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. This is intended to prevent the Victorian community bearing the resulting financial cost.

The Environment Protection (Scheduled Premises) Regulations 2017 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 providing guidance to industries requiring financial assurance:

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

Updates have recently been made to the following publications that describe how to comply with financial assurance requirements:

  • Licence management (publication 1322) sets out the financial assurance conditions that will be embedded in the licence based on scheduled premises. Refer to page 40 of the guideline for more details.
  • Closed landfill guidelines (publication 1490) sets out the minimum requirements for complying with financial assurance. Refer to page 17 of the guideline for more details.
  • Remedial notices policy (publication 1418) describes how financial assurance is included as a requirement of a pollution abatement notice (PAN).

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 financial.assurance@epa.vic.gov.au

Amending or releasing financial assurances

Duty holders can use Application for amendment or release of financial assurance (form F1002) to apply for an amendment to an existing financial assurance or a release of financial assurance.

Duty holders may apply for an amendment to the amount of financial assurance when there is a change to the environmental conditions underpinning the calculation of the approved financial assurance amount, by contacting EPA via financial.assurance@epa.vic.gov.au.

Applications for release of financial assurance should be submitted after EPA has confirmed the corresponding surrender of the licence or notice revocation.

Applications must be accompanied by sufficient evidence supporting an amendment or release of financial assurance to assist EPA to assess the application as quickly as possible.  

Q&A on financial assurances + Expand all Collapse all

  • What activities does financial assurance apply to?

    The Environment Protection (Scheduled Premises) Regulations 2017 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.

  • 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.

  • 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 financial.assurance@epa.vic.gov.au

  • 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.

  • What do public entities including local councils need to do to comply with financial assurance requirements?

    For local councils operating landfills, EPA accepts internal financial provisioning to comply with financial assurance requirements. This is to ensure that adequate funds are set aside for closure, rehabilitation, and aftercare costs.

    If EPA has requested a calculation of landfill closure, rehabilitation, and aftercare costs, local councils must prepare the requested calculation using EPA guideline 1596 and submit it as evidence that anticipated costs have been appropriately evaluated.

    Further, they must follow the Local Government Victoria guideline “Accounting for landfills” that sets out principles-based guidance to comply with the accounting standard and financial reporting requirements for internal provisioning.

  • 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.

  • Is insurance considered to be financial assurance?

    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.

  • 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.

Page last updated on 25 Jun 2018