Common environmental exposures faced by scrap yards: Automobile parts cover a variety of segments with each facing their own unique environmental exposures including metals, ceramics, plastics, rubber, textiles, batteries and electronics. Many of these segments utilize hazardous materials that produce hazardous wastes, all of which must be handled appropriately throughout the salvaging process.

Soil and/or ground water contamination from mercury, lead, cadmium, asbestos, oil, anti-freeze, hydraulic fluids, gas or diesel fuel, PCB’s, solvents, storm water runoff: releases from above ground or underground storage tanks: Inadequate secondary containment for above ground storage tanks: air emissions: non-owned off site disposal sites: history of on-site spills: transportation of potentially hazardous materials/wastes using owned and non-owned vehicles: Inadequate auditing of hazardous and non-hazardous waste handling and disposal contractors: loading and unloading from trucks or rail cars: older equipment:

Environmental Claims:

1. A river experienced a sudden, major fish kill that left 61 tons of fish dead. Sources were able to track the contamination to a scrap yard that stored hazardous waste in 55 gallon drums. During a heavy rain the ground washed away under the barrels releasing the contents. As a result of the incident, authorities imposed testing on local wells and other environmental impact studies. In such cases, the liable party can be responsible for clean-up, third-party damages as well as natural resource damage assessment claims.

2. A scrap yard routinely fills and stores on-site barrels of waste such as fuel, oil, anti freeze…. While loading about 1,000 pounds of potentially hazardous waste onto a truck, five barrels slipped off the fork lift releasing the contents. Fortunately for the scrap yard they had an emergency response plan in place and their emergency response team was able to contain the contaminants. Cost of clean up $70,000. s slipped off the forklift and saturated the ground with waste motor oil, metal cutting oil, paint thinners and solvents. The garage site is bordered on one side by an industrial park and on the other side by a trailer park. Approximately 3,000 people live within a one-mile radius of the site. An aquifer runs under the property and feeds nearby wells.

3. EPA officials determined that the potential for exposure to contaminants exists through ingestion or direct contact with the contaminated groundwater and soil. Twenty households were told to use bottled water until another water source was available. The scrap yard was ordered to build a protected storage and loading area with a cement floor equipped with retaining walls to prevent future spills from moving to soil and ground water. The scrap yard also settled claims from 40 people in the trailer park for property damage and bodily injury. Cost’s to the scrap yard, including claim settlements, totaled $1 million.

4. A scrap yard had been in operation since 1947. Over the years numerous owners used underground storage tanks to store petroleum products. Local residents began to complain about the quality of their water. Testing revealed petroleum contaminants in the groundwater and identified the scrap yard as the source of the pollution. Further investigation revealed that underground storage tanks had succumbed to corrosion and cracking. The contaminated groundwater entered breaks in nearby water distribution lines, polluting the drinking water supply. The scrap yard paid out over $500,000 in clean-up costs.

5. At a 26 acre site used as an auto salvage yard the EPA discovered over 600 rusting buried drums of chemicals. The barrels were illegally disposed on the property by the previous owner who had since passed away. Nearby resident’s field suit for perceived bodily injury from drinking the contaminated ground water. The auto salvage yard faced a multi-million lawsuit alleging liability for bodily injury, property damage and cleanup of pollution conditions.

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:

1. 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.
2. 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.
3. 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.

Pollution prevention Strategies for Automotive Salvage yards

• 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 hazardous materials.
• 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.
• Immediately clean up spills with rags or dry absorbent.
• Store solvents and used shop towels in metal cabinets and keep away from heat sources.
• Use a rag service for shop towels to reduce oily dumpster waste and a “throw it away” attitude.
• 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.