Common environmental exposures encountered at car dealerships, gasoline/service stations, and garages include: Leaking underground fuel and waste oil storage tanks; Untested underground fuel & waste oil/solvent tanks and pipes; Underground tanks which were removed/abandoned; Lack of information on existing and former underground tanks (e.g. age, contents, size, construction, cathodic protection, etc.); Poor housekeeping resulting in oil, fuel, parts cleaning solvents, and paint being spilled on unpaved areas; Leaking grease traps or oil/water separators that seriously pollute the soils and/or groundwater; Accumulated old batteries which contain leached acidic liquids; Wastewaters flowing from service bays into the sanitary sewers; Electrical equipment containing PCBs; Paint residues from the body shop washed into storm drains; Wash waters from a car wash discharged into a storm sewer; No auditing of waste handling and disposal companies; Poor information on the possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire. Some of the pollutants these operations are impacted by include asbestos, lead, mercury, cadmium, oil, diesel, etc.
1. An automobile dealership had a wash bay’s piping system that released a substantial amount of cleaning solvents into soil and ground water. The cost to remediate the cleaning solvents, soil and ground water cost $250,000
2. A service station had a waste hauler that was transporting its used motor oil overturn and spills its load into a nearby stream. Under CERCLA, the service station must contribute for their apportionment of the load for cleanup cost since federal law states that you own your waste from cradle to grave. Cost to settle the claim for the service station was $600,000.
3. A waste facility for an auto body shop released contaminates into a nearby neighborhood’s drinking water. The local regulatory agency designated the body shop as a responsible party. The contribution to settle the claim was $340,000.
Risk Transfer Strategies
The majority of automotive salvage yards operating today, lack the financial strength to self insure their environmental liabilities. Consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy.
Consider the three main benefits environmental liability insurance affords:
- Coverage includes defense cost. Environmental liabilities are relatively new and very litigious. Even if you do nothing wrong you can still get named in a suit and have to expense defense dollars to get released. At one time, Superfund had .83 cents of every dollar going to legal fees, and only .17 cents for actual cleanup. When you realize the average Superfund site cost in excess of $30,000,000 to clean up, you can begin to understand just how big of a factor defense costs play in your risk transfer strategy.
- All policies come with experts to assist you in handling the claim. Anytime you can have the EPA, state and local environmental officials along with the press pounding on your door, this is not a fender bender, you need experts to assist you in running damage control central.
- The majority of the time the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties, mainly for business interruption. You need to look at the customers and neighbors that can be impacted should an environmental loss occur. Who can you impact should you or a sub-contactor/vendor cause an environmental liability?
Three environmental risk transfer products for Automotive Salvage Yards:
ENVIRONMENTAL IMPAIRMENT LIABILITY (EIL)
EIL is for automotive salvage yards susceptible to economic loss caused by pollution that actually or allegedly originated from their operations. Sometimes referred to as pollution legal liability this coverage is for those who own, operate, lease, or have any other insurable interest in real property and the operations. Coverage can be written in a variety of ways addressing unknown preexisting conditions or new conditions. Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off site clean up costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multi year terms. Most EIL policies cover above ground storage tanks.
TRANSPORTATION POLLUTION LIABILITY
Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or other releases of their cargo. Broadened auto pollution liability (typically Form CA 9948) affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and over turn of transported cargo.
UNDERGROUND STORAGE TANKS
Financial responsibility requirements ensure that owners and operators of underground storage tank systems have the ability to financially handle a release from an underground storage tank. The responsibility encompasses the ability to pay funds for corrective action and third party bodily injury and property damage from non-sudden and sudden and accidental releases from a regulated underground system.
| Automotive Services and Repair Industry Highlights |
| Nationwide, car and truck dealerships, service stations and garages take care of the maintenance and repair of millions of vehicles every year. Operations may include general maintenance such as oil changes, engine repair and parts washing. Other vehicle services such as fueling, painting, body repair and engine cleaning may also be part of their business. Vehicle maintenance and repair requires the removal, replacement, storage and disposal of many types of hazardous materials such as automotive fluids (brake, transmission and hydraulic fluids etc.), parts (like tires, batteries, halogen light bulbs) and petroleum products (such as gas, diesel, grease and waste oil) which can pose pollution risks. Other operations such as vehicle painting generate hazardous waste from chemicals such as paint thinners and removers and cleaning solvents. Dealerships and garages are responsible for proper storage and disposal of their hazardous waste on site and at off-site treatment, storage or disposal facilities. They must evaluate their waste and keep records of evaluation. Some of the hazardous wastes and materials that may be produced include painting materials, automotive parts, solvent wastes, used oil, and more. The Need For Environmental Insurance:
In every area of vehicle servicing, repair and body shop operations there is potential for environmental risk. Car and truck dealerships, service stations and garages must properly store and dispose of potentially toxic fluids and materials on a daily basis. Also, the maintenance and repair of vehicle mandates the use of many chemicals and generates hazardous waste as well, placing this industry at great risk. |
Checklist: Pollution prevention for automotive repair and service stations
Service stations and other automotive repair shops are, by their nature, awash in oil, grease, solvents, antifreeze, gasoline and other pollutants that, if not properly disposed, could have an adverse affect on the environment. A list of pollution and waste prevention tips, provided by the Pollution Prevention Unit of the Alabama Department of Environmental Management, are geared specifically toward automotive repair and service stations, but many of them are also applicable to other industries.
Material use and supplies
- Switch to non-chlorinated compounds, such as a citrus-based solvent for parts cleaning.
- Cover all solvent containers and turn off your solvent sink when not in use. Solvent losses from evaporation and spills can range from 25 percent to 40 percent.
- Always use spring-loaded funnels or pumps to dispense and collect fluids such as antifreeze, solvents and used oil.
- Recycle used oil, antifreeze and solvents. Recycle filters after drip draining or spinning out the oil.
- Use a filter on parts cleaners to extend the life of the solvent. Use dirty solvent when first cleaning parts.
- Consider using burnable absorbents to clean up used oil. Often your used oil hauler can recycle them as well as your used oil.
- Pre-rinse parts before using hot tanks or jet spray washers.
- Switch to a recirculating spray cabinet for cleaning parts instead of using solvent or hot tanks.
- Purchase or use a solvent distillation service for solvent-based cleaners. The material can be reused at a cost savings to your shop.
- Keep hazardous and non-hazardous wastes separate to minimize disposal costs.
- Maintain an accurate record or inventory to prevent overstocking of hard-to-dispose-of items.
- Read the label carefully. Biodegradable does not necessarily mean environmentally sound, or that the product is exempt from regulations. So called “safe” products that are mixed with hazardous materials such as solvents or heavy metals may have to be handled as hazardous wastes. Maintain disposal records.
Safety: Prevent slips, trips and falls.
- Remove parts slowly after they have been in solvent tanks to prevent spillage.
- Use drip pads and pans to catch leaking fluids when working on vehicles.
- Keep parts cleaning equipment near service bays to reduce spills and drips.
- Immediately clean up spills with rags or dry absorbent.
- Store solvents and used shop towels in metal cabinets and keep away from heat sources.
Waste reduction.
- Use a rag service for shop towels to reduce oily dumpster waste and a “throw it away” attitude.
- Purchase your most frequently used materials in bulk to minimize container waste.
- Seal floor drains to prevent materials from entering the sanitary or storm sewers.
- Don’t wash off your parking lots and garage bays into grease traps, sumps or storm drains. Keep run-off to a minimum by using dry cleaners and absorbents to clean up any spills.
- Recycle cardboard and other bulk material that you are throwing away in your dumpster–empty dumpsters mean lower disposal costs.
Checklist: Pollution prevention and waste management
Regardless of whether waste is hazardous or non-hazardous, facilities still end up paying a great deal of money for its storage and disposal. Finding a way to reduce, or even eliminate, the waste translates into cost savings for the company.
The following checklist is courtesy of the New Hampshire Department of Environmental Services Pollution Prevention Program, Waste Management Division.
Pollution prevention policy and task force
- Does your company have a formal written pollution prevention policy?
- Have you established a pollution prevention team/task force?
- Have you considered the opportunity to reduce your regulatory requirements by incorporating pollution prevention practices at your facility?
Publicizing your waste reduction efforts
- Do you publicize your company’s efforts to reduce waste?
- Do your marketing strategies incorporate the positive image related to waste reduction?
Waste generation and management
- Are you aware of the potential harmful effects of the hazardous materials and wastes at your facility?
- Do you and your employees recognize the importance of proper management of hazardous materials and waste reduction?
- Have you conducted a facility assessment and developed a materials balance/flow diagram for your business?
- Do you maintain logs on these types and quantities of waste produced by your company so that you can target certain waste for waste reduction opportunities?
- Do you know the quantity of waste (liquid, solid, gaseous) produced by each process in your business?
- Have you re-evaluated parameters (pH, temperature, concentration, flow, etc.) for the optimal condition your process needs?
Cost of generating and managing wastes
- Do you calculate the costs of generating and managing wastes? Handling and storage, analysis and reporting, treatment and disposal (including transportation), insurance, training of workers, response planning, safety, potential liabilities (lawsuits, fines, cleanup costs, customer confidence)?
- Can you allocate the costs associated with waste generation to the various processes in your business (i.e. not “lumped” into overhead)?
Assessing the cleanliness of your facility
- Do you keep your shop clean and orderly to enable you to keep track of chemical handling and process operations?
- Are there noticeable spills, leaking containers or water dripping or running?
- Is there discoloration or corrosion on walls, work surfaces, ceiling and walls or pipes?
- Do you see smoke, dirt or fumes to indicate material losses?
- Do you notice any scrap or out-of-specification parts lying around?
- Are there open containers, stacked drums, shelving too small to properly handle inventory or other indicators of poor storage procedures?
Employee training and involvement
- Do you continuously train employees in good housekeeping procedures (spills, leaks, loss prevention, energy, water and material conservation)?
- Are there employee involvement or incentive programs in place to solicit suggestions on improving operations and reducing wastes?
Researching and using alternative products
- Are you investigating the potential for reformulating the products that require hazardous materials?
- Are you evaluating alternative methods of cleaning?
- Are you investigating the potential for reuse or recycling?
- Are all containers labeled as to their contents and hazards?
Monitoring and recordkeeping
- Do you monitor critical parameters and carefully maintain them?
- Do you keep records on the amount of raw materials used per process to monitor process efficiently?