The EPA’s Guidance on Financial Provision for Environmental Liabilities, published in August 2015, identifies the prevention and remediation of environmental damage and pollution from incidents and the closure of Agency-licensed facilities as one of its key strategic priorities. The guidance document was finalised after issuing draft guidelines for public consultation in 2014. During this period the general consenus was that the secured fund option (i.e. depositing moneny into a bank account) was the only option available for individual licence holders and acceptable to the EPA. Consultations by BlueRock Environmental Ltd with the EPA during 2015 in relation to a number of licenced sites indicated that a minimum value of €1 million was deemed the minimum fund requirement which corresponds with the minimum relevant envrironmental insurance policy package available.
The finalised financial provision document indicates that the EPA are now willing to accept the other forms of financial provision to cover the cost of remediation if an incident occurs at a site or if the site is closed. The financial provision must be secure, sufficient and available when required and is fully at the discretion of the EPA as to the extent of the provision.
Five forms of financial instruments have been outlined as acceptable:
- Secured funds: Funds lodged in a bank account accessible to the EPA.
- On-demand performance bonds: Financial instruments or bonds issued by a financial institution acceptable to the EPA.
- Parent company guarantee: Involves the parent company entering a legally binding commitment to fulfil the license’s obligations.
- Charge on property: a mortgage or charge over specific property in favour of the EPA. However, the conditions, particularly around valuations, are stringent.
- Insurance: Environmental Impairment Liability insurance if the policy wording is deemed acceptable.
The Secured Funds, On-Demand Performance Bonds and Charge of Property options are deemed acceptable for all liabilities by the EPA. However, not all Parent Company Guarantees are considered acceptable. Such guarantees are acceptable for most liabilities, but not for site closure. In relation to Environmental Insurance, this option is deemd suitable for unknown liabilities only.
A copy of the document can be found at http://www.epa.ie/pubs/advice/licensee/financiaprovisionsreport.pdf