AutoNation 2000 Annual Report Download - page 9

charges.
Environmental, Health and Safety Laws and Regulations
Our operations involve the use, handling, storage and contracting for
recycling and/or disposal of materials such as motor oil and filters,
transmission fluids, antifreeze, refrigerants, paints, thinners, batteries,
cleaning products, lubricants, degreasing agents, tires and fuel. Consequently,
our business is subject to a complex variety of federal, state and local
requirements that regulate the environment and public health and safety.
Most of our dealerships utilize aboveground storage tanks, and to a lesser
extent underground storage tanks, primarily for petroleum-based products.
Storage tanks are subject to periodic testing, containment, upgrading and
removal under the Resource Conservation and Recovery Act and its state law
counterparts. Clean-up or other remedial action may be necessary in the event
of leaks or other discharges from storage tanks or other sources. In addition,
water quality protection programs under the federal Water Pollution Control Act
(commonly known as the Clean Water Act), the Safe Drinking Water Act, and
comparable state and local programs govern certain discharges from some of our
operations. Similarly, certain air emissions from operations such as auto body
painting may be subject to the federal Clean Air Act, and related state and
local laws. Certain health and safety standards promulgated by the Occupational
Safety and Health Administration of the United States Department of Labor and
related state agencies also apply.
Some of our dealerships are parties to proceedings under the Comprehensive
Environmental Response, Compensation, and Liability Act, or CERCLA, typically
in connection with materials that were sent to former recycling, treatment,
and/or disposal facilities owned and operated by independent businesses. The
remediation or clean-up of facilities where the release of a regulated
hazardous substance occurred is required under CERCLA and other laws.
We incur significant costs to comply with applicable environmental, health
and safety laws and regulations in the ordinary course of our business. We do
not anticipate, however, that the costs of such compliance will have a material
adverse effect on our business, results of operations, cash flows or financial
condition, although such outcome is possible given the nature of our operations
and the extensive environmental, public health and safety regulatory framework.
7
COMPETITION
We operate in a highly competitive industry. We believe that the principal
competitive factors in the automotive retail business are location, service,
price and selection. Each of our key markets includes a large number of
well-capitalized competitors that have extensive automobile dealership
managerial experience and strong retail locations and facilities. We are
subject to competition from dealers that sell the same brands of new vehicles
that we sell and from dealers that sell other brands of new vehicles that we do
not represent in a particular market. Our new vehicle dealership competitors
have franchise agreements with the various vehicle manufacturers and, as such,
generally have access to new vehicles on the same terms as us. We also are
subject to competition from independent automobile service and repair shops and
service center chains.
In general, the vehicle manufacturers have designated specific marketing