Briggs & Stratton (BGG – $19.26), a small-engine manufacturer with corporate offices in Wisconsin, major manufacturing plants in six states, and offshore manufacturing in China, Dubai and the Czech Republic, has failed to mow down environmentalists or the Environmental Protection Agency (EPA), whose draft regulation of small-engine emissions standards will become rule this year.
Small engine emissions first fell under attack in California in 2001, when the California Air Resources Board (CARB), a division of the California EPA, issued stringent new non-road emissions regulations. In 2003, Dianne Feinstein (D-Ca.) took up the cause, charging that these emissions were the equivalent of 80 million automobiles.
Briggs & Stratton representatives challenged her statement and retaliated by suggesting that new emissions rules could cost as many as 22,000 jobs in 24 states, since retooling the factories that make small engines would be economically unfeasible. The implication was clear; the jobs would go overseas. Briggs & Stratton, the backbone of several regional economies, has used this threat in the past to limit other environmental initiatives. According to Margo T. Oge, director of the EPA’s Office of Transportation and Air Quality, other manufacturers have indicated they can safely meet both the (2007-2008) California requirements and the phased in (2009-2014) federal rule. Briggs remains the only dissenting voice.
When caviling about costs produced no result, Briggs & Stratton turned to Sen. Kit Bond (R-MO), whose home state had two Briggs & Stratton factories (Rolla and Poplar Bluff). Bond initially succeeded in delaying the California emissions rules by exaggerating the cost of retooling factories, but was quickly deflected by Feinstein, who cited the company’s recent Securities and Exchange (SEC) filing, in which it had specifically stated that such changes would have no "material effect on its financial condition or results of operation". Bond then conceded California (which, under the Federal Clean Air Act, is the only state allowed to independently enact environmental regulations that exceed federal standards). The lobbying effort cost the company $1.2 million; almost as much as it would have spent complying.
The fight proceeded on a national level. In 2005 Bond insisted on a study to determine whether adding catalytic converters to small engines (the EPA’s suggestion) would create fire hazards. In 2006, the EPA, with the help of the Consumer Product Safety Commission (and supported by the Outdoor Power Equipment Institute, or OPEI), released a study concluding that catalytic converters, rather than presenting a fire risk, actually provided additional safety. In the same study, the EPA added that small engines (i.e., those under 50 horsepower) would account for 18 percent of all emissions by 2020 if no standards were implemented.
California got approval in the form of an EPA waiver in 2006, and in January of 2007 its rule went into effect. The EPA draft rule for the rest of the nation, announced April 17, 2007, sets strict standards for most lawn and garden equipment and small recreational watercraft. These proposed regulations include phased-in implementation (2009 for boat motors and 2011 for lawnmowers, with final compliance in 2014), and will reduce emissions by 35 percent. The costs to industry are estimated at $9.5 million in 2008. The health benefits by 2030 are estimated to exceed $3 billion. A Swedish study on lawnmowers reported in ScienceDaily in 2001 showed that one hour of cutting grass with a gasoline-powered mower produced as many emissions as a 100-mile car ride. The EPA plans to issue a final emission’s rule in 2008, which observers fear may be watered down by lobbying and whining.
State regulators argue that the federal compliance dates are too far in the future, and environmental groups insist it is a violation of states’ rights to prevent the rest of the nation from following in California’s footsteps on the same, tight schedule (2007-2008). Briggs & Stratton, appeased by the EPA’s moderate approach, will continue manufacturing in Missouri, but only at one plant. The Rolla factory will be closed, and 500 jobs moved to China. The company’s April 19, 2007 third-quarter earnings report web cast hints at the possibility of more plants being phased out in the next 2-3 years and production moved to the Czech Republic (where labor costs are lower and shipping to the $2-million European sales market is cheaper and faster), and a general disinclination to get with an emission’s reduction program.
Briggs & Stratton remains the only audible dissenter, and its attempts to suborn due process set a deplorable precedent.
Disclosure: I don’t own Briggs & Stratton stock.