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Penny Wise and Pound Foolish: Why Dry Cleaners Must Implement the DSCA MMPs
This article has been reprinted from the February/March 2003 issue of Carolina Clean, a publication of the North Carolina Association of Launderers & Cleaners.

3.1.2003

By now, North Carolina dry cleaners should be familiar with the minimum management practices ("MMPs") mandated by the North Carolina Dry Cleaning Solvent Cleanup Act of 1997 and its subsequent amendments (hereafter "DSCA"). The MMPs are found in 15A NCAC § 2S.0200 and available on the DSCA website (http://www.ncdsca.org). Implementation guidance is available from NCALC.

Dry cleaners should also know that they are legally required to have the MMPs in place. Nevertheless, many dry cleaners continue delaying implementation because of the cost and trouble involved. This is a perfect example of penny-wise and pound-foolish thinking. The estimated cost for the average dry cleaner to implement the MMPs is $3,000 to $4,000, maybe less. Spread over time, this begins to look a lot like the premium on an insurance policy. To be sure, this is a policy dry cleaners cannot afford to go without.

In addition to being legally required, let me suggest five financial reasons why dry cleaners should implement the MMPs.

1. DSCA eligibility is contingent on MMPs implementation and compliance. As dry cleaners are no doubt aware, DSCA created a unique State regulatory program to finance and administer a trust fund that pays to cleanup qualifying dry cleaning solvent contaminated property, less a deductible (which is at most $39,000). Moreover, once a party potentially responsible (a.k.a. "potentially responsible party" or "PRP") for the contaminated property enters an assessment or remediation agreement with the State, the PRP is protected from liability for such activities. A dry cleaner's eligibility to enter the DSCA program is strictly contingent on, among other things, the dry cleaner having been in compliance with the MMPs at the time the contamination was discovered.

Assessing and cleaning up dry cleaning solvent contaminated property under State supervision can cost in the hundreds of thousands of dollars. The DSCA trust fund protects dry cleaners from such liability.

2. DSCA enforcement actions. The DSCA program will enforce compliance with the MMPs. Like other State regulatory programs, the DSCA program has authority to and will soon begin random inspections of dry cleaning operations to confirm compliance with the MMPs. Dry cleaners out of compliance risk being assessed civil penalties of up to $25,000 a day for continuing violations with a maximum fine of $200,000. While it is unlikely that the initial penalties assessed will be this high, it would be tragic for a dry cleaner to incur even a $5,000 civil penalty for failing to implement the MMPs that would have cost only $4,000.

3. Reduces the risk of Superfund and toxic tort liability. While compliance with the MMPs will not eliminate the risk of an accidental solvent spill, it will substantially reduce the likelihood of such a spill causing significant contamination. Regardless of whether you agree, the U.S. Environmental Protection Agency and the N.C. Department of Environment and Natural Resources classify perchloroethylene as a "hazardous substance." It is considered a known animal carcinogen and a suspected human carcinogen. For dry cleaners that use perc, this means two things - the federal Superfund law applies to perc contamination and dry cleaners responsible for such contamination are exposed to personal injury and property damage lawsuits. Superfund is the federal law that forces PRPs to clean up hazardous substance contaminated property. Toxic tort suits often arise where people are unwittingly exposed to hazardous substances through, for example their drinking water.

Superfund and toxic tort liability has cost companies millions and driven more than one out of business. In some cases, this liability has pierced the company's corporate form and reached the personal assets of the individual company owners. Dry cleaners exposing their business and personal assets to such liability in order to avoid implementing the MMPs makes little sense.

4. Landlords will require MMPs compliance. If it has not already occurred, dry cleaners that lease the land or building where they operate will begin to encounter lease provisions requiring that they comply with the MMPs. The failure to do so could lead to a breach of the lease and possible ejectment from the property.

5. MMPs compliance costs are likely tax deductible. Finally, the costs to implement the MMPs may be tax deductible or depreciable business expenses. Dry cleaners should confirm their individual situation with their tax advisors.

In the end, it is not a question of whether North Carolina's dry cleaners can afford the time and money required to implement the DSCA MMPs. Dry cleaners cannot afford to ignore them. As the Greek poet Hesoid said, the man who procrastinates struggles with ruin.

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