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UW 07 02 14 Uberflip

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Policy & Regulation 16 | 7Th - 13Th FEbrUarY 2014 | UTILITY WEEK Market view W hen is a water company a "public authority" for the purposes of the Environmental Information Regula- tions 2004 (the EIRs)? That was a question recently considered by the European Court of Justice in the case of Fish Legal and Emily Shirley v the Infor- mation Commissioner, United Utilities Water, Yorkshire Water Services, and Southern Water Services. The judgment it handed down has poten- tially significant implications for water companies and other privatised utility companies, and not just in the context of the EIRs. The applicants in the Fish Legal case had between them made various disclo- sure requests under the EIRs to the three water companies. There was no issue that the information requested related to "envi- ronmental" matters of a sort covered by the EIRs. The question was whether or not the water companies were "public authori- ties" for the purposes of the regulations and therefore required to abide by them. The companies took the view that they were not – and declined the requests (although subse- quently they provided disclosure on a volun- tary basis). The case before the European Court was a referral by the Upper Tribunal (the highest UK tribunal for determining issues relating to the EIRs). Having considered the case as the UK appellant court, it sought guidance on how the EIRs ought to be interpreted in the light of EU Law. The starting point for determining the obligation to disclose environmental infor- mation is the EU Directive 2003/4/EC. That is the EU legislation that has been imple- mented into UK law by the EIRs (and their Scottish equivalent). The directive imposes the obligations of disclosure upon a "public authority", which Article 2 (2) defines as: (a) government or other public administration… (b) any natural or legal person performing public administrative functions under national Law, [including specific duties, activities or services in relation to the environment]; (c) any natural or legal person having public responsibilities or functions, or providing public services [relating to the environ- ment] under the control of a body or per- son falling within (a) or (b). Having considered all the arguments on both sides, the court issued a judgment that makes a number of points of potentially broader significance: • In the interests of consistency, issues of interpretation of the directive (including what amounts to a "public authority") should be subject to the same condi- tions throughout the European Union. In other words, the concept should not vary according to the individual laws of mem- ber states. • Whether an entity is "performing public administrative functions" under (b) turns on whether it could be said to be "per- forming services of public interest" and for that purpose had been vested with "special powers" beyond those which prevail between private individuals." • As to the thorny topic of what amounts to being "under control" for the purposes of (c), that will arise where the entity "does not determine in a genuinely autonomous manner the way it performs [its public] functions… since a public authority [cov- ered by (a) or (b)] is in a position to exert decisive influence on the entity's action". • The manner in which that influence is exercised is, said the European Court, irrelevant. It did, however, go on to cite a number of examples of potentially "decisive influence"; the power to issue directions (whether or not in exercise of shareholder rights); the power to inter- vene in decisions – before or aer the event; the power to appoint or remove members of their management bodies. • Interestingly, the court went on to com- ment: "The mere fact that the entity in question is, like the water companies con- cerned, a commercial company subject to a specific system of regulation for the sector in question cannot exclude control within the meaning of Article 2 (2)(c)", providing the other criteria of the test are met. • Finally the European Court acknowledged a hybrid interpretation of the concept of "public authority" for organisations per- forming both public functions and exclu- sively commercial activities. A familiar circumstance for both the water and other privatised industries. There the disclosure obligations should only bite in relation to the performance of "public functions" within the meaning of the directive, not other commercial activities . Whether the specific circumstances of these water companies are such that they are, in fact, deemed to constitute "public authorities" is a matter which will now be referred back to the Upper Tribunal. It will no doubt wish to analyse carefully the rela- tionship between Ofwat as regulator and the water companies before reaching its conclu- sion on the particular facts of the Fish Legal case. Whatever the outcome, the implications of this decision for the application of the EIRs are likely to be significant. There is an obvious analogy between the privatised water companies (regulated by Ofwat) and other privatised companies in the regulated utilities industry – and beyond. (A point recognised by the court in its judgment). The rationale behind the decision also has potential application in cases involv- ing the Human Rights Act 1998, which has implications for "public authorities" includ- ing those carrying out "functions of a public nature". Finally, the Fish Legal case could have implications for the extent of activities that could be regarded as public functions capa- ble of being challenged by way of judicial review. So its ramifications could continue to be felt for some considerable time yet to come. Alison Oldfield, partner, Eversheds LLP Water firm: public authority? The European Court recently decided whether water firms were 'public authorities' for the purposes of environmental regulations. It's a significant judgment for the sector, says Alison Oldfield.

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