Privatised water companies are public authorities for the purposes of the Environmental Information Regulations 2004

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The Upper Tribunal (“UT”) has given its long awaited ruling in the matter of Fish Legal v Information Commissioner and has concluded that the privatised water companies involved are “public authorities” for the purposes of the Environmental Information Regulations (EIRs). 

The Upper Tribunal (“UT”) has given its long awaited ruling in the matter of Fish Legal v Information Commissioner and has concluded that the privatised water companies involved are “public authorities” for the purposes of the Environmental Information Regulations (EIRs).

The EIRs require “public authorities” to make environmental information available to the public both proactively and on request (unless an exception applies) regardless of the purpose of the request.  The implications of the ruling are therefore significant both for privatised water companies and other privatised utility providers.

Background

This decision is the conclusion of a lengthy legal battle by Fish Legal in its bid to overrule the view of the Information Commissioner (“ICO”) that privatised water companies should not be considered public authorities under the EIRs. 

The Regulations define public authorities as including

  • a body or person that carries out ” functions of public administration” 
  • a body or person that - has public responsibilities relating to the environment or, exercises functions of a public nature relating to the environment or, provides public services relating to the environment AND is under the control of an authority that is caught by FOIA or a body or person carrying out functions of public administration

The First Tier Tribunal agreed with the ICO’s view that water authorities were not public authorities for EIR purposes. The case was then appealed to the Upper Tribunal and a reference followed to the Court of Justice of the European Union (“CJEU”).  The CJEU gave its judgment in December 2013 in which it set out two tests to be applied when considering whether the water companies are public authorities for the purposes of the EIRs.  The CJEU referred the final decision back to the UK-based Upper Tribunal which delivered its judgment in February 2015.

The tests

The CJEU set out two tests:

  1. the “special powers test” which allows a determination as to whether a person or body has functions of public administration ; and
  2. the “control test” which allows a determination of whether a person or body is under the control of another relevant body.

The UT concluded that the water companies are public authorities by virtue of their “special powers” and are subject to the access provisions contained in the EIRs on that basis.

Special powers test

The UT had to decide whether each of the water companies was a body or person carrying out functions of public administration. In doing so it took into account the finding of the CJEU that when considering whether a person was performing public administrative functions

“it should be examined whether those entities are vested under the national law which is applicable to them, with special powers beyond those which result from the normal rules applicable in relations between persons governed by private law”

In applying this finding, the UT rejected an invitation to classify certain powers as State powers or other powers and adopted instead a practical approach.  In essence, the question was: does an entity have powers that give it an ability that confers on it a practical advantage relative to the rules of private law?   

The UT concluded that the water companies had the following powers under the Water Industry Act 1991 which amounted to “special powers”:

  • Compulsory purchase - Water companies may exercise powers of compulsory purchase with authorisation of the Secretary of State.  This, the UT found, conferred two advantages on the water companies over and above the position afforded to them by private law.  Firstly, the application process for authorisation itself offers the advantage of access to those individuals advising the Secretary of State, which is not generally available under private law.  Secondly, the existence of powers of compulsory purchase, even if rarely used, confers an important benefit on water companies in commercial negotiations.
  • Making byelaws - Water companies may (subject to confirmation by the Secretary of State)  make byelaws in respect of the public use of their land or waterways, contravention of which may constitute a criminal offence. The UT noted the value for the water companies of the opportunity to promote the exercise of the Secretary of State’s power. It also distinguished the power enjoyed by the water companies to promote the making of a byelaw, breach of which constitutes an offence, from a private landowner’s power to enforce a licence to enter on and enjoy land through civil law.
  • Land access - The UT engaged in a detailed comparison of the rights available under private law in relation to the access to land and concluded that whilst the same results (e.g. the laying of pipes over land or access to land for certain purposes) may be achieved by way of easement or licence under private law, consent is most commonly required to do so and such rights are generally narrowly circumscribed.  Whilst some land rights may be acquired under private law by implication or prescription, the UT considered that such rules operate on the basis of assumed consent or acquiescence.  By contrast, it considered that the rights afforded to water companies under the WIA effectively give them powers to compel the same results which are not constrained by any existing relationship, such as proximity to land, and are without practical limit.
  • Hosepipe bans - Water companies have powers to impose hosepipe bans in times of serious water shortages.  This power is supported by criminal sanctions if an individual contravenes such a ban.  This is a power that is unlike any available at private law.

Control test

The finding of the UT was that the degree of autonomy of action enjoyed by the water companies was such that it could not be said that they were “under the control” of relevant authorities for EIR purposes. Indeed the UT noted that the control test set out by the CJEU “is a demanding one that few commercial enterprises will satisfy”

Implications

The UT noted that

 “the extent to which CJEU’s judgment will result in bodies being classified as public authorities is unclear and undecided, but potentially wide…..The reasoning in these cases is potentially relevant to other privatised, regulated industries that deliver a once publicly owned service: electricity, gas, rail and telecoms”

It is advisable for any company whose business involves the delivery of such services to review their powers and consider whether these will amount to “special powers” with a view to determining whether they are caught by the Environmental Information Regulations.

Organisations that find consequently that they are subject to Regulations will need to put in place, as a matter of urgency, arrangements to deal with proactive publication of environmental information, internal records management and communication with external stakeholders, information request handling and EIR related complaints. It may also be advisable to review and revise commercial non- disclosure agreements and other contractual confidentiality clauses to reflect the limitations on commercial confidentiality that result from the EIRs.