National Clothesline

Implementation of a $3 per gallon fee on perchloroethylene sold in California will be delayed, the Halogenated Solvents Industry Alliance announced last month.

HSIA had expressed concerns to the California Air Resources Board after the board said in April that it would begin collecting the fee retroactively to Jan 1. After objecting on both practical and legal grounds, HSIA said it was told by the board’s staff that the new fee is not likely to be collected until later this year.

The fee was passed by the California assembly last year and signed into law by former Gov. Gray Davis just days after he was recalled from office in a special election Oct. 7.

The fee, which applies only to perc, would increase by $1 every year until it reaches $12 a gallon. The money would go into the Non-toxic Dry Cleaning Inventive Trust Fund, which would make grants of $10,000 to cleaners to switch from perc to a state-approved alternative. The grants would have to be used to replace, not supplement, existing perc equipment.

The legislature left it up to the air board to determine which alternatives would qualify. So far, the board has indicated that only two alternatives — wetcleaning and liquid carbon dioxide — would fit the requirement of “a non-toxic, non-smog forming alternative.”

The air board would determine the eligibility of individual grant recipients, with one stipulation being that at least 50 percent of the grant money would “directly benefit low-income communities and communities of color that are disproportionately impacted by air pollution.” Another provision directs the air board to establish a demonstration project to showcase professional wetcleaning.

Steve Risotto, HSIA executive director, argued in a letter to the air board that the statute “does not contain information on the process for assessing and collecting the fee, nor does it specify whether the fee is on gallons manufactured, gallons imported or gallons sold for drycleaning use.”

HSIA said that the board must develop regulations “to provide for an orderly system of fee collection.”

HSIA also said that the fee should not be collected retroactively because prior to its April 8 notice the board had taken no action to impose the fee. HSIA suggested that the fee should not be collected until 30 days after the companies who are to pay the fee are notified, which would provide a “reasonable amount of time for those parties to inform their customers and make necessary changes to their billing and accounting system.”

Retroactive collection of the fee would pose practical problems, as well, HSIA said. No effort had been made to notify perc importers or distributors of the board’s intent, so they had no reason to start collecting the fee on perc sales.

“To ask importers or distributors to be responsible for the fee on past sales would require them either to absorb the cost of the fee out of their own pockets or subsequently attempt to recover the money from their customers,” Risotto wrote.

HSIA also believes that the fee would best be collected at the point of sale by the distributor to the drycleaner. Not all perc that is shipped to the state is used in drycleaning and some of it ends up being shipped to other states. But at the time of import, it is virtually impossible to determine how the perc will be used, HSIA said. The worst point to apply the fee is at the actual point of import into the state, HSIA said.

Urging the state board to adopt official administrative rules before collecting fees, HSIA noted that “CARB could be forced to refund several years’ worth of fees” if a court eventually rules in favor of HSIA’s position that the fee can’t be imposed until official action is taken.”