Note: The following is not a verbatim transcript of the Zoning Hearing Board meeting; it is simply one person’s summary of the major points made by those involved in the hearing process.  For that reason, quotation marks are not used unless a direct quote was recorded.  For information about obtaining an official ZHB transcript, contact the New Hanover Township office.

The meeting opened with a brief mention of the closing of Mr. H. Lynn Kemper’s testimony. At this point it was on to the introduction of the next witness for Gibraltar Rock. This began with Mr. Harris, attorney for Gibraltar Rock, calling Mr. Alan K. Stagg to the stand to be sworn in.  Stagg was offered as an expert witness on “Economic Geology.” He is President/CEO of “Stagg Resource Consultants.”

According to Stagg, an “economic geologist” is involved in the financial evaluation of mining operations. An economic geologist is responsible for things such as an economic feasibility study that would include reserve assessment, analysis, estimation and an evaluation of costs in a mining operation.

Harris then entered Stagg’s resume into evidence as exhibit A-38. His resume details: a BS in geology from the University of Tennessee, 12 hours of graduate study (Not enough to receive his Masters degree) also from the University of Tennessee, a number of continuing education courses including “Economic evaluation and decision making” financial accounting, cost estimating, the legal implications of site assessments, etc. Stagg’s professional associations include Society of Economic Geologists, (and others) and he is a registered professional geologist in PA. He also has numerous publications in technical journals in the field of economic geology. He has also taught several corporate courses on economic geology and environmental site assessments.

Harris entered into evidence a long and fairly comprehensive list of sand and gravel quarries where Stagg has worked. He claims to have worked with groups that opposed quarry development but when cross-examined later this was found to be only minimally while the total quarries he’s been involved with either opening or operating number over 100 in more than 30 states. These include (apparently) several in PA including one other in Montgomery County. Finally, it was established that Stagg has testified and been qualified as an expert witness in various state and federal courts.  Harris closed this segment by entering into evidence exhibit A-41 that is a summary of litigation support and expert witness experience of Stagg.

Stagg then explained what factors are used in the estimation of the value (appraisal) of a proposed mining operation. He explained that an economic assessment is based on the reserves in the ground, the proposed operations at the site, marketplace conditions for the particular product. After estimating the cash flows he comes up with a single current value for the proposed operation. If, instead of a simple valuation, a more detailed economic assessment is required, then a fuller economic picture of the mining operations is developed.  Harris then submits exhibit A-42 that contains a list of previous appraisals done.

At this point the board requested clarification on the purpose of this expert witness and his relevance to the hearing at hand.  Harris explained that Stagg would compare the township plan with the (so-called) “DEP plan” and discuss the economic viability of each. It should be noted and recognized here that the phrase “DEP plan” is an attempt by Gibraltar Rock to define the terms of this debate in such a way that it will be favorable to Gibraltar Rock’s desired outcome. As far as either the township or any other interested parties are concerned, the DEP has nothing to do with Gibraltar Rock’s plans and as far as we know they have not yet even filed for the appropriate permits.

Mr. Robert Brant, representing the township, began cross-examination. Brant uncovered the fact that Stagg, while he has done graduate work in geology, has no graduate degree and never finished the masters program. During the questioning it was also made known that Stagg also has no degree in economics or finance although he has taken a few “short courses.”

During this phase of the questioning we also learned that Stagg was considered as an expert witness in February of 2002. Stagg admitted that he was aware that at this point the challenge to the township had already been filed by Gibraltar Rock and hearings were underway. Gibraltar Rock and Stagg had their initial meeting in April where Stagg was taken to the site. Retention came sometime in May, which was followed by a kickoff meeting in early June.

In a following line of questioning it was revealed that Stagg has spent very little time on the side of “special interest” groups or the government. He could only recall one special interest group that he ever did work for and no expert testimony was provided by Stagg in that instance and he said less that 10% of his expert testimony was for the government. When questioned further by Brant, Stagg admitted that he is basically worked for the mining industry.

Brant closed his questioning by asking about the rates that Stagg charge.  Stagg admitted that his rate is $200/hour and that Gibraltar has thus far paid him about 30-35 thousand dollars for services rendered.

Next David Makara, attorney for Davis and Bucco (the attorneys representing the Paradise Watchdogs) cross-examined Stagg. He asked questions about the percentage of Stagg’s experience with coal and gas throughout his career. In ending his cross-examination he revealed that Stagg has never testified in PA State courts or in federal courts in PA.

The board then accepted Stagg as an expert witness with no objections from those present.

Harris then allowed Stagg to describe what the steps are in doing an economic assessment of a mining operation of this sort.  Stagg explained that the first thing done is to figure out the reserves, that is, the economically recoverable portion of the mineral deposits of that resource that's being exploited. Then he considers any environmental, legal (like perhaps township ordinances) issues with developing those reserves, the cost for extraction, etc. Important in this evaluation is an understanding of the quality of the material and the current (and future) marketplace, transportation, etc. Then the pieces are fit together to build the economic value using a cash flow analysis. An appraisal consists of a current value of those cash flows to determine the economic feasibility of the operation.

Harris then directed Stagg to explain what were the steps that he went through to understand the geology (reserves) of the site.  Stagg explained that he begins with a literature search and adds to that information provided by Gibraltar Rock and the reports and studies done by Gibraltar Rock’s geologist. Then he explained that he walked the site, even though, he claims not much can be garnered from the experience. He did this the first week in June.

Stagg continued to explain what the geology of the site is like. From a previous Montgomery County geologic survey that portion of the county is in what Stagg called the “Newark Sedimentary Basin.” There is a “Rift valley” that extends through that part of the township, which evidences thick sedimentary rock. This would indicate a region good for mining. Using cores dug in the site and the geologic survey Stagg explained that the site forms a “Brunswick formation” which is predominantly shale and siltstone. Shale not suitable for a quarry stone but color changes in the shale indicates a prehistoric heat source and identifies the underlying Brunswick.

Use the “drill records” (cores) that are property specific from the study done by Gibraltar’s geologist the layers of the site were revealed. They include what Stagg called “the soil horizon. Below that is commercial and non-commercial grade of rock and Argillite material. In grueling detail he covered the bands, depths, and areas of commercial grade stones and how that stone is probably laid down at the site.

 The next meetings will be October 30, 2002.

See Also:
Summary of the previous meeting (September 17, 2002)