New Rules Reshape Dry Cleaning Industry
A sweeping ban on the solvent PCE is reshaping the dry cleaning industry and affecting commercial property stakeholders, with California's regulations setting the standard.
By 2033, perchloroethylene (PCE) - a widely used solvent linked to environmental and health risks - must be removed from all nationwide dry cleaning systems. This landmark ruling, reflected in the South Coast Air Quality Management District's (AQMD) Rule 1421, requires dry cleaners to physically remove PCE equipment, drain all remaining solvent and obtain new permits for PCE-free machinery. The South Coast AQMD is the air pollution control regulatory body for Southern California.
"The California Air Resources Board (CARB) and South Coast AQMD have banned the use of PCE in dry cleaning by 2023", says David McAlister, PG founder and president of McAlister GeoScience, Inc. , which specializes in environmental site assessments, geotechnical investigations, remedial action and regulatory compliance for Southern California developments. "Under Rule 1421, PCE systems must be physically removed or disconnected, with all PCE drained. Permits involving PCE are terminated, requiring businesses to transition to PCE-free equipment."
The transition poses challenges for dry cleaners navigating costs and compliance, McAlister argues. While small business assistance programs exist, he notes resources are limited. This can have a big impact on dry cleaning operators and shopping center owners who many be considering an acquisition or disposition. McAlister recommends budgeting for equipment removal and replacement to meet these stricter standards.
FEDERAL, STATEWIDE IMPACTS
California's PCE regulations have sparked a domino effect, with other states adopting similar measures.
"Although specifics vary, the general rule mandates removing PCE from service and switching to alternative dry cleaning solutions, " McAlister notes.
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On the federal level, the Environmental Protection Agency (EPA) is intensifying its focus on hazardous chemicals. The EPA proposed a rule in June 2023 under teh Toxic Substances Control Act (TSCA) that includes a 10-year-long phased ban on PCE.
"The EPA's proposed rule under the TSCA will phase out PCE from all consumer uses within two years and eliminate its use in dry cleaning by 2033," McAlister continues. "This aligns with broader federal efforts to regulate hazardous chemicals like asbestos and methylene chloride."
These regulations also emphasize the long-term risks associated with PCE. The substance is known for its durability and effectiveness when it comes to dry cleaning applications. However, PCE's presence in soil and groundwater can create health and environmental hazards.
"PCE is an effective, long-lasting solvent that withstands repetitive, high-temperature use in dry cleaning machines," McAlister explains. "However, these same characteristics make it persistent in the environment when spilled."
WHAT CRE OWNERS NEED TO KNOW
For owners, investors and developers involved in properties with dry cleaning tenants, these regulations could impact asset values and operational costs. Sites with legacy PCE contamination may face increased scrutiny, requiring costly remediation efforts. Meanwhile, landlords leasing to dry cleaners must ensure compliance with updated standards to avoid liability.
McAlister notes the South Coast AQMD can provide some support for small businesses transitioning to PCE-free systems, while federal assistance programs remain undefined. He recommends stakeholders closely monitor these regulatory shits to ensure any affected properties remain viable.
The PCE phase-out marks a turning point for the dry cleaning industry and its relevant real estate sectors. Though the goals of these measures are to reduce long-term environmental risks and protect public health, compliance may result in immediate costs. For commercial property stakeholders, proactive engagement with tenants and environmental consultants is essential to navigating this regulatory landscape effectively.