Assemblymember Kevin de León, Chair of the Assembly Appropriations Committee, today released an analysis by the Legislative Analyst’s Office (LAO) on the validity of the Varshney studies by Sanjay Varshney, Dean of Sacramento State College of Business Administration, that claim extraordinary costs associated with the implementation of AB 32, California’s landmark Global Warming Solutions Act and state regulations. Proponents of an initiative to repeal AB 32 frequently cite this study (www.suspendab32.org) and, in fact, reference its findings in the initiative itself which is currently being circulated for voter signatures.
Given the highly questionable value of the Varshney reports whose findings are cited in the proposed initative, Assemblymember de León wrote Assemblymember Nancy Skinner, Chair of the Natural Resources Committee, requesting oversight hearings on the Varshney studies and the proposed initiative which is currently in circulation.
In the LAO report, the normally reserved and cautious Legislative Analyst Mac Taylor was extremely critical of the two studies produced by Varshney and Associates stating they were so seriously flawed that they were “useless” to policymakers.
In the report, Mac Taylor stated specifically; “Our review of this study indicates that it contains a number of serious shortcomings that render its estimates of the annual economic costs of state regulations essentially useless.” (emphasis added)
Mr. Taylor concluded by stating; “Both of the two studies you have asked us to review have major problems involving both data, methodology, and analysis. As a result of these shortcomings, we believe that their principal findings are unreliable.” (emphasis added)
Opponents to AB 32, funded by Texas oil companies, have relied heavily on these studies as evidence of the economic costs associated with AB 32 and environmental regulations. These studies erroneously claim that the costs of state regulations and AB 32 on small businesses are in the hundreds of billions of dollars annually. The Legislative Analyst’s Office report determined that those reports as so deeply flawed that they are worthless to policymakers and voters alike.
“The trusted non-partisan LAO has concluded that these studies are bogus,” stated Assemblymember Kevin de León (D-Los Angeles). “This false and misleading information shouldn’t be used by Texas oil companies to scare California voters at our children’s expense.”
This LAO report closely follows on the heels of a draft report released last month by James L. Sweeney, Professor of Management Science and Engineering and Director of the Precourt Energy Efficiency Center at Stanford University, which stated that the Varshney study “estimates are highly biased, are based on poor logic and unsound economic analysis, and are likely to be too large by a factor of at least 10.” (emphasis added)