It has taken nearly six years to reach a conclusion and encompassed various routes of appeal, including a reference to the CJEU on the interpretation of EU law, but in its recent decision the Upper Tribunal (the 'tribunal') has determined that privatised water and sewerage companies are public authorities for the purposes of being required to disclose, on request, environmental information that is held by them.
The judgment in the case of Fish Legal v Information Commissioner and others, delivered on 19 February 2015, concludes that the companies are public authorities because they have special powers beyond those which result from the normal rules of private law, and accordingly carry out functions of public administration.
While the decision itself does not extend beyond the water and sewerage companies, it will almost certainly have implications for other privatised companies that have the same or similar 'special powers'.
The Environmental Information Regulations 2004 (the Regulations) implement into domestic legislation EU Directive 2003/4/EC on public access to environmental information, which in turn gives effect to the Aarhus Convention - an international treaty to which the EU is a party and which includes, among other things, provisions relating to access to environmental information.
Under the Regulations, where a public authority receives a request for environmental information that it holds, it must (subject to certain exceptions) provide that information to the applicant within a defined timescale. In August 2009, Fish Legal (the legal arm of the Angling Trust) requested environmental information from two privatised water and sewerage companies, namely United Utilities Water plc and Yorkshire Water Services Ltd. Around the same time, in an unconnected request, Mrs Shirley asked for environmental information from Southern Water Services Ltd (also a private water company).
The companies refused the requests on the grounds that they were not public authorities and therefore not required to provide the information. The applicants exercised their right to complain to the Information Commissioner, but the complaints were not upheld. The Information Commissioner decided (contrary to a previous decision he had made on the same matter) that the companies were not public authorities under the Regulations.
The applicants appealed the decision of the Information Commissioner to the First Tier Tribunal (FTT). The FTT, relying on an earlier decision of the Upper Tribunal on precisely the same issue (Smartsource Drainage and Water Reports Ltd v the Information Commissioner and a Group of 19 Water Companies), dismissed the appeal, but gave permission for further appeal to the Upper Tribunal which the applicants pursued.
The Upper Tribunal initially started to hear the cases but- recognising that the Regulations were essentially implementing EU law and that the appeals were effectively a challenge to the reasons given by it in the Smartsource case - decided to refer certain questions of interpretation and application of the EU law, which the Regulations implement, to the Court of Justice of the European Union (CJEU) for a preliminary ruling.
The CJEU delivered its preliminary ruling on 19 December 2013. It set out the tests to be applied for determining the questions put to it, but left it for the domestic courts (the tribunal in this case) to apply the answers to the case in question. It is the application of those tests that resulted in the tribunal's decision that the privatised water and sewerage companies are public authorities for the purposes of the Regulations.
Definition of public authority
Regulation 2(2) of the Regulations provides that public authority means -
- Government departments;
- Any other public authority defined as such in the Freedom of Information Act 2000 (but excluding certain specified categories);
- Any other body or person that carries out functions of public administration; and
- Any other body or person that is under the control of any of the above bodies/persons and either (i) has public responsibilities relating to the environment, (ii) exercises functions of a public nature relating to the environment, or (iii) provides public services relating to the environment.
This definition is taken from (but not identical in drafting to) the definition of public authority in the Directive which in turn is based on the definition of public authority in the Aarhus Convention.
The applicants' case was that statutory undertakers are public authorities by virtue of points (c) and (d) of the above definition. The main bases of their contentions were that (a) the companies were carrying out public administration functions given the activities undertaken and services provided by them pursuant to the Water Industry Act 1991 and (b) that they were under the control of other public authorities because they were subject to specific regulatory control and oversight by Ofwat (the economic regulator for the water industry) and also by the Secretary of State.
The tribunal's questions to the CJEU therefore focused on ascertaining the criteria for determining whether the companies were public authorities on the basis of points (c) and (d).
In its preliminary ruling, the CJEU ruled that:
- The test for determining whether any person was performing 'public administrative functions' (i.e. point (c) of the definition) was whether, under the national law applicable to it, that person had "special powers beyond those which result from the normal rules applicable in relations between persons governed by private law"
- A person was under the control of another person (i.e. point (d) of the definition) if they did not "determine in a genuinely autonomous manner the way in which they provide [their] services since a public authority [as defined in points (a) and (b) of the definition] is in a position to exert decisive influence on their action in the environmental field".
Public administration functions
The tribunal found that water and sewerage companies have a number of special powers that are beyond the normal rules of private law. It declined to set out a comprehensive and precise list of which of the companies' powers were or were not special powers but, by way of some illustrative examples, referred to powers of compulsory purchase, powers to make bye-laws which provide for breach of the bye-law to be a criminal offence, and powers to access land.
In this context the tribunal acknowledged that while it may be possible for some of these powers to potentially be obtained through exercise of the rules of private law, the test was whether the powers result from the rules of the private law and not whether they could result from the exercise of those rules. It also explained that such powers are special not simply because they exist, but because of the practical advantage that they give to the companies to whom they apply. So, for example, the tribunal observed that powers of compulsory purchase give the companies leverage in commercial negotiations, as they are essentially always available to the companies as a fall-back position.
It had also been suggested to the tribunal that it should analyse whether the companies' powers were by their nature State powers – as this would be indicative of whether the functions are public administration in nature. The tribunal declined to adopt this approach on the basis that there is no exhaustive criteria by which it could classify powers as being by their nature exclusively State powers, especially given the changing nature of the State (including by way of privatisation).
With regard to whether the companies were under the control of any other public authority, the tribunal concluded, having applied the test given by the CJEU, that the companies were not a public authority by virtue of that test.
In giving its judgment, the tribunal emphasised that no business is absolutely free to do whatever it likes. It is constrained by law, competition and market forces and by the realities of business life. In this context, it recognised that while in specific cases and at specific times there will be some involvement and/or oversight on the part of Ofwat and the Secretary of State, the companies are not subject to intervention in respect of most of their activities. It also considered it unhelpful to consider each particular instance in which Ofwat, the Secretary of State, or another public authority potentially have the power to exert influence; because doing so would not take account of the reasons for such a provision, nor take account of the freedoms within which the companies operate.
In reaching its conclusion, the tribunal reiterated that the test is about the manner in which a body performs its functions and not the nature of the functions. Consequently the fact that the companies are required to perform such functions under statute and/or licence is not a relevant consideration.
Finally, it provided that an overall view is to be taken in terms of determining whether, in practice, the companies operate in a genuinely autonomous way in the provision of services relating to the environment. It had taken such an overall view and concluded that the evidence does not show that the Secretary of State, Ofwat and the Environment Agency have an influence on the companies to such an extent that the companies do not have genuine autonomy.
Potential for wider application
There are a number of other companies, particularly those operating in the utilities sector, that have similar powers to those given as examples of special powers which are beyond the powers that result from the normal rules of private law.
Most (if not all) privatised utility infrastructure companies have powers of compulsory purchase and powers to access land for the purpose of discharging their functions. Many of these companies also operate as defacto regional or national monopolies and are therefore in a similar (but not identical) position to water and sewerage companies. Indeed, the potential for wider impact on other private regulated industries was referred to in the tribunal's reference to the CJEU.
The position of other bodies or industries having the same or similar powers was also raised by the companies as an argument in support of their contention that the powers were not 'special' powers. The tribunal dismissed this argument, but acknowledged that the extent to which the CJEU's judgment (and therefore, by implication, its decision) will result in other private companies being classified as public authorities is unclear and undecided. It accepted that there is potential for such companies to be public authorities and noted that the CJEU's judgement will have to be applied to such other bodies as and when cases arise.
The question will no doubt be put and answered in respect of certain other (non-utility) entities when the appeals which were effectively 'stayed' pending the determination of these appeals are heard. These appeals (namely (i) Duchy of Cornwall and HRH Prince of Wales v Information Commissioner and Mr Bruton and (ii) Miss Cross v Information Commissioner and the Royal Household) are also concerned with the application of the definition of public authority and, to avoid repetition of the arguments, the parties in these appeals were invited by the tribunal to attend the hearing and make submissions on the general nature of the tests set out by the CJEU.
The outcomes of these cases should therefore give further guidance on the types of powers that are considered to be 'special powers' in the context of public administration functions.
As to the classification of other privatised utility companies, Network Rail (which back in 2007 was determined not to be a public authority under the Regulations) has, since 24 March 2015, become subject to the Freedom of Information Act. It is therefore now also a public authority under the Regulations.
For other private companies operating in the energy, transport, telecoms etc. sectors and having the same or similar powers as those which have been identified as being special powers for water and sewerage companies, it will surely be very difficult to argue that they are not carrying out functions of public administration and thereby public authorities for the purposes of the Regulations.