GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1999

H	1 

HOUSE BILL 1326*

Short Title:  Dry-Cleaning Solvent Cleanup Amends.	(Public)

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Sponsors: Representatives Gibson; and Justus.

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Referred to:  Finance.

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April 23, 1999

A BILL TO BE ENTITLED
AN ACT TO REPEAL THE REQUIREMENT THAT OWNERS AND OPERATORS OF DRY-CLEANING FACILITIES ESTABLISH AND MAINTAIN FINANCIAL RESPONSIBILITY FOR LEGAL LIABILITY FOR CONTAMINATION, TO PHASE IN A PRIVILEGE TAX ON DRY-CLEANING AND LAUNDRY BUSINESSES BASED ON GROSS RECEIPTS, TO PHASE OUT STATE AND LOCAL SALES TAXES ON DRY-CLEANING SERVICES, AND TO MAKE OTHER AMENDMENTS TO  THE DRY-CLEANING SOLVENT CLEANUP ACT OF 1997.
The General Assembly of North Carolina enacts:

PART I.		REPEAL REQUIREMENT THAT OWNERS AND OPERATORS OF DRY-CLEANING FACILITIES ESTABLISH AND MAINTAIN FINANCIAL RESPONSIBILITY FOR LEGAL LIABILITY FOR CONTAMINATION

Section 1.1.  G.S. 143-215.104B(b)(20), 143-215.104E, 143-215.104F(b)(3), 143-215.104F(d)(3), 143-215.104F(g), 143-215.104J(a)(5), 143-215.104P(a)(1), and Section 3 of S.L. 1997-392 are repealed.
Section 1.2.  G.S. 143-215.104F(f) reads as rewritten:
"(f)	Financial Responsibility Requirements. – Each potentially responsible person who petitions the Commission to enter into a dry-cleaning solvent assessment agreement or dry-cleaning solvent remediation agreement shall accept written responsibility in the amount specified in this section for the assessment or remediation of the dry-cleaning solvent contamination identified in the petition. If two or more potentially responsible persons petition the Commission jointly, the requirements below shall be the aggregate requirements for the financial responsibility of all potentially responsible persons who are party to the petition. Unless an alternative arrangement is agreed to by co-petitioners, the financial responsibility requirements of this section shall be apportioned equally among the co-petitioners. 
Facility or Abandoned Site Where Release Occurred	Costs

Dry-cleaning facilities owned by persons who employ
fewer than five full-time employees, or the
equivalent, in activities related to dry-cleaning
operations during the preceding calendar year	$10,000

Dry-cleaning facilities owned by persons who employ
at least five but fewer than 10 full-time employees,
or the equivalent, in activities related to
dry-cleaning operations during the preceding calendar
year	$15,000

Dry-cleaning facilities owned by persons who employ 10
or more full-time employees, or the equivalent, in
activities related to dry-cleaning operations during
the preceding calendar year	$20,000

Wholesale distribution facilities	$30,000

Abandoned dry-cleaning facility sites	$50,000."
PART II.		PHASE IN OF PRIVILEGE TAX ON DRY-CLEANING AND LAUNDRY BUSINESSES BASED ON GROSS RECEIPTS; PHASE OUT OF STATE AND LOCAL SALES TAXES ON DRY-CLEANING SERVICES

Section 2.1.  Chapter 105 of the General Statutes is amended to add a new Article to read:
“ARTICLE 5F.
“Privilege Tax on Dry-cleaning and Laundry Businesses.
"§ 105-187.50.  Definitions.
The definitions set out in G.S. 105-164.3 apply to this Article, except that the term ‘sale' does not include lease or rental.
"§ 105-187.51.  Tax imposed.
(a)	A privilege tax is imposed on every person engaged in the business of operating a dry-cleaning, pressing, or hat-blocking establishment, or laundry, or any similar business, or engaged in the business of soliciting cleaning, pressing, hat-blocking, or laundering business for any of these businesses at a rate of two percent (2%) of the gross receipts of the business.
(b)	The tax imposed by this section does not apply to gross receipts derived from services performed for resale by a retailer that pays the tax on the total gross receipts derived from the services.  The tax imposed by this section does not apply to receipts derived from coin or token operated washing machines, extractors, and dryers.
"§ 105-187.52.  Administration.
Except as otherwise provided in this Article, the tax imposed by this Article shall be collected and administered in the same manner as the State sales tax imposed by Article 5 of this Chapter.
"§ 105-187.53.  Use of tax proceeds.
The Secretary shall deposit the taxes collected under this Article, less the allowance to the Department of Revenue for their administrative expenses, in the Dry-Cleaning Solvent Cleanup Fund established by G.S. 143-215.104C.  The Secretary may retain the cost of collection by the Department, not to exceed two hundred twenty-five thousand dollars ($225,000) a year as reimbursement to the Department."
Section 2.2.  G.S. 105-187.51(a), as enacted by Section 2.1 of this act, reads as rewritten:
"(a)	A privilege tax is imposed on every person engaged in the business of operating a dry-cleaning, pressing, or hat blocking establishment, or laundry, or any similar business, or engaged in the business of soliciting cleaning, pressing, hat blocking, or laundering business for any of these businesses at a rate of three percent (3%) of the gross receipts of the business."
Section 2.3.  G.S. 105-187.51(a), as enacted by Section 2.1 of this act and as amended by Section 2.2 of this act, reads as rewritten:
"(a)	A privilege tax is imposed on every person engaged in the business of operating a dry-cleaning, pressing, or hat blocking establishment, or laundry, or any similar business, or engaged in the business of soliciting cleaning, pressing, hat blocking, or laundering business for any of these businesses at a rate of four percent (4%) of the gross receipts of the business."
Section 2.4.  G.S. 105-164.4(a)(4) reads as rewritten:
"(4)	Every person engaged in the business of renting clean linen or towels or wearing apparel, or any similar business, or engaged in the business of soliciting business for any of these businesses, is considered a retailer under this Article. A tax at the general rate of tax is levied on the gross receipts derived by these retailers from services rendered in engaging in any of the occupations or businesses named in this subdivision. The tax imposed by this subdivision does not apply to gross receipts derived from services performed for resale by a retailer that pays the tax on the total gross receipts derived from the services."
Section 2.5.  G.S. 105-164.4(a) is amended by adding a new subdivision to read:
"(4d)	Every person engaged in the business of operating a dry-cleaning, pressing, or hat-blocking establishment, or laundry, or any similar business, or engaged in the business of soliciting cleaning, pressing, hat-blocking, or laundering for any of these businesses, is considered a retailer under this Article.  A tax at a rate of three percent (3%) is levied on the gross receipts derived by these retailers from services rendered in engaging in any of the occupations or businesses named in this subdivision.  The tax imposed by this subdivision does not apply to receipts derived from coin or token-operated washing machines, extractors, and dryers.  The tax imposed by this subdivision does not apply to gross receipts derived from services performed for resale by a retailer that pays the tax on the total gross receipts derived from the services."
Section 2.6.  G.S. 105-164.4(a)(4d), as enacted by Section 2.5 of this act, reads as rewritten:
"(4d)	Every person engaged in the business of operating a dry-cleaning, pressing, or hat-blocking establishment, or laundry, or any similar business, or engaged in the business of soliciting cleaning, pressing, hat-blocking, or laundering for any of these businesses, is considered a retailer under this Article.  A tax at a rate of two percent (2%) is levied on the gross receipts derived by these retailers from services rendered in engaging in any of the occupations or businesses named in this subdivision.  The tax imposed by this subdivision does not apply to receipts derived from coin or token-operated washing machines, extractors, and dryers.  The tax imposed by this subdivision does not apply to gross receipts derived from services performed for resale by a retailer that pays the tax on the total gross receipts derived from the services."
Section 2.7.  G.S. 105-164.4(a)(4d), as enacted by Section 2.5 of this act and as amended by Section 2.6 of this act, reads as rewritten:
"(4d)	Every person engaged in the business of operating a dry-cleaning, pressing, or hat-blocking establishment, or laundry, or any similar business, or engaged in the business of soliciting cleaning, pressing, hat-blocking, or laundering for any of these businesses, is considered a retailer under this Article.  A tax at a rate of one percent (1%) is levied on the gross receipts derived by these retailers from services rendered in engaging in any of the occupations or businesses named in this subdivision.  The tax imposed by this subdivision does not apply to receipts derived from coin or token-operated washing machines, extractors, and dryers.  The tax imposed by this subdivision does not apply to gross receipts derived from services performed for resale by a retailer that pays the tax on the total gross receipts derived from the services."
Section 2.8.  G.S. 105-164.4(a)(1d)d. reads as rewritten:
"d.	Sales to business establishments identified in G.S. 105-164.4(a)(4) of machinery used in the direct performance of the laundering or the pressing and cleaning service and of parts and accessories thereto."
Section 2.9.  G.S. 105-164.13(10) reads as rewritten:
"(10)	Sales to business establishments identified in G.S. 105-164.4(a)(4) of articles or materials used for the identification of garments being laundered or dry cleaned, wrapping paper, bags, hangers, starch, soaps, detergents, cleaning fluids and other compounds or chemicals applied directly to the garments in the direct performance of the laundering or the pressing and cleaning service."
Section 2.10.  G.S. 105-259(b)(20) reads as rewritten:
"(20)	To furnish to the Environmental Management Commission information concerning whether a person who is requesting certification of a dry-cleaning facility or wholesale distribution facility from the Commission is liable for delinquent taxes under Article 5D or Article 5F of this Chapter."
Section 2.11.  G.S. 105-467 reads as rewritten:
"§ 105-467.   Scope of sales tax.
(a)	The sales tax that may be imposed under this Article is limited to a tax at the rate of one percent (1%) of the following:
(1)	The sales price of tangible personal property subject to the general rate of sales tax imposed by the State under G.S. 105-164.4(a)(1) and (a)(4b).
(2)	The gross receipts derived from the lease or rental of tangible personal property when the lease or rental of the property is subject to the general rate of sales tax imposed by the State under G.S. 105-164.4(a)(2).
(3)	The gross receipts derived from the rental of any room or other accommodations subject to the general rate of sales tax imposed by the State under G.S. 105-164.4(a)(3).
(4)	The gross receipts derived from services rendered by business establishments subject to the sales tax imposed by the State under G.S. 105-164.4(a)(4) and G.S. 105-164.4(a)(4d).
(5)	The sales price of food that is not otherwise exempt from tax pursuant to G.S. 105-164.13 but would be exempt from the State sales and use tax pursuant to G.S. 105-164.13 if it were purchased under the Food Stamp Program, 7 U.S.C. § 51.
(b)	The sales tax authorized by this Article does not apply to sales that are taxable by the State under G.S. 105-164.4 but are not specifically included in this section.
(c)	The State exemptions and exclusions contained in G.S. 105-164.13 and the State refund provisions contained in G.S. 105-164.14 apply to the local sales and use tax authorized to be levied and imposed under this Article.  A taxing county may not allow an exemption, exclusion, or refund that is not allowed under the State sales and use tax.
(d)	The local sales tax authorized to be imposed and levied under this Article applies to taxable transactions by retailers whose place of business is located within the taxing county. For the purpose of this Article, the situs of a transaction is the location of the retailer's place of business."
Section 2.12.  G.S. 105-467(a)(4), as amended by Section 2.11 of this act, reads as rewritten:
"(4)	The gross receipts derived from services rendered by business establishments subject to the sales tax imposed by the State under G.S. 105-164.4(a)(4)."
Section 2.13.  G.S. 143-215.104C(b) reads as rewritten:
"(b)	Sources of Revenue. – The following revenue is credited to the Fund:
(1)	Dry-cleaning solvent taxes collected under Article 5D of Chapter 105 of the General Statutes.
(1a)	Taxes collected pursuant to Article 5F of Chapter 105 of the General Statutes.
(2)	Recoveries made pursuant to G.S. 143-215.104N and G.S. 143-215.104O.
(3)	Gifts and grants made to the Fund."
Section 2.14.  G.S. 143-215.104C(b), as amended by Section 2.13 of this act, reads as rewritten:
"(b)	Sources of Revenue. – The following revenue is credited to the Fund:
	(1a)	Taxes collected pursuant to Article 5F of Chapter 105 of the General Statutes.
(2)	Recoveries made pursuant to G.S. 143-215.104N and G.S. 143-215.104O.
(3)	Gifts and grants made to the Fund."
Section 2.15.  G.S. 143-215.104C(b), as amended by Sections 2.13 and 2.14 of this act, reads as rewritten:
"(b)	Sources of Revenue. – The following revenue is credited to the Fund:
	(2)	Recoveries made pursuant to G.S. 143-215.104N and G.S. 143-215.104O.
(3)	Gifts and grants made to the Fund."
Section 2.16.  G.S. 143-215.104F(d)(2) reads as rewritten:
"(2)	The petitioner is an owner or operator of the facility described in the petition and the petitioner owed delinquent taxes under Article 5D or Article 5F of Chapter 105 of the General Statutes at the time the dry-cleaning solvent contamination was discovered."
Section 2.17.  G.S. 143-215.104J(a)(4) reads as rewritten:
"(4)	The payment of taxes assessed to the facility under Article 5D or Article 5F of Chapter 105 of the General Statutes is delinquent."

PART III.	AMENDMENTS TO DRY-CLEANING SOLVENT CLEANUP ACT

Section 3.1.  G.S. 143-215.104F, as amended by Sections 1.1, 1.2, and 2.16 of this act, reads as rewritten:
"§ 143-215.104F. Requirements for certification, assessment agreements, and remediation agreements.
(a)	Any person petitioning for certification of a facility or abandoned site pursuant to G.S. 143-215.104G, for a dry-cleaning solvent assessment agreement pursuant to G.S. 143-215.104H, or for a dry-cleaning solvent remediation agreement pursuant to G.S. 143-215.104I, shall meet the requirements set out in this section and any other applicable requirements of this Part.
(b)	Requirements for Potentially Responsible Persons Generally. – Every petitioner shall provide the Commission with:
(1)	Information necessary for the Commission to determine the priority ranking of the facility or abandoned site described in the petition.
(2)	Information necessary to demonstrate the person's ability to incur the response costs specified in subsection (f) of this section.
(4)	Information necessary to demonstrate that the petitioner, and any parent, subsidiary, or other affiliate of the petitioner has substantially complied with:
a.	The terms of any dry-cleaning solvent assessment agreement, dry-cleaning solvent remediation agreement, brownfields agreement, or other similar agreement to which the petitioner or any parent, subsidiary, or other affiliate of the petitioner has been a party.
b.	The requirements applicable to any remediation in which the petitioner has previously engaged.
c.	Federal and state laws, regulations, and rules for the protection of the environment.
(5)	Evidence demonstrating that a release of dry-cleaning solvent has occurred at the facility or abandoned site and that the release has resulted in dry-cleaning solvent contamination.
(c)	Requirement for Property Owners. – In addition to the information required by subsection (b) of this section, a petitioner who is the owner of the property on which the dry-cleaning solvent contamination identified in the petition is located shall provide the Commission a written agreement authorizing the Commission or its agent to have access to the property for purposes of determining whether assessment or remediation activities are being conducted in compliance with this Part and any assessment agreement or remediation agreement.
(c1)	The costs of providing information required by this section shall not be reimbursable from the Fund.
(d)	The Commission shall reject any petition made pursuant to this Part in any of the following circumstances:
(1)	The petitioner is an owner or operator of the facility described in the petition and the facility was not being operated in compliance with minimum management practices adopted by the Commission pursuant to G.S. 143-215.104D(b)(2) at the time the contamination was discovered.
(2)	The petitioner is an owner or operator of the facility described in the petition and the petitioner owed delinquent taxes under Article 5D of Chapter 105 of the General Statutes at the time the dry-cleaning solvent contamination was discovered.
(e)	The Commission may reject any petition made pursuant to this Part in any of the following circumstances:
(1)	The petitioner fails to provide the information required by subsection (b) of this section.
(2)	The petitioner falsified any information in its petition that was material to the determination of the priority ranking, the nature, scope and extent of contamination to be assessed or remediated, or the appropriate means to contain and remediate the contaminants.
(f)	Financial Responsibility Requirements. – Each potentially responsible person who petitions the Commission to enter into a dry-cleaning solvent assessment agreement or dry-cleaning solvent remediation agreement shall accept written responsibility in the amount specified in this section for the assessment or remediation of the dry-cleaning solvent contamination identified in the petition. If two or more potentially responsible persons petition the Commission jointly, the requirements below shall be the aggregate requirements for the financial responsibility of all potentially responsible persons who are party to the petition. Unless an alternative arrangement is agreed to by co-petitioners, the financial responsibility requirements of this section shall be apportioned equally among the co-petitioners. 
Facility or Abandoned Site Where Release Occurred	Costs

Dry-cleaning facilities owned by persons who employ fewer
than five full-time employees, or the equivalent, in
activities related to dry-cleaning operations during
the preceding calendar year	$10,000

Dry-cleaning facilities owned by persons who employ at
least five but fewer than 10 full-time employees, or the
equivalent, in activities related to dry-cleaning
operations during the  preceding calendar year	$15,000

Dry-cleaning facilities owned by persons who employ
10 or more full-time employees, or the equivalent, in
activities related to dry-cleaning operations during
the preceding calendar year	$20,000

Wholesale distribution facilities	$30,000

Abandoned dry-cleaning facility sites	$50,000.

(h)	The amounts specified in subsection (f) of this section shall be the total amount for which a petitioner or group of petitioners shall be required to accept written responsibility with respect to a single contamination site."
Section 3.2.  G.S. 143-215.104I(a)(1) and G.S. 143-215.104H(b)(1) are repealed.
Section 3.3.  G.S. 143-215.104N(a) reads as rewritten:
	"(a)	Reimbursement. – To the extent monies are available in the Fund for reimbursement of response costs and appropriate documentation has been submitted, the Commission shall reimburse any person responsible for implementing assessment and remediation activities at a contamination site associated with a certified facility or a certified abandoned site pursuant to a dry-cleaning solvent assessment agreement or dry-cleaning solvent remediation agreement for the following assessment and remediation response costs:
(1)	Costs of assessment with respect to dry-cleaning solvent contamination.
(2)	Costs of treatment or replacement of potable water supplies affected by the contamination.
(3)	Costs of remediation of affected soil, groundwater, surface waters, bedrock or other rock formations, or buildings.
(4)	Monitoring of the contamination.
(5)	Inspection and supervision of activities described in this subsection.
(6)	Reasonable costs of restoring property as nearly as practicable to the conditions that existed prior to activities associated with assessment and remediation conducted pursuant to this Part.
(7)	Other activities reasonably required to protect public health and the environment."
Section 3.4.  G.S. 143-215.104O reads as rewritten:
"§ 143-215.104O.  Remediation of uncertified sites.
(a)	In the event the owner or operator of a facility or the current owner of an abandoned site cannot be identified or located, unreasonably refuses to enter into either an assessment agreement or remediation agreement or cannot be made to comply with the provisions of an assessment agreement or remediation agreement between the petitioner and the Commission, the Commission may direct the Department or a private contractor engaged by the Commission to use staff, equipment, or materials under the control of the Department or contractor or provided by other cooperating federal, State, or local agencies to develop and implement a plan for abatement of an imminent hazard, or to provide interim alternative sources of drinking water to third parties affected by dry-cleaning solvent contamination resulting from a release at the facility or abandoned site. The cost of any of these actions shall be paid from the Fund. The Department or private contractor shall keep a record of all expenses incurred for personnel and for the use of equipment and materials and all other expenses of developing and implementing the remediation plan.
(b)	The Commission shall request the Attorney General to commence a civil action to secure reimbursement of costs incurred under this section.
(c)	In the event a civil action is commenced pursuant to this Part to recover monies paid from the Fund, the Commission may recover, in addition to any amount due, the costs of the action, including reasonable attorneys' fees and investigation expenses. Any monies received or recovered as reimbursement shall be paid into the Fund or other source from which the expenditures were made."
Section 3.5.  G.S. 143-215.104G(a) reads as rewritten:
"(a)	A potentially responsible party may petition the Commission to certify a facility or abandoned site where a release of dry-cleaning solvent has occurred. The Commission shall certify the facility or abandoned site if the petitioner meets the applicable requirements of G.S. 143-215.104F. Upon its decision to certify a facility or abandoned site, the Commission shall inform the petitioner of its decision and of the initial priority ranking of the facility or site."
Section 3.6.  Section 7 of S.L. 1997-392 reads as rewritten:
"Section 7.  (a)	Any person who undertakes assessment or remediation of dry-cleaning solvent contamination pursuant to a notice of violation or enforcement action by the Department of Environment and Natural Resources during the period beginning 1 October 1997 and ending 30 June 2000 may, on or after 30 June 2000 seek reimbursement from the Dry-Cleaning Solvent Cleanup Fund for any costs exceeding fifty thousand dollars ($50,000).  The Commission shall reimburse costs if it finds that the costs incurred were (i) appropriately documented and reasonably necessary to assess or remediate the dry-cleaning solvent contamination; (ii) for any of the activities described in subdivisions (1) through (7) of G.S. 143-215.104N(a); (iii) not subject to any of the limitations in subdivisions (4) through (9) of G.S. 143-215.104N(b); and (iv) not reimbursable from pollution and remediation legal liability insurance.  No reimbursement may be paid pursuant to this section for dry-cleaning solvent contamination that did not result from operations at a dry-cleaning or wholesale distribution facility.
(b)	Any person who, as of 30 June 2000, is undertaking assessment or remediation of dry-cleaning solvent contamination shall be eligible to petition the Commission to enter into a dry-cleaning solvent assessment agreement or dry-cleaning solvent remediation agreement with respect to the contamination.  In calculating the required financial contribution of parties to any agreement, the Commission shall  determine the cost of any unreimbursed assessment or remediation activity undertaken by the parties with respect to the contamination site prior to 30 June 2000 and shall credit the amount toward any applicable financial responsibility limits established in G.S. 143-215.104F."

PART IV.		MISCELLANEOUS PROVISIONS AND EFFECTIVE DATES

Section 4.1.  Section 5 of S.L. 1997-392 reads as rewritten:
"Section 5.  This act constitutes a recent act of the General Assembly within the meaning of G.S. 150B-21.1.  The Environmental Management Commission may adopt temporary rules to implement this act until 30 June 2000."¨ 
Section 4.2.  The headings to the Parts of this act are a convenience to the reader and are for reference only.  The headings do not expand, limit, or define the text of this act.
Section 4.3.  If any section or provision of this act is declared unconstitutional or invalid by the courts, the unconstitutional or invalid section or provision does not affect the validity of this act as a whole or any part of this act other than the part declared to be unconstitutional or invalid.
Section 4.4.  The sections of this act become effective and expire on the dates specified in the following table:
Section		Effective Date	Expiration Date
Section 1.1	1 April 1998
Section 1.2	1 April 1998
Section 2.1	1 July 2000
Section 2.2	1 July 2001
Section 2.3	1 July 2002	1 July 2010
Section 2.4	1 July 2000
Section 2.5	1 July 2000
Section 2.6	1 July 2001
Section 2.7	1 July 2002	1 July 2010
Section 2.8	1 July 2003
Section 2.9	1 July 2003
Section 2.10	1 July 2000	1 July 2010
Section 2.11	1 July 2000
Section 2.12	1 July 2003
Section 2.13	1 July 2000
Section 2.14	1 January 2010
Section 2.15	1 July 2010
Section 2.16	1 July 2000	1 July 2010
Section 2.17	1 July 2000	1 July 2010
Section 3.1	When this act becomes law
Section 3.2	When this act becomes law
Section 3.3	When this act becomes law
Section 3.4	When this act becomes law
Section 3.5	When this act becomes law
Section 3.6	When this act becomes law
Section 4.1	When this act becomes law
Section 4.2	When this act becomes law
Section 4.3	When this act becomes law
Section 4.4	When this act becomes law.