subscription for it. So it's not accessible to me. Q Okay. MS. RAJ: And I'm going to ask Mr. Yoshida to pull up exhibit 7206-P, at PDF page 73. BY MS. RAJ: Q So they had asked you a sentence from the Stine report under figure 5, which is on a different page, but it was regarding existing quarries. What do you think about the existing quarries -- A Could you be -- Q -- as noted on here. MS. RAJ: Mr. Yoshida, if you could highlight the portion on the left that's in the green background, because it's a very small table and hard to see. BY MS. RAJ: Q Can you tell us what you think about the existing quarries in the area?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 695 A In what aspect? Q In the context of your review -- and their impact. A I'm sorry. I don't understand the question. Q So they had specifically -- MS. RAJ: I guess, Mr. Yoshida, could you pull up -- I'm sorry -- the same exhibit, 7206-P, at PDF 22? BY MS. RAJ: Q So on the right is page 22 from that report, and they had asked you to read out the first sentence, which was regarding existing quarries within the 25-, 50-mile radius. It's a little hard to read. And I was just wondering -- you were here yesterday when Mr. Stine testified, correct? A Yes. Q Okay. And so you saw him discussing the chart here on the left at page 73, which was of existing quarries? A Yes. Q And I was just wondering, looking at all the existing quarries in the area, what are your thoughts on that and how that would have impacted your market evaluation regarding a hypothetical quarry at the Riddle location? A In regards to the quarry distances and the
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 696 existing quarries in the area, I think that looking at the road-mile distance for those quarries can give you a better idea of the market reach for each of them, as aggregate is such a strongly distance-controlled market. And in these -- let's see. I'm sorry. I'm comparing the two. Q And what does that tell you, I guess, about the market demand with these existing quarries? A I'm sorry. I don't know what you mean. Q That's fine. I'll move on. They had also asked, as we discussed, about the road miles to county from Stine's report. A Correct. Q What does this tell you about the miles to the customer of a hypothetical quarry? A Oh, it was distance to county versus distance to the location of the demand center. It's just a more nuanced evaluation of where the quarry is, as to getting to major population centers, versus the county line. Because it could very well be 10 miles to the county, but then it might be 40 miles to the other side of the county, where the demand might be. It would vary based on county. Q What kind of transactions occur on the county line? A I don't know.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 697 Q And what is your opinion on market capture? A It's -- MR. WHARTON: I'm going to object. It calls for a narrative. I mean, we're talking about a report. I did some questioning about market capture, but I really think the witness' thoughts on market capture are contained within her direct report, and I don't know that we need to be -- THE COURT: I'll allow the question. THE WITNESS: Could you repeat the question? I'm sorry. BY MS. RAJ: Q Yeah. What are your -- what is your opinion on market capture? A Market capture isn't a hypothetical evaluation of the amount that you could sell if there are customers depending on the amount that might be produced. But for this particular market capture calculation, I think my point in my report was that the road distance is one part of it, or the distance is part of it, but the other aspects are just unknown in the report, based on whatever calculation factors come in from DODGE. It's just that it's not clear. MS. RAJ: And Mr. Yoshida, can you go ahead and take down these current exhibits?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 698 BY MS. RAJ: Q So as part of your analysis on market capture, who did you talk to for the case? A I mean, I spoke with producers in the area and analyzed the data that was available. Q And for this area, where are the customers located? A For Morgan County? Q In general, for a hypothetical quarry located at the Riddle location, where would the customers be located? A Generally, you're going to look at where the building permits are, where the population growth is, and compare that in relation to the distance you're going to have to travel the limestone to get it to those customers, to figure out how reasonable is it that they would sell to those people. MS. RAJ: Mr. Yoshida, can you pull up Exhibit 9005-R at PDF page 12, please? BY MS. RAJ: Q You were asked a question about Madison County growth. What is the growth of Limestone County? A Over this period of time, the 2014 to 2019, Limestone County grew by more than ten percent. Q And how much construction was there in Morgan County?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 699 A Construction? Q Yeah. Construction in general or estimated construction bathed on growth -- based on growth. A I couldn't estimate based on -- the construction in general, I could look at the change in population or the change in the number of building permits. Q Okay. So how much of a change in the number of building permits were there in Morgan County? A I would have to reference my report. I'm sorry. I don't know off the top of my head. Q You actually have your report in front of you, correct? A I do. Q I believe it's on PDF page 15. So we had just talked about the growth in Madison County. Now we're looking at Morgan County. A Okay. Q So can you tell us about the growth in Morgan County? A I'm sorry. I'm on a different page. So Morgan County had a growth -- or excuse me. There was an increase in the number of building permits in 2016 and then a decrease in 2017 and '18. Q And based on that, about how much of that growth and/or construction was in Huntsville?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 700 A That, I don't know. The data granularity doesn't say specifically. Q Do you have any recollection from your review and research or visits? A Not off the top of my head. I'm sorry. Q And do you recall about how far Huntsville is from the Riddle property? A Again, I'd have to look. I'm sorry. I don't recall off the top of my head. MS. RAJ: Okay. So Mr. Yoshida, can you pull down that exhibit, please? BY MS. RAJ: Q What evidence is there of total demand in 2017? A Total demand? Q Yeah. They had asked you about demand in 2017. When you're doing your review and creating your report, what are you looking at to determine the demand in 2017? What evidence is there? A Oh, in the -- excuse me. In that case, I would, again, go back to building permits and population change as a proxy for demand in those areas. Q And how was the market positioned to handle that demand in 2017? A Based on the amount that was produced at that time, or based on the amount of -- I'm sorry. I don't --
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 701 Q Oh, yeah. So -- A -- I don't understand. Q -- the existing market at that time, how was it situated in terms of being able to handle the demand that was present in 2017? A Thank you. From what I could see and analyze in this, the existing producers in 2017 were already able to meet the demand in the area. The production quantities increased, or varied, over time for each quarry, but the variability more than accounted for the potential -- in comparison to the amount that was going to theoretically be produced from the subject property, they seemed to be able to increase or decrease their production by that amount over time. Q And you were asked about presenting an alternative in your reports when conducting a review of other technical reports. Why didn't you present an alternative here? A That was not part of my scope. I was offering review of this report, not presenting my own theories. MS. RAJ: Ms. Yoshida, can you pull back up exhibit 9005-R at pdf page 22, please? Which will be page 21 of the -- BY MS. RAJ: Q Can you explain table five from your report?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 702 A Yes. It's the production reported from the quarries in the listed county areas, as well as the operator of the quarry as was listed in Alabama Department of Labor in 2017. And then it gives a percentage of the county production that each quarry -- based on the county, the amount of that production that each of these quarries accounts for. Q And you were asked about the Alabama Department of Labor data. Can you tell us about the accuracy of the Alabama Department of Labor data? A To my understanding, it is reported by each quarry operator to the state on a yearly basis. MS. RAJ: Ms. Yoshida, can you turn to page PDF at 10 of the same exhibit? BY MS. RAJ: Q Can you explain figure two from your report and specifically your reasons for looking at both 25 and 50 miles? A In this particular figure, I set a start location at the proposed entrance for the theoretical quarry on the property and then calculated a route distance of 25 miles and then another of 50 miles to show where, in relationship to those travel distances, the other existing quarries were. Q And how many competitors are located in the 50-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 703 mile area? A May I count? Within the -- I'm sorry. You asked about the 25 distance, or the 50? Q In the 50-mile area. A Ah. 50. Q How many other competitors are located in the 50-mile zone? A 13. MR. WHARTON: Can I ask for clarification if that's within the 50-mile zone but outside 25 miles, or if that's the total 50-mile? MS. RAJ: I was asking for the total within both 25 and 50 -- the total amounts all within the yellow, not exclusively between 25 and 50. BY MS. RAJ: Q Is that the question that you answered, Ms. Rentz? A I was answering the total number that I quickly counted from this within the 50-mile road distance. Q So you would have included, if we pull up the chart, you would have included the ones that are located in the blue zone? A Correct. Q Okay. MS. RAJ: And can we pull up -- I believe it's
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 704 page -- PDF at, I want to say, 18. BY MS. RAJ: Q So they had asked you about the customers in new construction. About how many quarries are servicing these customers for their new construction? A I'm sorry. Which -- Q Oh. A -- location? Q How many quarries are servicing these customers for their new construction -- the customers of the hypothetical Riddle quarry? A As I don't know specifically what customers were being served by each quarry, I couldn't speculate to that. Q And can we turn to table 4 on PDF page 21? A Pardon me. Q I know they had asked you about table 4, and I just want to see if there was anything you wanted to explain about it. MR. WHARTON: Objection. I never asked about table 4. It's outside the scope of cross. THE COURT: I believe that is correct. MS. RAJ: Yeah. Apologies. I think I wrote the wrong table down. BY MS. RAJ: Q Table 5 on 22. Do you want to elaborate
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 705 anything regarding table 5? MR. WHARTON: Objection. Calls for a narrative. THE COURT: The objection -- if you want to ask a more focused question? BY MS. RAJ: Q I think we did already cover table 5 a bit again, but I just wanted to see if there was anything that you had, additional. But I will move on. They did ask you on direct about the Langford quarry? A Yes. Q How would the Langford quarry compete with the hypothetical Riddle quarry? A I don't know because I don't know what the -- I don't know what customers the hypothetical quarry would be aiming to serve. I don't know if those would overlap with overlap with the Scott Langford quarry geographically. They're in the same competition area. Specific customer wise, that's difficult to determine because it's hypothetical. MS. RAJ: Thank you. RECROSS-EXAMINATION BY MR. WHARTON: Q Ms. Rentz, counsel was asking you a question about total building permit demand and also asking about
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 706 my questions about kind of an alternative analysis, right? A Correct. Q I had asked you on cross about if you did an alternative analysis, and your answer was no. And counsel asked you questions, well, why didn't you do one? And I believe you said it wasn't within your scope? A Correct. Q Okay. But today, you're here, and I have you on the stand for another couple questions. So I'd like to ask you, let's say that you had a total demand estimate for the counties in the market area that the Riddle quarry would have served. Are you with me on that? A A total demand estimate. Q Yes. Now, you are doing or you said you would not do, I believe, was your testimony earlier, the market capture approach that Mr. Stine took. So my question to you is, if you had the total demand, how would you figure out what the demand that a quarry on a Riddle Aggregates property would serve? A That's a little difficult to say. It depends on a lot of different factors and how much was known about the hypothetical quarry. If I were able to talk to the people that were running the quarry, I'd want to ask them what product mix they were selling, if they had predetermined contracts already, if they had, I believe
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 707 it's been mentioned earlier, specific deals with particular providers. That's going to help determine -- I don't know what a total demand would consist of in this particular case. Where did those numbers come from? What does that depend on? Q I believe that you testified on your qualifications that you have evaluated exploration type properties in the Aggregate space, five to ten, right? We call those greenfield properties. Have you heard that term before? A I've heard that term before. Q Okay. When you're evaluating a greenfield property, do you need to have contracts in place to start mining or to evaluate? A Evaluation is very different from starting mining. Q Yeah. A Just to clarify that. Q Do you need contracts to evaluate whether you can start mining? A You can evaluate anything. MR. WHARTON: All right. No further questions. THE COURT: You may sit down. Thank you for your testimony. THE WITNESS: Thank you.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 708 MR. HALLER: Your Honor, at this point Respondent would call Brian Groff to testify. I believe, given the timing, we're at just before 3, we'd at least qualify him and the reports and we see where we're at. Is that agreeable? MR. STEIGLEDER: If I have a chance, I have all my materials. I will need a break before we start. We just want to go through qualifications and get all my materials. MR. HALLER: When would Your Honor -- we're still proposing to move forward with him today. MR. STEIGLEDER: Excuse me? MR. HALLER: We're still proposing to move forward with him today, though. MR. STEIGLEDER: I think we'd like to -- we can get him qualified. We have enough time to do that. Get his report in. MR. HALLER: I think that Your Honor had expressed a desire that we keep moving things forward, and I'm happy to have him qualified. And I've already instructed him that if he takes the stand, qualified, he's crossed tomorrow. We don't have time today, that, of course, he would not speak about the matter until -- it's up to Your Honor on how you want to proceed. THE COURT: And Mr. Steigleder, are you, because
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 709 I know we're ahead of schedule. Are you ready to qualify this afternoon? MR. STEIGLEDER: I'm ready to proceed, Your Honor. I don't need to get my material. I may need a break, if we continue the cross, to get my materials together. THE COURT: We can take a five-minute break so you can get your materials. MR. STEIGLEDER: Okay. Yes. Thank you. MR. HALLER: Thank you, Your Honor. THE CLERK: All rise. (Whereupon, a recess was held from 2:53 p.m. until 3:03 p.m.) THE CLERK: All rise. THE COURT: You may be seated. MR. HALLER: Stephen Haller for Respondent. Your Honor, Respondent calls Brian Groff to the stand. BRIAN GROFF having been duly sworn, testified as follows: THE CLERK: Please state your name. THE WITNESS: Brian G. Groff. THE CLERK: Thank you. VOIR DIRE EXAMINATION BY MR. HALLER: Q Mr. Groff, why are you here today?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 710 A I'm here today to testify on the expert reports that I wrote for the Riddle Aggregates case, one being an opening report and the other being a rebuttal report to Messrs. Gold, Howle, and Stock (ph.). Q And what is your educational background from college onwards? A I earned a Bachelor's of Science in mining engineering from the University of Missouri at Rolla in 1999. And since that time, I've just had short courses and just continuing education to maintain my licenses. Q What professional registrations do you have? A I'm a licensed professional engineer in 18 states, including Alabama, Georgia, Tennessee, and Kentucky. I'm a registered member of the Society for Mining, Metallurgy & Exploration. I'm a certified minerals appraiser of the International Institute of Minerals Appraisers, and I'm a certified MSHA instructor. Q As part of SME, do you have any specialty? I'm sorry. As part of your professional engineering certification, do you have any specialties? A Yes. As most states only recognize a professional engineer, not specific disciplines, I am a mining and mineral processing engineer, which is recognized by the State of Nebraska specifically. Q And you're admitted there?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 711 A Yes. Q Are you a member of any SME committees? A Yes. I'm a past chair of the SME Resources & Reserves Committee. That is the committee that writes the SME guide for reporting exploration results, mineral resources, and mineral reserves. I'm also a member of the SME Valuation Standards Committee, which writes the SME valuation standards. Q Are you are you still a member of the Resources & Reserves Committee? A Yes, I am. Q And have you heard the term CRIRSCO? A Yes. Q What is that? A Yes. CRIRSCO is the international committee for writing the resources and reserves reporting standards to which SME is the U.S. member, CIM is the Canadian member. I am one of two representatives to CRIRSCO for the United States. Q And you mentioned the certified minerals appraiser designation. What's required for the CMA? A To be a certified minerals appraiser applicants must have at least four years of experience following the receipt of an undergraduate degree, such as a baccalaureate degree. They have to have training on
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 712 Uniform Standards of Professional Appraisal Practice. They have to have recommendations from at least three fellow certified minerals appraisers, and they have to submit a sampling of work to the IIMA to which they'll put together an ad hoc committee to review that work and determine if the applicant is experienced and eligible to receive the certified minerals appraiser designation. Q What's your current position and title? A I am the owner and the principal of Groff Engineering & Consulting PLLC, which was founded in Kentucky. Q When was that founded? A 2017. Q What experience do you have in the mining industry? A I have nearly 30 years of experience in the mining industry, starting in college with an extended internship at the zinc mines in Middle Tennessee. I also did an internship for Cargill Salt in New York. And then following graduation, I worked for Cargill Salt full time in Avery Island, Louisiana. Then I went to California to work some 30,000 acres in San Francisco Bay Area for producing salt. I was the maintenance manager for maintaining all the equipment, mobile and fixed, for that salt producing facility.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 713 Beginning in about 2005, I was recruited by Bucyrus International to move to Kentucky and work on the largest earthmoving equipment in the world, which were draglines and shovels, which we had maintenance contracts in West Virginia, Florida, and Grand Bahama. I was also an applications engineer for sizing draglines and sourcing used draglines for relocation for various projects. Following the recession, when many of us lost our jobs, I went into consulting, and in 2009 I passed the principles of practice exam for mining and mineral processing and obtained my PE license in 2010. Q And of the experience you just summarized, what experience is in limestone aggregates? A Much of my limestone aggregates experience has been since I've been a licensed PE. We've done several due diligence projects for the publicly traded company Summit Materials, when there was still Summit Materials. I've also been the engineer of record for developing and constructing a new underground limestone mine for Continental Cement in Hannibal, Missouri. As Groff Engineering, we've done due diligence projects for Construction Partners in acquiring Blount Springs Materials in North Alabama, Blue Water Industries for acquiring 17 aggregates operations in East Tennessee and
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 714 also in Northern Alabama. And I've also done due diligence for the newly formed Indian Creek Materials in South Central Missouri, to name a few. Q What experience do have modeling mineral resources and reserves? A I've been modeling resources and reserves almost my entire career, starting back in college using Maptek Vulcan when it was still Unix. I've got some experience on Datamine, but the bulk of my experience is using Carlson software, which is used heavily in the coal fields of East Kentucky and in the aggregates industry. I started learning it in 2008, after having already 15 years of CAD experience. I'm considered by Carlson today an expert user, and I teach at their user conference in Kentucky every other year. Q How many times have you testified in Tax Court? A I've testified in person twice. And once, I did not testify in person. They accepted my report as my testimony. That opinion, Harman Road, was just served earlier this month. Q And you're qualified in those cases? A Yes, sir. I was. Q And you mentioned the Harman Road opinion. What did the court say about your testimony in that opinion? A They found my testimony --
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 715 MR. STEIGLEDER: Objection, Your Honor. Just go to qualifications. I mean, we don't need to have him repeat what a Court decided -- THE COURT: Well, I had a concern myself. I believe, if I'm correct, you're referring to his report, because I, and maybe I'm incorrect, but I don't think the court has released an opinion. MR. HALLER: Oh, yes. Harman Road was, I believe, two weeks ago. The court relied on Mr. Groff's opinion in that opinion. THE COURT: Okay. MR. HALLER: I can, specifically on page 34 of the TC Memo opinion. MR. STEIGLEDER: Your Honor, we don't need to go into what the opinions are or what he did. I think we can establish the fact that he's qualified in that case, and that goes with his qualifications. Anything beyond that is potentially not relevant to his qualifications here today. THE COURT: The objection is sustained. MR. HALLER: Okay. Thank you, Your Honor. BY MR. HALLER: Q So do you recall the purpose that you were qualified? A I believe I was qualified as a mining engineer
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 716 and a expert in minerals resource and reserve evaluation and mineral valuation. Q What experience do you have reviewing and analyzing other mineral or mining technical reports? A Well, certainly, through all my experience and due diligence projects, we've reviewed technical reports for other limestone operations. Specifically, those would have been in reviewing company reports for acquisitions that Summit Materials was making or acquisitions that CRH was making, as in the Philippines, when we were working that. So I would say I've reviewed several technical reports for limestone operations. MR. HALLER: Your Honor, at this time Respondent offers Mr. Groff as an expert in mining engineering, mineral evaluation, mine feasibility analysis. Respondent also offers Mr. Groff as a certified mineral appraiser, skilled and knowledgeable of value of real estate with mineral deposits, resources, and reserves. Respondent notes that the Petitioner's counsel in this case were Petitioner's counsel in Mattock Holdings, and he was qualified as an expert in mining engineering and minerals appraisal. MR. STEIGLEDER: Voir dire, Your Honor? THE COURT: Yes. VOIR DIRE
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 717 BY MR. STEIGLEDER: Q Good afternoon, Mr. Groff. Is the CV in your report, is that current? A The CV in my report is not current, and I have submitted an errata sheet with some additions to that CV. Q And with that errata sheet, would you consider, then, that resume and with that errata sheet a current version of your CV? A Yes, I would. MR. STEIGLEDER: And if we could ask the clerk to please switch screens to Petitioner's control. BY MR. STEIGLEDER: Q Mr. Groff, you're not a licensed real estate appraiser in any state, are you? A No, I'm not. Q You're not a certified general real estate appraiser, correct? A That's correct. Q You do not hold an MAI designation from the Appraisal Institute, correct? A That is correct. Q Are you a member of the Appraisal Institute? A No, I am not. Q Have you ever been licensed by any state as a real estate appraiser?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 718 A No. Q And you're not an expert in uniform standards of appraisal practice, correct? A I am not an expert, though I am familiar with them. Q Could you repeat that last? A I said I am not an expert in USPAP, though I am familiar with the standard. Q You're familiar with the standards. And those standards refer to USPAP are the professional standards that govern the conduct of licensed real estate appraisers, correct? A The, as I understand it, USPAP governs both the ethics for licensed real estate appraisers and the methodologies and standards that they follow in doing their work. Q Are you governed by USPAP in your professional practice as a mining engineer, Mr. Groff? A I am not, but as a member of the IIMA, I am expected to follow the standards in USPAP. Q If the CMA is performing a nonappraisal service, USPAP doesn't govern it, correct? A If CMA is performing it. If it is a nonappraisal assignment, then USPAP does not apply. Q You're not governed by USPAP in your
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 719 professional practice in mineral evaluation, correct? A I'm expected to adhere to the principles in USPAP. Q And you're expected to adhere to those principles of USPAP based on your CMA? A Yes, I am. Q And that's certified mineral appraiser. Is that the title? A That's correct. Q And you used, you have a stamp in your report. They give you a stamp when you become a member of that? A Yes. A certified member. Q And the IIMA, the International Institute of Mineral Appraisers, which I'll refer to IIMA, they issued your certified minerals appraiser designation, correct? A Yes. Q And the IIMA is a private professional organization, correct? A Yes, it is. Q And it's a voluntary professional association for specialists in the appraisal of mineral properties, correct? A Yes. We are a volunteer run organization. Q And the IIMA has no governmental authority to license, regulate, discipline, or enforce standards on
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 720 CMAs the way that state agencies do for appraisers, correct? A That is correct. Q In fact, membership and the CMA designation are voluntary credentials based on the organization's own criteria, not state mandated requirements, correct? A That is correct. Q And earlier today, you were asked questions about how one becomes a member, what you must do to become a member or earn your CMA, correct? A Yes. Q As you said, you must have four years of experience? A Yes. Q And then I believe you said you must have certain USPAP training, correct? A Yes. Q And in fact, the requirements for membership as a CMA can include USPAP training, but it's not always mandatory, is it? A As I sit here today, the board does require applicants to have a 15-hour USPAP course. MR. STEIGLEDER: If we could pull up, or actually I'm going to -- may I approach Your Honor? THE COURT: Yes.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 721 MR. STEIGLEDER: And then I'm going to hand the witness an exhibit that's been pre-marked as Exhibit 7299-P. Oh. It's not pre-marked. MR. HALLER: Yeah. MR. STEIGLEDER: We can pre-mark it if you'd like. One moment. It's 7299-P. (Whereupon, the Document referred to as Exhibit 7299-P was marked for identification.) MR. STEIGLEDER: Can we publish it? BY MR. STEIGLEDER: Q I'd like to direct your attention to the bylaws, in particular, section 2.3.1, educational requirements for membership shall include. It says, first, you need a degree in geology, mining, or petroleum engineering, correct? A Correct. Q Number two, completion of the standard 15-hour USPAP course or an equivalent as recognized by the executive committee? A That's correct. Q And that's the executive committee of the IIMA? A Yes. Q And then three, a minimum of one continuing education course and appraisal of minerals as recognized by the executive committee, correct?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 722 A Yes. Q And then it says four, Number four, in lieu of the foregoing, evidence satisfactory to the executive committee or a committee of examiners duly appointed by it of sound knowledge and proficiency in a field appraisal of minerals. A Yes. Q So that USPAP requirement isn't a must. It's not a requirement. Someone can earn their CMA without taking the USPAP requirement, correct? A The way that the language is written requires some context. We do have some international members that are appraisers in other countries, and as part of their becoming a member of IIMA, the equivalent courses are accepted. But today, in practice, the executive committee, which I have worked with, advises and mandates that the applicants have that 15-hour USPAP course. Q That's based on your testimony here today and your work with the CMA. It doesn't say that on the website. A That is correct. Q And here, in this case, you were not hired to prepare a mineral appraisal. Is that correct? A That is correct. Q In terms of the qualifications, could you please
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 723 read those back? We will have an objection. MR. HALLER: Respondent offers Mr. Groff as an expert in mining engineering, mineral evaluation, mine feasibility analysis, and also offers Mr. Groff as a certified mineral appraiser, skilled and knowledgeable in valuing real estate with mineral deposits, resources, and reserves. MR. STEIGLEDER: Your Honor, I think we would agree to the mining engineering, the second designation regarding feasibility. But in terms of CMA, CMA and all the additional language skills or whatever follow that, we're not going to agree to that. I think that he should not be qualified in the descriptive words that Mr. Haller used to the CMA. And I also don't believe that the CMA is of any really particular relevance, given that he's admitted he's not performing an appraisal here and that it's a voluntary designation by a private company, not subject to state regulation or practice, and it has no relevance to any type of appraisal practice under USPAP, and there's no authority with which to discipline its members for any violation. So it's basically a very loose membership, where they give you a stamp that has no state regulatory effect. So I would suggest that he is not qualified as a CMA. One, it's not relevant. Two, he's not preparing an
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 724 appraisal here. MR. HALLER: May I respond, Your Honor? THE COURT: Yes. MR. HALLER: Again, I note that Petitioner agreed to him being recognized as a minerals appraisal expert in Mattock, so he's already been recognized as such. He does reflect aspects of Mr. Stine's fair market mineral valuation with his evaluation, so there are aspects of appraisal topics. So we ask that, again -- we can strike the added verbiage and just offer Mr. Groff as a mining engineer and a minerals appraiser. We're fine with that if that satisfies the other side. MR. STEIGLEDER: So you're saying mining engineer and? MR. HALLER: Yes. I said mining engineering, mineral evaluation, and mine feasibility analysis, all of which comes under the auspices of mining engineering. He's been qualified to do all of it. But I'm fine with mining engineering and minerals appraising. He has the qualifications to do both. MR. STEIGLEDER: And maybe just to make this easier, you said mineral evaluation? MR. HALLER: I said evaluation, but I've also said minerals appraisal. THE COURT: Okay. The Court's slightly
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 725 confused. MR. STEIGLEDER: If I can probably make this easy. BY MR. STEIGLEDER: Q If, for your understanding, Mr. Groff, is the term appraisal synonymous with valuation in the SME guidelines? A Yes. The term appraisal is synonymous with valuation. Q So if we say mineral valuation, would that encompass it? MR. HALLER: I'd be fine with that. THE COURT: Okay. So I need clarification on what you're offering him for now. MR. HALLER: So as revised, we could say mining engineering, minerals evaluation, and minerals valuation. THE COURT: Mining engineering? MR. HALLER: Mining engineering. THE COURT: Mineral evaluation? MR. HALLER: Yes. THE COURT: And mineral evaluation. MR. HALLER: Yes. THE COURT: And you're both in agreement? MR. STEIGLEDER: Agreed. THE COURT: All right. You're certified in
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 726 those three areas as an expert. DIRECT EXAMINATION BY MR. HALLER: Q Mr. Groff, did you prepare an expert witness report for this case? A Yes. I prepared two. Q And you prepared a rebuttal report? A Yes. MR. HALLER: Your Honor, may I approach to hand the witness and the Court a copy of the reports marked as Exhibits 9001-R and 9002-R? THE COURT: Yes. MR. HALLER: And I've also handed Petitioner's counsel a copy of the same. BY MR. HALLER: Q Mr. Groff, I've handed you Exhibit 9001-R. Will you review it and tell the Court what it is? A This is a copy of my opening reports for Riddle Aggregates. Q Did you prepare this report? A Yes, I did. Q Do you have any assistance? A Yes, I did. Q What assistance? A I have a senior mining engineer, PhD PE, that
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 727 works for me, and he assisted with some of the coding and analysis and CAD work under my direction. I also have a professional geologist that assisted me with some of the GIS mapping and research. Q When you say research, could you explain to the Court what you mean by research? A Yeah. It's locating parcel boundaries and roads and pulling in GIS layers effectively. Q Did you have any other assistance? A No. Q You were here earlier this morning in the courtroom? A Yes. Q And there was some discussion about use of computer software to assist in your review or editing. Do you use any computer software to review or edit your report? A The only computer software that I use to review or edit a report is Grammarly, and it's, I find it helpful. I'm an engineer. English wasn't my forte. Grammarly helps. Q And so as part of using of Grammarly, and you heard some back-and-forth about quota and issues there. How do you account for Grammarly and how it reviews your report?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 728 A It's mostly just editing sentences that I write. When we get to quoted material, Grammarly will edit it, and the user must be careful that it doesn't try to change quoted citations. Q Well, how do you ensure that it doesn't change your quoted citations? A For every edit, I have to manually acknowledge if I accept its suggestion or not, and I have to make a mental note to not allow it to make changes to those quoted references. Q To your knowledge, did Grammarly edit your quote in either of your reports? A No. Not to my knowledge. MR. HALLER: Mr. Yoshida, please go to Exhibit 9001-R, and that's PDF page 84. BY MR. HALLER: Q Mr. Groff, you can go to page 82 of your printed report, if you would. Do you see the page? A Yes. Q Is that your signature on this page? A Yes. That is my signature and my (indiscernible). Q Wonderful. Could you please now turn to Exhibit 9002-2? And will you review it and tell the Court what it is?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 729 A This is a copy of my rebuttal reports in Riddle Aggregates. Q Did you prepare this report? A Yes, I did. Q Did anyone assist you in preparing this report? A Yes. Q Who was that? A The same individuals as previously stated. Q Okay. Anyone else with respect to this rebuttal? A No. Q And with respect to use of Grammarly, any anything different than what you just said for your opening report? A No. Q Are the analysis explanations and opinions expressed in the rebuttal report your own? A Yes. MR. HALLER: Mr. Yoshida, please bring up 9002. Okay. Please go to PDF page 42 of 9002-R, which is on the screen. BY MR. HALLER: Q And Mr. Groff, that's page 40 of your printed report. Are you on that page? A Yes.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 730 Q Is that your signature? A Yes. And my (indiscernible). Q Setting that aside for now then. MR. HALLER: Your Honor, Mr. Groff had prepared an errata sheet. Opposing counsel had asked him a question about a CV. It was an errata sheet and exhibit identifying correct some omissions on his CV. Respondent had marked the errata sheet, which is 9040-R. That's also a stipulated exhibit that was received on Monday morning by the Court. And so Mr. Yoshida, please bring up Exhibit 9040-R. BY MR. HALLER: Q Mr. Groff, what is this exhibit? A This is a list of additional items that should be on my CV. Q So they were omitted from your CV then? A Yes. They were. Q And in addition to this page -- MR. HALLER: Mr. Yoshida, if you go advance one page and one more? BY MR. HALLER: Q So what is this on page 3 of the PDF? A This is the first page of my CV. Q Is this your revised CV?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 731 A Yes. It is. Q Do you have any other clarifications for the Court? A I do not. Only that the revision on the CV is that I was recently licensed in New York. So that would be the change. Q So it's an additional licensing? A Yes. Q Which licensing for the benefit of the Court? A Professional engineer. MR. HALLER: Your Honor, at this time, respondent offers Exhibits 9001-R and 9002-R as Mr. Groff's expert report and expert rebuttal report. MR. STEIGLEDER: Voir dire, Your Honor? THE COURT: Yes. VOIR DIRE BY MR. STEIGLEDER: Q Mr. Groff, in focusing first on Exhibit 9001-R, which is your opening or your initial report, I'll just clarify a few things. You mentioned in at the beginning, you said the format of your report follows that technical report summary, and it cites to Code of Federal Regulation section 229.601(b)(96). And that's on page 10 of your report. I apologize. A Yes. That is correct.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 732 Q All right. And so this reference, it's to the standard instructions for filing forms under the Securities Act of 1933 and the Securities Exchange Act of 1934, correct? A Yes. But as I explained in my report, we just follow the format of the table of contents. That's really all we're using. It is not a TRS for the SEC purposes. Q Okay. And those are just, again, you said the technical requirements and that's the structure your report? A The content of a technical report, yes. Q And are you familiar with what's commonly referred to as SK 1300 or subpart 1300 of Regulation SK? A Yes. I am. Q And that regulation -- that Regulation SK 1300, right, was adopted in 2018, and it became effective 2021; is that correct? A It was finalized in October or December of 2018. It had a long transition period, where reporting wasn't mandated until after fiscal year '21. Q You would agree that Riddle Aggregates is a privately held company, correct? A I don't know. I don't believe it's public, though. Q Were you here to the for the testimony of Mr.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 733 Kaynard yesterday? A Yes, but it was very hard to hear him sitting in the back. Q Okay. I imagine it was. So you're not aware that Riddle Aggregates membership interests are listed or traded on a national security exchange, correct? A No. I'm not aware that they are. Q And you would also agree that Riddle Aggregates then, if they're not listed, is not required to file periodic reports such as Form 10-K and Form 10-Q with the SEC, correct? A That's correct. Q And then you would agree that the technical report summary requirements of Regulation SK do not, by their own terms, apply to Riddle Aggregates, correct? A That is correct. Q Would you agree that the format of your report does not impose on Riddle Aggregates any obligation that would not otherwise exist under applicable law? A I would agree. Q Okay. A few other questions concerning your report. And to clarify, you don't hold any degree in biology, ecology, wildlife management, environmental science, or any related life science discipline, do you? A I do not.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 734 Q You're not trained in the habitat requirements, survey methods, or population dynamics of any species, are you? A No. Q You're not trained in the identification of habitats or species, are you? A No. Q Turning to wetlands, you don't have any experience regarding soils and soil identification, correct? A I have a little experience, but just through the work that I've done in my career. Q Okay. And you're not a wetland ecologist, a wetland scientist, a wetland specialist, or a wetland delineator, correct? A No, but I've had several projects where I have worked on wetlands and Clean Water Act section 404 permitting. Q And notwithstanding that experience, you've never held any professional certification related to wetland delineation, correct? A No. Q You're not a licensed environmental consultant, are you? A No.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 735 Q You've never received formal training in wetland ecology, correct? A What is formal training in wetland ecology? Q I'll assume then the answer is no. Have you received any training in in wetland ecology or -- MR. STEIGLEDER: Well, actually, let's strike that. BY MR. STEIGLEDER: Q You're not an expert in jurisdictional waters of the U.S. determinations, are you? A No. I rely on the Court to help with jurisdictional determinations. Q You've never worked for the U.S. Army Corps of Engineers, correct? A Correct. Q You're not trained in the three-parameter approach to wetlands identification, are you? A No. Q Are you familiar with the three-parameter approach of wetlands delineation? A Possibly. Q Well, the three-parameter approach to wetlands identification requires examination of hydrophytic vegetation, hybrid soils, and wetland hydrology; does that sound familiar?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 736 A It does, but I'm not trained in that. Q In fact, your CV under work experience identifies only one project related to Clean Water Act section 404 permitting, correct? A That may be, but I've certainly worked on more than one project related to wetland delineation. Q Your CV mentions a product for mountaintop removal coal mines in West Virginia? A Yes. Of which there were several projects. Q And it was that a project that involved the Clean Water Act, CWA section 404? A Yes. Absolutely. Q That was the one in West Virginia? A There were three in West Virginia specifically. Q And do you have any experience Alabama? A No. Q And each state has their own U.S. Army Corps of Engineers and offices, correct? A There are different districts. Yes. Q Is that correct? A Yes. Q And you're aware that are you aware that the U.S. Army Corps of Engineers provide region specific methods for wetlands delineation? A Yes.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 737 Q Finally, your professional license is in mining engineering, not environmental engineering, correct? A That is correct, though we do have to take reclamation courses in school. Q You've never held the job title of environmental manager environmental specialist, have you? A No. Q And you're not an expert in mine permitting, correct? A Depends on the state. I do do mine permitting, yes. Q Are you an expert in mine permitting in Alabama? A I have permitted in Alabama. I don't know if I'd consider myself an expert, but I am familiar with it and have done it. Q And you're not being qualified as an expert in permitting today? A That's correct. MR. STEIGLEDER: Your Honor, Petitioner moves to this Court to exclude from evidence section 16 of Brian Groff's expert report along with all opinions and conclusions contained therein, including but not limited to, the opinion in section 16.1 which states, "There are likely jurisdictional waters of the U.S. on the property; two, the conclusion in section 16.5.4 that the subject
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 738 property reasonably has jurisdictional wetlands and streams meeting the definition of waters of the United States; and three, the opinion in section 16.3 that it is reasonably probable that an endangered species is on the subject property." These opinions should be excluded because Mr. Groff lacks the qualifications and expertise necessary to render such opinions and the methodology underlying these conclusions fails to satisfy the reliability standards established under Daubert and Federal Rule of Evidence 702. Mr. Groff does not possess the education, training, or credentials necessary to offer expert opinions concerning the presence of jurisdictional wetlands or waters of the United States. He does not hold any degree in biology, ecology, wildlife management, environmental science, or any related life science discipline. He is not a wetland ecologist, a wetland scientist, a wetland specialist, or wetland delineator. He has never held any professional certification related to wetland delineation. He has no training in wet -- no formal training in wetland ecology. He is not an expert in wetland identification or jurisdictional waters of the United States. He has never worked for the U.S. Army Corps of
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 739 Engineers, which is the agency responsible for determining whether waters are jurisdictional under the Clean Water Act. Even if Mr. Groff possessed the requisite qualification, his methodology for reaching conclusions about the jurisdictional waters and wetlands fails to meet the standards of scientific reliability required under Daubert. Mr. Groff is similarly unqualified to render opinions regarding threatened endangered species on the subject property. He does not hold any degree in biology, ecology, wildlife management, environmental science, or any related life science discipline as stated. Despite these significant deficiencies, Mr. Groff opines in the sections identified, that it's reasonably probable that endangered species is on the subject property. For the foregoing reason, section 16 of Mr. Groff's expert report, including his conclusions that there are likely jurisdictional waters of the U.S. on the property, that the subject property reasonably has jurisdictional wetlands and streams, and that is reasonably probable that an endangered species is on the subject property should be excluded from evidence. Mr. Groff lacks a requisite qualification to offer these opinions as methodology fails to satisfy the reliability standards under Daubert and Federal Rule of Evidence 702.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 740 THE COURT: Mr. Steigleder, I was just being clear. Were you striking section 16 in its entirety, or were you stopping when it gets into permitting and -- MR. STEIGLEDER: Anything related to the wetlands permitting. THE COURT: I didn't know if you're going beyond -- that's you social impact, it's 16.4. So I didn't know because at one point, I think you said section 16, so I wanted to be clear. MR. STEIGLEDER: I would say 16.1, 16.2, 16.3, not 16.4, 16.5, 16.5.4. And that would be it, Your Honor. MR. HALLER: Just to be clear, 16.5 would include all of the subparts, which include mine permitting. May I respond, though, generally to -- THE COURT: Yes. MR. HALLER: -- Petitioner? Your Honor, first of all, I note that that we've heard extensive testimony by Petitioner's experts about their experience as mining engineers and in the mining industry. And we've heard about mining evaluations, mining evaluations, and valuations both typically include legally permissible, physically possible aspect of analyzing mine sighting, planning, et cetera. And as part of those responsibilities of understanding wetlands, understanding how water, hydrogeology impacts the site, flowing water,
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 741 spring water, and the like, all of that, how it impacts it. Mr. Groff's report note notes that as part of mine planning. It's required for mine planners to consider all of these aspects. This report discusses these in section 16 generally and some of the subparts. He has stated he's got experience in these areas. And his report goes into some detail. I spoke with folks at the Army Corps of Engineers and others who are knowledgeable, who have given him background expertise information on these topics. And again, Petitioners did not qualify Mr. Gold when he said it is legally possible, which, of course, includes zoning permitting, waters, et cetera. Petitioners did not qualify him in wetlands management, but there's wetlands on the property. So again, I mean, Mr. Groff has demonstrated his understanding background in wetlands management, water management, hydrogeology, and its impact in mine planning. As far as the permitting goes, he summarizes the permits that are required. Mr. Howle testified on aspects of that, and also noted that there are other Federal agencies, who have jurisdiction over that. Again, Mr. Groff is knowledgeable about that. He's had to consider that. He's testified that he has dealt with the U.S. Army Corps of Engineers and had to deal with for permitting requirements. We've heard about air permits. He's
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 742 knowledgeable about air permits, storm water, and water management on mines. That's part of being a mining engineer. So he's more than qualified. When we talk about on the topic of threatened and endangered species, it's a stipulated document. The baseline is a stipulated document in this case in which the baseline report makes represent that there are at least species, both plant as well as animal, on the property that are of are of interest. And Respondent conceded that the conservation purpose is met for this property. In other words, that there is that the conservation of the property preserves a natural habitat for various species, plant and animal. And again, the baseline report goes into some detail how there may be -- there is suggested evidence of threatened species, perhaps potentially endangered, although I don't know if anything informally endangered was seen on the property. That's always a question for from Respondent's perspective, but at least threatened species on the property. Again, specifically the document for Riddle. We're not talking about any other property here, just for Riddle. So I don't think it's out of his wheelhouse to ask in a review of a potential mining site whether there are endangered species on the site, whether there are
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 743 threatened species on the site. Mr. Groff, as I know, because I walked the property with him, identified aspects of springs, caves, did some research about the presence of caves. Caves often have endangered species associated with them, like bats. So in the context of all that, I do believe section 16 is applicable. It should be remain in the report. I'll make one final point. Petitioner's counsel mentioned methodology. He did not -- he queried his experience and expertise. He, in no way, looking at Daubert standards, in no way tested any methodology in the report. I think it's more appropriate for just cross-exam, and you can cross exam to his heart's content on that. But if you're going to rule on methodology, he presented no foundation that there are methodology defects. I apologize. And that's it, Your Honor. THE COURT: Do you want to respond before I rule? MR. STEIGLEDER: I do. First, they mentioned they have the baseline document in review. That was prepared by my biologist. That's what biologists do. So Respondent's been long aware of the baseline document report as well as the subject matters contained in them, including environmental review, habitat, species assessment.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 744 Here, he mentions that Greg Gold did the same thing, which is not true. Mr. Gold relied on the opinion of Joe Howle. Joe Howle is the only expert in permitting that this Court will hear this week. And there's a reason that we call experts in permitting. There's a reason that we call experts in specific disciplines because they're knowledgeable of it. We demonstrated that Mr. Groff is not knowledgeable. He may be aware, but he is not knowledgeable on this area. And in fact, when I asked him about the three parameters of wetlands delineation, he didn't seem to know those. This requires highly specialized knowledge, and just talking to someone doesn't make a person an expert. His opinions come out far beyond, which Mr. Gold incorporates in his report, for example, Joe Howle, he bases his opinion on an expert, right? That it's reasonably likely. Here, he's making a determination by himself saying it's reasonably likely that there are wetlands, waters in the United States, and rare threatened endangered species. That goes far beyond his scope of expertise. He is not qualified to offer those opinions, and further, the methodology as we discussed, would not satisfy Daubert's standards or Rule 702. This is nothing than a backdoor attempt to get in expert testimony on
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 745 areas that Respondent chose not to offer experts on. MR. HALLER: May I respond to the delineation point? THE COURT: Yes. And I'm ready to rule. MR. HALLER: His report, in no way -- delineation is a formal process that should be done by an expert. We're not pro -- there's no delete delineation, determination, or conclusion in this report in any way. And we have not proffered him as an expert in such, and he has said he doesn't have that expertise. I will note that that Mr. Howle, likewise, that there's probably wetlands there, but he did not make a delineation determination. He was not asked to do that either. So the Court hasn't heard, and isn't going to hear, any evidence of that, and the report doesn't do that. Thank you, Your Honor. THE COURT: I just had a question. I'm looking at 16.5.4, and the subject probably reasonably has wetlands. So I'm not sure if anywhere in the report is being conclusive. Is that correct, Mr. Haller? MR. HALLER: Right. And one of the tasks you'll hear this also with Dr. Rigby tomorrow, Your Honor, is you had pointed out that the whole point of the experts is to advise the Court from their perspective on what's necessary here for this hypothetical mining operation, for the mining engineer's perspective. And so to the extent
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 746 that a developer of a mining site would want to know, if you were the one who was asked, is this property appropriate for developing of a mine location? I would think from that perspective, you'd want to know. What do I need to know that I don't know? And part of that is, again, a mining engineer is familiar in geological principles, hydrogeology, wetlands, citing as Mr. Groff notes in his report, they can cross him on it, he cited his plan and his quarry specifically with respect to water and mine. I believe Mr. Gold also testified as to the water to some extent. They have to consider that including standing wetlands or wetlands that come and go. So again, I do believe it is in his area of expertise. He does not reach a conclusion that there are wetlands, and we're not proffering him for that. MR. STEIGLEDER: Are you ready to rule or? THE COURT: I'm ready to rule. At this time, I'm not going to strike any sections of the report. And you're able to ask as much as you want on cross with your concerns about the -- of the -- of on -- now I'm getting tongue tied. Make any objections you may have. I'm sorry. I meant to say ask -- MR. STEIGLEDER: Repeat that again. THE COURT: Yeah. During cross, you can raise any of these concerns about --
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 747 MR. STEIGLEDER: Your Honor, I don't plan to have any cross on this for this. He's not an expert in this area. That -- THE COURT: Well, the Court's ruling stands. MR. STEIGLEDER: He's already established that. He established the conclusion. THE COURT: I'm not striking the report. MR. STEIGLEDER: And he is reaching legal conclusions. It wasn't as simple as he said. There are legal conclusions that have legal impacts. And one of the main issues here is legal permissibility. And they did not bring a water in. They did not bring an expert in U.S. Clean Water Act. They did not bring a wetlands expert in, and he is reaching legal conclusions. That's what those are. Reasonably probable, it's likely that there's jurisdictional wetlands. Those are legal conclusions that an mining engineer is making in this case. THE COURT: My ruling stands. MR. HALLER: So Your Honor, have accepted both 9001 and 9002? THE COURT: No. I haven't -- I only just ruled on striking those sections. MR. HALLER: Okay. THE COURT: I didn't know if there were any
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 748 other objections to the report. And I'm just on 9001. MR. STEIGLEDER: That was it, Your Honor. Just his legal conclusions on the environmental and wetlands issues. THE COURT: So 9001-R is admitted. (Whereupon, the Document referred to as Exhibit 9001-R was received into evidence.) MR. HALLER: And Respondent also offers the rebuttal report, 9002-R. Is there any voir dire on that report? MR. STEIGLEDER: I do have a voir dire on this. VOIR DIRE BY MR. STEIGLEDER: Q And Mr. Groff, can you turn your rebuttal report 9002-2, page 5, paragraph number 5? Let me know when you're on paragraph number 5, please. A Yes. Q Concerning Mr. Stine's (ph.) report, you state that your report discusses how the relevant mineral appraisal standards require at least two approaches to valuation to reconcile a final value opinion if it is reasonably possible and appropriate, correct? A Correct. Q And in that footnote, you're citing to the SME standards guidelines for valuation of mineral properties?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 749 A Yes. Q If I refer to these guidelines as an SME valuation standard you're referring to. Yes. And rebuttal report in in the same paragraph, paragraph number 5, you refer to the relevant mineral appraisal standards, again, citing to the SME valuation standards? A Yes. Q Okay. And we may have already addressed this, but the SME valuation standards define the word appraisal by reference to and basically synonymous with the word valuation, correct? A Yes. For purposes of this case, that would be correct. Q So then for the purposes of your report, when you refer to appraisal here, are you referring to evaluation? A Yes. Q And then section 5 of your rebuttal report, section 5.1, which is found on page 12. Starting on page 12, section 5.1. And 5.1 is titled the one is assignment and property identification. If we turn the page to page 13 and focus on the last paragraph on page 13. A Yes. Q The last paragraph reads, the appraisal assignment in this matter was to value the real property
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 750 of interest in the minerals on the subject property, which is undeveloped mountainous property containing limestone; is that correct? A Correct. Q Does your reference here to appraisal assignment, does this refer to USPAP appraisal as an appraisal of real estate? A This would be an appraisal assignment in general under either USPAP or the SME valuation standards. Q Well, you're saying this is you're saying your assignment here is in reference to USPAP appraisal assignments and not appraisal as meaning valuation or the estimate guidelines? A It would be either or, as I interpret it. Q The valuation or appraisal assignment that you're describing in this paragraph, whose assignment are you referring to? Is this Mr. Stine's assignment or your assignment? A This would be the assignment of valuing conservation easement in this matter, which for me specifically, and I presume Mr. Stine as well, was to value the mineral interest in the real property. Q Was your assignment to value a conservation easement? A No, sir.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 751 Q So when you're referring to the valuation of the appraisal assignment here, are you referring to the Court's assignment A I presume it would be Mr. Stine's assignment. Q Would you believe that Mr. Stine -- well, let's turn to Mr. Stine's report. And in just page 1, which is section 2.1. Is this section, again, is a rebuttal to Mr. Stine? A Yes. Q Section 2.1, purpose and commissioning. If you blow that up. And again, I'm reading this. "I was engaged by Riddle Aggregates to repair a valuation of the limestone resource on the property as of December 8, 2017." A That's correct. Q Okay. And then if you look at the beginning of the next paragraph, "The purpose of this report is to provide an opinion of the fair market value of the economically recoverable limestone resource on the property." A Yes. I understand. Q So it's clear that Mr. Stine did not prepare an appraisal under USPAP, correct? A As you asked that, yes. I understand your question. That's correct.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 752 Q So then the heading for section 5.1 back on page 12 of Mr. Groff's report, just to tie this out, section 5.1, page 12. When it says," the assignment", and then later when we reference the "appraisal assignment", are those in reference to Mr. Stine's report? A Yes. As I wrote the report, that is in reference to his report. Q Okay. Now let me confirm. Let's discuss then your assignment. If we could focus back, go to page 13 now, the first full paragraph. Here, you're again saying -- first full paragraph. Scroll down just a touch. Here, you say, "This assignment involves a matter of valuing a conservation easement." And then you state a definition of conservation easement in the next sentence. That's what this paragraph says? A Yes. Q Is that what you believe your assignment is to value a conservation easement? A No. I believe the assignment is to value the mineral interest in the real property, but the matter of Riddle Aggregates involves a conservation easement. Q And you're clear, Mr. Stine didn't value or appraise the conservation easement, correct? A My understanding is that he attempted to value the mineral interest in the real property, which you can
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 753 call the limestone resource, but that's my understanding. Q And he did not perform a real estate appraisal, correct? A Correct. Q In your rebar report of Mr. Stine, specifically in this section, you frequently cite to USPAP, USPAP advisory opinions, and the appraisal of real estate, which is published by the appraisal, correct? A Correct. Q In section 5 of your report, you also cited the Uniform Appraisal Standards for Federal Land Acquisitions, correct? A Correct. Q And this is referred to as the Yellow Book? A Correct. Q The Yellow Book contains the Federal guidelines for appraising real property in connection with land acquisitions by the U.S. Government, including by eminent domain and condemnations, correct? A That's correct. Q Does this matter involve the acquisition of land by the federal government? A It does not. MR. STEIGLEDER: Your Honor, Petitioner moves to exclude portions of section 5.1, 5.2, and 5.3 of Mr.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 754 Groff's rebuttal report, where Mr. Groff interprets USPAP appraisal standards, real estate valuation principles offered by the Appraisal Institute, and the Uniform Appraisal Standards for Federal Land Acquisitions. In these sections, Mr. Groff intentionally misstates the purpose of Mr. Stine's report, framing it as involving an appraisal or valuation of conservation easement as a means to impose USPAP appraisal standards and USPAP advisory opinions to critique opinions that never claimed to rely on these standards, never cited these standards, and never addressed these standards. The same argument holds true for Mr. Groff's reliance on the Yellow Book. Mr. Stine's report does not address appraising property in connection with a Federal land acquisition or taking, nor does this matter involve such an issue. Mr. Groff is not a licensed real estate appraiser. He has not been qualified as an expert in Uniform Standards of Professional Appraisal practice, and he is not critiquing an appraisal of real estate or a minerals appraisal. In sum, USPAP does not govern Mr. Stine's report. And even if it did, Mr. Groff is not qualified to offer such opinions. Under Federal Rule of Evidence 702 and Daubert, an expert must be qualified by knowledge, skill, experience, training, or education to offer
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 755 opinions in a particular subject area. He has not been qualified as a USPAP appraisal expert, and by citing and relying on USPAP standards rules 1.4, 1.6, and advisory opinions 33 and 34, and other uniform appraisal standards. Mr. Groff is rendering opinions on professional appraisal standards that he is not licensed or qualified to interpret. Accordingly, Your Honor, these opinions should be excluded from his report, Groff's section 5.1, the assignment and property identification, that entire section. THE COURT: So it's just 5.1? MR. STEIGLEDER: And let me just confirm, Your Honor. 5.2 and 5.3. MR. HALLER: May I respond? THE COURT: You may. And I want to make sure you're done, right? He may respond now? MR. STEIGLEDER: Okay. Give me one moment. THE COURT: Okay. MR. STEIGLEDER: 5.1. There's a section in 5.1. That's it. It's just 5.1, Your Honor. I apologize. THE COURT: Just 5.1. MR. STEIGLEDER: 5.1. THE COURT: Okay. Mr. Haller? MR. HALLER: Yes. So as Petitioner's counsel
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 756 noted, SME valuation standards, which was cited by Mr. Groff, use the term "valuation appraisal" synonymously. And in fact, I believe I'm accurately representing, but we can also just ask Mr. Groff. He's on the standards committee. He's on the CRIRSCO equivalent. I believe that the SME valuation guide, which we can bring up on the screen, I can show you, incorporates principles of USPAP. In fact, it says USPAP controls for U.S. mineral properties. So I don't think that what Petitioner's counsel is representing is accurate at all. We've seen appraiser, appraisal, valuation are synonymous in the valuations guide. Those terms are used interchangeably. Mr. Stine's reports says fair market mineral valuation or valuation of the limestone resource and some resources is subset, basically, a property right of one of those bundles of sticks that Petitioner's counsel referenced yesterday, that attend to the real property interest. And so that's at the heart of what the parties are disputing. Here, Mr. Groff is qualified as certified minerals appraiser and from his experience on SME committees and CRIRSCO committees to talk about standards. Mr. Stine represented certain definitions of standards were not applicable and aren't controlled by the industry, but that's just not true.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 757 Mining engineers have actually worked in the industry both with private clients as well as public. Even if they're maybe not reporting requirements the same for public entities, mining engineers routinely rely on these standards and in fact, don't go past -- don't ignore the standards. You can also talk to that. We're actually going to ask that the Court allow at a certain point rebuttal of what Mr. Stine represented, although that's beyond the focus of the debate right now. All of what is described in here, I can have Mr. Groff elaborate if you have any concerns. All of this, he's competent to opine on -- analyze and opine on. It goes to the heart of what Mr. Stine did. He made mineral evaluation to which Mr. Groff is amply qualified. MR. STEIGLEDER: Mr. Stine performed a mineral evaluation. He did not provide or perform an appraisal subject to USPAP standards. MR. HALLER: Perhaps then we should just ask -- MR. STEIGLEDER: While we -- let me finish, please. While the SME references are defers to potential USPAP, it's very clear that it says within the United -- within the USA, state or Federal regulations or valuation user expectations may require that a mineral property valuation compliant with USPAP. It "may" require. But then which the real property appraisal standards closely
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 758 align the valuation standards and things such as, for example, highest and best use. But Stine did not do that here. His report did not mention USPAP, was not titled as such. It's not an appraisal. It's a mineral valuation. Mr. Groff was not qualified as a certified mineral appraiser, which would be the only -- MR. HALLER: Yes, he was. He was just qualified for that. THE COURT: I don't want talking over each other. I have a -- MR. STEIGLEDER: Well -- sorry. Go ahead. THE COURT: I'm going to ask Mr. Stine -- I mean, Mr. Groff -- a question about his report. If you could turn to your rebuttal report, page 13, and I'm looking at it. And I'm in the last two paragraphs, and the paragraph that starts with mineral appraisal. If you could go to the second to last sentence starting, "Second evaluation or appraisal completed" -- THE WITNESS: Yes. THE COURT: -- and then go to the full paragraph. I read this as you were looking at an appraisal, and I think you testified that that's not what Mr. Stine did. THE WITNESS: Yes. Mr. Stine, in his report,
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 759 states that he was tasked with finding the fair market value of the mineral resource, which would be, as I've always understood, a exercise of valuation or appraisal. And anytime we use fair market value, it involves a willing buyer and a willing seller, which almost always enters into our appraisal standards or valuation standards. THE COURT: I am going to allow the section to remain, but the Court might have some -- depending on what is asked of the witness, might have some questions because I find the section 5.1 a little confusing based on some of your previous answers. So I'm not striking the section. MR. STEIGLEDER: Okay. Your Honor, thank you. THE COURT: Any and you had no other objections? MR. STEIGLEDER: No other objections to Exhibit 9002-R. THE COURT: R. Yes. And so 9002-R is now admitted. (Whereupon, the Document referred to as Exhibit 9002-R was received into evidence.) MR. HALLER: Thank you, Your Honor. I believe the parties discussed that we would want to hold over the cross to tomorrow if that's agreeable? THE COURT: That's agreeable with the Court. MR. HALLER: There was a question about whether
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 760 the Court had had admitted 9001-R, but you have. THE COURT: I have, yes. And I'll just do that quickly. What I admitted today was 9005-R, 7298-P, 9001-R, and 9002-R. Because I assumed it was -- this one, 7299, it was the impeachment, or that part wasn't being offered. Did I have that wrong though? MR. STEIGLEDER: We didn't offer into evidence, Your Honor -- THE COURT: You didn't? MR. STEIGLEDER: -- but we will now. It was pre-marked. What was it? 7299? MR. HALLER: Yeah. THE COURT: Okay. So 7299-P is now admitted. (Whereupon, the Document referred to as Exhibit 7299-P was received into evidence.) THE COURT: All right. We'll go off the record for a minute. (Off the record 4:11 p.m. to 4:17 p.m.) THE COURT: The Court is in recess until 9 o'clock tomorrow morning. Thank you. (Whereupon, at 4:18 p.m., the above-entitled matter was recessed until March 19, 2026.)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 761 CERTIFICATE OF TRANSCRIBER AND PROOFREADER CASE NAME: Riddle Aggregates, LLC, Ornstein-Schuler, LLC, Tax Matters Partner v. Commissioner DOCKET NO.: 31104-21 We, the undersigned, do hereby certify that the foregoing pages, numbers 527 through 761 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Sierra Self on March 16, 2026 before the United States Tax Court at its session in Atlanta, GA, in accordance with the applicable provisions of the current verbatim reporting contract of the Court and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording. _______________________________________________ Alicia Chavez, CDLT-226 3/19/26 Transcriber Date _______________________________________________ Lori Busse, CET-4024 3/19/26 Proofreader Date
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