The purpose of a financial assurance is to cover the costs of a clean-up or remediation of a site. It works like a security deposit, ensuring funds are available if required.

Financial assurances are generally used as a condition of a prescribed permission, site management order or environmental action notice.

EPA considers the risk assessment criteria from the Environment Protection Regulations 2021 (the Regulations) when deciding if a financial assurance is needed, or if a review of financial assurance is needed. We also use the risk assessment criteria to decide how the financial assurance should be provided. Normally this is in the form of a bank guarantee.

EPA specifically considers the prescribed risk assessment criteria in Regulation 168 on page 202 of the Environment Protection Regulations 2021.

Risk of harm to human health and the environment

EPA considers several factors when deciding if a financial assurance is required. This includes whether there’s an increased risk of harm to human health and the environment from:

• clean-up or rehabilitation activities that may impact:
• nearby residents, for example with odour
• the environment around the site, for example surface water and groundwater.

• sites that:
  • receive, handle, store, process or dispose of dangerous goods and/or combustible wastes
  • manage persistent environmental contaminants
  • manage waste that is costly to treat
  • lack proven and effective risk controls.

Compliance history

We assess your permission application to find out your compliance history. This includes your previous compliance with current and past environmental laws.

We also take your compliance history into account if we plan to issue you a site management order or an environmental action notice.

If you haven’t previously complied with environmental laws, including historical ones, that may be an indicator that a financial assurance is needed.

Prohibited person

A prohibited person is not allowed to hold a permission unless we’re satisfied that it isn’t against the public interest.

We assess your prescribed permission application to determine whether you’re a prohibited person under the Act. We also do this if we plan to issue you with a site management order or environmental action notice. This status is then considered along with your compliance history.

Financial capacity of the person

We assess your permission application to decide whether you have the finances to comply with the conditions. The assessment also helps decide what type of financial assurance you need to provide.

If your ability to pay costs is low, you may require a financial assurance. This is to ensure enough funds are available to cover costs of a clean-up or remediation.

We also assess your finances if we plan to issue you a site management order or an environmental action notice.

Likelihood of site abandonment

When a site is abandoned, the Victorian community is left to cover the costs of a clean-up. We consider this possibility when we assess applications for prescribed permissions or when issuing site management orders or environmental action notices.

Our assessment covers:

• ownership of the site
• whether the value of the site exceeds the cost of clean-up
• amount of waste and material at the site
• short and long-term commercial viability of the activity
• the duty holder’s character
• how complex the company’s ownership is, including whether it’s foreign-owned.

Clean-up or remediation

We use the information you provide in your application to estimate what would be involved in a clean-up or remediation, and the cost. We also consider the amount and type of waste you expect to manage and any shut down plans you have.

Review the Calculation of financial assurance for landfills, reportable priority waste management and waste resource recovery facilities (publication 2003) for these types of permissions.

For other types of prescribed permissions we’ll work with you to estimate the costs. In some cases, EPA may require an independent cost assessment by an environmental auditor.

A financial assurance is required for site management orders or environmental action notices where a complex or costly clean-up or remediation is likely.

We’ll only waive financial assurance if we agree the estimated costs are low enough to not be an unacceptable risk to the community.

Read more about financial assurances

Financial assurances

Amending or releasing financial assurances

Financial assurances and landfills

Financial assurances and waste and resource recovery facilities