Energy & Resources Update
The payment of a FA is a requirement either under the EP Act or as a condition of an environmental authority (EA). The DEHP is required to decide the amount and form of FA under s295 of the EP Act. Such decision must be made having regard to the prescribed guideline being the Guideline: Financial Assurance under the Environmental Protection Act 1994 (4 March 2016) (the Guideline).
- It is not sufficient for the Department, or the Court, to merely consider the prescribed guideline in a cursory way. Rather the words “must have regard to” contained in section 295(3) of the EP Act, represent mandatory language which requires consideration that must involve an active, intellectual process.
- The Guideline: Rehabilitation requirements for mining resource activities (EM1122) is irrelevant to the assessment of the amount of financial assurance.
- The financial standing of the proponent is irrelevant to the assessment of the amount of financial assurance.
- The application of a contingency amount is contrary to the EP Act because the use of the expression total likely costs and expenses (found in section 295(4) of the EP Act) is diametrically opposed to the inclusion of a such amount, being an amount for unknown costs, and falls outside the scope and purpose of requiring FA to be given for an EA.
- The Precautionary Principle does not apply to the assessment of the amount of financial assurance pursuant to section 295 of the EP Act.
- The Guideline permits the parties to enter into agreements regarding the retention of infrastructure. The effect of this, is that the corresponding infrastructure can be removed from the assessment of the amount of financial assurance.
- In appeals such as these, each party will bear the onus of proving what they assert with respect to the rehabilitation plan and resulting FA calculations.
What you need to know …
- The Guideline: Rehabilitation requirements for mining resource activities does not apply to the assessment of FA
- Financial standing of an EA holder is irrelevant to the assessment of FA
- The application of a contingency amount is contrary to the provisions of the EP Act for the assessment of FA
- The precautionary principle does not apply to the assessment of FA
- The Guideline permits parties to enter into agreements regarding retention of infrastructure and in such circumstances, the corresponding amount does not need to be included in the FA
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