This paper presents a methodology for considering environmental factors in machining facilities through Monte Carlo system simulation models. Although system simulation is widely used to plan resource allocation, scheduling, product mix, buffer sizes, and other operational issues, the focus of system-level planning is traditionally the primary part flow. One key aspect of this approach is the modeling of secondary (or catalytic) flows within the facility in the solid, liquid and vapor phases. The advantages of the approach presented are that (1) human health hazards can be estimated prior to actual exposure in the facility, (2) available inventories of cutting fluids, solid scrap and tools can be more effectively synchronized with primary part flows, (3) potential system constraints based on environmental factors (such as catalyst recycling or disposal) can be identified, and (4) energy use in a facility can be quantified based upon the product mix and resources being used. This approach uses analytical process models embedded as attributes of systems resources to determine energy use and mass flows based on process time and volume of material removed. To illustrate this approach, we present a model of an aerospace machining facility comprising of 20 resources and 28 product types is presented and case studies addressing cutting fluid management and product mix are developed.