Water companies held to be public authorities for the purposes of the Environmental Information Regulations

In a recent ruling, the Upper Tribunal (Administrative Appeals Chamber) ruled that the special statutory powers given to water companies, for example compulsory purchase, were sufficient to meet Court of Justice of the European Union (CJEU) criteria for what should be classed as a public authority under the relevant EU directive. The Upper Tribunal's decision overturned that of the First-tier Tribunal in 2011.

The water companies have the right to appeal the decision, which will have implications for other companies operating in privatised industries where the EIR could potentially apply.

The EIR are similar to the UK's freedom of information laws but apply specifically to environmental information. They implement an EU directive on public access to environmental information in the UK. Under the EIR, public authorities are required to proactively make certain information available, and to provide information on request from a member of the public within set time limits, unless a specific exemption applies.

According to the EU directive, the term 'public authority' covers "government or other public administration, including public advisory bodies, at national, regional or local level" and businesses that perform "public administrative functions under national law, including specific duties, activities or services in relation to the environment". In December 2013, the CJEU said that this covered organisations that met a "special powers" test or a "control" test. However, it was left to national courts to apply these tests in individual cases.

In its ruling, the Upper Tribunal said that in order to be classed as a public authority under the 'special powers' test, a company would need to be performing public administrative functions beyond those which result from the normal rules that would apply between persons governed by private law. As water companies have statutory powers not generally available, such as powers to access and acquire land and to impose 'hosepipe bans', this was sufficient to satisfy the special powers test, the tribunal said.

The 'control' test, as set out in the EU directive, is a two-part test which requires an organisation to operate in a "genuinely autonomous manner" while at the same time operating in that way because a public authority is in a position to exert "decisive influence" over it. This essentially implies that the very existence of the public authority's powers has actual impact on the water companies' decision-making, even if the public authority does not exercise actual control.

The Upper Tribunal ruled that although the water companies were subject to stringent regulation and oversight, this was not enough to satisfy the control test. The Environment Agency, Ofwat and the UK government were certainly able to exert influence over the companies, which could potentially be extensive, but this influence was "relatively marginal compared to the extent of the freedom exercised", the tribunal said. However, the fact that they met the special powers test was enough to make them public authorities for the purposes of the EIR, it said.