A
PRESENTATION BY MR. TODD J. TESKE, PRESIDENT, CHAIRMAN and CEO, BRIGGS and
STRATTON CORP. TO THE HOUSE
ENERGY AND COMMERCE SUBCOMMITTEE ON ENERGY AND POWER
July
19, 2013
One Page
Summary:
Five reasons why EPA
should revisit its conditional certification of E-15:
1.
Research has shown, and EPA has agreed, that use of E15 in small non-road
engines can have harmful and costly consequences on small engines and outdoor power
equipment.
2.
Research on warning label effectiveness suggests that an E-15 warning label
will do very little to mitigate misfueling.
3.
Behavioral studies of customers at the gas pump conclude that consumers
overwhelmingly favor the lowest priced option, regardless of the consequences.
4.
Misfueling due to lack of education to consumers regarding the proper use of
E-15 will be significant.
5.
The use of Biofuels or “drop-in fuels” has been tested and could prevent
misfueling.
If
public policy requires that the federal government drive the market for
alternative fuels, Briggs and Stratton urges that the policy be amended to more
fully support the development and use of biofuels, from any feedstock, which
are intended for use as “drop-in fuels” which provide a safe fuel for both
legacy and newly manufactured small engines and outdoor power equipment.
At
a minimum we recommend that the reform legislation rescind the partial waiver
for E15, and establish gasoline blended with up to 10% ethanol as the general
purpose domestic fuel. The legislation should also require that all
considerations to increase domestic biofuel levels in the future be subject to
a formal EPA rulemaking whereby the market’s ability to safely distribute, retail
and consume such fuel is provided for.
July
19, 2013
Written Testimony of
Mr. Todd J. Teske, President, Chairman and CEO, Briggs and Stratton Corporation
Chairman
Whitfield, Ranking Member Rush, Congressman Barrow and distinguished Members of
the Committee, thank you for soliciting Briggs and Stratton’s perspective on
the issues raised by the EPA’s implementation of the Renewable Fuels Standard.
I have been extremely impressed by the Committee’s workmanlike approach to
educate itself, and the public, on the challenge which the RFS presents to
manufacturers, consumers and the environment. The Outdoor Power Equipment Institute,
on which I currently serve as Chairman, has submitted formal comments in
response to the Committee’s white papers. My statement, which is submitted
strictly in my capacity as Chairman and CEO of Briggs and Stratton, will
attempt to define that challenge as it pertains to small engine manufacturers
and offer suggestions on how to protect consumers from significant economic and
environmental damage.
Briggs
and Stratton Corporation, which is headquartered in Milwaukee, Wisconsin, is
the world’s largest producer of gasoline engines for outdoor power equipment.
We are a leading designer, manufacturer and marketer of pressure washers,
generators, lawn and garden, turf care and other power equipment through its
Briggs and Stratton, Simplicity®, Snapper®, Ferris®, Murray®, Branco® and
Victa® brands. Briggs and Stratton products are designed, manufactured,
marketed and serviced in over 100 countries by 6,200 employees. Approximately
5,300 of those employees work here in the United States. As a U.S. based
manufacturer, our company is proud to be celebrating its 105th anniversary this
year and continues to manufacture over 85% of its products here in America.
Briggs
and Stratton’s long standing commitment to the environment remains a key focus
for our business. We continue to manufacture our products with recycled
materials that are highly efficient and with reduced emissions. Since 1995, we
have reduced our emissions by 75% and, after completing the phase in of our new
product offering, will achieve an additional 35% reduction in those emissions
by January, 2014. In 2007, we signed a pledge with the Department of Energy to
reduce our energy consumption by 25% over 10 years. Just 6 years later, we have
already cut our consumption by 20%. These are just a few of the many examples
that demonstrate our commitment to the environment.
Below
are five factors justifying rescission of EPA’s conditional certification of
E-15 :
1. Research has
shown, and EPA has agreed, that use of E15 in small non-road engines can have
harmful and costly consequences on small engines and outdoor power
equipment.
Briggs
and Stratton has conducted extensive testing on levels of ethanol above 10%.
Increasing levels of ethanol in gasoline result in increased levels of alcohol.
Alcohol has inherent properties that cause issues with our engines and they
become more acute with increasing alcohol content.
Increasing
the alcohol in fuel changes the air-fuel ratio (enleanment) in our carbureted
engines. E-15 fuel, by definition would have an alcohol content ranging from 0
to 15%. Our engines would have great difficulty in meeting both emissions and
performance expectations with this type of alcohol range. Enleanment will also
result in higher operating temperatures that will lower engine life due to
issues such as valve sealing, piston scoring, and head gasket leakage, just to
name a few. Ethanol is also hydroscopic (absorbs water). Increased levels of
water will cause the engine to run poorly, and will also cause corrosion by
means of acidic attack, galvanic activity, and chemical interaction. Ethanol
will also cause other problems such as reduced fuel storage life, starting
issues and reduced fuel economy.
The
Department of Energy (DOE) also conducted testing. After testing E-15 on a
representative sample of small non-road engines, including Briggs and Stratton
powered generators and power washers, the DOE found that small engines
experienced a variety of difficulties with intermediate blends of ethanol. Most
engines performed worse in several metrics when running on higher ethanol
blends – engines often had higher operating temperatures, higher exhaust
temperatures, and NOx emission rates. Higher operating temperatures, lead to increased
wear and tear and more frequent maintenance. Moreover, 7 out of the 11 engines
behaved “poorly” or “erratically”, according to DOE’s report, with incidents of
unstable speeds, stalling, and clutch engagement at idle. As a result of this
testing, small engines were specifically excluded by EPA from the E-15 Waiver.
2. Research on
warning label effectiveness suggests that an E-15 warning label will do very
little to mitigate misfueling.
In
response to our concerns and the concerns of other interested parties, EPA has
issued a mandatory warning label for pumps that distribute E-15. Given the body
of research on the effectiveness of warning labels, we believe that this
warning will not prevent consumers from misfueling their engines with the E-15
blend, and, with no one else liable, will leave the equipment owner liable for
the damage to their products. Warning labels have been the subject of many
research studies, with results often showing little change in consumer
behavior. To address this concern, there are standards and testing protocol
that have been completed. The Association for Consumer Research further reports
that warning labels are considerably less likely to be successful when applied
to products that consumers use frequently and feel comfortable with, e.g. gas
pumps. If consumers visit their local gas station and do not realize that the
ethanol blend has been increased, this research would indicate that they are
unlikely to heed the warning label on the pump. There has been no testing done
by EPA to validate the effectiveness of the warning label, which is not
consistent with recognized safety standards such as ANSI.
When
the U.S. transitioned from leaded gasoline to unleaded gasoline in the 70s and
80’s, new cars running on unleaded gasoline were designed with different fuel
tanks to be incompatible with older leaded gasoline in an effort to prevent
misfueling. There is no such “transition” plan or tangible differentiation in
place for E-15 and it is solely up to the consumer to know what fuel is appropriate
for their automobile, lawn mower, generator, pressure washer, etc.
3. Behavioral studies
of customers at the gas pump conclude that consumers overwhelmingly favor the
lowest priced option, regardless of the consequences.
Historical
evidence suggests that when faced with a range of prices at the pump, consumers
are far more likely to choose the lowest-priced option despite potential
damages to their engines. As previously mentioned, when the United States
transitioned from leaded gasoline to unleaded gasoline in the 70’s and 80’s,
new cars running on unleaded gasoline were designed with different fuel tanks,
to be incompatible with older leaded gasoline pumps. Additionally, car buyers
were educated at the point of purchase about the new fuel. Even with those
prevention and education measures, the EPA reported that in 1983 – ten years
after the introduction of unleaded gasoline – misfueling rates remained as high
as 15.5%. The New York Times reported that “customers would go out of their way
to pump leaded gas if it was just a few cents cheaper. What they gain at the pump
they lose at the repair shop in higher maintenance costs.” If high rates of
misfueling still occurred when physical obstacles were in place, we believe
that a simple warning label next to the pump will not yield better results.
Similarly, the National Bureau of Economic Research reports very strong price
elasticity of demand in its own study on the use of premium vs. regular
gasoline during times of high gasoline prices. When gasoline prices increased,
consumers switched to less expensive, regular gasoline even though premium
gasoline was recommended for their vehicles. NBER concludes that households are
nearly 20 times more sensitive to the income effect for gasoline than to
equivalent effects from other sources.
4. Misfueling due to
lack of education to consumers regarding the proper use of E-15 will be significant.
EPA
has instructed stakeholders to “develop a broad public education and outreach
campaign that provides both consumers and retailers with the information they
need to avoid misfueling.” Briggs and Stratton is already taking steps to
educate its customers about proper fueling for its products and has introduced
additives and E-0 gasoline products to assist consumers with selecting the
proper fuel. Briggs and Stratton does not feel it, nor the outdoor power
equipment industry, should be held solely responsible for educating tens of
millions of Americans of the dangers of misfueling, especially when many
already own products which are incompatible with E-15. In a recent study, AAA
found that 95% of Americans had not heard of the new E-15 waiver. In a separate
study by the National Association of Convenience Stores, it was clear that
consumers were confused by E-15; many believed that E-15 had higher fuel
economy than E-10. And the study also found that of participants who said they
would consider fueling their cars with E-15, 60% of them owned cars for which
E-15 is incompatible and prohibited. Despite our best efforts at education and
prevention, we believe the risk of misfueling will be substantial, and damage
to our products will be irreversible. We risk losing decades of trust and our
brand reputation as a manufacturer of quality, reliable products while owners
will not get the value they expected when
they
purchased the product.
5. The use of
Biofuels or “drop-in fuels” has been tested and could prevent misfueling.
Small
engines and outdoor power equipment are not designed, warranted, or
EPA-approved to operate on gasoline containing more than 10% ethanol. Briggs and
Stratton fully supports the development and use of biofuels, from any feedstock,
which are “drop-in fuels”. Drop in fuels, by definition, meet existing gasoline
specifications and are ready to “drop-in” to infrastructure, minimizing
compatibility issues. These fuels are capable of satisfying the additional
growth in
biofuel
use, while also providing a safe and highly performing general fuel for both
legacy and newly manufactured small engines and outdoor power equipment. We
have conducted extensive testing with a drop-in isobutanol blended gasoline
which demonstrated evidence that such fuels can provide the performance and
operational criteria necessary, without demonstrating any negative effects.
Drop in fuels had not yet materialized when the RFS was developed in previous market
conditions and the EPA was compelled to grant the partial waiver to meet the
statutory targets using ethanol. E-15 will not provide compliance with current
RFS targets and will require EPA to continue to revise fuel standards creating
uncertainty in the marketplace and for manufacturers and increasing misfueling
risks to consumers. Misfueling will result in economic harm to all parties and
void product warranties. Ever changing targets will result in less efficient
investment
of manufacturing resources and more costly products.
Briggs and Stratton
Corporation’s Request To The Committee
For
the past three years we have worked closely with our Congressman, Jim
Sensenbrenner, in an effort to rescind the certification of E-15 until such
time as the National Academy of Science can convene a peer review panel to
evaluate EPA’s action and recommend alternative approaches which protect
consumers and the environment. Briggs and Stratton urges this Committee to work
in a bi-partisan, bi-cameral manner to pass reform legislation through
revisions to the RFS which will align domestic goals for biofuel use with the
market’s ability to produce, distribute and consume such fuels. At a minimum we
recommend that the reform legislation rescind the partial waiver for E-15, and
establish gasoline blended with up to 10% ethanol as the general purpose domestic
fuel. The legislation should also require that all considerations to increase
domestic biofuel levels in the future be subject to a formal EPA rulemaking whereby
the market’s ability to safely distribute, retail and consume such fuel is
provided for.
