NOTE: The following article is from the collection of articles in our Automobile Dealership Buy/Sell Newsletters. The newsletter deals with the complex area of buying and selling automobile dealerships. Some of the material may not be up to date because of changes in the law from the date shown at the end of the article. This article is not to be taken as legal, accounting, tax, or other advice. You should consult your own professionals for such advice and for any updating of the information provided.
In recent months, the environmental risk associated with hydraulic vehicle hoists has flared up as an issue for auto dealers planning on selling their dealerships. It’s not so much that environmental risks from hoists have become greater; it’s that environmental consultants seem intent on taking them more seriously.
First, some basic background: most hydraulic hoists include an underground reservoir that contains the hydraulic oil needed to make the thing work. Reservoir capacities are usually quite limited, typically ranging from 35-50 gallons. Because they are so small these reservoirs are exempt from state and federal underground storage tank regulations. That is, they do not have to be permitted. Nor does an owner or operator of a hoist have to install any leak detection system to asses its integrity.
As a result of this exclusion most dealers have paid little attention to their hoists. But, as noted above, that may be changing. One important reason is that a 1993 California law removes the regulatory exemption on hoists as of January 1, 1996. This change has a number of vendors touting the benefits of alternative systems. There is, however, a strong possibility that this law will be changed and the exemption restored. In fact, the state WRCB (the folks who make rules on underground tanks) may be close to recommending just that to the legislature.
Another reason for this change is that dealers are now coming to understand that, despite any regulatory exemption, a leaking hydraulic reservoir can create an environmental problem. More specifically, if oil leaks from one of these reservoirs into surrounding soil or groundwater, such a release may have to be reported and cleaned up. And, as dealers are well aware, cleanups of this sort can be expensive. Then there is the risk of liability; particularly if the dealership is operating on leased property or if the contamination has somehow placed a cloud on nearby properties.
The long and short of it is that from a risk standpoint, nothing has really changed. What has changed are perceptions. For reasons unknown, leaking hydraulic oil reservoirs have become a hot issue among consultants performing Environmental Assessments. An Environmental Assessment, incidentally, is an investigation that tries to identify any environmental issues or problems at a site that may restrict its future use or require a costly cleanup. These assessments are commonly performed as one component of franchise or property sales.
In years past, these assessments often overlooked underground hoists. Others discussed the risk only in general terms. Now, however, it is not uncommon for an assessment to recommend that the soil adjacent to each reservoir be checked for evidence of contamination. Some assessments even go so far as to recommend that all underground hoists be removed and replaced with aboveground units.
It is difficult for another consultant to argue with such recommendations. After all, we don’t have to pay for any modifications. But dealers do. And the cost can be significant; probably $1,000 or so for each soil sample and about $6,000-$7,000 for each hoist removal/ replacement.
With that in mind, we should go back to the beginning and recall that the oil reservoirs in these lifts are small. Consequently, the loss of a small amount of oil, say 5 to 10 gallons, will normally result in a hoist not working properly. Even a catastrophic failure would result in a comparatively small release.
While any release of a hazardous material is bad news, the failure of one of these reservoirs will not create the same type of problems as a hole in, say, an underground fuel tank. The liquid in such a tank is continually replenished and a leak can go on, undetected, for years. In contrast, hydraulic hoists have an excellent built-in leak detection system–they stop working. Thus, so long as maintenance on a leaking hoist does not consist of simply adding hydraulic oil, the consequences of such a leak can normally be minimized.
Considering the comparative risk of these hoists, dealers may wish to consider alternative methods for managing them. These alternatives could include:
- Programmed maintenance: A program which includes schedule preventative maintenance (possibly including periodic integrity testing) and prompt repair of faulty hoists can minimize the risk of operating underground hoists. Your hoist maintenance service company may have useful suggestions on how to structure a program.
One note of caution: these types of programs often start off with a bang only to soon fade away. If a scheduled maintenance program is to endure, management will have to periodically check its status.
- Replace hoist hydraulic oil with non-hazardous substitute: Vegetable-based hydraulic oils are now on the market. Under the right conditions, such an oil can provide many years of reliable service. And if a leak should occur, vegetable oils are commonly non-hazardous and therefore may not have to be cleaned up at all. Wouldn’t that be nice?
There are, of course, some downsides. First is the cost. Flushing out the oil in a unit and replacing it with a vegetable-based oil could easily run $ $1,000-$1,500. Also, this oil will reportedly degrade rather quickly if the hoist does not have a supply of dried and filtered compressed air. Some dealerships may have to upgrade their compression air systems in order to provide this quality of air.
Also, a lawyer may be able to make some sort of argument that leaking vegetable oil, even if nonhazardous, somehow contributed to an environmental problem.
- Replace underground hydraulic hoists with aboveground units: Aboveground units seem to be popping up everywhere and dealers no doubt know what they look like. From an environmental standpoint, these hoists are pretty much risk-free. On the other hand, they cost a lot. If a dealership does install aboveground units, it should get the oil out of the underground hoists that are going out of service. As for the unused units them selves, once emptied, they may be removed, capped off or simply abandoned. Remember, these units are not presently regulated and they may be abandoned in place.
In summary, underground hydraulic hoists do present some environmental risk to the dealership. This risk, however, is comparatively modest and can be further reduced by relatively common-sense practices. Alternately, it can be essentially eliminated if the dealership is willing to invest the necessary sums.
This article was written in 1995.