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Publications / Planning and Environment

30 May 14
Risk-based scheme for NSW Environment Protection Licences

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Holders of environment protection licences (EPLs) could see their administration fees increase in the 2016/17 financial year.

On Friday 2 May 2014, the Protection of the Environment Operations (General) Amendment (Licensing Fees) Regulation 2014 (Licensing Regulation) came into effect.  The Licensing Regulation introduces a new risk-based licensing scheme that aims to encourage EPL holders to improve their environmental performance.

The risk-based licensing scheme will change the way that EPL fees are calculated and inform the level of regulatory intervention imposed on EPL holders.

Higher fees and a greater regulatory burden will be imposed on operators who have a poor environmental management history or who are carrying out operations that pose significant risks to the environment.  Fees can be reduced when steps are taken to mitigate the environmental risks caused by an operation.

Risk-based fees

The status quo
EPL holders are required to pay an annual administrative fee for their EPL.  This fee is currently calculated by multiplying the amount of one administrative fee unit by the number of administrative fee units allocated to the activity that is authorised or controlled by the EPL (Current Fee).

The administrative fee unit is a dollar value set out in the Licensing Regulation that increases each financial year.  The number of administrative fee units allocated to a particular operation is dependent on annual production capacity and amount of pollution caused by that operation.

Fees under the risk-based licensing scheme
In order to calculate fees under the new scheme, the Environment Protection Authority (EPA) will allocate an Environmental Management Category (A, B, C, D or E) to an EPL, based on:

  • the number and nature of any regulatory actions taken by the EPA in relation to operations carried out under the Licence
  • the licensee’s compliance history
  • the environmental management systems and practices put in place by the licensee to mitigate environmental risks, and
  • any environmental improvement works and programs initiated by the licensee.

Each category has an ‘environmental management factor’ assigned to it, as shown in the table below.  Under the new scheme, the Current Fee will be multiplied by the relevant ‘environmental management factor’.

Environmental management category Environmental management factor Consequence for EPL fees
A 0.95 Reduction
B 1.00 No change
C 1.30 Increase
D 1.60 Increase

E

2.00

Increase

 

The result is that the fees for EPLs in ‘category A’ will be discounted by 5%, whereas fees for EPLs in the lowest environmental management category will double.

Risk-based levels of regulatory intervention

The EPA will also assign an ‘overall environmental risk level’ (Risk Levels) to each EPL, from level one to level three, with level three being the highest risk. 

The Risk Levels will inform the level of regulatory intervention imposed on EPL holders.  Monitoring and reporting obligations, for example, may be more onerous for level three licenses.  Risk Levels will also be published on the EPA’s public register.

Calculation of overall risk levels
In determining the overall risk level for an EPL, the EPA will consider:

the environmental management category of the EPL

the day to day operations carried out under the EPL, and

the risk of a pollution incident occurring and the impact that an incident would have on the environment.

Application

The risk-based licensing scheme will apply to all EPLs, except those issued for the transport of trackable waste.  The EPA’s rationale is that the risk-based licensing scheme is intended to focus on premises-based operations.

Timeline for implementation

The Regulation commences on 1 July 2014, however, EPA officers will begin undertaking site-specific risk assessments in consultation with current EPL holders this month. To prepare for the site specific assessments, EPL holders should give consideration to the environmental management systems and practices in place at the premises to mitigate environmental risks; and any environmental improvement works and programs that may be presented to the EPA during the assessment stage.

The EPA will begin assigning environmental management categories and overall risk levels to EPLs from 1 July 2015.

Environmental management categories will have an impact on EPL fees payable from the 2016/17 financial year onwards.

For further information on any of the issues raised in this alert please contact our team.
 

Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication. 

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