State of California et al v. Trump et al

Filing 220

MOTION for Partial Summary Judgment Re Section 2808 and NEPA filed by Commonwealth of Virginia, State of California, State of Colorado, State of Hawaii, State of Maryland, State of New Mexico, State of New York, State of Oregon, State of Wisconsin. Motion Hearing set for 11/20/2019 10:00 AM in Oakland, Courtroom 2, 4th Floor before Judge Haywood S Gilliam Jr.. Responses due by 10/25/2019. Replies due by 11/1/2019. (Attachments: # 1 Appendix of Declarations re: Environmental Harms, # 2 Declaration of Colonel William Green, # 3 Declaration of Alison Lynn Reaser, # 4 Declaration of Heather Leslie, # 5 Request for Judicial Notice ISO Mot for Partial Summary Judgment Re Section 2808 and NEPA, # 6 Proposed Order Granting Motion for Partial Summary Judgment, # 7 Certificate/Proof of Service)(Leslie, Heather) (Filed on 10/11/2019)

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XAVIER BECERRA
Attorney General of California
ROBERTW. BYRNE
SALLY MAGNANI
MICHAEL L. NEWMAN
Senior Assistant Attorneys General
MICHAEL P. CAYABAN
CHRISTINE CHUANG
EDWARD H. OCHOA
Supervising Deputy Attorneys General
BRIAN J. BILFORD
SPARSH S. KHANDESHI
LEE I. SHERMAN
JANELLE M. SMITH
JAMES F. ZAHRADKA 11
HEATHER C. LESLI E (SBN 305095)
Deputy Attorney General
State Bar No. 305095
1300 I Street, Suite 125
P.O. Box 944255
Sacramento, CA 94244-2550
Telephone: [phone]
Fax: [phone]
E-mail: [e-mail]
Attorneys.for Plaint[!( State of Cal(fornia

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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OAKLAND DIVISION

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Case No. 4:19-cv-00872-HSG

STATE OF CALIFORNIA et al.;

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Plaintiffs,
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v.

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DONALD J. TRUMP, in his official
capacity as President of the United States of
America et al.;

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Defendants.

DECLARATION OF ALISON LYNN
REASER IN SUPPORT OF MOTION
FOR PARTIAL SUMMARY JUDGMENT
REGARDING SECTION 2808 AND
NEPA

Judge:

Honorable Haywood S. Gilliam,
Jr.
Trial Date:
None Set
Action Filed: February 18, 2019

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Declaration of Alison Lynn Reaser ISO Mot. For Partial Summ. J re Section 2808 and NEPA (4: l 9-cv-00872)

I, ALISON LYNN REASER, declare as follows:

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1.

I have personal knowledge of all the facts stated herein. This declaration is based

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on my personal knowledge, my review of publicly-available documents, and the knowledge and

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expertise I have acquired in the course of over 40 years as a trained business and academic

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economist, including analysis of the economic impacts of defense expenditures and military

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construction. If called and sworn as a witness, I could and would testify competently to the

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matters set forth herein.

Qualifications and Background

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2.

I have a B.A., M.A., and Ph.D. in Economics, all awarded by the University of

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California Los Angeles. Since 2009, I have been the Chief Economist for the Fermanian Business

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and Economic Institute (FBEI), a strategic unit of the Fermanian School of Business at Point

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Loma Nazarene University (PLNU), and have taught as an Adjunct Professor of E;conomics in the

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MBA program at PLNU. Attached hereto as Exhibit A is a true and correct copy of my

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curriculum vitae.

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3.

Previously, from 1996 through 2009, I served as Chief Economist for Barnett

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Banks, Inc. (acquired by Bank of America) and Bank of America's Investment Strategies Group.

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Prior to that, from 1992 through 1996, I served as the Chief Economist for First Interstate Bank

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(acquired by Wells Fargo Corporation), where I served in various other economic and managerial

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roles beginning in 1974.

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4.

I currently serve as a member of the California Chamber of Commerce Economic

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Advisory Council. I have recently served (tlu-ough the end of 2018) as the Chair of the California

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State Treasurer' s Council of Economic Advisors, as well as the National Association for Business

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Economics Foundation. I previously served as Chair of the California State Controller's Council

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of Economic Advisors and as the President of the National Association for Business Economics.

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5.

In my current role at PLNU, I serve as the director and principal economist for the

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FBEI. The Institute does consulting for companies, non-profit organizations, and govenunent

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entities. Its purpose is to provide objective and actionable economic analysis, forecasts, and

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recommendations to entities that may not have a full staff of in-house economists. We study
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Declaration of Alison Lynn Reaser ISO Mot. For Pmtial Summ. J re Section 2808 and NEPA ( 4: I 9-cv-00872)

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issues such as the impact of the military on the region, water, homelessness, utilities, land use,

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housing policy, tourism, and transportation. I give frequent presentations on the eco11omic

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outlook, covering the global, U.S ., financial markets, and regional economies.

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From July 1, 2018 to June 30, 2019, I was interviewed 185 times by 27 sources

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(newspapers, TV, radio/podcasts, and internet) regarding my work. Some of these interviews

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were disseminated across multiple platforms, resulting in nearly 300 total media reports. I am a

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member of the CNBC Federal Reserve Forecasting Panel, comprised of Wall Street analysts, the

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Wall Street Journal Panel of Economic Forecasters, and the Economic Outlook Forecast Panel for

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the National Association for Business Economics.

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7.

Beginning in 2012 and annually each year since, I have authored an Economic

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Impact Study calculating the economic impacts of all the spending from the Department of

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Defense that flows into San Diego. This comes in various channels, including payrolls of U.S.

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Navy and Marine Corps personnel, defense contracts, grants, and retirement benefits. During the

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past two years, I have also included spending linked to the Department of Veterans Affairs and

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the U.S. Coast Guard. This study includes a full analysis of the multiplier or ripple effects as

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defense dollars spread through supply chains of defense contractors and others who support

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various programs and military activities, as well as the effects on consumer spending. I have

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mapped the effects into the total impact on gross regional product (GRP), personal income, and

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jobs for the entire San Diego region (San Diego County). The study is sponsored by the non-

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profit San Diego Military Advisory Counci l (SDMAC), which is fonded by various companies

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and other organizations. The study is widely respected as the authoritative document on the

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impact of military spending in the region and is regarded as a model of how such studies should

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be done. U.S. Navy and Marine Corps leadership in San Diego, Department of Defense officials

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in Washington, and political leaders in Congress and in California view the document as highly

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credible and valuable.

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The annual economic impact of military spending discussed above in Paragraph 7

includes the effects of military construction as a vital element. I have also authored a separate

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Declaration of Alison Lynn Reaser ISO Mot. For Partial Summ. J re Section 2808 and NEPA (4: 19-cv-00872)

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study focusing exclusively on military construction spending, along with another report which

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·analyzed a major development project tied to a new military facility.

Methodology

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Before drafting this declaration, I reviewed the list of military construction

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projects announced by the Department of Defense from which funding is being diverted under 10

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U.S.C. § 2808 towards construction of border barriers along the southern border of the United

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States. I identified a total of nineteen projects that are within the jurisdictions of the plaintiff

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states in the above-captioned matter. Nine of these twenty plaintiff states have projects targeted

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for funds diversion: California, Colorado, Hawaii, Maryland, New Mexico, New York, Oregon,

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Virginia, and Wisconsin (the States). Information provided by counsel for the State of Virginia

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indicated that the Pentagon Metro Entrance Facility project in Virginia was unlikely to be

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constructed as intended before defendants' diversion of funds. The counsel for the State of

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Oregon also indicated that the project to replace the fuel facilities at Klamath Falls Airport was

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unlikely to go forward. These two projects were therefore excluded from my analysis. Seventeen

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projects in the States were therefore analyzed, which represented a total value of de-funded

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projects equal to $493 million. For each of those projects, I reviewed the Department of Defense

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form 1391 (1391 form), which contains basic information regarding each project.

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10.

I also reviewed the list prepared by the Department of Defense of proposed barrier

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borders to be constructed with the funds diverted under 10 U.S .C. § 2808. Offsetting positive

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impacts on the States from border barrier building were based on information from this report.

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All of the estimated costs for each project as identified in the 1391 forms were

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carefully analyzed. The timing of fund expendih1re was based on the timeframes identified for

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construction in each 1391 form. Construction expendih1res were allocated to the appropriate

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industry or type of firm except in cases where it appeared likely that some items would have to be

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sourced primarily out of state. In addition to the expenditure amounts included in the construction

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dollar totals, two other types of effects were included. First, expenditures on equipment, furniture,

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or other items that are contingent on the project' s completion ,vere included in the analysis since

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these spending benefits would also be lost. These amounts were identified in the 1391 forms and
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Declaration of Alison Lynn Reaser ISO Mot. For Partial Summ. J re Section 2808 and NEPA (4: l 9-cv-00872)

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cited as being appropriated under separate bills. Second, where operations were scheduled or

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targeted to be expanded following the construction project's completion, the annual impact on

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direct military payrolls in terms of lost jobs and incomes was modeled.

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The economic benefits of spending from construction of the proposed border

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barriers was based on the gross contract totals supplied by the Department of Defense noted in

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Paragraph 10 above. This affected two of the nine States analyzed: California and New Mexico.

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All construction was assumed to take place in 2020. The amounts of construction materials

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sourced within each state was estimated. Labor costs were based on their typical share of contract

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totals in similar projects.

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The IMPLAN® model was used to analyze the total economic impact of military

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expenditure changes. This is a model widely used by economists to evaluate the various ripple or

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multiplier effects of an increase in spending on a region's sales, output, income, employment, and

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local tax revenues. These ripple effects encompass two stages: supply chain and consumer effects.

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The supply chain effects reflect the impact on other businesses when a local firm has to purchase

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additional goods or services to support its own increase in sales or activity. The consumer effects

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refer to the increase in household outlays due to the gain in jobs and income created by the direct

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impact of the increase in spending as well as the effects along the supply chain. I have used this

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model frequently in studies of various issues involving regional economies and have utilized it in

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all of the reports I have prepared on the impact of defense spending.

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For this analysis, I built models to analyze the effects of proposed changes in

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spending for each of the nine states paired with each of the other eight states. For each state,

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models were built for each year between 2020 and 2022 where spending would be impacted. A

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total of 171 models were built. This process allowed me to assess not only the direct effects of

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changes in a given state, but also the feedback effect of other states as their spending was

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impacted.

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The diversion of funds from military construction projects located outside of the

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plaintiff states would also have economic ripple effects on the plaintiff states. However, my

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analysis conservatively included only projects within the plaintiff states ' boundaries because the
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Declaration of Alison Lynn Reaser ISO Mot. For Partial Summ. J re Section 2808 and NEPA (4: l 9-cv-00872)

diversion of those projects would have primary effects on the plaintiff states. Because the

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secondary effects of defendants' diversion of military construction projects located in other states

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and countries were not considered in my analysis, the actual economic harm resulting from all of

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defendants' diversion of military construction projects would be greater than represented in this

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declaration. Those secondary effects, as well as the secondary effects of the projects considered in

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this analysis, would be felt in all of the plaintiff states as well as the states not involved in this

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action.
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The use of the IMP LAN® involves five primary steps. First, spending for a project

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is allocated over time. For example, in the case of the Space Control Facility in Colorado

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proposed for defunding, the utilities and basic infrastrncture would be installed before the

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building of the facility would begin. Second, the geographic direction of project dollars is

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determined. For example, in the case of the C-1301 Flight Simulator Facility at the Chmmel

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Islands Air National Guard Station in California, the flight simulator would be built out of state.

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In contrast, construction dollars on various projects, such as for the Cyber Operations Facility in

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Hampton, Virginia, would typically be directed to firms within the state. Third, the spending on

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various projects is divided across different industries, such as construction firms, suppliers of

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electronics equipment, or providers of communications systems. Fourth, the impact of these

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dollars across the economy is modeled based on the historical relationships tracked by the U.S.

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Bureau of Economic Analysis and included in the IMPLAN® Model. For example, in a given

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state, a certain fraction of construction dollars is typically subcontracted out to other firms while

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other parts are spent on different types of building materials. The IMPLAN® Model also includes

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the historical data on the number of workers and wages used in the various industries that might

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be affected in supply chains and is used to estimate the impact on consumer spending for various

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goods and services that would typically occur in a given state. Fifth, the total effects of changes in

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the initial contract dollars, changes across various supply chains, and effects on consumer

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spending are sununed to determine the total effects on jobs, income, GRP, and state and local

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taxes.

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Declaration of Alison Ly!Ul Reaser ISO Mot. For Partial Summ. J re Section 2808 and NEPA (4: l 9-cv-00872)

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The $493 million that would be diverted from the projects does not fully or

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accurately reflect the total amount of economic benefit that would have eventually been realized

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by the local and state-wide economies of the States. As noted above in Paragraph 11, there are

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additional amounts under other appropriations that would be scuttled as well as the ongoing

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effects on jobs and incomes if planned operation expansions do not take place. In addition, and

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importantly, trade flows between states must be considered, since supply chains are activated by

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each project that may cross state lines. In order to accurately and objectively calculate the

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existence and amount of any net economic losses caused by the diversions, the economic benefits

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conferred by construction of the border barriers at issue were also considered using the same

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methodology discussed above.

Economic Impacts on the States

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Totaling all of the direct and interstate effects, the diversion of the $493 million in

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military construction funds would result in a total of $366 million in total lost business sales

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within the States over the next three calendar years, 2020-2022. These reductions reflect lost sales

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for the primary contractors for the project, subcontractors, various firms in the supply chains, and

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companies selling goods and services to individuals hired to work directly on the project or at

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some point in the supply chain. The $366 million loss factors into consideration the offsetting

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benefits to the States caused by the $1.0 billion of U.S. funds that would be spent in California

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and New Mexico to build the proposed border barriers. Excluding California from this analysis,

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the total lost business sales within the remaining States affected - Colorado, Hawaii, Maryland,

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New Mexico, New York, Oregon, Virginia, and Wisconsin - would be $789 million.

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Across 2020-2022, the gross regional product (GRP) of the States would be

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reduced by $165 million as a result of this diversion of military funds. Total personal income

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losses would total $97 million. Excluding California from this analysis, the GRP losses and

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personal income reductions within the remaining states affected - Colorado, Hawaii, Maryland,

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New Mexico, New York, Oregon, Virginia, and Wisconsin - would be $416 million and $273

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million, respectively. California would see economic benefits from building of the proposed

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border barriers only in 2020. By 2021 it would experience economic losses, including a small
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Declaration of Alison Lynn Reaser ISO Mot. For Partial Summ. J re Section 2808 and NEPA (4: I 9-cv-00872)

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number of jobs. The loss of employment for all nine States in 2021 would reach nearly 1,600

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jobs.

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The tax revenues for state and local governments, through taxes on personal

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income, retail sales, corporate profits, and other sources, for the States of Colorado, Hawaii,

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Maryland, New Mexico, New York, Oregon, Virginia, and Wisconsin would be reduced by over

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$36 million as a result of defendants' diversions from the military construction projects.

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Among all the States, California is the only state that would see net benefits to its

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economy and tax revenues as a result of the diversions over the 2020-2022 period. This is because

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only one project in California, the construction of a C-130J Flight Simulator Facility at the

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Channel Islands Air National Guard Station, would be defunded at a total cost of $8.0 million.

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That loss is outweighed by the economic benefits resulting from the proposed border barrier

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construction in the state. However, the net benefits from the border barrier building would only

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occur in 2020, with economic losses following in 2021 and 2022.

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Colorado faces the defunding of one project, a Space Control Facility at the

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Peterson Air Force Base, at a cost of $8.0 million. This would lead to a net loss of$37 million in

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business sales over the 2020-22 period, while its GRP would lose over $25 million. Personal

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income would be reduced by $18 million and employment would be reduced by 82 jobs in 2020,

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growing to an impact of 129 jobs in 2022. The state would receive over $1.0 million less in state

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and local tax revenues.

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Hawaii faces the defunding of two projects: a consolidated training facility at the

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Joint Base Pearl Harbor-Hickam and security improvements at the Mokapu Gate at the Marine

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Corps base at Kaneohe Bay, at a total cost of $32 million. As a result, Hawaii would see a net loss

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of $48 million in business sales over the 2020-22 period, while its GRP would lose $27 million.

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Personal income would be reduced by $17 million and employment in 2020 would be adversely

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affected with 163 fewer jobs. The state would receive $2.5 million less in state and local tax

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revenues.

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Maryland faces the defunding of three projects: an expansion of cantorunent area

roads at Fort Meade, construction of a hazardous cargo loading and unloading pad and explosive
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Declaration of Al ison Lynn Reaser ISO Mot. For Partial Summ. J re Section 2808 and NEPA (4:19-cv-00872)

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ordinance disposal training range at Joint Base Andrews, and construction of a child development

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center at Joint Base Andrews, at a total cost of $66.5 million. Maryland would see a net loss of

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$123 million in business sales over the 2020-22 period, while its GRP would lose $63 million.

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Personal income would be reduced by $42 million and employment in 2020 would be adversely

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affected with 319 fewer jobs, while employment would be reduced by 326 jobs in 2021. The state

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would receive over $5.0 million less in state and local tax revenues.

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New Mexico faces the defunding of two projects: the construction of an air combat

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training facility for umnanned vehicles at Holloman Air Force Base and an Information Systems

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Facility at White Sands Missile Range, at a total cost of $125 million. Even with the economic

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boost from construction of the proposed border barriers the state would receive, New Mexico

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would see a net loss of nearly $165 million in business sales over the 2020-22 period, while its

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GRP would lose $70 million. Personal income would be reduced by $39 million and employment

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in 2020 would be adversely affected by close to 450 fewer jobs, ·while employment would be

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reduced by over 300 jobs in 2021. The state would receive nearly $9 million less in state and local

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tax revenues.

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New York faces the defunding of two projects: an Engineering Center and Parking

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Structure, both at the U.S. Military Academy at West Point, at a total cost of$160 million. New

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York would see a net loss of $260 million in business sales over the 2020-22 period, while its

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GRP would lose close to $150 million. Personal income would be reduced by more than $100

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million and employment in 2020 would be adversely affected with over 1,000 fewer jobs, while

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employment would be reduced by about 400 jobs in 2021 . The state would receive $13 million

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less in state and local tax revenues .

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Excluding the project to replace the fuel facilities at Klamath Falls Airport, Oregon

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faces the defunding of the construction of an indoor small arms training range at the Klamath

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Falls International Airport, at a total cost of $8 million. This would result in a net loss of $13

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million in total business sales in the 2020-22 period and $7 million in GRP. The state's personal

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income would be down by $5 million, while the state would also see the loss of about 70 jobs in

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2020. The state would receive about $0.6 million less in state and local tax revenues.
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Declaration of Alison Lynn Reaser ISO Mot. For Partial Smnm. J re Section 2808 and NEPA (4:19-cv-00872)

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Excluding the Pentagon Metro Entrance project, Virginia faces the clefunding of

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four projects: the construction of a cyber operations facility at Joint Base Langley-Eustis, the

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replacement of two different Hazardous Materials Warehouses at the Norfolk Naval Station in

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Norfolk and the Norfolk Naval Shipyard in Portsmouth, and the conversion and repair of a major

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Ships Maintenance Facility at the Naval Support Station in Portsmouth, at a total cost of $77

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million. This would result in a net loss of $130 million in total business sales and nearly $70

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million in GRP over the 2020-22 period. The state's personal income would be clown by almost

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$45 million, while the state would also see the Joss of about 435 jobs in 2020 and 325 jobs in

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2021 . The state would receive close to $5 million less in state and local tax revenues.

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Wisconsin faces the defunding of one project, the construction of an indoor small

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arms training range at Truax Field, at a total cost of $8 million. This would result in a net loss of

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$16 million in total business sales and over $8 million in GRP over the 2020-22 period. The

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state's personal income would be down by about $6 million, while it would also see the loss of

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about 75 jobs in 2020. The state would receive about $0.6 million less in state and local tax

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revenues.

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I declare under penalty of pe1jury under the laws of the United States of America that the
foregoing is true and correct.
Dated this 11th clay of October, 2019 at

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, California.

aii_~=~

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Alison Ly1m Raser,Ph.D.

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Declaration of Alison Lynn Reaser ISO Mot. For Partial Summ. J re Section 2808 and NEPA (4: 19-cv-00872)