Select Committee on Delegated Powers and Regulatory Reform Twelfth Report


10 Orders under section 33 of the WRA, etc

Clause 10 (1)

Power conferred on:    Secretary of State and National Assembly for Wales

Power exercisable by:    Statutory Instrument - order

Parliamentary procedure:    Negative Resolution

Section 33 of the Water Resources Act 1991 provides for applications to the Secretary of State for orders to remove the normal requirement for abstraction licensing from any source of supply. This new provision enables the Secretary of State to make orders to revoke such exemption orders. This extends to any local or private Act which alters the normal licensing requirements. In addition, an order can also repeal the power in local or private Acts to make such exemptions. It is submitted that a delegated power is appropriate to rescind orders already made under delegated powers and to repeal the enabling provisions where they exist outside general public legislation, and that this should be effected through the negative resolution procedure.

APPLICATIONS FOR A LICENCE

13 Applications: types of abstraction licence

New Section 36A (1) WRA

Power conferred on:    Secretary of State

Power exercisable by:    Direction

Parliamentary procedure:    Nil

Applicants for an abstraction licence will have the initial choice of what type of licence to apply for. The notice of application shall be in a manner and period that may be prescribed. This clause enables the Environment Agency to require an applicant for one type of abstraction licence to apply instead for another type or to group several related applications together. The Agency can reach its decision on this on the basis of its assessment of the likely effect of the abstraction, the likely effect taken together with abstractions under any other licence held or applied for by the applicant and any other prescribed matter. The decision-making is regulated by an appeal to the Secretary of State, who can make a direction about how the application is to be determined. It is submitted that a delegated power is appropriate to clarify any other factors which the Agency may include in its assessment and that this should be effected through a power to give directions as the power applies only on a case-by-case basis.

14 Publication of application for licence

New section 37(6) and new subsection 37A (1) WRA

Power conferred on:    Secretary of State

Power exercisable by:    Statutory Instrument - regulations

Parliamentary procedure:    Negative Resolution

The detailed publication requirements for licence applications are already set out in regulations made under section 37 of the Water Resources Act 1991 though these will be replaced in new procedural regulations to reflect the provisions of this Bill. This clause modifies the existing powers to enable the procedural regulations to specify the circumstances in which publication is dispensed with. This will pave the way for Crown exemption, excluding the Queen in her private capacity or the Duchy of Cornwall, from abstraction and impoundment licensing to be lifted since it is currently necessary for all licence applications to be advertised. The details of some abstractions should not be advertised on national security grounds. Other circumstances in which advertising may be dispensed with include the renewal of a time-limited licence on same terms or with reduced quantities and the conversion of a permanent licence to a time-limited one without alteration of quantity or with a reduced quantity. This should lead to a more flexible system.

CONSIDERATION OF LICENCE APPLICATIONS

18 Register of certain protected rights

New section 39B(1) WRA

Power conferred on:    Secretary of State

Power exercisable by:    Statutory Instrument - regulation

Parliamentary procedure:    Negative Resolution

Individuals may have protected rights to abstract water. This clause introduces a new 39B into the WRA, and at 39B(1) the Secretary of State may make regulations to govern the keeping of a register of protected rights. Is appropriate that this is dealt with under secondary legislation due to the level of detail required and to allow for changes in the system to be made as and when required.

New section 39B(3) WRA

Power conferred on:    Secretary of State

Power exercisable by:    Statutory Instrument - order

Parliamentary procedure  :  Negative Resolution

By order under the new 39B(3) the Secretary of State may designate any geographical area in respect of which a register relates to compulsory registration. This is considered important to allow the Environment Agency to regulate other abstractions by way of licences whilst taking into account any protected rights.

MODIFICATION OF LICENCES

21 Modification of impounding licences

New section 51(1D)

Power conferred on:    Secretary of State

Power exercisable by:    Statutory Instrument - regulations

Parliamentary procedure:    Negative Resolution

Under the current law, if the holder of an impounding licence applies to the Environment Agency for its revocation, the Agency must revoke. This allows licence holders to avoid the requirements of licence conditions. Under the new s.51(1A) the duty to revoke is changed into a discretion, and the Agency can impose conditions on agreeing to allow the licence to be revoked. In particular, under s.51(1B) these are to govern the removal of the impounding works, and the restoration of the site and the flow of the waters. An appeal to the Secretary of State is provided for under (1C), and under (1D) the Secretary of State may make regulations governing the appeal. It is submitted that by their nature, these provisions are appropriate for delegated legislation under the negative resolution procedure.

22 Proposals for modification at instance of Agency or Secretary of State

Amended section 52 WRA

Power conferred on:    Secretary of State

Power exercisable by:    Statutory Instrument - regulations

Parliamentary procedure:    Negative Resolution

Section 52 of the Water Resources Act 1991 makes provision for licences to be modified at the instance of the Environment Agency or the Secretary of State. Section 52 states where notices of proposed modifications are to be published but provides that the form of notice is as prescribed in regulations. This clause provides that the means of publication are to be as may be prescribed in regulations and brings the advertisement requirements into line with those in clause 14 which are prescribed in regulations.

TRANSFER AND APPORTIONMENT OF LICENCES

23 Transfer and apportionment of licences

New section 59D (1)

Power conferred on:    Secretary of State

Power exercisable by:    Statutory Instrument

Parliamentary procedure:    Negative Resolution

Section 59 of the Water Resources Act 1991 gives the Secretary of State power to make regulations governing the manner in which applications for the revocation or variation of licences are dealt with. Section 59 is extended to enable licence holders to apply to the Agency for the apportionment of licences on transfer. The regulation making power is extended to govern the provisions to be contained in apportioned licences so as to correspond as closely as possible with the provisions of the original licence in respect of the point(s) of abstraction, the land on which the water is to be used and the purpose of the abstraction.

CLAIMS AND COMPENSATION

25 Compensation for modification of licence on direction of Secretary of State

New section 61(4A) WRA

Power conferred on:    Secretary of State

Power exercisable by:    Direction

Parliamentary procedure:    None

This clause modifies the direction making power of the Secretary of State over compensation for modification of licences to take into account the changes being made by the Bill.

ENFORCEMENT

30 Enforcement notices, and related procedures and offences

New Section 25A (7) and (9) WRA

Power conferred on:    Secretary of State

Power exercisable by:    Statutory Instrument - regulation

Parliamentary procedure:    Negative Resolution

This clause gives the Environment Agency the power to issue an enforcement notice where abstraction or impounding takes place without a licence or does not comply with the terms of a licence. It enables regulations to be made to specify the form or content of notices, the requirements for consultation and other procedural steps. It is submitted that a delegated power is appropriate for specifying procedural details and that it should be subject to negative resolution procedure.

New section 25A(8) WRA

Power conferred on:    Secretary of State

Power exercisable by:    Direction

Parliamentary procedure:    Nil

The clause, at the new 25A(8), also gives the Secretary of State a power to give directions to the Agency on how it should exercise its powers under this clause. It is submitted that this is an appropriate safeguard.

Part 2 - New Regulatory Arrangements, Etc

This Part establishes a regulatory Authority to replace the existing individual Director General of Water Services and a new independent Consumer Council for Water to replace the Customer Service Committees. It also introduces other provisions to improve the regulatory regime. Part 2 of the Bill also include provisions to extend the level of competition in the water industry in England and Wales by allowing access to the public distribution network by licensing new entrants to supply large non-household customers.

ESTABLISHMENT, ETC OF NEW BODIES

34 Consumer Council for Water

New Section 27A (4)

Power conferred on:    Secretary of State and National Assembly for Wales

Power exercisable by:    Direction

Parliamentary procedure:    None

This clause grants the Secretary of State and the Assembly (for undertakers wholly or mainly operating in Wales) the power to direct the allocation of undertakers to regional committees for a six-month period. Thereafter the Council may establish or abolish a regional committee, or alter an undertaker's allocation, only with the consent of the Secretary of State or Assembly.

It would be difficult to attempt to allocate undertakers to predetermined regional committees without also introducing prescriptive regulations to permit the relevant authority to make adjustments to the number of committees or their jurisdiction. The proposal at Subsection 4 will ensure that the Council is able reorganise quickly if ownership of water companies changes significantly enough to warrant a change to regional boundaries. A power of direction is thought appropriate in this case because it will be addressed to the Council alone.

36 Conditions relating to costs of water regulation

Subsection (8)

Power conferred on:    Secretary of State

Power exercisable by:    Direction

Parliamentary procedure:    None

This clause permits the Secretary of State to give a direction to the Authority governing the payment conditions to be included in water licences to recover the expenses: (a) of the newly established Consumer Council for Water; and (b) of the Authority, the Secretary of State or the Assembly in establishing the Council.

Council is independent of the Authority, there is no locus for the Authority to determine the valid expenses of that body (or indeed those of the Secretary of State in relation to the establishment of the Council), and it is necessary to provide both for a power to recover those expenses through licence fees and a mechanism to ensure that the Authority makes necessary modifications to the licence conditions so as to ensure their recovery.

A delegated power is sought because it is not appropriate to specify licence conditions in the primary legislation nor is it possible to say now whether the Secretary of State will need to take any action under this clause. A power of direction is thought appropriate in this case because it will be addressed to the Authority alone. The procedure for the Authority to allocate the costs will be the same as that for imposing other license conditions.

37 Forward work programmes and annual reports

New Section 192B(3) WIA

Power conferred on:    Secretary of State

Power exercisable by:    Direction

Parliamentary procedure:    None

This clause allows the Secretary of State to give directions as to what is to be set out in the annual report made by the Water Services Regulation Authority. It is submitted that this is an appropriate level of control.

OBJECTIVES OF REGULATION OF WATER INDUSTRY

39 Guidance to Authority on social and environmental matters

New Section 2A (1) WIA

Power conferred on:    Secretary of State

Power exercisable by:    Guidance

Parliamentary procedure:    None

This clause enables the Secretary of State to issue guidance to the Authority on the Government's social and environmental policies. Although this is not strictly a delegated power, the issuance of guidance imposes an obligation on the Authority, which must have regard to it when carrying out its statutory functions. The Secretary of State must consult the Authority, Council, relevant undertakers and anybody else he thinks appropriate before issuing guidance. The guidance can only be issued 40 days after a draft has been laid before each House of Parliament (subsection 5) and no motion has been carried against it. Relevant precedents can be found in sections 10 and 14 of the Utilities Act 2000.

The guidance ensures that the Authority is fully appraised of the Government's social and environmental policies, so far as they are relevant to the regulation of the water sector, and enables the Authority to make an appropriate contribution to the Government's overall objectives. The Secretary of State also has the flexibility he needs to change the guidance as appropriate in response to changing circumstances.


 
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