U.S. GOVERNMENT PRINTING OFFICE

67–353 WASHINGTON : 2000

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

(

(II)

COMMITTEE ON SMALL BUSINESS

JAMES M. TALENT, Missouri, Chairman

LARRY COMBEST, Texas

JOEL HEFLEY, Colorado

DONALD A. MANZULLO, Illinois

ROSCOE G. BARTLETT, Maryland

FRANK A. LOBIONDO, New Jersey

SUE W. KELLY, New York

STEVEN J. CHABOT, Ohio

PHIL ENGLISH, Pennsylvania

DAVID M. MCINTOSH, Indiana

RICK HILL, Montana

JOSEPH R. PITTS, Pennsylvania

MICHAEL P. FORBES, New York

JOHN E. SWEENEY, New York

PATRICK J. TOOMEY, Pennsylvania

JIM DEMINT, South Carolina

EDWARD PEASE, Indiana

JOHN THUNE, South Dakota

MARY BONO, California

NYDIA M. VELAZQUEZ, New York

JUANITIA MILLENDER-MCDONALD,

California

DANNY K. DAVIS, Illinois

CAROLYN MCCARTHY, New York

BILL PASCRELL, New Jersey

RUBEN HINOJOSA, Texas

DONNA M. CHRISTIAN-CHRISTENSEN,

Virgin Islands

ROBERT A. BRADY, Pennsylvania

TOM UDALL, New Mexico

DENNIS MOORE, Kansas

STEPHANIE TUBBS JONES, Ohio

CHARLES A. GONZALEZ, Texas

DAVID D. PHELPS, Illinois

GRACE F. NAPOLITANO, California

BRIAN BAIRD, Washington

MARK UDALL, Colorado

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

PHIL ENGLISH, Pennsylvania

PATRICK J. TOOMEY, Pennsylvania

CAROLYN MCCARTHY, New York

RUBEN HINOJOSA, Texas

CHARLES A. GONZALEZ, Texas

GRACE F. NAPOLITANO, California

PHILIP ESKELAND, Senior Professional Staff Member

(III)

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 CarolinaChapel 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

(1)

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?

2

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,

3

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 CampPrice 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.

4

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, UNCChapel 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 everyVerDate 11-MAY-2000 08:34 Feb 22, 2001 Jkt 070352 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 E:\HEARINGS\67353 pfrm02 PsN: 67353
5

thing 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

6

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 socalled 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 cerVerDate 11-MAY-2000 08:34 Feb 22, 2001 Jkt 070352 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 E:\HEARINGS\67353 pfrm02 PsN: 67353
7

tainly 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.

8

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]

9

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.

10

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.

11

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

12

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.

13

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

14

$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 commuVerDate 11-MAY-2000 08:34 Feb 22, 2001 Jkt 070352 PO 00000 Frm 00018 Fmt 6633 Sfmt 6602 E:\HEARINGS\67353 pfrm02 PsN: 67353
15

nities, 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 situaVerDate 11-MAY-2000 08:34 Feb 22, 2001 Jkt 070352 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 E:\HEARINGS\67353 pfrm02 PsN: 67353
16

tions; 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 emVerDate 11-MAY-2000 08:34 Feb 22, 2001 Jkt 070352 PO 00000 Frm 00020 Fmt 6633 Sfmt 6602 E:\HEARINGS\67353 pfrm02 PsN: 67353
17

power 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

18

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

19

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 pos- sibly $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 marVerDate 11-MAY-2000 08:34 Feb 22, 2001 Jkt 070352 PO 00000 Frm 00023 Fmt 6633 Sfmt 6602 E:\HEARINGS\67353 pfrm02 PsN: 67353
20

keting 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

21

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 fulltime 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

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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.

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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, longterm 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

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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

25

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.

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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.

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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?

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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

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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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