Property Types

Recycler - Auto

Auto recycling facilities process and store vehicle parts, automotive fluids, shredder residue, tires, scrap metal, etc. These activities create a variety of environmental exposures. Metals, petroleum constituents, and other contaminants are present in the materials and fluids used in autos, and they may leach into stormwater or leak or spill during removal or processing. Hazardous air emissions may also result from processing operations. Additional exposures can come from the equipment and chemicals used and stored at the facility for processing automobiles. These releases can result in environmental liability for cleanup, natural resource damage, third-party bodily injury, and property damage.

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Environmental Exposures May Include

Fluid Removal & Spill Hazards
Storage Tanks
Component Removal & Hazardous Materials
Chlorofluorocarbons
Stormwater Run-off
PFAS & Heavy Metals in Shredder Residue
Hazardous Waste Management
Air Emissions
Gas-Torch Operations & Explosion Risks
Tires
Degreasing Equipment & Solvent Releases
Wastewater Management
Accidental Spills During Transport

Fluid Removal & Spill Hazards

Automotive fuels and fluids are present in vehicles and must be removed before dismantling, shredding, or storing vehicles. Leaks and spills can occur during removal or if these chemicals are not adequately removed from vehicles. These leaks or spills could impact soil or groundwater or be carried in stormwater to sewer or stormwater drains and discharged to surface water.

Storage Tanks

Waste fuels, fluids removed from vehicles, fresh oils, lubricants, and other chemicals used in equipment at auto recycling facilities may be stored in aboveground or underground storage tanks or reservoirs within on-site equipment. Leaks or spills during storage, loading, or unloading can contaminate soil, groundwater, or surface water. Releases to surface water may cause damage to natural resources or negatively impact local drinking water sources.

Component Removal & Hazardous Materials

Batteries, mercury switches, and airbag cartridges must all be removed from vehicles before dismantling or shredding. Batteries are toxic and corrosive and can easily ignite or explode. Lead and sulfuric acid can be released from batteries. Mishandling or breakage of mercury switches can result in the release of mercury. Airbag cartridges contain an explosive chemical, sodium azide, which can burn unprotected skin and severely irritate the lungs if inhaled, potentially injuring third parties. All of these materials must be appropriately handled and stored on-site, or releases could occur that damage the environment or injure third parties.

Chlorofluorocarbons

Chlorofluorocarbons may be present in motor vehicle air conditioners. It is illegal to vent or release these refrigerants into the environment, and an auto recycler can be fined for improper handling or release of these refrigerants.

Stormwater Run-off

Outdoor storage of vehicles or vehicle parts, such as tires, engine blocks, mufflers, chrome bumpers, batteries, and other parts, may occur at auto recycling facilities. Stormwater coming into contact may contain oil and grease, heavy metals, arsenic, and particulates. If contact is not minimized or stormwater is not properly managed, run-off from storage areas can impact soil, groundwater, or surface waters.

PFAS & Heavy Metals in Shredder Residue

Non-metal parts of vehicles, called auto fluff or shredder residue, have been found to contain petroleum hydrocarbons, mercury, lead, cadmium, chromium, arsenic, polyvinyl chloride, and PCBs. Also, more recently, auto shredder residue has been idenfied as a source of per-and polyfluoroalkyl substances (PFAS). If not properly stored, toxic substances within these materials may leach into surrounding soil and groundwater or stormwater. This residue may also be flammable and can catch fire, resulting in emissions of numerous air pollutants and polluted run-off.

Hazardous Waste Management

Auto recycling facilities handle many hazardous or regulated wastes, including shredder residue, batteries, mercury switches, waste fuels, waste fluids, etc. These facilities are often subject to hazardous waste generator requirements and must properly store, contain, label, and dispose of these materials; otherwise, they may receive regulatory fines. As generators, these facilities would retain “cradle to grave” liability for waste disposal at non-owned disposal sites.

Air Emissions

End-of-life vehicles may be shredded at an auto recycling facility. The pulverizing and shredding of scrap metal can generate particulates, volatile organic compounds (VOCs), hazardous air pollutant emissions, and nuisance odors. If emissions are not properly controlled, regulatory violations could be levied against the facility, and bodily injury claims could result.

Gas-Torch Operations & Explosion Risks

Some parts or vehicles may not be shredded but may be cut with gas torches. Gas-cutting torches involve the storage of flammable and explosive gases on-site. Gas tanks must be inspected, tested, and appropriately stored and handled. Fires related to these operations can produce toxic smoke and polluted run-off.

Tires

Tires removed from vehicles accepted at auto recycling facilities may be stockpiled on-site. Degrading tires releases plastic polymers that can migrate from stormwater to surface waters. Burning tires are very hard to extinguish and can impact the environment. Stockpiled tires are also an excellent breeding ground for mosquitoes and vermin, which can impact third parties.

Degreasing Equipment & Solvent Releases

Degreasing equipment may be used at auto recycling facilities to clean metal parts. Chlorinated solvents may be used or were used in the past. A release of solvents can migrate to and contaminate the environment.

Wastewater Management

Wastewater may be generated from vehicle washing, washing down floors, flushing radiators, and other operations at an auto recycling facility. These wastewaters may contain pollutants and must be appropriately stored, handled, and pretreated before discharge or off-site disposal. Mishandling, leaks, or wastewater spills can occur and impact the environment.

Accidental Spills During Transport

Leaks and spills can occur during the transport of new or used automotive fluids due to improper cargo securement, a loose valve, or vehicle upsets or overturn. Additionally, leaks or spills of automotive fluids can occur during the transport of vehicles to be processed. These releases could impact the environment or harm third parties.

Environmental Pollution Liability Can Provide Coverage For

On-site cleanup of new and pre-existing pollution conditions

Off -site cleanup of new and pre-existing pollution conditions

Both sudden and gradual pollution conditions

Third-party claims for bodily injury and property damage

Defense of third-party claims

Business interruption resulting from pollution conditions

Aboveground and underground storage tanks

First and third-party transportation pollution liability

Loading and unloading

Non-owned disposal sites

Products pollution

Crisis/reputation management

Illicit abandonment

Natural resource damage

Claims Scenarios & Examples

A recycling facility stored sulfuric acid in a 20,000-gallon aboveground storage tank at their location. Chemically sealed masonry walls that were two feet high surrounded the storage tank. One night, the storage tank ruptured. Because the leak was higher than the containing wall, roughly 3,000 gallons of sulfuric acid was released beyond the wall and into the soil and an adjacent stream. The facility faced government-mandated costs of over $1 million to clean up on-site soils and the stream and stream bank.
Two car crushing and recycling facilities were accused of emitting excess pollutants, including particulate matter, asbestos, mercury, and volatile organic compounds, and mishandling hazardous wastes at their facilities. A consent judgment required the companies to install emissions controls and implement improved testing and sampling protocols. The two companies also had to pay a civil penalty of $900,000.
Two environmental groups sued an automobile salvage yard for allowing stormwater run-off containing copper, iron, and lead to migrate into a nearby river. The two groups claimed that the yard was violating the Clean Water Act. A settlement was reached, and the yard stopped all stormwater discharges, took on cleanup efforts, and monitored the pollutants from their facility.
A next-door business sued an auto recycler/scrap metal yard for not complying with environmental standards. The yard allegedly completed vehicle shredding operations, creating auto fluff (including plastic, rubber, and fibers) and releasing iron, lead, and cadmium dust into the air.
An auto recycling facility allegedly released hazardous air emissions, including metals such as lead, cadmium, and zinc, at elevated levels, impacting the surrounding community’s health. Nearby residents were found to have the highest asthma rates in the state. The state environmental regulatory agency sued the company. The company had to pay $1.55 million in civil penalties, $2.1 million for supplemental environmental projects to benefit the local community, and $450,000 to reimburse the state for investigative and enforcement efforts.
Workers at a recycling facility had allegedly dumped used motor oil for several years, and some oil had been flushed into sling ponds and contaminated the water supply. A civil complaint was filed, and violations exceeded $1 million. The recycling company went bankrupt trying to comply with the cleanup order.
A waste disposal company picked up 1,000 gallons of waste oil from an auto salvage yard that they alleged later was contaminated with PCBs. They claimed that the oil-containing PCBs contaminated their tanks, trucks, and other equipment at their disposal facility. The company filed a complaint with the Department of Environmental Quality (DEQ) and sued the salvage yard, seeking $5 million in cleanup costs. The DEQ then investigated the salvage yard and found PCB contamination in the soil around the salvage yard’s crushing equipment. In addition to the lawsuit, the yard also faced fines and was ordered to clean up the PCB contamination in the soil.
An auto recycler was known to purchase old automobiles and salvage usable parts from the vehicles and then crush the cars for scrap metal. However, the recycler did not properly collect and store fluids from the vehicles, such as waste oil, gasoline, brake fluid, antifreeze, etc., and instead sent the fluids down a drain that the recycler put in the floor of the building. These fluids then went into a culvert further out in the yard. The Department of Environmental Conservation (DEC) was notified of the potential violations and got a search warrant to check out the facility. They realized the soil around the facility was heavily contaminated with these auto fluids. The company was ordered to remove the contaminated soil and clean the site to DEC standards.
An auto recycling yard experienced a fire that set off a series of small explosions after a worker caused a spark when using a drill on a plastic gasoline tank. Although the fire was accidental, it caused much damage and required 30 fire departments to respond. More than 80 vehicles in the yard were damaged, and due to the hazardous fumes, roads were closed, nearby apartments were evacuated, and two residents (one of which was a child) had to be taken to the hospital due to complications from the fumes.

Final Consideration

Your business can be faced with the cost to defend itself against allegations or legal action from pollution related events, regardless if you are at fault or not. Having the proper insurance coverage in place will help fund the expenses incurred to investigate or defend against a claim or suit and provide you with environmental claims handling expertise.

This environmental risk overview offers a general understanding of potential risks and may not reflect all risks associated with your business. Environmental Risk Professionals has compiled this overview for informational purposes only. This overview does not constitute legal opinion or advice, nor does it establish a consultant-client relationship. This overview is not intended to guide project parties in interpreting specific contracts or resolving disputes; such decisions may require consultation with counsel and depend on various factors. © 2025 Environmental Risk Professionals, LLC

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