Financial Provision for Environmental Liabilities

The prevention and remediation of environmental damage at contaminated sites, and from the closure of authorised activities, is a strategic priority for the EPA. To this end, operators under various authorisation regimes (waste, industrial emissions directive and integrated pollution control licensing, and dumping at sea permitting) are required to make adequate financial provision for the potential environmental liabilities associated with:

closure and restoration/aftercare and
response to, and completion of remedial measures in the event of, an incident.

The EPA published Guidance on assessing and costing environmental liabilities in 2014, and provided other supports by way of unit cost rates for verification of any costings, a FAQ document and webinar.

The EPA published Guidance on financial provision environmental liabilities in 2015, and provided other supports by way of templates for the financial instruments to be used in making financial provision.

The guidance package above replaces the previously issued 2006 guidance and provides clear direction on the standards necessary to comply with relevant licence and permit conditions relating to:

planning for and costing closure and restoration/aftercare (variously referred to in licences as CRAMP, DMP or RMP),
assessing and costing potential incidents (referred to in licences, sometimes in combination with the closure documents referenced above, as ELRA), and
making financial provision (preferably by way of the following forms of instrument which are, in principle, acceptable to the EPA; secured fund, on-demand performance bond, parent company guarantee, charge on property and environmental impairment liability insurance).

Irrespective of the type of financial instrument used, all financial provisions must be: