EPA Guide places responsibility on companies to provide for environmental liabilities and costs

Date released: Aug 17 2006

The EPA today published a guidance document to help companies quantify and provide adequately for their environmental liabilities - thereby protecting the public purse and the environment. Guidance on Environmental Liability Risk Assessment, Residuals Management Plans and Financial Provision presents a step-by-step approach for companies, local authorities, financial institutions and consultants to use in assessing the inherent risk to the environment that an industrial activity poses.

Commenting, Dara Lynott, Director, EPA's Office of Environmental Enforcement said, "Though intended as a guide for companies, this document very firmly underpins the polluter pays principle, by ensuring that inability to pay cannot be used as a means to avoid remediation or compensation responsibilities by companies that pollute. The level of financial provision required of a company will vary depending on three things: the complexity, and therefore the risk, attaching to the site; the sensitivity of the receiving environment and the effective management of environmental risk by the company.

The guide also underpins the rationale for granting pollution prevention and control licenses by the EPA.Such licences confer considerable enforcement powers on the EPA and considerable responsibilities and costs on licensed companies," Mr Lynott added.

The guidance published today sets out how companies can:

  • Identify the risks associated with their particular activity.
  • Eliminate or reduce the risk by improving environmental performance and thus reducing financial provision costs.
  • Prepare for closure and aftercare of the facility in a structured manner.

It will also provide information on how to:

  • Reduce the potential for environmental damage as the result of accidents.
  • Minimise residual / long term impacts from manufacturing and waste management facilities upon closure.
  • Financially plan for environmental liabilities.
  • Reduce the financial provision required.

The EPA guidance document subdivides liabilities into known liabilities (such as a planned facility closure) and unknown or unexpected liabilities such as a leak or explosion. In many instances, potential liabilities extend well beyond the operational life of a company, thereby requiring a mix of financial provisions ranging from cash or ESCROW accounts, to parent company guarantees, or risk transfer instruments such as insurance or bonds.

You can purchase the report on-line at www.epa.ie/downloads/pubs from our Publications Office, McCumiskey House, Richview, Dublin 14 on 01-2680100. Price €20.