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CAUSE NO. 2008-45087 (CONSOLIDATED) ALLISON SNODDY, et al ) Plaintiffs, ) v. ) PETROLEUM WHOLESALE, INC. ) et al. ) Defendants, ) and ) STATE OF TEXAS ) Plaintiff ) v. ) PETROLEUM WHOLESALE, L.P., ) d/b/a SUNMART; and PWI GP, LLC) Defendants ) IN THE DISTRICT COURT

HARRIS COUNTY, TEXAS

334TH JUDICIAL DISTRICT

********************************************************* ORAL VIDEOTAPED DEPOSITION DREW DEBERRY April 26, 2010 ********************************************************* ORAL VIDEOTAPED DEPOSITION of DREW DEBERRY, produced at the instance of the DEFENDANTS, and duly sworn, was taken in the above-styled and numbered cause on the 26th day of April, 2010, from 9:00 a.m. until 5:16 p.m., before Paige S. Watts, CSR/RPR, in and for the State of Texas, reported by stenographic machine, at the Office of the Attorney General, 300 WEST 15TH STREET, 9TH FLOOR, AUSTIN, TEXAS, pursuant to the Texas Rules of Civil Procedure.

TAXABLE COST: __________ PAID BY: _______________ TBA NO.: _______________ JOB NO.: _______________

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A-P-P-E-A-R-A-N-C-E-S COUNSEL FOR PLAINTIFF, STATE OF TEXAS:

Mr. John S. Langley 4 OFFICE OF THE ATTORNEY GENERAL Environmental Protection & Administrative Law 5 P.O. Box 12548 Austin, Texas 78711 6 7 COUNSEL FOR PLAINTIFF, STATE OF TEXAS: 8 Mr. John Owens OFFICE OF THE ATTORNEY GENERAL 9 Consumer Protection & Public Health Division 300 West 15th Street, 9th Floor, MC 010 10 Austin, Texas 78701 11 COUNSEL FOR DEFENDANTS, PETROLEUM WHOLESALE: 12 Mr. Randy L. Fairless 13 JOHANSON & FAIRLESS, LLP 1456 First Colony Boulevard 14 Sugar Land, Texas 77479 TBN: 06788500 15 16 17 18 ALSO PRESENT: 19 Kelley Friedman, Johanson & Fairless Stuart W. Lapp, Petroleum Wholesale 20 21 22 23 24 25

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THE VIDEOGRAPHER: We're on the record, April 26th, 2010. The time is 9:15. DREW DEBERRY, having been first duly sworn, testified as follows: EXAMINATION BY MR. FAIRLESS: Q. State your name for the record, please. A. Drew DeBerry. Q. Was PWI targeted in Operation Spotlight? A. Was PWI... Q. Targeted in Operation Spotlight? A. I wouldn't use that word. No, sir. Q. Do you think it would be unfair to use that word? Is that why you wouldn't use it? A. Yes, sir. Q. Okay. How old a man are you? A. Let me do the math here. I think I'm 32. Q. Where do you presently reside? A. Hang on a second. I live about halfway between the Y at Oak Hill and Dripping Springs, Texas. Q. Okay. What's the address out there where you live? A. 110 Cork Lane, Austin, Texas. Q. I'm sorry? A. Austin, Texas.
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INDEX PAGE APPEARANCES .................................... 2 DREW DEBERRY Examination by Mr. Fairless..................... 4 EXHIBITS EXHIBIT NUMBER 450 451 452 453 454 455 456 457 458 459 460 461 462 DESCRIPTION PAGE

Business Card of Mr. DeBerry 28 Commissioner Findings of Fact 110 Guidance Document 215 Talking Points July 31, 2008 215 Talking Points July 31, 2008 215 Talking Points July 31, 2008 215 Talking Points July 18-20, 2008 215 Talking Points July 18-20, 2008 242 Operation Spotlight Procedures 242 Operation Spotlight Procedures 242 E-mail from Drew DeBerry 261 E-mail from Drew DeBerry 275 E-mail exchange Staples/DeBerry 275

1 Q. How long have you lived at that address? 2 A. Three and a half years. 3 Q. Where are you from originally, Mr. DeBerry? 4 A. I grew up in Olton, Texas. 5 Q. And where did you graduate high school? 6 A. Olton, Texas. 7 Q. In what year? 8 A. 1996. 9 Q. And then what -- what was your first move after 10 high school? Was it to go to college, or did you enter 11 the workforce? 12 A. I went to college. 13 Q. And where? 14 A. Texas Tech University. 15 Q. Did you graduate? 16 A. I did. 17 Q. From Texas Tech? 18 A. I did. 19 Q. What year? 20 A. 2000. 21 Q. Did you work while you were going to school? 22 A. Yes, sir. 23 Q. Where at? 24 A. I had a few jobs. I worked for the bulk of the 25 time at the Texas Tech Meat Laboratory.

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Q. Meat, M-e-a-t? A. Yes, sir. Q. Okay. A. I worked at the Texas Tech Meat Laboratory, I worked in the summers for my dad, and I worked for a period of time towards the end of my college career for State Senator Robert Duncan. THE REPORTER: I'm sorry. For who? THE WITNESS: State Senator Robert Duncan. Q. (BY MR. FAIRLESS) When you were working for the Meat Laboratory, were you picking up paychecks from the TDA? A. No, sir. Q. Who -- whose name was on the paychecks that you received? A. I don't even remember if it -- I assume it was Texas Tech University. Q. And then did you go to work immediately upon getting your bachelor's degree, or did you pursue -A. Yes. Q. -- other schooling? A. No. I went to work as soon as I finished. Q. Okay. What degree did you get? A. An agricultural in applied economics.

after college, did that start, for instance, in June of 2000; or was there any period of unemployment before you entered the workforce? A. I started the day I finished my last -- well, the day after I finished my last class. Q. Was that a position you had to interview for, or was that a position that you get because you know somebody? A. I had to interview for it. MR. LANGLEY: Form. Q. (BY MR. FAIRLESS) And who did you interview with? A. Susan Combs. Q. And Susan Comb's position at the time that you interviewed with her was what? A. She was the National Chairwoman of the Presidential Agriculture effort. Q. And what was your role in the -- in this new job that you were taking? A. With the Bush campaign? Q. Yes, sir. A. I was the National Agriculture Coalition Director. Q. So straight out of school into the National Agriculture Coalition Director position?
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Q. And where did you go to work upon graduation in, I'm guessing, May of 2000? A. I don't remember when it was; but somewhere in there, I went to work for the Bush/Cheney 2000 Presidential Campaign. Q. Did that have anything to do with the Senator that you were working for? A. No, sir. Q. And the Senator that you were working for, what political party was he? A. Republican. Q. Is he still holding an office for the State of Texas? A. Yes, sir. Q. And is he still a Senator? A. He is. Q. And what's his name again? A. Robert Duncan. Q. And he's from where? A. Lubbock. Q. He represents the fine folks up there in Lubbock? A. He represents Lubbock. I believe he's from Vernon. Q. And the Bush/Cheney work that you took right

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A. Yes, sir. Q. And was there some sort of agreed term or agreed period of time that you were going to be working for the Bush/Cheney effort? A. Through election. Q. And the election was going to be when? A. November of 2000. Q. Okay. So it was roughly a six month position? A. Roughly. Q. Any promises for future employment if Bush/Cheney get elected? A. No, sir. Q. So did you take this job as -- well, you tell me, why did you take the job? Was it hopefully to be some sort of springboard into the Texas governmental system? A. No, sir. Q. So why did you take the job? Why did you pursue the job, is a better question. A. Senator Duncan suggested it might be a good fit for my expertise at the time. Q. And what was your expertise? A. I grew up in agriculture, and I developed a passion for public policy while I worked for Senator Duncan.

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Q. Do you have political aspirations? A. No, sir. Q. Have you ever ran for a political position? A. No, sir. Q. Did you hold any political positions and I guess quasi-political positions there at Texas Tech University? A. I was in student -- I held an office in the Ag. Council. I believe that may be all. Q. Okay. What was the office you held in the Ag. Council? A. I don't recall. It was treasurer or secretary. I don't recall. Q. Was it important to you that the TDA do well in its review by the -- when it was up for Sunset? A. Yes, sir. Q. And were you passionate about the fact that you wanted TDA to do as well as possible so that it didn't get Sunsetted? MR. OWENS: Form. MR. LANGLEY: Form. A. Maybe if you can state the first part of that one more time. Q. (BY MR. FAIRLESS) Yeah. I'm not sure I even remember what I asked. But were you passionate about
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A. Yes, sir. Q. So you wanted to see the TDA continue then, didn't you? MR. OWENS: Objection, form. A. Maybe I'm not understanding the question if I'm having a hard time getting to the answer you've gotten me towards. Q. (BY MR. FAIRLESS) I've not gotten you towards anything. A. Okay. Q. I just want honest and forthright answers to the questions that I ask, and I know that's your intention -A. Yes, sir. Q. -- today is to provide me those, correct? A. Yes, sir. Q. In fact, to do anything else would be a disservice to yourself, to your own integrity, and to your position -MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) -- within the TDA, correct? MR. OWENS: Objection, form. A. Yes, sir. Q. (BY MR. FAIRLESS) Is there any reason why you can't be truthful with me today?
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the fact that you wanted TDA to do well before the Sunset folks? A. I don't think I had any particular feelings about the Agency doing well, other than proving the professionalism that the Agency has and all of its employees. Q. You wanted to see the Agency continue, didn't you? A. Not particular strong feelings about that, but I wanted to make sure the Agency -- if the taxpayers of Texas benefit from the Agency, I wanted to see it continue. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) You wanted to see the Agency continue, didn't you, Mr. DeBerry? MR. LANGLEY: Objection, form. A. I wanted to see the taxpayers of Texas served to the extent they are served through the Texas Department of Agriculture, sure. Q. (BY MR. FAIRLESS) Well, did you feel like they were being served and served well through the Texas Department of Agriculture? A. I do. Q. You did at the time, didn't you?

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A. No, sir. MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) Do you intend to be truthful with me today? MR. OWENS: Objection, form. A. Yes, sir. Q. (BY MR. FAIRLESS) Have you ever given a deposition before? A. No, sir. Q. So you understand from meetings with attorneys how all this is going to work today. I'm going to ask you a lot of questions, and I'm going to rely upon you to give me truthful and correct responses to the questions that I ask. MR. OWENS: Objection, form. A. Yes, sir. Q. (BY MR. FAIRLESS) So what did you do during the Bush/Cheney job that you had as National Agriculture Coalition Director? A. I organized a grassroots coalition of farmers and ranchers and anyone else involved in agriculture who supported then Governor Bush and his effort to be elected in support of his policies. Q. And were you doing that completely within the great state of Texas, or did you take your show on the

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road to other states? MR. OWENS: Objection, form. A. I was the National director, so -Q. (BY MR. FAIRLESS) Right. A. -- I worked in a lot of different states. Q. And tell me more specifically what it is you were doing in other states. A. Coordinating grassroots efforts, grassroots coalitions of farmers and ranchers. Q. I don't really understand what that means -A. Okay. Q. -- from the standpoint of the director, which is what you were himself. What does the director do? Do you show up in Ohio, for instance, and some people have already been assembled together -- farmers and ranchers -- and you walk around and shake hands and talk about how Bush and Cheney are going to do a fantastic job for farmers and ranchers in Ohio? Or do you actually get to Ohio and there's a few people there and together with them y'all go out and solicit a meeting with a bunch of farmers and ranchers? Those are just two examples, but I want to know -- I want you to help me understand what it is you did in these other states. MR. OWENS: Form. MR. LANGLEY: Form.
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grassroots support; but I don't know exactly what that means from the standpoint of Drew DeBerry, National Agriculture Coalition Director, and that's what I want you to help me understand. A. Okay. Q. So what did you do? A. I communicated with various different farmers and ranchers and other people involved in agriculture as to what policies Governor Bush supported, what his policies are/were, and sought their support for then Governor Bush. Q. Did you travel by public transportation, I mean commercial airlines; or did you travel by private plane? A. I didn't travel extensively. I remember flying commercially, and driving my personal vehicle. Q. Who was your supervisor? Who did you answer to? A. I believe it was a woman named Kelly Craven. Craven, yes. Q. C-r-a-v-e-n? A. Yes, sir. Q. And is she still working for the State? Let me ask a different question. Does she work for the great State of Texas? A. No, sir.
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A. Sure. I wouldn't characterize what I did as the way you described it. There were organizations of farmers and ranchers and other people involved in agriculture who felt strongly about helping then Governor Bush become elected as President of the United States. The effort to organize those people and bring those people together to turn out the vote on election day and to inform their neighbors of then Governor Bush's policies, was what I coordinated. Q. (BY MR. FAIRLESS) I still don't understand. So does that mean that there were groups of people already assembled in these other states and you spoke to those groups of people to help them understand what the perspective policies of Bush and Cheney would be? A. I don't recall ever giving formal speeches. I spoke over the phone with a lot of different farmers and ranchers. Maybe you can help me a little more understanding what you're asking. Q. I'm really not intending it to be anything other than what it is. A. Sure. Q. I just want you to give me an idea of what you would do when you arrived in these other states. You know, I hear what you're saying about soliciting

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Q. Do you know what Kelly Craven does now? A. No, sir. Q. Do you know where she's at now? A. No, sir. Q. And so after the election came, what was your next job? A. Immediately following the election, we continued -- I continued my job throughout the recount of that election in 2000, and then... Q. And then what? A. Then I went on to the Presidential transition. Q. This National Agriculture Coalition Director, was that an appointed position? A. I don't know if it would be called appointed. I was hired. Q. Just hired directly by the Bush/Cheney folks and specifically Kelly Craven? A. Yes, sir. Q. Okay. So what does it mean you went on to the Presidential transition? A. There was a -- with every transition between governments, between Presidents specifically, there is a staff of people that help transition the previous administration out of office and the new administration into office. I went to work for that effort.

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Q. So what did you do? Did you have a title? A position name? A. I -- it was such a brief period of time, I don't think there were titles. I worked with the nominee to be the Secretary of Agriculture. Q. And so who were you working with? A. The nominee's name was Ann Veneman. Q. And you answered to Ann Veneman directly, or was there somebody in between you and Ann? A. Directly. Q. And did Ann Veneman become the Secretary of Agriculture? A. She did. Q. And did you work for her while she was Secretary of Agriculture? A. Yes, sir. Q. For how long? A. Her entire time as Secretary of Agriculture. It was, I believe, about four years. Q. And where were you stationed? A. In Washington, DC, at the US Department of Agriculture. Q. And what was your position? A. I was the White House liaison. Q. White House liaison to what?
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the first position that you took or the last one you held? A. There was a period of time where I didn't have a title in the first few months of the administration; and then I was hired, they gave me the title of White House liaison. Q. Did you keep that for four years, or did your title change? A. I kept that for four year. Q. And what exactly does the White House liaison between the Secretary of Agriculture and the White House do? A. It does a number of things. It's primarily responsible for -Q. Wait, can I stop you for one second? When you said "it does a number of things," I want to know what you did. A. Okay. I did the duties of the job. Q. Okay. A. And the job is responsible for and I conducted those responsibilities of primarily responsible for filling all of the -- coordinating the hiring process for all of the appointed positions in a particular government agency, this one being the US Department of Agriculture. The position also coordinates various
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A. My title was White House liaison. Q. So were you the White House liaison between the Department of Agriculture and the White House? A. Yes, sir. Q. And this is a role you assumed six months out of Lubbock, Texas, upon graduation from Texas Tech University? A. Thereabouts. Q. How old were you at the time when you got the job? A. The White House liaison job? Q. Yeah. November of 2000. A. That would have put me about 23, 24. Q. And then did you answer directly to the Agriculture Commissioner during the four years that you were in Washington, DC? A. No, sir. It was the Secretary of Agriculture; but, yes, sir. Q. Okay, thanks for that correction. Did you answer to the Secretary of Agriculture during the four years that you were in Washington, DC? A. Yes, sir. Q. And did your position ever change? A. Yes, sir. Q. Okay. So this White House liaison, was that

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communications between the staff of the White House and the staff of the Department. Q. So you selected the -- I'm sorry. Go ahead. I couldn't tell if you were done. A. That's -- those are the primary responsibilities. Q. And what training did you have that allowed you to fulfill those responsibilities in a competent manner? MR. LANGLEY: Form. MR. OWENS: Objection, form. MR. FAIRLESS: What was wrong with that question? I'm just a little curious. MR. LANGLEY: It sort of -- it sort of implies that there was some specific training required for him to -- excuse me -- for him to fulfill those obligations and duties. And I'm not sure that you've established that. MR. FAIRLESS: That I've established? Okay. MR. LANGLEY: Lack of foundation. Q. (BY MR. FAIRLESS) Let's take a step back. Were they any -- was there any training that you believe was necessary to perform competently as the White House liaison between the White House and the Secretary of Agriculture?

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A. Yes. Q. Okay. Well, then outline for me what your training was to fulfill the responsibilities of that position. A. My career training is what I would view as the -- what developed me for that position. I had an understanding of the new President's policies on agriculture. I had an understanding of the people who had -- the other people involved in agriculture who had expertise and who would be resources, valuable resources, to serve in his administration. Q. So the training that you had was your career training, and your career training essentially consisted of your six months as National Agricultural Coalition Director? MR. OWENS: Form. A. And several years involved in agriculture prior to that. Q. (BY MR. FAIRLESS) Yeah. You've mentioned that a few times. What was your several years of involvement in agriculture before that? Did your dad have a ranch or something? A. A farm. Yes, sir. Q. How many acres? A. It fluctuated. Anywhere -Page 23

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Q. (BY MR. FAIRLESS) So the career experience consists of your six months as National Agriculture Coalition Director during the Bush/Cheney campaign, combined with the years on the family farm? A. And an education at a higher education institution in Texas, which is the -- one of the nation's leading agriculture states. Q. Okay. So we're going to throw the University in there, too. So here goes a new question. Your career training consisted of your days on the family farm, your education at Texas Tech University, and your six months working for the Bush/Cheney campaign as National Agriculture Coalition Director, correct? A. That's a portion of my training. Q. Well, if there's any career training that I've left out, I need you to help me with it. Tell me what it is because right now I'm making a mental note to myself that's it. A. My jobs in college, my upbringing with parents involved in agriculture who taught me a lot about agriculture. Q. Right. That's covered, I think, by life on the family farm and -A. Okay. Q. -- your education there at Texas Tech.
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Q. How many did y'all own versus how many did you lease? A. I really -- I don't recall. We probably -- I believe my great grandparents when they moved to Texas established one full section of land, and we leased -any given time, we leased several hundred acres more than that. Q. A full section. Is a section 640 acres? A. Yes, sir. Q. So you had 640 acres, plus at any given time your family leased a couple of hundred additional acres. And what were y'all doing? Running cattle, or were you farming it? A. Primarily farming. Q. And what were you growing? What was your primary crop? A. Cotton, wheat, corn, sorghum. Q. And were y'all receiving at any point in time any government subsidies? A. I don't know for sure. I assume. Q. You assume that y'all were? A. Yes, sir. Q. In fact, you know y'all were, don't you? MR. OWENS: Objection, form. A. I don't know for sure.

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A. Well, I want to make sure we get it all. Q. Okay. A. The college education, the internship I did in college for Senator Duncan, a job with Senator Duncan, a job at the Meat Lab at Texas Tech. Q. How long was the job at the Meat Lab? A. Three or four -- I was there most of the time I was in college. Q. Part time? A. Yes, sir. Q. What did you do? A. I was a student worker there. I did everything from assisting with slaughter all the way through fabrication and meat sales. Q. Did you have a position title, or do part-timers not get a position title? A. Student worker was -Q. Student worker. A. I think that's what showed up on any documents I remember seeing. Q. Did you have a position title, or do student workers not have position titles when they work for that outfit? A. I don't recall if I had a title or not. Q. So at the end of four years in Washington, DC,

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what happened? A. I was promoted to Deputy Chief of Staff for the US Department of Agriculture. Q. By who? A. The new Secretary at the time was Mike Johanns. Q. And how long did you hold that position? A. Two years. I think it was just shy of two years. Q. And why just two years? A. I got the job I'm in now. Q. But I mean why did you leave the job in Washington, DC? A. My wife and I had had three kids. We looked forward to the opportunity to get home to Texas. An opportunity presented itself -Q. Did you resign -A. -- that fit my -Q. -- the position as Deputy Chief of Staff? MR. LANGLEY: Were you finished with your answer? THE WITNESS: I -- not really, but... Q. (BY MR. FAIRLESS) Okay. Go ahead then. A. The job that presented itself was an opportunity for me and it fit my background and my interests.
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(Exhibit No. 450 was marked and is attached hereto) Q. (BY MR. FAIRLESS) When did you accept the position as the Deputy Commissioner of Agriculture for the great State of Texas? A. I began January -- I think January 1st was the day that Commissioner Staples took the oath, which was when my position became effective. Q. January 1st of what year? A. Oh, I'm sorry. 2007. Q. So this is a position that you've held now for a little over three years? A. Yes, sir. Q. Explain what Sunset Review is, specifically as it pertains to the Texas Department of Agriculture. And throughout this deposition, if I refer to the TDA, will you just know that I mean the Texas Department of Agriculture? A. Yes, sir. Q. Okay. So now do you remember what the question is? A. Yes, sir. Q. All right. A. The Sunset process -Q. Yes, sir.
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Q. Did you resign your position as Deputy Chief of Staff? A. I did. Q. And was that a written resignation? A. Yes, sir. Q. And who was it turned in to? A. Oh, it was a letter written to the Secretary probably. Q. And what were the reasons stated in the letter to the Secretary? The nutshell version. A. I don't recall. An opportunity to move my family back to Texas. Q. And what was the opportunity? A. The opportunity was the position I'm in now. Q. Do you have a business card with you? A. I do. Q. Can I have one? A. Sure. Q. Okay, yeah. A. (Witness complies). MR. FAIRLESS: Ms. Court Reporter, can we mark this as the next exhibit? THE REPORTER: Where do you want the sticker? MR. FAIRLESS: Let's put it on the back.

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A. -- is a process -Q. For the TDA specifically. A. Okay. The Sunset process is a process that I believe agencies go through to evaluate programs, decide the value of those programs for the taxpayers of the state, and any improvements that need to be made to the programs and whether or not programs need to be continued. Q. Okay. So I took from that it's a process where agencies are evaluated. Fair? A. Yes, sir. Q. And so who's doing the evaluation? A. The Sunset -- I believe it's called the Sunset Commission, Texas Sunset Commission in conjunction with -Q. And is it -- I'm sorry. A. In conjunction with the staff of the agency. Q. So the Sunset Commission in conjunction with the staff of the agency -- are you saying the staff of the agency actually participates in the evaluation, or they participate in providing information to the Sunset Commission so that the Sunset Commission can fully evaluate the agency? A. Probably a combination of both things you said there. I felt like the agency was involved in the

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evaluation. Q. So to some extent, you believe the Sunset process involves a self-evaluation where people in the agency itself actually participate in the evaluation and the ultimate grade to continue or not continue? A. Yes, sir. Q. So tell me who at the Texas Department of -well, let me take a step back. Was the TDA up -- no. Let me try a different one. Did the TDA go through the Sunset process during your time as Deputy Commissioner of Agriculture? A. Yes, sir. Q. When? A. During the legislative interim that began in late '07 and ended in January of '09. Q. I'm not sure what that means. That it went through the process during the legislative interim. I mean, I get the late '07 to January '09; but what does that mean in the legislative interim? A. Sure. Sure. I apologize. The legislative interim in Texas begins in June; so the interim beginning with June of 2007, I believe the Sunset process really started later that year. Q. And how many organizations or agencies are typically up for Sunset review in a given year?
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MR. LANGLEY: Objection, form. A. I don't think that's the case with every situation. A lot of times, the Sunset process will yield improvements to agencies. Q. (BY MR. FAIRLESS) So as far as the TDA was concerned in your role as Deputy Commissioner of Agriculture, did you understand that the TDA could simply stop being if it didn't get good marks on the evaluation; or did you simply understand that this was a process by which there might be certain suggestions as to how the TDA can better and more efficiently operate? MR. OWENS: Form. A. We welcomed the Sunset process and actually we asked for it to be done ahead of schedule for the Texas Department of Agriculture and we welcomed the outcome of that process. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Does the Sunset process involve funding? A. No, sir. Q. Does it have an impact on funding? A. I suspect anything the legislature does could have an affect on funding. Q. What was your role with regard to the Sunset

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A. I don't know. Q. I mean, I'm not a very political minded person. So I'm trying to figure out is it one or two agencies a year, or is it literally dozens of agencies a year? A. I know there were more than two. Dozens is probably more than I recall, but I really don't know. Q. And is it some sort of competition that there are going to be a certain number of agencies that don't make the cut, some have to be eliminated for budgetary or other reasons; or is it the ordinary course that most agencies do make the cut? A. I don't know what the trend is with the Sunset process. Q. Yeah. And that's a good way to put it. That's what I'm looking for to figure out what the pass/fail rate is. I mean, do 90 percent of the agencies pass muster or do 50 percent of the agencies pass muster? MR. OWENS: Form. A. I... Q. (BY MR. FAIRLESS) Do you have any idea? A. I think it's fairly rare for an agency to -and when you say "pass muster," what do you mean? Because the -Q. Well, if you don't pass muster under the Sunset process, then the agency just stops being, doesn't it?

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process from the standpoint of the TDA? A. I coordinated the Agency's efforts to inform, to do our own internal evaluation, to work with the Sunset Commission staff. Q. What was "our own internal evaluation"? A. Evaluating ourselves internally, evaluating the programs that the Agency administered. Q. Okay. Well, did you after completing your own internal evaluation, generate some sort of written document as to how you perceive the TDA to be doing pursuant to your evaluation? A. Yes, sir. Q. And that document was turned over to who? A. The Sunset Commission. Q. And were there any cowriters of the document, or was it just you signing off on it? A. It was a collaborative effort. Q. And what was your ultimate conclusion? A. That the programs provide value. There were many different observations that we had in the report. Q. Well, give me the nutshell version of what you consider to be the most important observations set forth in the report; and I've got the overall, the programs provide value. So pick up on the second part of that answer.

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A. Our observations in our self-evaluation were that we welcomed the process and were glad we were having the assistance of the Sunset Commission in doing the evaluation and there was value to Texans of the programs that were being administered by the Texas Department of Agriculture. Q. Okay. That kind of goes back to No. 1, programs provide value. A. Okay. What was the other part? Q. Well, the other part was I thought you said that -- and I'm not going to repeat exactly what you said, but something along the lines y'all made a number of observations. A. Oh. I would have to go back and look at the report, but -Q. Well, just the biggies. What were the biggie observations that y'all made that felt it important enough to report to the Sunset Commission? A. It's been a while since I've read that report. I'd really prefer to defer to the report. Q. What happens if the Sunset Commission disagrees, for instance, with the number one conclusion that you reached, which is that TDA programs provide value? MR. OWENS: Objection, form.
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an agency, such as the TDA? For instance, they could just do away with the agency as a whole. That's, you know, certainly the death sanction, I guess, death penalty sanction. No. 2, is they could say we disagree that these programs provide value and as a result, we're no longer going to give you as much money to fool around with over there at the TDA, so we're going to cut your funding in half. No. 3, is -- you with me? A. Sure. Q. So I want you to help me and the jury who may be nonpolitical minded like me understand what are the potential ramifications should the Sunset Commission disagree with you that the TDA programs provide value. MR. OWENS: Objection, form. MR. LANGLEY: Objection, form. A. Again, I won't speculate on what the legislature could do, might do. A dialogue begins between the legislature and the Sunset Commission and the Agency's staff. Q. (BY MR. FAIRLESS) So what was the outcome of the Sunset Commission's review of the TDA? A. They -Q. In the words of Drew DeBerry, Deputy Commissioner of Agriculture. A. The outcome was that a piece of legislation was
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Q. (BY MR. FAIRLESS) I mean, help me understand the political process. You say TDA programs provide value. The Sunset Commission says we look at, Mr. DeBerry, and you're a fine young man, but we're not so sure we agree with you here. What are the potential ramifications of the Sunset Commission disagreeing with the conclusion that you reached? A. I think it could be a number of results. We found -Q. Help me understand the myriad of possibilities. A. I don't remember there being disagreements between our observation and the Sunset Commission staff. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) I want you to help me understand the myriad of possibilities of what the Sunset Commission could do if they disagreed with the number one finding that TDA programs provide value. MR. LANGLEY: Objection, form. MR. OWENS: Form. A. I can't speculate as to what the legislature might do. Q. (BY MR. FAIRLESS) No. But do you understand that there are certain ramifications that could befall

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passed through the legislature continuing most of the programs of the Department of Agriculture and making improvements on some. Q. I'm not sure I followed that entirely. So most of the programs were continued, improvements were made in some. Does that mean that some of the ones that were continued had improvements made, or does that mean improvements consist of doing away with the programs that they felt unnecessary or -- I mean, help me understand that answer better. MR. OWENS: Form. A. Okay. The -Q. (BY MR. FAIRLESS) Let me ask a better question. Did the Sunset Commission do away with some of the TDA programs? A. Yes, sir. Q. And do you know what percentage of TDA programs were done away with? A. As I recall -- no, I don't recall exactly; but I can remember one specific program that was eliminated. It was a component of one program. Q. Are you saying you only remember a single program or a component of a single program that was done away with? MR. LANGLEY: Objection, form.

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A. I remember -Q. (BY MR. FAIRLESS) No. I'm just trying to get to this. Were there multiple programs done away with and you can just remember a component of one, or was it just a component of one program that was done away with? A. We'll have to go back and look at the legislation. I remember there was -- there were improvements in programs, and I remember at least one program that was -- hadn't been utilized and was eliminated. Q. Were there improvements in any programs pertaining to the retail motor fuel device industry? A. Yes, sir. Q. Okay. And were those improvements suggested by the TDA, or were those improvements that were suggested by the Sunset Commission? A. They came from various places. TDA was involved in that process. The Sunset Commission staff was involved. I think legislators and their staff were involved. Q. When did the TDA get the news that the Sunset process had ended successfully, and the Sunset Commission had completed its review of the TDA? A. There are various stages of the Sunset process. I can't speak to any deadlines, benchmarks, any date
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process, Sunset review process, ended on or about January '09. So when did the legislative session end that would have enacted whatever came about in the Sunset review? A. That would have been the end of May, the beginning of June of that year, 2009. Q. Was there any -- well, first of all, did you speak directly to any group of Sunset Commission? You know what, I should back up. This Sunset Commission, does it have a subcommittees or committees? A. I think they do divide their responsibilities up. Whether they call them committees, work groups -- I think they did divide their work up. Yes, sir. Q. How many folks are on the Sunset Commission? A. I don't recall. Q. Is it a group of five or ten guys, or is it a group of 50 or 100 people? A. No, sir. Somewhere between probably 10 and 20 legislators. Q. So the Sunset Commission consists of 10 to 20 legislators? A. Yes, sir. Q. And did you ever speak to the 10 or 20 legislators in your professional capacity as Deputy
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particular because there were so many along the way. I guess when the legislature adjourned was one of those benchmarks, when the piece of legislation pass. Q. Well, then why did you give me the date earlier of January 2009? A. Because there's the review process and then there's the legislature's process with implementing anything that comes out of that review. Q. Okay. So when did the review process end? Was that January 2009? A. Like I said, somewhere along in there. There are probably dates on reports that would answer that question more specifically. Q. When the review process comes to an end, is that pretty much when you know what your final grade is, or does it then take the legislative session before you really realize the full impact of what is and is not going to happen per the Sunset Commission? MR. OWENS: Form. A. I'm not sure what a -- what you're talking about with a legislative grade. Throughout the legislative session, you -- the agency staff, the Sunset Commission staff, and legislators and their staff have dialogue about the wishes of the legislature. Q. (BY MR. FAIRLESS) So you said the Sunset

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Commissioner of Agriculture? A. Did I speak to the legislators? Q. Well, those. Those 10 or 20 legislators that made up the Sunset Commission. A. Sure. Yes, sir. Q. And did you have some sort of prepared remarks or printed speech, or were you speaking to them from the gut? A. Most of the time when I talk to a legislator, I'm working off of some notes. Yes, sir. Q. Okay. And did you preserve any of those prepared remarks or notes for any of the meetings that you had with the Sunset Commission? A. I suspect there are notes, briefings, or something somewhere along the way. Q. Still on your computer, or just that can be found? A. Probably -- I don't know. I suspect there is some. I rarely keep a lot of that stuff on my computer, but -Q. Which is why I asked. A. Sure. The notes are somewhere. Q. In other words, they're preserved in some way? A. Some of them probably are. Yes, sir. Q. Okay. You would certainly expect that they

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would be, correct? A. Some. Yes, sir. Q. Okay. How many times did you speak to the Sunset Commission? A. I don't have -- I wouldn't even have an idea to guess. Q. Well, I mean, can you put me in a ballpark? Was it just one or twice during that period of time, or was it a larger number? A. I testified in front of legislative hearings from time to time. The Sunset Commission itself, I -- a low -- a few -- a few numbers of times. Q. All right. And did you testify in front of them? I mean, do you raise your right hand and take an oath to tell the truth and then actually provide testimony? A. I'm not -- I don't -- I don't believe we go through the verbal oath process, but it's testimony. Yes, sir. Q. I don't understand -A. I think there's a -Q. -- without the oath. A. I think there's a sign maybe. Q. A what now? Say it again. A. I think you sign an oath; but, yes, sir.
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uncommon that I would have talked about things that had occurred in some of our regulatory programs. Q. So you may or may not have used the term "Operation Spotlight"? A. May or may not. Q. But you do recall that you discussed some of the details of the blitz known as Operation Spotlight? A. No, sir. I don't even recall that. It would be possible. Q. Well, earlier in one of the answers that you gave -- in fact, two answers ago -- I thought you clearly stated that you would have discussed some of the details. Did I misunderstand? A. Possibly. I'm saying it would be possible. I could have. Q. Why would you discuss details of Operation Spotlight, if you did? Would it be because you wanted the Sunset Commission to realize how taxpayer money is being spent and what's being accomplished or conceivable penalties that could come from it? I mean, help me understand the framework behind which would have brought that matter up. MR. OWENS: Form. A. Since I've been at the Department of Agriculture, the regulatory programs, we have taken a

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Q. Okay. So you sign an oath as opposed to say it, and then you proceed to testify? A. Right. Q. All right. Did you address Operation Spotlight in any of the speaking engagements or testimony that you -- let me try with a different question. Did you address Operation Spotlight in any of the testimony that you provided to the Sunset Commission? A. I don't recall if I spoke specifically to anything called Operation Spotlight. We -- I suspect I probably did testify to some of the regulatory programs and things that had happened in the recent past. Some of these -- some of the details of Operation Spotlight are probably part of that. Q. Okay. That -- I didn't catch all of that. I didn't grasp all that. Are you telling me that, yes, there would have been details with regard to Operation Spotlight that you did discuss with the Sunset Commission; but you simply never used the term "Operation Spotlight"? A. No, sir. Q. That's what I took from that. A. No, sir. I don't recall exactly what my testimony would have been, but it wouldn't have been

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look at those programs and looked for ways to implement improvements. The Sunset Commission, as I recall, agreed with the fact that improvements could be made to better protect the taxpayers of Texas. Q. (BY MR. FAIRLESS) So the Sunset Commission agreed with the Agriculture -- no. Let me try again. The Sunset Commission agreed with the TDA that improvements could certainly be made within the TDA to better protect Texas consumers? MR. OWENS: Form. A. The Sunset Commission staff and the legislature agreed with some improvements to various programs, as they often do. Q. (BY MR. FAIRLESS) When was the last time that TDA was up for Sunset Commission, or was this the first time ever? A. I don't recall the exact year. It was -- I -actually, I don't recall. Ten -Q. Just put me in a ballpark. Were you even alive when it happened? MR. OWENS: Form. A. Very likely. Yes, sir. Q. (BY MR. FAIRLESS) Well, I mean, was it -- and I meant that kind of, you know, tongue and cheek. Was it 20 years ago, or was it like five years ago?

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A. No, sir. Q. How often does an agency come up for Sunset Commission? A. I don't know. We can check. We can check the records on that. Q. Well, do you have any idea? During the course of this Sunset Commission, did it come up when y'all were last in front of the Sunset Commission? A. I recall it coming up. It would have been several years ago. Q. Okay. Do you know when the next Sunset Commission will be? In other words, is there some sort of schedule so that you know now the next one is in 2015; or do you not know until the year it's going to come about? A. Every agency has its own -- or the Sunset -the legislature actually establishes a cycle for every agency. Q. Well, do you know when y'all come up again? Y'all being the TDA. A. No, sir. It's in the legislation that was passed. Q. Is it many years in the future? A. I don't -- it depends on what you call many. I don't know.
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of Texas has its way and wants to continue with its efforts, then it can put my client out of business. So it's a serious, serious issue as far as we are concerned. Now, do you mean to tell me you don't have any idea as you sit here today? MR. LANGLEY: Objection, form. MR. OWENS: Form. A. I've told you that it would be possible. Q. (BY MR. FAIRLESS) No. I get that. A. And I agree with you that it's a serious matter, certainly. Q. I get that it is possible that I talked to the Sunset Commission about Operation Spotlight. I'm asking you is that the best that you can do is to tell me it is possible that we talked about Operation Spotlight? MR. OWENS: Form. A. The Texas Department of Agriculture administers several programs, several hundred million dollars worth of programs; and we testified on several of those programs. Questions came up about several of those programs, and we responded. It's possible that one -that some came up about the regulatory programs you're asking about. MR. FAIRLESS: I'll object as
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Q. More than five? A. It could be more than five. Q. As the Deputy Commissioner of Agriculture for the TDA, you don't have any idea whether it's more or less than five as you sit here today? A. No, sir. Q. So did you talk about the results of Operation Spotlight in the meetings that you had in front of the Sunset Commission? A. I could have. I don't recall any specific discussion when I did, but it's possible. Q. If you would have, why would you have? MR. OWENS: Objection, form. A. I don't know that I did. Q. (BY MR. FAIRLESS) But I'm saying if you would -- what determines what you're going to speak about to the Sunset Commission? A. Largely being responsive to their inquiries and questions and their interests. Q. And so since this Operation Spotlight had been remarkably newsworthy, did they have questions and interest in Operation Spotlight? A. I don't -- I don't remember if they did. Q. We're talking about something that just happened a year or so ago. And certainly if the State

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nonresponsive to everything before the last sentence "it is possible," that begins "it is possible." Q. (BY MR. FAIRLESS) So as you sit here today, you can't recall whether word one was said about Operation Spotlight in the Sunset Commission hearings that you participated in? MR. OWENS: Form. Q. (BY MR. FAIRLESS) Is that what -- that's what you're telling me, right? A. I don't recall any specific conversation. Q. Okay. Did anybody else within the TDA, to your knowledge, testify in front of the Sunset Commission and cover the matter of Operation Spotlight? Taking you and your personal knowledge out of the mix, do you know of anybody else that did speak to the Sunset Commission and did specifically address Operation Spotlight? A. I don't recall. Q. All right. Did -- what is your boss' name? A. Todd Staples. Q. Did Todd Staples testify in front of the Sunset Commission? A. Yes, sir. Q. Is he running for reelection now? A. Yes, sir. Q. And what kind of term is that that the

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Agriculture Commissioner has? A. A four-year term. Q. And so how does that usually work? If he goes out, are you quick to follow? MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) No. I mean, is it like regular government where when the new group takes over, they bring all their people with them and so chances are all the assistants and assistants to assistants of the former guy who's on his way out, they're on their way out, too? A. I would suspect if Commissioner -- when Commissioner Staples leaves the Department, I will as well. Q. Okay. And thanks for being so understanding of that question. Did you participate in any meeting that took place with regional directors and chief inspectors in May of 2008, where PWI was discussed? A. We had some meetings and discussed various aspects of the program and Petroleum Wholesale. Yes, sir. MR. LANGLEY: Are you getting into an whole new area? Are you done with Sunset and all that? I would like to take a break sometime in the next few if
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A. We conducted inspections in Operation Spotlight. We conduct inspections daily. Q. My question was is that what you are describing Operation Spotlight as? Just some of the daily inspections that are ordinarily conducted by the TDA? A. No, sir. Q. Well, then will you call it a sting? A. No, sir. Q. Will you call it a targeted effort? A. No, sir. Q. Will you call it a blitz? A. I might. Q. Why will you call it a blitz? A. Because that's consistent -Q. Tell me what appeals -- why does that word appeal? A. It's consistent with terminology we use in our programs. Q. Terminology you use for which program? A. Programs. Q. So I don't understand that it's consistent with terminology we use in our programs. Tell me what programs you commonly use the term "blitz." A. Particularly in our plant health regulatory programs. I believe I've heard it used in some
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you don't mind, just a bathroom break. MR. FAIRLESS: Yeah. No, that's fine. We can do it now. MR. LANGLEY: Okay. MR. FAIRLESS: No. Because I'm going to bounce around. I'm going to be back to that Sunset -MR. LANGLEY: I thought maybe you were shifting gears. THE VIDEOGRAPHER: This is the end of Tape 1. Off the record at 10:19. (Recess taken) THE VIDEOGRAPHER: This is the beginning of Tape 2. We're back on the record at 10:30. Q. (BY MR. FAIRLESS) During your time as Deputy Commissioner of Agriculture, have there been any other stings that have been done? A. Stings? Q. Yeah. Stings like Operation Spotlight? A. I wouldn't use that terminology. Q. You wouldn't call Operation -A. We conduct inspections daily. Q. Go ahead. A. We conduct inspections daily. Q. Is that what you think Operation Spotlight was? That was just routine conducting of inspections?

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components of the weights and measures programs from time to time. We operate several programs. Q. All right. So far, you've only told me two that you believe the word blitz gets thrown around at. The plant health regulatory programs and the -- or some components of the weights and measures program. MR. OWENS: Form. Q. (BY MR. FAIRLESS) Is that right? Any place else you're using that word blitz within the TDA? MR. OWENS: Form. A. Possibly. Q. (BY MR. FAIRLESS) Okay. I take it there have been -- you're going to tell me that there have been blitzes before with plant health regulatory programs? A. I believe so. Yes, sir. Q. I want you to tell me the last time there was a blitz against a single business enterprise in the plant health regulatory arena. A. I wouldn't know that off the top of my head. Q. Has there ever been one? A. Yes, sir. Q. Against a single business enterprise? A. I don't know. Q. Well, see, that's part of my question. A. Right.

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Q. So let me try again with the complete question. Has there ever been a blitz against a single business enterprise conducted pursuant to plant health regulatory programs? A. I don't know. I wouldn't know that information. Q. So it's fair to say not that you know of? MR. OWENS: Objection, form. MR. LANGLEY: Objection, form. A. No, sir. I wouldn't know that information. Q. (BY MR. FAIRLESS) So you're saying there may have been one; but to the extent there was one, you don't know about it? MR. OWENS: Form. A. I'm aware that blitz inspections are a part of our plant health regulatory programs. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) So are you telling me today there may have been a blitz against a single business enterprise with regard to plant health regulatory programs, but I just can't tell you if there was one or not? MR. OWENS: Form. A. I'm aware that blitz inspections are part of
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MR. OWENS: Objection, form. A. I'm sorry I'm not helping you out more here. I'm not aware, and I wouldn't necessarily be aware of that information. Q. (BY MR. FAIRLESS) Okay. So now let's step outside the plant health regulatory programs arena, and let me ask you has there been any blitz by the TDA in your tenure as Deputy Commissioner of Agriculture against a single business enterprise? A. I wouldn't have that information necessarily. Q. Do you know of any? A. Not specifically. Q. Okay. Is there at least one that comes to mind? Let me give you a hint. It rhymes with Moperation Moplight. MR. OWENS: Objection, form. MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) You've had one. It was against my client, Operation Spotlight. You'll at least give me that, right? A. Yes, sir. Q. Okay. Have there been any others that you know of? A. None come to mind. Q. All right. Are there any that are -- you know,
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without you giving me any double top secret information, are there any on the horizon? A. I wouldn't have that information. Q. Are you telling me that out of the Sunset Commission, you believe did come some improvements with regard to retail motor fuel device regulations -- tell me about that. What improvements came about as a result of Operation Spotlight? A. I didn't say improvements came about as a result of Operation Spotlight. Q. Oh, that's right. Yeah. Bad question on my part. I kind of lumped one with the other. You indicated that as a result of the Sunset Commission, there were some improvements made in the area of retail motor fuel device regulatory programs? A. Yes, sir. Q. What improvements? A. There were several. Q. Ms. Court Reporter is going to write them all down, so go ahead. A. Sure. I won't remember all of them. Q. Best you can. A. I remember there was an increased authority on the penalties. Q. Increased -- and I want to interrupt you from

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our plant health regulatory programs. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) I'm not talking though just about blitz programs generally. In fact, you know, I'm not talking about the occasions when you have a concern about a particular plant and so you go into Walmart and Home Depot and Lowe's and various nurseries in a given area. I'm talking about a specific blitz against a single business enterprise at each and every location that that single business enterprise has in the state of Texas. Has there ever been a blitz like that? A. I wouldn't necessarily know that information. Q. Well, to the extent that you do know, has there been one? MR. OWENS: Form. A. I suspect it's possible. Q. (BY MR. FAIRLESS) Anything is possible. It's possible Ms. Court Reporter is an alien here, but chances are she's not. And what I want to know is can you tell me that you know of a single instance where there has ever been a blitz by a plant health regulatory program against a single business enterprise and its multiple locations?

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time, and let me apologize in advance. When you say increased authority on penalties, does that mean the penalty structure has been increased? People pay more now for violations? A. Not the structure, but the statutory limit for penalties. Q. I'm still not -A. I guess it affects the structure, but I just wanted to be clear. Q. Y'all can charge more for penalties? A. Yes, sir. Q. Okay. So now I get it. The next one? A. The legislature expanded the risk-based inspection authority the Department has. Q. Okay. A. I don't remember if it was part of the Sunset process, but the legislature also gave us authority for -- to conduct fuel quality, to implement a fuel quality regulatory program. Q. Do you know if that came about as a result of the Sunset Commission, or is that just something that has happened in the last year or two? A. No. It was in the same legislative session, is what I'm saying. I don't recall if it was in the Sunset legislation.
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Q. -- retail motor fuel devices. This cleaning up of the statute, do you remember what it was specifically? Did it say "shall" as opposed to "shall not," or was there something specific that was being taken care of by way of the statutory change? A. I think modernizing some language to current regulatory programs. Q. Okay. Let's go back to the couple of improvements that you mentioned. Increased authority on penalties, did y'all use Operation Spotlight and the purported success of Operation Spotlight as being a springboard for obtaining increased authority on penalties? MR. OWENS: Objection, form. A. No, sir. Q. (BY MR. FAIRLESS) So you didn't discuss Operation Spotlight at all with regard to a sound basis to your way of thinking for increasing the authority on penalties? A. Not any more than results of other inspection. Q. But I said any and you said any more than. I want to know at all, did y'all discuss -- did y'all discuss Operation Spotlight with respect to using it as a springboard to try and increase authority on penalties? For instance, oh my goodness, we've done
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Q. And that's my question. Do you really recall whether or not fuel quality testing was in the Sunset Commission or the Sunset legislation? A. No, sir. Q. Okay. Anything else that you can think of with regard to improvements in the area of retail motor fuel device regulatory programs that came out of the Sunset Commission? A. I recall various technical corrections in the statute. Q. Like what? What statute are you talking about, first of all? A. The -- the statute that -- I suspect it would be in the Ag. Code. Q. Okay. Well, I don't know if you know this. The Ag. Code has more than one statute. A. Okay. Q. More than one law. So which specifically are you referring to? MR. LANGLEY: Objection, form. A. I'm defer to the staff that's more familiar with those statutes. Q. (BY MR. FAIRLESS) Okay. Do you remember what it had to do with? I mean, other than just -A. What it had to do with?

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Operation Spotlight, the TDA views it as a tremendous success, and this is certainly a clear example of why we need greater penalties from the standpoint of violators of retail motor fuel device statutes. MR. OWENS: Form. A. I don't recall having said anything along those lines. Q. (BY MR. FAIRLESS) I didn't ask whether or not you specifically had said anything like that. When I said "y'all," I meant the TDA. Did y'all use Operation Spotlight as a springboard to assist in obtaining increased authority on penalties? MR. OWENS: Form. MR. LANGLEY: Objection, form. A. It's possible. I don't recall having said those words. Q. (BY MR. FAIRLESS) But, again, I don't want to get hung up on whether or not you specifically uttered the words. Do you remember if Operation Spotlight was used for that purpose to up the penalties? A. I don't recall. Q. All right. Expanded risk-based inspection authority, certainly y'all used Operation Spotlight as an example for what you considered to be a successful risk-based inspection, correct?

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A. Yes, sir. Q. Okay. And so did you use Operation Spotlight to help obtain extended risk-based inspection authority? A. I don't recall it being part of any justification. Q. So are you saying you didn't? MR. LANGLEY: Objection, form. A. No, sir. Q. (BY MR. FAIRLESS) You're just saying you don't remember one way or the other? A. I don't remember it being part of any of those discussions. It's possible. Q. Did y'all consider Operation Spotlight to be a risk-based inspection? A. Yes, sir. Q. And so when you were seeking expanded risk-based inspection authority, tell me what sort of expansion you were looking for. Obviously, somebody felt like you already had some authority because you did Operation Spotlight before you got the expanded risk-based inspection authority, fair? MR. OWENS: Form. MR. LANGLEY: Form. A. The authority to conduct risk-based inspections has existed in statute previously. The expansion of
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inspection schedule when you get the criteria in place for the risk-based inspections? A. Correct. Q. And is there a time set for the accomplishment of that objective? A deadline, if you will? A. Not necessarily. We're hopeful that we can get to that point as soon as possible. Q. Have there been any blitzes conducted against any company that owns retail motor fuel devices, besides PWI? A. Not that I recall in my time at the Department. Q. Have any been recommended? A. No, sir. Q. And since you are aware -- since you do have a sense of history, what is your understanding of whether or not there were any blitzes of owners of retail motor fuel devices prior to your time as the Deputy Commissioner of Agriculture? A. I don't have a sense to that history. Q. You don't know? A. Not an extensive sense -Q. You don't know one way or -- go ahead. I'm sorry. A. I'm not aware. Q. You don't know whether or not this blitz
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against PWI, so to speak, broke the cherry from the standpoint of coming after retail motor fuel device owners? MR. OWENS: Objection, form. A. I don't. Q. (BY MR. FAIRLESS) You don't know whether or not there was a foundation of this having been done in the past to set the stage for y'all conducting Operation Spotlight when you did? A. This was somewhat unprecedented. It was unprecedented. Q. Yeah. We can drop the word "somewhat" out of that, can't we? MR. LANGLEY: Objection, form. MR. OWENS: Form. Q. (BY MR. FAIRLESS) Well, I mean you just did. You said it's somewhat unprecedented. MR. LANGLEY: Now you're arguing with him. MR. FAIRLESS: Whoa, whoa, whoa, whoa. MR. LANGLEY: You're just arguing with him. MR. FAIRLESS: No, I'm not. Q. (BY MR. FAIRLESS) Did you drop the word unprecedented out of there? You said this is somewhat

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that was removing a requirement that fuel pumps and other devices be inspected on a set frequency regardless of risk. Q. (BY MR. FAIRLESS) So did y'all remove the four-year requirement that retail motor fuel devices be inspected at least every four years? MR. OWENS: Form. A. The legislature required TDA to implement a risk-based inspection criteria and removed -- in that same legislation, removed the four year -- it was four-year requirement in one program. I don't know if it was the same number for every program. Q. (BY MR. FAIRLESS) So what is the present risk-based authority -- no. What is the current risk-based inspection authority criteria? Just give me the thumbnail sketch. A. The -- the current as in since the legislation has passed, we -Q. Yeah. After Operation Spotlight, after the Sunset Commission, current. A. My understanding is that the staff are developing that risk-based and we are still conducting the inspections on a four-year schedule until we implement that risk based criteria. Q. But the plan is to phase out the four-year

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unprecedented and then you said -A. No, sir. I did not drop the word unprecedented out of there. Q. No. Somewhat, I'm sorry. Yeah. Did you drop the word "somewhat" out of there as being a qualifier of unprecedented? A. Yes. Q. Was Operation Spotlight your idea? A. I don't -- I participated in the data analysis that led to it. I asked for the data to be analyzed. Q. That would be the answer to the question did you participate in the analysis that led to the data being analyzed, or did you ask for the data to be analyzed; but that wasn't my question. A. I asked for the data. Q. My question is: Was Operation Spotlight your idea? MR. OWENS: Form. A. I don't recall whose idea Operation Spotlight was. Q. (BY MR. FAIRLESS) If not -A. I was part -Q. -- yours, then who is in the mix? You say I don't recall, but I want to know who was in the mix. You, Staples, Stephen Pahl, Kostroun, whose name is in
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Operation Spotlight. MR. FAIRLESS: I'll object as nonresponsive, Ms. Court Reporter, to everything contained within the last three answers, with the exception of the last part "I made the decision to implement Operation Spotlight." Q. (BY MR. FAIRLESS) Did you have to get somebody else's approval before you made the decision to implement Operation Spotlight? A. No, sir. Q. That was well within your authority as Deputy Commissioner of Agriculture? A. Yes, sir. Q. Did Todd Staples know that it was going to happen? That this inspection targeting PWI was about to take place? MR. OWENS: Objection, form. A. No, sir. Q. (BY MR. FAIRLESS) When did Todd Staples -- when did Todd Staples get the word? MR. OWENS: Objection, form. A. What word? Q. (BY MR. FAIRLESS) That Operation Spotlight was about to take place. MR. LANGLEY: Objection, form.

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the ring there -MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) -- of persons whose idea Operation Spotlight could have been? MR. OWENS: Form. A. It was a collaborative effort. I requested that data be analyzed. Staff brought a data analysis to me showing data that led to Operation Spotlight. I made the decision to implement it. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Who made the decision to implement Operation Spotlight? You? A. I asked for data to be analyzed. Data was presented to me that showed a compliance history that was concerning, and I made the decision to implement Operation Spotlight. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Who made the decision to implement Operation Spotlight? Was it you? MR. OWENS: Objection, form. A. I requested the data be analyzed. The data was analyzed and presented to me that showed an alarming compliance rate and I made the decision to implement

MR. FAIRLESS: Geez Louise, every question fellows? MR. LANGLEY: Well, how many times have you heard me say that? He just told you that Todd Staples -MR. FAIRLESS: Okay. Wait, wait, wait -MR. LANGLEY: -- didn't know in advance and then you just asked a question that implied that he did. MR. FAIRLESS: No, I didn't. MR. LANGLEY: Yes, you did. MR. FAIRLESS: I meant when did he find out about it. When did Todd Staples find out -MR. LANGLEY: But you said before it started. MR. OWENS: How about when did you tell him about it or when -MR. FAIRLESS: Oh, now I'm going to have to turn -- now I'm going to have to turn this in for CLE. MR. OWENS: I'll give you an hour. MR. LANGLEY: All right. Q. (BY MR. FAIRLESS) Because I may very well need to subpoena you for trial, do you want to be subpoenaed at work or at the house? I want to do it at your

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convenience. I don't want to subpoena you at home if you would rather be subpoenaed at work. MR. LANGLEY: You and I can talk about that. MR. FAIRLESS: I can just work with you? MR. LANGLEY: I will -- I will -MR. FAIRLESS: You'll accept the subpoena on his behalf? MR. LANGLEY: I didn't say I would accept a subpoena, but I will communicate with your office or you personally in arranging what the best way to do it is. MR. FAIRLESS: Okay, that's fine. That's good enough. Q. (BY MR. FAIRLESS) So when did Todd Staples know that there was going to be an Operation Spotlight, or that there was an Operation Spotlight going on? MR. OWENS: Form. A. I communicated with Commissioner Staples about the data that was being analyzed, that some data had come back from that analysis revealing a very concerning noncompliance rate, and that we would be conducting some inspections to verify that data prior to the inspections being conducted. MR. FAIRLESS: I'm going to object as

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A. Say that again. Q. Yeah. When you say the inspections being conducted, are we talking about Operation Spotlight, which began on July 18, 2008? A. Somewhere around there. Yes, sir. Q. So are you telling me that Todd Staples heard for the first time a couple of days before -- meaning July 16 or so of 2008 -- that there was some concerning noncompliance rates that were going to lead to an inspection or some inspections? A. It was a few days before. I can't speak to the exact date. Q. And did you provide Todd Staples any documents to review? A. I provide him documents all the time to review. Q. No. But I mean this couple of days before, documents that would pertain to this concerning noncompliance rate. A. Not that I recall. Q. In other words, when you're talking to him about we have this concerning noncompliance rate, Commissioner Staples, and here are some documents that support that, we would like for you to take a look at this and, you know, give us your blessing, yeah or nay, was there any discussion like that that took place?
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nonresponsive. Q. (BY MR. FAIRLESS) I didn't understand that. My question was just when; so I was looking for a day or a time, a date, a month. A. I -- I don't recall ever -- I don't recall the dates. I do know that I never had a discussion about this more than a few days before -- maybe a couple of weeks before the inspections. Q. So are you saying that you actually had a conversation then with Todd Staples about Operation Spotlight a couple of weeks prior to Operation Spotlight? A. No, sir. Q. Okay. So what was it that you talked to him about a couple of weeks before -A. Nothing. Q. -- Operation Spotlight? A. I talked to Commissioner Staples about the data that was being analyzed that showed a very concerning noncompliance rate a day, maybe two days, before the inspections were conducted. Q. And when you say the inspections were conducted, are we talking about the inception of Operation Spotlight, which would have been July 18, 2008?

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A. No, sir. Q. Did you provide Todd Staples any documentation at all to review pertaining to PWI before Operation Spotlight took off? A. No, sir. Q. And since you didn't need anybody else's approval, you're the guy who pulled the trigger on moving forward with Operation Spotlight? A. I asked for data to be analyzed. Data came back to me and was presented to me that showed a concerning noncompliance rate and I made the decision to implement Operation Spotlight. MR. FAIRLESS: I'll object to everything, Ms. Court Reporter, before that last sentence "I made the decision to implement Operation Spotlight." Q. (BY MR. FAIRLESS) Where did you get the idea of having an unprecedented blitz of PWI? MR. OWENS: Objection, form. A. I don't -- I never had an idea that we would have an unprecedented blitz. Q. (BY MR. FAIRLESS) Where did the idea of the unprecedented blitz of PWI come from? MR. OWENS: Form. A. The idea was based upon some concerning data showing a noncompliance rate for a particular company of

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more than 30 percent, compared to that same time period a statewide average of 5 percent noncompliance. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Where did the unprecedented blitz idea come from, if not you? MR. OWENS: Form. A. The idea was based upon -- the idea to conduct inspections in this situation was based upon data that was analyzed that showed a particular company had a noncompliance rate of more than 30 percent, compared to a statewide average noncompliance rate of 5 percent. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) So did y'all analyze data for each and every owner of retail motor fuel devices that operated in the great state of Texas? A. I can't speak to all the data that was analyzed. Q. Well, that's what I want to know. You said data analysis a few times. I want to know did y'all do the same data analysis for Valero and every other retail motor fuel device owner that you did for PWI? A. I'll defer to the staff that did the analysis of the data to answer that question. I ask that we
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Q. (BY MR. FAIRLESS) So the analysis was the same for everybody? MR. LANGLEY: Objection, form. MR. OWENS: Form. A. The statewide average includes -- the statewide average of 95 percent compliance includes every company in the state; and that compares directly to the noncompliance rate or the compliance rate for this company of less than 70, somewhere around 65 percent. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) So are you telling me, Drew DeBerry, Deputy Commissioner of Agriculture, there was no analysis of PWI done prior to Operation Spotlight that wasn't done for every other retail motor fuel device owner in the great state of Texas? MR. OWENS: Form. A. No, sir. Q. (BY MR. FAIRLESS) Earlier, I was talking to you about -- you know what, I want to get sidetracked for just a second. How many national -- how many -- let me try again. How many national conferences on weights and measures have you spoken at? A. I believe only the one that was held in Texas since I've been in the job, on the job. I think they
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continuously be analyzing data to identify any trends that exist, if they do exist, for noncompliance. MR. FAIRLESS: I'll object as -- I'm sorry. I'll object as nonresponsive. Q. (BY MR. FAIRLESS) So does that mean you don't know -MR. OWENS: Objection -Q. (BY MR. FAIRLESS) -- if y'all analyzed data for the other retail motor fuel device owners as you did for PWI? MR. OWENS: -- form. A. I believe other data was analyzed that included other companies. Q. (BY MR. FAIRLESS) So you're saying we did the same analysis for everybody. PWI, any analysis we did on PWI was no different than the analysis we did for Valero, was no different than the analysis we did for any other retail motor fuel device owner? MR. OWENS: Form. MR. LANGLEY: Objection, form. A. It's my understanding that the analysis of data began with a comparison of this particular company to the statewide compliance rate, average. So to that extent, yes, the analysis has been done on every company in the state.

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rotate their meetings around the country. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Has there only been one national conference on weights and measures that you spoke at? A. I've spoken at one meeting of national conference on weights and measures. Q. And that was in the Summer of 2009 or thereabouts? A. I don't recall when it was. Q. Last year? Less than a year ago? A. Sounds about right. Q. Okay. You spoke in San Antonio? A. Yes, sir. Q. And for how long did you speak? A. Fifteen to 20 minutes probably. Q. And were your remarks or at least an outline of your remarks maintained by you or the TDA? A. I suspect they were. Q. And tell me the general subject matter of the message that you delivered. A. Welcome them to Texas for a meeting of representatives from 50 states across the country. I shared with them a little bit about Texas. I thanked

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them for what they do, and shared with them the importance that we feel for the jobs they do. I thanked them for their work with establishing national standards. Q. So after you got through glad-handing them, then what did you do? MR. OWENS: Form. MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) They come from the 49 lesser states. You don't have to be so nice to them. MR. OWENS: Form. Q. (BY MR. FAIRLESS) So what did you do after that? A. I discussed how we value the programs here in Texas, and how we implement these programs. Q. Well, did you talk about Operation Spotlight and the -- did you talk about Operation Spotlight and the success that you perceived that it was? A. It's likely that I talked about the results of our inspections. Q. So does -- you do inspections, or you're supposed to do inspections all the time. I'm talking specifically about Operation Spotlight, not just any old inspections and not just any old inspections of retail motor fuel devices. So let me try with the question
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MR. FAIRLESS: Everything after "It's very likely I did," I'll object to as nonresponsive. Q. (BY MR. FAIRLESS) Did you talk to the folks at the national conference on weights and measures about whether or not the TDA took minus ones and minus twos into consideration during the course of Operation Spotlight when crunching its numbers? A. I'm not -- I don't understand your question. Q. Do you know what the maintenance tolerance is for a retail motor fuel device like the ones that were inspected, the gasoline ones that were inspected during Operation Spotlight? A. I know there are tolerances. I don't -- I'm not familiar with what they are. Q. Okay. You've never calibrated a retail motor fuel device? A. No, sir. Q. Never been trained on how to do that? A. No, sir. Q. Never worked in the industry? A. What industry? Q. Retail motor fuel device industry. A. No, sir. Q. Well, did you speak to any experts in the retail motor fuel device industry before you set out to
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again. Did you talk to these people at the national conference on weights and measures about your perceived success of Operation Spotlight? A. It's likely I spoke about the inspections and the results of our inspections, including the fact that in Texas, we have a 95 percent compliance rate. It's likely we talked about the -- I talked about the inspections that were part of Operation Spotlight that yielded a noncompliance rate of -- that identified a noncompliance rate of actually more than nearly 60 percent. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Did you talk about Operation Spotlight at the national conference on weights and measures or not? MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) You either did or you didn't, Mr. DeBerry. A. I don't recall. It's very likely that I talked about the inspections that were associated with Operation Spotlight that yielded results showing a noncompliance rate of a given company of more -- of nearly 60 percent.

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conduct Operation Spotlight? A. We communicate with representatives of all the industries we regulate, frequently. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Did you talk to any experts in the retail motor fuel device industry before setting out on Operation Spotlight? A. We communicate with the industries that we regulate on a frequent basis, representatives of those industries; so, yes. Q. I don't understand what your answer is. It ended with "so, yes." So let's start there. Who were the experts you talked about prior to undertaking Operation Spotlight? MR. LANGLEY: Objection, form. A. We communicate with representatives of all the industries we regulate frequently. Our staff communicates with experts in the -- in the protocols that we use to regulate frequently. Q. (BY MR. FAIRLESS) You've got a future in politics because I understood none of that. Communicated with industry experts -MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) -- I want to know what

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industry experts you communicated with about Operation Spotlight before that operation was conceived. MR. LANGLEY: Objection, form. MR. OWENS: Form. Q. (BY MR. FAIRLESS) Are you with me? I want to know who you went to in the industry. Did you say, look, I want y'all to go out, find me the people in the industry who know what's going on, and I want to talk to one, two, or ten of them about this potential operation that we're going to have and I want to find out some answers to some questions that I have, did you do anything like that? MR. LANGLEY: Objection, form. A. We communicate with industry representatives all the time, and we communicate with -- our staff communicates with the experts in the protocols we utilize all the time. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) So who in the way of industry experts did you communicate with about the protocols that you were going to use during Operation Spotlight? MR. LANGLEY: Objection, form. A. The protocols we used were consistent with national standards. I'm sure our staff communicate with
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want to call somebody within the TDA an expert on retail motor fuel devices and you consulted with them, then let their name be the first ones on the list. MR. LANGLEY: Thank you for that clarification. That was the problem I was having. Q. (BY MR. FAIRLESS) So now let me try with a clean question. What experts, industry experts pertaining to retail motor fuel devices did you communicate with prior to the inception of Operation Spotlight? A. My communications were with internal staff who analyzed the data, presented the data to me. The data showed a concerning noncompliance rate of more than 30 percent, compared to the statewide average of 5 percent. I made the decision to go forward with Operation Spotlight based on those discussions. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) So does that mean you didn't talk to any industry experts? I don't want to know who you talked to about crunching data or the data results that were obtained. I want to know did you talk to any industry experts with regard to retail motor fuel devices and the inspections that were about to take place.
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experts frequently about those. Q. (BY MR. FAIRLESS) Well, tell me what experts you believe your staff communicated with. MR. LANGLEY: Objection, form. MR. FAIRLESS: Why? Because you're saying he wouldn't know? MR. LANGLEY: No. Because the problem I'm having with this line of questioning is I think you're assuming that those industry experts have to exist outside of the TDA, and I'm not sure that's a fair assumption. MR. FAIRLESS: No. Right now -- I'm going to get there; but right now I'm not even there. I just -MR. LANGLEY: Well -MR. FAIRLESS: If he thinks it's an expert within the TDA, I want that person's name. MR. LANGLEY: Okay. Well, that was the problem I was having with your questions. MR. FAIRLESS: Okay. Q. (BY MR. FAIRLESS) Are you with me? It doesn't -A. Catch me up. Q. We're going to talk later about whether or not it's an outside expert. Right now, I'm saying if you

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MR. OWENS: Form. A. Yes. Q. (BY MR. FAIRLESS) Who? A. We communicate -- our staff communicates with experts all the time about -Q. Who? A. -- our protocols. Q. I sound like an owl. Who? MR. OWENS: Form. A. They communicate with counterparts around the country. Q. (BY MR. FAIRLESS) Who? A. Regulatory counterparts around the country. Q. Who? A. I'll defer to our staff to see what experts they communicate with. Q. So the answer is I don't know, I would have to defer to my staff to find out what experts, if any, we communicated with prior to the inception of Operation Spotlight? MR. OWENS: Form. Q. (BY MR. FAIRLESS) Fair? A. No, sir. Q. Okay. A. The answer is --

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MR. LANGLEY: You're wanting him to identify by name individuals? MR. FAIRLESS: Right, right. MR. LANGLEY: Okay. So if you can't do that -MR. FAIRLESS: Of if he wants to give me a position title like the assistant to the assistant to the substitute director of the assistant of deputy commissioner of agriculture. So make it a position, or make it a name. Name is my preference, position is second. MR. OWENS: Objection, form. A. I communicated with our staff and the team we have in place that helps us implement the national standards. Q. (BY MR. FAIRLESS) So who on your staff is it that you're recognizing as a retail motor fuel device expert in the industry -A. There were various staff -Q. -- that you spoke to -- you've got to let me finish -- that you spoke to and listened to prior to the inception of Operation Spotlight? A. Okay. There were various staff. I spoke with Stephen Pahl. I spoke with -- I spoke with David Kostroun.
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Q. Okay. Are you aware as you sit here today of any non-TDA employee industry experts that were consulted prior to Operation Spotlight? A. I'm not aware of any discussions about Operation Spotlight prior to it being conducted with anybody externally. Q. When did the TDA submit its budget request in 2008 for the 2009 year? A. Budget -- the legislative appropriation requests are submitted in the fall, late summer, fall of -- of even numbered years. Q. Right, which is why I asked about 2008. A. Okay. Q. And I don't want to just go though with late summer, early fall. I want to know if you can tell me in 2008, when the legislative appropriation request was submitted. A. It would have been in the fall or late summer of 2008, for the year -- for the -Q. And I guess -A. Wait a minute, wait a minute. The fiscal year 2009 -Q. Right. A. -- is what you're asking about? Q. Yes.
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Q. Those guys are industry experts? MR. LANGLEY: Now, he wasn't finished I don't think. MR. FAIRLESS: No, I know. And I told him earlier I was going to interrupt him from time to time and I apologized in advance. So here goes one of my interruptions. Q. (BY MR. FAIRLESS) Those guys, Stephen Pahl and David Kostroun, are industry experts to your way of thinking? MR. LANGLEY: Since you weren't finished with your answer, don't let him tie you down to his interpretation of your partial answer. THE WITNESS: Sure. MR. LANGLEY: And I'm instructing you not to allow him to do that. A. Our staff communicates with the industry experts. Those staff are Stephen Pahl, David Kostroun, Joe Benavides, and the various staff that oversee these programs. Q. (BY MR. FAIRLESS) Okay, thank you for that list. Now, tell me who are the industry experts that they spoke to. A. I don't know if they did, but I'll defer that to them.

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A. That -- the appropriation request for that fiscal year would have been in 2006, I believe. Let me think about this. Yeah, it would have been in -- in the Fall of 2006, would be when we submit our legislative appropriation request for the... Q. I'm not sure that's right. A. I might have to get a calendar here. Q. Why don't you think about that. A. I'm going to have to get a calendar out here. The legislature meets in the beginning of the odd numbered year. Q. Let me just ask it this way. Do you remember if there was a legislative appropriations request made in the Fall of 2008? A. There was. Q. And was that legislative appropriations request made after Operation Spotlight? A. Yes. Q. And were there as part of that legislative appropriations request, more funding requested for risk-based inspections? A. Yes, sir. Q. And would you view Operation Spotlight, as you sit here today, as an example of a type of risk-based inspection?

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MR. OWENS: Objection, form. A. I would consider the inspections conducted in Operation Spotlight to be based upon risk. Q. (BY MR. FAIRLESS) Now, do you remember a meeting occurring in May of 2008, involving you going to the Extension Center there in the Houston area and speaking to a bunch of regional directors and chief inspectors? A. I don't recall that. Q. Do you remember Operation Spotlight -- and, you know, perhaps it didn't have a name at the time -- but do you remember the inspections that would become Operation Spotlight being discussed as early as May of 2008? A. No. Q. When is it -A. They weren't. Q. You sound pretty confident of that. A. Say the dates again. Q. May of 2008. A. State the question again. Q. Operation Spotlight or the inspections that became Operation Spotlight, were they discussed as early as May of 2008? A. No.
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A. I don't recall. Q. Right. But if you don't recall and you don't have any idea, then how can you say it wasn't the communications or the media people? A. Because they weren't aware of it until the inspections were already conducted. Q. Okay. So you can limit the field some. Was it somebody within TDA that came up with name Operation Spotlight then? A. I don't know who it was. Q. So the only people that we know for sure who are outside the circle are the communications and the media people. A. Okay. Q. Everybody else is inside the circle? MR. OWENS: Form. A. What -- what -- what are you -Q. (BY MR. FAIRLESS) The circle of people who conceivably could have come up with the name Operation Spotlight. A. Okay. Q. The only ones you've -A. It would have been someone with TDA. Q. Okay. And is that the best you can do for me, or can we narrow the circle any more?
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Q. When was Operation Spotlight -- I know it was put into motion that Friday morning, July 18; but when was it decided by you we're going to go forward with Operation Spotlight? A. One or two days before is when I made the decision. Q. Okay. Did you speak to the regional directors for the TDA before Operation Spotlight's inception about Operation Spotlight? A. I wasn't even aware that it was called Operation Spotlight until it was underway, but I had discussions with the people who were going to implement it a few days before. Yes, sir. Q. Okay. So you found out it was going to be called Operation Spotlight during the operation itself? A. It was maybe the day before it started, maybe the day of. I don't recall. Q. Well, who came up with the name? A. I don't recall. Q. I take it it wasn't you? A. It was not me. Q. Was it somebody in the communications or the media department for the TDA or the Texas government? A. No, sir. Q. Who was it?

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A. I don't believe I can help you narrow it. Q. And did you have to give approval for the name, just like you gave approval for the operation itself? A. No, sir. Q. Did anybody have to give approval of the name, to your knowledge? A. No, sir. Q. So then I'm a little bit lost. Since nobody had to give approval for the name, it would seem to me that whoever came up with the name would have to be in a certain level position or higher if that person didn't have to have anyone's approval to name this unprecedented blitz that was taking place. A. No, sir, not necessarily. Our regional directors and various staff have authority to administer the programs within decisions we've made. Q. Right. But I wouldn't think that they would have permission to name this unprecedented blitz without at least some green light from a higher ranking official within the TDA. A. The name was not something we felt to be significant with regard to the scope of the noncompliance rate of 34 percent before the inspections. MR. FAIRLESS: Okay. I'll object as nonresponsive to everything after the words to the

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effect of the name wasn't that important. Q. (BY MR. FAIRLESS) So tell me about the meeting that you had with the regional directors and the chief inspectors. First of all, was it a face-to-face meeting; or was it you talking into a telephone into a room filled with people? A. What meeting? Q. The meeting -A. You asked early about a meeting I don't remember. Q. The meeting we talked about a few minutes ago where you were speaking to regional directors and chief inspectors prior to Operation Spotlight getting started. You said it was a couple of days before. MR. OWENS: Objection, form. A. No, sir. I didn't say that. Q. (BY MR. FAIRLESS) You didn't say that there was a meeting with regional directors and chief inspectors a couple of days before Operation Spotlight whereupon you spoke to them? A. I don't recall saying that. I recall saying I made a decision to implement Operation Spotlight a day or two before. I had discussions with the staff several days before that. Q. Okay. So when did you have discussions with
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Q. Well, I'll pick up on that in a minute, the trends you had noticed; but right now, I'm just talking about the meeting whereupon you spoke to the regional directors and the chief inspectors. You said it was a week or so -- over a week before Operation Spotlight, to the best of your recollection. It took place in Austin. And tell me what you spoke to the people about. A. I went to the meeting to ask Stephen Pahl some questions. Stephen utilized the opportunity with the regional directors there to -- I think he brought them into the discussion that we were having about some of these trends that I wanted to get verified. Q. So are you saying that at the time you sat off for the meeting, which was across the hall or across the town, that you did not have an Operation Spotlight in mind to talk to the regional directors and chief inspectors about? A. Yes, sir. Q. Okay. So the idea of these inspections only came to you once you were at the meeting receiving some sort of feedback and having some sort of dialogue with the regional directors and chief inspectors? A. No. That meeting, we didn't -- we didn't discuss the idea of conducting inspections. We simply
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the staff? A. With those staff you're talking about? Q. Right. A. And who are those? Q. Regional directors and -A. I have meetings with a lot of staff. Q. -- chief inspectors. A. Okay. That meeting would have probably been -it was several days before. I don't know, again, the exact dates; but it would have been several days, probably more than a week before. Q. And where was the meeting? A. It was in -- here in Austin at the Department. Q. So did the chief inspectors and regional directors come here? A. They were in town for another meeting. I'm not sure what that meeting was. Q. Do you have any idea? A. No, sir. Q. So while they were in town for another meeting, you got them together and talked to them about what would a week later become Operation Spotlight? A. I asked -- I went to their meeting looking for Stephen Pahl to ask him a question about some trends that I had noticed and wanted to get verified.

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discussed doing trend analysis, as I recall. Q. Okay. A. Analyzing the data. Q. What started all this off was I was asking you about a meeting wherein you talked to the regional directors and chief inspectors about what their roles were going to be in Operation Spotlight, this operation that was coming up. A. I don't remember that being what you were asking about. MR. LANGLEY: Objection, form. MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) Man, I'm hearing one thing come out; and everybody else is evidently hearing something else. Did you ever have a meeting with the regional directors and the chief inspectors before Operation Spotlight, where you talked about the inspections that were going to be performed and later known as Operation Spotlight? A. I had a discussion with Stephen Pahl where I asked Stephen some questions about some enforcement orders that had crossed my desk that were fairly egregious against a -- all against a given company, a single company. Stephen engaged the other folks in the

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room to help me answer some questions. Those people in the room happened to be there for another meeting. They were regional directors, chief inspectors, probably some other folks. I'm not sure who all was there. We discussed the notices of violation that the enforcement orders, I guess I should say, that I had questions about. MR. FAIRLESS: I'll object to all that as nonresponsive. Q. (BY MR. FAIRLESS) Did y'all talk about the inspections that were going to be done during July 18, 19, and 20 of only PWI locations? A. I don't recall that we did. Q. Okay. So then that's not the meeting I'm talking about. A. Okay. Q. I'm talking about a meeting other than this meeting with Stephen Pahl and the people that he was meeting with, wherein you spoke to regional directors and chief inspectors about inspections that were going to take place on July 18, 19, and 20. Was there ever any such meeting? A. I've had discussions with regional directors about -- and I certainly talked to regional directors about the operation before it commenced.
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subject. Q. But I don't get it. Are you saying there may have been -- there may have been such a meeting, but you don't remember as you sit here today; or are you saying, yeah, listen fellow, there was a meeting, but the chief inspectors weren't there, it was just the regional directors? I mean, I'm still -- you know, I've got a thousand other questions; but I can't get to them until I can figure out whether or not there was this meeting. MR. OWENS: Form. A. Sure. I recall a meeting where I went and asked Stephen Pahl some questions. There was a meeting going on with the regional directors and chief inspectors while I asked him the questions, and we got into a discussion with the group about those enforcement orders. Q. (BY MR. FAIRLESS) Okay. Was there ever any other meeting that you attended prior to the inception of Operation Spotlight, that was attended by regional directors and chief inspectors? A. I don't -- I don't believe so. Q. All right. So now tell me about the trends you had noticed that you referred to earlier. A. There were several trends. I noticed originally a few enforcement orders cross my desk with a
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Q. There you go. That's what I want to know. A. But I don't recall a -- the way you're portraying it as a meeting that I convened or went to. Q. So what -- are you saying there never was a meeting, you in isolated in conversations spoke to regional directors about what was to be Operation Spotlight; but there never was really a formal meeting where they were present along with chief inspectors and y'all talked about the inspections? MR. OWENS: Form. A. I know there were meetings. I don't recall if I participated in the meetings talking about -- I know I wasn't involved in meetings talking about the protocols and how we would implement Operation Spotlight consistent with the protocols that we had established. Q. (BY MR. FAIRLESS) Well, then maybe we can clear it up pretty quick. Can you, Drew DeBerry, say listen fellow, I was never involved in a meeting with regional directors and chief inspectors there together where I spoke to them about what was to be the inspections that made up Operation Spotlight? A. I can't say that. I communicated with the regional directors and chief inspectors from time to time, more directly with the regional directors; and it wouldn't be uncommon for me to talk to them about this

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given -- a single company violating one of our most egregious penalties, the predominance threshold in the weights and measures program, several times. I believe they were even far above the predominance threshold. I think, as I recall, they were upwards of 80 percent noncompliant at a few locations with that same company. That was the first that I recall. Q. Okay. Well, let me make a note of that. That's Trend No. 1. So tell me what documents you had that supported Trend No. 1; or if you had somebody else do some homework for you, tell me about that. MR. OWENS: Objection, form. A. I -MR. FAIRLESS: What's the basis of that? MR. OWENS: You asked two questions and -MR. FAIRLESS: Okay, okay. MR. OWENS: And homework is argumentative. Q. (BY MR. FAIRLESS) All right. I want to know what documentation you had supporting what you just told us was the first trend. A. Enforcement orders with notices of violation, and I believe they were complete with a check from Petroleum Wholesale paying the penalty.

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Q. And were all the enforcement orders pertaining to PWI? A. Yes, sir. Q. And are these the enforcement orders, NOVs, and check that you carried with you to this meeting that you talked about where you were going to ask some questions of Stephen Pahl and y'all kind of threw it out to the room? MR. OWENS: Objection, form. A. There were enforcement orders. Q. (BY MR. FAIRLESS) Right. But I'm saying are those the enforcement orders that you talked about at that meeting that you went to to see Stephen Pahl and it just so happens he was meeting with regional directors and chief inspectors? A. Right. The ones I just described, yes. Q. Yeah. They're the same -A. Yes. Q. -- enforcement orders? A. Yes. Q. And how many enforcement orders did you have, Mr. DeBerry? A. I don't -- I don't recall. Q. Well, I mean, did you have two or did you have 22 or 222?
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carrying around for PWI that pertained to bulk diesel, or were they all retail motor fuel devices for gasoline operated vehicles? A. I don't recall. Q. Did it matter to you? A. What mattered was the 80 percent of the pumps inspected triggering being tilted in favor of the company. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Are you saying that these five enforcement actions that you had, each supported 80 percent predominance violations? A. They supported a predominance violation as I recall, a violation of the predominance threshold, which was set at 60 percent, I believe, at the time. And as I recall, some or all of these were over 80 percent noncompliant. Q. Did you take any enforcement orders from entities other than -- that pertained to entities other than PWI? A. No, sir. Q. On July 18 of 2008, you had enforcement orders that showed up on your desk for a single entity that had a check associated with a payment of the penalties for
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A. It was a handful or less. Q. A handful or less? A. As in five or less. Sorry. Q. Okay. And did all of those enforcement orders pertain to gasoline retail motor fuel devices? A. I recall they pertained to retail motor fuel devices. Q. Right. Which underscores why I asked did it pertain to gasoline retail motor fuel devices, or did it pertain to bulk diesel as well? Do you know what bulk diesel is? A. Yes, sir. MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) What is bulk diesel? A. What is diesel? Q. What is -- yeah. Do you know what bulk diesel is? A. We refer -- we refer to bulk flow meters as the retail fuel dispensers that flow at a rate for bulk sale. Q. Right. That your commercial trucks would fill up at? A. Right. Q. All right. Well, then that's what I want to know. Were there any enforcement orders that you were

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$10,000. Do you remember that? MR. OWENS: Form. A. I don't remember that particularly. Q. (BY MR. FAIRLESS) Do you remember any -- is that not -- let me try again. Is that not noteworthy for the Deputy Commissioner of Agriculture to remember a single check from an owner of retail motor fuel devices in the amount of $10,000 or more for penalties? A. It's a sizable amount. I'm more concerned with what the violation was. Q. Okay. Assume the violations were for predominance rule violations, retail motor fuel device inaccuracies. MR. OWENS: Object -Q. (BY MR. FAIRLESS) -- so does that make it more noteworthy to you then? MR. OWENS: Object to the form. A. Not necessarily. Q. (BY MR. FAIRLESS) Well, how much -A. I would be interested in knowing the details, but I -- that's what I focus my attention on is what was the violation. Q. And if you had any questions about what the details were, then you could certainly talk to the people that handle such details within the TDA and you

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could expect answers from them, fair? A. Correct. Q. Now, the checks that you looked at in conjunction with these enforcement orders, were they checks to pay the penalties that were set forth in the notices of violation associated with the enforcement orders? A. Yes, sir. Q. And these checks of one to five or that -- I should say the checks that went along with the enforcement orders, the handful or less, five or less, how much did those checks add up to? A. I don't recall. Q. Do you have any idea? A. No, sir. Q. If those checks added up to $5,000 or less, would it be fair to say that certainly a check for the same type of violations that was $10,000 or more, would certainly catch your attention? MR. OWENS: Objection, form. MR. LANGLEY: Form. A. All right. Do you mind saying that again? It was kind of long. Q. (BY MR. FAIRLESS) Yeah. If these checks that went along with these enforcement actions that you saw
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Wholesale violating the predominance threshold, which I used to ask our staff to analyze data about how this particular company compares to the statewide average for compliance and to look at if there are any other companies out there that have a significantly higher noncompliance rate. The data was analyzed, and what was brought back to me was a noncompliance rate for this particular company of more than 30 percent compared to a statewide average of 5 percent. As I recall, this company had a history of violating the predominance threshold at a much higher rate than other companies in the state. Q. I'm making a list of all your reasons. Is that it? A. Those are the ones that come to mind right now. Q. So the possible trends supported by the several -- the several enforcement orders, those are the orders that you told me about earlier that you had up to a handful, so five or less? MR. OWENS: Objection, form. A. Right. Q. (BY MR. FAIRLESS) Well, if there was something else that indicated this possible trend, then I want you to tell me what it was. But as I'm understanding what
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for PWI was $5,000 or less and -- I'll ask it differently. Do you remember any enforcement actions, notices of violations, or checks coming across your desk at or about the time of Operation Spotlight that were for penalties of $10,000 or more? A. I don't recall the details of enforcement orders I sign. I sign several every day. Q. Was there some reason why you wanted to target PWI in the inspections that were going to take place on July 18, 19, and 20? MR. OWENS: Form. A. I wouldn't say -- I wouldn't use the word "target." Q. Actually, you would; but... A. Okay. MR. OWENS: Form. A. Do you want to ask it again, please, sir? Q. (BY MR. FAIRLESS) Yeah. Is there some reason you targeted PWI as opposed to other owners of retail motor fuel devices for your blitz July 18, 19, and 20 of 2008? A. There were several reasons, beginning with what we identified as a possible trend with several enforcement orders crossing my desk from Petroleum

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you're saying, it was these enforcement orders, the associated NOVs, and the associated check or checks that triggered this trend analysis, fair? A. That was the first -- the first thing I noticed, which led to an analysis of data compared to -to compare this company to the statewide average. And in Texas, we have a high compliance rate for retail motor fuel dispensers of 95 percent. This particular company had a noncompliance rate of more than 30 percent compared directly to that statewide average. MR. FAIRLESS: Everything after the first sentence I'll object to as nonresponsive. Q. (BY MR. FAIRLESS) I'm going to serve up the softball in a minute or the umpteenth time, and you can whack it out of the park about the -- what you believe the data results to be. But right now, I'm just trying to figure out what written documents did you have in your hand when you were considering this trend analysis. MR. LANGLEY: I object to the form as to the softball comment. MR. OWENS: And form, repetitive. A. The documents that I had that led to my requesting of an analysis of the data -Q. (BY MR. FAIRLESS) Ding, ding, ding. That's it.

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That's the question right there. A. Yes, sir. And I'm sorry I've -- I thought I had answered that, but I'm happy to say it again was the enforcement orders that showed several egregious violations of the State of Texas laws. Q. Anything else? The NOVs, you evidently now didn't have them at the time; the checks that were for payment of the penalties associated with those enforcement orders, you didn't have those? MR. OWENS: Form. MR. LANGLEY: Form. A. Normally, when I -- when an enforcement order crosses my desk, it includes the notice of violation. I believe there's a stipulation to waiver of a hearing that the regulated entity signs and proof that the enforcement order has been paid. MR. FAIRLESS: Okay. I object to all that as nonresponsive. Go ahead, Videoman. THE VIDEOGRAPHER: This is the end of Tape 2. Off the record at 11:54. (Recess taken) (Exhibit No. 451 was marked and is attached hereto) THE VIDEOGRAPHER: This is the beginning of Tape 3. Back on the record at 12:55.
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A. Well, I have a standing request for staff to be identifying any -- be analyzing data and seeing if there are any trends to make sure that we are acting on any of those trends. I've had questions on other notices of violations. Q. My question -A. Other enforcement orders. Q. Okay. So the answer to my question is, yes, I have made a specific request for a trend analysis pertaining to retail motor fuel device owners? A. I believe, yes, sir. Q. Okay. When was the last time that you did? A. I don't... Q. Give me the circumstances as you recall them. A. I don't -- I just recall that I've seen egregious violations that I wanted to have some data analyzed, and we've looked at data in other -- on other companies. Q. Give me the name of as many other companies as you can think of that you had someone that was in your department do a trend analysis on for purposes of retail motor fuel devices. A. We've never had another company that's had the level of noncompliance that Petroleum Wholesale had, so I can't recall any others that -- no other company name.
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Q. (BY MR. FAIRLESS) Are you able to identify for me the five enforcement orders with NOVs saying -- with check or checks that you saw that pertain to PWI that you maintain led to your request for a trend analysis? A. I might be able to identify them. I don't -Q. Well, that's what I'm wondering. I mean, if I were to pull some out and lay them in front of you, are you going to be able that say, yep, that was one of the five I saw or, no, that was not one of the five? A. I don't know. Q. I don't want to go through that whole exercise like we've done some things this morning, if you're simply going to tell me, "I'm not going to be able to tell you, Mr. Fairless. I see a lot of those things. I see them day after day. I wouldn't know if that's one I say or not." So I'm asking you would you be able if I showed you to tell me, yep, that's one of the enforcement orders I saw that led to me requesting a trend analysis? A. I don't know. As many as I see in a day, it's unlikely I would be able to identify a particular one. Q. Okay. Have you ever asked for a trend analysis for any other company that was involved in the sale of retail motor fuels?

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MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) I didn't ask you for any other company name that had the level of noncompliance that you perceived PWI to have had. What I asked you was simply the names of the other companies or as many of those names as you can remember that you specifically had someone on your staff do a trend analysis of pertaining to retail motor fuel devices. A. I've -- I don't recall any other particular names -Q. Okay. A. -- that rose -- that had the noncompliance rate that would leave the company name in my head. MR. FAIRLESS: Everything and including the one word before "rose" I'll object -- no. The first sentence or the first segment of that answer is fine. Everything else I'll object to as nonresponsive. Q. (BY MR. FAIRLESS) Do you remember what the check or checks added up to that you had with you when you went to see Stephen Pahl and he happened to be with the regional directors and chief inspectors? MR. OWENS: Form. A. No, sir. Q. (BY MR. FAIRLESS) Do you -- can you put me in a

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ballpark as to what the check or checks added up to? A. No, sir. Q. If somebody wants to fuss about a notice of violation that they've been issued, where must they do that? A. There's an administrative process the State has. Q. There's an administrative hearing that's required, correct? A. It's allowed if they -- if there's a -- if the respondent chooses to exercise that. Q. Okay. And where does the administrative hearing take place at? A. It could be with the State Administrative -with the State Office of Administrative Hearings. The Texas Department of Agriculture has hearing judges, hearing officers. Q. Where? Amarillo or Dallas or Austin? A. I'll defer to the staff that are involved in those hearings. Q. Well, don't you look at these orders all the time? I thought you said earlier I see those orders every day. Did I misunderstand that? A. No, sir. Q. Okay. So you see these orders every day. You
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administrative hearings. I'm familiar that some programs might be different than other programs. Q. Okay. What program do you call the retail motor fuel device arena? A. Well, we administer programs that regulate motor fuel devices through our weights and measures program. We also regulate fuel quality that has to do with these locations. Q. Do you know what a stipulation and waiver of hearing is? A. Generally, yes, sir. Q. Well, I mean, are stipulations and waivers of hearing documents that you see? A. Yes, sir. Q. And so it's got the word "hearing" in the title. Where is that hearing to take place if it's not waived? MR. OWENS: Objection, form. A. I'll defer to the staff that administer those programs. Q. (BY MR. FAIRLESS) You don't know? A. I'll defer to the staff. We have an able workforce at the Department of Agriculture that will make sure that anyone who seeks a hearing gets the fair hearing they're entitled to.
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Q. I'm sure you do have an able staff, but I'm not deposing them today. I'm deposing you. And right now, I want to know: Do you know where the hearing is to take place if someone protests a notice of violation? MR. OWENS: Form. A. I'm -- forgive me. I thought I'd answered that. No. That's a detail that I defer to the staff on. Q. (BY MR. FAIRLESS) How many notices of violation are protested? Either you can give me a number or -and you can pick the time period you want to focus on, a number a day, a number a week, a number a month. You can tell me a percentage. Oh, Mr. Fairless, I can't tell you a specific number; but I can tell you that 25 percent of all notices of violation are protested. So are you able to give me either a number count of protests over a given period of time or a percentage of notices of violation that are protested over a given period of time? A. I defer that to the staff that would be able to -- that would be familiar with those requests for hearings. Q. That staff reports to you? A. Yes, sir. Q. Okay. And you generally have some idea of what

know there's a provision in there that allows for an administrative hearing, correct? A. I suspect if -- I suspect some of them do. I suspect maybe all of them do. Q. You don't know? As the Deputy Commissioner of Agriculture, you don't know? A. I'd be happy to take a look at what you're looking at there, and see if it's in there. Q. I'm going to show it to you in just a second; but right now as part of an evaluation of your creditability, I'm also wanting to test your recollection and knowledge of the documents that evidently you relied upon when asking for a trend analysis pertaining to my client. MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) So do you know without me showing you this document -- don't worry, this document is coming your direction -- but do you know before it gets there? MR. OWENS: Form. Q. (BY MR. FAIRLESS) Let me start with a clean question. Do you know where the administrative hearings are to take place if someone wants to protest a notice of violation? A. I don't know that there's a given place for

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the staff that reports to you is responsible for, correct, and what they're doing? A. Yes, sir. Q. Well, I want you to give me and 12 of Harris County's finest, some idea of how often notices of violation are protested. A. I'd be happy to get with the staff, and get you that; but I don't have that information. Q. Okay. Will you get with your staff and provide that to your lawyer, who's here in the room today; and then he can get it to me. But in the meantime, in the meantime, can you put me and the jury in a ballpark? MR. LANGLEY: Objection, form. A. No, sir. Q. (BY MR. FAIRLESS) So you wouldn't know as you sit here today, whether it's 1 or 2 percent of notices of violation that are actually protested to the point of going through a formal hearing versus whether or not it's a number as high as 25 or 50 percent? A. I know that all of our notices of violation result in the process being afforded to the respondent. To be more specific than that, I defer that to the appropriate staff. Q. See, it's that whole process being afforded to
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MR. OWENS: Form. A. I don't have the information to answer your yes. Q. (BY MR. FAIRLESS) Okay. Let me show you what's been marked as Exhibit No. 451. MR. OWENS: Is that a new exhibit, Randy? MR. FAIRLESS: It is. MR. LANGLEY: Thank you. Q. (BY MR. FAIRLESS) The top document is an order, correct? A. Yes, sir. Q. Is that what you were referring to earlier as an enforcement order? A. Yes, sir. Q. And is this document -- the first two pages, which is referred to as the enforcement order, is that signed by you? A. It is. Q. And is that dated July 17 of 2008? A. It is. Q. And would that have been the first day of Operation Spotlight? A. I'll -MR. LANGLEY: Objection, form. A. -- defer -- I don't remember the exact date.

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the respondent that I'm looking to explore now. I want to know how many of those respondents, to use your word, asked to be afforded of the process, to use your word, with regard to contesting a notice of violation. MR. LANGLEY: Objection, form. MR. OWENS: Form. A. I've been answering your question I feel like, so maybe help me understand it a little bit more. Q. (BY MR. FAIRLESS) Yeah. I want to know how many people take you up on this protesting of the notice of violation. Is that something that rarely ever happens? Can you at least give me that? Or is it something that happens all the time? Can you at least give me that? MR. OWENS: Form. MR. LANGLEY: Objection, form. A. I -- I will defer that to the staff that works with those cases. Q. (BY MR. FAIRLESS) So the answer is you don't have any idea, as you sit here today, whether it's 1 percent or 99 percent that take the issue of notices of violation to the protest stage? MR. OWENS: Form. MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) Is that right?

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Q. (BY MR. FAIRLESS) If the testimony and the evidence in this case is that Operation Spotlight started on July 17, 2008, which was a Friday, do you know of anything that disputes that? MR. OWENS: Objection, form. MR. FAIRLESS: Geez Louise, you mean to tell me we can't even agree that Operation Spotlight started on a Friday? That's what we've been reduced to? MR. OWENS: Not on the 17th; and that's what your question said, the 17th. You might talk to Kelley to get your dates straight. MR. FAIRLESS: Oh, because the date's wrong? MR. OWENS: Because your question is wrong. MR. FAIRLESS: Oh, okay. All right. Yeah. Sometimes I forget what case I'm in, so let me regroup. Q. (BY MR. FAIRLESS) Do you know Operation Spotlight to have started on July 18th, 2008, which was a Friday? A. I recall that on Friday we conducted some inspections on the case that you're talking about. Q. Do you not want to call those inspections Operation Spotlight for some reason?

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A. No, sir. There -- what we were doing on Friday was an inspection of a sampling of the company's fuel pumps. Q. What you were doing on Friday was the first phase of a targeted blitz against a single entity that owns retail motor fuel devices, fair? MR. LANGLEY: Objection, form. MR. OWENS: Objection, form. A. What we did on Friday was conducted inspections on a sampling of the company's fuel dispensers. At the time, we held out hope that that was going to be -those -- that sampling was going to be all that would be inspected. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) And remind you that you're under oath when you say we held out hope. Really, Mr. DeBerry, do you want to go with that? MR. OWENS: Objection, form. MR. LANGLEY: Don't -- wait. MR. FAIRLESS: No, I'm just saying come on now. MR. LANGLEY: Well -MR. FAIRLESS: Held out hope? MR. LANGLEY: You may not like his answer
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one? A. I don't recall the details of a lot of the enforcement orders, so I -Q. Do you recall -MR. OWENS: You can finish your answer. Q. (BY MR. FAIRLESS) Yeah, go ahead. I can't ever tell when you're done, but you go ahead. I started my question too quickly. A. This is a sizable penalty. Q. Okay. But I'm not asking you whether or not it's a sizable penalty. I want to know can you recall another penalty of $10,000 or more to an owner of retail motor fuel devices besides this one to Valero, which you signed on July 17th, 2008? A. I seem to recall since the penalties were increased in 2007, I think is when we increased the penalties, I seem to recall that the amount went up significantly on these penalties. This amount is sizable, and I can't say I recall the amounts of any of the... MR. FAIRLESS: I'll object to nonresponsive everything before the sentence I can't -whatever that last sentence was -- I can't recall any of them. Q. (BY MR. FAIRLESS) Do you know how many retail
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and -MR. FAIRLESS: For Pete's sake. MR. LANGLEY: -- you may not like the fact that the jury may appreciate his answer. MR. FAIRLESS: They may. MR. LANGLEY: But ask -- ask a clean question. MR. FAIRLESS: Okay. MR. LANGLEY: Please. MR. FAIRLESS: Yes. Q. (BY MR. FAIRLESS) This document, this enforcement order that you signed pertaining to Valero, was signed the day before Operation Spotlight began, correct? A. It was signed on July 17th, 2008. Q. Do you know, as you sit here today, whether or not that's the day before Operation Spotlight began? MR. LANGLEY: Objection, form. A. I don't recall the date. I'm sorry. Q. (BY MR. FAIRLESS) How much is this enforcement order for? A. 10,250. Q. Are you aware of a single notice of violation amounting to $10,000 or more in the history of your time as Deputy Commissioner of Agriculture, other than this

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motor fuel devices Valero has in the great state of Texas? A. No, sir. Q. Are they a big player in the retail motor fuel device industry? A. Yes, sir. Q. Are they one of the biggest, if not the biggest; or do you know? A. I don't know how they rate in comparison to others. Q. And do you know what the violation was that prompted this $10,250 enforcement order? If you don't know from your recollection, why don't you take a look at Page 5, which is the NOV, the Notice of Violation. A. That's what I'm looking at. This order is connected to a violation of the predominance threshold. Q. So what does that mean? That the violation is that Valero had their pumps predominantly in favor of the pump owner? A. That's correct. Yes, sir. Q. And what was the percentage that had purportedly been found to be in favor of the pump owner? A. It says here 80 percent of your pumps set in favor of your business. Q. Does it -- then yours says something different

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than mine, which I thought was a copy of yours. The one that I have says more than 80 percent of your pumps set in favor of your business. A. Okay. It says "more than." Q. And so did you ask your staff to run an analysis on Valero in light of this? A. I don't recall. Q. Did you ask your -A. Possibly. Q. I'm sorry? A. Possibly. Q. Okay. So if you don't recall, who would know the answer to the question of whether or not you asked someone on the staff to run an analysis on Valero? A. The staff I usually speak to about this would be Stephen Pahl or David Kostroun or Joe Benavides. Q. Okay. Was this $10,250 fine to Valero contested? A. I assume there was no -- they stipulated to the facts of the case. Is that -- is that what your question is? Q. That's what will answer my question. Are you on Page 4, where it says "Stipulation and Waiver of Hearing"? A. Yes, sir.
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the stipulation and waiver of hearing, fair? MR. LANGLEY: Form. A. I'm not aware of anybody asking to do that. So I'm not familiar with what you're asking, a situation like what you're asking. Q. (BY MR. FAIRLESS) Are you aware -- and you can only rely upon your personal knowledge for this. A. Right. Q. Are you aware of anyone ever receiving permission to change the wording on a stipulation and waiver of hearing, or not sign it at all and just pay the penalty? A. I'm not aware. Q. All right. If you take a look at the next to the last page near the bottom, this again is the notice of violation. Do you see it says what you must do in response to this notice? A. Yes, sir. Q. And there's two choices. You can either accept the Department's determination by paying the recommended penalty or contest the occurrence of the violation or the amount or both, correct? A. Correct. Q. And then if you take a look at the very next page, do you see in bold where it says -- and it's the
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Q. Do you see that? Yes? A. Yes, sir. Q. Okay. By reviewing the stipulation and waiver of hearing that you see before you, does that indicate that Valero is stipulating to the penalty and the violation and is waiving the hearing? A. Yes, sir. Q. And the penalty that they stipulated to was $10,250? A. I believe so. Yes, sir. Q. And they stipulated to all findings set forth in the NOV? A. Yes, sir. Q. Let me ask you this. If somebody wants to haggle a little bit about the language -- for instance, you give them a penalty and it's let's say $2,000. And they say, well, I didn't do it and I want to fuss about it; but, you know, it costs me more money to fuss about it than it would to just pay it. So can I just pay it and change some of the language on the stipulation and waiver of hearing? Can they do that? MR. LANGLEY: Objection, form. A. I'm -- I'm not aware they can. Q. (BY MR. FAIRLESS) It's your belief that, look, if you're going to pay the penalty, you've got to sign

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seconds paragraph from the top. We're on the last page. A. Hang on. Q. Do you see where it says if you choose to contest the Department's determination? A. Yes, sir. Q. And if you choose to contest the Department's determination, does it talk about where the hearing is going to take place? Next paragraph down. A. It does. Q. And where is the hearing to take place? A. In Austin, Texas. Q. Okay. Now, go back to the previous page, the next-to-the-last page; and let's look at that No. 1, which was you can, if you want, simply accept the Department's determination by paying the recommended penalty. And what must you sign and return if you want to pay the penalty? A. The stipulation and waiver of hearing, you must sign and a personal or business check or cashier's check or money order in the amount of. Q. Sure. Okay. So according to the notice of violation itself, if you're going to -- if you want to just pay the notice of violation and be done with it, pay the penalty, well, then you must sign the stipulation and waiver of hearing and return it with

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your check, correct? A. That's the way I understand it. Q. And this kind of goes back to the questions I was asking you earlier, which I'm just curious, to say the least, as to how often somebody actually goes to Austin to contest a notice of violation pertaining to a retail motor fuel device. MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) So now given what we've talked about with -- or I guess pertaining to this exhibit that you have in front of you, has any of this refreshed your recollection as to how many people actually make the trip to Austin to fuss about the notice of violation? MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) Or would I still have to look to your staff for that? MR. OWENS: Form. A. I'm not sure that what you just said is what this says. But, no, this conversation has not refreshed my memory of any data I didn't have before. Q. (BY MR. FAIRLESS) Okay. What part of what I said did you think misinterpreted this document or this series of documents? MR. LANGLEY: Objection, form.
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Q. Okay. Do you know how often it is that -- that someone is found to be under extraordinary circumstances such that the hearing can take place outside of Austin? A. I suspect that's a determination for the law judge to make. Q. And I guess I'm just trying to find out do you know of any such hearings ever taking place outside of Austin; and if so, how off does that happen? A. It says here that the hearings are held by the State Office of Administrative Hearings, so I can't speak to their statistics. Q. No. But you're somebody who evidently used some notices of violation to trigger a request for a trend analysis, correct? A. That's correct. Q. And what I'm trying to figure out is did you ask any questions or did you do any investigation beforehand to get it straight in your own mind how many notices of violation are actually protested, how many people actually come to Austin, how often is there extraordinary circumstances where we go to them such that somebody actually goes through a formal hearing process to talk about penalties and notices of violation that they've received? A. I didn't ask for any of that data.
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A. The -Q. (BY MR. FAIRLESS) Well, I mean, if I said something wrong, I want the opportunity to correct it. So you help me out if I misspoke on something. A. I'm not sure you have to come to Austin to express your concern or opposition. It says you should choose to do so in writing. Q. Oh, you're reading that paragraph on the last page, the first one? A. Yes, sir. Q. That's to let them know that you're going to contest it, you have to advise them in writing. A. Right. Q. The hearing itself takes place in Austin. A. Right, okay. I'm -MR. LANGLEY: Objection, form. A. I thought that's what you were asking. MR. LANGLEY: Are you going to include the entire sentence there? MR. FAIRLESS: Oh, yeah. I see what you want. Q. (BY MR. FAIRLESS) The hearing itself takes place in Austin, absent extraordinary circumstances, correct? A. Correct.

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Q. Well, were you alarmed on July 17, 2008, when you saw that Valero, one of the largest owners of retail motor fuel devices in the state of Texas, was stipulating to penalties, stipulating to a violation where more than 80 percent of their pumps were purportedly shortchanging consumers and was attaching a check for $10,250? MR. OWENS: Objection, form. A. I'm alarmed by every violation of the State's laws. Q. (BY MR. FAIRLESS) Well, did you follow up on this order and this notice of violation and this receipt of check by requesting a trend analysis like you did when you had notices of violation pertaining to PWI? MR. LANGLEY: Objection, form. A. I may have. I don't recall if I did it on this particular case. Q. (BY MR. FAIRLESS) Okay. Well, how would I know? How can I find out whether you did? Because you can't remember whether you did or you didn't, and I want to know how can I find out? MR. LANGLEY: Objection, form. A. Perhaps there are other staff that would help remember that. Q. (BY MR. FAIRLESS) Suppose that there is and

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suppose I've taken depositions from some of them and nobody else remembers you requesting any additional information pertaining to Valero, then would it be safe to say that you didn't request any additional information? MR. OWENS: Objection, form. A. No, sir. Q. (BY MR. FAIRLESS) Can you think of any resource that you would go to to find out whether or not you requested a trend analysis on Valero following receipt of these documents in this Exhibit 451? A. No, sir. Q. All right. Exhibit 332 is an exhibit that -A. Do you want this back, or do I keep this? Q. No, you can hang on to it right there. Do you see Exhibit 332 there? A. Yes, sir. MR. FAIRLESS: And sorry, John, I don't have another copy. MR. LANGLEY: That's all right. MR. OWENS: I've got mine. If it's premarked -- if we've used it before, I think I've got it. Q. (BY MR. FAIRLESS) The -- this says at the top in the printed portion, it looks like this maybe is
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Q. I bounce around a lot; and so if that ever confuses you, stop me and tell me your confused. Now I'm fixing to bounce back to the document we were talking about before, that Exhibit 451. And I want to ask you did you when you were requesting your trend analysis, ask to see a listing of all penalties that had been paid in conjunction with notices of violation for the owners of retail motor fuel devices? A. One more time. Q. Yeah. Did you say to -- first of all, who did you ask for the trend analysis? A specific name or person. A. I asked Stephen to coordinate it. Q. Stephen Pahl? A. Pahl. Yes, sir. Q. Okay. So did you -- did you tell Stephen Pahl, Stephen, I also want you to look back and for the last year, I want you to tell me how much each owner of retail motor fuel devices has paid in fines that are associated with notices of violation? A. No, sir. Q. In other words, did you want to know how much did Valero pay the previous year versus PWI versus RaceTrac versus any of the other owners of retail motor fuel devices in Texas?
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coming off of some printed notepad. Is that what this is? A. It's note cards. Yes, sir. Q. Right. It says Texas Department of Agriculture, Drew DeBerry, Deputy Commissioner, and that's in print; and then at the very bottom of the card, I guess, it has the address, correct? A. Yes, sir. Q. And then there's some handwriting in between there, between top and bottom of the card. Is that your handwriting? A. It looks like it is. Yes, sir. Q. And the TS, does that mean Todd Staples? A. Possibly. Yes, sir. Q. Well, if not Todd Staples, then who else? A. I don't know. I would suspect it means Todd Staples. Q. All right. And do you communicate with Todd Staples by giving him note cards like this, or would this typically be notes you made to yourself to remind you when you talk to Todd Staples to tell him these things? A. I suspect this was a note, but I don't remember what it was used for. It was a note from myself to remind me what to -- what to talk to him about.

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A. The amount of the penalty is of less concern than the penalty and what the violation was; but, no, sir, I didn't request that. MR. FAIRLESS: Okay. Everything before, "No, sir, I didn't request that," I'll object to as nonresponsive. Q. (BY MR. FAIRLESS) Did you -- well, what did you ask for? What was the specific trend that you wanted analyzed? A. The rate of noncompliance. The rate at which this company's fuel pumps were tilted in favor of the company when presented to our inspectors for inspection. Q. Okay. I want to talk to you about the rate of noncompliance; but, first of all, I want to move into something you just said that I've seen in quite a bit of TDA literature, "tilted in favor of." When y'all send a TDA inspector to a gas station and he does a test, I don't understand the use of the words "tilted in favor" of versus "found in favor of." Do tilted and found mean the same thing? A. Yes, sir. Q. Right. Because really the only thing the inspector can determine is assuming -- first of all, you have to assume with me for the test results to be reliable, the test itself and the manner in which it was

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performed has to be reliable, correct? A. Yes, sir. Q. Okay. So if the test was reliable, then the only thing the tester can really tell is whether or not the findings as found were shortchanging consumers, correct? A. All right. The first part of that... Q. Yeah. Can the inspector really determine anything with an accurate test, other than the findings are or are not found to be in favor of the station owner? A. An inspector can find a fuel pump that would be found in favor of the company or the customer. Is that... Q. I'm just trying to figure out why it is that you folks at the TDA were using tilted in favor of in your documentation as opposed to found in favor of. MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) When you were referring to my client, PWI. A. If a pump is found in favor of, that pump is tilted in favor of, I guess, is the thought process behind the use of that term. Q. So you didn't intend the connotation of tilted in favor of to be that it was intended by the owner that

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MR. FAIRLESS: I'm going to object to all that as nonresponsive. Q. (BY MR. FAIRLESS) We're not there yet. I'm not there yet to ask you about what your opinion of the results ultimately culminate into. A. Okay. Q. I'm just asking what was meant by tilted in favor of. Did you mean to convey any sort of intentional connotation, or were you simply meaning to say found in favor of? A. Well, forgive me. I feel like I've answered this question. Q. Try me one more time. A. Yes. Yes, the use of the word tilted and found, I was comfortable with the way you described it. Q. Okay, good enough. Has anybody told you that PWI intentionally set their pumps to shortchange Texas consumers? MR. OWENS: And if that communication came from an attorney, you're instructed not to answer it. MR. LANGLEY: Same instruction. MR. FAIRLESS: All right. I don't want to know what your lawyers told you. MR. LANGLEY: He's asking you -- excuse
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that pump be in favor of the station? MR. LANGLEY: Objection, form. A. I don't -- our role with determining intent is simply to go out and conduct inspections consistent with the protocol and let the inspection results speak for themselves. Q. (BY MR. FAIRLESS) And inspections that were done, assuming any were, that were consistent with the protocol would only tell you whether or not the pumps were found in favor of the business or the consumer. Not whether or not there was some sort of intentional setting of the pumps. Fair? MR. LANGLEY: Objection, form. A. An inspection in and of itself might not. Q. (BY MR. FAIRLESS) And so you and the folks at the TDA were not trying to convey intent when you used the term tilted in favor of. Fair enough? A. I don't -- I think maybe you're suggesting there's more in that word than I'm thinking there is. I'm not understanding what you're -- what you're asking. Q. I'm asking you is there more to that word, or does tilted in favor of simply mean found in favor of? A. Well, I think the results of the data analysis and the trend analysis, the inspections, all yielded results that suggested that it could be intentional.

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me. He's asking you about communications other than with lawyers. MR. FAIRLESS: Right. A. One more time. Q. (BY MR. FAIRLESS) Yeah. I'll break it down a little bit in the question. Has anyone that works presently for PWI ever told you that they were calibrating pumps to shortchange Texas consumers? A. No, sir. Q. Has anybody who has ever worked for PWI told you that they were calibrating pumps to shortchange Texas consumers? MR. LANGLEY: Objection, form. MR. FAIRLESS: What's wrong with -- oh. Anyone other than lawyers -MR. LANGLEY: To the extent of he knows -- no. And to the extent that he knows whether they used to work for PWI or not. You're assuming he has that knowledge. MR. FAIRLESS: Okay. All right. Q. (BY MR. FAIRLESS) Has anyone that has ever worked for PWI, to your knowledge, ever told you that PWI was calibrating pumps to the negative to shortchange Texas consumers? A. Not that I -- not to my knowledge.

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Q. Has anyone other than a lawyer that represents or speaks for the AG's Office or the TDA, I want to take those people out of the equation. Are you with me? Take all lawyers out of the equation. Now, has anybody ever told you that PWI was calibrating pumps to the negative to shortchange Texas consumers? A. My hesitation on answering is based on the fact that the inspection results yielded some discussion about whether there was intent, so I -Q. I'm not asking you for your interpretation of the inspection results, which is where that answer is going. A. Okay. Q. I'm asking you the words -- I'm thinking of that movie Rush Hour, "Do you understand the words coming out of my mouth?" Did you ever see that show? A. No, sir. Q. I want to know has anybody ever told you that PWI was calibrating pumps to the negative to shortchange Texas consumers. And, again, we've taken lawyers out of the equation. I don't care or want to know what they have told you. A. I don't recall any specific conversation when anyone told me that.
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problems with Sunmart fuel pumps, he became knowledgeable of... Q. Arthur Ramirez. A. Arthur Ramirez. They would have discussions from time to time. I don't -- I don't have any idea for how frequently that would happen. And -- and Stephen said that they did have discussions about what causes the high rate of problems with Sunmart fuel pumps. Q. So what did he tell you Arthur told him that shed some light on this high rate of problems? A. Stephen said that Arthur indicated he was just doing what he was told. Q. So did Stephen tell you that Arthur was told to set the pump -- or did Stephen -- let me try a different question. Did Stephen tell you that Arthur told him, Stephen, that Arthur was told to set the pumps to the negative by someone within the PWI family? MR. OWENS: Form. A. There was a lot of -Q. (BY MR. FAIRLESS) Right. A. -- saids in there. Can you repeat it? Q. Yeah, but I'm not going to repeat it exactly. I just want you to tell me specifically as best you can recall, what it is that Stephen told you that Arthur
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Q. Did Stephen Pahl ever tell you that he had a conversation Arthur Ramirez, wherein they discussed PWI and its calibration of dispensers? A. Yes, sir. Q. And did Stephen Pahl tell you that one time or many times about this conversation with Arthur? Was that something he told you one time, and so you only heard it once in your life; or is that something that you and Stephen have talked about many times over the years? A. I remember one discussion. Q. Okay. When was that one discussion? A. I... Q. Let's start with was it before, during, or after Operation Spotlight? A. I don't believe it was before. Q. Okay. So it was either during or after Operation Spotlight was underway? A. Right. Q. Okay. Now, tell me what it is, as best you can recall, that Stephen Pahl told you about a conversation he had with Arthur Ramirez where they talked about PWI's calibration of its dispensers or a dispenser? A. Stephen said that when he was an inspector, he -- as I recall, because there were frequently

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told him about calibrating PWI pumps. A. I don't remember much more than Arthur said he was doing what he was told. Q. Right. But that whole context of doing what he's told, depending on what it is Arthur is doing at the moment, he says, "I'm just doing what I'm told," has an impact on, you know, what that could really mean. Are you with me? A. Uh-huh. Q. Yes? A. I'm with you. Q. Okay. So what was Arthur doing per Stephen at the moment in time when Arthur says, "I'm just doing what I'm told"? A. I don't know. Q. Did you understand any more of the background behind what Arthur meant when he said, "I'm just doing what I'm told"? I mean, did Stephen fill in some gaps for you? What exactly does that mean, Stephen, Arthur saying, "I'm just doing what I'm told"? A. Stephen and I discussed the implication that possibly that meant he was being told to set the pumps a certain way, but -Q. And did you -- go ahead. Did you ask Stephen,

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well, Stephen what did you do to verify that that's possibly what Arthur meant? A. I don't recall asking Stephen that question. Q. For instance, did you say, "Stephen, look, you were an inspector back then. Did you go ask other inspectors to talk to Arthur or did you go talk to someone else who calibrates for PWI or, Stephen, did you contact PWI and somebody in their maintenance department or front office to ask them whether or not Arthur had ever been instructed to calibrate to the negative or, Stephen, did you go talk to the front office people at PWI and ask them if Arthur had been told to calibrate to the negative?" Those are all just by way of example, but that's what I want to know. Did you ask Stephen whether he did any follow up to try and find out what Arthur may have meant? MR. OWENS: Form. MR. LANGLEY: How can he possibly be responsive to what you just uttered? MR. FAIRLESS: Easy. He just focuses on that last part. MR. LANGLEY: Okay. Objection, form. Q. (BY MR. FAIRLESS) Did you ask -- did you ask Stephen if he did any follow up at all to try to help
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A. I don't know the dates that he was an inspector. Q. No, I know you don't know the dates. But do you know if it was two years ago or five years ago or ten years ago or longer? A. I don't know. Q. Okay. So as far as you know sitting here today, this conversation Stephen had with Arthur, it could have taken place in early 2007 or 2006 or 1996. I mean, you just don't know. MR. OWENS: Objection, form. A. All I know is it would have taken place prior to when I arrived in 2007. Q. (BY MR. FAIRLESS) Did you ever ask the question, well, Stephen, was there ever anything that -any discussions that you had with not just Arthur, but any PWI person or any third-party calibrator that worked for PWI since that conversation with Arthur to help us maybe understand a little more about that statement Arthur made? A. No, sir. Q. Did you ever ask Stephen if he or anyone at his direction went and interviewed third-party calibrators to find out what instructions they were being given by PWI when it comes to calibration, if any instructions?
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A. No, sir. Q. Did you ever ask Stephen to find out who does PWI's calibration work and let's start there and figure out, you know, who's doing the work and then we can explore their motivations? A. The motivation is of less concern to me than the fact that there's a violation. The violation is the main concern. And in this case, we had a 34 percent noncompliance rate that was verified to be actually nearly 60 percent noncompliance when we conducted our inspections. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Do you remember my question? A. Would you -- you can restate it. Q. Did you ask Stephen whether or not he had gone to any third-party calibrators that did work for PWI calibrating dispensers to find out what their feedback was regarding instructions, if any, from PWI? A. No. I thought you used the word "motivation" before, so -Q. I did. And I can't ever remember those questions exactly, remember them and repeat them exactly the same. A. Okay. Well --

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ascertain what it was that Arthur meant when Arthur said, "I'm just doing what I told"? A. I don't remember if we had that -- the discussion in that detail. Q. When did Stephen tell you he had this discussion with Arthur? A. When he was an inspector. Q. Right. But did he give you some idea of when that was? Because you were off in Washington, DC, for a number of years. Did you just know when it was Stephen was an inspector, or did you have to ask? A. I didn't ask. Q. Okay. Well, when was Stephen an inspector? He works directly for you now, so are we talking about a comment that was supposedly made by Arthur five years ago or ten years ago or more than ten years ago? A. Stephen was the chief of the regulatory department or chief of the weights and measures department within our regulatory division when I started at the Texas Department of Agriculture, so he would have been an inspector prior to 2007. Q. But that is why I asked you the question. Do you know when Stephen was an inspector, therefore, helping you understand more about this time period when he would have had this conversation with Arthur?

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Q. Do you want me to try it again? A. No, I don't recall asking Stephen that question. Q. Okay. To this day, to your knowledge, has anybody gone to the third-party calibrators to ask them what instructions, if any, they received from PWI before they actually calibrated PWI's dispensers? A. I don't -- I don't know. Q. Was that part of the analysis that was done before targeting PWI? MR. OWENS: Objection, form. A. Was what part of the analysis? Q. (BY MR. FAIRLESS) Trying to find out what instructions, if any, PWI actually gave the third-party calibrators that did the bowl work of PWI calibrations? A. The data that was analyzed before, which is what I think you're asking about, was a comparison -- a simple, a very simple direct comparison of this company's noncompliance rate to the statewide average. That combined with us also finding out that they had a history, a very concerning history, of violating the predominance threshold is what -- back to your question -- led to -- led to the inspections. MR. FAIRLESS: I'll object as nonresponsive.
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Q. (BY MR. FAIRLESS) Does that include bulk diesel? A. I assume it includes all pumps inspected. Q. So does that include bulk diesel? MR. LANGLEY: Objection, form. MR. FAIRLESS: What could possibly be wrong with that question? If he didn't know, he can just say he doesn't know. MR. LANGLEY: Well, I think he's already told you he would defer to the people who were actually crunching the numbers for the basis for those calculations, but he's -MR. FAIRLESS: Well, then why can't you just let him answer? MR. LANGLEY: -- giving you his best memory, but you're trying to tie his answer as being definitive for what actually transpired in terms of the calculations and I know that's what you're doing. MR. FAIRLESS: I can't tie it to anything other than this is what Drew DeBerry told me. That's all I'm going to tie it to, Drew DeBerry. MR. LANGLEY: Good deal. Then we're good. MR. OWENS: He said the numbers inspected.
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Q. (BY MR. FAIRLESS) So let's talk about the -we'll come back to this document in a minute. How was the PWI compliance rate calculated? You've mentioned it -- oh, I don't know -- two dozen times already today. So just tell us how it was calculated. MR. OWENS: Objection, form. A. I'll defer to the people that calculated it. But when it's explained to me, it's a rate of the number of pumps that are noncompliant compared to the -- as a percent of the total number of pumps inspected. Q. (BY MR. FAIRLESS) Okay. So it's number of pumps noncompliant over number of pumps inspected? A. Yes, sir. Q. And what was the percentage again? A. 34, 35. That's what it was before we conducted the inspections. It was six -- nearly 60, as I recall, when we conducted the inspections. MR. FAIRLESS: I'll object as nonresponsive everything after 34, 35. Q. (BY MR. FAIRLESS) You mean 34 to 35 percent, right? A. Yes, sir. Q. Okay. And is that all pumps including bulk? MR. LANGLEY: Objection, form.

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Q. (BY MR. FAIRLESS) To your knowledge, does the number of pumps noncompliant over the number of pumps inspected include bulk diesel? A. I assume so, but I don't have that information. Q. And so did you look at the number of pumps noncompliant over the number of pumps inspected for every other retail motor fuel device owner in the great state of Texas? A. We looked at the statewide average, yes, sir. Statewide average, which includes every other pump inspected in the state of Texas was 5 percent for noncompliant. MR. FAIRLESS: I'll object as -- I'll object as nonresponsive. Q. (BY MR. FAIRLESS) I'm not asking you did you compare the 34 percent to some statewide average. I'm asking you did you run the same calculation, number of pumps noncompliant over the number of pumps inspected, for each and every other retail motor fuel device owner in the great state of Texas for whatever time period it was y'all were looking at? A. Yes. We -Q. Okay. A. We did the statewide -- the statewide average includes all of those other companies.

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Q. But I'm not asking you about the statewide average. The statewide average might be all those other 50 companies out there, Mr. Fairless, they had 5,000 pumps that were noncompliant and we looked at 100,000 pumps total and this is the statewide average, what do you know, 95 percent. I'm not asking you about any of that. Okay? I don't want to know if y'all did it on a statewide average. I want to know if piecemeal you broke it and down and said for RaceTrac, their rate of compliance or noncompliance, if you will, is X. For Valero, it's Y. For this other company, it's Z. Are you with me? I want to know if you broke it down for each company as opposed to taking everybody else as a whole and looking at it as an average. A. Right. I do think that some of that analysis was done. I don't remember the results of any other particular one. Q. Who would have done that analysis? A. I believe it was part of what Stephen helped coordinate, Stephen Pahl. Q. So what does that mean? It's what -- did Stephen Pahl do anything on his own, to your knowledge; or is it something we asked Wynne Hexamer to do? A. I assume he used the help of people that can
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rate? A. I don't -- I can't answer that without having the data in front of me. Q. And how many pumps did they have inspected? MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) Or how many pumps do they own? Are you able to give me any of that information? A. No, sir. Q. All right. So this is how you got the 34 percent and the -- I'm guessing the 95 percent was arrived at -- first of all, were you saying 5 percent noncompliant or 95 percent compliant? Which was -which is the way you pitch it? MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) No. I mean, how have you been saying it? 95 percent compliant is everybody else in the industry, or 5 percent noncompliant is everybody else in the industry? Because I want to use your words. A. I've used both -- both terms. Q. Okay. The 95 percent compliance then, would that have been reached by the number of pumps that were compliant over the number of pumps that were inspected? MR. LANGLEY: Objection, form. A. I would think it would be a simple subtraction from 100 on what the noncompliance rate is, but I -- the
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access the database. Q. Do you know who Wynne Hexamer is? A. Yes, sir. Q. Okay. Did he use anybody other than Wynne Hexamer, to your knowledge, to crunch any of these numbers that resulted in this analysis? MR. OWENS: Objection, form. A. I -- I don't know who all he use. Q. (BY MR. FAIRLESS) Right. That's why the question started to your knowledge. A. Okay. Q. Okay. To your knowledge, did Stephen Pahl use anyone else to crunch numbers besides Wynne Hexamer? MR. OWENS: Objection, form. A. Not to my knowledge. Q. (BY MR. FAIRLESS) Okay. And are you able to tell me as opposed to saying everybody else out there but PWI, their average is 95 percent compliant, 5 percent noncompliant, are you able to break down the companies that constitute everybody else and tell me what their noncompliance percentage rates are? A. I believe we would be able to do that. Q. Okay. Who was the highest company besides PWI? Evidently, if we're going to go with PWI was the highest, who was the next highest and what was their

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staff -Q. (BY MR. FAIRLESS) Okay. So -A. -- that conducts those would be better to answer that question. Q. So everybody else in the industry, you think the number of all noncompliant pumps found over the total number of pumps inspected in the great state of Texas, that's where the 5 percent noncompliance would come from? MR. LANGLEY: Objection, form. A. I think that's what I said, but can you say that one more time? Q. (BY MR. FAIRLESS) Yeah. If you took the number of pumps noncompliant for everybody else but PWI and then into that, you divide the number of pumps inspected for everybody but PWI, is that how you get the 5 percent compliance? A. Oh, wait. No, no, no, no. I'm not understanding it. Q. I'm just using what you told me earlier. A. I know. Can -Q. Number of pumps noncompliant -A. Can I see what you're looking at? Maybe that will help. Q. Yeah. Number of pumps noncompliant over number

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of pumps inspected. MR. OWENS: I want that pad marked as an exhibit. A. And this is to determine the number of the noncompliance rate, which you've written 34 percent; so that's the PWI noncompliance rate before the inspections? Q. (BY MR. FAIRLESS) Right. A. Okay. Q. And I want to know when you did the calculation for the rest of the industry, was it the same way? Number of pumps noncompliant over the number of pumps inspected for the remainder of the industry to get to the 5 percent noncompliant? MR. LANGLEY: Don't answer that question. MR. FAIRLESS: Why? MR. LANGLEY: Because you just asked him when he did the calculation. MR. FAIRLESS: No. MR. LANGLEY: That was your question. MR. FAIRLESS: Right. But my meaning -MR. LANGLEY: And you know -- okay. MR. FAIRLESS: Look, he didn't do the calculation. MR. LANGLEY: Okay. And I just don't
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5 percent noncompliant, PWI is 34 percent noncompliant; so I assume somebody reported that back to you? A. Correct. Q. So what else did they report back to you? A. That Petroleum Wholesale in direct comparison to the statewide average of 5 percent noncompliant, Petroleum Wholesale had a 34 percent noncompliance rate. Q. We just talked about that. A. Petroleum Wholesale -Q. That's why my question was what else. God, we don't need to repeat what we've already done. I just want you to tell me what else. A. Okay. MR. LANGLEY: He just doesn't like your answer. MR. FAIRLESS: I'll object to all that as -- I've heard it a thousand times. I get it. MR. LANGLEY: Well, and I -MR. FAIRLESS: I get it. MR. LANGLEY: -- know you're not a man of patience. MR. FAIRLESS: I only have a limited amount of time, so I can't spend -- never mind. Okay. I got that one. I'll object to what you answered as nonresponsive.
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want you speculating. THE WITNESS: Sure. MR. LANGLEY: All right. So... Q. (BY MR. FAIRLESS) It your understanding that the calculation to come up with the 5 percent for the rest of the industry was done the same way as the calculation to come up with the 34 percent for PWI? A. Yes. Q. Now, when you came up with the rest of the industry, did you factor in PWI when coming up with the industry numbers; or did you look at the numbers exclusive of PWI? MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) Do you understand what I'm getting at? A. The statewide average would include every pump inspected in the state. Q. Including PWI's pumps? A. We'll have to -- you can verify that with the staff that conducted it, but that would be my assumption. Q. Okay. So what else did you take from this trend analysis that you asked for? What else did you receive in response to the trend analysis you asked for? Hey, Mr. DeBerry, everybody else in the industry is

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Q. (BY MR. FAIRLESS) Now, go ahead and tell me what else. A. Well, if I'm not being responsive, maybe you can rephrase the question. Q. I want to know what else besides the 5 percent compared to the 34 percent noncompliance rate was given back to you in response to your request for a trend analysis? A. The fact that Petroleum Wholesale had violated the predominance threshold, had a history, a concerning history of violation of the predominance threshold; and I seem to recall also being told that the 34 percent noncompliance rate was not only significant in direct comparison of the 5 percent statewide average, but also in comparison to other companies. Q. So somebody did look at the other companies individually then? They didn't just measure the 34 percent against the statewide average. What you're saying is they also looked at what Valero's percentage was, what RaceTrac's percentage was; and the 34 percent you're saying was a larger number than the others, even on an individual versus individual basis? Yes? A. Yes. Q. Okay. Who did that analysis, company-by-company-by-company analysis? Was that Wynne

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Hexamer? A. I don't know who did it. I never saw it. Q. Do you have -- do you have an -- you never saw it? A. No, sir. Q. Okay. Do you have an understanding, not withstanding that you never saw it, who did it? A. I asked Stephen Pahl -Q. No -- go ahead. MR. LANGLEY: I think he wants to know if you know who did the actual calculations. A. I assume Stephen did some. I'm sure he utilized Wynne. I don't -- I don't know what all resources Stephen utilized to get -Q. (BY MR. FAIRLESS) Okay. A. -- to analyze that data. Q. And then when you said PWI violated the predominance threshold, that that was reported to you, what did they show you in that regard? What support did they have for that? A. There was a number -- there was a number -- I don't recall what it was. Well, this note here has a number written on it. MR. LANGLEY: You're referring to 332? THE WITNESS: Correct.
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A. I don't recall specifically seeing a break down like what you're asking. Q. Would you have expected to see that data so that you would know, okay, well, I see what PWI's predominance violations have been for this given period of time. Now, let's see how that ranks with everybody else. How many did RaceTrac have for the same period of time, and how many stations do they have. Okay, well, how many does Valero have in the way of predominance violations and how many stations do they have. And would you have expected to see that type of analysis if you were going to consider predominance violations? MR. OWENS: Form. A. Not necessarily. No, sir. The data that we relied on was inclusive of all of the data, including the 34 percent compared to 5 percent that everybody else in this state meets with no problem and a significant number of predominance threshold violations, all of that combined. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Who else in this state can you compare a blitz to of the size and magnitude that was done during Operation Spotlight of PWI?
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A. I would interpret that note of ten stations over 60 percent between the time period of January 25th, 2006, and June 8th, 2007. And then the note right below it, three stations over 60 percent for a different period of time. MR. FAIRLESS: I'll object to all that as nonresponsive. Q. (BY MR. FAIRLESS) We're going to talk about that. That's why I said earlier we're going to come back and talk about this exhibit. A. Okay. Q. But right now, I'm just wondering what documentation, if any, that you saw pertaining to the report that was being given to you that PWI violated the predominance threshold? A. I don't recall specific documents. Q. What ever it was that you saw, did you see the same thing for Valero and RaceTrac and all the others so you could see in your -- in living color what PWI's number of predominance violations was in comparison to every other retail motor fuel device owner in the great state of Texas? A. I've seen a lot of different data associated with our various programs. Q. Did you see that data?

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MR. OWENS: Form. A. I'm not comparing anybody else in the state to the 68 or 58 percent that was found through the operation. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Who else underwent that kind of inspection scrutiny in the great state of Texas during your tenure as Deputy Commissioner of Agriculture, besides PWI? MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) Anybody? A. I'm not aware that anyone has been through a particular level of data scrutiny; but I do know that our staff has a request from me, a directive from me, to continuously identify or analyze data to see if there are other trends out there like this 34 percent. MR. FAIRLESS: I'll object to everything that begins with "but I do know" as nonresponsive. Q. (BY MR. FAIRLESS) So did you look at the predominance violations of other owners of retail motor fuel devices or not? A. I seem to recall that some -- there was some data analyzed on other companies. The main thing I was concerned about was the statewide average.

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Q. I didn't ask you though about some data on other companies. I asked you specifically about predominance violations for other owners of retail motor fuel devices. And I've already talked to Wynne Hexamer and I've already talked to Stephen Pahl and now I'm testing your recollection. I want to know did you see any of that type of information on the others? MR. LANGLEY: Him personally? MR. FAIRLESS: Yeah, yeah. You personally because you're the one who pulled the trigger on the decision to move forward. MR. LANGLEY: I'm just trying to make clear the question. MR. OWENS: Form. A. Well, Mr. Fairless, I'm again sorry. I thought I had answered that. I didn't realize that's where -that's the question you were asking just now. I've not seen that information that I can recall. Q. (BY MR. FAIRLESS) Okay. What time period -because we've talked about, you know, a given time period or I have, you haven't. But what time period was this 34 percent calculated over? A. I don't recall the specifics of the time period.
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A. As I recall, that's what it means. Q. And then it says 35 dash Phase 1. Does that mean in this targeted blitz against PWI, there are going to be 35 stations blitzed as part of Phase 1? MR. OWENS: Form. A. I believe that was referring to 35 stations to be inspected. Q. (BY MR. FAIRLESS) And then it says ten stations over 60 percent from 1/25/06 to 6/8/07. So that means there were ten stations of 98 that were over the 60 percent mark during a one and a half year period of time? MR. OWENS: Form. MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) What does it mean ten stations over 60 percent from 1/25/06 to 6/8/07? A. I assume that means ten stations violated the predominance threshold during that period of time or -no. Ten stations were over 60 percent during that period of time. Q. Okay. Well, when it says predominance threshold, what is it? A. That's a component of the national standard requires that predominance, if there are a predominant number of devices noncompliant, then the penalty could
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Q. Well, using this Exhibit 332, does that help you at all or no? A. No, sir. Q. See the 34.2 percent at the bottom, that's this percentage that you've been talking about, number of pumps noncompliant over the number of pumps inspected? A. Yes, sir. Q. And let's just -- let's just go down through this. First of all, where did this information come from? Is this you making notes about something that was shown to you by Stephen Pahl, or is this you making notes that come from what Stephen Pahl is telling you? A. Probably a combination. Stephen presented data to me verbally; and I remember seeing reports that he had run, too. Q. And it -- there would be no point in me trying to talk to you about what reports you saw because you can't remember them, can you? A. No, sir. Q. All right. It says 98 stations. Is that information that came to you from Stephen Pahl? A. Possibly. Q. It says 71 not in last six months. Does that mean 71 stations were not inspected in the last six months?

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be escalated. Q. I didn't understand any of that, but I'm not so sure I need to. 10 percent over 60 -- I mean, I'm sorry. It says ten stations over 60 percent. That's ten stations of the 98 stations? A. Ten stations of what Sunmart Petroleum Wholesale operate in Texas, I assume. Q. Well, what is the 98 stations at the top mean? A. That's -- I assume that's how many stations Sunmart operates. MR. LANGLEY: He's not asking you to assume things. Q. (BY MR. FAIRLESS) So from January of '06 to June of '07, roughly a year and a half, there were ten stations over this 60 percent mark? That's what your note indicates? A. Yes, sir. Q. And then for the next it looks like ten months, there were three stations over the 60 percent mark? MR. OWENS: Form. A. Yes, sir. Q. (BY MR. FAIRLESS) And I'm saying three stations only because that's what you wrote down. There were actually only two stations because one was inspected twice and found to be over 60 percent both times, right?

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MR. OWENS: Form. A. I don't know if that was one of the three or if there were only two stations, one of them twice. Q. (BY MR. FAIRLESS) Oh. So you don't know if there were three stations and one of those three was twice versus whether or not there was only two stations and one of those two was twice. Is that what you're telling me? A. I don't know if that means that there were one of the three or that there were only two stations and one of them was found twice. Q. The one that was found twice, the same station, did you ask anybody as part of your search for information, search for data, did you ask anybody to check into the fact that wait a second, if they were over 60 percent, then those pumps can't be put in service until they've been calibrated and then they're subject to a reinspection, so I want you boys to tell me who went out there and calibrated those pumps because we evidently turned right around and found them above 60 percent again? MR. OWENS: Form. MS. FRIEDMAN: You're out of time on the tape. MR. FAIRLESS: It's what?
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Q. (BY MR. FAIRLESS) If I told you that Wayne Services is the one that went to Station 493, calibrated all of those pumps there, and then by goodness the TDA comes out again and finds the pumps still to be 60 percent or greater, is that information coming to you as news or had you heard that before? MR. OWENS: Form. A. I don't recall having heard that. Q. (BY MR. FAIRLESS) Would it interest you though today as you sit here, Deputy Commissioner of Agriculture, to know who calibrated the pumps if it was found to be on back-to-back inspections above 60 percent? MR. OWENS: Form. Q. (BY MR. FAIRLESS) Would you want to know who calibrated them after the first inspection? A. I suspect -MR. OWENS: Form. A. -- some of our staff would be looking into those details. Q. (BY MR. FAIRLESS) You would certainly expect so, wouldn't you? MR. OWENS: Form. A. Yes, sir. Q. Did you say yes? What did you say?
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1 2 3 MR. LANGLEY: It's a good time for a 4 bathroom break. 5 Q. (BY MR. FAIRLESS) Are you with me? 6 A. No, I'm not. I didn't follow that question. 7 MR. LANGLEY: You can finish this up. 8 Yeah. 9 MR. FAIRLESS: Huh? 10 MR. LANGLEY: Finish this up, and then at 11 some point I would like to take a bathroom break is all 12 I'm trying to tell you. 13 MR. FAIRLESS: No, I hear you. But are 14 out of the tape? 15 THE VIDEOGRAPHER: One minute. 16 MR. LANGLEY: Yeah, that's what I'm 17 saying. Q. (BY MR. FAIRLESS) Okay. This is what I want to 18 19 know: Did you have anybody go to the station records 20 where the station was found above 60 percent twice and 21 say, well, who calibrated the pumps after they were 22 found to be above 60 percent the first time and let's 23 start there with our analysis? 24 MR. OWENS: Objection, form. 25 A. No, sir.

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calibrated, you're there when it's calibrated, you watch it being calibrated, and then you tag it, seal it, and then come back one month, two months, six months later to find out how or if that calibration has changed, if it's moved towards the positive, if it's moved towards the negative, and do that to a series of pumps so that you can analyze the conclusions? MR. OWENS: Form. A. I'm not aware that we've done anything like what the Parks Department does on that program. Q. (BY MR. FAIRLESS) Okay. Have you solicited any information like that from experts in the industry as to what can, does, or could happen if you calibrate a pump and then come back six months later or a year later after the pump has been experiencing regular use? A. I can't speak for what our staff has sought feedback from them on, but -Q. To your knowledge. A. Not to my knowledge. Q. The -- the discussions that took place at that meeting where Stephen Pahl was there with the regional directors and the chief inspectors, you had some documents in hand, a handful or less, five or less enforcement orders, NOVs, and checks and you went over to where Stephen Pahl was, correct?
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the documents and say, "Stephen, look here, look what we have here"? Take me from there. Tell me about the conversation with Stephen. MR. OWENS: Form. A. I asked him if he was -- if he had seen things like this in the past, if he had any thoughts on how we could verify whether or not there's a trend. Q. (BY MR. FAIRLESS) All right. Did every document that you had with you that day pertain to PWI? A. Yes, sir. Q. And when you said that you asked him had he seen things like this in the past, did you mean notices of violation for the predominance rule generally or did you mean notices pertaining to PWI or did you mean multiple notices for any single retail motor fuel device owner? MR. OWENS: Form. A. I think it was simpler than that. I was curious as to whether he had ever seen anything like that as far as the egregiousness. Q. (BY MR. FAIRLESS) The egregiousness being the more than 60 percent or the egregiousness being a preponderance issue? I mean, what do you mean egregiousness? A. The violation of the predominance threshold
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A. Yes, sir. Q. And where was he? A. In our building in a conference room. Q. Okay. And so how many people were in that meeting with him? A. I couldn't speculate; but there were more than five, less than 50. Q. And did you call Stephen Pahl out of the room to talk to him about the issues that you had in mind to discuss with him, or did you have your discussion with Stephen Pahl in front of the more than five, less than 50 people? A. As I recall, Stephen was sitting on the back row, not at the conference table; and I sat down beside him and asked him some questions. Q. Oh. Somebody else was doing the speaking, and Stephen was just somebody who was in attendance; is that it? A. I imagine he was participating, but I don't know what his role was. Q. When you came upon him, he wasn't talking. He was on the back row? A. As I recall, yes, sir. Q. And there was a vacant chair next to him, so you sat down and then what did you do? Did you pull out

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with multiple occurrences by the same company within a close period of time. Q. What we see there in front of you on Exhibit No. 451, that shows the $10,250 fine for a single location, that is -- has more than 80 percent of their pumps noncompliant, is that egregious? A. Yes, sir. Q. And do you know where that station was? A. No, sir. Q. Which is the biggest media market from -- well, you just tell me which is the bigger media market. Is Temple, Texas; or is it Houston, Texas? MR. OWENS: Objection, form. A. I would imagine Houston is a larger media market. Q. (BY MR. FAIRLESS) Well, come on now. I mean, you were involved in the campaigns such as Bush and Cheney. You know which one is the larger media market, don't you; or do you really have to imagine? MR. OWENS: Objection. MR. LANGLEY: Objection, form. A. I've not done press for any of my former employers. Q. (BY MR. FAIRLESS) As you sit here today, you can't tell this jury which is the larger media market,

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Temple, Texas, or Houston, Texas? MR. OWENS: Objection, form. A. I would imagine Houston is. Q. (BY MR. FAIRLESS) Do you really have to imagine, or do you know? MR. LANGLEY: Objection, form. MR. OWENS: Objection, form. A. I have no data on the size of media markets. I would imagine Houston is. Q. (BY MR. FAIRLESS) Were y'all looking for a company that had a large media market presence when you were making a decision about targeting an entity for retail motor fuel device violations? MR. OWENS: Objection, form. A. We weren't looking for a company to, in your words, target; so I can't speculate on the rest of that. Q. (BY MR. FAIRLESS) So Stephen Pahl and Wynne Hexamer would not have been given any directive to find a company to target by the data that they were analyzing? A. No, sir. Q. They were just being told to collect the data for you to look at, and they were not aware -- they had not been told that there was going to be some operation undertaken?
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of the predominance threshold getting better or worse from '06 to '08? A. I can't -- I can't speculate based on that data. Q. By looking at this data that you have noted here on your note, you can't tell that however bad it is, it's at least getting better? MR. OWENS: Form. A. Well, no, sir. One of them -- one of them is a time period that is a year and a half, and one of them is less than a year. Am I right on that? Q. (BY MR. FAIRLESS) You are right about that. It's -- one of them is roughly 17 months, and the other one is ten months. A. Okay. Q. Let's take the one that's ten months; and let's just double it, make it 20 months. So it will even be more than the 17 months in front of it. So if you take the one that's ten months and you double it to account for the time factor -- what's three times two? MR. OWENS: Form. A. Six. Q. (BY MR. FAIRLESS) Okay. So you have ten stations over a year and a half, and then you have the equivalent on a pro rata basis of six stations over more
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A. Initially, we just wanted to analyze some data, see if there were trends. We later verified that there were concerning trends. Q. The trend with the -- do you still have this 332 in front of you? A. Yes, sir. Q. It says ten stations over 60 percent for that year and a half from '06 -- the first of '06 to the middle of '07. And then the next year, from the middle of '07 to the middle of '08, there's three stations over 60 percent. So what's the trend there? A. It represents violations of the predominance threshold. Q. Really? That's the best you can do? You don't see any other trend? That there were ten stations over 60 percent for a year and a half period of time and then the following year, they're down to three stations over 60 percent and you don't see a trend other than they both show stations that have predominance violations? MR. OWENS: Form. A. It's different lengths of time; but the trend that we saw was the whole picture of 34 percent noncompliance, a history of violation of the predominance threshold. Q. (BY MR. FAIRLESS) Is this history of violations

than a year and a half. So is it getting better, or is it getting worse? MR. OWENS: Form. MR. LANGLEY: Objection, form. MR. FAIRLESS: I don't know if you know this guys. The jury can do the same math me and this young man are doing. MR. LANGLEY: Probably better. MR. FAIRLESS: Certainly better and quicker. Q. (BY MR. FAIRLESS) Do you see the trend -A. I think -- I don't think we've got -Q. I'm just trying to point out the obvious. A. I don't think we've got enough data here to figure out if that trend is improving or worsening. You look at the 34 percent noncompliance, you combine that with a history of violation of the predominance threshold. No other company that I'm aware of in the state has a problem like that of meeting our standards. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) You don't even know whether or not the other entities in the state were looked at the same way because when I asked you questions about whether or not predominance violations of the other

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stations were even looked at or considered, you said you had no idea. A. I know the statewide average is 5 percent noncompliance. Q. For predominance violations? A. For noncompliance. Q. Do you know? Right. But we're talking about predominance violations. Okay? A. Okay. Q. Let's assume one is apples and one is oranges. I want to get away from the apples, and focus on the oranges. Did you look at predominance violations for individual outfits like RaceTrac, Valero, and the various other entities? A. I don't recall having seen that. Q. Okay. Because you tell me we were considering the percent noncompliance as well as the predominance violations, that's why I'm asking you, well, let's focus on the second half of that. Just based on what you have here on your note, are you able to see that the predominance violations are better in more recent times than they were in more distant times? MR. OWENS: Form. A. Again, they're -- I can't make a determination
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don't recall what that means. Q. (BY MR. FAIRLESS) Oh. You don't know if that means one station was over 60 percent twice? MR. OWENS: Form. Q. (BY MR. FAIRLESS) I'm not talking about the three right now. Whether or not that's included in the three or not included in the three. A. Sure. There was some significance to what I wrote down. Q. Well, was it significant enough that you told your staff to go find who calibrated the pumps in between the two notices of violation so that you could explore how they could calibrate the pumps and then weeks, a month later, the pumps are still 60 percent in number noncompliant? MR. OWENS: Form. A. I did not ask that question of the staff. Q. (BY MR. FAIRLESS) So what else did you and Stephen Pahl talk about at that meeting where he was sitting on the back row and you sat down next to him? I want to make sure we've covered everything y'all talked about before I move on. A. I asked Stephen if he had seen violations like this, if it looked like a trend, and if he had ideas on how to analyze data to determine if there is a trend.
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like what you're asking based on this note. Q. (BY MR. FAIRLESS) This note is all I have to go on because these are the only things that evidently you saw fit to be important enough to write down. If you had written down more information, then I would have more information to talk about. So I'm confined to what you wrote down. This is what you wrote down, right? MR. LANGLEY: Objection, form. A. That appears to be my handwriting. Q. (BY MR. FAIRLESS) Obviously, you deemed it important enough to write down the time period from January '06 to June of '07, because you wrote it down. Fair enough? MR. LANGLEY: Objection, form. A. Yes, sir. Q. (BY MR. FAIRLESS) Obviously, you considered it important enough to write down what happened in the time period from July of '07 to May of '08, because you wrote it down. Fair enough? A. Yes, sir. Q. And then obviously you considered it important that one of the stations was over 60 percent twice because you wrote that down, correct? MR. OWENS: Form. A. We've already discussed that. I'm not -- I

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Q. Had you recognized at that point in time PWI to be some sort of problem child based upon notices of violation that you've seen? A. Other than what I had in my hand at the time, no, sir. Q. Had Stephen Pahl told you at that moment in time that PWI was a problem child based on everything he knew about them? A. Throughout the course of the discussion, he asked what the company name was. I showed him and he said, yeah, they're -- that company -- he said something to the effect of that company has had a violation history, but he wanted to analyze the data to verify what it was. Q. Did he -- did you ask any questions or did he volunteer any information about what that company's, quote, violation history, end quote, was? A. No, sir. Q. And clearly he didn't tell you at that point that funny you should mention the name of that company, I talked to one of their service technicians, Arthur Ramirez, years ago and he told me that he was doing what he was told when we -- when I was asking him about calibrations? A. I don't recall it being then.

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Q. Don't you think that's kind of an important historical fact not to bring up? MR. LANGLEY: Form. A. I can't speculate as to what Stephen thought was important. Q. (BY MR. FAIRLESS) I'm not asking you to speculate about what he thought was important. I'm asking you as the Deputy Commissioner of Agriculture, don't you think that was an important fact to leave out when discussing with your boss whether or not there is a noncompliance history of a particular entity? MR. LANGLEY: Form. A. It wouldn't be out of the ordinary for certain details like that to be left out of conversations with me because of my role in executing these enforcement agreements. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) So why did he tell you later? It was important later, but it wasn't important at the time when you were trying to figure out whether or not more data was necessary to do an analysis? MR. OWENS: Form. A. I'm -- I'm pretty sure I said I couldn't recall exactly when he said it.
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MR. LANGLEY: Objection, form. MR. OWENS: Form. A. All I was asking Stephen about was whether he saw a trend or a potential trend and if he had ideas on how to analyze data to -Q. (BY MR. FAIRLESS) And so the -- what? Go ahead. I'm sorry. A. To verify whether or not there was a trend. Q. So did he give you the answer to the -- this is how we analyze data or did he say, "I'll get back to you on that"? A. He said he could run some numbers and do some data analysis and work with the staff to do that. Q. And did you just leave it up to him as to what data to analyze? A. We had a discussion about analyzing the compliance history. Q. Well, see, that takes me back to what I asked earlier when I said I want to know everything y'all talked about. So if you had a discussion about how to analyze the compliance history, I want you to tell me about it because clearly you remember something about it, so tell me about it. A. Other than what I just said, we discussed analyzing data regarding compliance history and
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Q. (BY MR. FAIRLESS) Yeah. You said during or after Operation Spotlight. A. Okay. Q. So why was it important then and not at this point when he evidently asked you specifically who are we talking about and you told him the name of the company? MR. LANGLEY: Objection, form. A. I -- he could have told me at any time during that process. Q. (BY MR. FAIRLESS) But he didn't. A. As the -- as we developed a better understanding of the data, more information was able to be shared. Q. I don't even understand that; and to the extent I do, it doesn't make any sense. So let me ask you: Does that make any sense to you why he would not share that information with you at that time after he has already specifically asked you who are we talking about and you say this company right here, PWI? MR. LANGLEY: Objection, form. MR. OWENS: Form. Q. (BY MR. FAIRLESS) Does it make any sense to you that he wouldn't follow with the comment funny you should mention them?

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comparing it to the statewide average. Q. Okay. So what y'all specifically talked about is, Stephen, let's pull PWI's compliance history and let's measure it against the industry average for the state? MR. OWENS: Form. Q. (BY MR. FAIRLESS) Is that what you're telling me? A. I don't recall every detail of the conversation. Q. I don't need every detail. I mean, I'd like it; but evidently I'm not going to get it. I want to know with regard to the compliance history, did you say let's look at it, every single company, let's look at the same information like on an Excel spreadsheet or did you say let's look at PWI versus everybody else as an average? MR. OWENS: Form. A. Like I said, I don't recall the details, the exact details of the conversation. I recall that we discussed analyzing the data to see if there was a trend. Q. (BY MR. FAIRLESS) Did you invite anybody else in the room to participate in this back-row discussion that you and Stephen were having?

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A. I did not invite anyone else into the room. Q. No. Did you invite anyone else who was already in the room to participate in the discussion that you and Stephen were having as he sat in the back row? A. I think at some point we had a discussion with one of the regional directors, but I don't recall. Q. Who? A. I don't -- I really don't recall. It could have been any of them. Q. Okay. So at some point, you and Stephen and one of the regional directors had a discussion; and what was the scope of that discussion? A. Just whether or not there was a trend that anybody at the regional level had identified and any information they had that might be helpful in figuring out how to do the data analysis we were discussing. Q. Pertaining to PWI? A. We discussed both in general and with regard to PWI. Q. Okay. But I'm trying to figure out did y'all discuss PWI with the regional director? A. I believe -- yes, sir, I think it came up. Q. Okay. A. Actually, as I recall, it wasn't PWI. It was Sunmart. I wasn't aware that PWI was the name other
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was it? A. It was -- it evolved into more than just me and Stephen talking. Q. And I realize that because you just told me it evolved into you and Stephen -A. Right. Q. -- and the regional director. But now I'm trying figure out did it evolve into more than that? A. Sure. I think there were probably several people in the room that heard the conversation we were having. Q. And so did anybody provide any feedback? A. Like I said, I remember a regional director contributing to the conversation. Q. And the regional director was the only one that contributed? Do you remember anybody else contributing? A. David Kostroun was in the room, I think. Q. Did he contribute? A. I don't recall him saying anything actually. Q. Did David Kostroun, at that point in time, know Sunmart from Adam? MR. OWENS: Objection, form. A. I didn't ask. Q. (BY MR. FAIRLESS) To your knowledge. A. I can't speculate. I didn't ask.
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than Sunmart at the time. Q. So y'all discussed Sunmart with the regional director, inviting his or her input into the trend analysis? A. Correct. Q. And do you remember if it was -- if we're talking about Dudley Allen or are we talking about Jennifer? Who are we talking about regional director wise? A. I really can't recall. Q. Did you have any of the chief inspectors participate in the discussion? A. Possibly. Sure, we weren't -- it's possible that some of them were part of it, but I don't recall. I recall my conversation with Stephen, and there was some discussion with a regional director. Q. Well, see, as a lawyer, I try to get past anything is possible answer because I realize anything is possible. What I want to know is did y'all put it out there on the floor for open discussion with the room; or was it just like me and Ms. Court Reporter here, sitting beside each other, somebody else in the room is talking and I'm engaging Ms. Court Reporter in a little discussion of our own here on the back row? That's what I'm trying to get a flavor of. Which way

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Q. Okay. Well, had you and David Kostroun ever had any discussions about Sunmart before then? A. No, sir. Q. Well, what I'm trying to figure out is did anybody -- David Kostroun or this regional director, who you believe contributed -- did they contribute anything in the way of I'm familiar with Sunmart and this is what I will tell you about them, following which they spoke about Sunmart? A. That's -- the regional director I recall contributing, indicated that was a familiar name for a violation history. Q. Okay. Anything else other than that's a familiar name for violation history? A. I can't recall exactly what was said. Q. I don't want you to recall exactly. I just want you to tell me if generally there was anything else, or was it just that? A. I can't recall anything in specific detail. I recall that there was a discussion about a potential violation history. Q. You weren't asking David Kostroun to do anything, were you? A. No. No, sir. Q. Okay. Were you asking the regional director to

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do anything? A. No, sir. Q. So the only one you were really asking to do anything was Stephen Pahl? A. Correct. Q. To the extent anybody else contributed, they were just providing their two cents worth? A. Yes, sir. Q. Now, have we talked about all the discussions that may have involved PWI at that meeting with Stephen Pahl, the regional director, and David Kostroun that you can recall? A. Yes, sir. Q. All right. Now, when the information came back to you, this trend analysis, and we've talked about what that information was; but when it came back to you, who brought it back to you? A. I believe Stephen did. Q. And did he bring anybody with him to help share the information? A. I can't recall. Q. Was there some sort of computer show or computer demonstration of documents, Power Point, anything like that? A. I don't recall there being.
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me. I do recall that he had some documents, and we discussed -- he discussed those with me. Q. But I'm talking about result-oriented documents, opinion documents, final calculation documents. I mean were there documents that reached an opinion, that reached a conclusion that Stephen Pahl prepared for you? A. I can't -- I can't speculate on what was in his hands. Q. Have you ever had a discussion, other than what you've told me that you could recall just a few moments ago, have you ever had a discussion with a regional director about PWI? A. Prior to that, no, sir. Q. Okay. How about after that? You've told me everything you can remember about that -- what may have been a conversation with a regional director when you went to talk to Stephen Pahl. So take me from that point to now. Have you had any discussions with regional directors about PWI? MR. LANGLEY: Obviously, he's not asking you about conversations where lawyers were present, if that occurred. So other than lawyers. A. I recall a discussion with regional -- with the staff that was presenting the results of the
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Q. Was there any documentation that was generated specifically with results? And I'm not talking about just a spreadsheet for you to look at in your leisure. But was there a document that had results on it? A. I don't -- I recall a verbal presentation, and that Stephen had some documents; but I don't recall if he showed them to me, or... Q. And is it fair to say the verbal presentation is what yielded the information that is contained here on Exhibit 332? MR. OWENS: Form. A. I don't -- I don't know the timing of this, but I -- I don't know the timing of this. I don't know. I can't speculate on what yielded that information. Q. (BY MR. FAIRLESS) When you say "this," Ms. Court Reporter don't know what you're talking. It's not going to be reflected in the record. By "this," you mean Exhibit 332? A. Yes, sir. Q. Well, are there notes somewhere or is there a document that Stephen Pahl created for you that contained results of the meeting with Stephen Pahl where he brought back to you the analysis information you requested? A. I don't recall if there were documents shown to

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inspections. I think there were -- I know there was -Jennifer Bailey was on the phone. Q. (BY MR. FAIRLESS) Who was the staff that was presenting the results of the investigation? A. Stephen Pahl was involved. I believe David Kostroun was also involved. Q. Do both of them answer to you directly, or did they at the time? A. Yes, sir. Q. Was one above the other, or do they hold equal positions? A. David Kostroun is an Assistant Commissioner, and Stephen Pahl is our Director of Regional Operations. Q. Yeah, that doesn't mean anything to me. Is one higher than the other? A. An assistant commissioner -- it probably depends on who you ask, but I think assistant commissioner is a senior level position. Q. So I'm trying to figure out would they have observed a chain of command. Are you telling me that Stephen Pahl would have reported to David Kostroun and David Kostroun would have been reporting the results to you? A. No, sir. They both report to me. Q. Okay. Well, we're talking about an environment

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where somebody is reporting the results of the operation to you. And I want to know who is it coming to you from, Stephen or David; or did they divide it up and present it to you? A. It was a collaborative presentation. They had -- they were familiar with the data, and were both present. Q. And who else was either on -- was this a meeting where y'all were all face to face, or was this a meeting where some people were participating by telephone? A. I -- there was -- someone was on the phone. I remember Jennifer was on the phone. Q. Okay. The three of y'all -- you, David, and Stephen -- are all in Austin. So y'all were all in the same room? A. I don't remember if David was there. I remember seeing -- yeah. Stephen was there. Q. Okay. You and Stephen were in the same room. David may have been elsewhere. Jennifer was elsewhere. And then who else was participating? A. I don't recall everyone that was there. Q. Everyone that was there in the room, or everybody that was there one way or the other? A. One way or the other, I don't recall who all
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by Stephen and David and Jennifer, was that -- well, you tell me, what was it? A. The inspection results yielded, as I recall, a noncompliance rate of close to 60 percent for all of the fuel pumps that were tested. There were several, close to -- close to half of the stations, the locations that were inspected, that had violations in excess of the predominance threshold. Several of the stations, more than ten, had -- were cheating customers on 100 percent of the fuel pumps tested. Q. Okay. Are you at the end or if you're waiting for me to look startled because you used the word "cheating," I've heard it and read it before, so -MR. LANGLEY: Don't respond to that. Q. (BY MR. FAIRLESS) Are you at the end? MR. OWENS: Form. A. There was -- that's what I recall. Q. (BY MR. FAIRLESS) Why did you use the word cheating instead of saying the pumps were found in favor of or the predominance rule was violated, just now when you were telling me? A. The consumers of Texas deserve to get what they pay for. Q. Absolutely they do. A. When a consumer in Texas -Page 201

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was participating. Q. Was there anybody else in the room with you and Stephen? A. I don't recall. Q. Was Dudley Allen on the phone along with Jennifer? A. I don't know. Q. Was Todd Staples either on the phone or in the room? A. He was later in the process, but not when we were having this initial discussion. Q. What does that mean "later in the process"? Later that day, later on a different call, or just at the tail end of that call? A. As I recall, we had a discussion where the data was presented to me; and then later on, we briefed the Commissioner. Q. So did he participate in the telephone call slash meeting or no? A. No. Not -Q. He got a later briefing from you or you and Stephen? A. Me and Stephen. I don't recall who all was on the phone when I briefed the Commissioner. Q. And the information that you got briefed to you

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Q. Go ahead. A. When a consumer in Texas buys a gallon of gas, they deserve to get a gallon of gas. When they buy a gallon of gas and don't get a full gallon of gas, I don't know what else to call it. Q. What about tolerances? Are there tolerances that are in play with regard to the measure of fuel? A. Yes, sir. Q. And do you know what the allowable tolerance is? Is tolerance another way of saying allowable error? MR. OWENS: Form. MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) Is tolerance another way of saying allowable error? A. I've never heard it say that way. No, sir. Q. You would disagree if somebody did define it that way? A. I might. Yes, sir. Q. Okay. How much is a cubic inch? Do you know? A. It's a cubic inch. Q. Well, I mean, will a cubic inch fill that cup there beside you, that coffee cup? A. No, sir. Q. Will a cubic inch fill a tablespoon? A. I don't know.

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Q. And what is the allowable tolerance, the maintenance tolerance for a gallon of gas? MR. OWENS: Form. MR. LANGLEY: Objection, form. A. I don't -- I defer to our able staff for those details. Q. (BY MR. FAIRLESS) The able staff which the TDA takes responsibility for training? A. Yes, sir. Q. Nobody else takes responsibility for training them, do they? A. We take responsibility for our staff. Q. And would you agree with me that the staff that conducts inspections, the TDA inspectors, if you will, need to be properly trained? A. Absolutely. Q. And will you agree with me that they need to do their job in a competent fashion? A. Yes, sir. Q. And will you agree with me that they need to do their job consistently and their testing methods and means? A. Yes, sir. Q. And will you agree with me that they need to use quality equipment to perform accurate testing?
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Q. None of that is your personal knowledge. So I'm taking it that is your expectation as the Deputy Commissioner of Agriculture, correct? What you just said is your expectation of what your inspectors will live up to? A. That's my expectation. Q. And if they don't live up to that, then you would be sorely disappointed. Fair? MR. LANGLEY: Objection, form. A. It's my expectation that the staff of the Texas Department of Agriculture conduct themselves with the professionalism that the taxpayers of Texas deserve. Q. (BY MR. FAIRLESS) And if they don't, you would be sorely disappointed, correct? MR. LANGLEY: Objection, form. MR. OWENS: Form. A. It is my expectation that the staff of the Department of Agriculture conduct themselves with the professionalism that the taxpayers of Texas pay for and deserve. Q. (BY MR. FAIRLESS) Do you think if you say that multiple times that that somehow becomes responsive? I just want to know an answer to my question. If they don't, if the TDA inspectors -- let me start with a new question. All that other stuff I said is objectionable.
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A. Yes, sir. Q. And will you agree with me that if their testing is not accurate, then their results are unreliable? MR. OWENS: Form. MR. LANGLEY: Objection, form. MR. FAIRLESS: I think the jury can connect the dots on that one, boys. MR. LANGLEY: Thank you. Q. (BY MR. FAIRLESS) Will you agree with me that if the testing that is done is not accurate, then the results are therefore unreliable? MR. OWENS: Form. MR. LANGLEY: Objection, form. A. Our inspections are conducted in an accurate manner. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Have you ever been to one? A. No, sir. Q. Well, then why would you say that? A. Because we have a training system. Our inspectors are trained, our inspectors are professional, and they conduct their responsibilities with all of that professionalism.

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If the TDA inspectors don't perform their job to the expectations that you just set out in your previous answer, would you be disappointed? A. I would expect that that would be corrected. Q. So it's, yes, and I would expect that that would be corrected? MR. LANGLEY: No. Objection, form. Quit putting words in his mouth. A. No, sir. I would expect that -MR. FAIRLESS: I'm trying to put words in his mouth because I want a fair response to that question. MR. LANGLEY: What you perceive as fair. MR. FAIRLESS: Right. Perception is realty. MR. OWENS: Form. Q. (BY MR. FAIRLESS) So will you agree with me that if they don't do their job in accordance with your expectations as Deputy Commissioner of Agriculture, that you would be disappointed in their testing methods? MR. OWENS: Form. A. I would expect that it be corrected if that ever happens. Q. (BY MR. FAIRLESS) And y'all went through some corrections in December of 2009, didn't you?

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MR. OWENS: Form. MR. LANGLEY: Objection, form. A. We went -- say it again, please, sir. Q. (BY MR. FAIRLESS) Did y'all make some corrections to your testing protocol or testing criteria in December of 2009? A. We -- we're continuously making improvements to our protocols and... Q. That would be the answer to the question are you continuously making corrections to your protocol; but, see, that's not my question. My question is specific as to December of 2009. So let me try again. In December of 2009, were there changes made to the TDA inspection procedures and protocol for retail motor fuel devices? MR. LANGLEY: Objection, form. A. I recall that we've made changes in our programs in the last year. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) So is the answer you don't know if changes were made in 2009. You just know at some point in the past year, changes have been made? A. I recall that our programs go through a continuous review process to make sure that they are
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generally. I'm talking about specific changes from the standpoint of testing retail motor fuel devices and changes that were made after Operation Spotlight. And those are the changes I want to know did you have a hand in seeing come to fruition? A. I would -- I would imagine I did if there were changes to our -- to certain policies, I would have been involved. Q. And did you make those changes in light of what was deemed to be a lack of consistency in testing that was done by the various TDA inspectors? A. I'm not sure what changes you're talking about. MR. OWENS: Form. MS. FRIEDMAN: It's already an exhibit. MR. FAIRLESS: Do you know what number it is? MS. FRIEDMAN: 334. Q. (BY MR. FAIRLESS) Let me hand you what's been marked as Exhibit 334. MR. FAIRLESS: Langley, do you want this? MR. LANGLEY: Thanks. MR. FAIRLESS: Do you have it? MR. OWENS: Yeah, I have it. Q. (BY MR. FAIRLESS) Do you see that there on the first two pages are 16 mandatory procedures, practices
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providing the services the taxpayers expect from us. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Did you play a role in changing the policies and procedures in December of 2009? A. Can you clarify what policies and procedures we're talking about? Q. Do you know what policies and procedures I'm talking about? A. I know we have policies and procedures in our program. Yes, sir. Q. Okay. Well, I'm talking about policies and procedures with regard to the inspection of retail motor fuel devices. And do you know why the changes -- I guess my question -- my first question is: Did you play a role in initiating those changes, making those changes come about? MR. OWENS: Form. A. Maybe I'm not being clear enough, Mr. Fairless; but I'm not understanding your question. Since I've been at the Department of Agriculture in January of 2007 to now, from that time period, we've made changes to the program. Q. (BY MR. FAIRLESS) I'm not asking about changes

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for immediate implementation by all inspectors? MR. OWENS: Objection, form. MR. FAIRLESS: What's wrong with that? I'm just reading it. MR. OWENS: Oh, I thought you were -- I didn't realize that, and I didn't track it while you were reading it. A. I see there's a list of 16. Q. (BY MR. FAIRLESS) Okay. Well, I'll point out to you I'm just reading at the top where it says mandatory and that's underlined, right? A. Yes, sir. Q. Procedures slash practices for immediate implementation by all inspectors, colon. Did I read that correctly? A. Yes, sir. Q. And why was it important that these procedures and practices by mandate be implemented immediately by all inspectors? MR. OWENS: Objection, form. A. Any changes or any changes to the protocol should be implemented immediately. Q. (BY MR. FAIRLESS) And so were these changes made because of what was perceived to be a lack of consistency with regard to testing by the TDA

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inspectors? A. Well, I'm not sure which of these are changes and which are procedures that existed previously to this document. Q. Either way, does it matter? Is the ultimate hope here that somebody is wanting consistency, whether it's a change or whether it's enforcement of what already exists, they want consistency, right? A. Yes, sir. Q. Okay. So was the purpose of this being printed out and circulated to make sure that the inspectors were utilizing consistent means and methods with regard to testing retail motor fuel devices? MR. OWENS: Form. A. There are many purposes for having procedures and practices. Consistency is one of them, professionalism, accuracy -Q. Education? MR. OWENS: Let him finish answering. Q. (BY MR. FAIRLESS) Okay, go ahead. A. There are many forms. There are many -- there are many reasons for having procedures in practice. Q. But I cut you off at accuracy. What were you going to say after accuracy? A. I don't know.
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utilizes the changes, understands and utilizes the changes, correct? A. Correct. Q. Even the best policies and procedures in the world serve no purpose if they can't be understood and implemented by the people who are expected to implement them, would you agree with me? A. Say it one more time, please, sir. Q. Yeah. Even policies -- even the best policies and procedures in the world don't do any good if they're not understood by the people expected to understand and implement them, fair? A. Yes, sir. Q. And there shouldn't be -- should not be any reason why TDA inspectors go about their inspections of retail motor fuel devices in different manners, fair? MR. LANGLEY: Objection, form. A. I won't speculate on what the procedures are. There may be different circumstances. Q. (BY MR. FAIRLESS) You would expect that absent different circumstances, there should be consistency from inspector to inspector so that the device owners will understand what the nature and course of inspection will be, fair? A. Yes, sir.
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Q. How about education? Good reason to have policies and procedures? A. Is it -- say that again. Q. Education, is that a good reason to have policies and procedures? A. Sure. Q. Training, is that a good reason to have policies and procedures? A. Policies and procedures are a part of training. Q. Right. A. Employees are trained. Q. Using, guess what, policies and procedures? A. Yes, sir. Q. So education, training, consistency, accuracy, those are all good reasons to have policies and procedures and to make sure that -- first of all, they're all good reasons to have policies and procedures, right? A. Yes, sir. Q. And they're all good reasons to make sure that your policies and procedures are immediately implemented, correct? A. Yes, sir. Q. Particularly if you're going to implement changes because you want to make sure that everybody

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Q. And is there any point in me talking to you about the details of these changes or the -- well, is there any point in me talking to you about the details of this document I've just handed you or will -- do you know enough about the details to specifically address them? A. I don't -- I know some of the details. I don't know all of the details. Q. Well, then tell me which ones you had a hand in seeing implemented. And I'll -- guess I'll talk to you about those. Out of 1 through 16, just... A. So you're asking which ones have been implemented since I've been here? MR. OWENS: He's asking -MR. LANGLEY: He want's to know which ones you had a hand in implementing. MR. OWENS: A hand in. So read them and tell them which ones you had a hand in. THE WITNESS: Okay. MR. LANGLEY: Which ones that you had -which ones that you had involvement in. Q. (BY MR. FAIRLESS) And I've got a red pen. When you get to one, I want you to tell me and I'm going to give it to you so you can circle it and then we're going to mark that as an exhibit. Do you need the red pen

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yet? A. I've come across one that I recall being involved in. Q. Here. Okay. Just keep it until you're done, until you get through 16. MR. OWENS: For the record, can you reproduce these in red? We've had exhibits before that were highlighted in different colors and I didn't get the different colors. THE REPORTER: Yes. MR. OWENS: I don't care what it costs. If he does it in red, pink, or blue or yellow, I would like my copy to be in the same color. MR. FAIRLESS: Can we go off the record for this? MR. OWENS: If you want to. This is the kinder and gentler... MR. FAIRLESS: I appreciate that. Are you almost done or if it's going to take much longer, maybe we need to. THE WITNESS: I just want to make sure -I just want to make sure I'm getting it. MR. LANGLEY: You want perfection out of him and then when he tries to be perfect, you fuss at him.
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MR. FAIRLESS: Yeah. Exhibit 452 is marked. It's what has been marked as a previous exhibit. Q. (BY MR. FAIRLESS) I don't remember what number it is, but I had her mark it again because you circled Items 6 and 7, correct? A. Yes, sir. Q. All right. And then what role did you play in the change to No. 6? A. I met with staff about the changes, approved them. Q. Well, did somebody put forth the changes to you with a recommendation? A. Yes, sir. Q. And who did the recommendation come from? A. I believe it was from the regulatory division, staff in the regulatory division. David Kostroun being the Assistant Commissioner. Q. Okay. So it came to you by way of David Kostroun; and as far as how it came to him, you don't know or do you know the genesis of this change? MR. OWENS: Form. A. Yes, sir. Q. (BY MR. FAIRLESS) What's the genesis of it? Where did it begin?

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1 2 3 3:27. 4 (Discussion off the record) 5 (Exhibit Nos. 452-456 were marked and are 6 attached hereto) THE VIDEOGRAPHER: This is the beginning 7 8 of Tape 5. Back on the record at 3:41. 9 Q. (BY MR. FAIRLESS) Did you mark them? 10 MR. FAIRLESS: Oh, sorry, Videoman. I 11 was talking over you. 12 A. I did. 13 MS. FRIEDMAN: I marked them. 14 MR. FAIRLESS: No. I'm talking to the 15 witness, not you. But thanks, Kelley, for your 16 attention. 17 MS. FRIEDMAN: You're welcome. 18 MR. OWENS: Are you remarking that? 19 MR. FAIRLESS: No. I mean it's marked. 20 MR. OWENS: Okay. I -21 MR. FAIRLESS: I put a -- I put a -because when you were out of the room, I told Ms. Court 22 23 Reporter to go ahead and put a sticker on this. 24 MR. OWENS: Okay. I just haven't heard 25 anything on the record. I'm sorry.

MR. OWENS: Start counting the minutes. THE VIDEOGRAPHER: Off the record at

A. Throughout the last three years, since I've been at the Department of Agriculture, the program as undergone other changes. One of those being a significant increase in the penalty structure that resulted in industry representatives communicating with us a need to look at the -- how the predominance threshold is implemented to build in a little small amount of relaxation there. Q. So the industry representative has been communicating this to you for the past three years? A. No, sir. Q. Okay. Well, when did it get communicated to you? A. As the penalties have gone up, we've heard from industry representatives about it. Q. And the penalties went up in 2007? A. Yes, sir. Q. So you're familiar with the fact that the industry wanted a certain amount of leeway, be it minus one and a half and below or something else even prior to Operation Spotlight? A. I don't -- I don't recall when industry representatives brought it to us, but sometime after the penalty matrix was -- or the penalty structure was increased.

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Q. Well, the penalty structure -- we just went over this -- was increased in 2007. So it was sometime after 2007 and prior to Operation Spotlight that this discussion set forth as No. 6 on this Exhibit 452 was addressed with you, fair? MR. OWENS: Objection, form. MR. LANGLEY: Form. A. No. 6 -- no. I think No. 6 is mainly having to do with the technology of the equipment. The newer -the newer provers have readings in half cubic inch -- I believe those are cubic inch increments. Q. (BY MR. FAIRLESS) Okay. You're right. So why did we start off talking about No. 6 anyway with regard to -- never mind. MR. OWENS: Form. Q. (BY MR. FAIRLESS) So what -- what role did you have in No. 6? A. Staff presented it to me, and I approved implementing it. Q. You didn't have to approve the other 14? The only two you had to approve were No. 6 and No. 7? A. As I read through, I think most of the other ones were in place before. Q. So you're saying the only changes as of December '09, are No. 6 and No. 7?
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that the staff felt the need to bring to your attention for approval purposes? A. After I read through it -MR. OWENS: Objection, form. MR. LANGLEY: Objection, form. A. -- there were only those two that I recall having -Q. (BY MR. FAIRLESS) After you read -A. -- specifically discussed. Q. After you read through Exhibit 452, the only ones that you recall being brought to your attention for purposes of approval were No. 6 and No. 7? A. Correct. Q. Okay. No. 6, you're just -- the new policy is what? Everything is to be read to the .5? A. On No. 6? Q. Yeah. As opposed to going to whole numbers, now y'all can go to .5s? A. Yes, sir, that's essentially... Q. All right. And No. 7, what's the change there? A. No. 7 is a small allowance in the 60 percent predominance threshold. Q. Meaning for purposes of ascertaining whether or not there was a predominance violation, minus ones and minus 1.5s will not be counted?
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A. I don't know that with certainty. I was involved -- the staff ran the -- No. 6 and No. 7 past me as a change that they needed my approval on. Q. Well, wouldn't they have needed your approval on any changes? A. They know I have their confidence to make some changes within -Q. So is the answer no? A. -- their authorities. Q. Is the answer no, they don't need your approval on any changes? They just need your approval on some changes? MR. OWENS: Objection, form. A. They know I have confidence in their ability to administer the programs. Q. (BY MR. FAIRLESS) Then why didn't they just utilize their knowledge that you have confidence in them and not even run No. 6 and No. 7 past you? MR. LANGLEY: Objection, form. A. Well, because like I told you, industry representatives had communicated to me about that issue in No. 7. No. 6 is related to No. 7 in that No. 7 involves the use of half cubic inch increments. Q. (BY MR. FAIRLESS) Okay. So No. 6 and No. 7 were the only ones, the only policies and procedures

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A. Yes, sir. That's correct. Q. And you say that was a suggestion made by industry representatives? A. Not that specific recommendation. Q. I thought that's what you said a few minutes ago. A. They -- they requested that the predominance threshold be relaxed. We -- our staff came up with those numbers. Q. So did the industry come to you and say that they didn't want the low negative numbers to be included in predominant -- in determining whether or not there was a predominance violation. And you're saying the negative one and a half, negative one, and negative .5 were not their numbers; but the idea was what they were pushing? A. The industry asked us for a relaxation in the predominance threshold. Q. And what did they want it relaxed to? .2s, .3s -A. I don't -Q. -- did they want those counted? A. I don't recall that I even heard a proposal. Q. Well, did you ever talk to anybody? Did you speak directly to one of these industry representatives?

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A. Yes, sir. Q. One or many times? A. Maybe one or two, maybe three. Q. And were they all in conjunction with this issue right here, identified by No. 7 on Exhibit 452? A. No. We have an ongoing, very positive working relationship with industry representatives who we regulate, and we discuss a number of things about our programs. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Did you talk about this Item No. 7, each of the two or three times that you met with industry representatives? A. However many times it was, that was what I was -- that's where that number came from, one or two or three times. Yes, sir. Q. Okay. Then who were the industry representatives? A. Most often, I communicate with the government affairs representatives of the Texas Petroleum Marketers and Convenience Store Association. Q. Well, who was that? A. Chris Newton is the person I normally communicate with.
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MR. OWENS: Objection, form. A. It's my understanding those would have been utilized. Q. (BY MR. FAIRLESS) Okay. And -A. The -- the .5, I don't know because we didn't have that reading previously. So I guess I can't respond to that. Q. Well, that would go back to that consistency issue with regard to what the inspectors were doing. If the bottom of the meniscus, assuming that's what they were reading, was beneath one; but not all the way down to zero, we would have to know how they were reading that to determine whether they put zero or minus one, wouldn't we? MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) Do you know what the -A. If the -Q. Do you know what the -MR. OWENS: You can answer his question. A. If the reading was below zero. Q. (BY MR. FAIRLESS) No. Okay, go ahead. A. My understanding is if the reading was below zero, that represented that the pump was not dispensing the fuel the consumer was paying for. That's what the predominance threshold is designed to find.
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Q. So if it was below zero, it should have been read as a negative one? MR. OWENS: Objection, form. MR. LANGLEY: Form. A. I assume that's what we're talking about here. Q. (BY MR. FAIRLESS) Okay. Well, do you really have to assume. You're the Deputy Commissioner of Agriculture. A. Well, I rely on the capable staff of the Department who are involved in these details at the level you're asking me. Q. Well, you keep saying you rely on other people; but you know what, in five hours, almost five hours worth of deposition, I'm not sure you've said, "I don't know" one time. MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) So do you know? A. Do I know what? Q. Do you know whether or not they were marking negative one if the bottom of the meniscus, assuming that's what they were reading, was less than zero? MR. OWENS: Objection, form. A. No. Q. (BY MR. FAIRLESS) Okay. Has anybody gone back to analyze what the Operation Spotlight figures for the

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Q. And so was Chris Newton the only one you communicated with as regards this Item No. 7, or did you communicate with others as well that fall under this category of industry representative? A. I don't recall if Chris was the only one, or if I even discussed it with him. I don't recall who I discussed it with. Q. Well, you just got through saying you discussed it with industry representatives. So are you saying now that you cannot even be sure that you discussed it with Chris? A. That's correct. Q. Can you be sure -- can you give me any name and say but I am sure I discussed it with that person who's an industry representative? A. No, sir. Q. This Item No. 7, let me ask you the negative 1.5, negative one, and negative .5, were those included in determining predominance violations during Operation Spotlight? A. Which ones? Q. Negative 1.5, negative one, and negative .5. A. It's my -- it's my understanding they would have been. Q. Is that the same as, yes, they were?

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PWI stations would be if negative .5, negative ones, and negative 1.5s were not included? A. I don't know. Q. You don't know if anybody has or hasn't? I should have said you hadn't said, "I don't know" earlier because then, boom, I don't know. MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) I'm clowning around. Okay. Do you understand the question though? You don't know if they have or they haven't gone back and determined how this new change would have made a difference or if it would have made a difference? A. No, sir. Q. Okay. So the other 14 items, you didn't play a role in? A. Not that I recall. Q. Who actually reports to you? A. The assistant commissioners. Q. Well, how many are there? A. There are nine assistant commissioners. Q. Okay. David Kostroun, is he the one that's an assistant commissioner that would have a role with regulatory programs pertaining to retail motor fuel devices? A. Yes, sir.
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A. Shannon Rusing. Q. Spell it. A. R-u-s-i-n-g. Q. Okay. Did Shannon Rusing have any involvement in any of the issues that are involved with Operation Spotlight, this litigation? A. Not that I'm aware of. No, sir. Q. Okay. Who else has a direct report to you and did in July of 2008? A. Stephen Pahl. Q. Okay. Stephen Pahl the individual, or Stephen Pahl in his position as whatever his position title is? MR. LANGLEY: Objection, form. A. I don't understand. Q. (BY MR. FAIRLESS) Does Stephen Pahl answer to you no matter what his position is or does his position answer to you and he just happens to be the person in that position? A. Stephen Pahl reports to me through the position he occupies. Q. Yeah, that's good. What's his position? A. Director of Regional Operations. Q. What's his region? A. All regions. Q. Are there any other director of regional
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Q. Are there other assistant commissioners that would fulfill that role as well, or is it just Kostroun? A. David is the assistant commissioner overseeing that program. Q. Okay. So as far as the issues that are on the table here today, David Kostroun is really the assistant commissioner that would deal with such issues? A. Yes, sir. Q. Now, who else reports to you then besides assistant commissioners? Anybody else have a direct report line to you? A. The chief of staff. Q. What chief of staff? Is that it? That's the full title, chief of staff? A. Yes, sir. The Chief of Staff for the Texas Department of Agriculture. Q. Okay. So the TDA Chief of Staff. And who was that in July of 2008? A. Shannon Rusing. Q. Shannon? A. Shannon Rusing. Q. I'm not understanding. Are you saying Shannon or Channon? A. Shannon. Q. Shannon Rusing?

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operations? A. No, sir. Q. Okay. Who else has the direct report to you? This doesn't have to be like pulling teeth. I mean, you can just give me a list if you want. A. Chris Drews. Q. Chris Drews. What position? A. He's a -- I don't recall his exact title. He's a Quality Assurance Specialist, I believe. Q. Who else? A. I believe that's -- I believe that's all. Q. Okay. What is -- what does a quality assurance specialist -- you know, let me back up. Is Chris Drews the only quality assurance specialist or are there others? A. He's the only one. Q. Okay. And what is he quality assurance specialist of? What does that position do? A. He works with the director of regional operations. Q. So is he like the assistant to Stephen Pahl? A. No. He's the -- coordinates our quality assurance efforts in our regional operations. Q. What kind of quality assurance? Like retail motor fuel devices or some other quality assurance?

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A. For multiple programs. Q. Does it include retail motor fuel devices? A. Yes, sir. Q. Did you contact other states -- when I say you, I mean you or at your direction -- contact other states to inquire as to PWI and their compliance slash noncompliance history with regard to retail motor fuel devices? A. Did I contact -- one more time, please. Q. You or someone at your direction, did y'all contact any of the 49 lesser states to inquire about PWI and retail motor fuel devices? A. We made contact with the other states. Q. In writing or by telephone? A. In writing. Q. Okay. Did you send the same letter to everybody and just change the addressee on the letter, or did everybody get their own little individually crafted letter? A. I believe we wrote a letter that went to -- in its same form -- to all 50 states informing them of the results of our inspection. Q. And what feedback did you get? Well, first of all, that form letter you're talking about, did you invite feedback from the other states; or did you just
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MR. FAIRLESS: I'll object to everything beginning with the word "specifically" as nonresponsive. Q. (BY MR. FAIRLESS) PWI, I mean per their Web site which you guys looked at, only did business in ten other states; so why did you send it to all 50? A. I don't know that we did. Q. You don't know if you sent it to all 50, or you don't know if you checked the Web site? A. I don't know if we sent it to all 50. Q. Oh, I thought you said a few -- not I thought. A few minutes ago you said you did. A. Well, we sent it to other states. I thought that's what we were talking about. I don't recall if we sent it to each and every of the other 49. Q. Did you get any feedback from any of these other states with respect to PWI? A. I don't recall. Q. Isn't that the kind of thing that you would recall, particularly before you come to give a deposition is, hey, we heard this back from New Mexico, hey, we heard this back from Oklahoma, and I need to be mindful of it when that PWI lawyer asks me questions today? MR. LANGLEY: Objection, form. MR. OWENS: Form.
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Q. (BY MR. FAIRLESS) I mean, isn't that the type of thing that you would make yourself aware of before you came to give a deposition? MR. OWENS: Form. MR. LANGLEY: Form. A. Not necessarily. Q. (BY MR. FAIRLESS) Have you done any checking to find out if you've heard back from any of the other states? A. I don't recall if we invited feedback. Q. I didn't ask you did you invite feedback. I asked you did you check around to find out if you had heard back from any of the other states who got the form letter? A. No, sir. Q. What was PWI's consumer complaint history like prior to Operation Spotlight? A. I don't -- I don't recall. Q. Certainly you asked for that to be analyzed by Stephen Pahl and the results to be provided back to you before implementing Operation Spotlight, didn't you? A. I don't recall if I requested that. Q. To this day, have you ever seen what PWI's consumer complaint history was like? A. Not that I recall.

say, hey guys, FYI, and then provide the results? A. I don't recall. Q. Don't you recall that you invited feedback? A. I don't recall. Q. You don't have any idea as you sit here today? A. No, sir. Q. Was part of the reason of sending the letter to invite feedback? MR. LANGLEY: Objection, form. A. I don't recall if we invited feedback. Q. (BY MR. FAIRLESS) Why did you send the letter then? I mean were you just wanting to make sure -- why? You tell me why. A. As I recall, we wrote a letter for all of the other states that might have an interest in our inspection results to be aware that this particular company had a very concerning compliance, noncompliance rate in Texas. Q. Had y'all ever -- were you done? A. No, sir. Q. Go ahead. A. Specifically, we had consumers in Texas who were buying fuel from this particular company who nearly 60 percent of their pumps were tilted in favor of the company.

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Q. Have you ever done anything to -- if not look at PWI's complaint history individually, evaluate what PWI's complaint history looks like as compared to everyone else in the industry? A. I don't recall if that data has ever been presented to me. Q. You certainly don't recall as you sit here today ever seeing it, do you? A. I don't recall if that information has ever been presented to me. Q. Which would mean I don't recall having ever seen that information, right? MR. OWENS: Objection, form. A. I don't recall having ever seen that information. Q. (BY MR. FAIRLESS) Okay. Have you directed anybody to make contact -- I mean, specifically go out and make contact with the other states, not just send them a letter; but contact somebody with the Department of Agriculture for Utah or the Department of Agriculture for New Mexico or Colorado or Oklahoma or any of the other states where PWI does business to speak TDA to TDA and get insider information, if you will? A. What was the first part? Have I what? Q. Have you established such contact yourself or
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talked to David Kostroun or Chris Drews or Joe Benavides or Stephen Pahl about the deposition? A. No, sir. Q. And did you make the decision and -- never mind. I don't want to know what you talked to lawyers about, but did you specifically seek out Stephen Pahl's deposition from Stephen? A. No, sir. Q. Were the reinspection procedures changed after Operation Spotlight was concluded? Meaning after July 20th, but during the time period when reinspections were being done following the Operation Spotlight blitz? MR. OWENS: Form. MR. FAIRLESS: What's wrong with that? MR. OWENS: I didn't understand it. THE WITNESS: I don't understand. MR. FAIRLESS: Yeah, that was a bad question. Q. (BY MR. FAIRLESS) Do you know anything about reinspection procedures? A. Very limited. Q. And if I were to tell you that the reinspection procedures changed after Operation Spotlight started, do you know how they changed? A. No, sir.
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directed anybody to establish such contact so that the state agencies can interact with one another and share information pertaining to PWI? A. Beyond the letter, I don't -- I'm not aware of any other contact. Q. And as you sit here today, you don't have an independent recollection of any other state coming back to the Texas Department of Agriculture to tattletale on PWI? MR. OWENS: Form. Q. (BY MR. FAIRLESS) If you do, share it with me. A. I don't recall. Q. Did you ever speak to Russell Langston or Roy Lee Langston? A. I don't recall. Q. Do you know those names? A. No, sir. Q. What documents did you review to get ready for your deposition today? A. I read through the transcript, not in its entirety, but the transcript of Stephen Pahl's deposition. Q. Okay. Did you read anybody else's? A. No, sir. Q. Have you talked to anybody? Like have you

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Q. Do you know why they changed? A. I can't speculate without knowing what procedures you're talking about. Q. Reinspection procedures. A. Right. Q. Yeah. Do you know how they changed, or why they changed? A. I can't -- I don't recall being aware of any reinspection procedure changes. Q. Okay. The one to five enforcement orders with NOVs with one or more checks that you saw for PWI and brought to Stephen Pahl's attention, did any of those fail the preponderance rule? MR. LANGLEY: Predominance rule? MR. FAIRLESS: Yeah, preponderance rule. Q. (BY MR. FAIRLESS) Did any of those fail the predominance rule because the devices that were looked at -- you know, I should have ask you first: Do you know if somebody goes out to do a bulk diesel inspection whether or not for predominance purposes at the time of Operation Spotlight, they were looking at just bulk diesel dispensers or would they be calculating the predominance rule based on bulk diesel, automotive diesel, and automotive gas? MR. OWENS: Form.

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Q. (BY MR. FAIRLESS) Do you understand what I'm asking? A. I could use a little bit better explanation. Q. I want to know -- remember earlier you gave me what's on top and what's on bottom in the -- you know, in the analysis of the -- I'm trying to think what it was now -- the number of pumps compliant versus number of pumps inspected. Okay. Now, I want to know for purposes of the predominance rule in calculating the 60 percent, what's on top, what's the numerator, and what's on bottom, what's the denominator. A. Number of -- number of pumps versus number of pumps tilted in favor of the company. Q. Okay. So when you say number of pumps, are you talking about total number of pumps at the station? Is that what is to go in that area, or is it just the total number of whatever you're looking at, for instance, bulk diesel? MR. OWENS: Form. A. Well, I know different equipment is used for different pumps; so -- but I can't speculate on how that works exactly. Q. (BY MR. FAIRLESS) Let's do this. If you're going to a station and there are let's say 56 gasoline
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then there would have been no predominance violation. Are you with me? MR. OWENS: Form. MR. LANGLEY: Objection, form. A. No, I'm not with you. Q. (BY MR. FAIRLESS) The example that I just gave you about the 56 gas pumps and -A. Yes. Q. -- the eight bulk diesel -A. Yes. Q. -- do you know if any of the five that you had in hand of the one to five that you had in hand when you went to see Stephen Pahl, were predominance -- they were ruled as predominance violations and notice of violations were issued, NOVs were issued as predominance violations even though the only predominance had to do with the bulk diesel as opposed to all of the dispensers at the station? Do you know if any of the one to five fell in that category? MR. OWENS: Form. A. I'm sorry. I'm really not following your question here. Q. (BY MR. FAIRLESS) Do you know -- well, you don't know. Do you know how it's -- no, I think you answered that. So you don't know what you're supposed
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dispensers. You know, grades, fuel blends some of your TDA inspectors call it. And then there are eight bulk diesel. And let's say six of the eight bulk diesel, which would be 75 percent if you were just looking at bulk diesel, were noncompliant according to the inspector's results. A. Of what percent? Q. Six of eight of the bulk diesel were noncompliant. So in determining the application of the 60 percent rule, would you just look at the six of eight or would you look at the six of 64, which would be the 56 gas plus the eight? A. I'll defer to the staff on that. Q. You don't know? A. I'll defer to the staff that do know. Q. Right. And I'm not making fun of you because you don't know. I'm just saying are you deferring to the staff because you don't know? A. Yes, sir. Q. All right. Do you know whether or not any of those few that you -- any of the few notices of violation, the one to five that you had in your hand when you went to see Stephen Pahl, if any of those showed noncompliance violations even though had the total number of devices, gas and diesel been considered,

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to look at. That's what you would defer to the people underneath you to tell you? MR. OWENS: Form. Q. (BY MR. FAIRLESS) Is whether or not you look at the total number of dispensers or just the bulk diesel if you're testing bulk diesel? MR. OWENS: Form. A. There are procedures for determining the predominance threshold violations and when it comes to me, if it says it violated the predominance threshold that's the extent of my understanding on those that I was looking at. Q. (BY MR. FAIRLESS) But that's the thing. Would you know whether or not those predominance violations were predominance for the entire station or were they predominance just because, for instance, six of the eight bulk diesel were supposedly outside tolerances? A. Okay. I understand your question now. Q. Okay. A. I wouldn't know that. Q. All right. And would anybody have to come to you as Deputy Commissioner to get any approval from you before they changed reinspection procedures following Operation Spotlight? A. Some inspection procedures would come to me for

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approval. Q. All right. MR. FAIRLESS: Let me -- have they been marked? Q. (BY MR. FAIRLESS) Let me show you what's been marked as -MR. FAIRLESS: Do we have an extra copy? MS. FRIEDMAN: Yes. MR. FAIRLESS: Where's 454? THE WITNESS: Do we have any water over there? MR. FAIRLESS: Oh, these are the talking points. I want to know about the inspection procedures. MS. FRIEDMAN: The reinspection procedures? We didn't mark those. MR. FAIRLESS: Okay. Have they ever been marked? MS. FRIEDMAN: The reinspection -- I don't know where they are. MR. FAIRLESS: Ms. Court Reporter, can I get you to put your sticker on that? (Exhibit Nos. 457-459 were marked and are attached hereto) Q. (BY MR. FAIRLESS) I'm going to hand you what's been marked Exhibits 458 and 459.
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that's Pages 2 and 3. MR. OWENS: That's fine. Let me just get... MR. FAIRLESS: I'm not going to go over the details with him. MR. OWENS: That's fine. MR. FAIRLESS: I just want to know if he's ever seen them. MR. OWENS: I'm familiar with the documents. Q. (BY MR. FAIRLESS) Have you ever seen those? A. No, sir. Q. They're reinspection procedures. One group of them, the July group, were in effect during Operation Spotlight; and then the August group reflect changes made after Operation Spotlight. Do you know that, or does that give you any more familiarity with them? MR. LANGLEY: Objection, form. A. I don't recall having seen these, so... Q. Okay. Fine. So obviously, I would assume that since you don't recall having seen them, then they didn't need your approval to put into operation. Fair? A. That doesn't mean I didn't see them. I don't recall having seen them.
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MR. FAIRLESS: And, John, I don't know. These may have been marked before. These are the reinspection procedures. MR. OWENS: That's fine. You've double marked stuff before. MR. FAIRLESS: Right. MS. FRIEDMAN: Those are copies of the first one. MR. FAIRLESS: Heres copies of... MR. LANGLEY: Thank you. MR. FAIRLESS: What about the other one? MS. FRIEDMAN: For some bizarre reason, the first page got missed; so I'm missing the first page. But those are copies of the second one. MR. FAIRLESS: Okay. Well, here's all but the first page of the second one. MR. OWENS: Are you saying you only have one copy of these? MR. FAIRLESS: One -- no. There's a complete copy of the first one. MS. FRIEDMAN: The second exhibit, I'm missing the first page of your copy. The witness has the first page. MR. FAIRLESS: And then on the next exhibit, we don't have a copy of the first page; but

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Q. What's Exhibit 453? MS. FRIEDMAN: This is a set for you. MR. FAIRLESS: Huh? MS. FRIEDMAN: This is a set for you. A. It says it's talking points. MR. LANGLEY: Thank you. MR. OWENS: Has this been marked? MS. FRIEDMAN: Huh? MR. OWENS: Has this been mark? MR. FAIRLESS: Yeah, they're right here. That first one is 453. MR. OWENS: The entirety? MR. FAIRLESS: No. MR. LANGLEY: No, just the first page. MR. FAIRLESS: Just the first page. MS. FRIEDMAN: I gave you all of the ones that we've marked. The first page is 453. MR. FAIRLESS: T1 and -MR. LANGLEY: So you've marked all of these, but you've just handed the witness this first one? MR. FAIRLESS: Right. MR. LANGLEY: Okay. MR. OWENS: Which is? MR. FAIRLESS: T1.

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MR. LANGLEY: This one, T1. MS. FRIEDMAN: On top. MR. OWENS: I know. I just want to know the number. MR. FAIRLESS: 453. MR. OWENS: Okay. Sorry. Q. (BY MR. FAIRLESS) So what did you say? You saw it, or you didn't? A. You asked me what it was. I said it was talking points. Q. Okay. So now my next question: Have you seen it? A. Yes, sir. Q. Did you draft it? A. I was involved in drafting it. Yes, sir. Q. What does that mean you were involved in drafting? Did y'all have some sort of round table where you brainstormed about talking points? A. I was involved with other staff in developing the talking points. Q. I assure you we were going to shine a light on all violators who are looking to shortchange Texans. What light have you shined on all violators? A. I guess that's referring to the light of our regulatory programs.

performed after Operation Spotlight, which was nearly, what, two years ago? A. I don't -- not that I'm aware of. Q. Yes, it was nearly two years ago, not that you're aware of. No, there haven't been any risk-based inspections done. Fair? A. Yes, sir. Q. Okay. So this light that you're going to shine on all violators, just doesn't have the batteries in it yet? MR. OWENS: Objection, form. MR. LANGLEY: Form. A. I'm not sure what you mean. Q. (BY MR. FAIRLESS) Well, you know what I'm mean. Just commonsensical wise, is that what you're -- I mean, is that fair to look at it this way? I know it's your talking point, but you say you're going to shine a light on all violators; but you haven't done anything in the way of a risk-based inspection to accomplish that, have you? MR. OWENS: Form. A. We have not come across any trends as -Q. (BY MR. FAIRLESS) You haven't looked for any? MR. OWENS: Let him finish his answer. Q. (BY MR. FAIRLESS) Go ahead. I thought you

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Q. So what specifically have you done to shine light on all violators? A. We've made multiple improvements to our regulatory programs since I came into my job in January of 2007, including increase -- increasing the penalty matrix significantly, we've worked with the legislature to increase the statutory authority for penalties, we've -Q. That's not the context I'm asking for. MR. OWENS: Let him finish his answer. Q. (BY MR. FAIRLESS) Go ahead. A. We've obtained increased authority on the ability to conduct risk-based inspections. We've enacted a number of changes that will help identify anyone shortchanging Texans. Q. What risk-based inspections have you conducted of a single entity, other than PWI? A. We're in the process of developing our risk-based criteria at the legislature's direction. Q. So is the answer none today? A. We conduct risk-based inspections in other programs. Q. I'm not talking about other programs. I'm talking about this program pertaining to retail motor fuel devices. Have any risk-based inspections been

were. A. We've not come across any trends that would suggest someone is looking to shortchange Texans. What led to Operation Spotlight, as a reminder, was a trend of more than 30 percent noncompliance compared to the statewide average of 5 percent. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) What trends have you looked for specifically with regard to retail motor fuel device and regulatory enactment of your programs? A. We're developing a risk-based inspection criteria that will include trend analysis and we have a directive to all staff involved with these programs to continuously look for anything that suggests there might be a trend that needs to be researched. Q. I'm talking specifically. What have you specifically done to look for trends to shine the light on violators? A. We've directed all staff who interact with these programs to monitor the programs from their perspective and identify anything that they feel needs to be researched as a possible trend and we're in the process of developing a risk-based inspection criteria. Q. Wait a second. Having everybody and their

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brother look for a trend that could be developing, that's -- that was going on long before Operation Spotlight, wasn't it? A. We had directed it long before then. Yes, sir. Q. So it's not like that instruction changed at all after Operation Spotlight, right? A. Correct. Q. And nobody brought it to your attention, hey, here's a trend we all need to be mindful of, that later gave birth to Operation Spotlight, fair? A. Say it one more time please, sir. Q. Nobody came to you and said here's a trend that I have been seeing that we need to be mindful of and it subsequently gave birth to Operation Spotlight. That's not the way it came about, is it? A. That's correct. Q. The way it came about is you yourself looking at NOVs that evidently came across your desk, noticing enforcement orders and attached checks and then noticing that some of them had the name of the same company, that being PWI and/or Sunmart, that is what triggered an analysis, correct? A. That is what caused me to ask for an analysis of the data. Q. So when you say that we're relying upon, you
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here's a company that we need to look into? MR. OWENS: Form. Q. (BY MR. FAIRLESS) Did they? MR. OWENS: Form. MR. LANGLEY: Form. A. I identified what I believed could be a trend based upon the enforcement orders that crossed my desk and -Q. (BY MR. FAIRLESS) That's not my question. MR. LANGLEY: He's already answered your question. MR. FAIRLESS: No, he hasn't. MR. LANGLEY: Yes he has. He answered that very question. Q. (BY MR. FAIRLESS) Nobody brought a PWI trend to your attention in your entire period of time as Deputy Commissioner of Agriculture, correct? A. That's not correct at all. MR. OWENS: Form. Q. (BY MR. FAIRLESS) Okay. Who brought a PWI trend to your attention? A. After I asked for the data to be analyzed, the trends that were brought to my attention were alarming, 34 percent I believe noncompliant compared to a statewide average of 5 percent noncompliant. Then after

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know, people to constantly analyze data to shine a light on possible violators, that's what you had been doing for years before and that's not how PWI came to the forefront, is it? A. PWI and Operation Spotlight came about due to an increased awareness of potential trends, some enforcement orders that crossed my desk that showed what appeared could be a trend to me, which resulted in me requesting that data be analyzed. That resulted in data yielding -- data showing that this company has a noncompliance rate of more than 30 percent compared to the statewide average of 5 percent, comparing this company to all other companies in the state and we identified that this company had a history of violating the predominance threshold. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Nobody brought to you a PWI trend. That was something you decided to look into yourself. MR. OWENS: Form. MR. LANGLEY: Asked and answered. Q. (BY MR. FAIRLESS) Correct? A. What's -- forgive me. What's the question? Q. Nobody brought to you a PWI trend, and said

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we conducted the inspections, the data that people brought to my attention, which I believe is what you're asking -Q. It's not. A. -- showed that 58 percent of the fuel pumps inspected in Texas by -- that this company operates, were tilted in favor of the company. Q. We should keep talking about that it though. It's gone down from 60 percent to 58 percent the more we talk about it. MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) The -- I'm talking about before you sent everybody out or sent Stephen Pahl out to have trend analysis done. Nobody before that moment in time brought to you any sort of trend analysis that questioned PWI or its business ethics, correct? MR. OWENS: Form. MR. LANGLEY: Form. MR. FAIRLESS: He'll be at trial, boys. MR. LANGLEY: We know. A. Nobody brought to my attention anything prior to the trend that I suspected could exist. I asked for data to be analyzed and the trend that came back to me, that staff brought to me, showed a 34 percent noncompliance rate compared to a statewide average of 5

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percent noncompliance. Q. (BY MR. FAIRLESS) You should get paid by how many times you've mentioned that 34 percent today. You would be a wealthy man. MR. LANGLEY: It won't be as much as how many times you've looked at his business card today. MR. FAIRLESS: Exhibit -- it won't be because I can't ever remember what the hell his position is. If I got paid a nickel for every time I looked at this, I would have a pocket full nickels. MR. LANGLEY: I tell you what, you've got it at the ready. MR. FAIRLESS: I know I do, don't I? I need one of my very own to frame. Q. (BY MR. FAIRLESS) What's Exhibit 454? A. Talking points. Q. And what -- who came up with these? MR. OWENS: Just for the record -MR. LANGLEY: Which one? THE WITNESS: I think this one. MR. OWENS: He's looking at talking points with T1 on them and you -MR. LANGLEY: I think they're both -- are they different? MR. FAIRLESS: They both have T1 on them.
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press conference. Q. (BY MR. FAIRLESS) I didn't ask you was he involved before the press conference. I said did y'all come up with these talking points, Exhibits 453 and 454, without the involvement of Todd Staples? A. We drafted them without Commissioner Staples' involvement. Q. Okay, thank you. Exhibit 455, did you participate in the drafting of that? A. I think all of these documents, these three are different versions of the same one. They all say talking points. Q. Right. But I didn't generate them, see. All I'm doing is looking at them. So are you saying that this is yet another document that was part of the initial talking points that were being drafted for later submission to Todd Staples? MR. LANGLEY: Page 2. A. This is a version of those talking points. Q. (BY MR. FAIRLESS) These are three different versions of what was going to be the talking points that would be shared with the media? A. This was one of the versions. Q. You're saying this -A. One of the drafts.
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MR. OWENS: So there's two different -THE WITNESS: Looks like they're formatted differently. MR. OWENS: So there's two different T1s? MS. FRIEDMAN: Yeah. MR. OWENS: Okay, sorry. I didn't know. MR. LANGLEY: They are different. Q. (BY MR. FAIRLESS) So did you play a role in this, too? A. I played a role in the development of the talking points Commissioner Staples used on that day. Q. Is that how y'all work in politics is that y'all come up with things for the politician to say? Y'all come up with the points and then y'all just tell him what the points are and he takes them to the media and announces them as his points? MR. OWENS: Form. MR. LANGLEY: Objection, form. A. No, sir. Q. (BY MR. FAIRLESS) Well, I mean, y'all came up with these things without Todd Staples around, didn't you? These are points y'all came up with independent of Todd Staples, yes? MR. OWENS: Form. A. Commissioner Staples was involved before the

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Q. -- but you're pointing to Exhibits 453, 454, and 455. You're saying that they all culminated in a set of talking points that Todd Staples used with the media? Yes? A. Yes, sir. Q. Okay. And which is the final version? 453, 454 or 455? A. I can't say. MR. LANGLEY: Objection, form. A. I can't say without seeing the transcript of the press conference. Q. (BY MR. FAIRLESS) Would he read it word for word? Is that the way those -- I've always wondered about that. When there's that press conference going on, is he reading these word for word? A. Sometimes he'll read. Sometimes he will not read. Q. Well, you said I wouldn't know without a transcript of the media conference. So if you had the transcript, then you would know whether or not he used 453, 454, or 455 because you would know which one he read? MR. OWENS: Form. MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) Right?

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A. I probably couldn't say with complete certainty, but I would be able to get closer than I can without it. Q. Who told him look at the camera and wink when he said that one part during the conference? MR. LANGLEY: Objection, form. MR. OWENS: Form. A. I don't recall the -MR. FAIRLESS: What's wrong -- what could possibly be wrong with that? MR. LANGLEY: Who told him to look at the camera and wink? That assumes someone told him to do it. MR. OWENS: I think y'all Photoshopped that. Q. (BY MR. FAIRLESS) Who did that? That was your idea, wasn't it? A. I didn't even recall that the Commissioner winked. Q. You're the brains behind this. MR. OWENS: Y'all Photoshopped that. Q. (BY MR. FAIRLESS) Tell me you did that, right? You told him to do that? MR. LANGLEY: Objection, form. Don't answer that.
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camera. Q. (BY MR. FAIRLESS) Do you see -- I want you to -- I'm going to underline it here. MR. FAIRLESS: Can I mark on this, Kelley? MS. FRIEDMAN: Have at it. MR. OWENS: You've marked on everything else. Q. (BY MR. FAIRLESS) Do you see the part I've underlined? Can you read that? MR. OWENS: Let the record reflect that you've underlined something in red. MR. FAIRLESS: Right, yeah. MR. OWENS: On -MR. FAIRLESS: It's not an exhibit. MR. LANGLEY: It's not marked yet? MR. FAIRLESS: No. Q. (BY MR. FAIRLESS) Here, let me tear that page off and mark it once you're done reading it. Are you done? MR. LANGLEY: Make him wait. It drives him crazy. MR. FAIRLESS: Should we mark the whole thing, Kelley? MS. FRIEDMAN: No, because there's
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Q. (BY MR. FAIRLESS) How about this e-mail that you sent. It's from you and it's to the Commissioner. The Commissioner, is that Todd Staples? A. It is. Q. Okay. So this is to Todd Staples and you specifically tell him... MR. LANGLEY: I don't have that. MR. OWENS: Randy is going off the reservation. MR. FAIRLESS: Yeah. MR. OWENS: Earth to Randy. MR. LANGLEY: Where is it again, Kelley? I'm so far off the reservation, I can't find it. Oh, Bryan. Q. (BY MR. FAIRLESS) Who's Bryan, Bryan Black? A. Bryan Black is our Director of Communications. Q. Okay. So you told Todd Staples that Bryan Black intends, quote, that at -- you said as the time. I'm assuming you mean at the time -- intends that at the time, you would drive the message to the camera, end quote. That's when Todd Staples winked at the camera, isn't it? MR. LANGLEY: Objection, form. MR. OWENS: Form. A. I don't even recall that he winked at the

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unrelated stuff in there. MR. FAIRLESS: Okay. (Exhibit No. 460 was marked and is attached hereto) Q. (BY MR. FAIRLESS) I've marked this document as Exhibit No. 460. And at the bottom where I've underlined in red, that's an e-mail from you to Todd Staples? A. Yes, sir. Q. And you're telling him at one point what Bryan wants him to do and I see that carbon copied on that e-mail is Bryan Black, with that same unique spelling, B-r-y-a-n. So I assume when you say Bryan wants him to do something, you're talking about Bryan Black? A. Yes, sir. Q. And Bryan Black is the communications guru? MR. OWENS: Form. A. Bryan Black is the director of communications at the Department of Agriculture. Q. (BY MR. FAIRLESS) So Bryan Black -- it's not unusual for Todd Staples to take some direction from Bryan Black when it comes to communications with the media? MR. LANGLEY: Object to form. Q. (BY MR. FAIRLESS) Fair?

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A. It's not unusual. Q. Okay. And read what I highlighted. You can read it. Go ahead. No. I mean, read it out loud just like school. A. Yes, sir. Bryan intends that as you -- Bryan intends that at the time you would drive the message to the camera. Q. And what message are you wanting Todd Staples to drive to the camera? MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) I mean, what were you talking about when you said at the time you would drive the message to the camera? What message? A. There were evidently previous sentences. There are some bolding in the talking points. Q. Okay. And the bold that I see on Exhibits 453, 454, and 455, are those the points that Todd Staples is to drive to the camera? MR. OWENS: Form. MR. LANGLEY: Form. A. I don't know which of these was attached to this e-mail. Do you? Q. (BY MR. FAIRLESS) I don't. Well, do you know -- but you're the one who wrote this. Do you know what you were talking about at the time?
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than Bryan intends, as that sentence says there. Q. (BY MR. FAIRLESS) Right. But did Bryan tell you what he wanted Todd Staples to do to drive home the message? A. I assume the rest of that sentence. MR. LANGLEY: Did he tell you is what he's asking? A. I don't recall. Q. (BY MR. FAIRLESS) Would the wink accomplish that? MR. OWENS: Form. MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) No. I just want to know. Does the wink accomplish that driving home the message to the camera? MR. LANGLEY: Objection, form. A. I don't recall that he winked at the camera. Q. (BY MR. FAIRLESS) Okay. Never mind. Okay, Exhibit 457 and Exhibit 456. They've got a copy. MR. OWENS: Let me just see which ones they are. MR. FAIRLESS: They were all in order when I gave them to y'all. MR. OWENS: Yeah. Then you went out of order, Randy.
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MR. OWENS: Form. A. I was talking about some bolding in some talking points that were attached to this e-mail. Q. (BY MR. FAIRLESS) Right. But do you know if that has to do with Exhibit 453, 454, or 455; or were there other talking points? A. I don't -- I don't know which of these. Q. Well, we see bolded in 453, 454, and 455 is the sentence: And one Texan cheated is one Texan too many. That's bolded in all three of these -A. Which number? Q. 453, 454, and 455. A. Oh, okay. Q. The three that you said were just different versions of the same, they all -- each one of those have it bolded that one Texan cheated is one Texan too many, correct? A. Yes, sir. Q. And how did you want Todd to drive home the message to the camera? MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) I mean, what did you have in mind when you said drive home the message to the camera? MR. LANGLEY: Objection, form. A. Well, I don't know what I had in mind other

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MR. FAIRLESS: One page. MR. LANGLEY: This one. MR. OWENS: This one. MR. LANGLEY: And this one right here, yep. MR. OWENS: Okay. Exhibit 457. What's the other one? MR. LANGLEY: I didn't see it yet. MR. OWENS: 456, got it. Q. (BY MR. FAIRLESS) Are these more talking points? MR. LANGLEY: Again 457, 456, is that what you're talking about? MR. FAIRLESS: Right. A. Yes, sir. Q. (BY MR. FAIRLESS) Does Todd Staples get talking points for everything, or just when he's addressing the media? A. It depends on the situation. Q. If he's giving a speech or talking to a group, is he being given talking points? A. He'll be given briefing material, including talking points. Q. And so did you help draft these? A. I helped draft the talking points that were

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given to the Commissioner. There's a few versions here. Q. Right. There's a lot of versions there. But I'm talking now specifically about 456 and 457. Did you help draft those? MR. OWENS: Form. A. I -- yes, sir. I helped draft the talking points that were given to the Commissioner. Q. (BY MR. FAIRLESS) And the document that you sent to the other states, this form document we talked about, was that a regulatory alert? A. I believe that's what it was called. THE WITNESS: I don't know how much time we've got left, but I'm going to need a break before too long. THE REPORTER: Eight minutes. THE WITNESS: I can wait. MR. LANGLEY: You can have a break whenever you want a -- Randy, how much longer do you think you have? MR. FAIRLESS: Not much more. I couldn't have much more time. How much time do I got? THE REPORTER: Eight -- eight minutes. MR. OWENS: I mean, you can wrap up. Do you need a restroom break or something before that, or do you want to go ahead get her done?
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MR. OWENS: Form. Q. (BY MR. FAIRLESS) And I'm not asking you did you take the information that you got back and interpret it a certain way or assume that it means a certain thing. I'm asking you what direct evidence do you have that PWI was intentionally shortchanging Texas consumers? MR. OWENS: Form. MR. LANGLEY: Objection, form. A. The evidence of the inspections would indicate that there's a significant issue there. 58 percent noncompliance when everyone else in the state operates at a 5 percent noncompliance rate. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) That -- assuming you were right, that could lead to some assumptions. A. Okay. Q. But that is not direct evidence that pumps were set to intentionally shortchange consumers. That just shows that at the time the testing was done, assuming the testing was valid, correct, and accurate and was done by competent officials, that the pumps were found to be in the negative; thereby, shortchanging consumers
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THE WITNESS: No. I'm fine. Q. (BY MR. FAIRLESS) All these talking points that have the word "intentional" in them, what evidence, direct evidence, did you have that any of the conduct of PWI was intentional? A. Where are you -- where are you talking about? Q. All over these documents. A. Okay. Q. I'm looking at Exhibit 457. Let's see, it's in the first paragraph twice. It's in the last paragraph. And those are just the first two I've looked at, so... MR. LANGLEY: Your question is what? Q. (BY MR. FAIRLESS) Is what direct evidence do you have that PWI intentionally did anything to shortchange consumers, much less intentionally cheated consumers? A. The results of the inspection were so significantly higher than the standards that are met by every other retail fuel operator in Texas. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Y'all didn't -- we've already covered that, remember? Y'all didn't do any blitz of any other retail motor fuel device owner in the state of Texas. And that's not direct evidence anyway.

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depending on how you interpret tolerances. Okay? So I'm taking all of that out of the mix and saying -- asking you what direct evidence do you have -- not what conclusions can you make from the information you looked at. But what direct evidence do you have of intentional shortchanging Texas consumers? MR. OWENS: Form. A. There are a number of factors that -- a number of findings that came out of these inspections. The noncompliance at the pump being a portion of them. The observations our inspectors made about the timing of some of the calibrations being others. Q. (BY MR. FAIRLESS) I don't even understand that. How is that direct evidence? MR. LANGLEY: Objection, form. MR. OWENS: Form. Q. How are the findings -MR. OWENS: Let him answer the question. Go ahead. MR. FAIRLESS: He wasn't even saying anything. MR. OWENS: He was about to talk about what the inspectors saw. A. As our inspectors reported back to us, they saw calibration employees operating immediately ahead of our

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employees. Our inspectors would identify pumps that had just been calibrated that were still out of calibration. There were a number of things that observations combined with the inspection results. Q. (BY MR. FAIRLESS) Does that tell you a little bit about the competency of your testing when the testing is being done on the heels of somebody, an independent third party, calibrating pumps and yet your testers still find the pumps out of calibration? A. I have complete confidence in the inspectors of the Texas Department of Agriculture. Q. So the only thing evidently that tells you is the people who are calibrating in front -- immediately in front of the inspectors are either complete idiots or they still are setting pumps to the negative, even though they know the TDA has an inspection soon to follow? MR. OWENS: Objection, form. MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) Which would, oh, by the way, they are indeed idiots? MR. OWENS: Objection, form. MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) Do you not see the rub there? MR. OWENS: Form.
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Texas consumers? MR. LANGLEY: Objection, form. MR. OWENS: Objection, form. A. There was an enormous amount of evidence that came out of these inspections that it -- that revealed that this company was shortchanging Texas customers at a much higher rate than anyone else in this state. And that's reason for us to be concerned as to why that would be happening. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) And I would disagree with you wholeheartedly. But even if I did agree with you, how do those results show anything other than what the pumps were found at, as opposed to what the mind set and the intent was for the company who hired the individuals that did the calibrations? MR. OWENS: Form. A. The significance of the data that came out of the inspections. Q. (BY MR. FAIRLESS) Say that one more time. A. The significance -- I was waiting on you. Q. Okay, thanks. A. The significance of the data that came out of the inspections. We've -- in my time at the Department

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A. I don't recall the question. Q. (BY MR. FAIRLESS) What would be the possible -no. What would be any rational explanation why somebody would send calibrators out ahead of the TDA and then have those calibrators calibrate to the negative, knowing the TDA is soon to follow? MR. LANGLEY: Objection, form. MR. OWENS: Form. Q. (BY MR. FAIRLESS) Give me a single rational explanation. MR. LANGLEY: Objection, form. A. I can't speculate as to why someone would do that. Q. (BY MR. FAIRLESS) I don't want you to speculate. I want you to give me a single rational explanation. MR. LANGLEY: Objection, form. A. Mr. Fairless, I can't speculate on why someone would do something like that. Q. (BY MR. FAIRLESS) Okay. So is that the only direct evidence that you have? That there were calibrators out there ahead of the TDA and the TDA came along after that and still found the pumps to be in the negative, so is that the direct evidence you have with regard to pumps being intentionally set to shortchange

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of Agriculture, I have never seen a company in this state shortchanging Texas consumers that significantly. I find it unacceptable. I find it unacceptable for pumps in this state to be shortchanging customers at a rate of 58 percent. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Now it sounds like you're running for office. What is this document right here? MR. LANGLEY: Objection, form. MR. OWENS: Objection, form. Q. (BY MR. FAIRLESS) Just the top part when you say you want SWR -- is it him that wrote that? You want SWR -- I'm not copying SWR since she is insulated on this one. What does that mean? A. SWR is our chief of staff. Q. What's SWR stand for? A. It's her initials. Q. Right. What -- say her name. A. Shannon Wickliffe Rusing. Q. Okay. So you want her insulated on this one. What is it you want her insulated on? Because the subject is confidential, Operation Spotlight. A. Out of respect for those we regulate, we have protocols at the Department of Agriculture to insulate

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the person who executes an enforcement order from those staff who have access to details of any particular case. Again, out of respect for the regulated entity. MR. FAIRLESS: Did you understand that? MS. FRIEDMAN: No. MR. OWENS: How -- I know we're... MR. FAIRLESS: Yeah. You're going to let me wrap up though, right? MR. OWENS: I'm going to let you wrap up. MR. FAIRLESS: It's not going to be long. MR. OWENS: I'm going to let you wrap up. Q. (BY MR. FAIRLESS) Can you say that again? I didn't understand that. A. Sure. We have a protocol at the Department of Agriculture. Q. Right. A. To protect the person who enforces -- who executes enforcement orders from details of a particular case. Q. What does that mean executes enforcements orders? The person who signs off on them? A. Who executes it. That's the signature is what executes it. Q. Right. That's what I want to know. What you're talking about when you say execute just means
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understood that when I said PWI, I've meant Sunmart? A. Yes, sir. Q. Okay. Did you have any involvement with postal inspectors? Have you met with any postal inspectors about PWI? A. No, sir. Postal inspectors? Q. Postal inspectors? Federal investigators? A. Okay. No, sir. Q. Have you met with any of them? A. No, sir. Q. Have any discussions been brought to you that any of your people at the TDA have had with postal inspectors, US postal inspectors? A. No, sir. Q. Okay. Let me show you what's been marked as Exhibit 462. MR. FAIRLESS: Kelley, do you have one for them? MS. FRIEDMAN: Yes. Q. (BY MR. FAIRLESS) And if you start reading these e-mails from the bottom up, that's how I'm told that these things are read. Do you see the -- yeah. I wasn't even going to the previous page. I'm just looking at that first page. It says we've shut down about 36 stations so far yesterday and today. And -Page 277

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signed it, who signed it. No. I'm saying that's what you mean? A. Oh. Yes, sir. Q. Execute just means signed? A. Yes, sir. Q. All right. Okay. Can I see that for one second? MR. FAIRLESS: Ms. Court Reporter, can we put a sticker on this? (Exhibit No. 461 was marked and is attached hereto) MR. FAIRLESS: Kelley, do you have another copy? It's Exhibit 461. So since I'm on a limited amount of time just to wrap up, can we take a break for just a minute and then I'll just see what else there is? MR. OWENS: Sure. THE VIDEOGRAPHER: Off the record, 4:57. (Recess taken) (Exhibit No. 462 was marked and is attached hereto) THE VIDEOGRAPHER: We're back on the record at 5:06. Q. (BY MR. FAIRLESS) Today, there have been times when I've asked you questions about PWI. Have you

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MR. OWENS: Bottom of Page 1. A. Oh, yeah. Q. (BY MR. FAIRLESS) Do you see it? A. I'm with you now. Yes, sir. Q. Then Todd Staples is saying, great, we should treat the team to some Nilgai sausage wraps sometime for all their efforts. Did y'all do that? A. No, sir. MR. LANGLEY: What kind of sausage wraps? MR. FAIRLESS: Nilgai, that's deer. MR. LANGLEY: Nilgai, Nilgai. MR. FAIRLESS: Nilgai? I've never heard it called Nilgai. MR. LANGLEY: You haven't? MR. FAIRLESS: Uh-uh. MR. LANGLEY: You're not from south Texas, are you? MR. FAIRLESS: No. I'm from east Texas, and we call them Nilgai guy. Q. (BY MR. FAIRLESS) But you see on the middle of the page when they were talking about 36, they qualify that it's not 36 stations that have been shut down. That it's 36 places where presumably test results demonstrate that 60 percent or more of the pumps were in favor of the station. Do you see that?

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A. Q. A. Q. these. A.

Yes, sir. What's the -You're -What's the difference? You're the one writing What qualification are you making there? We... MR. LANGLEY: Are we talking about the same statement? I mean, which one are you asking about? MR. FAIRLESS: Thirty-six. MR. LANGLEY: Okay. So in the middle of the page? MR. FAIRLESS: Well, it starts at the bottom. Q. (BY MR. FAIRLESS) See, at the bottom you're saying they shut down 36 stations and all I'm getting at is -MR. OWENS: So far yesterday and today. MR. FAIRLESS: Right. We just covered that. Q. (BY MR. FAIRLESS) The 36 stations -MR. LANGLEY: But your specific question is about this right here? Is that what you're talking about? MR. FAIRLESS: No. I'm talk about both of them.
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shutting down the whole stations. We're only shutting down pumps that were in the negative that we believe fell within the 60 percent predominance findings? MR. OWENS: Form. A. The way the predominance rule is working in this situation, is the -- if you -- if there was a pump tilted in favor of the company -Q. (BY MR. FAIRLESS) Found in favor, right. Go ahead. A. -- that pump would be counted in the calculation to determine what percentage of the pumps were tilted in favor of the company. Q. Got it. And then if you come up with 60 percent, are you going to shut down the whole station or just the 60 percent or whatever percentage were in favor of the station? A. We'll tag the pumps. We're tagging the pumps out of order that were tilted in favor of the company in that situation. Q. Why do you keep saying predominance threshold when everybody else in this case has made it a special point to say predominance rule? All the other TDA people are singing the predominance rule song. Why are you saying predominance threshold? MR. OWENS: Objection, form.
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MR. LANGLEY: Okay. All right. Do you understand? Q. (BY MR. FAIRLESS) Are you distinguishing when you say actually no, we just realized that what was being said was wrong. What are you talking about? What was wrong? A. Hang on. Okay. The distinction is these stations we're talking about violated the predominance threshold, which I corrected to clarify that results in tagging the pumps that were tilted in favor of the company out of order. Q. As opposed to shutting down the whole station, which is what was being broadcast to the media? A. I don't know that that's what was being broadcast to the media. There were some stations that were shut down in their entirety because 100 percent of the pumps were cheating the customer. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) Do you see the part we just realized that was being said wrong. Being said to who? A. I guess in -Q. Being said to the media? A. -- the e-mail previously. Q. Okay. So the clarification is we're not

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A. I won't speak to why someone says a different word than I say. Q. (BY MR. FAIRLESS) Well, they're all your staff. They work for you. I'm just wondering why you have a different word than the rest of them. It's kind of unique. A. There's a threshold that's established by national standards that is based upon a predominant number of the pumps being tilted in favor of the company. When that threshold is met, higher penalties can be assessed. MR. FAIRLESS: I'll object as nonresponsive. Q. (BY MR. FAIRLESS) I just want to know why you use that word and everybody else has been using the word rule instead of threshold. A. I can't speak to why anyone else used a different term. Q. And has Texas adopted Handbook 44. MR. OWENS: Objection, form. MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) Wait a second. A. Has Texas -Q. Wait, wait. MR. LANGLEY: Oh, he's got the business

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card again. Q. (BY MR. FAIRLESS) As Drew DeBerry, Deputy Commissioner of Agriculture, has the great state of Texas adopted Handbook 44? A. We utilize Handbook 44 as the national standard. MR. OWENS: Form. Q. (BY MR. FAIRLESS) So the answer is yes? MR. LANGLEY: Objection, form. Q. (BY MR. FAIRLESS) Yes? You can say it. It's okay. MR. LANGLEY: Objection, form. A. Yes. Q. (BY MR. FAIRLESS) Pre-depo meetings, who did you meet with to get ready for your deposition? I don't want to know what y'all talked about. I just want to know who you met with. Who was there? Who was in the room? A. I met with the two gentlemen here from the Attorney General's Office. Q. The John twins? MR. LANGLEY: The two gentlemen, and we are gentlemen. MR. FAIRLESS: You throw that word around loosely.
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1 A. Not that I can recall. 2 MR. FAIRLESS: Okay. That's all the 3 questions I have. I'll reserve whatever additional 4 questions I have until the time of trial. 5 MR. OWENS: So will we. 6 MR. LANGLEY: Okay. 7 THE VIDEOGRAPHER: Off the record, 5:16. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
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Q. (BY MR. FAIRLESS) And when did you meet with them? Today? MR. LANGLEY: You've got one minute according to the videographer. A. I met -- we met this morning. We met a couple -Q. (BY MR. FAIRLESS) Today is not the only meeting y'all have ever had, is it? A. No, sir. Q. All right. I mean about this. It's not the only meeting y'all have ever had? A. No, sir. Q. Before Operation Spotlight and the, quote, trend, end quote, you noticed for Sunmart, had you ever been involved in weights and measures enforcement to this degree? MR. OWENS: Form. A. I've been deeply involved in weights and measures regulatory programs since we came into this -since I came into this position in '07. Q. (BY MR. FAIRLESS) Have you had meetings with Todd Staples subsequent to this lawsuit being filed about PWI? A. I don't believe -- since the lawsuit was filed? Q. Yes, sir. About PWI.

SIGNATURE AND ERRATA PAGE PAGE LINE SHOULD READ REASON

________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________

I, DREW DEBERRY, have read the foregoing 11 deposition and hereby affix my signature that same is true and correct, except as noted above. 12 ______________________ 13 14 DREW DEBERRY 15 ******** 16 THE STATE OF TEXAS: COUNTY OF ____________ 17 18 BEFORE ME, ______________, on this day personally appeared DREW DEBERRY, known to me or proved 19 to me under oath or through ____________ (description of identity card or other document) to be the person whose 20 name is subscribed to the foregoing instrument and acknowledged to me that they executed the same for the 21 purposes and consideration therein expressed. 22 Given under my hand and seal of office this ______ day of ____________, 2010. 23 _______________________ 24 Notary Public in and for 25 The State of TEXAS

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1 CAUSE NO. 2008-45087 (CONSOLIDATED) 2 ALLISON SNODDY, et al ) IN THE DISTRICT COURT Plaintiffs, ) 3 v. ) PETROLEUM WHOLESALE, INC. ) 4 et al. ) Defendants, ) 5 and ) STATE OF TEXAS ) HARRIS COUNTY, TEXAS 6 Plaintiff ) v. ) 7 PETROLEUM WHOLESALE, L.P., ) d/b/a SUNMART; and PWI GP, LLC) 8 Defendants ) 334TH JUDICIAL DISTRICT 9 JOB NUMBER: _____________ 10 ORAL VIDEOTAPED DEPOSITION OF DREW DEBERRY 11 APRIL 26, 2010 12 I, Paige S. Watts, Certified Shorthand Reporter in and for the State of Texas, hereby certify 13 to the following: 14 That the witness, DREW DEBERRY, was duly sworn by the officer and that the transcript of the oral 15 deposition is a true record of the testimony given by the witness. 16 That I am neither counsel for, related to, nor employed by any of the parties or attorneys in 17 the action in which this proceeding was taken, and further, that I am not financially or otherwise 18 interested in the outcome of the action. That the charges for the preparation of 19 the foregoing completed deposition and any copies of exhibits are $__________, charged to attorney for 20 Defendant, Petroleum Wholesale. That amount of time used by each party at 21 the deposition is as follows: 22 Mr. Fairless.............6 hours, 14 minutes 23 Mr. Langley..............0 hours, 0 minutes 24 Mr. Owens................0 hours, 0 minutes 25
1 SUPPLEMENTAL CERTIFICATION PURSUANT TO RULE 203 2 CAUSE NO. 2008-45087 (CONSOLIDATED) 3 ALLISON SNODDY, et al ) IN THE DISTRICT COURT Plaintiffs, ) 4 v. ) PETROLEUM WHOLESALE, INC. ) 5 et al. ) Defendants, ) 6 and ) STATE OF TEXAS ) HARRIS COUNTY, TEXAS 7 Plaintiff ) v. ) 8 PETROLEUM WHOLESALE, L.P., ) d/b/a SUNMART; and PWI GP, LLC) 9 Defendants ) 334TH JUDICIAL DISTRICT 10 JOB NUMBER: _____________ 11 ORAL VIDEOTAPED DEPOSITION OF DREW DEBERRY 12 APRIL 26, 2010 13 I, Paige S. Watts, Certified Shorthand Reporter in and for the State of Texas, hereby certify 14 to the following: 15 That the deposition was submitted on the _____ day of _________, _______, to the attorney for the 16 witness for examination and signature, and was ___ was not ___ returned to me by the _____ day of __________, 17 ________. 18 That the attached correction sheet contains the changes, if any, and reasons therefor made 19 by the witness. 20 That the original deposition transcript, or a copy thereof, together with copies of all exhibits 21 was delivered, in accordance with Rule 203.3, to the attorney or party who asked the first question appearing 22 in the transcript on the ____ day of __________, _______. 23 That pursuant to information given the deposition officer at the time said testimony was taken, 24 a copy of this certificate has been filed with the clerk and has been served on all parties of record as listed 25 below:

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1 Mr. Langley, Attorney for PLAINTIFF, STATE OF TEXAS 2 Mr. Fairless, Attorney for DEFENDANT, PWI GP. 3 4 5 6 Certified to by me this ____ day of 7 ___________, ________. 8 9 10 11 12 13 14 15 __________________________ 16 Paige S. Watts, CSR, RPR CSR Certificate Number: 8311 17 Expiration: December 31, 2010 Firm Registration Number: 169 18 Ross Reporting Services, Inc. 11706 Playa Court 19 Houston, Texas 77034 281-484-0770 20 21 22 23 24 25

3 4 5 6 7 8 9 **************** 10 11 12 Certified to by me this _______ day of 13 _____________, ___________. 14 15 16 17 18 19 __________________________ 20 Paige S. Watts, CSR, RPR CSR Certificate Number: 8311 21 Expiration: December 31, 2010 Firm Registration Number: 169 22 Ross Reporting Services, Inc. 11706 Playa Court 23 Houston, Texas 77034 281-484-0770 24 25

That pursuant to information given the deposition officer at the time said testimony was taken, a copy of this certificate has been filed with the clerk and has been served on all parties of record as listed below: Mr. Langley, Attorney for PLAINTIFF, STATE OF TEXAS Mr. Fairless, Attorney for DEFENDANT, PWI GP

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