Drinking water and breaches of EC law

The nature of the legal obligations on the Government where the UK is in breach of an EC environmental law have been explored for the first time by the High Court. R v Secretary of State for the Environment ex parte Friends of the Earth (Divisional Court, Queens Bench Division, 29 March 1994) concerned a challenge to the legality of the Secretary of State's actions with respect to the 1980 EC Directive on drinking water quality. The Department of the Environment (DoE) and the water utilities will be relieved that the Court upheld the validity of the Government's approach, but the judgement of Mr Justice Schiemann raises significant points of principle which will have a bearing beyond the specific facts in issue.

The water privatisation legislation - the Water Act 1989 and its successor, the Water Industry Act 1991 - contains special mechanisms for enforcing the duties of the privatised utilities. In particular, section 18 of the 1991 Act provides that once the Secretary of State is satisfied that a water undertaker is in breach of any of its statutory duties or conditions of its licence appointment, he must make an enforcement order against the company to secure compliance with its obligations.

This is a formal legal step, and section 19 then goes on to provide a limited number of circumstances where there is no duty to make such an order. The key such exception is where a company has given an undertaking to the Secretary of State to take such steps as appear appropriate to "secure or facilitate" compliance with the relevant obligation and continues to comply with the undertaking. Breach of an undertaking itself is enforceable by an enforcement order.

The main aim of the undertaking mechanism appears to be to place the burden on the companies themselves to come up with appropriate remedial steps and to provide a rather more flexible means of enforcement. In fact, during the passage of the Water Act in 1989, the provisions concerning undertakings were the subject of discussion between the DoE and the European Commission, which was concerned that the original, much looser, draft was inappropriate where a breach of EC law was concerned.

Upon privatisation, it was accepted that many drinking water supplies failed to meet standards set by the 1980 Directive, and that major investments in water treatment and other measures would be needed to ensure compliance. As a consequence, the Secretary of State accepted a large number of undertakings from water companies. Friends of the Earth (FoE) attacked the legality of undertakings relating to pesticides, which had tended to be in highly generalised and standardised terms, and at the end of 1989 was granted leave by the High Court to bring proceedings for judicial review. Undertakings relating to Thames Water were chosen as a specimen case.

Some two years later, Thames Water offered new undertakings in respect of pesticides which were more specific and less standardised. FoE was therefore obliged to drop the original action, but made a fresh challenge to the Secretary of State's decision to accept the replacement undertakings, and leave was again granted.

The undertakings were clearly something of a moving target, since yet more replacement undertakings relating to pesticides in even more specific terms were accepted shortly before the case came to court, though too late to prevent the hearing taking place.

Mr Justice Schiemann first considered the question whether FoE had standing to bring the case. It might have been argued that since the European Commission possesses a legal duty to ensure that Directives are properly applied by Member States, granting standing in a case such as this would be inappropriate on the grounds of duplication. Mr Justice Schiemann was alive to the issue, but the DoE did not challenge standing (though reserving the right to raise it again on other such occasions), and on the facts he held that the court had jurisdiction to entertain the case.

The court accepted that the UK was in breach of the 1980 Directive, and the critical legal question was whether the Secretary of State's acceptance of undertakings was an unlawful way of fulfilling his duty to remedy those breaches.

FoE first argued that while enforcement orders are served for the purpose of "securing" compliance with an obligation, the undertakings were accepted for the purpose of "securing or facilitating" compliance - a less exacting requirement where a breach of EC law was concerned. Mr Justice Schiemann rejected the argument on the grounds that the evidence from the affidavits of senior DoE officials indicated that at all times the Secretary of State had accepted the undertakings with the intention that ultimately the UK would comply with its obligations. Whether he had adopted a too leisurely approach was a different question.

One of the strongest arguments put forward by FoE concerning the nature of the undertakings arose from the proceedings brought by the European Commission against the UK in respect of other aspects of the 1980 Directive. In November 1992, this culminated in the first decision by the European Court of Justice against the UK for breach of an environmental Directive (ENDS Report 215, p 39 ). The year before, in oral hearings before the Court, the UK had argued that its duty under the Directive was not absolute but to take all practicable steps to comply with the standards, but the European Court firmly rejected this approach in holding that, bar any special derogations in the Directive, the duty to comply was absolute.

FoE pointed out that the UK's arguments in that case had been made only a month after the Secretary of State had accepted the revised undertakings and therefore suggested that he had approached his task on the wrong legal basis.

Mr Justice Schiemann held that for present purposes the UK's obligation was "to rectify the breach as soon as possible and not merely as soon as practicable." But while he accepted that from the evidence it frequently appeared that the Secretary of State was seeking to secure a result as soon as practicable, he held that this was not necessarily an illegal approach. He accepted that there was considerable practical complexity in bringing all the water supplies concerned speedily up to standard - not least in ensuring that supplies were maintained where disruption took place because of the installation of treatment works - but did not feel that FoE had shown any convincing evidence of faster methods of securing compliance.

It was next argued that the terms of many of the undertakings lacked sufficient precision for effective enforcement, with much of the detail relegated to annexes which were expressly stated not to form part of the undertakings themselves. But Mr Justice Schiemann held that, given that there was continuing breach of the EC standards, the acceptance of an undertaking did not preclude the Secretary of State from making an enforcement order at any stage: "he has the whip hand should it be that the undertakers are not making what he would regard as sufficient progress." The revision of the undertakings, and the regular beating of target dates in the annexes, suggested continuing monitoring by the Secretary of State and a willingness to strive for a tighter timetable.

Under the 1991 Act, breach of an enforcement order gives rise to a civil action by anyone who has suffered loss or damage as a result, but no similar right exists for breach of an undertaking. In its closing reply before the court, FoE argued that by not imposing an enforcement order the Secretary of State was effectively denying citizens the opportunity to enforce rights to wholesome water derived from EC law.

Since this line of argument had not been fully developed during the hearing, Mr Justice Schiemann did not deal with it in detail, especially as there was no claim to actual damage in the case. But he noted that if EC law did give such rights to citizens, these could not be taken away by any actions of the Secretary of State, with the implication that they could be enforced whatever the wording of the statutory provisions.

As the first case of its kind, the decision raises a number of important points of principle. Clearly, the applicants failed to convince the judge that there were significant alternative remedial measures that could have been effectively taken, though he noted during the hearing that the bringing of the action itself had probably had some influence on the tightening up of the undertakings - something which the Government could be expected to deny.

Mr Justice Schiemann held that the initial identification of the steps to be taken was a matter for the Secretary of State. But in a passage of potential longer term significance, he expressly left open the question whether, given that a breach of EC law was concerned, these steps were ultimately a matter for the court to decide upon on objective criteria, or remained within the Secretary of State's discretion, subject to the so-called Wednesbury test of reasonableness. In several cases, the European Court of Justice has not been averse to adopting a more objective approach where Member States' decisions are challenged, and the developing attitude of British courts in this respect will be of critical importance in the future.

Richard Macrory, Denton Hall Professor of Environmental Law, Imperial College.

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