The Water Framework Directive (WFD) and implications for water and wastewater industries - e.g., conflicts between regulatory timeframes and cost recovery determinations - are underscored by UK law firm Pinsent Masons, specializing in related infrastructure activities.
Described by some as “the most important piece of water legislation for decades”, the Water Framework Directive requires Member States to put in place a range of oversight procedures (Article 3) and consultation processes (Article 14) aimed at assessing, protecting and safeguarding the quality and quantity of water resources within any given river basin district. The overall aim is to bring rivers and water resources to a “good ecological status” by 2015, to be achieved through the development of River Basin Management Plans (RBMPs).
Timetable
Under Article 14, Member States must publish and consult on an interim overview of significant water management issues for each river basin district by 22 December (Article 14). A year later, draft RBMPs are due (Article 14) after consultation on the interim overview. In two years (December 2009), the first RBMPs will be published (Article 13) after further consultation, along with a programme of measures for each River Basin District to deliver the environmental objectives (Article 11). The programme of measures will be key in determining which projects require technology and finance to reach compliance by 2015.
There’s also a 2010 deadline looming for ensuring proper water pricing policies (Article 9). In fact, one of the main concerns in the UK is whether arrangements will be in place to pay for any capital works programmes flowing from the WFD. For water and sewerage undertakers in England and Wales in particular, there’s the question of precisely how the water pricing cycle interrelates with the legal regime for implementation.
Following the planning stages, implementation of measures and works to ensure compliance is due to commence in December 2012.
The operative provisions
Many of the operative provisions concerning improvement of the ecological status of river basins don’t come from the WFD itself, but from either the daughter directives or pre-existing legislation, such as the Urban Waste Water Treatment Directive. In addition to pre-existing legislation, the European Parliament approved the Groundwater Directive on 12 December 2006. Hence, the only remaining legislation to be passed to give full effect to the WFD is the Daughter Directive on priority substances.
Priority Substances Directive
The operative provisions relating to the control of pollution come from Article 16. Article 16(2) identifies the EC as the body responsible for setting out a list of priority substances that present a significant risk to or via the aquatic environment. Last 17 July, the EC adopted a proposal for a Daughter Directive (COM(2006)397 Final) which is currently undergoing the co-decision procedure. The proposed directive addresses environmental quality standards, identification of priority hazardous substances (identifying 33 priority substances and 8 other pollutants) and repeal of existing directives dealing with chemical pollution of water.
Water quality status
The WFD considers two categories of water - surface and groundwater.
Deadlines loom for Water Framework Directive implementation, but costs aren’t addressed until later in the process.
Surface water quality status includes two components, chemical and ecological. To achieve “good surface water chemical status” the body of water must comply with certain environmental quality standards for a range of pollutants. Classification of ecological status is less straightforward, though, with a five point classification system ranging from “high” to “bad”, as defined in Annex V to the WFD. The overall status of a body of surface water is determined by the poorer of its ecological and chemical status.
Groundwater has two criterion on which the overall status of the source is judged. Similar to surface waters, there’s an assessment of the chemical status. There are also provisions relating to the rate of abstraction of groundwater which, to achieve a “good quantitative status” requires that abstraction rates aren’t exceeded by replenishment rates.
There’s also the necessity to identify all bodies of water used for abstraction intended for human consumption providing over 10 m3/day or serving over 50 persons or those bodies of water intended for such future use. Member States must ensure the water treatment regime for such waters complies with the Quality of Water Intended for Human Consumption Directive (80/778/EEC), as amended by Directive 98/83/EC of the same name. For bodies of water from which the abstraction rate exceeds 100 m3/day on average, there’s also the requirement to monitor the ecological status in accordance with Annex V to the directive and ensure treatment compliance with the Quality of Water Intended for Human Consumption Directives.
There are permitted derogations from the overall requirement to achieve “good ecological status” by 2015 (Article 4), although these are narrowly circumscribed, depend upon the initial characterisation of the water body concerned and must be under continual review.
River Basin Management Plans
The first RBMPs are to be published by 22 December 2009. But this is only the beginning: Each RBMP must be reviewed and updated on a six-year cycle designed to protect the ecological status of water (surface and ground) on a continuous basis.
Each RBMP must be submitted to the European Commission (EC), along with its programme of measures and results of subsequent monitoring exercises. No doubt this is the means by which Brussels will consider whether to bring actions against member states for non-compliance with the WFD - with the potential that the RBMPs in any Member State may become a “rod for their own backs”.
But while a RBMP may be the vehicle for ensuring Member State compliance with the WFD, how are ecological improvements identified within the RBMPs going to be achieved and what will be their status in national law?
Legal obligations
As a framework directive, it’s up to Member States themselves to analyse and characterise their river basin districts and devise a detailed programme of measures within each RBMP to achieve “good” status by 2015. As a framework directive, even more so than with more prescriptive directives such as the Nitrates and Urban Waste Water Treatment Directives, it’s down to individual member states to determine how they’ll implement the requirements of this Directive and what legal obligations result. A Common Implementation Strategy has been established by the European Union to ensure harmonisation across Member States in the way this Directive is implemented. But whilst various guidance notes have been issued, none of these is binding on Member States.
Given that a programme of measures will be generated at the same time as a RBMP, will the RBMPs of themselves create legal obligations? The answer in England and Wales is that the RBMPs don’t of themselves appear to create legal obligations. Article 17 of The Water Environment (WFD) (England and Wales) Regulations 2003 (the transposing regulations) states: The Secretary of State, the Assembly, the Agency and each public body must, in exercising their functions so far as affecting a river basin district, have regard to the river basin management plan for that district as approved. This effectively establishes the RBMP as a benchmark to inform decision makers.
A public body?
Both the Water Services Regulation Authority (formerly OFWAT) and the statutory undertakers (i.e., water and sewerage undertakers) are caught within the 2003 Regulations “public body” definition. It’s also worth mentioning Section 3 of the Water Industry Act 1991 which imposes on both the Authority and statutory undertakers a requirement to take into account any effect which… proposals would have on the beauty or amenity of any rural or urban area or on any such flora, fauna, features, buildings, sites or objects. It’s debatable as to whether this requirement gives any legal force to the RBMP, but it seems unlikely.
Given the Article 17 requirement within the 2003 Regulations for public bodies to have regard to the RBMP, implementation may depend on the legal status of the entity charged with developing works to ensure compliance with the WFD. There are three possible scenarios depending on whether the obligation to comply with the requirements of the RBMP (and its “programme of measures”) falls to a public or private body, or whether to a private individual (e.g., a paper mill operator or a developer proposing a development).
From the 2003 Regulations, a ministerial direction can be given under section 122 of the Environment Act 1995 to any public body which, as mentioned, includes the statutory undertakers. It’s clear, therefore, that water and sewerage companies will have obligations arising from the WFD although depending on the timing of any directions, there may be implications with regard to price review and funding, as noted below.
A Private Body?
By contrast, there are no provisions within the 2003 Regulations for directly creating obligations on private individuals. Consequently, measures for ecological improvement identified within RBMPs as they impact on industrial installations will presumably be achieved through the Pollution Prevention and Control licensing regime and its associated periodic review process - the Environment Agency (EA) having regard to the river basin management plan in reaching its permitting decisions.
Proposed developments will be considered for their implications with regards to the WFD at the planning stage. To some extent, the framework for planning applications is already in place through the planning policy guidance note system. The RBMP will act as a benchmark for quality against which planning applications will be scrutinised for their impact (with the EA acting as a statutory consultee when necessary), with appropriate conditions being placed as obligations on developers within any planning decision.
Timing and Funding Implications
The WFD espouses the “polluter pays” principle, which in turn means that end consumers will have to pay for improvements to catchment management. Putting aside the debate as to what extent this means “water consumers”, in England and Wales, this is most likely to be achieved though the price review mechanism that undertakers perform on a five-year cycle with the Water Services Regulation Authority.
At first sight, it appears the timing of the pricing cycle under the Asset Management Programme (AMP) and the 2010 deadline for having proper water pricing policies in place should not give cause for concern. However, each of the programmes will require time for costing. The direction of the EA to the undertakers may be the legal instrument required under the undertakers’ licences which triggers a legal obligation required to be funded. Unless the directions come significantly in advance of the water companies pricing review processes, costing the implications of the WFD may have to take place midway through the AMP [6] pricing process - particularly when the Directive itself calls for operational programmes of measures to be in place by 22 December 2012 (Article 11).
Interim determinations?
There’s no mechanism within an undertakers’ licence for anticipated changes in law, but the water companies themselves will be bound at the moment a section 122 Direction comes from the EA as the “competent authority” in England and Wales for the purposes of the WFD. And an undertaker cannot apply for an interim determination on user charges until the legal obligation arises comes into force.
Will the consumer base be prepared to pay for increased charges within two years of a price review? Equally, will the regulator allow charges to be levied unless the direction is specific to the water companies only? Current regulatory practice indicates that unless the new legal requirement is specific to the sector, no price variation will be allowed.
Physical assets?
Regardless of the problems in determining when the provisions of the Water Framework Directive actually “bite” and their costing implications, the water and wastewater industries need to consider now the types of work that are in the pipeline. Whilst first considerations will relate to discharges which compromise the ecological status of a river basin and the review of significant water issues (due December 2007) and draft RBMP’s (due December 2008) will be useful pointers, it’s hard to see how these works can be realistically considered, costed and planned until the programme of measures for each River Basin District is published in December 2009. And even then, they may not be certain until the operational programmes are published in December 2012.
Author’s Note:
Sarah Thomas is a partner with international law firm Pinsent Masons , specialising in the water and energy infrastructure sectors and can be contacted on +44 (0)207 490 6273 or sarah.thomas @pinsentmasons.com
