Licences and approvals

Financial assurances

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Financial assurance was introduced as a regulatory tool following a number of incidents where EPA conducted a cleanup.

The Environment Protection (Scheduled Premises and Exemptions) Regulations 2007 specify which scheduled activities must submit financial assurance. These include premises that have licences to conduct prescribed industrial waste management, landfills, bulk storage and container washing.

Three publications were released in 2016 to clarify financial assurance requirements:

These documents replace Guidelines for determining financial assurances – Schedule 4 premises (publication 456) and Determination of financial assurance for landfills (publication 777).

All sites that have a licence condition to maintain a financial assurance will be reviewed against the reformed model. EPA will prioritise the implementation based on risk and will work with duty holders to agree to feasible timeframes for submitting a financial assurance.

Financial assurance proposals should be prepared using the guidance documents above and address the following components (at a minimum):

  • amount (including supporting calculations)
  • type/s – if the proposed type is not a bank guarantee, the proposal should include a justification and how risks to EPA are managed through use of the proposed type
  • an overview of the premises and operations
  • an overview of the company
  • any information supporting the environmental track record of the company.

Financial assurance proposals should be sent to

The 2016 publications are new versions of the draft position (publication 1568) and draft guidance documents on calculation of financial assurance (publication 1584) and Types of financial assurance (publication 1586), which were released for public comment in 2014 and 2015. Twenty-two submissions were received and these were considered in finalising the publications.

Summary of submissions received during public consultation

Summary of comment EPA response
Industry consultation is requested to be undertaken during the reform process. EPA has engaged with industry members and industry groups throughout the financial assurance reform – including with the Waste Management Association of Australia (Victorian Landfills Group); the Waste Industry Alliance via the Australian Industry Group; the Australian Institute of Petroleum; and the Victorian Waste Management Association – in addition to hosting a workshop to discuss the draft guidelines.
Ensure that phase-in is resourced appropriately and applied consistently. The phase-in of the financial assurance reform will be implemented across all duty holders with an FA requirement and prioritised on a risk basis.
Gate rates collected by operators can be used as an indicator of whether waste is being managed safely.

Gate fees may vary for a number of reasons and cannot be continuously monitored by EPA.

Information from industry is a key source of intelligence for EPA inspections and any concerns about industry practices can be reported to EPA’s pollution report line on 1300 372 842 (1300 EPA VIC).


Industry differentiation:

  • Consider a tiered approach to financial assurance to consider the varying levels of risk posed by individual industry operators.
  • There should be differentiation between waste storage operations and waste treatment operations.

EPA’s priority is to balance the need to be both proportionate and consistent in the application of financial assurance across duty holders. EPA believes this is best achieved through applying a consistent calculation method across duty holders whilst considering more flexible types of financial assurance on a risk basis, as set out in publication 1595.

Waste treatment and waste storage operations both pose a risk of abandoning waste at the site, so the calculation of the financial assurance amount remains the same between them.


Tailoring financial assurance to suit individual circumstances:

  • Allow commercial waste operators to use internal provisioning.
  • Clarify what a ‘parent company undertaking’ is and when it can be used.
  • Allow progressive accumulation of financial assurance.

Publication 1595 sets out factors that will be considered in order to account for individual circumstances. A guarantee (by deed poll) is set out that would support the use of financial provisioning. It is a guarantee from a parent company or responsible related entity. It would only be accepted if a threshold credit rating is achieved.

Publication 1594 sets out EPA's position, that in exceptional circumstances EPA may allow duty holders to stage the provision of a financial assurance over a period of time.


Local governments and public entities:

  • Power generation assets covered under the Essential Services Act should be considered as a special case, due to the high investment in assets, as should public sector entities.
  • Local councils should not tie up ratepayers’ money unnecessarily.
  • The financial assurance regime should support competitive neutrality between local government and industry.

Publication 1594 has been updated to describe how financial assurance will be applied to public entities and local government and is applicable to multiple types of activities.

EPA has established a Landfill Rehabilitation Costs Working Group to better understand and improve guidance for the financial management and accounting for landfill rehabilitation costs by local councils. The intention of this work is to establish a model for internal provisioning by public entities to ensure that funds are available when required to rehabilitate landfills.

Landfills operated by government entities are subject to the Victorian Competitive Neutrality Policy, and are required under that policy to implement measures to ensure that they compete in a neutral way in markets. Read about competitive neutrality (Victorian Competition and Efficiency Commission).


Composting industry:

  • EPA has previously advised that PIW composters were exempt from financial assurance.
  • Composters who discharge PIW directly to land will not be charged a financial assurance, which creates inequity within the industry.

It is a priority for EPA to ensure that financial assurance is applied equitably to all licence holders. The current Scheduled Premises Regulations state that all operations licenced to manage PIW are required to submit financial assurance.

Sites that are currently licenced to compost PIW but that do not have a PIW storage area or mixing pit will be reviewed through EPA’s periodic licence review process in order to introduce a mixing pit and/or PIW storage area, in accordance with Designing, constructing and operating composting facilities (publication 1588).


Clarification of terms is required:

  • remediation requirements for bulk storage facilities.
  • for landfills – ‘operational landfill’, ‘closed landfill’, ‘fully rehabilitated’, ‘fully capped’ and ‘all auditor recommendations have been actioned’.

Publications 1594 and 1596 have been updated to remove these terms or clarify their definitions.

Landfill financial assurance:

  • Use the approved volume rather than the filled volume to calculate operational financial assurance, due to rapidly changing filled volume.
  • Require any additional financial assurance to be lodged before waste is permitted in the cell.

The calculation formula for the Operational ‘component’ of landfill financial assurance has been updated to be based on approved volume. The formula has also been updated to include landfill gas migration.

Additional financial assurance to address new cells can be included as a condition in the works approval for construction of the new cell, with the works approval not deemed to be complete until the financial assurance is submitted.


Prescribed industrial waste management feedback:

  • Some of the PIW codes are no longer in use.
  • Some of the prices are set too high and some are set too low.
  • The calculation should be based on expected proportions of various wastes or actual amounts over time, rather than being based on a worst-case scenario.
  • Sub-limits of PIW are not supported, since they restrict the flexibility of the business.

Waste codes that are no longer in use have been removed from publication 1596.

Lower disposal costs have been included in the guidance where evidence is available supporting lower waste disposal costs.

An additional category of low cost wastes has been included that addresses J, K, L and some T-coded wastes.

Reduced contaminated soil costs have also been added.

Duty holders may apply to amend their licence to reflect a lower nominal amount of waste storage than their design capacity, or limit the amounts of certain expensive types of waste stored, in order to reduce the financial assurance. Sub limits reflect a lower risk of accumulation of waste that is expensive to dispose of and are an appropriate mechanism for lowering the amount of financial assurance required.


Drums have owners and would be returned to their owners in the event of insolvency. A licence condition has been created that requires a nominal amount of waste to be covered by storage agreements, which can be used as a basis to reduce the financial assurance calculation. The Licence management guidelines will be updated to include key components required to be addressed in storage agreements.

Addressing site contamination with financial assurance:

  • Clarify that financial assurance in a  PAN will be used to address contamination.
  • Use a common approach to all financial assurances in licences and notices.

Publication 1594 has been updated to clarify that financial assurance for contamination will be addressed through remedial notices rather than through the licence.

Publication 1418 has been updated to refer to financial assurance for remedial notices however it does not address the form or amount of financial assurance to be provided.

These will be considered on a case-by-case basis.


It is unclear what would happen if the consumer price index were reset to 100. Relative movements of any series of indices over time are not generally affected by a reference base change; it is the relative movement over time that is included in the CPI adjustment formula.


Q&A on financial assurances + Expand all Collapse all

  • When can a duty holder use a type other than bank guarantee?

    EPA expects that it will continue to require bank guarantees as the form of financial assurance in most cases, however other types of financial assurance may occasionally be appropriate. The final Types of FA guideline provides guidance on circumstances where alternative types of financial assurance may be acceptable.

    EPA advises duty holders to prepare a proposal describing the proposed financial assurance amount and type/s. If the proposed type of financial assurance is not a bank guarantee, the duty holder must substantiate why the alternative type is justified and how risk to EPA would be mitigated. This should include an overview of premises operations, reference to the criteria in the guideline, financial position of the duty holder, duty holder environmental track record and how the duty holder intends to fund any remedial or rehabilitation works required at the site.

  • How can EPA duty holders reduce the amount of their financial assurance obligation?

    The new calculation guidelines encourage duty holders to minimise risk through providing means to reduce the amount. This can be achieved for PIW management facilities by any combination of the following:

    • reducing the amount of waste permitted to be stored on their site
    • including licence sub-limits for wastes that are expensive or difficult to treat or dispose
    • nominating amounts of waste or containers that will have storage agreements in place and therefore would be returned to the waste owners if required.

    Landfill operators can reduce their financial assurance amount through progressive rehabilitation of the landfill.

  • Is there a mutual fund that duty holders can join?

    At this stage there are no operating mutual funds available for duty holders to join. EPA is most likely to accept mutual funds as a form of financial assurance when proposed by an industry association.

  • Are there any current cases where insurance covers the financial assurance requirement?

    Holding insurance for sudden and accidental events and gradual pollution is prudent for any duty holder; this applies to a range of duty holders beyond those that are required to provide financial assurance.

    Insurance is not generally available for anticipated costs such as landfill rehabilitation or disposal of stockpiles of waste, which are required to be addressed under financial assurance requirements. No policies have yet been presented that provide this coverage.

  • What input did EPA seek in developing FA reform?

    Consultation on financial assurance reform commenced in early 2014. 

    EPA has been working with industry groups including the Australian Industry Group (AiGroup), waste management groups and individual duty holders on FA reforms for almost two years. The first phase of consultation informed the development of the draft EPA position on provision of financial assurance for licences and works approvals (publication 1568), which was released in June 2014 for industry consideration and comment.

    In February 2015, consultation drafts of the new FA calculation and types of FA guidelines were released and EPA has used feedback from the consultation processes to finalise the guidance documents.

  • What activities does financial assurance apply to?

    The Environment Protection (Scheduled Premises and Exemptions) Regulations 2007 specify which scheduled activities are required to submit financial assurance.

    Scheduled activities required to have financial assurance as part of licences are landfills, PIW management (including PIW composting), container washing, and bulk storage facilities.

    Additionally, financial assurance can be a requirement of a works approval or pollution abatement notice associated with any of these activities, as well as for contaminated sites requiring long-term management or onsite soil containment.

  • What should a financial assurance proposal contain?

    Financial assurance proposals should be prepared using the new guidelines and be in a letter style addressing the following components at a minimum:

    • amount (including supporting calculations)
    • type/s – if the proposed type is not a bank guarantee, the proposal should include a justification and how risks to EPA are managed through use of the proposed type
    • an overview of the premises and operations
    • an overview of the company
    • any information supporting the environmental track record of the company.

    Financial assurance proposals should be sent to

  • How long do duty holders have to submit their financial assurance?

    All sites that have a licence condition to maintain a financial assurance will be required to provide one.

    EPA will prioritise this work based on risk and will contact duty holders individually to advise of the required timeframes for submitting a financial assurance. The time permitted will allow sufficient time for the administrative tasks involved in providing the financial assurance.

    EPA strongly recommends that all sites review the requirements and prepare a proposal describing the proposed financial assurance amount and type.

Page last updated on 27 Apr 2016