On 1 October 2011 ownership of all private sewers and lateral drains will be transferred to the regulated sewerage companies. This is governed by the Water Industry (Schemes for Adoption of Private Sewers) Regulations 2011 which came into force on 1 July 2011.
Bac kground and aims
The regulations are the culmination of the government’s long held aim to improve the sewerage system in England and Wales. The government has been developing its policy through consultations in 2003, 2007 and 2010 and the implementation stage has finally been reached through these regulations.
There are two main issues which the regulations seek to address: firstly, there is a perceived unfairness to private sewer owners who pay sewerage charges but are also responsible, often without realising, for the maintenance of private sewers: secondly, the financial burden on private owners of maintaining sewers and the difficulties in accessing sewers and drains under public highways or land owned by third parties may mean that maintenance and repairs are not carried out as they should be. With an estimated 50% of properties in England and Wales connected to a private sewer in some form or another, these issues affect a significant part of the sewerage system. The transfer of sewers and private drains to the sewerage companies means that a more integrated, better managed maintenance programme can be adopted.
What do the regulations cover?
Sewers and lateral drains serving commercial property as well as residential property are caught by the regulations, but the detail of the regulations means that the impact on commercial property may be mitigated to some extent.
The regulations apply to all private sewers and lateral drains which “communicate with” (according to the DEFRA guidance on the regulations this simply means “drain to”) the public sewerage system. Pumping stations also fall within the ambit of the regulations, but they will not transfer until 1 October 2016.
A lateral drain is that part of a drain which takes foul and surface water away from an individual property and which lies outside the curtilage of that property. Sewers are those which drain foul and surface water from more than one building, or buildings within the same curtilage.
In assessing the impact of the regulations on each property, the key is to establish where the curtilage is. “Curtilage” is not defined in the regulations because the government decided, after consultation, that any attempt to do so would be impractical. Instead curtilage will need to be assessed in each case, taking into consideration the background to and reasons for introducing the regulations.
In consultation, the government suggested that some industrial and commercial sites will be deemed a single curtilage. In line with this, DEFRA guidance on the regulations published in August 2011 (which does not have legal force but nevertheless provides useful direction as to how the regulations should be interpreted) states that a single property for the purposes of the regulations may include an office or commercial building and an industrial, business, retail or science park. It also states that:
“a single curtilage may contain a number of individual properties under common ownership (such as a shopping mall) or with separate lease or other arrangements (such as commercial estates) but which have common drainage arrangements.”
This means that sewerage companies may only be responsible for the part of the lateral drain or private sewer which is outside the boundary of an estate as a whole, leaving the property owners/occupiers responsible for the drains and sewers within the estate itself.
It would seem then that many multi-occupier sites such as industrial, retail and office estates will be treated as if they are a single curtilage (although it would have been more helpful if this point had been clearly covered in the legislation as the guidance is non-binding).
The transfer will happen in three stages. All private sewers and lateral drains which communicate with a public sewer before 1 July 2011 will be transferred to the regulated sewerage companies on 1 October 2011.
There is then a supplemental scheme to cover private sewers and lateral drains which will communicate with the public sewerage system on or after 1 July 2011. These will remain as private drains for the time being (unless they are the subject of, and adopted in accordance with, a s.104 agreement). The trigger for the transfer of these is when s.42(1) of the Flood and Water Management Act 2010 (“FWMA”) comes fully into force. No date has yet been set for this. S.42(1) of the FWMA will introduce a requirement for all new sewers and lateral drains which connect into the public sewerage system to be automatically adopted by sewerage undertakers. Sewers and drains which first communicate with a public sewer in this interim period (between 1 July 2011 and the automatic adoption of new sewers and lateral drains when s.42(1) of the FWMA comes into force) will be transferred six months after s.42(1) comes into force.
The third stage is the automatic adoption of all new sewers and lateral drains which are intended to connect into the public sewerage system. Once s.42(1) comes into force there will be a requirement (in practice on the developer) to enter into an adoption agreement before construction of any sewer or lateral drain which is intended to connect into the public sewer.
The regulated sewerage companies must have served notice by 1 August 2011 (ie two months before the transfer on 1 October 2011) on the owners of all affected private sewers and lateral drains. Notification must also be published in the London Gazette and in as many local or regional newspapers as necessary to cover the whole of the sewerage undertaker’s area.
Any queries about what is or is not going to be transferred should be directed to the relevant sewerage undertaker. The Consumer Council for Water (CCWater) should also be able to offer advice on the extent of the transfer.
Owners of private sewers may appeal either against a proposed transfer or against the lack of a proposal to transfer. Appeals should be made to Ofwat (the Water Services Regulatory Body).
Appeals against a proposed transfer must be lodged within two months of the notice being served or published in the press (whichever is later). Appeals against the failure to propose a transfer must be made within three months of the date of the transfer scheme. In the context of the main scheme this means you must submit any appeal against a failure of the sewerage company to serve notice to transfer by 30 September 2011. This time limit changed after consultation as the original guidance suggested that there would be no time limits for receipt of appeals against the failure to propose the transfer of a sewer or lateral drain. The time limits are absolute and, if missed, no appeal will be allowed.
The grounds for appeal against a proposal to transfer are either (i) that the regulated sewerage company has no duty to transfer the private sewer or lateral drain or (ii) that to do so would cause serious detriment to the interest of the appellant. You can appeal against the failure to propose to transfer if you consider that a private sewer or lateral drain should have been included in the proposal.
In August 2011 Ofwat published guidance on how it will deal with appeals. The onus is on the appellant to provide Ofwat with sufficient evidence to consider any appeal.
To show serious detriment you need to show that you would be significantly worse off (financially or otherwise) as a result of the transfer. Even if Ofwat conclude that there is serious detriment they may still allow the transfer if the benefits of the transfer would be greater than the detriment, or if measures have been identified which mitigate the detriment so that the benefits outweigh the detriment.
Ofwat will not take account of past issues when considering an appeal. For example they are unlikely to have regard to any expenditure that the appellant has spent on the sewer. The justification for this is that Ofwat is only concerned if the appellant will be significantly worse off after the transfer.
A potentially significant issue for landowners and developers is that, although each case will be looked at on its merits, Ofwat considers that in general, reduced development potential, land value loss or additional access rights of the sewerage companies over private land will not amount to serious detriment. Landowners and developers may need to factor in negotiations with the regulated sewerage companies if a strategic lateral drain or private sewer becomes a public drain or sewer overnight.
Are adoption agreements still necessary?
Yes. Currently s.104 agreements are voluntary. When s.42(1) of the FWMA comes into force anyone who wants to connect a newly built private sewer or lateral drain into the public sewerage system cannot do so unless they enter into a s.104 agreement.
If a s.104 agreement already exists for a private sewer or lateral drain which is covered by the main scheme (ie communicated with the public sewerage system before 1 July 2011), its adoption will occur on the date of vesting specified in that agreement or on 1 October 2011, whichever is earlier. The s.104 agreement is then treated as terminated except in relation to any provisions which allow the regulated sewerage company to benefit from security for the costs of any works it carries out before the vesting date. Similar provisions will apply in relation to the supplementary scheme.
Pending applications for the adoption of private sewers and lateral drains which fall under the main scheme will be treated as withdrawn as they will be transferred on 1 October 2011. Any appeals against a refusal to enter into an adoption agreement which were pending at 1 July 2011 will be discontinued. Similar provisions will apply in relation to the supplementary scheme.
Impact on the regulated sewerage companies
The issue for the regulated sewerage companies is that overnight they will own and be responsible for sewers and lateral drains which have not been constructed or maintained to an adoptable standard. The sewerage companies will have no bond or other security to call upon to pay the costs of bringing the sewers and drains up to standard.
In their impact assessment DEFRA states that “once the transfer is announced some property developers might be dis‑incentivised from constructing new sewers and lateral drains to adoptable standards, in the knowledge that these assets will be transferred to the regulated sewerage companies in the future. However, if an agreed mandatory design and construction standard is established as soon as possible, before transfer takes place, this potential problem can be mitigated.” To date, no mandatory design and construction standard has been imposed. It remains to be seen whether the regulated sewerage companies will pass these costs onto their customers in increased water and sewerage bills.