A recent decision of the Upper Tribunal has recast the received definition of "public authority" under the Environmental Information Regulations 2004 and highlights the risks of over-reliance on published guidance.

 

The case arose from a request by Smartsource, a specialist business providing information about water and wastewater billing, to 16 water companies for information about their asset management databases, their water and sewerage billing records and their water pressure registers. All 16 companies refused to disclose the information claiming they were not public authorities under the Environmental Information Regulations 2004 (EIRs).

 

Having been referred to the Information Commissioner and then to the First-Tier Tribunal of the General Regulatory Chamber (Information Rights Division), the case was then transferred to the Upper Chamber (only the second case to be transferred in this way) because the First-Tier Chamber President considered it to involve "a question of law of special difficulty or an important point of principle or practice". 

 

The definition of "public authority" in the EIRs has always been broader than the corresponding term in the Freedom of Information Act 2000. As well as government departments and most of the other public authorities listed in Schedule 1 of FOIA, Regulation 2, paragraph 2 of the EIRs also covers:

 

3. (c)any other body or person that carries out functions of public administration; or
   

4. (d)any other body or person that is under the control of [one of the aforementioned], and (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.
   

 

Prior to Smartsource the prevailing view was that water companies fell squarely within this definition. The Information Commissioner ruled in 2008, for example, that Sutton and East Surrey Water plc was a public authority, and Ofwat's website stated (up until this case) that "water companies are ... classed as public authorities for the purposes of [the] EIRs and are liable to answer requests made under [the] EIRs". There was even guidance on the Aarhus Convention (which the EIRs implement) using water companies as a specific example of private companies that might fall within the definition.

 

In considering limb (c), the Tribunal looked at two previous Information Tribunal (as was) cases. In Port of London Authority v Information Commissioner [EA/2006/0083] the Tribunal had cited five key issues in determining whether an organisation was carrying out functions of public administration:

1. •were its functions of a type that are typically governmental in nature?
   

2. •did its functions form part of a statutory scheme of regulation?
   

3. •were its functions such that, if it did not exist, some governmental provision would need to be made to exercise those functions?
   

4. •did the organisation exist under statutory authority?
   

5. •was it accountable to members/shareholders, or did it have some formal accountability to government?
   

In Network Rail v Information Commissioner [EA/2006/0061 and EA/2006/0062] the Tribunal had considered a series of similar tests, namely:

1. •whether the body was publicly funded;
   

2. •whether it was exercising statutory powers;
   

3. •whether it took the place of central or local government;
   

4. •whether it provided a public service;
   

5. •whether it performed a regulatory function; or
   

6. •whether it was under government control.
   

Applying this 'multi-factor' approach to the facts in Smartsource, the Tribunal found that water companies receive no public funding by way of capital or income (save for payment in exchange for water and sewerage services), that they operate under a licence regime supervised by a regulator (Ofwat), that they have considerable commercial freedom (e.g. in setting salaries, pension arrangements and other terms of employment), and that they have no government nominees on their Boards. Accordingly, the Tribunal held that they were not carrying out functions of a public nature.

 

Limb (d) of the definition requires that a body be under the control of another body which falls within one of limbs (a) - (c). Smartsource argued that the water companies were under the control of the Secretary of State and/or Ofwat (both of which did fall within these earlier limbs) by virtue of the very detailed regulatory regime governing the sector. In particular, DEFRA guidance on the control test stated that: "Control may relate not only to the body, but also to control of the services provided by the body ... the level of control needs to be sufficient to exert a decisive influence on the body - the simple existence of a contract with a public authority does not necessarily provide this control."  Tellingly, the guidance went on to use water companies as an example of where private enterprises might be caught by limb (d).

 

The Upper Tribunal cast a distinction however between 'regulation' on the one hand and 'control' on the other. "Control must go further than the functions associated with regulation," it said. Although the water companies were subject to a detailed regulatory regime, the Upper Tribunal agreed with the Commissioner that they enjoy a high degree of commercial freedom and independence and the 'decisive influence' contemplated by the DEFRA guidance did not exist. As such, they did not fall within limb (d) of the definition.

 

It remains to be seen whether this decision will be appealed but already another requestor (whose case was put on hold pending the outcome of Smartsource) had indicated that it may write to the Aarhus Compliance Committee in Geneva, and to DEFRA, to ask them to intervene.