    [House Hearing, 106 Congress]
    [From the U.S. Government Publishing Office]

      HELPING SMALL DRY CLEANERS ADOPT SAFER TECHNOLOGIES: WITHOUT LOSING
                                   YOUR SHIRT

    =======================================================================

                                    HEARING

                                   BEFORE THE

                   SUBCOMMITTEE ON TAX, FINANCE, AND EXPORTS

                                     OF THE

                          COMMITTEE ON SMALL BUSINESS
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED SIXTH CONGRESS

                                 SECOND SESSION

                                   __________

                         WASHINGTON, DC, JULY 20, 2000

                                   __________

                               Serial No. 106-69

                                   __________

             Printed for the use of the Committee on Small Business

                                   __________

                        U.S. GOVERNMENT PRINTING OFFICE
    67-353                     WASHINGTON : 2000

                          COMMITTEE ON SMALL BUSINESS

    JAMES M. TALENT, Missouri, Chairman  NYDIA M. VELAZQUEZ, New York
    LARRY COMBEST, Texas                 JUANITIA MILLENDER-McDONALD,
    JOEL HEFLEY, Colorado                    California
    DONALD A. MANZULLO, Illinois         DANNY K. DAVIS, Illinois
    ROSCOE G. BARTLETT, Maryland         CAROLYN McCARTHY, New York
    FRANK A. LoBIONDO, New Jersey        BILL PASCRELL, New Jersey
    SUE W. KELLY, New York               RUBEN HINOJOSA, Texas
    STEVEN J. CHABOT, Ohio               DONNA M. CHRISTIAN-CHRISTENSEN,
    PHIL ENGLISH, Pennsylvania               Virgin Islands
    DAVID M. McINTOSH, Indiana           ROBERT A. BRADY, Pennsylvania
    RICK HILL, Montana                   TOM UDALL, New Mexico
    JOSEPH R. PITTS, Pennsylvania        DENNIS MOORE, Kansas
    MICHAEL P. FORBES, New York          STEPHANIE TUBBS JONES, Ohio
    JOHN E. SWEENEY, New York            CHARLES A. GONZALEZ, Texas
    PATRICK J. TOOMEY, Pennsylvania      DAVID D. PHELPS, Illinois
    JIM DeMINT, South Carolina           GRACE F. NAPOLITANO, California
    EDWARD PEASE, Indiana                BRIAN BAIRD, Washington
    JOHN THUNE, South Dakota             MARK UDALL, Colorado
    MARY BONO, California                HELLEY BERKLEY, Nevada
                         Harry Katrichis, Chief Counsel
                      Michael Day, Minority Staff Director
                                     ------

                   Subcommittee on Tax, Finance, and Exports

                     DONALD A. MANZULLO, Illinois, Chairman
    STEVEN J. CHABOT, Ohio               CAROLYN McCARTHY, New York
    PHIL ENGLISH, Pennsylvania           RUBEN HINOJOSA, Texas
    PATRICK J. TOOMEY, Pennsylvania      CHARLES A. GONZALEZ, Texas
                                         GRACE F. NAPOLITANO, California
               Philip Eskeland, Senior Professional Staff Member

                                C O N T E N T S

                                                                       Page
    Hearing held on July 20, 2000....................................     1

                                   WITNESSES

    Camp, Dave, Member, U.S. House of Representatives................     2
    Price, David, Member, U.S. House of Representatives..............     3
    Ustanik, Tom, Owner, Lansing Cleaners............................     8
    Shaw, Gordon, Former Owner, Fairlane Cleaners....................     9
    Fisher, William, Chief Executive Officer, International Fabricare
      Institute......................................................    10
    DeSimone, Joseph, Professor of Chemistry, University of North
      Carolina-Chapel Hill...........................................    13
    Cole, Henry, President, Henry S. Cole & Associates, Inc..........    14

                                    APPENDIX

    Opening statements:
        Manzullo, Hon. Donald A......................................    30
        McCarthy, Hon. Carolyn.......................................    31
    Prepared statements:
        Camp, Dave...................................................    32
        Price, David.................................................    34
        Ustanik, Tom.................................................    36
        Shaw, Gordon.................................................    41
        Fisher, William..............................................    45
        DeSimone, Joseph.............................................    51
        Cole, Henry..................................................    57
    Additional Information:
        Written testimony of Rep. Carolyn Maloney....................    71
        Written testimony of Ted Williams, Sr........................    73
        Written testimony of Ann Hargrove, President, Ann Hargrove
          and Associates.............................................    79
        Written testimony of Carl Rohman, Owner, Hangers Cleaners....    81
        Written testimony of Sam Brickle.............................    86
        Letter to Chairman Manzullo from Bank of America.............    91
        Letter to Chairman Manzullo from Global Technologies.........    93
        Letter to Chairman Manzullo from Clean Water Action..........    96
        Letter to Representative Camp from the Joint Committee on
          Taxation...................................................    97
        Letter to Chairman Manzullo from Three Rivers Constitution...    98

       HEARING ON HELPING DRY CLEANERS ADOPT SAFER TECHNOLOGIES: WITHOUT
                               LOSING YOUR SHIRT!

                                  ----------

                            THURSDAY, JULY 20, 2000

                      House of Representatives,
              Subcommittee on Tax, Finance and Exports,
                                   Committee on Small Business,
                                                        Washington, DC.
        The Subcommittee met, pursuant to call, at 10:05 a.m. in
    room 2360, Rayburn House Office Building, Hon. Donald A.
    Manzullo, (chairman of the Subcommittee) presiding.
        Chairman Manzullo. I am pleased to call this hearing to
    highlight what we should be doing more of in Congress--adopting
    incentive based approaches to resolving complex environmental
    problems, as opposed to heavy-handed, one-size-fits all
    government imposed regulatory mandates on small businesses.
        There are more than 30,000 dry cleaners across the country.
    Most employ only a handful of workers. They are truly small
    businesses. These small dry cleaners face immense financial
    pressures on numerous fronts, including casual work days that
    have resulted in less business for dry cleaners, aggressive
    price competition and lingering superfund liabilities at the
    work site. We should do everything in our power to make sure
    that we do not add to their problems.
        The Environmental Dry Cleaning Tax Credit Act is a
    bipartisan, creative alternative that deserves serious
    consideration by every Member of Congress. The benefits
    associated with this bill clearly outweigh the long-term
    environmental costs of clean up if we do nothing.
        Just a few days ago, the North Carolina legislature passed
    a similar bill to H.R. 1303. It will be interesting to see the
    impact of this initiative on the state level. I look forward to
    hearing the testimony of the witnesses and particularly welcome
    those who have traveled a great distance to be with us this
    morning.
        I now yield for an opening statement from my good friend
    from New York, the Ranking Minority Member, Mrs. McCarthy.
        Mrs. McCarthy. I thank you, Mr. Chairman, and I apologize
    for being late. I will actually just enter my opening statement
    into the record to save time.
        Chairman Manzullo. I appreciate that very much. Without
    objection.
        Do either of you have a pressing obligation right after
    this? Dave, do you have a mark up that you are in the middle
    of?
        Mr. Price. I do, but it is right across the hall.
        Chairman Manzullo. All right. Who wants to go first?
        Mr. Camp. You can go ahead. I do not have a mark up.
        Mr. Price. Go ahead. I will gladly defer to my colleague.
        Chairman Manzullo. Okay.
        Mr. Price. There is no rush over here.
        Chairman Manzullo. Congressman Camp? We are going to have
    the five minute rule that applies to everybody, including those
    who wear pins.

       STATEMENT OF THE HONORABLE DAVE CAMP, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF MICHIGAN

        Mr. Camp. Well, thank you very much, Mr. Chairman. I will
    try to keep my remarks under five minutes.
        Congresswoman McCarthy, thank you very much for allowing me
    the chance to testify before this distinguished Subcommittee. I
    appreciate the opportunity, and I commend the leadership of
    Chairman Manzullo for calling this hearing.
        Our local dry cleaner is probably one of the most common
    services that we all use, and it is such a part of our lives
    that we do not even give a second thought to how our clothes
    are cleaned in many cases. For most of us, our clothes are
    cleaned right now using a 1960s era technology, specifically by
    a chemical known as perc.
        Today's perc dry cleaners certainly look a lot different
    than they did when the technology was first introduced.
    Emissions are less, and the cleaning machinery is considerably
    more efficient, as we will hear from other folks today at this
    hearing.
        I believe we need to take the next step away from
    incremental changes in existing technologies to new
    technologies and cleaner technologies. Two of these are wet
    cleaning and carbon dioxide cleaning, and they are the subject
    of today's hearing. I think they hold a potential for enormous
    gains in the control of emissions into the environment. That is
    why last year I introduced H.R. 1303 with bipartisan support
    from my good friend and colleague, David Price. We are original
    co-sponsors of the bill.
        This legislation provides a tax credit for a portion of the
    cost of a new dry cleaning machine using environmentally
    friendly technology and cleaning methods. It does not
    discriminate in favor of or against any specific technology. It
    simply provides a tax credit on an even playing field for any
    dry cleaning method that does not use the perc chemical or a
    petroleum derived compound.
        The wet cleaning technology and the carbon dioxide
    technology can clean a person's clothes effectively, but today
    these alternatives are still at the stage where they are not
    yet economically competitive with traditional dry cleaning
    methods.
        Existing dry cleaners right now may want to make a shift to
    new technology for a variety of reasons. They may be frustrated
    with Clean Air Act requirements instead of worrying about
    cleaning clothes, and they may be hearing from customers who
    are worried about some of the studies that have been pointing
    toward risks in the environment or to health, associated with
    traditional dry cleaning methods and many cannot afford it.
        Right now, because this brand new technology does cost
    more--the average carbon dioxide machine may cost as much as
    $150,000, more than twice the cost of a traditional machine--
    there are only a small number of machines currently operating,
    and the big reason for that is the cost of this equipment.
        The best way to bring down the cost is to encourage the
    purchase and manufacture of more machines. A tax credit to
    offset a portion of this cost will make the difference for at
    least some dry cleaners who are interested in using a cleaner
    and different technology.
        The intention of my bill is to allow cleaner dry cleaning
    technology to get off the ground and start making an impact.
    That is what my bill does. It provides a 20 percent tax credit
    to the purchaser of a dry cleaning machine using
    environmentally friendly methods. As I mentioned earlier, the
    bill does not discriminate for or against any particular
    cleaning method.
        Mr. Chairman, we all agree that we have a commitment to
    ensuring the cleanest possible environment for our families and
    our children, and there are two ways that the government can do
    that. First, we can impose mandates. Second, the government can
    contribute to a cleaner environment by encouraging the
    development and use of newer technologies.
        We already see that in the Tax Code with tax credits for
    the use of electric vehicles, for example, and for wind energy,
    just to name a few. H.R. 1303 is designed to be an incentive
    for the purchase of better technology that might not otherwise
    occur.
        In closing, I want to thank again the Chairman and the
    Committee for calling this hearing and for calling attention to
    this important issue.
        Thank you.
        [Mr. Camp's statement may be found in appendix]
        Chairman Manzullo. I appreciate that.
        Congressman Price.

    STATEMENT OF THE HONORABLE DAVID E. PRICE, A REPRESENTATIVE IN
               CONGRESS FROM THE STATE OF NORTH CAROLINA

        Mr. Price. Thank you, Mr. Chairman, Mrs. McCarthy, other
    Members of the Subcommittee. I appreciate the invitation to
    appear here today to express my support for H.R. 1303, the
    Camp-Price Environmental Dry Cleaning Tax Credit Act.
        Dave Camp and I have worked closely together in drafting
    this legislation. It was introduced on March 25 of last year
    and now has 29 bipartisan co-sponsors. This legislation will
    provide an incentive for dry cleaners to make the transition to
    environmentally friendly dry cleaning technologies by providing
    a 20 percent tax credit for the purchase of technologies that
    substantially reduce risk to public health and the environment.
    Currently these would include liquid carbon dioxide
    technologies and wet cleaning technologies, which rely on water
    based solvents.
        I should mention here that we became aware during the final
    stages of drafting the bill that references to ``dry cleaning''
    might be interpreted to exclude so-called wet cleaning
    technologies, which was not our intent and is not our intent.
    We were advised at the time by legislative counsel that a
    clarification of this issue would be appropriate in report
    language accompanying this bill or any legislative vehicle
    containing this bill.
        I first became interested in the idea of a tax credit for
    dry cleaners after hearing about the work of Joe DeSimone, a
    professor of chemistry at UNC-Chapel Hill and a professor of
    chemical engineering at North Carolina State University. Joe is
    here in the audience today and has worked tirelessly on this
    technology. He is also the director of the NSF Science and
    Technology Center, and he is co-founder of Micell Technologies
    located in Research Triangle Park in North Carolina.
        The genius of Research Triangle Park, Mr. Chairman, as you
    may know, has been to attract the most dynamic high tech
    companies to an area with a high quality of living and in the
    midst of three major research universities, North Carolina
    State, UNC-Chapel Hill and Duke University. RTP, as we call it,
    has been the source of countless innovations over the year, and
    the liquid CO2 dry cleaning technology developed by
    Dr. DeSimone, who will be testifying later this morning, is a
    good example of RTP at its best.
        Dr. DeSimone's story also illustrates how the federal
    government can play a constructive role in the development of
    technologies which benefit society. In 1995, Dr. DeSimone and
    fellow scientists Timothy Romack and James McClain invented an
    environmentally friendly alternative to traditional dry
    cleaning and metal cleaning methods; that is, the use of carbon
    dioxide for professional garment care, metal degreasing and
    textile processing. This process eliminates the need for
    conventional dry cleaning solvents such as perchloroethylene or
    perc, and it frees dry cleaners from the regulatory burdens
    associated with such solvents.
        Funding from both the NSF and EPA's Green Chemistry Program
    supported the basic research that led to Dr. DeSimone's
    development of cleaning detergents that dissolve in liquid
    CO2. This new technology is both environmentally
    friendly and safer for consumers and workers in the dry
    cleaning industry.
        I think there is a role for the federal government in
    encouraging the use of technologies like this. I am not talking
    about choosing winners and losers. The federal government
    should not be in that business. It should not be favoring one
    technology over another. But we can play a constructive role in
    accelerating the transition to technologies that meet our
    criteria for greater energy efficiency or for the greater
    protection of public health and the environment.
        If we really want the private sector to move towards
    greener and healthier technologies and, as Representative Camp
    just said, if we do not want simply to rely on new regulation
    to do this, the simplest and most effective method is through
    targeted tax incentives.
        President Clinton and others have proposed this type of
    approach for equipment that helps reduce energy consumption,
    and I think we need to be looking at it and considering the
    same approach in other areas of protecting human health and the
    environment.
        The North Carolina General Assembly enacted a similar 20
    percent tax credit for environmentally friendly dry cleaning
    technologies on July 12, just a week ago. I hope this
    Subcommittee will agree with North Carolina that investing in
    these new dry cleaning technologies through tax credits is
    worthwhile.
        In our lifetimes, the pace of technological progress and
    change has been astounding. From health care, to manufacturing,
    to communications, technology has changed in some way almost
    everything about the way we live and has vastly improved the
    efficiency and the scope of what we as a society can
    accomplish.
        We are just beginning to see the possibilities of what
    technology can accomplish for the environment and for
    environmental protection.
        Environmental technology promises to mend the rift that has
    too often arisen between environmental protection and economic
    development. It will make reducing pollution easier and cheaper
    and will itself become an engine for growth in our economy.
        H.R. 1303 would take a small, but important, step in the
    direction of encouraging the use of forward thinking technology
    in the dry cleaning industry. I urge you to consider it
    favorably, and I thank you for the opportunity to testify this
    morning.
        [Mr. Price's statement may be found in appendix]
        Chairman Manzullo. Thank you, Congressman Price.
        We are going to do something a little bit out of order
    here. Before we proceed with questions of the two Members,
    Congressman Weller has a constituent who will be appearing on
    the second panel. He has to run off to a Ways and Means mark
    up.
        Jerry, if you would like to introduce your constituent,
    then we will bring him up here at the appropriate time.
        Mr. Weller. Mr. Chairman, Mrs. McCarthy, I thank you for
    the courtesy. Today is a great day. We are going to pass
    legislation today wiping out the marriage tax penalty for
    25,000,000 married working couples, so I know Representative
    Camp and I will be on the Floor working on that before the
    Committee.
        I am sorry. Mrs. McCarthy?
        Mrs. McCarthy. Well, I was just wondering. Being that we
    are letting you go first, can I get some of my projects
    through? [Laughter]
        Mr. Weller. Thank you for the courtesy of allowing me to
    introduce a constituent of mine who is going to be testifying
    before your Subcommittee today and for accommodating me so I
    can move and get to the Floor.
        Mr. Chairman, Mrs. McCarthy, it is my privilege today to
    introduce a constituent who is going to be testifying on the
    second panel, Tom Ustanik, of Lansing, Illinois, a south
    suburban community just south of Chicago on the state line, who
    is going to testify here today on H.R. 1303, the Dry Cleaning
    Environmental Tax Credit Act.
        Mr. Ustanik and his family have owned and operated Lansing
    Cleaners in my district since 1946. They have five locations,
    two in Illinois, two in northwest Indiana and a main plant in
    Lansing, Illinois, which does both retail cleaning, as well as
    fire restoration work.
        The Ustaniks have made great efforts to make their
    businesses as environmentally friendly as possible. These
    efforts include transitioning over to cleaner and safer
    cleaning technologies such as wet cleaning and liquid carbon
    dioxide machines. As you may imagine, these newer and cleaner
    technologies often come at a higher cost, which leaves us as a
    society to decide which is more important, a cleaner
    environment or lower cost equipment.
        We would argue that in the long run everyone benefits by
    encouraging business owners such as the Ustaniks to incorporate
    cleaner and safer technologies into their businesses. That is
    why I support H.R. 1303, which provides a tax credit to
    businesses that take advantage of these technologies.
        I look forward to hearing about Mr. Ustanik's testimony
    before your Subcommittee about these new technologies, as well
    as they help our environment and improve his business. Mr.
    Chairman and Mrs. McCarthy, thank you for the courtesy of
    allowing me to slip in to introduce my constituent and also
    voice my support for H.R. 1303. Thank you, Mr. Chairman.
        Chairman Manzullo. Thank you, Congressman Weller.
        Mrs. McCarthy, do you have a couple of questions you want
    to ask?
        Mrs. McCarthy. I do, and I thank you.
        I think it is important, Congressman Price, that you go
    over again, because I think this is where the confusion comes
    in. Your position has been that the tax credit does not
    discriminate against or does not favor any one dry cleaning
    process, and I think it is important that you explain that
    again.
        The bill specifically states qualified dry cleaning
    property means equipment designed primarily to dry clean
    clothing and other fabric. It is my understanding that wet
    cleaning is not considered dry cleaning. Do you have any plans
    to make any changes to the bill by adding language including
    the wet cleaning process?
        Just on a follow up, the majority of our small businesses
    that operate dry cleaners are family owned, and my concern is
    even with the 20 percent tax credit would our real small
    businesses, you know, the mom and pop, two people running the
    business very long hours, would they be able to afford the new
    equipment? Is it going to be enough for them?
        Mr. Price. That latter question is one that the
    Subcommittee may well want to examine. We thought the 20
    percent credit was about right. As I said, in the case of North
    Carolina, it can be combined with local or state tax credits.
    But exactly what kind of tax credit would be appropriate is an
    open question.
        I think these technologies will increasingly become
    commercially viable. That is our hope. I know in the case of
    the CO2 technology the costs have already come down
    some and have brought this within reach for some
    entrepreneurial dry cleaning owners. But we certainly do need a
    tax credit now to make this viable for the majority of
    operators. I would invite the Committee's attention to whether
    the 20 percent level is in fact the optimal level.
        Your assumption, Ms. McCarthy, is exactly right about the
    so-called wet cleaning technologies. Our intention is that
    those wet cleaning technologies which rely on water based
    solvents would be included. The point here is not to favor any
    one technology, but to favor environmentally friendly
    technologies in general.
        If it is deemed necessary to add language to the bill or
    certainly to add report language accompanying the bill, I think
    that would be appropriate, and again that is the Subcommittee's
    judgement whether that is necessary to clarify our intent.
        Mr. Camp. Could I just comment as well, please? Yes, our
    intent is to include the wet dry cleaning technology, and the
    language of the bill defines what is a hazardous solvent and
    then says all other technologies are in, so if we need further
    clarification I would certainly agree with Congressman Price
    that we would be willing to do that because our intent was in
    drafting the bill to also include that technology.
        Also, the machines are not as affordable as we would like
    them to be now, and that is why we need the tax credit. We
    believe that as this tax credit, first of all, offsets 20
    percent of the cost that is a help, but as more machines are
    built economies of scale and Economics 101 will kick in, and
    hopefully the cost of those machines will come down, but right
    now this is new technology, and it is more expensive, but if
    the machines were affordable we would not be before you with
    this legislation.
        Mrs. McCarthy. Well, I applaud your efforts because
    certainly even in my own local district when a new dry cleaner
    is trying to come into the area we are seeing a lot of
    resistance, you know, from the neighborhood mainly because the
    reports that have been going out as far as the emissions and
    everything else, so I applaud what you are trying to do, and I
    think it is a great first step.
        Mr. Price. Thank you.
        Mr. Camp. Thank you.
        Chairman Manzullo. Are both of you gentlemen going to be
    able to join us on the panel up here?
        Mr. Camp. I will be able to.
        Chairman Manzullo. How about you, Congressman Price?
        Mr. Price. I have a competing mark up next door, so I will
    do the best I can.
        Chairman Manzullo. I do not have any questions.
        Congressman Camp, you will be able to respond and ask
    questions. Any question I would have asked you can be handled
    otherwise.
        Okay. There being no more questions, you are both excused.
    I appreciate your coming.
        Mr. Camp. Thank you.
        Mr. Price. Thank you, Mr. Chairman.
        Chairman Manzullo. Mr. Camp, if you want to have a seat up
    here?
        Thank you, Congressman Price.
        If we could have our second panel come up to the table,
    please? Okay. We welcome our second panel. The order of
    witnesses will be Tom Ustanik, who is the owner of Lansing
    Cleaners in Lansing, Illinois. The next witness will be Gordon
    Shaw, a former owner of Fairlane Cleaners in LaJolla,
    California; Bill Fisher, who is the CEO of the International
    Fabricare Institute out of Silver Spring, Maryland, which is
    the industry association.
        Joseph DeSimone, Ph.D., professor of chemistry at UNC at
    Chapel Hill. Wait a second. It is Simone. That is an Italian
    name. You have to pronounce the E at the end. We have
    Norwegians trying to tell Italians how to pronounce Italian
    names. Can you imagine that? He is the chairman and co-founder
    of Micell Technologies out of Raleigh, North Carolina; and
    Henry ``Hank'' Cole, president of Henry S. Cole & Associates,
    Upper Marlboro, Maryland, former science director of Clean
    Water Action.
        We are going to hold everybody to the five minute rule.
    When you see the yellow light come on on the box that means you
    have 30 seconds. When the red light comes on the gavel comes
    down.
        Our first witness, Mr. Ustanik?

               STATEMENT OF TOM USTANIK, LANSING CLEANERS

        Mr. Ustanik. Thank you, Mr. Chairman and Members of the
    Subcommittee. I appreciate the opportunity to be able to talk
    in benefit of this bill that holds the future of our industry.
        Chairman Manzullo. Could you bring the mike closer to your
    mouth?
        Mr. Ustanik. Sure.
        Chairman Manzullo. Thank you.
        Mr. Ustanik. Do you want me to start over or just go from
    here?
        Chairman Manzullo. No. Go ahead.
        Mr. Ustanik. Okay. This bill will help us facilitate
    bringing about dry cleaning technologies that are both safe and
    sustainable. Wet cleaning is a water based cleaning system that
    uses biodegradable detergents to clean clothing that normally
    is not able to be cleaned in water. CO2 is a
    cleaning system, no matter whose you use, that uses
    CO2, the same that you would drink in your soda pop
    or exhale in normal breath.
        These are both sustainable technologies. Water is usually
    recyclable, and CO2, the kind that we use in our
    machinery, is recaptured from other industrial processes. This
    eliminate potentials of greenhouse gaseous emissions because we
    use them instead of conventional solvents during their
    production producing greenhouse gases by using energy in their
    production.
        This bill will also facilitate getting access to these
    processes much sooner through our industry. We were one of the
    first to be able to use liquid CO2. We have the
    capability of doing that. We still use dry cleaning machines
    that use perchloroethylene. They are fourth generation
    machines, and eventually they will fail. All machinery does,
    but a washer or dry cleaning machine using CO2 will
    not have much more of an additional impact into the environment
    upon a failure, while my perc machines always can.
        This will also help us in moving this along into a more
    sustainable, cleaner and safer technology without driving us
    into the ground with regulations that we have quite a bit of.
    With four machines that use perc, I have a considerable amount
    of paperwork in order to justify their operations and a
    considerable amount of inspection. These become more ominous to
    a smaller company that is only two or three employees.
        This bill will help us move forward in that direction. This
    will allow us to have machinery that is safe and sustainable.
    This bill will also allow us to get there sooner by having
    additional machines put out, which will drive down the cost,
    just as when the personal computers came out they were quite
    expensive. Now you can get one for $99 that is ten times more
    powerful.
        This will also show the cleaners that government is willing
    to work with us to help us go along without driving us into
    oblivion. We do not have the capability as a large company like
    Dow or General Motors to survive against environmental
    onslaught. It is just us.
        I appreciate the time that you have given us in
    consideration of this bill and hope that you will pass it.
    Thank you.
        [Mr. Ustanik 's statement may be found in appendix]
        Chairman Manzullo. Thank you, Mr. Ustanik.
        Mr. Shaw.

              STATEMENT OF GORDON SHAW, FAIRLANE CLEANERS

        Mr. Shaw. Thank you, Chairman Manzullo and Subcommittee
    Members. I really appreciate the opportunity to come here today
    and give my testimony in support of H.R. 1303.
        The reason I have come from San Diego is mainly there are
    three points that I feel are very important. First of all, our
    dry cleaning industry provides an essential service to everyone
    in the country, while providing paychecks to hundreds of
    thousands of Americans.
        Secondly, we in the industry want to be the best neighbors
    that we can and also to be the best employers that we can. This
    bill can help revolutionize the industry in a positive way for
    the owners, the employees and for our communities.
        I have been in the dry cleaning industry for 22 years in
    the San Diego area, and over those 22 years not only have I
    paid attention to my business, but I have gotten an acute
    understanding of the industry and a great interest in the
    industry. Through that interest, I have served as a director
    and president of the San Diego Dry Cleaners Association, a
    director and vice-president of the California Cleaners
    Association. I have also been a member of a compliance
    improvement team with the San Diego Air Pollution Control
    District.
        Although I no longer hold those positions, my interest in
    the industry remains just as strong. I have had eight different
    locations, five dry cleaning plants, all of them
    perchloroethylene plants, and I have always gone to all the
    trade shows and stayed up to date with the newest technology,
    one of which is the CO2 technology, among other
    alternative solvents.
        These technologies give me a great deal of interest because
    I see that the way that the industry's future is. Living near
    the ocean, I have a lot of respect for the environment, the
    ocean, and anything I can do in my industry to improve the way
    we do things for our environment is of great interest to me.
        H.R. 1303 is a great way to start. It offers something that
    we in the industry can do positively for the environment, but
    it needs to be encouraged, and it needs to be a lot more
    affordable.
        Right now in California, well over 90 percent of all the
    dry cleaning is done in perchloroethylene. EPA has determined
    that perc is a hazardous material. Liquid carbon dioxide is a
    better solvent. It creates less wear and tear on clothing. It
    is safer on many of the delicate garments, but the machines are
    very expensive, as we have already heard. They can be two to
    three times as expensive to purchase. They cost more to
    install. They require more extensive tenant improvements to
    install, and they are more expensive to operate.
        With the tax credit, this will help to stimulate dry
    cleaners like myself to take a chance and do something that is
    positive for the industry. States have already come up with an
    incentive. North Carolina and Nebraska have incentives to
    encourage dry cleaners to shift to a more environmentally
    friendly solvent. They are effective, but a national tax credit
    would be much more effective.
        In summation, dry cleaning is everywhere. It is essential
    to everyone. H.R. 1303 protects the environment and all the
    proud, hard working people that work in our industry, and I
    want to be part of positively revolutionizing our industry. Our
    employees and our neighbors deserve the best that we can offer.
        Thank you very much, and I really urge your support of H.R.
    1303.
        [Mr. Shaw's statement may be found in appendix]
        Chairman Manzullo. Before we get to our next witness, could
    somebody very briefly explain dry cleaning with perc, wet
    cleaning without perc and the method we are talking about here?
    You have three different methods.
        Mr. Ustanik. Right.
        Chairman Manzullo. Just very quickly. We need to lay this
    predicate before we go on. Go ahead, Tom.
        Mr. Ustanik. Wet cleaning is typically a very modified,
    high performance washing machine that uses specific detergents
    with regular water in order to clean clothes like the garments
    you are wearing without causing shrinkage, which is normally
    why you would put it in a dry cleaning situation or dye bleed.
    Other than that, it would clean effectively.
        Perchloroethylene is another dry cleaning solvent. It is
    done in enclosed machinery to clean a garment again in this
    respect with no water using detergents to lift stains off your
    garments.
        CO2 would be another ``dry'' solvent--it does
    not have water in it--to clean the garments again in a very
    specific pressurized vessel in order to have a liquid to clean
    your clothing and detergents specific to it.
        Petroleum would be similar as being a non-water solvent and
    also be silicone based.
        Chairman Manzullo. But you cannot clean all clothing in the
    wet cleaning? Is that correct?
        Mr. Ustanik. I was involved as an evaluator for a project
    with design of environment for EPA called the Greener Cleaner,
    and there it was tried to determine how much you absolutely,
    positively could clean in water based.
        Yes, you cannot clean 100 percent, but you also cannot
    clean 100 percent in perc. There are items that you cannot do,
    you cannot do in CO2 and pretty much in any other
    solvent. They do not quite do all of them, but combinations,
    this case wet cleaning and CO2, you can do or
    combinations of any other others if so chosen.
        Chairman Manzullo. Okay. Appreciate that.
        Mr. Fisher.

      STATEMENT OF BILL FISHER, INTERNATIONAL FABRICARE INSTITUTE

        Mr. Fisher. Thank you. To help out on the definition of wet
    cleaning and laundering--as we are the association of dry
    cleaners, which includes CO2, wet cleaners and
    launderers--laundering is what we do to your shirts and
    underwear. Wet cleaning is when we take water and put it in a
    very specialized machine that can be controlled very, very
    closely. Dry cleaning is machine which can be controlled very
    closely.
        Thank you. I am Bill Fisher, chief executive officer of the
    International Fabricare Institute. We are the national and
    international trade association of professional neighborhood
    dry cleaners, launderers and wet cleaners. My comments today
    are on behalf of our members whose stores represent better than
    one-half of the nation's 30,000 mom and pop dry cleaners.
        Today, many of those dry cleaners are either facing or
    going through significant financial hardship. This has been
    brought about by fewer clothes being professionally cleaned as
    a result of casual dress and by an increasing entrance into the
    industry by new investors.
        Before I go any further, let me note on the wet cleaning
    side that wet cleaning technology in fact typically costs about
    $35,000 and that about 40 percent of the existing plants in the
    industry today already do some wet cleaning. In fact, with a
    good wet cleaning machine and dryer, one can do up to about 45
    percent of the garments that would otherwise be professionally
    dry cleaned.
        With an additional $18,000 to $20,000 investment; in other
    words about $50,000 total, one has a complete wet cleaning
    system with tensioning finishing equipment. That is what we
    call it. It is a press where you can stretch the garments while
    you press them, and that is because wet cleaning does shrink
    garments a little bit.
        Right now, unfortunately, as we read the bill as structured
    we felt it was more likely to damage than to help existing
    small business dry cleaners and to further exacerbate their
    financial problems.
        I want to make it clear that we actively support
    environmentally responsible operation of existing dry cleaning
    systems. We actively promote the development and investigation
    of alternative systems. IFI founded the professional wet
    cleaning partnership with Greenpeace and several labor unions.
    We were specifically and directly responsible for the
    introduction of Greenpeace and other environmental groups to
    carbon dioxide cleaning.
        CO2 dry cleaning, by the way, was invented by
    Hughes Aircraft and another company called Global Technology.
    Dr. DeSimone is to be credited for being the first person that
    was able to commercialize it so that in fact dry cleaners have
    been able to begin to use it.
        We tested and recommended to the industry the type of dry
    cleaning equipment chosen by U.S. EPA as the NESHAP standard
    for perc, and we have continually let our members know what
    questions need to be asked, and the answers they have to get in
    order to consider new technology.
        Again, I want to make it clear that we support wet cleaning
    and we support carbon dioxide dry cleaning. We are interested
    in another possible new technology that may fall under this
    bill, dry cleaning in silicone liquid of all things, but in
    representing the dry cleaning industry we would like to make
    sure that this bill in fact is going to do what we believe you
    all intended for it to do.
        I am not going to go into detail with my first set of
    comments that arguably it does not apply to wet cleaning
    technology or the comments that were made about report language
    and/or simple language changes within the bill. That will be
    taken care of, but arguably the bill did not cover wet
    cleaning. We are glad to see that it will because it should.
        On the credit for dry cleaning equipment using reduced
    amounts of hazardous substances, the dry cleaning industry has,
    yes, used a substance that is considered hazardous, perc, for
    many years. We have also worked closely with EPA to reduce our
    consumption, and in fact the average plant today that has put
    in new equipment has a tenfold decrease from that of even ten
    years ago.
        We do believe that the Committee should look at an
    extension of this to dry cleaners who have put in equipment
    that meet the requirements of EPA's NESHAP. We were one of the
    first National Emission Standard groups under the Clean Air Act
    amendments of 1990.
        Dry cleaners in the past four or five years have put in
    some very high technology equipment, and if the Committee would
    like to see them be able to afford to switch to new technology
    they have to pay off what they have. They have done the right
    thing in meeting EPA's regulations.
        The current language states that there is an exception for
    any liquid containing ten percent petroleum solvents, and that
    surprised us. While we do suggest that a solvent such as
    petroleum, if they meet EPA standards, be considered for
    inclusion of the tax credit here, we think the Committee needs
    to be careful about allowing blends that may escape any
    regulations, but again that is something the Committee can look
    at in more detail. Additionally, global stratospheric issues
    are of a concern to us.
        Chairman Manzullo. We are at five minutes. Could you
    summarize in 30 seconds?
        Mr. Fisher. Yes, sir. I will.
        We applaud the Committee for their action. We would like to
    see some of our comments certainly looked at so that there
    could be expansion of the bill to really afford a credit to
    small business dry cleaners, those that we represent.
        As of tomorrow, I have been in this industry for 35 years,
    and there are a lot of wonderful mom and pop people out there.
    I literally talk one on one with thousands of them a year. I
    would like to see our industry be given the chance under this
    bill to move forward to better technologies.
        Thank you.
        [Mr. Fisher's statement may be found in appendix]
        Chairman Manzullo. Thank you, Mr. Fisher.
        Dr. DeSimone.
        Dr. DeSimone. Okay.
        Chairman Manzullo. How do you like it pronounced?
        Dr. DeSimone. My family uses DeSimone, but my cousins use
    DeSimone, but others have used DeSimone.
        Chairman Manzullo. I guess the Norwegian was right on the
    pronunciation.
        I look forward to your testimony.

       STATEMENT OF JOSEPH DESIMONE, PROFESSOR OF CHEMISTRY, UNC
       CHAPEL HILL, CHAIRMAN AND CO-FOUNDER, MICELL TECHNOLOGIES

        Dr. DeSimone. Thank you. Mr. Chairman and distinguished
    Members of the Subcommittee, thank you for inviting me to
    testify.
        My name is Joseph DeSimone, and I am an academician who has
    dedicated his career to establishing the utility of carbon
    dioxide to replace organic solvents in a wide range of
    processes. I do this through a joint professorship at the
    University of North Carolina at Chapel Hill in chemistry, as
    well as the chemical engineering department at NC State.
        Recently I was appointed by the National Research Council
    onto their Board of Chemical Science and Technology, and my
    students and I have received numerous awards, including the
    Presidential Faculty Fellowship Award, the National Science
    Foundation Young Investigator Award and the Presidential Green
    Chemistry Challenge Award. Most relevant to today's issue,
    however, is I am director of the National Science Foundation's
    Science and Technology Center for Environmentally Responsible
    Solvents and Processes.
        This NSF funded multi-disciplinary, multi-institutional
    center comprised of scientists and engineers from Chapel Hill,
    NC State, North Carolina A&T, as well as the University of
    Texas at Austin, is focused on the use of CO2 to
    replace solvents. We use CO2 research to develop and
    share scientific knowledge profitably among students, among
    scientists, among industry and society for a cleaner
    environment.
        The need for our activity is clear. There is some
    30,000,000,000 pounds of organic solvents that are manufactured
    every year. These solvents get used in everything from cleaning
    hard disk drives to painting cars to dry cleaning clothes. Much
    of the solvent inevitably ends up in our environment, in our
    land, our air and our drinking water.
        I would like to share with you today three thoughts. For
    the first time in history, there is now an environmentally
    responsible alternative available to dry cleaners that
    eliminates their dependency on organic solvents, and that
    choice is carbon dioxide and water.
        Second point. Other industries beyond dry cleaning are
    greatly expanding their utility of CO2 to replace
    their dependency on organic solvents. Dry cleaners are not
    alone.
        Third, government needs to treat small businesses
    differently than the way it treats large, multi-national
    companies in regards to pollution prevention.
        Let me elaborate on these points. We developed a process
    that uses CO2 to clean clothes in. Our focus was the
    development of detergents for CO2. It is the same
    CO2 that is used to carbonate soda in gas form at
    restaurants all over the country. It is a natural substance,
    and it is readily available.
        Carbon dioxide is finding promise as a solvent replacement
    in lots of industry. Many of you heard about decaffeinated
    coffee or naturally decaffeinated coffee. That is a process
    that uses carbon dioxide instead of methylene chloride to
    decaffeinate 250,000,000 pounds per year of coffee beans.
        Dupont has recently announced they are licensing a
    technology from our labs to make Teflon in CO2. They
    are investing $275,000,000 to build a world scale Teflon plant
    that makes Teflon in CO2.
        An offshoot of our university research was the development
    of these detergents for CO2. We recognize, as Mr.
    Fisher mentioned, that other people have invented
    CO2 machines and that detergents are going to allow
    CO2 to be more useful in cleaning. CO2 by
    itself is not effective, just like water by itself is not
    effective.
        Unlike the plastics or paint industry, when we went to
    transfer this technology to the marketplace there are no
    Duponts or IBMs of the dry cleaning industry. There is actually
    very little R&D that gets done on behalf of small businesses,
    and so at this challenge and believing in the impact that we
    would have on society, we decided to form our own small company
    to bring this technology into the marketplace.
        However, it became quite clear to us early on that the
    equipment costs were going to be expensive for our technology.
    These machines are made out of stainless steel. They are a very
    different engineering type of machine than one would use with
    traditional solvents.
        Despite the fact that there are at least four different
    companies now trying to roll out liquid CO2 dry
    cleaning machines, we are all faced with the fact that the
    equipment is more expensive, so despite all the selling about
    the positive attributes of CO2, it being a room
    temperature process, no heat setting of stains, less lint
    generated, better color fastness on many different fabric types
    and no environment contamination issues, small businesses must
    focus on what is the cost as opposed to what is the return on
    investment. This is a challenge for small businesses.
        So we are here today advocating a positive, proactive
    approach that allows small businesses to invest in pollution
    prevention technologies. What it really boils down to is we
    need to treat small businesses different than we do large
    companies. It is okay to shake a stick at a large company to
    invest in pollution prevention technologies, but if we do that
    to small businesses they will inevitably go out of business.
        We see it already with the underground storage tanks in gas
    filling stations across this country where they were
    regulatorily put out of business as opposed to given incentives
    to invest in new tank systems. If we do not do something for
    dry cleaning, we are going to have on our hands a similar
    situation in the dry cleaning industry, and we think that would
    be a shame.
        Thank you for your support for this incentive, and I would
    be happy to answer any questions later on. Thank you.
        [Dr. DeSimone's statement may be found in appendix]
        Chairman Manzullo. I appreciate your testimony.
        Our next witness is Dr. Henry Cole. Dr. Cole.

        STATEMENT OF HENRY S. COLE, PRESIDENT, HENRY S. COLE &
                               ASSOCIATES

        Dr. Cole. Thank you, Chairman Manzullo and other
    distinguished Members of the Subcommittee, for this excellent
    hearing and for the opportunity to testify.
        My name is Henry Cole. I am president of Henry Cole &
    Associates, a consulting firm that promotes environmentally
    safe communities, technologies and businesses. I am the former
    science director of Clean Water Action and appear today
    representing Clean Water Action and its 700,000 members across
    the U.S.
        I want to make three main points. First, environmental,
    public health and consumer advocates have embraced safe and
    sustainable cleaning technologies, and by that we mean wet
    cleaning and liquid CO2.
        Secondly, these technologies offer safe and healthful
    alternatives to toxic chemicals like perchloroethylene
    currently in widespread use.
        Third, H.R. 1303 is the right approach. It will empower dry
    cleaners to speed up the----
        Chairman Manzullo. Dr. Cole, excuse me a second.
        Dr. Cole. Yes?
        Chairman Manzullo. We have a vote coming up now. I am
    predisposed at this point to cease your testimony, then when we
    come back to start all over with it.
        Are you going to come back, Mr. Camp?
        Mr. Camp. Yes.
        Chairman Manzullo. All right. Why do you not go ahead?
        Dr. Cole. Okay.
        Chairman Manzullo. We still have about another five
    minutes, but if we need time after that I am going to give it
    to you.
        I have stopped the clock. Go ahead. The clock is not
    running, but when the bell goes off the second time please
    stop. Go ahead.
        Dr. Cole. The third point was that H.R. 1303 will empower
    dry cleaners to speed up their transition to safe and healthful
    technologies. This is the right approach for this particular
    industry.
        Let me elaborate. Perchloroethylene is a highly toxic
    chemical and one to which hundreds of thousands and dry
    cleaning workers and members of the public are routinely
    exposed. This chemical poses a range of significant risks and
    hazards associated not only with its use, but with its
    production, its release and its ultimate disposal.
        We acknowledge the progress that dry cleaners have made,
    but it does not eliminate the fact that this is a toxic
    chemical that should be phased out. It is a highly volatile
    liquid that readily evaporates into air and is not only
    difficult to contain, but very burdensome to regulate.
        We know that it affects the nervous system. High exposures
    can cause dizziness, headaches, confusion, nausea, impaired
    ability to walk and speak and unconsciousness. Such conditions
    can occur with accidental releases or spills from machines or
    containers. My written testimony includes an example of a
    recent incident in Florida in which the owner of a dry cleaner
    was overcome and immobilized by perchloroethylene fumes.
        There are also risks associated with long-term exposure to
    lower levels of perchloroethylene. The International Agency for
    Research on Cancer in 1995 upgraded perchloroethylene from a
    possible to a probable human carcinogen. EPA reports that
    perchloroethylene may cause dysfunction of liver and kidneys
    and also cause birth defects.
        A 1998 EPA report presents evidence showing that
    significant concentrations of perchloroethylene occur in the
    following situations; in dry cleaning establishments, including
    some with advanced dry to dry machines, in apartments located
    over dry cleaners, in stores next to dry cleaners such as in
    strip malls. Levels measured as reported by EPA in those
    locations generally exceeded New York state's community health
    guideline of .1 milligram per cubic meter. Frequently the
    values were higher than the one milligram per cubic meter,
    which is New York's recommended corrective action level.
        There is another serious problem. Thousands of dry cleaners
    have released perchloroethylene to soil and groundwater. Once
    in the groundwater, this chemical presents a very nasty clean
    up job--one that is very expensive and very difficult to clean
    up.
        I know about this problem firsthand. One of my clients owns
    and operates about a dozen shopping centers in New England, and
    at about seven of those shopping centers dry cleaners release a
    significant amount of perchloroethylene into the ground. In
    each case, that required a response under state law.
        Two of those cases were terribly unfortunate because not
    only were the releases large, but they occurred in drinking
    water aquifers located upgradient of municipal well fields. Let
    me tell you that those clean ups will take many years to
    complete and will each cost more then $1,000,000.
        Now, as a result, this particular company now prohibits the
    use of perchloroethylene on its premises. It also, because of
    its flammability, prohibits hydrocarbon cleaning as well.
        Chairman Manzullo. Dr. Cole, we have to go vote. We will
    come back, and I will give you an additional couple minutes
    once we get back.
        [Recess.]
        Chairman Manzullo. Okay. We will reconvene our hearing.
        Dr. Cole, had you completed your remarks, or do you want a
    couple of extra minutes?
        Dr. Cole. One minute should do, Mr. Chairman.
        Chairman Manzullo. Sure. Fine. Go right ahead.
        Dr. Cole. At the break, I was making the point that these
    clean ups, the shopping center clean ups from the
    perchloroethylene releases, the two worst ones, each of those,
    the total clean up cost will exceed $1,000,000.
        The point is that when we talk about the expense of
    perchloroethylene we need to fully look at all of the costs,
    including these environmental costs and health costs. We find
    that the costs of perchloroethylene are not so cheap.
        Now, as I said, as a result this particular landlord now
    prohibits the use of perchloroethylene on the premise. It will
    not allow a switch to flammable hydrocarbons either. Its
    preference is that these cleaners go to liquid CO2
    and to wet cleaning. Clearly H.R. 1303 would help dry cleaners
    in situations like this move to safe, preventive and
    sustainable technologies, wet cleaning and CO2.
        Let me repeat my three points. Environmentalists and others
    concerned about our health embrace safe and sustainable
    cleaning technologies, wet cleaning and liquid CO2.
    These technologies offer safe and healthful alternatives to
    toxic chemicals like perchloroethylene currently being used.
    Finally, this bill will empower dry cleaners to make the
    transition to these safe and healthful technologies.
        In conclusion, on behalf of Clean Water Action and its
    700,000 members, we urge Congress to enact this very good piece
    of legislation, and thank you for your efforts, Mr. Chairman,
    and the other sponsors of the bill.
        [Dr. Cole's statement may be found in appendix]
        Chairman Manzullo. Thank you for your patience, Dr. Cole.
        Mr. Camp, I would like to have you go first and make sure
    that I would like to see a dialogue with you and Mr. Fisher
    about the drafting of this bill.
        Mr. Camp. Yes. Thank you very much, Mr. Chairman.
        Before I do that, just one quick question for either Mr.
    Ustanik or Mr. Shaw.
        What kind of impacts would a tax credit have on your bottom
    line like this, and how would it affect your business
    decisions, just quickly?
        Mr. Ustanik. Do you want to answer first?
        Mr. Camp. Mr. Shaw? Go ahead. Either one.
        Mr. Shaw. It would encourage me to move forward with
    something new. Something new is always more expensive, but it
    would be another little vote of confidence. It would not have a
    real significant impact on the bottom line, but it would, you
    know, encourage people to take that step.
        Mr. Ustanik. For us it would mean cutting our time table
    from four years to two years before purchase of an additional
    machine and then, of course, consequently speed up additional
    purchase. For our operation it will take three machines in
    order to fully convert to CO2 and liquid wet
    cleaning technology.
        Mr. Camp. Thank you.
        Mr. Fisher, in preparing for this hearing I saw your
    written testimony, and in that you mention that there has been
    a 70 percent decline in perc use in the last decade.
        Mr. Fisher. Yes, sir. That is correct.
        Mr. Camp. Is that correct? So clearly dry cleaners are
    searching to find a way to minimize their use of perc, and it
    is our understanding that the bill applies to all technologies,
    given our definition of what hazardous material is.
        I would be happy to work with you to try to make sure that
    we address that because I think if wet cleaning--if there is
    any question, we want to make sure that that is answered. I
    know that Congressman Price feels the same way.
        There are some other technologies out there, silicone, as
    you mentioned in your testimony, and others, at least two other
    ones. Is it your understanding that those would be included
    under the bill as written?
        Mr. Fisher. Yes, sir. The silicone based technology being
    commercially sold, just beginning to be sold and placed under
    the name of Green Earth. Yes. Our reading is that Green Earth
    would probably be covered under this.
        I will have to admit that the final language in the bill
    where it says if there are any hazards or regulations, that may
    be language that you would want to look at so not to exclude
    anything that in fact is safe. I am not trying to say make this
    overly expansive, but some wordsmithing may be needed at that
    point.
        Yes, I believe the silicone would be. Water based wet
    cleaning would be simply by saying dry cleaning or wet cleaning
    equipment, and you have solved the problem.
        Mr. Camp. Citrus Max, if there is any other technology out
    there, it is my understanding that that would be included as
    well.
        Mr. Fisher. It may well be. There is another technology
    called Rynex. That is a glycol ether. It probably would not be,
    but a full evaluation of the toxic properties and safety has
    not been made on that either so until those questions are
    answered I do not think one would want to leap in that
    direction.
        Mr. Camp. All right. Thank you.
        Dr. DeSimone, again I want to thank you for all of your
    work in developing this technology and helping bring it to
    market and all of your efforts there. I just wondered if there
    were any additional comments you wanted to make after having
    heard all the comments this morning?
        Dr. DeSimone. Yes. You know, the issue of going forward in
    pollution prevention versus what is typically referred to as
    command and control and the end of pipe issues is an
    interesting one.
        Pollution prevention is the highest level of safety for our
    citizenry and our environment where you just simply eliminate
    the solvents that are used in that particular case. We
    certainly applaud the dry cleaning industry and all the
    manufacturers of equipment for making the equipment more
    effective, less emitting than historically.
        But, when one looks at command and control and regulations
    related to emissions that continues to encourage continued use
    as opposed to preventing its use because there are a lot of
    issues related to not only at the dry cleaner level, but
    getting the solvents to them.
        Many dry cleaners are in fact good stewards of the
    environment. They are practicing the issues associated with
    proper handling of the solvents, but often the stewardship
    recommendations that were given to them early on were not
    adequate, and it has been a challenge to achieve really a
    significant change, and that is where pollution prevention
    really differs from end of pipe controlled regulations.
        Mr. Camp. All right. I see the red light is on. Thank you,
    Mr. Chairman.
        Chairman Manzullo. Well, we probably will have time for
    another round if you want to stick around.
        Mr. Camp. Okay.
        Chairman Manzullo. Mrs. McCarthy.
        Mrs. McCarthy. Thank you, Mr. Chairman.
        I am going to go back to one of my original questions. When
    we say it is $150,000, is that for the machine, or is that for
    the whole set up? Is that for everything included, or are we
    talking about even more money going into this?
        Dr. DeSimone. For the machines sold by Micell Technologies,
    that is the cost of the machine. There is typically a chiller,
    an auxiliary chiller that is needed for it is just like one
    needs to have steam or electricity and those sorts of things,
    but the machine sells for $150,000.
        I have seen prices from our competitors in the market, and
    I have seen numbers that range from $80,000 to $140,000, so
    there are different price ranges.
        Mrs. McCarthy. Does anybody have an estimate with the cost
    of the machine and the set up for what it would actually do for
    a small dry cleaner to really change their whole operation?
        Mr. Fisher. Yes. Could I offer a comment on that? Yes. One
    could put in a basic CO2 machine such as the Micell
    and have it up and running with the existing finishing
    equipment, the pressing equipment that you have, for probably
    in the $150,000 to $170,000 range if you could purchase a
    Micell machine. You cannot.
        Micell has a franchise. In fact, if the Committee is
    interested they have a great 27-page frequently asked question
    list on their website as to the requirements of the franchise.
    One must purchase a franchise, pay a franchise fee, pay a fee
    on gross profits, and one is required to put in a very
    substantial, beautiful, and they are beautiful, dry cleaning
    plant.
        Then the total cost with the equipment is in the $500,000
    to possibly $800,000 range, and that is the only commercially
    available CO2 right now, and that is one of our
    concerns. That is why we want to make sure that this is
    available.
        Now, there are other CO2 machines out there that
    may be commercially available in the future, but for the past
    two years only the franchise option is there.
        Mrs. McCarthy. So basically are you saying like my little
    dry cleaner in Mineola, it is a husband and wife. Even if we
    here on the Small Business Committee try to certainly make sure
    there were loans through 7(A)s or 504s, 7Ms, it still would be
    out of their reach then?
        Mr. Fisher. It is unlikely that your small dry cleaner can
    afford the $500,000 to $800,000 investment to become a Micell
    operator.
        Mrs. McCarthy. And I am not saying that we should not go
    ahead with this, but obviously I am concerned with, you know,
    we here are small business. That is obviously what we are here
    for, and we care about them very much.
        I think, you know, we are on the right track with this, and
    I am not against this, but again what I am saying is it is the
    mom and dad and the husband and wife that I am concerned with
    because they are not going to have the capital for this, so
    somehow we here on the Small Business are going to have to work
    with them also.
        Dr. DeSimone. Yes. I would just comment that there are
    several different manufacturers out there with machines, and
    Mr. Fisher is right that we certainly were the first to market.
    We have cleaned almost 1,000,000 pounds of clothes now in our
    affiliated system, but certainly you can purchase machines from
    several different manufacturers.
        I know Tom has seen equipment on the floor at different
    trade shows. I just read a press release that one of our
    competitors just put a machine on a Carnival cruise ship, and
    those prices that I have seen advertised were certainly less
    than $150,000.
        Our particular business strategy was to combine the
    technology with a franchise system to allow dry cleaners to
    have the marketing materials and related to augment the
    technology, but that is just the way our company chose to roll
    it out. There are three or four different choices out there.
        Mrs. McCarthy. Like I said, I am not against this bill, and
    I am not. My concern again is for everybody to be involved in
    it. Obviously the more we can do the better off we all are
    because of the environmental issues, certainly the clean up
    issues.
        I had asked off on the side what would this tax credit
    cost, and we are talking about $50,000,000.
        Chairman Manzullo. $50,000,000.
        Mrs. McCarthy. $50,000,000 over ten years, which if you
    really add up the clean up costs just in a few areas we could
    probably justify it, so hopefully we will work together to
    extend this, but again I am concerned with the owners of, you
    know, like I said, the husband and wife. I mean, they put in so
    many hours. I mean, they are open at 7:00 in the morning. They
    close at 7:00 at night, and they are cleaning after hours.
        Again, I am not discriminating against the larger
    commercial either. You know, we have to start somewhere, but I
    think this has to include everybody.
        Mr. Camp. Would the gentlelady be kind enough to yield?
        Mrs. McCarthy. Absolutely.
        Mr. Camp. I did write the Joint Committee on Taxation, and
    the five-year number is $146,000,000. The ten year number is
    $533,000,000 in terms of cost, so it is a little bit more than
    what we had initially heard, but I just wanted to put that in
    the record.
        Mrs. McCarthy. Everything is in this place.
        Mr. Camp. Yes. People are into numbers here.
        The other thing, I just wanted to underscore the point that
    there is more than one company in this field. This legislation
    is written for any technology, any company. Some companies may
    choose to franchise. Some may not. I just wanted to make it
    clear that there are more. There are competitors in this field,
    and I think this would help develop that.
        Some have raised the point about the people who have helped
    reduce their use of perc are not getting anything out of this.
    I worked very hard on the electric vehicle credit in the Ways
    and Means Committee, and we did not give credit to the existing
    technology, so for more efficient gasoline engines we have not
    adopted tax credits, in that way, but for new technology, for
    trying to bring new technology to the market, there has been a
    precedent for doing that.
        That is why Congressman Price and I wrote this bill to
    address the new technology issue because the other is ongoing
    and is occurring.
        Thank you.
        Mrs. McCarthy. And I thank you. Again, I am going to
    support this and certainly hopefully will continue to work with
    all of you.
        I think Small Business, certainly this Committee, can again
    watch out for those truly small businesses and work with them
    through our Committee to make sure that they have the
    opportunity to buy the different equipment also to the best--it
    is just that, you know, when you start talking about $200,000
    even, you know, for redoing the store and everything else like
    that, that would be way out of line with almost any of my small
    businesses.
        Mr. Shaw. Mrs. McCarthy?
        Mrs. McCarthy. Thank you, Mr. Chairman.
        Mr. Shaw. Right here.
        Chairman Manzullo. Go ahead. Sorry.
        Mr. Shaw. Am I allowed to respond on that point about small
    business and mom and pop because I am a mom and pop without the
    mom. I am just me. My daughter has helped me a little bit, and,
    you know, I have built my business up over 20 some years.
        I can do this, and there is no reason why any other dry
    cleaners cannot work their way up and aspire to being the best
    they can. Many of the dry cleaners will not be able to do this,
    just as they cannot put new tile in their store, just as they
    cannot pay good wages, because they are not very good
    operators, but this is not--you know, the technology itself is
    not off limits to mom and pop or small organizations because I
    am going to do it.
        Mrs. McCarthy. Well, I think that comes back to our
    Committee then to make sure that those small businesses that
    are running, that we make them better business people, and that
    is part of our job here, too, to give them the information on
    how to have a stronger economy in their business and make a
    good living.
        Thank you.
        Chairman Manzullo. I am going to follow up on that. This is
    the Small Business Committee, and this is a reference in regard
    to the thousands of cleaning establishments throughout the
    country.
        Mr. Fisher, maybe you can help me with this. The typical
    dry cleaning establishment is one facility.
        Mr. Fisher. Yes, sir.
        Chairman Manzullo. Is that correct?
        Mr. Fisher. That is correct.
        Chairman Manzullo. What is the average number of employees?
    A husband, wife and maybe one or two other employees?
        Mr. Fisher. Typically about six, the equivalent of about
    six full-time employees, five to six full-time, including
    husband and wife.
        Chairman Manzullo. One of our concerns, and the reason why
    I asked for this hearing, is the fact that we are seeing
    communities throughout the nation following the lead of the
    owner of that shopping center. They are not allowing dry
    cleaning establishments to come in if they use perc period.
        I think it is just a matter of time before perc is banned.
    If the EPA does not outlaw it either states will outlaw it or
    communities will outlaw it or people who build shopping centers
    will. The writing is on the wall for the demise of perc, and I
    think we have to recognize that.
        We are not here to discriminate against the small stores
    that can do it, but let me explore something with you. You
    probably know personally tons of operators across the country.
    What kind of debt are they carrying, those with the perc
    machines? Can you give us a scenario?
        Mr. Fisher. Yes. If a perc dry cleaning plant has done
    anything in the past six to eight years, they have put in the
    top-of-the-line equipment, and that would be equipment to meet
    the new emission standards from EPA under the Clean Air Act;
    very, very tight and very good equipment, but that type of
    equipment would typically price out between $50,000 and $80,000
    a machine depending on whether you get a Chevy or a Cadillac or
    a Mercedes.
        Chairman Manzullo. With an anticipated life of?
        Mr. Fisher. On that, typically we are going to be looking
    at eight to 12 to 14 years.
        Chairman Manzullo. Okay.
        Mr. Fisher. Usually they will not have paid off the debt on
    that before the lifespan is finished.
        Chairman Manzullo. Do you have any figures through your
    association to indicate the number of stores that are carrying
    debt on existing fifth generation perc machines?
        Mr. Fisher. We do not, but we are doing some survey work
    right now in conjunction with U.S. EPA that would provide those
    numbers.
        Chairman Manzullo. We are very much interested in that
    because you cannot look at new technologies without also taking
    into consideration the fact that the fifth generation perc
    machine is new technology----
        Mr. Fisher. Yes, sir. Could I offer----
        Chairman Manzullo [continuing]. That has not been paid off
    yet.
        Mr. Fisher. I am sorry. Could I offer a comment on what
    your bill will do, because we do think it is positive.
        For example, Mrs. McCarthy was talking about a very small
    dry cleaner. With this type of tax credit, her dry cleaner
    could in fact look at a wet cleaning technology. The equipment
    dryer there is about $35,000. That will let you do up to about
    40 percent of the garments that come in in wet cleaning.
        If somebody already has wet cleaning, and wet cleaning
    really began its resurgence in our industry about four years
    ago. That is one of the reasons we suggest that you look at
    1996 instead of 1999. If you have wet cleaning equipment you
    put in three years ago, two years ago, you would not get a
    credit, but if you did get a credit you could afford the
    tensioning finishing equipment which would let you do 80 or 90
    percent of the garments that otherwise would be dry cleaned if
    you wish.
        These people that have put in new perc equipment, the very
    best, very tightest that is out there, those people, because of
    their debt service, are in a position where they cannot
    financially afford to look at new technology such as
    CO2, and that is one of the reasons that we
    recommended something we would hope you would take a look at,
    which would be----
        Chairman Manzullo. I think that Mr. Camp----
        Mr. Fisher. Yes.
        Chairman Manzullo [continuing]. Recognized the fact that
    that is an issue, and the purpose of this subcommittee is to
    help all small business people.
        Mr. Fisher. Precisely. If one did look at that then perc
    dry cleaners in fact would have the opportunity to look at
    other technologies.
        Chairman Manzullo. Now, I have been learning a lot about
    dry cleaning lately. I guess you just take dry cleaning for
    granted. Somebody mentioned silicone.
        Dr. DeSimone. Yes, sir. I did.
        Chairman Manzullo. What is that? What kind of technology?
        Mr. Fisher. A working partnership between General Electric,
    who really are the leader in silicone fluids, and some dry
    cleaners from California resulted in the development and now
    testing in about 30 or 40 installations in the U.S. of a
    silicone based dry cleaning fluid.
        It is not as good of a dry cleaning solvent. We recognize
    that, but that is a tradeoff against the safety issue. It looks
    like toxicologically that there are no problems with that, and
    there is some final testing, I understand, that General
    Electric is finishing up for U.S. EPA and so forth to make
    certain of that.
        Chairman Manzullo. Did you want to add to that, Dr.
    DeSimone, about the silicone base?
        Dr. DeSimone. It is a chemical solvent. Certainly it has
    been around for a long time. It is being introduced into the
    dry cleaning industry. It certainly is more preferable than
    perc.
        It is a flammable solvent like petroleum solvents, and it
    has to be run in special machines associated with its
    flammability, but certainly it is better than perc in the
    context of toxicity based on what I have read, but it is still
    a chemical solvent, whereas in the context of CO2
    and water it is really a pollution prevention.
        Chairman Manzullo. That is just gas introduced into water?
        Dr. DeSimone. Yes. We are just exhaling it as we sit here.
    Yes.
        Chairman Manzullo. Okay. Mr. Price.
        Mr. Fisher. Could I make a clarification?
        Chairman Manzullo. Sure. Go ahead.
        Mr. Fisher. You have the words flammable and so forth.
    Flammable means something like lighter fluid that has a very
    low flash point. Actually, the solvent is combustible, which
    means it burns like a cardboard box, so that gives you an idea.
        I do not know of any commercial places in the United States
    that have prohibited that solvent, so fire codes have not been
    an issue for it.
        Chairman Manzullo. Thank you.
        Mr. Price. Thank you, Mr. Chairman. I am sorry to have to
    run back and forth with this mark up across the hall, but I
    appreciate the chance to ask a few more questions about cost
    and feasibility. I understand this has been explored to some
    extent.
        Dr. DeSimone, if you could respond to this, and any others
    who want to to chime in? When we talk about the up front costs
    of these CO2 machines versus conventional machines,
    I understand there is a considerable disparity. And, of course,
    we hope the tax credit would ease that.
        Are there other considerations, though, when a dry cleaning
    owner is thinking about this, considering the feasibility of
    this? Are there longer term savings that might factor in?
        How does the equipment compare in durability, for example,
    with conventional equipment?
        Are there liability and insurance considerations? Are there
    other factors that go in or should go into the calculation of
    costs, long-term as well as short-term?
        Dr. DeSimone. That is very interesting. When we are out,
    when our team is out there marketing and selling our
    technology, you know, there is often the very question of what
    does it cost? It is hard to sell through something that is two
    or three times what they are used to spending.
        You have to turn the argument around into what is the
    return on investment, as opposed to what is the cost, and
    exactly those issues you talk about. I mean, our machines use
    beverage grade carbon dioxide. It is the same CO2
    that is being delivered to every McDonalds and every Burger
    King. One of our dry cleaners goes through about as much
    CO2 a year that a Burger King goes through in about
    the same order of magnitude.
        There is just no contamination issues associated with that
    and so, you know, to play that back, to pay back the cost of,
    you know, no site contamination, the ability to get into sites
    that most dry cleaners would be prohibited to get into because
    of chemical solvents, we can get access to them, but it really
    gets back into the investment in their employees.
        I mean, probably the best part of this job that I have
    enjoyed is getting some of the most passionate testimonials
    from dry cleaning operators that have been running equipment
    for 15, 20 years, and they come up to you, and they talk about
    how we have changed their lives, how when they operate the
    equipment they are not getting the huff of solvent that they
    get in a traditional machine. It is much better operators.
        In fact, our cleaner in Wilmington, he bought our first
    machine, and his operators--he had two other perc machines or
    six other perc machines, put our CO2 machine in
    there. His operators would not go back to the other equipment
    and so he had sort of an internal turmoil of operators
    preferring to work on equipment.
        It is much better. I mean, you can just smell the
    difference when you go in our facilities. It is really a high
    quality work environment for the first time, so if you turn
    that into an investment in the employees it is also an
    investment in the consumer.
        It is hard to calculate all these, you know, returns on
    investment associated with these issues, but it makes a
    difference in a business that can appreciate in value, as
    opposed to being a liability after years, and that is the big
    difference that we offer.
        Mr. Price. So this tax credit would be available in a
    context where there are substantial other incentives and other
    payoffs, but hopefully this would clinch the deal so to speak
    in terms of operators?
        Dr. DeSimone. That is right. This is a cash flow business,
    and up front capital costs is challenging.
        Mr. Price. Do any of the other witnesses want to chime in
    on this issue of cost and feasibility?
        Mr. Ustanik. We have been running one of the machines for a
    little over a year. I did the installation, and I do all the
    service work, so my thing is looking at the equipment.
        It is a pressure vessel. Most of the components on it are
    listed, which means they are good for 15 years. We are used to
    on the dry cleaning machines ten to 12 is probably pushing it,
    and even at that point after 12 years it is getting tired.
        This machine already has components on it that are rated to
    withstand a minimum of 15 years.
        It is made out of a high grade stainless steel,
    considerably different than our machinery. In fact, I had a
    friend of ours who works for Nabisco who is a mechanic came
    down. He said for a change you actually got a real toy, not the
    stuff that we are used to that is generally sometimes pretty
    flimsy.
        As for cost of other machinery, the wet cleaning is
    available for any operator and is much less expensive. All
    these machines have much longer longevity than our perc
    machines will ever have, and even for the newer solvents like
    DF, which is a Class III-A solvent, those machines have a lot
    more maintenance concerns to them because they have a lot more
    safety concerns to them. There is a lot more that goes into
    them than these machines.
        These machines pretty much self-diagnose and control
    themselves. If they fail, they take care of it and shut it down
    whereas under these others the operator has to do all the work,
    so there is a lot more intensive maintenance in those than
    these would ever be.
        Mr. Price. So the new techniques carry some advantages in
    terms of----
        Mr. Ustanik. Right.
        Mr. Price [continuing]. Maintenance costs and durability of
    the equipment?
        Mr. Ustanik. And that is part of, you know, long-term
    ownership compared to the others.
        Mr. Price. All right. Thank you, Mr. Chairman. I appreciate
    the chance to sit in.
        Chairman Manzullo. Mr. Camp, did you have some more
    questions?
        Mr. Camp. Not at this time, Mr. Chairman. Thank you.
        Chairman Manzullo. I wanted to ask a question about perc
    itself. I am also concerned about silicone, which is viewed as
    safe now, but that is what people have said about MTBEs several
    years ago.
        I am not here to wave a red flag, but I can see traps
    happening to small businesses where they will comply today with
    an EPA environment, and then two years from now the EPA will,
    based upon some bona fide research, find out that they made a
    horrible mistake two years earlier and catch the small business
    in the trap.
        Dr. Cole.
        Dr. Cole. Mr. Chairman, I have to admit I do not know much
    about the new silicone technology, but it is a chemical. It is
    flammable. Like you say, we are concerned about the tests which
    really need to be done to look at something like that.
        But, what we do know is that water and CO2 are
    part of our everyday lives. They are essential ingredients to
    the ecosystems of this planet and to all of us. Nature, over
    the course of 4,000,000,000 years, has done the testing, and we
    do not have to worry. The real sustainable and preventive
    method is to use these natural substances which we know will
    not be hazardous or toxic.
        Chairman Manzullo. Mr. Fisher?
        Mr. Fisher. Yes. That is something in the association we
    are very, very concerned about, and I share exactly your
    concerns. In 1977 when we started work with EPA's Air Office on
    air regulations, they asked us if we would as an association
    move everybody to Freon 113, F-113, because it was not toxic,
    and it was good for the environment and so forth.
        We said yes, but Rowen and Molena have just come out with
    this information. Would you tell us that you are not going to
    ban and regulate it? They could not. We said well, until we
    know that is true we cannot tell the industry go that
    direction. Of course, we know what happened with fluorocarbons
    and the Montreal protocol.
        I with silicones share the same thing. Until we know and
    the companies involved know themselves that there are just as
    many assurances as possible, there are no problems, we would
    not be going out to the industry and saying great. Hey, switch
    to this.
        With carbon dioxide, I do not know whether anybody has done
    calculations to say if the entire industry went to carbon
    dioxide, and Micell's information is about 4,000 pounds of
    CO2 released per month from a carbon dioxide
    machine. That is from their website. I do not know if 30,000
    dry cleaners at 4,000 pounds a month is something that EPA
    would be concerned about, but I would like to get an answer
    from EPA.
        Chairman Manzullo. That sounds like a giant belch.
        Dr. DeSimone, do you have an answer to that?
        Mr. Fisher. I suspect there is not a problem, but I would
    like to know on behalf of our members, and so I think the point
    is well taken. We need to know about any of these possible
    alternatives before we move in that direction.
        Dr. DeSimone. I share Mr. Fisher's concerns for the
    industry and sort of the evolution of technologies over the
    years and how challenging it has been after being encouraged to
    go in one direction and going in the other direction.
        CO2 in water sort of eliminates that issue. It
    is very interesting that the CO2 that is distributed
    all through the country that goes to fast food restaurants, all
    that carbon dioxide is generated from other processes. There is
    a huge out stream of carbon dioxide from a wide range of
    commercial processes. When companies make fertilizer, when they
    make ethanol, when they make hydrogen, CO2 is a
    byproduct from all those processes.
        So when companies sell CO2 to fast food
    restaurants they capture a byproduct waste stream and capture
    that and then sell it into carbonation of soda or sell it to
    dry cleaners. Nobody is out there burning carbon to sell you
    carbon dioxide. In fact, it is estimated that far less than one
    percent of the CO2 that we generate as a country is
    ever captured for reuse.
        Every gallon of gas that you burn in your car you generate
    20 pounds of carbon dioxide. It is everywhere. That is why it
    is so cheap, and that is why it is so easy to tap into, so that
    is a pollution prevention issue related to the greenhouse gas
    issue.
        More importantly, the properties of CO2 allow
    one to do distillation and separations with much less energy
    required than it does to distill water. If you look at how much
    energy is required to distill a gallon of water as opposed to
    distilling a gallon of liquid CO2, it takes far more
    energy to do that for water than does CO2.
        When you talk about energy efficiency, you relate that back
    to the burning of fossil fuels, and you actually generate less
    new CO2 using CO2 based processes than
    you do with conventional solvents or with water, so it is not
    only a pollution prevention alternative. It is an energy
    efficient approach.
        Now, our first generation dry cleaning machines do not
    capture all the energy efficiency that we can. We see
    technically we should get about a 40 percent more efficient
    machine, energy efficient, than a perc machine. Right now we
    are running on par because we are running a little
    inefficiently, but we think we can capture a machine or
    generate and design a new machine that will be able to capture
    that energy efficiency as well.
        Chairman Manzullo. Mrs. McCarthy.
        Mrs. McCarthy. Being that this is a taxation committee,
    Congressman Camp, one of the things that I was just talking to
    the Congressman, our colleague, is North Carolina apparently is
    going to give a 20 percent tax credit, and if we give a 20
    percent tax credit that is actually 40 percent.
        Mr. Camp. No. That is under the state tax.
        Mrs. McCarthy. Under state tax.
        Is there any way that we could encourage the states,
    because obviously to me it is an environmental issue which most
    of our states are concerned about. I know we do not like to put
    mandates down on the states. I do not think we should, but is
    there any way of working it out that certainly go through with
    the federal, but also try to encourage our states to give state
    credits also?
        This way it would certainly in my opinion bring more people
    up faster, even if it was a time cap, five years or so, you
    know.
        Mr. Camp. I know a couple of states are looking at also
    enacting a state tax credit for environmentally friendly dry
    cleaning. I do not know offhand what we could do at the federal
    level to encourage the state legislatures to act from a tax
    standpoint, but it is certainly worth exploring.
        I would like to do that because that would then make it
    both on state and federal tax returns they would be able to get
    a benefit, and I think it would make it more feasible. I have
    been in contact with some folks about it, and I think it would
    be a very good idea.
        Mrs. McCarthy. You know, even if we on the federal level
    were able to give monies to the states, and I do not know, but
    to me even if it was a time cap of five to ten years or
    whatever it would certainly help everybody along the line, you
    know, and then you could rescind it because everybody would
    have the new equipment, and the regular maintenance would be
    there. It always sounds easy until we get involved in it.
        Chairman Manzullo. Could you yield?
        Mrs. McCarthy. Certainly, Mr. Chairman.
        Chairman Manzullo. On that topic, you know, we have these
    504 loans. These are long-term loans through the SBA. What is
    going on here is a pincer movement because it is a matter of
    time before perc is banned. For a lot of dry cleaners, it has
    already happened where perc simply cannot be used. One of the
    things I would also like to take a look at is using the 504
    loan program to help dry cleaners.
        Take your choice. Do we subsidize a 504 loan with cheap
    interest so a small business can afford to buy this new
    machine, or do we use that money to clean up the mess because
    perc machines are still out there?
        Do you have an opinion on that?
        Mr. Fisher. Yes, sir, I do. In fact, we as an association
    brought to Congress five years ago a proposal for a bill for
    legislation that would have imposed a tax on dry cleaners to
    set up a national clean up fund because of the superfund
    controversies, and we all know how involved it gets. That was
    something that was not feasible.
        We have in fact worked with 12 of our state dry cleaning
    associations, and in fact there are now 12 state dry cleaning
    funds where the legislation was proposed by our industry to
    those states where the taxes are solely on our industry. In
    fact, generally there is a tax on the perc itself, which leads
    to a double incentive to use it. We use those funds to clean
    up.
        The bottom line with those clean up funds is it removes the
    liability from the shopping center owners for the clean up and
    says the fund will clean up that, and the state will administer
    the fund.
        So there is a separate trail going along on that, and
    anything that helps dry cleaners will help that side as well.
        Mr. Camp. Mr. Chairman?
        Would the gentlelady yield?
        Mrs. McCarthy. I love these open discussions. No, I do.
    Certainly I yield.
        Mr. Camp. Well, I think particularly we have had a lot of
    discussion about the cost of this new technology, and we really
    need to look at the comprehensive costs of comparing existing
    technology perc with the new technology.
        I believe all of these costs, the costs of additional tax
    payments and clean up, ought to be included when you are doing
    a comparison because the $150,000 may not look as steep when
    you look at the long term, $150,000 per machine and
    $533,000,000 over ten years that the tax credit may cost. I
    think we need to look at that very carefully and get a
    comparison.
        I do not believe there has been any in-depth study. Do any
    of the panelists know of those cost comparisons, cost benefit
    analyses? Has that been done?
        Mr. Fisher. Not that I am aware of, but I share your
    sentiment, and we certainly realize both in approaching
    Congress and at the state level that the dry cleaning clean up
    bills would encourage people to look at all technologies, and
    that is definitely one of the things we knew would happen.
        Chairman Manzullo. Thank you. Thank you very much.
        Would you yield?
        Mrs. McCarthy. Certainly. Always to the Chairman.
        Chairman Manzullo. Well, let me ask a question. The more
    machines that are built lowers the cost of production. Can
    somebody elaborate on that quantitatively? Can you do that, Dr.
    DeSimone?
        Dr. DeSimone. When dealing with carbon dioxide, it is very
    different than dealing with perc or different than dealing with
    petroleum. Certainly, you know, the petroleum machines and
    silicone based solvents have, you know, fire suppression issues
    and oxygen sensors. They are a different level of machine than
    a perc machine.
        But a CO2 machine, because of its pressurized
    system, is made out of stainless steel, and it is a different
    device than a sheet metal based perc machine, for example.
    Therefore, you can just weigh it and just weigh the amount of
    steel required to do it, compare it and that is your baseline.
        No matter how you manufacture it, it is always going to be
    more expensive just based on the sheer weight of the equipment.
    Certainly economics of scale will be able to drive a lot of
    that out, but there is a floor there that is inherently higher
    than the floor associated with the perc machine.
        Chairman Manzullo. Well, we appreciate you all coming.
        Mr. Fisher, I especially appreciate your openness on your
    concerns about the bill, I encourage the authors of the bill to
    work with you.
        There are a lot of things that can be done. Not only is
    there the issue of the tax credit. Congress increased expensing
    from $19,000 to $30,000 so that you can now use to expense as
    opposed to writing off. There may be some other things that can
    be done with the 504 loans. There may also be some type of
    accelerated depreciation for environmentally friendly machines.
        You have all been excellent witnesses adding unique
    dimensions to everything we discussed. I think everyone concurs
    that we must deal with the environment and we still must clean
    our clothes. We have to take a look at all new technologies and
    Congress should do whatever by way of the Tax Code to encourage
    the affordability of these new technologies. This has been the
    purpose of this hearing.
        This hearing is adjourned. Thank you.
        [Whereupon, at 11:57 a.m. the Subcommittee was adjourned.]

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