In a long awaited judgment the Upper Tribunal has applied the guidance from the Court of Justice of the European Union ("CJEU") to decide that private water and sewerage companies are "public authorities" for the purposes of the Environmental Information Regulations 2004 ("EIRs") by virtue of the special powers they possess, and are therefore obliged to disclose environmental information they hold pursuant to requests unless a valid exception applies.

Fish Legal and Emily Shirley v Information Commissioner, United Utilities Water plc, Yorkshire Water Services Ltd, Southern Water Services Ltd and the Secretary of State for the Environment, Food and Rural Affairs [2015] UKUT 0052 (AAC)

Key Points

  • Companies with "special powers beyond those which result from the normal rules applicable in relations between persons governed by private law" will be treated as public authorities for the purposes of the EIRs.
  • In addition to water and sewerage companies this decision could also affect other private regulated utility companies that deliver a previously publicly owned service such as electricity, gas, rail and telecoms.
  • Private companies found to be public authorities will be subject to significant burdens in terms of disclosure and transparency, including being susceptible to requests for information from the public and having to disclose the requested information unless they can demonstrate that a valid exception applies and that the public interest in withholding the information outweighs the public interest in disclosure. 

Background

The EIRs implement in domestic law both the international law obligations imposed on the UK as a party to the 1998 Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters ("Aarhus Convention") and the EU law requirements inspired by the Aarhus Convention and set out in the Environmental Information Directive 2003/4/EC (the "Directive"). These arrangements aim to enable the public to obtain information on matters with environmental implications in order to safeguard the environment for future generations.

Under the Aarhus Convention and the Directive, those required to disclose environmental information are called “public authorities”, defined widely as:

  1. all forms of government agencies;
  2. anyone performing “public administrative”  functions under national law in relation to the environment; and
  3. anyone else with public responsibilities or functions, or providing public services, in relation to the environment who is “under the control” of one of the above.

The EIRs are intended to implement these rules. They define a “public authority” in similar terms.

One of the aims of this definition is to ensure that if a government privatises previously public services this cannot exempt those now delivering such services from being obliged to provide environmental information to the public. However, the question of exactly how far into the private sector the definition of “public authority” extends has been on-going. Originally the Upper Tribunal (Administrative Appeals Chamber) decided in Smartsource Drainage & Water Reports Ltd v Information Commissioner [2010] UKUT 415 (AAC) that privatised water companies were outside the EIR regime. This outcome was then revisited in Fish Legal v Information Commissioner [2012] UKUT 177 (ACC), brought by the legal arm of the Angling Trust which is concerned about water quality in relation to fishing. The claimants and their supporters argued that water and sewerage companies should be brought within the EIR regime (at least in relation to their regulated functions). The Upper Tribunal in Fish Legal referred these questions of interpretation to the CJEU for a preliminary ruling (Case C-279/12). The CJEU gave lengthy guidance on the issues in its judgment but declined to apply the principles to the facts of the particular case, so ultimately it fell for the Upper Tribunal to dispose of the case by applying the CJEU's judgment.

Special Powers

The key issue was whether the private companies were "performing public administrative functions under national law" under limb (b) above. The CJEU judgment set out how this test was to be applied:

"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."

The Upper Tribunal referred to this as the special powers test. The question of whether the powers could properly be classed as "state powers" was not considered helpful, partly because of the difficulty of defining that vague term but also since that was not the test that the CJEU had seen fit to apply.  However the Tribunal considered it a useful check to ask whether the relevant duties or activities would have been considered as public administrative functions if undertaken directly by Government.

The Tribunal refused to rule on whether just one special power would be sufficient to satisfy the test since the companies in question actually had a number of such powers. The particular powers conferred on the companies by the Water Industry Act 1991 which the Tribunal viewed as satisfying this test included:

  1. Compulsory purchase powers – the water companies had to seek permission from the Secretary of State before using such powers and they argued that the powers were rarely used, but nonetheless the Tribunal commented that they gave significant commercial advantage to the water companies in any negotiations with private entities concerning the purchase of land.
  2. Powers to make byelaws backed by criminal sanctions – again although the permission of the Secretary of State was required the fact that the companies had access to criminal sanctions as a means of enforcement clearly signalled powers beyond those available simply through private law.
  3. Hosepipe bans backed by criminal sanctions.
  4. Powers of entry to land without consent.
  5. Powers to lay pipes.

The Tribunal refused to go through every power conferred by the statutory regime on the water companies to assess whether it would be considered a "special power", which would have been a useful exercise for other industries to be able to assess by analogy whether their own statutory regimes contained such special powers. Nor was the Tribunal at all sympathetic to the submission that intolerable burdens would be placed on private companies as a result of their classification as public authorities. In fact the Tribunal noted that: "The extent to which the 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 will have to be applied to those and other bodies as and when cases arise." This explicit statement envisaging wider application to other industries may well encourage requestors to seek information from companies with a view to having the position clarified through case law sooner rather than later.   

Control

The Tribunal also considered the issue of control under limb (c) of the above definition. Control relates to the manner of performance of functions rather than to the functions themselves. The main question was whether the company is performing its functions in a "genuinely autonomous manner". Although the companies had to deal with significant involvement from both the Secretary of State and OFWAT, ultimately the Tribunal found that the influence exerted was relatively marginal compared to the extent of the actual freedom the companies had. The Tribunal concluded that "the control test is a demanding one that few commercial enterprises will satisfy."

Comment

This is a highly significant and relevant judgment for all in the privatised, regulated utility industries. There is now a serious risk that many companies in such industries will face requests for environmental information under the EIRs and that refusals on the basis that they are not public authorities will be challenged and tested before the Information Commissioner and ultimately the Tribunal. Commercial organisations in these sectors may wish to examine the powers they are given to consider whether they would satisfy the "special powers" test. If they do possess such powers they will need to prepare for the additional burdens created by the EIRs sooner rather than later. If however they consider themselves outside the definition it would be worth preparing the arguments to that effect.