Upper Tribunal decides that water companies are "public authorities"

The Fish Legal case has finally been concluded, with the Upper Tribunal ruling that the four water companies involved are indeed to be considered "public authorities" for the purposes of the Environmental Information Regulations 2005 ("the EIRs"), which provide a right of access to environmental information to anyone regardless of purpose and virtually free of charge. The decision has wide ranging implications for all privatised regulated industries.

The case has seen numerous twists and turns, with Fish Legal seeking to overrule the previously long standing view of the Information Commissioner, that water companies are not considered to be public authorities and therefore do not have to comply with the radical access provisions of the EIRs.

After the first tier Information Tribunal upheld the ICO's view, Ms Shirley and Fish Legal appealed to the Upper Tribunal, which saw fit to refer the matter to the European Court of Justice. That judgment was delivered in December 2013 and stated that it is for the UK Courts to determine whether a privatised water company is a public authority, but set out 2 tests to be applied when answering that question (known as the "special powers test" and the "control test").

The Special Powers Test

The water companies involved were found to be public authorities because they met the "special powers test".  This test looks at whether the body in question has powers that go beyond those that exist between persons/organisations in private law.  The powers of the water companies involved included the following:

Compulsory purchase: water companies have the power of compulsory purchase under s. 155(1) of the Water Industry Act 1991 ("WIA").  This power is not generally available to ordinary citizens or bodies. The process involved provides water companies with privileged access to those who advise the Secretary of State.  Further it provides leverage in commercial negotiations in circumstances where a water company is unable to secure agreement by negotiation.

Power to make byelaws: water companies can make byelaws that are enforced through criminal sanction (s.157 WIA).  This is beyond the powers available to a private landowner. 

Power to access land: the power to allow water companies to access land (s. 168 WIA) and to ban hosepipes (s 76 – 76C WIA) is not constrained by any existing relationship, such as proximity to the land, and is without any practical limit (for instance it could extend to surveying and boring). It is not a power available under the normal rules of private law.

It was argued that the special powers test would be satisfied if the Upper Tribunal identified just one special power.  However, the Upper Tribunal did not go that far; instead it declined to express a view because the companies had a number of "special powers".  The water companies invited the Upper Tribunal to exhaustively list which of their powers it considered were and were not special powers which might inform future lobbying activities (to divest themselves of these powers so that they fell outside the special powers test).  The Upper Tribunal refused to undertake this exercise.

The Control Test

There are two elements to the control test, the body must (a) operate in a genuinely autonomous matter; and (b) operate in that way because a public authority is in a position to exert decisive influence over it.  The public authority does not need to exercise actual control over the water companies; it is enough if the very existence of the public authority's powers has an actual impact on the water companies' decision making.

The Upper Tribunal concluded that the water companies did not meet the control test because on the whole the companies retain sufficient freedom over the way in which they provide their services.  However, because they meet the special powers test and are therefore classified as public authorities for the purposes of the EIRs it made little practical difference.

Implications of the decision

Subject to any successful appeal of the decision, water companies will urgently need to consider how they organise their systems to comply with the EIRs as it is of general application.  The decision opens the floodgates to a flurry of requests for environmental information which water companies will have to deal with in compliance with the EIR, which provides for information to be provided as soon as possible after it is requested and allows only minimal charges to be levied for doing so.  Now that the Fish Legal judgment is out, it is only a matter of time before requests are made by a range of people including those acting for house buyers to inspect for example, the drainage records of any given street, for a fraction of the cost of a standard water & drainage search.  Dealing with their responsibilities under the EIRs is an issue which local authorities have been dealing with for the last few years and given the number of water searches undertaken daily, the financial implications could be significant.

In order to ensure compliance with the EIRs, the following issues are amongst those that will need to be considered:

• What data is considered to be "environmental information" and what is not – the definition of "environmental" is now known to be wider than first envisaged.
• The requirement to allow any environmental information held on a register or list to be inspected and the prohibition on charging for such inspection.
• For information that is not on a register/list, there are alternatives to allowing the data to be inspected (e.g. it could be sent to the applicant by post or email) but there must be a good reason for offering alternatives and policies will need to be put in place.
• How will companies be able to respond to requests for information in the timeframe required (which as "as soon as possible" and normally no later than 20 working days).
• How will charges be set for providing the environmental data – a schedule of charges must be available to the applicant in advance or the charge will not be lawful.
• Have historic charges for the provision of information (such as water and drainage searches) been compliant with the EIRs?  If not, water companies need to be prepared for a wave of refund claims for search fees (which could potentially go back to January 2005 when the EIRs first came into force).

Bevan Brittan regularly advises a range of public authorities on the EIRs and other information law issues and challenges.  We are currently acting for the Local Government Association and 370 of its member local authorities in England and Wales in a collective action involving 7000 claims dating back to 2005 for refunds of property search fees allegedly levied in breach of the EIR. Water companies may have a limited window of time to take stock before they become faced with the same scenario. At the very least, they should undertake a thorough review of their systems to ensure that they are fully EIR compliant going forward to minimise the risk of any future claims and challenges.