Part 1 Abstraction and impounding

Restrictions on abstraction and impounding

1 Licences to abstract water

(1) After section 24 of the Water Resources Act 1991 (c. 57) (in this Act referred to as the “WRA”) there is inserted—

“24A Abstraction licences

(1) Each licence to abstract water shall be of one of the following three types—

(a) a licence to abstract water from one source of supply over a period of twenty-eight days or more for any purpose (a “full licence”);

(b) a licence to abstract water from one source of supply over a period of twenty-eight days or more for the purpose of—

(i) transferring water to another source of supply; or

(ii) transferring water to the same source of supply, but at another point, in the course of dewatering activities in connection with mining, quarrying, engineering, building or other operations (whether underground or on the surface),

in either case without intervening use (a “transfer licence”);

(c) a licence to abstract water from one source of supply over a period of less than twenty-eight days (a “temporary licence”).

(2) In this Act, a reference (however expressed) to a licence to abstract water is to be taken as a reference to all types of licence, unless it is clear that a different meaning is intended.”

(2) In section 72 of the WRA (interpretation of Chapter 2), in subsection (1), in the appropriate places there is inserted—

““full licence” has the meaning given in section 24A above;”,

““temporary licence” and “transfer licence” have the meanings given in section 24A above.”

2 Restrictions on impounding

(1) Section 25 of the WRA (restrictions on impounding) is amended as provided in subsections (2) to (5).

(2) For subsection (1) there is substituted—

“(1) Subject to the following provisions of this Chapter and to any drought order or drought permit under Chapter 3 of this Part, no person shall—

(a) begin, or cause or permit any other person to begin, to construct or alter any impounding works at any point in any inland waters which are not discrete waters; or

(b) cause or permit the flow of any inland waters which are not discrete waters to be obstructed or impeded at any point by means of impounding works,

unless (in either case) the conditions mentioned in subsection (1A) below are satisfied.

(1A) The conditions are—

(a) a licence under this Chapter granted by the Agency to obstruct or impede the flow of those inland waters at that point by means of impounding works is in force;

(b) the impounding works will not (or, as the case may be, do not) obstruct or impede the flow of the inland waters except to the extent, and in the manner, authorised by the licence; and

(c) any other conditions or requirements imposed by the provisions, as for the time being in force, of the licence (whether as to the provision of compensation water or otherwise) are complied with.”

(3) In subsection (2), the words “, in circumstances not constituting such a contravention,” are omitted.

(4) In subsection (5), for “shall not apply to the construction or alteration of any impounding works” there is substituted “shall not apply in respect of any impounding works”.

(5) After subsection (8) there is added—

“(9) In relation to impounding works, references to alteration include the removal or partial removal of those works, and cognate expressions shall be construed accordingly.”

(6) A licence which—

(a) has been granted in respect of particular impounding works, for the purposes of section 25 of the WRA, before the coming into force of subsection (2), and

(b) is in force,

is to be taken to satisfy the condition referred to in section 25(1A)(a) of that Act, as inserted by subsection (2), in respect of those impounding works.

(7) In section 64 of the WRA (abstraction and impounding by the Agency), for subsection (1)(b) there is substituted—

“(b) in relation to—

(i) the construction or alteration by the Agency of impounding works; and

(ii) the obstruction or impeding by the Agency of the flow of inland waters by means of impounding works,”.

(8) In section 67 of the WRA (ecclesiastical property), in the definition of “the relevant land” in subsection (8), in paragraph (b)(i), after “impounding works” there is inserted “is, or”.

(9) In section 72 of the WRA (interpretation of Chapter 2), in subsection (1), in the definition of “the restriction on impounding works”, for “25(1)” there is substituted “25(1)(a) and (b)”.

(10) Subject to section 3 of this Act, the amendments of the WRA made by this section apply (as regards any act or omission after this section comes into force) with respect to impounding works whenever constructed.

3 Existing impounding works

(1) Except as provided in subsection (3), the restriction in section 25(1)(b) of the WRA (as substituted by section 2 of this Act) does not apply in respect of any existing unlicensed impounding works.

(2) With respect to any existing unlicensed impounding works to which, but for subsection (1), that restriction would apply, the Environment Agency may serve a notice on any relevant person requiring him to apply for a licence.

(3) If that person fails to apply for such a licence within—

(a) the period of 28 days beginning with—

(i) the date of service of the notice, or

(ii) if an appeal is brought under subsection (4) and the appeal is dismissed, the date when the decision of the appropriate authority is notified to that person, or

(b) such extended period as may be agreed in writing between the Agency and that person,

the restriction in section 25(1)(b) of the WRA applies in respect of the impounding works from the expiry of that period.

(4) If the relevant person on whom a notice is served under subsection (2) is aggrieved by the service of that notice, he may by notice appeal to the appropriate authority.

(5) The appropriate authority may by regulations make provision with respect to—

(a) the manner in which notices of appeal under subsection (4) shall be served,

(b) the period within which such notices shall be served,

(c) the procedure on any such appeal.

(6) Where an appeal is brought under subsection (4)—

(a) the appropriate authority may allow or dismiss the appeal or reverse or vary any part of the decision of the Agency, whether the appeal relates to that part of the decision or not, and

(b) the decision of the appropriate authority shall be final.

(7) Subsections (4) to (6) are subject to section 114 of the Environment Act 1995 (c. 25) (delegation or reference of appeals).

(8) On an application for a licence in respect of any existing unlicensed impounding works, section 39(1) of the WRA applies only to the extent that the obstruction or impeding of the flow of inland waters which would, if the licence were granted, be authorised by that licence is to differ in any material respect from that which was taking place at the time the application was made.

(9) If a licence granted in respect of existing unlicensed impounding works is revoked or varied in the circumstances mentioned in section 61 of the WRA (compensation where licence modified on direction of the Secretary of State), subsection (3) of that section shall apply as if that licence had been granted when construction of the impounding works began and had remained in force since then.

(10) Subsection (9) does not apply to a licence granted in respect of existing unlicensed impounding works if, before the effective date, there had occurred any contravention of section 25(1) of the WRA in respect of those impounding works.

(11) Nothing in the preceding subsections affects the application of section 25(1)(a) of the WRA (as substituted by section 2 of this Act) to the alteration, after the effective date, of any existing unlicensed impounding works.

(12) In this section—

• “the appropriate authority” means—

  (a)

  in relation to Wales, the Assembly, and

  (b)

  in relation to England, the Secretary of State,

• “the effective date” means the date when section 2 of this Act comes into force,

• “existing unlicensed impounding works” means unlicensed impounding works, the construction of which was begun before the effective date,

• “licence” means a licence of the kind referred to in section 25 of the WRA,

• “relevant person” means any person who appears to the Environment Agency to have responsibility in respect of the impounding works in question, and

• “unlicensed impounding works” means impounding works (as defined in section 25(8) of the WRA) in respect of which—

  (a)

  no licence or authorisation of the kind referred to in section 25 of that Act was in force immediately before the effective date, and

  (b)

  no such licence has been granted since that date.

(13) In section 114 of the Environment Act 1995 (power of Secretary of State to delegate or refer in connection with appeals), in subsection (2)(a), after paragraph (viii) there is inserted—

“(ix) section 3 of the Water Act 2003,”.

4 Existing impounding works: works notices

(1) Without prejudice to the Environment Agency’s power under subsection (2) of section 3, where it appears to the Agency to be necessary for—

(a) the protection of the environment, or

(b) the performance of its functions in connection with the management of water resources,

the Agency may serve a works notice on any relevant person with respect to any existing unlicensed impounding works of the kind mentioned in subsection (2) of that section.

(2) For the purposes of subsection (1), a works notice is a notice requiring the person on whom it is served to carry out such works or operations in relation to the impounding works as—

(a) appear to the Environment Agency to be required for the purposes mentioned in subsection (1)(a) or (b), and

(b) are specified in the notice.

(3) The following provisions of the WRA apply in relation to works notices under this section as they apply in relation to notices referred to in those provisions—

(a) subsections (5) to (9) of section 25A (as inserted by section 30 of this Act), and

(b) sections 161B and 161C,

including any power to make regulations or give directions, but references in those provisions to the Secretary of State shall be treated as references to the appropriate authority.

(4) If a person on whom the Agency serves a notice under this section fails to comply with any of its requirements, he shall be guilty of an offence.

(5) A person who commits an offence under subsection (4) shall be liable—

(a) on summary conviction, to a fine not exceeding £20,000,

(b) on conviction on indictment, to a fine.

(6) If a person on whom a works notice has been served under this section fails to comply with any of its requirements, the Agency may do what that person was required to do and may recover from him any costs or expenses reasonably incurred by the Agency in doing it.

(7) If the Agency is of the opinion that proceedings for an offence under subsection (4) would afford an ineffectual remedy against a person who has failed to comply with the requirements of a works notice, the Agency may take proceedings in the High Court for the purpose of securing compliance with the notice.

(8) In this section, “the appropriate authority”, “existing unlicensed impounding works” and “relevant person” have the meanings given in section 3.

5 Rights of navigation, harbour and conservancy authorities

For section 26 of the WRA (rights of navigation, harbour and conservancy authorities) there is substituted—

“26 Rights of navigation, harbour and conservancy authorities

(1) Subject to subsection (2) below, the restriction on abstraction shall not apply to any transfer, without intervening use, of water from inland waters described in the first column of the Table below to inland waters described in the corresponding entry in the second column, if the transfer is in the course of, or results from, any operations carried out by a navigation authority, harbour authority or conservancy authority in the carrying out of their functions as such an authority.

(2) Subsection (1) above shall not apply to a transfer of water from a water system to any inland waters outside that water system in order to—

(a) empty a dry dock; or

(b) introduce into those inland waters all or part of a quantity of water to be abstracted from any connected inland waters in pursuance of a licence to do so granted under this Chapter.

(3) The restriction on impounding works shall not apply to—

(a) the construction or alteration of impounding works; or

(b) the obstruction or impeding of inland waters by means of impounding works,

in the course of the performance by a navigation authority, harbour authority or conservancy authority of their functions as such an authority, unless the construction, alteration, obstruction or impeding affects any inland waters in relation to which the authority does not have functions.

(4) In this section, references to—

(a) an authority’s water system are to a water system in relation to which the authority has functions;

(b) an authority’s supply reservoir are to a reservoir—

(i) belonging to a navigation authority;

(ii) used for the purposes of supplying that navigation authority’s water system; and

(iii) which does not discharge to any inland waters other than that water system.

(5) For the purposes of this section, “water system” means the canals, the harbours, or the canals and harbours constituting the system in question—

(a) together with the locks, docks, balancing reservoirs, weirs and other works associated with the system (other than any supply reservoir as described in subsection (4)(b) above); but

(b) excluding any part of the system which consists of a navigable river or part of one.”

6 Rights to abstract small quantities

(1) For section 27 of the WRA (rights to abstract small quantities) there is substituted—

“27 Rights to abstract small quantities

(1) The restriction on abstraction shall not apply to any abstraction of a quantity of water not exceeding twenty cubic metres in any period of twenty-four hours, if the abstraction does not form part of a continuous operation, or of a series of operations, by which a quantity of water which, in aggregate, is more than twenty cubic metres is abstracted during the period.

(2) In the case of any abstraction of water from underground strata which falls within subsection (1) above, the restriction imposed by section 24(2) above shall not apply—

(a) to the construction or extension of any well, borehole or other work; or

(b) to the installation or modification of machinery or other apparatus,

if the well, borehole or other work is constructed or extended, or the machinery or apparatus is installed or modified, for the purpose of abstracting the water.

(3) Where a person is authorised by a licence under this Chapter to carry on a particular abstraction operation (or series of operations), this section does not permit him to carry it on beyond the authorisation conferred by the licence.

27A Variation of small quantity threshold

(1) The Secretary of State may by order made by statutory instrument provide that section 27(1) above is to have effect in relation to—

(a) a geographical area; or

(b) a class of inland waters; or

(c) a class of underground strata; or

(d) a class of inland waters or of underground strata within a geographical area,

(in each case as specified in the order) as if for “twenty cubic metres” there were substituted another quantity specified in the order.

(2) The Secretary of State shall not make such an order except upon the application of the Agency; but he may direct the Agency to make such an application.

(3) Such an order may—

(a) make different provision in relation to the different paragraphs in subsection (1) above; and

(b) make different provision for different areas, waters or underground strata.

(4) Schedule 6 to this Act shall have effect with respect to applications for orders under subsection (1) above and with respect to the making of such orders.

(5) An order under subsection (1) above which specifies a greater quantity than the one which previously had effect in relation to the area, waters or strata in question may make provision for a licence to abstract water granted under this Chapter—

(a) which is for the time being in force; but

(b) which by virtue of the order has become wholly or partly unnecessary,

to cease to have effect, or to cease to have effect to the extent specified in the order.

(6) An order under subsection (1) above may include provision for or in relation to the payment by the Agency of compensation, in cases specified in the order, to a person who—

(a) immediately before the making of an order under subsection (1) above, had been in a position to carry out an abstraction to which, by virtue of section 27(1) above, the restriction on abstraction did not apply;

(b) following the making of that order, requires a licence under this Chapter in order to carry out that abstraction; and

(c) has suffered loss or damage as a result of his having been—

(i) refused such a licence in respect of that abstraction; or

(ii) granted such a licence, but in respect of an abstraction of more limited extent than the one he had been in a position to carry out.

(7) Paragraphs (e) and (f) of section 219(2) below apply in relation to orders under subsection (1) above as they apply to regulations made under this Act.

(8) A statutory instrument containing an order under subsection (1) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.”

(2) Section 28 of the WRA shall cease to have effect.

7 Rights to abstract for drainage purposes, etc

(1) Section 29 of the WRA (rights to abstract for drainage purposes etc) is amended as follows.

(2) After subsection (1) there is inserted—

“(1A) The restriction on abstraction shall not apply to any abstraction of water from inland waters within the district of an internal drainage board if—

(a) the abstraction is carried out by or on behalf of that board in connection with its functions;

(b) the water abstracted is transferred to another area of inland waters within the board’s district without intervening use; and

(c) the sole or main purpose of the transfer is to augment that other area of inland waters.”

(3) For subsection (2) there is substituted—

“(2) The restriction on abstraction shall not apply to any abstraction of water from a source of supply in so far as the abstraction (where it does not fall within subsection (1) or (1A) above) is an emergency abstraction and the person abstracting the water complies with subsection (2B) below.

(2A) An abstraction of water is an emergency abstraction if, in the opinion of the abstractor, an emergency has arisen which makes the abstraction necessary to prevent immediate danger of interference with any mining, quarrying, engineering, building or other operations (whether underground or on the surface) or, in relation to such operations, to prevent an immediate risk—

(a) to a human being of death, personal injury or harm to health;

(b) of serious damage to works resulting from any such operations; or

(c) of serious damage to the environment.

(2B) In the case of any emergency abstraction, the person abstracting the water shall before the end of the period of five days beginning with the date on which the abstraction started give notice to the Agency of—

(a) the abstraction and of the source of supply in question; and

(b) the reasons for the abstractor’s opinion that an emergency had arisen and that the abstraction was necessary.

(2C) The Agency may give notice to the person referred to in subsection (2B) above that in the Agency’s opinion an emergency had not arisen, or that the abstraction is not, or is no longer, necessary for any of the reasons set out in subsection (2A) above; and, if the Agency does so, the restriction on abstraction shall apply to the abstraction from the time when the notice is served (and, if applicable, the restriction imposed by section 24(2) above shall apply accordingly).”

(4) Subsection (3) is omitted.

(5) For subsection (5) there is substituted—

“(5) In this section, “land drainage”—

(a) includes the protection of land against erosion or encroachment by water, whether from inland waters or from the sea; but

(b) does not include warping, irrigation (including spray irrigation), or transferring water from one source of supply to another (whether with or without intervening use) solely or mainly in order to augment the latter.”

8 Amendments relating to section 7

(1) Subsections (2) to (6) make amendments to the WRA consequential on the amendments made by section 7.

(2) In section 21 (minimum acceptable flows)—

(a) in subsection (9), the words from “and in that subsection” to the end are omitted,

(b) after subsection (9) there is added—

“(10) In subsection (5) above, the reference to land drainage includes—

(a) defence against water (including sea water), irrigation (other than spray irrigation), warping and the carrying on, for any purpose, of any other practice which involves management of the level of water in a watercourse; and

(b) the provision of flood warning systems.”

(3) Sections 30 (notices with respect to borings not requiring licences) and 31 (appeals against notices under section 30) shall cease to have effect.

(4) In section 70 (civil liability under Chapter 2), for “24, 25 and 30” there is substituted “24 and 25”.

(5) In section 199 (notice of mining operations which may affect water conservation)—

(a) for subsections (2) and (3) there is substituted—

“(2) Where a notice under subsection (1) above is given to the Agency by any person, the Agency may (subject to section 199A below) by notice to that person require him, in connection with the construction, extension or use of the work to which that person’s notice relates, to take such reasonable measures for conserving water as are specified in the notice.

(2A) The measures that may be specified in a notice under subsection (2) above shall be measures which, in the opinion of the Agency, will not interfere with the winning of minerals.

(3) Section 70 above shall apply to the restrictions imposed by this section as it applies to the restrictions imposed by sections 24 and 25 above.”,

(b) in subsection (4), for “conservation notice given by virtue of” there is substituted “notice under”.

(6) After section 199 there is inserted—

“199A Appeals against conservation notices under section 199

(1) The person on whom a notice under section 199(2) above (“a conservation notice”) is served may, by notice to the Secretary of State, appeal to him against the conservation notice on either or both of the following grounds, that is to say—

(a) that the measures required by the conservation notice are not reasonable;

(b) that those measures would interfere with the winning of minerals.

(2) Any notice of appeal against a conservation notice shall be served within such period (not being less than twenty-eight days from the date of service of the conservation notice) and in such manner as may be prescribed.

(3) Before determining an appeal against a conservation notice, the Secretary of State may, if he thinks fit—

(a) cause a local inquiry to be held; or

(b) afford to the appellant and the Agency an opportunity of appearing before, and being heard by, a person appointed by the Secretary of State for the purpose;

and the Secretary of State shall act as mentioned in paragraph (a) or (b) above if a request is made by the appellant or the Agency to be heard with respect to an appeal.

(4) On an appeal against a conservation notice the Secretary of State may confirm, quash or vary the notice as he may consider appropriate.

(5) The decision of the Secretary of State on any appeal against a conservation notice shall be final.

(6) The Secretary of State may by regulations make provision as to the manner in which appeals against conservation notices are to be dealt with, including provision requiring the giving of notices of, and information relating to, the making of such appeals or decisions on any such appeals.

(7) Section 69 above applies to a decision of the Secretary of State on any appeal to him under this section as it applies to a decision of his on an appeal to him under Chapter 2 of Part 2, taking the reference in subsection (2)(b) of that section to that Chapter as a reference to this section.

(8) This section is subject to section 114 of the 1995 Act (delegation or reference of appeals).”

(7) In section 114 of the Environment Act 1995 (c. 25) (power of Secretary of State to delegate or refer in connection with appeals), in subsection (2)(a)(v), for “or 191B(5)” there is substituted “, 191B(5) or 199A”.

9 Power to provide for further exemptions

After section 33 of the WRA there is inserted—

“33A Power to provide for further exemptions

(1) The Secretary of State may make regulations providing for further cases in which—

(a) the restriction on abstraction (and, in the case of abstractions from underground strata, the other restrictions imposed by section 24 above); or

(b) the restriction on impounding works,

shall not apply; and in this section such a case is referred to as an “exemption”.

(2) The regulations may, in particular, make provision, in relation to an exemption—

(a) for the exemption to apply only for a prescribed period;

(b) for the exemption not to apply unless prescribed conditions are satisfied, or continue to be satisfied;

(c) for the Agency to be notified, or its consent obtained—

(i) before any particular abstraction operation or series of such operations begins; or

(ii) in connection with such an operation or series of operations relating to the abstraction of water in underground strata, before any other thing which is mentioned in section 24(2) above is done; or

(iii) before any impounding works are constructed or altered,

in reliance on the exemption.

(3) The regulations may provide for an exemption to apply generally or to relate to—

(a) a prescribed geographical area;

(b) a prescribed source of supply (in the case of an exemption from the restriction on abstraction or the other restrictions imposed by section 24 above); or

(c) prescribed inland waters (in the case of an exemption from the restriction on impounding works).

(4) Subject to subsection (5) below, if regulations under this section provide for an exemption falling within subsection (1)(a) above, the regulations shall—

(a) if appropriate, make provision for the exemption not to permit a person who is authorised by a licence under this Chapter to carry on an abstraction operation (or series of operations) to carry it on beyond the authorisation conferred by the licence; and

(b) make provision as to whether or not, in relation to any abstraction, the exemption provided for by the regulations is to be counted cumulatively with any other exemption which a person has by virtue of this section or section 27 above.

(5) The regulations may make provision for a licence granted under this Chapter and which is for the time being in force to cease to have effect, or to cease to have effect to the extent specified in the regulations, if it authorises an activity which falls to any extent within the exemption provided for by the regulations.”

10 Orders under section 33 of the WRA, etc

(1) The appropriate authority may by order revoke—

(a) any order made under section 33 of the WRA (power to provide for further rights to abstract),

(b) any order made under any local or private Act which provides for any exception from—

(i) the restriction on abstraction (within the meaning of Chapter 2 of Part 2 of the WRA), or

(ii) that restriction and the one imposed by section 24(2) of the WRA,

or for an exception which has the effect of such an exception.

(2) An order of a kind referred to in paragraph (a) or (b) of subsection (1) is referred to below in this section as an “exception order”.

(3) In this section, “the appropriate authority” means—

(a) in relation to the revocation of an exception order which relates to inland waters or underground strata which are wholly in England, the Secretary of State,

(b) in relation to the revocation of an exception order which relates to inland waters or underground strata which are wholly in Wales, the Assembly,

(c) in relation to the revocation of an exception order which relates to inland waters or underground strata which are partly in England and partly in Wales—

(i) the Secretary of State, in relation to the English part,

(ii) the Assembly, in relation to the Welsh part,

and references in this section (however expressed) to the revocation of an exception order are to be construed accordingly.

(4) Subject to subsection (3)(c), an order under this section may revoke the exception order either wholly, or only in relation to—

(a) any one or more areas of inland waters specified in the order under this section or any class of inland waters so specified, or

(b) any underground strata described in the order under this section in any way mentioned in section 33(2)(b) of the WRA or any other way.

(5) An order under this section may make provision, subject to any conditions or limitations specified in the order—

(a) for the restriction on abstraction (and, in the case of abstractions from underground strata, the other restrictions in section 24 of the WRA) to continue not to apply to an abstraction despite the revocation of the exception order,

(b) for a person to continue to be taken to have a right to abstract water, for the purposes of Chapter 2 of Part 2 of the WRA, to the same extent he was taken to do so under the exception order,

(c) for the payment by the Agency of compensation, in cases specified in the order, to any person who suffers loss or damage as a result of the revocation of the exception order.

(6) If an order under this section provides as mentioned in subsection (5)(a), the order must also say whether or not the exemption so provided for is to be counted cumulatively with any other exemption which a person has by virtue of section 27 or 33A of the WRA.

(7) If an order made under subsection (1)(b) revokes the exception order wholly, or wholly so far as it is not already revoked, the order under subsection (1)(b) may also repeal so much of the local or private Act as constitutes the power to make the exception order.

(8) The procedure provided for by section 33 of and Schedule 6 to the WRA, or (as the case may be) any corresponding procedure provided for by the local or private Act in question, does not apply in relation to an order under this section.

(9) The power of the Assembly to make an order by virtue of subsection (3)(b) or (c)(ii) of this section is to be treated as if it were a relevant transferred environmental function for the purposes of paragraph 6 of Schedule 3 to the Government of Wales Act 1998 (c. 38) (intervention in case of functions relating to water).

(10) No order may be made under this section before the coming into force of section 6 of this Act.

(11) Section 33 of the WRA shall cease to have effect; but (subject to the provisions of this section) any order under section 33 of the WRA which was in force immediately before its repeal shall continue in force despite the repeal.

(12) In this section, “inland waters” and “underground strata” have the meanings given in section 221(1) of the WRA.

Applications for a licence

11 Who may apply for a licence

(1) Section 35 of the WRA (restrictions upon who may apply for abstraction licences) is amended as follows.

(2) For subsections (2) and (3) there is substituted—

“(2) In relation to abstractions from any inland waters, a person shall be entitled to make the application if, as respects the place (or, if more than one, as respects each of the places) at which the proposed abstractions are to be effected, he satisfies the Agency that—

(a) he has, or at the time when the proposed licence is to take effect will have, a right of access to land contiguous to the inland waters at that place (or those places); and

(b) he will continue to have such a right for the period of at least one year beginning with the date on which the proposed licence is to take effect, or until it is to expire (if sooner).

(3) In relation to abstractions from underground strata, a person shall be entitled to make the application if he satisfies the Agency that—

(a) he has, or at the time when the proposed licence is to take effect will have, a right of access to land consisting of or comprising those underground strata; and

(b) he will continue to have such a right for the period of at least one year beginning with the date on which the proposed licence is to take effect, or until it is to expire (if sooner).

(3A) The Agency may, in particular, take evidence of a person’s occupation of land to be evidence of his right of access to it.”

(3) In subsection (4)—

(a) for “is the occupier of” there is substituted “will have a right of access to”, and

(b) in paragraph (a), for “occupy” there is substituted “a right of access to”.

12 Abolition of combined licences

Section 36 of the WRA (combined abstraction and impounding licences) shall cease to have effect.

13 Applications: types of abstraction licence

(1) After section 36 of the WRA there is inserted—

“36A Applications: types of abstraction licence

(1) The Agency may decide that—

(a) an application for a full licence, a transfer licence or a temporary licence ought to be for one of the other types of licence;

(b) a number of applications for licences (of any type or types) to abstract water from a particular source of supply ought to be treated as an application for a single such licence (of any type);

(c) an application for a single licence (of any type) to abstract water from a particular source of supply ought to be treated as a number of applications for such licences (of any type or types); or

(d) any such application as is referred to above ought to be accompanied by an application for revocation of an existing licence to abstract water.

(2) The Agency may arrive at the decision referred to in paragraph (a), (b), (c) or (d) of subsection (1) above on the basis of its assessment of any one or more of the following—

(a) the likely effect of the abstraction (or abstractions) for which the applicant has applied for a licence (or licences);

(b) the likely effect of that abstraction (or those abstractions) taken together with abstractions under any other licence held by the applicant, or abstractions which would be authorised under any other licence for which the applicant has applied;

(c) any other prescribed matter.

(3) If the Agency does so decide, it shall serve a notice of its decision on the applicant; and, subject to subsections (4) to (8) below, shall deal with the application (or applications) accordingly (which, if the Agency made the decision referred to in paragraph (d) of subsection (1) above in relation to any application (or applications), means not publishing any notice under section 37 below, or taking any further step in connection with the application (or applications), until the application for revocation has been received).

(4) The applicant may by notice appeal to the Secretary of State against the decision, and shall serve a copy of any such notice on the Agency.

(5) That notice, and the copy of it, shall be served in such manner and within such period as may be prescribed.

(6) If the Agency serves a notice under subsection (3) above, it shall not publish any notice under section 37 below, or take any further step in connection with the application (or applications), before—

(a) the end of the period within which notice of an appeal may be served on the Secretary of State; or

(b) if notice of an appeal is so served, the appeal has been determined.

(7) The Secretary of State—

(a) may allow or dismiss the appeal, or vary any part of the decision of the Agency, whether the appeal relates to that part of the decision or not; and

(b) shall direct the Agency to deal with the application, or applications, accordingly (which, if the Agency’s decision was made under paragraph (d) of subsection (1) above in relation to any such application, and that decision is upheld, may mean not publishing any notice under section 37 below, or taking any further step in connection with the application, until the application for revocation has been received).

(8) Subsections (2) and (7) of section 44 below apply in relation to an appeal under this section as they apply in relation to an appeal under section 43 below.

(9) This section is subject to section 114 of the 1995 Act (delegation or reference of appeals).”

(2) In section 41 of the WRA (Secretary of State’s power to call in applications), after subsection (2) there is added—

“(3) An application may not be referred to the Secretary of State under this section—

(a) if in relation to the application the Agency is still considering whether to make any such decision as is referred to in subsection (1) of section 36A above, or if it has made such a decision but has not yet served the notice referred to in subsection (3) of that section; or

(b) where the Agency has served a notice on the applicant under subsection (3) of that section, until the period for appealing under that section has expired or (if the applicant appeals) the appeal has been determined.”

(3) In section 45 of the WRA (regulations with respect to appeals)—

(a) in subsection (1), after “against decisions” there is inserted “of the Agency under section 36A above or”,

(b) after subsection (2) there is inserted—

“(2A) Subsection (2) above does not apply in relation to appeals against decisions of the Agency under section 36A above.”

(4) In section 114 of the Environment Act 1995 (c. 25) (power of Secretary of State to delegate or refer in connection with appeals), in subsection (2)(a)(v), after “section” there is inserted “36A,”.

14 Publication of application for licence

(1) For section 37 of the WRA (publication of application for licence) there is substituted—

“37 Publication of application for licence

(1) The Agency shall publish a notice of an application for—

(a) a full licence or a transfer licence; or

(b) a licence under this Chapter to obstruct or impede the flow of any inland waters by means of impounding works,

in the prescribed way or (if no way is prescribed) in a way calculated to bring the application to the attention of persons who in the Agency’s view are likely to be affected by the licence.

(2) Not later than the date on which that notice is first published, the Agency shall also serve a copy of it on the persons referred to in subsection (3) below (except the applicant, if the applicant is one of those persons).

(3) Those persons are—

(a) any water undertaker within whose area any proposed point of abstraction or impounding is situated;

(b) any navigation authority, harbour authority or conservancy authority having functions in relation to any inland waters at any such proposed point; and

(c) the drainage board for any internal drainage district within which any such proposed point is situated,

but paragraphs (b) and (c) above do not apply if the licence applied for is exclusively for the abstraction of water from a source of supply that does not form part of any inland waters.

(4) A notice for the purposes of the preceding provisions of this section shall—

(a) be in the prescribed form and shall include any prescribed matters; and

(b) state that any person may make representations in writing to the Agency with respect to the application at any time before the end of a period specified in the notice.

(5) The period referred to in subsection (4)(b) above—

(a) begins on the date the notice referred to in subsection (1) above is first published as mentioned there; and

(b) shall not end before the end of the period of twenty-eight days beginning with that date.

(6) The Secretary of State may make regulations providing for—

(a) the requirements of subsection (2) above, or of both subsections (1) and (2) above, not to apply in prescribed cases;

(b) notices of applications to exclude prescribed classes of information, either generally or as respects prescribed classes of application.

(7) In this section, “proposed point of abstraction or impounding”, in relation to an application for a licence referred to in subsection (1) above, means a place where a licence, if granted in accordance with the application, would authorise—

(a) water to be abstracted; or

(b) the flow of inland waters to be obstructed or impeded by means of impounding works,

(as the case may be).

(8) This section is subject to section 37A below.”

(2) After section 37 of the WRA there is inserted—

“37A Power to dispense with publication requirements

The Secretary of State may by regulations make provision for—

(a) enabling the Agency; or

(b) him, in the case of applications referred to him in accordance with section 41 below,

to direct or determine that the requirements of subsections (1) and (2) of section 37 above may in any case (except where the Agency is the applicant) be dispensed with, if in that case it appears to the Agency (or, as the case may be, the Secretary of State) to be appropriate to do so.”

(3) The WRA is further amended as follows—

(a) in section 38 (general consideration of applications)—

(i) in subsection (1), for “for the purposes of the application in accordance with section 37(5)” there is substituted “in the notice referred to in section 37(4)(b)”,

(ii) after subsection (3) there is added—

“(4) Subsection (1) above, and paragraph (a) of subsection (3) above, do not apply if in relation to the application in question the requirements of section 37(1) above do not apply by virtue of section 37(6)(a) above or have been dispensed with by virtue of section 37A above.”,

(b) in section 42 (consideration of called-in applications), in subsection (3)(a), for “37(4)(b) and (6)(a)” there is substituted “37”,

(c) in section 43 (appeals to Secretary of State), in subsection (5), for “for the purposes of the application in accordance with section 37(5)” there is substituted “in any such notice as is referred to in section 37(4)(b)”,

(d) in section 66 (inland waters owned or managed by British Waterways Board), in sub-paragraph (ii) of subsection (2)(c), for the words from “subsection (1)” to the end of that sub-paragraph there is substituted “paragraphs (b) and (c), and the succeeding words, of subsection (3) of that section were omitted.”

Consideration of licence applications

15 General consideration of licence applications

(1) Section 38 of the WRA (general consideration of licence applications) is amended as follows.

(2) After subsection (1) there is inserted—

“(1A) An application shall be determined in two stages in accordance with subsections (1B) and (1C) below if it is an application for a full licence or a transfer licence which, if granted—

(a) would take effect immediately after the expiry of an existing licence of the same type (the “existing licence”) and be held by the same person as the holder of that licence; but

(b) would in any other respect be different from the existing licence in a way which, if the existing licence were to continue without expiring, would require an application to be made under section 51(2) below for a variation of the licence.

(1B) So far as the application relates to any such difference as is mentioned in subsection (1A)(b) above, it shall first be treated for determination purposes as if it were an application for a variation under section 51(2) below (but as if the existing licence were to continue without expiring).

(1C) If the result of that would have been the grant of the application for variation of the licence, the application referred to in subsection (1) above shall be treated as one for a licence with that variation, and its determination concluded accordingly; and otherwise its determination shall be concluded as if it were an application for a licence with no such variation.”

(3) In subsection (3), after “regard to” there is inserted “all the relevant circumstances, including any duty imposed by or under any enactment on bodies having functions in relation to inland waters (for example, navigation authorities and internal drainage boards), and shall have regard in particular to”.

16 Protection from derogation

(1) Section 39 of the WRA (obligation to have regard to existing rights and privileges) is amended as provided in subsections (2) to (5).

(2) In subsection (1), at the beginning there is inserted “Subject to subsection (1A) below,”.

(3) After subsection (1) there is inserted—

“(1A) Subsection (1) above does not apply when—

(a) the application to be determined is one which does not fall within subsection (1A) of section 38 above only because paragraph (b) of that subsection is not satisfied; or

(b) the determination of an application is being concluded in accordance with subsection (1C) of that section.”

(4) Subsection (3) is omitted.

(5) In subsection (4), for “section 27(6) above or, as the case may be, section 48(1) below” there is substituted “(as the case may be) section 39A(2) or (7), 48(1) or 59C(10) below or section 102(3) of the Water Act 2003, or in a provision made in an order by virtue of section 10(5)(b) of that Act, in each case subject to any limitations mentioned there”.

(6) In section 42 of the WRA (consideration of called-in applications)—

(a) in subsection (4), at the beginning there is inserted “Subject to subsection (4A) below,”, and

(b) after subsection (4) there is inserted—

“(4A) Subsection (1A) of section 39 above applies in relation to subsection (4) above as it applies in relation to section 39(1) above.”

(7) In section 44 of the WRA (determination of appeals)—

(a) in subsection (4), at the beginning there is inserted “Subject to subsection (4A) below,”, and

(b) after subsection (4) there is inserted—

“(4A) Subsection (1A) of section 39 above applies in relation to subsection (4) above as it applies in relation to section 39(1) above.”

17 Protected rights

(1) After section 39 of the WRA there is inserted—

“39A Protected rights for the purposes of this Chapter

(1) For the purposes of this Chapter, a right is a protected right if—

(a) it is such a right as a person who is the holder of a full licence is taken to have by virtue of section 48(1) below;

(b) it is such a right as a person is taken to have by virtue of subsection (2) below;

(c) it is such a right as a person continues to be taken to have by virtue of subsection (7) below;

(d) it is such a right as a person is taken to have by virtue of subsection (10) of section 59C below;

(e) it is such a right as a person continues to be taken to have by virtue of a provision made under subsection (5)(b) of section 10 of the Water Act 2003 in an order made under that section; or

(f) it is such a right as a person continues to be taken to have by virtue of section 102(3) of that Act.

(2) A person who is in a position to carry out an abstraction of a quantity of water which—

(a) by virtue of section 27(1) above is not subject to the restriction on abstraction; and

(b) also falls within subsection (4) or (5) below,

shall be taken, for the purposes of this Chapter, to have a right to do so in respect of the maximum quantity mentioned in subsection (3) below.

(3) The maximum quantity is the lower of the following—

(a) twenty cubic metres;

(b) if, by virtue of an order under section 27A(1) above, section 27(1) above has, or has ever had, effect in relation to the source of supply and point of abstraction in question as if it referred to a quantity lower than twenty cubic metres, that lower quantity (or, if more than one, the lowest of them).

(4) An abstraction falls within this subsection if it is an abstraction from inland waters carried out by or on behalf of an occupier of land contiguous to those waters at the place where the abstraction is effected (“contiguous land”), and—

(a) the water is abstracted for use on a holding consisting of the contiguous land with or without other land held with that land; and

(b) it is abstracted for use on that holding for either or both of the following purposes—

(i) the domestic purposes of the occupier’s household;

(ii) agricultural purposes other than spray irrigation.

(5) An abstraction falls within this subsection if it is an abstraction from underground strata and the water is abstracted by or on behalf of an individual as a supply of water for the domestic purposes of his household.

(6) Subsection (2) above shall not apply to a person in respect of an abstraction which that person is, or was at any time, taken to have a right to carry out by virtue of any provision mentioned in paragraph (a), (c), (d), (e) or (f) of subsection (1) above.

(7) Subject to subsection (8) below, a person who was the holder of a full licence which has ceased to have effect (or has ceased in part to have effect) by virtue of—

(a) any provision made by virtue of section 27A(5) above in an order made under section 27A(1) above; or

(b) any provision made by virtue of section 33A(5) above in regulations made under section 33A above,

and who was taken in consequence of that licence (or that part of the licence) to have a right to abstract water by virtue of section 48(1) below shall continue to be taken to have that right for the purposes of this Chapter.

(8) For the purposes of this Chapter, the person who was the holder of the licence in question (“the old licence”) shall cease to continue to be taken to have a right, by virtue of subsection (7) above, to abstract water if—

(a) during a period mentioned in subsection (9) below he does not carry out any such abstraction as would have been authorised by the old licence if it had still been in force; or

(b) following a further order under section 27A(1) above or further regulations under section 33A above, he is granted another full licence in respect of abstraction from the same point as that authorised by the old licence.

(9) The period referred to in subsection (8)(a) above is—

(a) four years; or

(b) if the abstractions authorised under the old licence were abstractions planned to be carried out at intervals of more than four years, or abstractions for emergency purposes only, such longer period as the Agency may determine on the application of the holder of the old licence.

(10) In subsections (8) and (9) above, references to the old licence, in the case of a licence which ceased to have effect only to the extent specified in the order or regulations referred to in subsection (7) above, are to the part of the licence which ceased to have effect.

(11) Any reference in this Chapter to the person entitled to a protected right shall be construed in accordance with this section.

(12) This section is subject to any provision made by virtue of subsection (3) of section 39B below, and to subsections (4) and (5) of that section.”

(2) In section 72 of the WRA (interpretation of Chapter 2), in the entry for “protected right” in subsection (1), for “section 39(3)” there is substituted “section 39A”.

18 Register of certain protected rights

After section 39A of the WRA (inserted by section 17) there is inserted—

“39B Register of certain protected rights

(1) The Secretary of State may by regulations make provision for and in connection with the establishment, and for the keeping and maintenance by the Agency, of one or more registers of protected rights which arise otherwise than by virtue of a licence under this Chapter to abstract water.

(2) The regulations may, in particular, provide for—

(a) a register to relate to a prescribed geographical area, or for different sections of a register to relate to different geographical areas (whether prescribed or not);

(b) the inclusion of protected rights which arise other than by virtue of any provision of this Act;

(c) the form and contents of the register, and its inspection by members of the public;

(d) the procedure for applying for a protected right to be included in the register, including any information which is to accompany the application;

(e) cases in which it is the duty of the Agency to include a protected right in the register without an application for inclusion having been made.

(3) The Secretary of State may by order designate any geographical area in respect of which a register, or a section of a register, relates as an area of compulsory registration.

(4) If he does so, a protected right in that area which is not registered shall not have effect as a protected right for any purpose of this Act (other than that of registering it) for so long as it is not registered.

(5) Subsection (4) above does not apply in relation to any protected right until after the expiry of the period of two years beginning with the date on which the order under subsection (3) above was made, or such longer period as may be specified in the order.

(6) An order under subsection (3) above may be made only on the application of the Agency; but the Secretary of State may direct the Agency to make such an application.

(7) Schedule 6 to this Act shall have effect with respect to applications for orders under subsection (3) above and with respect to the making of such orders.

(8) The power to make orders under this section shall be exercisable by statutory instrument; and a statutory instrument containing an order under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(9) Paragraphs (d) to (f) of section 219(2) below apply in relation to orders under this section as they apply to regulations made under this Act.”

Form, contents and effect of licences

19 Form, contents and effect of licences

(1) Section 46 of the WRA (form and contents of licences) is amended as provided in subsections (2) to (5).

(2) In subsection (2), for the words before paragraph (a) there is substituted “Every full licence under this Chapter shall, and any other licence under this Chapter to abstract water may, make—”.

(3) After subsection (2) there is inserted—

“(2A) For the purposes of section 61(4A) below—

(a) every full licence under this Chapter which is for a term exceeding twelve years shall; and

(b) any transfer licence under this Chapter which is for a term exceeding twelve years may,

specify a minimum value for the quantity referred to in subsection (2)(a) above.”

(4) For subsections (4) and (5) there is substituted—

“(4) Every licence under this Chapter to abstract water shall also specify the purposes for which water abstracted in pursuance of the licence is to be used.

(5) Every licence under this Chapter to abstract water shall state—

(a) the date on which it takes effect; and

(b) the date on which it expires.

(5A) Every licence under this Chapter to obstruct or impede any inland waters shall remain in force until revoked.”

(5) In subsection (7), for “or by different means” there is substituted “, by different means or for different purposes”.

(6) In section 47 of the WRA (holders of licence), in subsection (1), the words “to abstract water” are omitted.

20 Limited extension of abstraction licence validity

After section 46 of the WRA there is inserted—

“46A Limited extension of abstraction licence validity

(1) If the condition in subsection (2) below is met, a full licence or a transfer licence whose term exceeded twelve months but whose expiry date (“the expiry date”) has passed shall be treated for all the purposes of this Act as not expiring until the date mentioned in subsection (4) below.

(2) The condition is that the Agency receives, not later than the beginning of the period of three months ending on the expiry date (or such later date before the expiry date as the Agency agrees), a valid application for a new licence—

(a) for abstraction from the same point as the abstraction licensed by the expiring licence;

(b) whose holder would be the same as the holder of the expiring licence; and

(c) which would take effect immediately after the expiry date.

(3) For the purposes of subsection (2) above, a “valid” application is one which complies with all the requirements of this Act in relation to the making of applications for licences of the type in question.

(4) The date referred to in subsection (1) above is whichever is the later of—

(a) if a new licence is granted (whether or not on the terms applied for), the date on which it takes effect;

(b) otherwise—

(i) except where the Secretary of State calls in an application under section 41 above, the expiry of the period for appealing under section 43 above, or if an appeal is brought, the date of its withdrawal; or

(ii) where the Secretary of State decides (under section 42 or 44 above) that no licence is to be granted, the date on which that decision is notified to the applicant.”

Modification of licences

21 Modification of licences

(1) Section 51 of the WRA (modification of licence on application of licence holder) is amended as follows.

(2) In subsection (1), after “Chapter” there is inserted “to abstract water”.

(3) After subsection (1) there is inserted—

“(1A) The holder of a licence under this Chapter to obstruct or impede the flow of inland waters (an “impounding licence”) may apply to the Agency to revoke the licence and, on any such application, the Agency may revoke the licence accordingly.

(1B) The Agency may require conditions to be met to its satisfaction before revocation of the impounding licence takes effect, and those conditions may in particular include conditions—

(a) requiring the removal of all or part of the impounding works;

(b) as to the restoration of the site of the impounding works to a state which is satisfactory to the Agency;

(c) relating to the inland waters the flow of which is obstructed or impeded by means of the impounding works.

(1C) The person making an application under subsection (1A) above (“the applicant”) may by notice appeal to the Secretary of State if—

(a) he is dissatisfied with the decision of the Agency as to—

(i) whether his licence may be revoked; or

(ii) any conditions imposed by virtue of subsection (1B) above; or

(b) the Agency fails to give notice of its decision to the applicant within the prescribed period or within such extended period as may be agreed in writing between the Agency and the applicant.

(1D) The Secretary of State may by regulations make provision with respect to—

(a) the manner in which notices of appeal under subsection (1C) above shall be served;

(b) the period within which such notices shall be served;

(c) the procedure on any such appeal.

(1E) Where an appeal is brought under subsection (1C) above, the Secretary of State may—

(a) allow or dismiss the appeal or reverse or vary any part of the decision of the Agency, whether the appeal relates to that part of the decision or not; and

(b) may deal with the application as if it had been made to him in the first place.

(1F) The decision of the Secretary of State on any appeal under subsection (1C) above shall be final.

(1G) Subsections (1C) to (1F) above are subject to section 114 of the 1995 Act (delegation or reference of appeals).”

(4) In section 114 of the Environment Act 1995 (c. 25) (power of Secretary of State to delegate or refer in connection with appeals), in subsection (2)(a)(v), after “43,” there is inserted “51,”.

(5) The amendments made by this section apply (as regards any act or omission after this section comes into force) in respect of impounding licences, regardless of when the impounding works were constructed.

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

(1) Section 52 of the WRA (proposals for modification of licences at the instance of the Agency or the Secretary of State) is amended as follows.

(2) After subsection (1) there is inserted—

“(1A) In the case of a licence to obstruct or impede any inland waters, a variation may take the form of a requirement that the impounding works be modified in ways specified in the proposed new provision of the licence.”

(3) In subsection (4), for paragraph (b) there is substituted—

“(b) be published in the prescribed way or (if no way is prescribed) in a way calculated to bring it to the attention of persons likely to be affected if the licence were revoked or varied as proposed.”

(4) In subsection (5), for “otherwise than in the London Gazette” there is substituted “as mentioned in subsection (4)(b) above”.

(5) For subsection (6) there is substituted—

“(6) A notice for the purposes of subsection (4) above shall—

(a) include any prescribed matters; and

(b) state that, before the end of a period specified in the notice—

(i) the holder of the licence may give notice in writing to the Agency objecting to the proposals; and

(ii) any other person may make representations in writing to the Agency with respect to the proposals.”

(6) For subsection (7) there is substituted—

“(7) The period referred to in subsection (6)(b) above—

(a) begins on the date the notice referred to in subsection (4) above is first published as mentioned there; and

(b) shall not end before the end of the period of twenty-eight days beginning with that date.”

(7) Subsection (8) is omitted.

Transfer and apportionment of licences

23 Transfer and apportionment of licences

(1) After section 59 of the WRA there is inserted—

“Transfer and apportionment of licences

59A Transfer of licence

(1) The following licences—

(a) a full licence;

(b) a transfer licence; or

(c) a licence to obstruct or impede the flow of inland waters by means of impounding works,

may be transferred by the holder of the licence to another person (“the transferee”) in accordance with the following provisions of this section.

(2) The holder and the proposed transferee shall give notice (a “transfer notice”) to the Agency of their agreement that the licence should be transferred.

(3) The transfer notice shall include—

(a) such information as the Agency reasonably requires; and

(b) (in the case of the transfer of a full licence or of a transfer licence) a declaration by the proposed transferee that—

(i) he has, or at the time when the proposed transfer is to take effect will have, a right of access in relation to each point of abstraction; and

(ii) he will continue to have such a right for the period of at least one year beginning with the date on which the proposed transfer is to take effect, or until the licence is to expire (if sooner),

and may specify the date on which the holder and the transferee wish the transfer to take effect.

(4) If the holder is a person in whom the licence has vested under section 59B below, a transfer notice shall be of no effect unless the notice required by section 59B(4) has been given.

(5) Subject to subsection (4) above, if the Agency receives a transfer notice which complies with the requirements of subsections (2) and (3) above, the Agency shall amend the licence by substituting the name of the transferee as holder of the licence.

(6) The transfer shall take effect—

(a) from the date on which the Agency amends the licence; or

(b) from the date specified in the transfer notice, if later.

(7) Nothing in this section shall affect the liability of the holder of the licence for any failure by him, before the transfer took effect, to comply with any condition or requirement of that licence.

(8) In this section—

• “point of abstraction” means a place where the licence authorises water to be abstracted from inland waters or (as the case may be) a place consisting of or comprising underground strata from which the licence authorises water to be abstracted; and

• “right of access” means, in relation to a point of abstraction, a right of access to land of the kind referred to in subsection (2)(a) or, as the case may be, (3)(a) of section 35 above; and references to a person who will have such a right of access shall be construed in accordance with that section (including subsections (4) to (6)).

59B Vesting of licence on death or bankruptcy of holder

(1) On the death of the holder of a licence under this Chapter, the licence shall be regarded as property forming part of the deceased’s personal estate, whether or not it would be so regarded apart from this subsection, and shall accordingly vest in his personal representatives.

(2) If a bankruptcy order is made against the holder of a licence under this Chapter, the licence shall be regarded for the purposes of any of the Second Group of Parts of the Insolvency Act 1986 (insolvency of individuals; bankruptcy) as property forming part of the bankrupt’s estate, whether or not it would be so regarded apart from this subsection, and shall accordingly vest as such in the trustee in bankruptcy.

(3) A person in whom a licence vests under this section shall become the holder of the licence, in place of the prior holder, from the date of the vesting.

(4) Where a licence other than a temporary licence vests in any person under this section, that person shall give notice of that fact to the Agency not later than the end of the period of fifteen months beginning with the date of the vesting.

(5) If—

(a) a licence vests in any person under this section; but

(b) that person fails to give the notice required by subsection (4) above within the period mentioned there,

the licence shall cease to have effect.

59C Apportionment of licence to abstract

(1) The holder of a full licence or of a transfer licence (the “old licence”) may apply to the Agency for the division of the holder’s right to abstract water in accordance with the old licence and for the transfer—

(a) to another person of part, or to a number of other persons of parts not amounting to the whole; or

(b) to a number of other persons of parts amounting in all to the whole,

of that right.

(2) The holder of the old licence and any person proposing to carry on a part of the abstraction authorised by the old licence in place of the holder (a “successor”) shall give notice to the Agency of their agreement to the division and transfer (an “apportionment notice”).

(3) The apportionment notice shall, in relation to the abstraction authorised by the old licence—

(a) specify, for each proposed successor, what quantity of water he proposes to abstract, and (if the holder of the old licence is to continue the abstraction in part) what quantity of water he proposes to abstract;

(b) specify the purpose or purposes for which those persons referred to in paragraph (a) above who would require a new licence granted under subsection (5) below would abstract water (being one or more of the purposes for which abstraction is authorised under the old licence);

(c) specify the point (or points) of abstraction from which it is proposed that the persons referred to in paragraph (a) above would abstract water (being one or more of the points from which abstraction is authorised under the old licence);

(d) include a declaration by each of those persons who requires a licence under this Chapter in order to carry on the abstraction that—

(i) he has, or at the time when the proposed grant to him of a new licence under subsection (5) below is to take effect will have, a right of access in relation to each such point of abstraction; and

(ii) he will continue to have such a right for the period of at least one year beginning with the date on which the new licence is to take effect, or until it is to expire (if sooner); and

(e) include such other information as the Agency reasonably requires,

and may specify the date on which the holder and the successor (or successors) wish the division and transfer (or transfers) to take effect.

(4) The apportionment notice shall be accompanied by an application on the part of the holder of the old licence for its revocation.

(5) Subject to subsection (9) below, if the Agency receives an apportionment notice and the application for revocation referred to in subsection (4) above, the Agency shall—

(a) revoke the old licence;

(b) if the holder is to continue the abstraction in part and a licence is required under this Chapter for that purpose, grant to the holder of the old licence a licence relating to that part of the abstraction; and

(c) grant to each successor who requires a licence under this Chapter in order to carry on his part of the abstraction a licence relating to that part of the abstraction.

(6) Sections 34 to 45 above shall not apply to the grant of a new licence under subsection (5) above.

(7) Subject to section 46 above and to any provision of regulations made under section 59D(1) below, each new licence to be granted under subsection (5) above shall be granted subject to provisions which correspond as nearly as practicable to those of the old licence in relation to the part of the abstraction to be authorised by the new licence.

(8) The revocation of the old licence and the grant of the new licences shall take effect—

(a) from the date on which the Agency revokes the old licence and grants the new ones; or

(b) from the date specified in the apportionment notice, if later.

(9) The Agency shall not grant a new licence to the holder of the old licence or to a successor if, by virtue of an exemption, the restriction on abstraction would not apply to that part of the abstraction proposed in relation to him in the apportionment notice.

(10) For the purposes of this Chapter, a person (whether the holder of the old licence or a successor) who proposes to carry on a part of the abstraction in the circumstances mentioned in subsection (9) above shall, if the old licence was a full licence, be taken to have the right to do so in relation to that part, subject to subsection (11) below.

(11) For the purposes of this Chapter, a person shall cease to be taken to have a right, by virtue of subsection (10) above, to carry on an abstraction if—

(a) during a period mentioned in subsection (12) below that person does not carry out any such abstraction; or

(b) following an order under section 27A(1) above or regulations under section 33A above, that person is granted a full licence in respect of abstraction from the same point.

(12) The period referred to in subsection (11)(a) above is—

(a) four years; or

(b) if the abstractions authorised under the old licence were abstractions planned to be carried out at intervals of more than four years, or abstractions for emergency purposes only, such longer period as the Agency may determine on the application of the person in question.

(13) For the purposes of section 39A above, a new licence granted under subsection (5) above shall be treated—

(a) as if it had been granted at the time the old licence was granted; and

(b) as if it and any other new licence granted by virtue of the relevant apportionment notice had been granted in place of the old licence.

(14) In this section—

• “exemption” means the disapplication of the restriction on abstraction under or by virtue of section 27 or 33A above; and

• “point of abstraction” and “right of access” have the same meanings as in section 59A above.

59D Apportionment of licence to abstract: supplementary

(1) The Secretary of State may make regulations about the provisions to be contained in licences granted under section 59C above.

(2) Nothing in section 59C above shall affect the liability of the holder of the old licence for any failure by him, before the revocation of that licence took effect, to comply with any condition or requirement of that licence.

(3) If the holder of the old licence is a person in whom the old licence has vested under section 59B above, an apportionment notice shall be of no effect unless the notice required by section 59B(4) has been given.

(4) In this section, “apportionment notice” and “old licence” have the same meanings as in section 59C above.”

(2) In section 47 of the WRA (holders of licence)—

(a) for subsection (2) there is substituted—

“(2) The person to whom a licence under this Chapter is granted to abstract water or to obstruct or impede any inland waters is the holder of the licence for the purposes of this Act, subject to sections 59A to 59C and 67 below.”,

(b) subsection (3) is omitted.

(3) In section 189 of the WRA (register of abstraction and impounding licences), in subsection (1)(b), for the words from “section 49” to the end there is substituted “section 59A, 59B or 59C above”.

(4) Sections 49 and 50 of the WRA (which relate to the succession to licences to abstract water) shall cease to have effect.

(5) Subsection (4) does not affect the succession to a licence to abstract water where the death or other act or event referred to in section 49(2)(a) or 50(1)(a) or (b) of the WRA occurred before the coming into force of that subsection, and section 49 of the WRA or (as applicable) any regulations under section 50 of the WRA which were in force immediately before the coming into force of subsection (4) are to continue to have effect in relation to such a case despite the repeal of the applicable section.

Claims and compensation

24 Claims arising out of water abstraction

(1) After section 48 of the WRA there is inserted—

“48A Civil remedies for loss or damage due to water abstraction

(1) Subject to subsection (7) below and to section 79 (including that section as applied by section 79A(9)) below, a person who abstracts water from any inland waters or underground strata (an “abstractor”) shall not by that abstraction cause loss or damage to another person.

(2) A person who suffers such loss or damage (a “relevant person”) may bring a claim against the abstractor.

(3) Such a claim shall be treated as one in tort for breach of statutory duty.

(4) In proceedings in respect of a claim under this section, the court may not grant an injunction against the abstractor if that would risk interrupting the supply of water to the public, or would put public health or safety at risk.

(5) Except as provided in this section, no claim may be made in civil proceedings by a person (whether or not a relevant person) against an abstractor in respect of loss or damage caused by his abstraction of water.

(6) Nothing in this section prevents or affects a claim for negligence or breach of contract.

(7) This section does not apply, and no claim may be brought under this section, where the loss or damage is caused by an abstractor acting in pursuance of a licence under this Chapter and is loss or damage—

(a) in respect of which a person is entitled to bring a claim under section 60 below (or would be so entitled if there were a breach of the duty referred to in that section);

(b) in respect of which a person would have been entitled to bring a claim under section 60 below but for an express provision (including, for example, section 39(1A) above and section 59C(6) below) disapplying that duty; or

(c) constituting grounds on which a person is entitled to apply to the Secretary of State under section 55 below (or would be so entitled but for subsection (2) of that section) for the revocation or variation of that licence,

but without prejudice to the application of section 48 above.”

(2) In section 48 of the WRA (general effect of licence), in subsection (2), after “supply” there is inserted “(other than an abstraction in respect of which a claim could be brought under section 48A below, in which case that section shall apply)”.

(3) In relation to loss or damage suffered before the coming into force of this section—

(a) section 48A of the WRA inserted by subsection (1) of this section does not apply, and

(b) section 48 of, and paragraphs 1(2) and 2 of Schedule 7 to, the WRA continue to have effect as if subsection (2) of this section were not in force.

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

(1) Section 61 of the WRA (compensation where licence modified on direction of the Secretary of State) is amended in accordance with subsections (2) and (3).

(2) In subsection (4), for “seven” there is substituted “four”.

(3) After subsection (4) there is inserted—

“(4A) No compensation shall be payable under this section in respect of the variation of a full licence, or of a transfer licence which specifies a minimum value under section 46(2A) above, so as to reduce the quantity of water which the holder of the licence is authorised by the licence to abstract from the source of supply to which the licence relates if—

(a) the ground for varying the licence is that the Secretary of State is satisfied that the variation is necessary in order to protect the availability of water in the source of supply to which the licence relates;

(b) the variation does not reduce the quantity of water which the holder of the licence is authorised by the licence to abstract to less than the minimum value specified in the licence under section 46(2A) above for the purposes of this subsection; and

(c) the conditions set out in subsection (4B) below are satisfied.

(4B) Those conditions are that—

(a) the licence was granted after the coming into force of section 19 of the Water Act 2003;

(b) the variation is made no sooner than the end of the period of six years beginning with the date on which the licence took effect; and

(c) the variation takes effect no sooner than the end of the period of six years beginning with the date of the variation.”

(4) The amendment made by subsection (2) has effect in relation to the revocation or variation of a licence only if the period referred to in section 61(4) of the WRA during which no water was abstracted in pursuance of the licence began after the coming into force of that subsection.

26 Recovery of compensation from new licence-holder

After section 61 of the WRA there is inserted—

“61A Recovery of compensation from new licence-holder

(1) This section applies where compensation has been paid under section 61 above to the holder of a licence (“licence A”) following its revocation, and—

(a) the holder of licence A was a water undertaker;

(b) at the time of the revocation an application from a qualifying person for a licence to abstract water (“licence B”) was outstanding;

(c) if the Agency had granted licence B while licence A still had effect, the Agency would have been in breach of the duty imposed on it by section 39(1) above owed to the holder of licence A;

(d) the ground for revoking licence A was that the Agency was of the view that in the interests of greater efficiency in the use of water resources it would be better for licence B to be granted and licence A revoked; and

(e) the Agency proposes to grant licence B.

(2) If this section applies, the Agency may (if licence B is granted) recover from the qualifying person the amount of the compensation referred to in subsection (1) above (or such lesser amount as the Agency determines).

(3) Subsection (6) of section 41 of the 1995 Act (which confers powers to make schemes imposing charges) shall apply to the amount referred to in subsection (2) above as if it were a charge due and payable to the Agency in respect of the subsistence of licence B.

(4) In this section, “qualifying person” means—

(a) a water undertaker; or

(b) a person who has made an application for an appointment or variation replacing a company as a water undertaker under section 8 of the Water Industry Act 1991 which has not been determined.”

27 Withdrawal of compensation for certain revocations and variations

(1) This section applies where—

(a) a licence to abstract water is revoked or varied on or after 15th July 2012 in pursuance of a direction under section 54 or 56 of the WRA (which provide for the Secretary of State to direct the Environment Agency to revoke or vary a licence in certain circumstances);

(b) the licence was granted before the coming into force of section 19 of this Act;

(c) the licence is one which is expressed to remain in force until revoked; and

(d) the ground for revoking or varying the licence is that the Secretary of State is satisfied that the revocation or variation is necessary in order to protect from serious damage—

(i) any inland waters,

(ii) any water contained in underground strata,

(iii) any underground strata themselves,

or any flora or fauna dependent on any of them.

(2) Where this section applies, no compensation is payable under section 61 of the WRA in respect of the revocation or variation of the licence.

(3) Expressions used in sub-paragraphs (i), (ii) and (iii) of subsection (1)(d) are to be construed in accordance with section 221 of the WRA; and “waters”, in relation to a lake, pond, river or watercourse which is for the time being dry, includes its bottom, channel or bed.

Water resources management schemes

28 Water resources management schemes: other abstractors

After section 20 of the WRA there is inserted—

“20A Water resources management schemes: other abstractors

(1) The Agency may enter into and maintain such arrangements with holders of abstraction licences other than water undertakers for securing the proper management or operation of—

(a) the waters from which they have the right by virtue of their licences to abstract water; and

(b) any reservoirs, apparatus or other works which are used for the purposes of or in connection with their abstractions and which belong to them, are operated by them or are otherwise under their control,

as the Agency from time to time considers appropriate for the purpose of carrying out its functions under section 6(2) of the 1995 Act.

(2) Without prejudice to the power of the Agency and any holder of an abstraction licence to include any such provision as may be agreed between them in arrangements under this section, such arrangements may—

(a) make provision by virtue of subsection (1)(a) above with respect to the construction or installation of any reservoirs, apparatus or other works which the holder of the licence will use for the purposes of or in connection with his abstraction;

(b) contain provision requiring payments to be made by the Agency to the holder of the licence; and

(c) require the reference to and determination by the Secretary of State or the Water Services Regulation Authority of questions arising under the arrangements.

(3) The Agency shall send a copy of any arrangements entered into by it under this section to the Secretary of State.

(4) In this section, references to abstraction licences are to licences under Chapter 2 of this Part to abstract water.”

29 Water resources management schemes: referral to Secretary of State

(1) After section 20A of the WRA (inserted by section 28) there is inserted—

“20B Water resources management schemes: referral to Secretary of State

(1) This section applies where—

(a) the Agency has sought to enter into arrangements acceptable to it under section 20 or 20A above, but is satisfied that the other party is unwilling to enter into such arrangements or to do so on terms appearing to the Agency to be reasonable; or

(b) having entered into such arrangements, the Agency has sought to renew or vary them but is satisfied that the other party is unwilling to do so or to do so on terms appearing to the Agency to be reasonable.

(2) Where this section applies, the Agency may refer to the Secretary of State the question (as the case may be)—

(a) whether such arrangements should be entered into, and if so, on what terms; or

(b) whether the arrangements should be renewed or varied (as the case may be), and if so, on what terms.

(3) If the Secretary of State determines that arrangements should be entered into or (as the case may be) renewed or varied, such arrangements on the terms determined by the Secretary of State shall be enforceable—

(a) by civil proceedings by the Secretary of State for an injunction or for any other appropriate relief; and

(b) where the other party is a water undertaker, also under section 18 of the Water Industry Act 1991 (enforcement orders) by the Secretary of State.

(4) The functions of the Secretary of State under subsection (2) above shall be treated for the purposes of section 114 of the 1995 Act (delegation or reference of appeals) as if they were functions to which paragraph (a) of subsection (1) of that section applied.”

Enforcement

30 Enforcement notices, and related procedures and offences

After section 25 of the WRA there is inserted—

“25A Enforcement notices

(1) Subject to the following provisions of this section, where it appears to the Agency that a person is—

(a) in breach of section 24(1) or (2) or section 25(1) above; or

(b) for the purposes of section 24 or 25 above a holder of a licence under this Chapter and has not complied with a condition or requirement imposed by the provisions, as for the time being in force, of that licence,

the Agency shall be entitled to serve an enforcement notice on him if the condition in subsection (2) below is satisfied.

(2) The condition is that it appears to the Agency that the breach or failure to comply is causing or is likely to cause significant damage to the environment.

(3) An enforcement notice is a notice requiring the person on whom it is served—

(a) to cease his breach of section 24(1) or (2) or section 25(1) above, or to comply with the condition or requirement in question; and

(b) to carry out any works or operations specified in the notice.

(4) The works or operations which may be specified are works or operations which it appears to the Agency are appropriate for the purpose of remedying or mitigating the effects of the breach or failure to comply, and may include—

(a) works or operations for the purpose, so far as it is reasonably practicable to do so, of restoring any affected waters, including any flora and fauna dependent on them, to their state immediately before the breach or failure to comply; and

(b) in the case of a breach of section 25(1) above, the removal of any unauthorised impounding works or the reversal of any unauthorised alteration to impounding works.

(5) An enforcement notice must specify the periods within which the person on whom it is served must do each of the things specified in the notice.

(6) Before serving an enforcement notice on any person, the Agency shall take reasonable steps to consult that person about the works or operations which are to be specified in the notice.

(7) The Secretary of State may by regulations make provision for or in connection with—

(a) the form or content of enforcement notices;

(b) requirements for consultation, before the service of an enforcement notice, with persons other than the person upon whom the notice is to be served;

(c) steps to be taken for the purposes of any consultation required under subsection (6) above or regulations made by virtue of paragraph (b) above;

(d) any other steps of a procedural nature which are to be taken in connection with, or in consequence of, the service of an enforcement notice.

(8) An enforcement notice is not invalid, or invalidly served, merely because of a failure to comply with subsection (6) above or with regulations made by virtue of subsection (7)(b) above.

(9) The Secretary of State may, if he thinks fit in relation to any person, give directions to the Agency as to whether or how it should exercise its powers under this section.

(10) In proceedings for any offence under section 24 or 25 above against a person upon whom an enforcement notice has been served, the following are not to be taken as evidence that he has committed the offence—

(a) the fact that an enforcement notice has been served on him;

(b) the fact that he does not appeal against it;

(c) the fact that on an appeal against it the notice is confirmed (whether with or without modifications).

25B Rights of entry and appeals

Sections 161B and 161C below (including any power to make regulations) shall apply in relation to enforcement notices as they apply in relation to works notices under section 161A below.

25C Consequences of not complying with an enforcement notice

(1) If a person on whom the Agency serves an enforcement notice fails to comply with any of its requirements, he shall be guilty of an offence.

(2) A person who commits an offence under subsection (1) above shall be liable—

(a) on summary conviction, to a fine not exceeding £20,000;

(b) on conviction on indictment, to a fine.

(3) If a person on whom an enforcement notice has been served fails to comply with any of its requirements, the Agency may do what that person was required to do and may recover from him any costs or expenses reasonably incurred by the Agency in doing it.

(4) If the Agency is of the opinion that proceedings for an offence under subsection (1) above would afford an ineffectual remedy against a person who has failed to comply with the requirements of an enforcement notice, the Agency may take proceedings in the High Court for the purpose of securing compliance with the notice.”

Miscellaneous

31 Bulk supplies

(1) After section 20B of the WRA (inserted by section 29 of this Act) there is inserted—

“20C Proposals for bulk supply arrangements

(1) In the circumstances mentioned in subsection (2) below, the Agency may, in carrying out its functions under section 6(2) of the 1995 Act, propose to a qualifying person (within the meaning of section 40 of the Water Industry Act 1991) that he make an application under that section for a bulk supply of water from a water undertaker.

(2) The circumstances referred to in subsection (1) above are that it appears to the Agency that such a bulk supply is necessary in order to secure the proper use of water resources.

(3) The Agency shall not make such a proposal without first consulting the Water Services Regulation Authority.

(4) The Agency may include in its proposal the period for which, and terms and conditions on which, the Agency considers it appropriate that the bulk supply should be given.”

(2) In section 38 of the WRA (general consideration of applications), in subsection (3), after paragraph (b) there is inserted—

“and may have regard to any failure on the part of the applicant to make an application under section 40 of the Water Industry Act 1991 pursuant to a proposal made by the Agency under section 20C above.”.

32 Visiting forces

Section 223 of the WRA (exemption of visiting forces from restrictions on abstraction etc) shall cease to have effect.

33 Application of certain water resources provisions to this Act

(1) The relevant WRA provisions apply to (or in relation to) the following sections of this Act (the “applicable sections”) as they apply to (or in relation to) Part 2 or, as the case may be, Chapter 2 of Part 2 of the WRA—

(a) section 3 (existing impounding works),

(b) section 4 (existing impounding works: works notices), and

(c) section 10 (orders under section 33 of the WRA, etc).

(2) Accordingly, in the relevant WRA provisions—

(a) references to Part 2 of, or to Chapter 2 of Part 2 of, the WRA are to be read as if the applicable sections were included in that Part or that Chapter,

(b) references to the related water resources provisions are to be read as if those provisions meant, in relation to the applicable sections, the relevant WRA provisions other than section 222 of the WRA, and

(c) references to the Secretary of State are to be read as references to the appropriate authority (as defined, in each case, in the applicable section in question).

(3) The “relevant WRA provisions” are the following provisions of the WRA—

(a) section 120 (contributions between the Agency and certain other authorities),

(b) section 158 (works agreements for water resources purposes),

(c) section 201 (power to require information in respect of water resources functions), as substituted by section 70 of this Act,

(d) section 216 (enforcement: powers and duties),

(e) section 222 (Crown application), as in force immediately before the substitution made by paragraph 2(4) of Schedule 21 to the Environment Act 1995 (c. 25) and for so long as the substituted section 222 does not apply to Part 2 of the WRA.

(4) Section 220 of the WRA (provisions relating to service of documents) applies to documents required or authorised by virtue of any of the applicable sections to be served on any person as it applies to documents required or authorised to be served by virtue of the WRA.

(5) References in the WRA to the functions (generally) of the Environment Agency are to be read as including the Agency’s functions under the applicable sections.

Part 2 New regulatory arrangements, etc

Establishment, etc of new bodies

34 Water Services Regulation Authority

(1) After section 1 of the Water Industry Act 1991 (c. 56) (in this Act referred to as the “WIA”) there is inserted—

“1A Water Services Regulation Authority

(1) There shall be a body corporate to be known as the Water Services Regulation Authority (in this Act referred to as “the Authority”) for the purpose of carrying out the functions conferred on or transferred to it by this Act or under or by virtue of any other enactment.

(2) The functions of the Authority are performed on behalf of the Crown.

(3) Schedule 1A to this Act shall have effect with respect to the Authority.

(4) In Welsh the Authority may be known as “Awdurdod Rheoleiddio Gwasanaethau Dŵr”.”

(2) Schedule 1 (which inserts the new Schedule 1A into the WIA) is to have effect.

(3) The office of Director General of Water Services is abolished.

(4) Section 1 of, and Schedule 1 to, the WIA (which make provision in relation to the Director General of Water Services) shall cease to have effect.

35 Consumer Council for Water

(1) After section 27 of the WIA there is inserted—

“The Consumer Council for Water

27A Establishment of the Council and committees

(1) There shall be a body corporate to be known as the Consumer Council for Water (in this Act referred to as “the Council”) for the purpose of carrying out the functions of the Council under this Act.

(2) In Welsh the Council may be known as “Cyngor Defnyddwyr Dŵr”.

(3) The Council shall not be regarded as a servant or agent of the Crown or as enjoying any status, immunity or privilege of the Crown.

(4) The Council shall establish such committees of the Council—

(a) as the Assembly may direct, for relevant undertakers whose areas are wholly or mainly in Wales; and

(b) as the Secretary of State may direct, for other relevant undertakers.

(5) A direction under subsection (4) above may provide for the allocation of each relevant undertaker to a committee specified in the direction.

(6) The power to give a direction under subsection (4) above may not be exercised after the end of the period of six months beginning with the commencement of section 35 of the Water Act 2003.

(7) After the end of the period mentioned in subsection (6) above the Council may (subject to paragraph 11 of Schedule 3A to this Act)—

(a) establish such committees for relevant undertakers as it considers appropriate; or

(b) alter the allocation of a relevant undertaker to a committee established under this section.

(8) The Council shall ensure that each relevant undertaker is allocated to a committee established under this section.

(9) A committee established under this section is referred to in this Act as a “regional committee”.

(10) The purposes of a regional committee shall be—

(a) the provision of advice and information to the Council on consumer matters affecting the areas of the relevant undertakers allocated to that committee;

(b) such other purposes as the Council may determine.

(11) The provisions of Schedule 3A to this Act (which makes further provision about the Council and regional committees) shall have effect.

(12) The Council shall exercise and perform its powers and duties in the manner which it considers is best calculated to contribute to the achievement of sustainable development.

(13) In this Chapter—

• “consumers” includes both existing and future consumers;

• “the interests of consumers” means the interests of consumers in relation to—

  (a)

  the supply of water by means of a water undertaker’s supply system to premises either by water undertakers or by licensed water suppliers acting in their capacity as such; and

  (b)

  the provision of sewerage services by sewerage undertakers; and

• “consumer matter” means any matter connected with the interests of consumers.

27B Co-operation between Council and other authorities

(1) This section imposes duties on—

(a) the Authority and the Council;

(b) the Council and the Secretary of State; and

(c) the Council and the Assembly.

(2) It shall be the duty of the bodies mentioned in each paragraph of subsection (1) above to make arrangements with a view to securing—

(a) co-operation and the exchange of information between them; and

(b) the consistent treatment of matters which affect both of them.

(3) As soon as practicable after agreement is reached on any arrangements required by this section, the parties shall prepare a memorandum setting them out.

(4) Arrangements under this section shall be kept under review by the parties.

(5) As soon as practicable after agreement is reached on any changes to arrangements under this section, the parties shall revise their memorandum.

(6) Parties to arrangements required by this section shall send a copy of their memorandum, and any revised memorandum, to each other person mentioned in subsection (1) above who is not a party to the arrangements set out in the memorandum (or revised memorandum).

(7) The Secretary of State shall lay a copy of every memorandum or revised memorandum under this section before each House of Parliament.”

(2) Schedule 2 (which inserts the new Schedule 3A into the WIA) is to have effect.

(3) The customer service committees established under section 28(1) of the WIA are abolished.

(4) Section 28 of, and Schedule 4 to, the WIA shall cease to have effect.

36 Transfer to Authority and Council of functions, property etc

(1) The functions of the Director General of Water Services are transferred to the Water Services Regulation Authority.

(2) Subject to any express amendment made by this Act, each reference to the Director General of Water Services (or to him as the Director) in the WIA (however the reference is expressed) is to have effect as a reference to the Water Services Regulation Authority (or, as the case may be, the Authority), and accordingly in the WIA “he”, “him” and cognate expressions, in relation to the Director General of Water Services, are to have effect as “it” (or the appropriate equivalent) in relation to the Water Services Regulation Authority.

(3) The Secretary of State may make one or more schemes (“transfer schemes”) for the transfer of the property, rights and liabilities of the Director General of Water Services to the Water Services Regulation Authority (referred to below in this Part as “the Authority”) or to the Consumer Council for Water (referred to below in this Part as “the Council”).

(4) A transfer scheme may provide for the transfer to the Council of rights and liabilities relating to persons employed in the civil service of the state.

(5) On the day appointed by a transfer scheme, the property, rights and liabilities which are the subject of the scheme shall, by virtue of this subsection, be transferred in accordance with the provisions of the scheme.

(6) Schedule 3 is to have effect in relation to transfer schemes and transfers under this section.

37 Conditions relating to costs of water regulation

(1) In this section “payment conditions” means conditions included in an appointment under Chapter 1 of Part 2 of the WIA by virtue of section 11(1)(c) of that Act.

(2) The payment conditions of such an appointment may (without prejudice to the generality of section 11(1)(c)) require the payment by the company holding the appointment of sums relating to any of the expenses mentioned in subsection (3).

(3) Those expenses are—

(a) the expenses of the Council, and

(b) the expenses of the Authority, the Secretary of State or the Assembly in relation to the establishment of the Council.

(4) The Authority may, in accordance with this section, modify any payment conditions where it considers it necessary or expedient to do so in consequence of, or of preparations for—

(a) the establishment of the Council, or

(b) the abolition of the customer service committees established under section 28(1) of the WIA.

(5) Where the Authority modifies under subsection (4) any payment conditions of an appointment it may make such incidental or consequential modifications as it considers necessary or expedient of the other conditions included in the appointment.

(6) Before modifying under subsection (4) or (5) the conditions included in such an appointment, the Authority shall consult the company holding the appointment.

(7) The powers of the Authority under subsections (4) and (5) may not be exercised after the end of the period of two years beginning with the commencement of this section.

(8) The Secretary of State may, after consulting the Assembly, give directions to the Authority for the purpose of securing that sums relating to any of the expenses mentioned in subsection (3) are included in the sums payable by virtue of payment conditions; and the Authority shall comply with any such direction.

(9) If this section comes into force before the coming fully into force of section 36(1), references in this section to the Authority are to be read as including references to the Director General of Water Services.

38 Forward work programmes and annual reports

(1) Before section 193 of the WIA there is inserted—

“192A Forward work programmes

(1) The Authority and the Council shall, before each financial year, each publish a document (the “forward work programme”) containing a general description of the projects, other than those comprising routine activities in the exercise of its functions, which it plans to undertake during the year.

(2) That description must include the objectives of each project.

(3) The forward work programme for any year shall also include an estimate of the overall expenditure which the Authority or the Council expects to incur during the year in the exercise of its functions.

(4) Before publishing the forward work programme for any year, the Authority or the Council shall give notice—

(a) containing a draft of the forward work programme; and

(b) specifying the time within which representations or objections to the proposals contained in it may be made,

and shall consider any representations or objections which are duly made and not withdrawn.

(5) The notice under subsection (4) above must be published by the Authority or the Council in such manner as it considers appropriate for the purpose of bringing the matters contained in it to the attention of persons likely to be affected by them.

(6) The Authority must send a copy of any notice given by it under subsection (4) above to the Council, the Secretary of State and the Assembly.

(7) The Council must send a copy of any notice given by it under subsection (4) above to the Authority, the Secretary of State and the Assembly.

192B Annual and other reports

(1) The Authority shall, as soon as practicable after the end of each financial year, make to the Secretary of State a report (the “annual report” for that year) on—

(a) its activities during that year; and

(b) the activities of the Competition Commission during that year in respect of any references made by it.

(2) The annual report for each year shall include—

(a) a general survey of developments in respect of matters falling within the scope of the Authority’s functions;

(b) a report on the progress of the projects described in the forward work programme for that year;

(c) a summary of final and provisional orders made and penalties imposed by the Authority during the year;

(d) a report on such matters relating to any relevant undertaker whose area is wholly or mainly in Wales as the Assembly may from time to time require; and

(e) a report on such other matters as the Secretary of State may from time to time require.

(3) The annual report for each year shall set out any general directions given by the Secretary of State under section 27(3) above.

(4) The Secretary of State or (as the case may be) the Assembly shall consult the Authority before exercising the power under subsection (2)(d) or (e) above in relation to any matter.

(5) The Secretary of State shall—

(a) lay a copy of each annual report before each House of Parliament; and

(b) arrange for the report to be published in such manner as he considers appropriate.

(6) The Authority may also prepare other reports with respect to any matter falling within the scope of its functions and may arrange for any such report to be published in such manner as it considers appropriate.

(7) The Authority shall send a copy of each annual or other report under this section to the Assembly, the Council and the Chief Inspector of Drinking Water.

(8) In making or preparing any report under this section the Authority shall have regard to the need for excluding, so far as that is practicable, any matter which relates to the affairs of a particular individual or body of persons (corporate or unincorporate), where publication of that matter would or might, in the opinion of the Authority, seriously and prejudicially affect the interests of that individual or body.”

(2) Sections 193 and 194 of the WIA (which make provision about annual and other reports by the Director General of Water Services and customer service committees) shall cease to have effect.

Objectives of regulation of water industry

39 Objectives and duties under WIA

(1) Section 2 of the WIA (general duties with respect to water industry) is amended as follows.

(2) In paragraph (a) of subsection (1), after “relevant undertakers” there is inserted “and of licensed water suppliers”.

(3) For subsection (2) there is substituted—

“(2A) The Secretary of State or, as the case may be, the Authority shall exercise and perform the powers and duties mentioned in subsection (1) above in the manner which he or it considers is best calculated—

(a) to further the consumer objective;

(b) to secure that the functions of a water undertaker and of a sewerage undertaker are properly carried out as respects every area of England and Wales;

(c) to secure that companies holding appointments under Chapter 1 of Part 2 of this Act as relevant undertakers are able (in particular, by securing reasonable returns on their capital) to finance the proper carrying out of those functions; and

(d) to secure that the activities authorised by the licence of a licensed water supplier and any statutory functions imposed on it in consequence of the licence are properly carried out.

(2B) The consumer objective mentioned in subsection (2A)(a) above is to protect the interests of consumers, wherever appropriate by promoting effective competition between persons engaged in, or in commercial activities connected with, the provision of water and sewerage services.

(2C) For the purposes of subsection (2A)(a) above the Secretary of State or, as the case may be, the Authority shall have regard to the interests of—

(a) individuals who are disabled or chronically sick;

(b) individuals of pensionable age;

(c) individuals with low incomes;

(d) individuals residing in rural areas; and

(e) customers, of companies holding an appointment under Chapter 1 of Part 2 of this Act, whose premises are not eligible to be supplied by a licensed water supplier,

but that is not to be taken as implying that regard may not be had to the interests of other descriptions of consumer.

(2D) For the purposes of subsection (2C) above, premises are not eligible to be supplied by a licensed water supplier if—

(a) they are household premises (as defined in section 17C below); or

(b) the total quantity of water estimated to be supplied to the premises annually for the purposes of subsection (2) of section 17D below is less than the quantity specified in that subsection.

(2E) The Secretary of State and the Authority may, in exercising any of the powers and performing any of the duties mentioned in subsection (1) above, have regard to—

(a) any interests of consumers in relation to electricity conveyed by distribution systems (within the meaning of the Electricity Act 1989);

(b) any interests of consumers in relation to gas conveyed through pipes (within the meaning of the Gas Act 1986);

(c) any interests of consumers in relation to communications services and electronic communications apparatus (within the meaning of the Communications Act 2003),

which are affected by the exercise of that power or the performance of that duty.”

(4) For subsections (3) and (4) there is substituted—

“(3) Subject to subsection (2A) above, the Secretary of State or, as the case may be, the Authority shall exercise and perform the powers and duties mentioned in subsection (1) above in the manner which he or it considers is best calculated—

(a) to promote economy and efficiency on the part of companies holding an appointment under Chapter 1 of Part 2 of this Act in the carrying out of the functions of a relevant undertaker;

(b) to secure that no undue preference is shown, and that there is no undue discrimination in the fixing by such companies of water and drainage charges;

(c) to secure that consumers are protected as respects benefits that could be secured for them by the application in a particular manner of any of the proceeds of any disposal (whenever made) of any of such a company’s protected land or of an interest or right in or over any of that land;

(d) to ensure that consumers are also protected as respects any activities of such a company which are not attributable to the exercise of functions of a relevant undertaker, or as respects any activities of any person appearing to the Secretary of State or (as the case may be) the Authority to be connected with the company, and in particular by ensuring—

(i) that any transactions are carried out at arm’s length;

(ii) that the company, in relation to the exercise of its functions as a relevant undertaker, maintains and presents accounts in a suitable form and manner;

(iii) that, if the person is a licensed water supplier, its licence does not authorise it to carry on any activities in the area of the company;

(e) to contribute to the achievement of sustainable development.

(4) In exercising any of the powers or performing any of the duties mentioned in subsection (1) above in accordance with the preceding provisions of this section, the Secretary of State and the Authority shall have regard to the principles of best regulatory practice (including the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed).”

(5) After subsection (5) there is inserted—

“(5A) In this section—

• “consumers” includes both existing and future consumers; and

• “the interests of consumers” means the interests of consumers in relation to—

  (a)

  the supply of water by means of a water undertaker’s supply system to premises either by water undertakers or by licensed water suppliers acting in their capacity as such; and

  (b)

  the provision of sewerage services by sewerage undertakers.”

(6) In subsection (6), for paragraphs (a) and (b) there is substituted—

“(a) subject to subsection (6A) below, the reference in subsection (1) above to the provisions of this Act relating to the regulation of relevant undertakers and of licensed water suppliers is a reference to the provisions contained in Part 2 of this Act (except section 27A, and Schedule 3A), or in any of sections 37A to 38, 39, 39B, 39C, 66B, 66D, 66F to 66H, 66K, 66L, 95, 96, 153, 181, 182, 192A, 192B, 195, 195A and 201 to 203 below;

(b) the reference in that subsection to the provisions relating to the financial conditions of requisitions is a reference to the provisions contained in sections 42, 43, 43A, 48, 51C, 99, 100 and 100A below; and”.

(7) In subsection (6A), for “Subsections (2) to (4) above” there is substituted “Subsections (2A) to (4) above and section 2A below”.

(8) In subsection (6B), for “subsections (2) to (4) above” there is substituted “subsections (2A) to (4) above and section 2A below”.

(9) After subsection (6B) there is added—

“(7) The duties imposed by subsections (2A) to (4) above and section 2A below do not affect the obligation of the Authority or, as the case may be, the Secretary of State to perform or comply with any other duty or requirement (whether arising under this Act or another enactment, by virtue of any Community obligation or otherwise).”

40 Guidance to Authority on social and environmental matters

After section 2 of the WIA there is inserted—

“2A Guidance on social and environmental matters

(1) Guidance may be issued from time to time—

(a) by the Assembly, with respect to appointment areas which are wholly or mainly in Wales; and

(b) by the Secretary of State, with respect to other appointment areas,

about the making by the Authority of a contribution towards the attainment of any social or environmental policies set out or referred to in the guidance.

(2) In formulating guidance, the Secretary of State and the Assembly shall, where practicable, have regard to the costs and benefits which may be expected to result from the guidance.

(3) The Authority shall, in exercising and performing the powers and duties mentioned in section 2(1) above (subject to section 2(6) above), have regard to any guidance issued under this section.

(4) Before issuing guidance under this section the Secretary of State and the Assembly shall consult—

(a) the Authority;

(b) the Council;

(c) in the case of the Secretary of State, the Assembly and vice versa;

(d) relevant undertakers;

(e) licensed water suppliers; and

(f) such other persons as the Secretary of State or the Assembly considers it appropriate to consult in relation to the guidance.

(5) A draft of any guidance proposed to be issued by the Secretary of State under this section shall be laid before each House of Parliament.

(6) Guidance shall not be issued by the Secretary of State under this section until after the period of forty days beginning with—

(a) the day on which the draft is laid before each House of Parliament; or

(b) if the draft is laid before the House of Lords on one day and the House of Commons on another, the later of those two days.

(7) If, before the end of that period, either House resolves that the guidance should not be issued, the Secretary of State must not issue it.

(8) In reckoning any period of forty days for the purposes of subsection (6) or (7) above, no account shall be taken of any time during which—

(a) Parliament is dissolved or prorogued; or

(b) both Houses are adjourned for more than four days.

(9) The Secretary of State and the Assembly shall arrange for any guidance issued by him or it under this section to be published in such manner as he or it considers appropriate.

(10) In this section, an “appointment area” is an area for which an appointment is held under Chapter 1 of Part 2 of this Act.”

41 Standards of performance in relation to water supply

(1) Section 39 of the WIA (procedure for making regulations relating to performance standards in connection with water supply) is amended as follows.

(2) Before subsection (1) there is inserted—

“(A1) The Secretary of State may make regulations under section 38 above—

(a) on an application by the Authority, in accordance with subsections (1) to (3) below; or

(b) otherwise than on such an application, in accordance with subsections (4) to (8) below.”

(3) In subsection (1)—

(a) for the words preceding paragraph (a), and paragraph (a), there is substituted “Where the Authority has made to the Secretary of State a written application complying with subsection (2) below, the Secretary of State may make regulations under section 38 above if—”,

(b) in paragraph (b), the “and” at the end of sub-paragraph (i) is omitted, and after sub-paragraph (ii) there is inserted—

“(iii) on the Council; and

(iv) on such other persons or bodies as the Secretary of State may consider appropriate;”,

(c) in paragraph (c)(ii), for “(b)(ii)” there is substituted “(b)”.

(4) In subsection (2)—

(a) in paragraph (a), for “draft provisions proposed by the Director for inclusion in” there is substituted “the Authority’s proposals for the making of”,

(b) in paragraph (b), for “those provisions” there is substituted “the regulations”.

(5) In subsection (3)—

(a) for “under section 38 above” there is substituted “on an application by the Authority under this section”,

(b) in paragraph (a), for “the provisions proposed by the Director in his application or those provisions” there is substituted “those which in the opinion of the Secretary of State give effect to the proposals set out in the Authority’s application or to those proposals”,

(c) in paragraph (b), the “and” at the end of sub-paragraph (i) is omitted, and after sub-paragraph (ii) there is inserted “and

(iii) to any person or body on whom a copy of the Authority’s application was served under subsection (1)(b) above.”

(6) After subsection (3) there is added—

“(4) Where no such application as is mentioned in subsection (1) above has been made, the Secretary of State may make regulations under section 38 above only if he considers—

(a) that the regulations will contribute towards the attainment of policies relating to public health or the environment; or

(b) (if he does not consider that they will so contribute) that there are exceptional reasons why it is otherwise in the public interest that the regulations should be made.

(5) Before making regulations under section 38 above by virtue of subsection (4) above, the Secretary of State shall—

(a) give notice of his proposals;

(b) consider the results of the research carried out in accordance with subsection (7) below; and

(c) consider every representation or objection with respect to the proposals which has been duly made and not withdrawn.

(6) A notice under subsection (5)(a) above must—

(a) summarise the Secretary of State’s reasons for his proposals;

(b) specify the water undertaker or undertakers in relation to which it is proposed the regulations should apply; and

(c) specify the period within which objections or representations with respect to the proposals may be made.

(7) Before giving notice under subsection (5)(a) above the Secretary of State shall arrange for such research as he considers appropriate with a view to discovering the views of a representative sample of persons likely to be affected.

(8) A notice under subsection (5)(a) above shall be given by serving a copy on—

(a) the Authority;

(b) the Council;

(c) every water undertaker to which the regulations will apply;

(d) persons or bodies appearing to the Secretary of State to be representative of persons likely to be affected by the regulations; and

(e) such other persons or bodies as the Secretary of State may consider appropriate.”

42 Standards of performance in relation to sewerage services

(1) Section 96 of the WIA (procedure for making regulations relating to performance standards in connection with sewerage services) is amended as follows.

(2) Before subsection (1) there is inserted—

“(A1) The Secretary of State may make regulations under section 95 above—

(a) on an application by the Authority, in accordance with subsections (1) to (3) below; or

(b) otherwise than on such an application, in accordance with subsections (4) to (8) below.”

(3) In subsection (1)—

(a) for the words preceding paragraph (a), and paragraph (a), there is substituted “Where the Authority has made to the Secretary of State a written application complying with subsection (2) below, the Secretary of State may make regulations under section 95 above if—”,

(b) in paragraph (b), the “and” at the end of sub-paragraph (i) is omitted, and after sub-paragraph (ii) there is inserted—

“(iii) on the Council; and

(iv) on such other persons or bodies as the Secretary of State may consider appropriate;”,

(c) in paragraph (c)(ii), for “(b)(ii)” there is substituted “(b)”.

(4) In subsection (2)—

(a) in paragraph (a), for “draft provisions proposed by the Director for inclusion in” there is substituted “the Authority’s proposals for the making of”,

(b) in paragraph (b), for “those provisions” there is substituted “the regulations”.

(5) In subsection (3)—

(a) for “under section 95 above” there is substituted “on an application by the Authority under this section”,

(b) in paragraph (a), for “the provisions proposed by the Director in his application or those provisions” there is substituted “those which in the opinion of the Secretary of State give effect to the proposals set out in the Authority’s application or to those proposals”,

(c) in paragraph (b), the “and” at the end of sub-paragraph (i) is omitted, and after sub-paragraph (ii) there is inserted “and

(iii) to any person or body on whom a copy of the Authority’s application was served under subsection (1)(b) above.”

(6) After subsection (3) there is added—

“(4) Where no such application as is mentioned in subsection (1) above has been made, the Secretary of State may make regulations under section 95 above only if he considers—

(a) that the regulations will contribute towards the attainment of policies relating to public health or the environment; or

(b) (if he does not consider that they will so contribute) that there are exceptional reasons why it is otherwise in the public interest that the regulations should be made.

(5) Before making regulations under section 95 above by virtue of subsection (4) above, the Secretary of State shall—

(a) give notice of his proposals;

(b) consider the results of the research carried out in accordance with subsection (7) below; and

(c) consider every representation or objection with respect to the proposals which has been duly made and not withdrawn.

(6) A notice under subsection (5)(a) above must—

(a) summarise the Secretary of State’s reasons for his proposals;

(b) specify the sewerage undertaker or undertakers in relation to which it is proposed the regulations should apply; and

(c) specify the period within which objections or representations with respect to the proposals may be made.

(7) Before giving notice under subsection (5)(a) above the Secretary of State shall arrange for such research as he considers appropriate with a view to discovering the views of a representative sample of persons likely to be affected.

(8) A notice under subsection (5)(a) above shall be given by serving a copy on—

(a) the Authority;

(b) the Council;

(c) every sewerage undertaker to which the regulations will apply;

(d) persons or bodies appearing to the Secretary of State to be representative of persons likely to be affected by the regulations; and

(e) such other persons or bodies as the Secretary of State may consider appropriate.”

Functions of the Council

43 General functions of the Council

(1) After section 27B of the WIA (which is inserted by section 35) there is inserted—

“General functions of the Council

27C The interests of consumers

(1) In considering the interests of consumers, the Council shall have regard to the interests of—

(a) individuals who are disabled or chronically sick;

(b) individuals of pensionable age;

(c) individuals with low incomes;

(d) individuals residing in rural areas; and

(e) customers, of companies holding an appointment under Chapter 1 of Part 2 of this Act, whose premises are not eligible to be supplied by a licensed water supplier,

but that is not to be taken as implying that regard may not be had to the interests of other descriptions of consumer.

(2) For the purposes of subsection (1) above, premises are not eligible to be supplied by a licensed water supplier if—

(a) they are household premises (as defined in section 17C above); or

(b) the total quantity of water estimated to be supplied to the premises annually for the purposes of subsection (2) of section 17D above is less than the quantity specified in that subsection.

27D Acquisition and review of information

The Council shall have the function of obtaining and keeping under review—

(a) information about consumer matters (including matters affecting consumers in different areas); and

(b) information about the views of consumers on such matters (including the views of consumers in different areas).

27E Provision of advice and information to public authorities

(1) The Council shall have the function of—

(a) making proposals, or providing advice and information, about consumer matters (including matters affecting consumers in different areas); and

(b) representing the views of consumers on such matters (including the views of consumers in different areas),

to public authorities, companies holding an appointment under Chapter 1 of this Part, licensed water suppliers and other persons whose activities may affect the interests of consumers.

(2) Subject to subsection (7) below, information which relates to the affairs of any particular individual or body of persons (corporate or unincorporate) shall not be disclosed in the exercise of the Council’s function under this section unless one or more of paragraphs (a) to (c) of subsection (3) below applies to the information.

(3) Information relating to a particular individual or body may be disclosed if—

(a) the individual or body has consented to the disclosure;

(b) it is information that is available to the public from some other source; or

(c) it is not information the disclosure of which would or might, in the opinion of the Council, seriously and prejudicially affect the interests of the individual or body.

(4) Before deciding to disclose any information relating to a particular individual or body in pursuance of subsection (3)(c) above, the Council shall—

(a) consult that individual or body; and

(b) have regard to any opinion expressed by the Authority as to the application of subsection (3)(c) above to the information or as to the desirability or otherwise of its disclosure;

and paragraph (b) applies whether the opinion is given in relation to the information itself or to information of a description which applies to that information.

(5) Subject to subsection (7) below, the Council shall not in the exercise of its function under this section disclose any information which it considers relates to any matter which is, or is likely to be, the subject of criminal proceedings.

(6) In considering whether information relates to any matter as mentioned in subsection (5) above, the Council shall have regard to any opinion expressed (whether in relation to the information itself or to information of a description which applies to that information) by the Secretary of State, the Assembly or the Director of Public Prosecutions.

(7) Subsections (2) to (5) above do not apply to a disclosure of information which is made to the Authority, the Secretary of State, the Assembly, the Competition Commission or any other public authority.

(8) The disclosure by the Council of information in the exercise of its function under this section does not contravene section 206 below (restriction on disclosure of information).

27F Provision of information to consumers

(1) The Council has the function of providing information to consumers about consumer matters in such form as appears to the Council to be most useful to the recipients.

(2) That function may be exercised by—

(a) publishing information in any manner the Council thinks appropriate for the purpose of bringing it to the attention of those likely to be interested; or

(b) furnishing information to any consumer (whether in response to a request or otherwise).

(3) Information may only be disclosed in the exercise of that function if it is information that is available to members of the public from some other source.

(4) The Council shall maintain at least one office in each of England and Wales at which consumers may apply for information.

27G Power to publish information and advice about consumer matters

(1) If it appears to the Council that the publication of any advice and information about consumer matters (including information about the views of consumers on such matters) would promote the interests of consumers, the Council may publish that advice or information in such manner as it thinks fit.

(2) Information which relates to the affairs of any particular individual or body of persons (corporate or unincorporate) shall not be published in the exercise of the Council’s function under this section unless one or more of paragraphs (a) to (c) of subsection (3) below applies to the information.

(3) Information relating to a particular individual or body may be published if—

(a) the individual or body has consented to the publication;

(b) it is information that is available to the public from some other source; or

(c) it is not information the publication of which would or might, in the opinion of the Council, seriously and prejudicially affect the interests of the individual or body.

(4) Before deciding to publish any information relating to a particular individual or body in pursuance of subsection (3)(c) above, the Council shall—

(a) consult that individual or body; and

(b) have regard to any opinion expressed by the Authority as to the application of subsection (3)(c) above to the information or as to the desirability or otherwise of its publication;

and paragraph (b) applies whether the opinion is given in relation to the information itself or to information of a description which applies to that information.

(5) The Council shall not in the exercise of its function under this section publish any information which it considers relates to any matter which is, or is likely to be, the subject of criminal proceedings.

(6) In considering whether information relates to any matter as mentioned in subsection (5) above, the Council shall have regard to any opinion expressed (whether in relation to the information itself or to information of a description which applies to that information) by the Secretary of State, the Assembly or the Director of Public Prosecutions.

(7) The publication of information under this section does not contravene section 206 below (restriction on disclosure of information).”

(2) Before section 30A of the WIA there is inserted—

“Further functions of Authority

30ZA Duty to consult Council

(1) It shall be the duty of the Authority to consult the Council in relation to the exercise of each of its functions, except where—

(a) the Council has indicated to the Authority (whether specifically or generally) that it does not wish to be consulted; or

(b) the Authority considers that it would be clearly inappropriate to consult the Council.

(2) That duty is in addition to any duty on the Authority to consult the Council which is provided for elsewhere.

30ZB Copies of notices

Where the Authority is required by any provision of this Act to publish a notice or any other document, it shall send a copy of the document to the Council.”

44 Provision of information to the Council

After section 27G of the WIA (which is inserted by section 43) there is inserted—

“27H Provision of information to the Council

(1) The Council may direct—

(a) the Authority;

(b) a company holding an appointment under Chapter 1 of this Part; or

(c) a licensed water supplier,

to supply to it, in such form as it may reasonably specify, such information specified or described in the direction as it may require for the purpose of exercising its functions.

(2) A body to whom a direction under this section is given shall, if the information specified or described in the direction is in its possession, comply with the direction as soon as reasonably practicable.

(3) Before giving a direction under this section and in specifying the form in which any information is to be supplied, the Council shall have regard to the desirability of minimising the costs, or any other detriment, to the body to whom the direction is given.

(4) If a body to whom a direction under this section is given fails to comply with the direction it shall, if so required by the Council, give notice to the Council of the reasons for its failure.

27I Publication of notice of reasons

(1) Subject to the following provisions of this section, the Council may publish a notice given to it under section 27H(4) above.

(2) Information which relates to the affairs of any particular individual or body of persons (corporate or unincorporate) shall not be published under subsection (1) above unless one or more of paragraphs (a) to (c) of subsection (3) below applies to the information.

(3) Information relating to a particular individual or body may be published if—

(a) that individual or body has consented to the publication;

(b) it is information that is available to the public from some other source; or

(c) it is not information the publication of which would or might, in the opinion of the Council, seriously and prejudicially affect the interests of the individual or body.

(4) Before deciding to publish any information relating to a particular individual or body in pursuance of subsection (3)(c) above, the Council shall—

(a) consult that individual or body; and

(b) have regard to any opinion expressed by the Authority as to the application of subsection (3)(c) above to the information or as to the desirability or otherwise of its publication;

and paragraph (b) applies whether the opinion is given in relation to the information itself or to information of a description which applies to that information.

(5) The Council shall not in the exercise of its function under this section publish any information which it considers relates to any matter which is, or is likely to be, the subject of criminal proceedings.

(6) In considering whether information relates to any matter as mentioned in subsection (5) above, the Council shall have regard to any opinion expressed (whether in relation to the information itself or to information of a description which applies to that information) by the Secretary of State, the Assembly or the Director of Public Prosecutions.

(7) The publication by the Council of information under this section does not contravene section 206 below (restriction on disclosure of information).

27J Provision of information by the Council

(1) Any of—

(a) the Authority;

(b) the Secretary of State; or

(c) the Assembly,

may direct the Council to supply to him or it, in such form as he or it may reasonably specify, such information specified or described in the direction as he or it may require for the purpose of exercising his or its functions.

(2) The Council shall, if the information specified or described in the direction is in its possession, comply with a direction under this section as soon as reasonably practicable.

(3) Where the Council fails to comply with a direction given under subsection (1) above it must give to the person who gave the direction notice of its reason for the failure, and that person may publish that notice in such manner as he considers appropriate.

(4) A person publishing a notice under this section shall have regard to the need for excluding, so far as that is practicable, any matter which relates to the affairs of a particular individual or body of persons (corporate or unincorporate), where he considers that publication of that matter would or might seriously and prejudicially affect the interests of that individual or body.

27K Sections 27H to 27J: supplementary

(1) The Secretary of State may make regulations prescribing—

(a) descriptions of information which a person to whom a direction is given under section 27H or 27J above may refuse to supply; or

(b) circumstances in which such a person may refuse to comply with a direction given under either of those sections.

(2) The Council may, if no person is prescribed for the purpose under subsection (3) below, refer a failure by a company holding an appointment or a licensed water supplier to comply with a direction under section 27H above to the Authority.

(3) The Secretary of State may make regulations for the purpose of enabling a failure to comply with a direction under section 27H or 27J above to be referred by the person who gave the direction to such person (other than the Authority) as may be prescribed by the regulations.

(4) A person to whom such a failure is referred (whether under subsection (2) above or regulations under subsection (3) above) shall—

(a) consider any representations made by either party;

(b) determine whether the person failing to comply with the direction is entitled to refuse to do so, and, if not, order him to comply with the direction; and

(c) give notice of his determination and any order under paragraph (b), with reasons, to both parties.

(5) The duty of a company holding an appointment and a licensed water supplier to comply with an order under this section shall be enforceable by the Authority under section 18 above.

(6) A notice under subsection (4) above may be published by either party to the reference.

(7) Subsections (2) to (7) of section 27I above apply to the publication of a notice under this section as they apply to the publication of a notice given to the Council under section 27H(4) above.”

45 Provision of statistical information to consumers etc

(1) After section 38A of the WIA there is inserted—

“38B Publication of statistical information about complaints

(1) It shall be the duty of the Council to publish, in such form and manner and with such frequency as it thinks appropriate, such statistical information as it considers appropriate relating to complaints made by consumers about any matter relating to the activities of water undertakers or licensed water suppliers and the handling of such complaints.

(2) In subsection (1) above, “complaints” includes complaints made directly to water undertakers or licensed water suppliers (or anyone carrying on activities on their behalf) and complaints to the Authority, the Council, the Assembly or the Secretary of State.”

(2) After section 95A of the WIA there is inserted—

“95B Publication of statistical information about complaints

(1) It shall be the duty of the Council to publish, in such form and manner and with such frequency as it thinks appropriate, such statistical information as it considers appropriate relating to complaints made by consumers about any matter relating to the activities of sewerage undertakers and the handling of such complaints.

(2) In subsection (1) above, “complaints” includes complaints made directly to sewerage undertakers (or anyone carrying on activities on their behalf) and complaints to the Authority, the Council, the Assembly or the Secretary of State.”

46 Consumer complaints

(1) For section 29 of the WIA (duties of customer service committees) there is substituted—

“29 Consumer complaints

(1) This section applies to a complaint which any person (“the complainant”) has against a relevant undertaker or a licensed water supplier in relation to any matter connected with the functions of that undertaker or the services provided by that licensed water supplier.

(2) Where a complaint to which this section applies (other than one appearing to the Council to be frivolous or vexatious) is referred to the Council by or on behalf of the complainant, the Council shall (subject to subsections (3) and (8) below) investigate the complaint for the purpose of determining whether it is appropriate to take any action under subsection (9) below.

(3) Where it appears to the Council that the complaint is one the Authority would be required to investigate under section 181 below, the Council shall, instead of investigating the matter to which it relates, refer the complaint to the Authority.

(4) Where it appears to the Council that the complaint relates to a matter in respect of which a function under section 18 or 22A above is or may be exercisable by any person, the Council shall (unless it considers that that person already has notice of the matter) refer the matter to that person.

(5) Where it appears to the Council that the complaint relates to a matter which constitutes or might constitute an offence, the Council shall refer the matter—

(a) to the Assembly, if the matter relates to a relevant undertaker whose area is wholly or mainly in Wales or to services provided by a licensed water supplier using the supply system of a water undertaker whose area is wholly or mainly in Wales; or

(b) to the Secretary of State, in any other case.

(6) Where it appears to the Council that the complaint relates to a matter which constitutes a dispute of a kind which can be referred to the Authority for determination under any provision of this Act, the Council shall, if the complainant consents, refer the matter to the Authority.

(7) A referral under subsection (6) above shall have effect for the purposes of section 30A below as if it were a referral by the complainant of a dispute for determination by the Authority.

(8) The Council is not required to investigate any matter if it appears to the Council that—

(a) it is unlikely that the complaint could be resolved by action taken by the relevant undertaker or the licensed water supplier;

(b) the relevant undertaker or the licensed water supplier has not been given a reasonable opportunity to deal with the complaint; or

(c) in a case mentioned in subsection (4) or (5) above or (where the complainant does not consent to the matter being referred to the Authority) subsection (6) above, it is inappropriate to do so.

(9) Where it appears to the Council to be appropriate to do so with a view to assisting in reaching a satisfactory resolution of a complaint referred to it under this section, the Council shall make representations on behalf of the complainant to the relevant undertaker or the licensed water supplier about anything to which the complaint relates.

(10) After investigating a complaint the Council may make a report to the Authority, the Secretary of State or the Assembly.

(11) A report under subsection (10) above may include information about—

(a) any representations made by the Council under subsection (9) above; and

(b) the response of the relevant undertaker or the licensed water supplier to the complaint or any such representations.

(12) No report under subsection (10) above or information about a complaint referred to the Council under this section, from which the complainant may be identified, shall be published or disclosed by the Council, the Authority, the Secretary of State or the Assembly in the exercise of any power under this Act without the consent of the complainant.

(13) Where a representation made to the Authority, the Secretary of State or the Assembly about any matter (other than a representation appearing to the person to whom it is made to be frivolous or vexatious) appears to that person—

(a) to be about a matter which is or amounts to a complaint to which this section applies (other than one which, in the case of the Authority, it is its duty to investigate under section 181 below); and

(b) to have been made by or on behalf of the complainant,

that person shall refer the matter to the Council.”

(2) Section 30 of the WIA (duties of Director with respect to complaints) shall cease to have effect.

47 Investigations by the Council

After section 29 of the WIA there is inserted—

“29A Power of Council to investigate other matters

(1) The Council may investigate any matter (not being a matter which it is its duty to investigate under this Part) which appears to it to be a matter relating to the interests of consumers.

(2) Before undertaking an investigation under this section the Council shall consult the Authority, the Secretary of State and the Assembly.

(3) Where the Council has investigated a matter under this section it may make a report on that matter to the Authority, the Secretary of State, the OFT, the Assembly or any other public authority whose functions appear to the Council to be exercisable in relation to that matter.

(4) Subject to subsection (5) below, the Council may—

(a) send a report on any matter investigated under this section to any person who appears to the Council to have an interest in that matter; and

(b) publish any such report in such manner as the Council thinks appropriate.

(5) Information which relates to the affairs of any particular individual or body of persons (corporate or unincorporate)—

(a) shall not be included in a report which is to be sent to any person under subsection (4)(a) above, unless one or more of paragraphs (a) to (c) of subsection (6) below applies; and

(b) shall be excluded from any such report which is to be published under subsection (4)(b) above, unless one or more of paragraphs (a) to (c) of subsection (7) below applies.

(6) Information relating to a particular individual or body may be included in a report to be sent under subsection (4)(a) above if—

(a) that individual or body has consented to the disclosure;

(b) it is information that is available to the public from some other source; or

(c) it is not information the disclosure of which would or might, in the opinion of the Council, seriously and prejudicially affect the interests of that individual or body.

(7) Information relating to a particular individual or body may be included in a report to be published under subsection (4)(b) above if—

(a) that individual or body has consented to the publication;

(b) it is information that is available to the public from some other source; or

(c) it is not information the publication of which would or might, in the opinion of the Council, seriously and prejudicially affect the interests of that individual or body.

(8) Before deciding to include in such a report any information relating to a particular individual or body in pursuance of subsection (6)(c) or (7)(c) above, the Council shall—

(a) consult that individual or body; and

(b) have regard to any opinion expressed by the Authority as to the application of subsection (6)(c) or (7)(c) above to the information or as to the desirability or otherwise of its inclusion in the report;

and paragraph (b) applies whether the opinion is given in relation to the information itself or to information of a description which applies to that information.

(9) The Council shall not include in any report to be sent under subsection (4)(a) above or published under subsection (4)(b) above any information which it considers relates to any matter which is, or is likely to be, the subject of criminal proceedings.

(10) In considering whether information relates to any matter as mentioned in subsection (9) above, the Council shall have regard to any opinion expressed (whether in relation to the information itself or to information of a description which applies to that information) by the Secretary of State, the Assembly or the Director of Public Prosecutions.”

Enforcement of obligations

48 Financial penalties

(1) After section 22 of the WIA there is inserted—

“Financial penalties

22A Penalties

(1) Where the Authority is satisfied—

(a) in the case of any company holding an appointment under Chapter 1 of this Part, that the company—

(i) has contravened or is contravening any condition of the appointment;

(ii) has caused or contributed to, or is causing or contributing to, a contravention by a company holding a licence under Chapter 1A of this Part of any condition of the licence; or

(iii) has failed or is failing to achieve any standard of performance prescribed under section 38(2) or 95(2) below; or

(b) in the case of any company holding a licence under Chapter 1A of this Part, that the company—

(i) has contravened or is contravening any condition of the licence; or

(ii) has caused or contributed to, or is causing or contributing to, a contravention by a company holding an appointment under Chapter 1 of this Part of any condition of the appointment,

the Authority may, subject to section 22C below, impose on the company a penalty of such amount as is reasonable in all the circumstances of the case.

(2) Where the Authority, the Secretary of State or the Assembly is satisfied—

(a) in the case of any company holding an appointment under Chapter 1 of this Part, that the company—

(i) has contravened or is contravening any statutory or other requirement which is enforceable under section 18 above and in relation to which he or it is the enforcement authority; or

(ii) has caused or contributed to, or is causing or contributing to, a contravention by a company holding a licence under Chapter 1A of this Part of any such requirement; or

(b) in the case of any company holding a licence under Chapter 1A of this Part, that the company—

(i) has contravened or is contravening any statutory or other requirement which is enforceable under section 18 above and in relation to which he or it is the enforcement authority; or

(ii) has caused or contributed to, or is causing or contributing to, a contravention by a company holding an appointment under Chapter 1 of this Part of any such requirement,

he or it may, subject to section 22C below, impose on the company a penalty of such amount as is reasonable in all the circumstances of the case.

(3) In a case in which—

(a) subsection (1) above applies by virtue of paragraph (a)(ii) or (b)(ii) of that subsection, or

(b) subsection (2) above applies by virtue of paragraph (a)(ii) or (b)(ii) of that subsection,

references in the following provisions of this section and sections 22B and 22C below to a contravention include references to causing or contributing to a contravention.

(4) Before imposing a penalty on a company under subsection (1) or (2) above the Authority, the Secretary of State or the Assembly (the “enforcement authority”) shall give notice—

(a) stating that it proposes to impose a penalty and the amount of the penalty proposed to be imposed;

(b) setting out the condition, requirement or standard of performance in question;

(c) specifying the acts or omissions which, in the opinion of the enforcement authority, constitute the contravention or failure in question and the other facts which, in the opinion of the enforcement authority, justify the imposition of a penalty and the amount of the penalty proposed; and

(d) specifying the period (not being less than twenty-one days from the date of publication of the notice) within which representations or objections with respect to the proposed penalty may be made,

and shall consider any representations or objections which are duly made and not withdrawn.

(5) Before varying any proposal stated in a notice under subsection (4)(a) above the enforcement authority shall give notice—

(a) setting out the proposed variation and the reasons for it; and

(b) specifying the period (not being less than twenty-one days from the date of publication of the notice) within which representations or objections with respect to the proposed variation may be made,

and shall consider any representations or objections which are duly made and not withdrawn.

(6) As soon as practicable after imposing a penalty, the enforcement authority shall give notice—

(a) stating that he or it has imposed a penalty on the company and its amount;

(b) setting out the condition, requirement or standard of performance in question;

(c) specifying the acts or omissions which, in the opinion of the enforcement authority, constitute the contravention or failure in question and the other facts which, in the opinion of the enforcement authority, justify the imposition of the penalty and its amount; and

(d) specifying a date, no earlier than the end of the period of forty-two days from the date of service of the notice on the company, by which the penalty is required to be paid.

(7) The company may, within twenty-one days of the date of service on it of a notice under subsection (6) above, make an application to the enforcement authority for him or it to specify different dates by which different portions of the penalty are to be paid.

(8) Any notice required to be given under this section shall be given—

(a) by publishing the notice in such manner as the enforcement authority considers appropriate for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be affected by them;

(b) by serving a copy of the notice on the company;

(c) by serving a copy of the notice on the Council; and

(d) where the notice is given by the Secretary of State or the Assembly, by serving a copy of the notice on the Authority.

(9) Any sums received by the enforcement authority by way of penalty under this section shall be paid into the Consolidated Fund.

(10) The power of the enforcement authority to impose a penalty under this section is not exercisable in respect of any contravention or failure before the commencement of this section.

(11) No penalty imposed by an enforcement authority under this section may exceed 10% of the turnover of the company (determined in accordance with provisions specified in an order made, after consulting the Assembly, by the Secretary of State).

(12) The power of the Secretary of State to make an order under subsection (11) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(13) An enforcement authority shall not impose a penalty under this section where it is satisfied that the most appropriate way of proceeding is under the Competition Act 1998.

22B Statement of policy with respect to penalties

(1) Each enforcement authority shall prepare and publish a statement of policy with respect to the imposition of penalties and the determination of their amount.

(2) In deciding whether to impose a penalty, and in determining the amount of any penalty, in respect of a contravention or failure an enforcement authority shall have regard to his or its statement of policy most recently published at the time when the contravention or failure occurred.

(3) An enforcement authority may revise his or its statement of policy and where he or it does so shall publish the revised statement.

(4) Publication under this section shall be in such manner as the enforcement authority considers appropriate for the purpose of bringing the matters contained in the statement of policy to the attention of persons likely to be affected by them.

(5) An enforcement authority shall undertake such consultation as he or it considers appropriate when preparing or revising his or its statement of policy.

22C Time limits on the imposition of financial penalties

(1) Where no final or provisional order has been made in relation to a contravention or failure, an enforcement authority may not impose a penalty in respect of the contravention or failure later than the end of the period of twelve months from the time of the contravention or failure, unless before the end of that period—

(a) the notice under section 22A(4) above relating to the penalty is served on the company under section 22A(8) above; or

(b) a notice relating to the contravention or failure is served on the company under section 203(2) below.

(2) Where a final or provisional order has been made in relation to a contravention or failure, an enforcement authority may not impose a penalty in respect of the contravention or failure unless the notice relating to the penalty under section 22A(4) above was served on the company under section 22A(8) above—

(a) within three months from the confirmation of the provisional order or the making of the final order; or

(b) where the provisional order is not confirmed, within six months from the making of the provisional order.

22D Interest and payment of instalments

(1) If the whole or any part of a penalty is not paid by the date by which it is required to be paid, the unpaid balance from time to time shall carry interest at the rate for the time being specified in section 17 of the Judgments Act 1838.

(2) If an application is made under subsection (7) of section 22A above in relation to a penalty, the penalty is not required to be paid until the application has been determined.

(3) If the enforcement authority grants an application under that subsection in relation to a penalty but any portion of the penalty is not paid by the date specified in relation to it by the enforcement authority under that subsection, the enforcement authority may where he or it considers it appropriate require so much of the penalty as has not already been paid to be paid immediately.

22E Appeals

(1) If the company on which a penalty is imposed is aggrieved by—

(a) the imposition of the penalty;

(b) the amount of the penalty; or

(c) the date by which the penalty is required to be paid, or the different dates by which different portions of the penalty are required to be paid,

the company may make an application to the court under this section.

(2) An application under subsection (1) above must be made—

(a) within forty-two days from the date of service on the company of a notice under section 22A(6) above; or

(b) where the application relates to a decision of an enforcement authority on an application by the company under section 22A(7) above, within forty-two days from the date the company is notified of the decision.

(3) On any such application, where the court considers it appropriate to do so in all the circumstances of the case and is satisfied of one or more of the grounds falling within subsection (4) below, the court—

(a) may quash the penalty;

(b) may substitute a penalty of such lesser amount as the court considers appropriate in all the circumstances of the case; or

(c) in the case of an application under subsection (1)(c) above, may substitute for the date or dates imposed by the enforcement authority an alternative date or dates.

(4) The grounds falling within this subsection are—

(a) that the imposition of the penalty was not within the power of the enforcement authority under section 22A above;

(b) that any of the requirements of subsections (4) to (6) or (8) of section 22A above have not been complied with in relation to the imposition of the penalty and the interests of the company have been substantially prejudiced by the non-compliance; or

(c) that it was unreasonable of the enforcement authority to require the penalty imposed, or any portion of it, to be paid by the date or dates by which it was required to be paid.

(5) If an application is made under this section in relation to a penalty, the penalty is not required to be paid until the application has been determined.

(6) Where the court substitutes a penalty of a lesser amount it may require the payment of interest on the substituted penalty at such rate, and from such date, as it considers just and equitable.

(7) Where the court specifies as a date by which the penalty, or a portion of the penalty, is to be paid a date before the determination of the application under this section it may require the payment of interest on the penalty, or portion, from that date at such rate as it considers just and equitable.

(8) Except as provided by this section, the validity of a penalty shall not be questioned by any legal proceedings whatever.

(9) In this section “the court” means the High Court.

22F Recovery of penalties

Where a penalty imposed under section 22A(1) or (2) above, or any portion of it, has not been paid by the date on which it is required to be paid and—

(a) no application relating to the penalty has been made under section 22E above during the period within which such an application can be made; or

(b) an application has been made under that section and determined,

the enforcement authority may recover from the company, as a civil debt due to him or it, any of the penalty and any interest which has not been paid.”

(2) In section 195 of the WIA (keeping of a register), in subsection (2), the “and” at the end of paragraph (d) is omitted, and after paragraph (e) there is inserted—

“(f) every penalty imposed under section 22A(1) or (2) above and every notice under section 22A(6) above;”.

49 Enforcement of certain provisions

(1) The WIA is amended as follows.

(2) In section 18 (orders for securing compliance with certain provisions)—

(a) in subsection (1)(b), for “has contravened any such condition or requirement and is likely to do so again” there is substituted “is likely to contravene any such condition or requirement”,

(b) for subsection (4)(a)(ii) there is substituted—

“(ii) is likely to contravene any such condition or requirement;”.

(3) In section 20 (procedure for orders made under section 18), in subsections (1)(c) and (4)(b), for “twenty-eight” there is substituted “twenty-one”.

(4) Subsection (3) does not have effect in relation to—

(a) a provisional order which has been made before the commencement of that subsection, or

(b) a final order in respect of which notice has been given under section 20(1) of the WIA before the commencement of that subsection.

Remuneration and standards of performance

50 Links between directors' pay and standards of performance

After section 35 of the WIA there is inserted—

“Disclosure of arrangements for remuneration

35A Remuneration and standards of performance

(1) This section applies to any company holding an appointment under Chapter 1 of this Part.

(2) As soon as reasonably practicable after the end of each financial year of the company it must make a statement to the Authority—

(a) disclosing whether or not remuneration has been paid or become due during that financial year to the directors of the company as a result of arrangements falling within subsection (3) below; and

(b) where such remuneration has been paid or become due, describing the arrangements and the remuneration.

(3) Arrangements fall within this subsection if they are arrangements for linking the remuneration of the directors of the company to standards of performance in connection with the carrying out by the company of the functions of a relevant undertaker.

(4) A description under subsection (2)(b) above must include in particular—

(a) a statement of when the arrangements were made;

(b) a description of the standards of performance in question;

(c) an explanation of the means by which the standards of performance are assessed; and

(d) an explanation of how the remuneration was calculated.

(5) The statement required by subsection (2) above must also state—

(a) whether or not there are in force in respect of the financial year during which the statement is made arrangements falling within subsection (3) above; or

(b) if not, whether the company intends that such arrangements will be in force at some time during that financial year,

and if there are, or it is intended that there will be, such arrangements in force the statement must describe those arrangements.

(6) A description under subsection (5) above must—

(a) include in particular the matters listed in subsection (4)(a), (b) and (c) above; and

(b) where the arrangements described are different from any arrangements described under subsection (2)(b) above, state the likely effect of those differences on the remuneration of each director of the company.

(7) The statement required by subsection (2) above must be made to the Authority in such manner as may be required by the Authority.

(8) The statement required by subsection (2) above—

(a) must be published by the company making the statement in such manner as it reasonably considers will secure adequate publicity for it; and

(b) may be published by the Authority in such manner as it may consider appropriate.

(9) The duty of a company under this section applies in respect of any person who has at any time been a director of the company.

(10) In this section—

• “remuneration” in relation to a director of a company—

  (a)

  means any form of payment, consideration or other benefit (including pension benefit), paid or due to or in respect of the director; and

  (b)

  includes remuneration in respect of any of his services while a director of the company;

• “standards of performance”, in relation to any company, include any standards which are—

  (a)

  set by or under any conditions of the company’s appointment under Chapter 1 of this Part;

  (b)

  contained in or prescribed by regulations made under section 38(1)(b) or (2) or section 95(1)(b) or (2) below; or

  (c)

  set or agreed to by the company.

(11) Any requirement imposed by this section shall be treated as a statutory requirement enforceable under section 18 above by the Authority.”

Miscellaneous

51 Reasons for decisions

After section 195 of the WIA there is inserted—

“195A Reasons for decisions

(1) This section applies to the following decisions of the Authority, the Secretary of State or the Assembly, namely—

(a) the modification of the conditions of an appointment under Chapter 1 of Part 2 of this Act or the variation of the area to which an appointment relates;

(b) the modification of the conditions of a licence under Chapter 1A of that Part;

(c) the termination of such an appointment or the revocation of such a licence;

(d) the giving of any directions or consent in pursuance of a condition included in such an appointment by virtue of section 12(1) above or in such a licence by virtue of section 17G(3)(a) or (b) above;

(e) the determination of a question referred in pursuance of a condition included in such an appointment by virtue of section 12(2) above or in such a licence by virtue of section 17G(3)(c) above;

(f) the making of a determination under section 17E or 66D(1) above; and

(g) the making of a final enforcement order, the making or confirmation of a provisional enforcement order or the revocation of a final order or of a provisional order which has been confirmed.

(2) As soon as reasonably practicable after making such a decision the Authority, the Secretary of State or the Assembly shall publish a notice stating the reasons for the decision in such manner as it considers appropriate for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be interested.

(3) A person publishing a notice under subsection (2) above shall serve a copy on the company holding the appointment or licence to which the decision relates.

(4) A person preparing a notice under subsection (2) above shall have regard to the need for excluding, so far as that is practicable, any matter which relates to the affairs of a particular individual or body of persons (corporate or unincorporate), where he considers that publication of that matter would or might seriously and prejudicially affect the interests of that individual or body.

(5) This section does not apply in relation to a decision of the Authority resulting in any provision which the Authority was directed under section 195(3) above not to enter in the register required to be kept under that section.”

52 Co-operation between water regulators

(1) This section imposes duties on each of the following—

(a) the Secretary of State,

(b) the Assembly,

(c) the Environment Agency, and

(d) the Water Services Regulation Authority.

(2) It is the duty of each of those mentioned in subsection (1) to make arrangements with each of the others with a view to promoting, in the case of each pair of them—

(a) co-operation and the exchange of information between them, and

(b) consistency of treatment of matters which affect both of them.

(3) That duty relates only—

(a) in the case of the Water Services Regulation Authority, to its functions under the WIA relating to the regulation of water and sewerage undertakers and licensed water suppliers,

(b) in the case of the Secretary of State and the Assembly, to their functions of the description referred to in paragraph (a), and to their functions under the WIA relating to the quality of water supplied by water undertakers and licensed water suppliers,

(c) in the case of the Environment Agency, to its functions concerning water resources and water pollution so far as they relate to water and sewerage undertakers and licensed water suppliers.

(4) As soon as practicable after agreement is reached on any arrangements required by this section, the parties must prepare a memorandum setting them out.

(5) The parties to any such arrangements must keep them under review.

(6) As soon as practicable after agreement is reached on any changes to arrangements under this section, the parties must revise their memorandum.

(7) Parties to arrangements required by this section must send a copy of their memorandum (and any revised memorandum) to each person mentioned in subsection (1) who is not a party to the arrangements set out in it.

(8) The Secretary of State must lay before each House of Parliament a copy of every memorandum (and revised memorandum) under this section.

The Competition Commission

53 Specialist members of the Competition Commission

(1) In section 104(1) of the Utilities Act 2000 (c. 27) (appointment of members of the Competition Commission)—

(a) the “or” at the end of paragraph (a) is omitted, and

(b) after paragraph (b) there is inserted “; or

(c) section 12, 14, 16A, 17K or 17P of the Water Industry Act 1991.”.

(2) The persons who are, immediately before the commencement of subsection (1), members of the Competition Commission by virtue of appointments made under section 14(8) of the WIA shall continue as members of the Commission and their appointments shall be treated as having been made under section 104 of the Utilities Act 2000.

(3) Section 14(8) and (8A) of the WIA (which are superseded by this section) shall cease to have effect.

(4) The provision made by this section does not affect any group which has been selected, before the commencement of subsection (1), to perform functions of the Commission in relation to any reference under or by virtue of section 14 of the WIA.

54 Determination references under section 12 of the WIA

(1) Section 12 of the WIA (determinations under conditions of appointment) is amended as follows.

(2) After subsection (3) there is inserted—

“(3A) For the purposes of subsection (3) above, where—

(a) the question or matter referred to the Commission concerns the review of a price control imposed on the company holding the appointment; and

(b) the Commission is to decide to what extent it is reasonable to take into account in its determination costs incurred or borne by the company in connection with the reference,

the Commission shall also have regard to the extent to which, in its view, its determination is likely to support the company’s (rather than the Authority's) claims in relation to the question or matter referred to it.

(3B) Subsections (4) and (5) of section 14, and sections 16A and 16B, below apply to references to the Competition Commission under this section as they apply to references under section 14.

(3C) A report of the Competition Commission on a reference under this section—

(a) shall be made to the Authority; and

(b) shall include definite conclusions on the questions or other matters comprised in the reference, together with such an account of their reasons for those conclusions as, in the opinion of the Competition Commission, is expedient for facilitating a proper understanding of those questions or other matters and of their conclusions,

and subsections (5) and (6) of section 15 below apply to such a report as they apply to a report on a reference under section 14.”

(3) Subsections (3)(b)(i), (4) and (5) shall cease to have effect.

55 Conditions of appointments under the WIA

(1) The WIA is amended as follows.

(2) In section 14(5) (modification references to the Competition Commission)—

(a) after “this section” there is inserted “or in carrying out functions under section 16A below”,

(b) after “the investigation” there is inserted “or the carrying out of those functions”, and

(c) after “such investigation” there is inserted “or such functions”.

(3) In section 16 (modification of conditions of appointment following report of Competition Commission), after subsection (4) there is inserted—

“(4A) After considering any representations or objections made in response to proposals set out in a notice under subsection (3) above, the Authority shall give notice to the Competition Commission—

(a) setting out the modifications it proposes to make to remedy or prevent the adverse effects specified in the report; and

(b) stating the reasons for making the modifications.

(4B) The Authority shall include with the notice under subsection (4A) above a copy of any representations or objections received in relation to the notice under subsection (3) above.

(4C) If the period of four weeks from the date on which the notice under subsection (4A) above is given elapses without a direction under section 16A(1)(a) below having been given to it, the Authority shall—

(a) make the modifications set out in the notice; or

(b) if a direction under section 16A(1)(b) below has been given, make the modifications which are not specified in the direction.”

(4) After section 16 there is inserted—

“16A Commission’s power of veto following report

(1) The Competition Commission (in this section referred to as “the Commission”) may, within the period of four weeks after the date on which it is given a notice under section 16(4A) above, direct the Authority—

(a) not to make the modifications set out in that notice; or

(b) not to make such of the modifications as may be specified in the direction;

and the Authority shall comply with any such direction.

(2) The Secretary of State may, within the period of four weeks after the date on which the Commission is given a notice under section 16(4A) above and on the application of the Commission, direct that the period for giving a direction under subsection (1) above (and, accordingly, the period mentioned in section 16(4C) above) shall be extended by fourteen days.

(3) The power to give a direction under subsection (1) above may only be exercised in respect of such of the modifications set out in the notice under section 16(4A)(a) above as appear to the Commission not to be the modifications which are requisite for the purpose of remedying or preventing all or any of the adverse effects specified in the report as effects which could be remedied or prevented by modifications.

(4) If the Commission gives a direction under subsection (1) above, it—

(a) shall give notice setting out the modifications proposed by the Authority, the terms of the direction and the reasons for giving it; and

(b) shall itself make such modifications as appear to it to be requisite for the purpose of remedying or preventing—

(i) if the direction was given under subsection (1)(a) above, the adverse effects specified in the report as effects which could be remedied or prevented by modifications;

(ii) if the direction was given under subsection (1)(b) above, such of those adverse effects as are not remedied or prevented by the modifications made by the Authority under section 16(4C)(b) above.

(5) In exercising its power under subsection (4)(b) above, the Commission shall have regard to the matters to which the Authority is required to have regard when determining the conditions of a company’s appointment.

(6) Before making modifications under subsection (4)(b) above the Commission shall give notice—

(a) stating that it proposes to make the modifications and setting them out;

(b) stating the reason why it proposes to make them;

(c) specifying the period (not being less than twenty-eight days from the date of publication of the notice) within which representations or objections with respect to the proposed modifications may be made,

and shall consider any representations or objections which are duly made and not withdrawn.

(7) A notice under subsection (4)(a) or (6) above shall be given—

(a) by publishing the notice in such manner as the Commission considers appropriate for the purpose of bringing it to the attention of persons likely to be affected by the making of the modifications; and

(b) by serving a copy on the Authority and the company whose conditions of appointment it is proposed should be modified.

(8) The Commission may not make any modification under this section which the Authority could not make under section 16 above.

(9) After making modifications under this section the Commission shall publish a notice stating that the modifications have been made and setting them out, with the reasons for making them.

(10) This section does not apply to the modification of the conditions of a company’s appointment following a report of the Commission made before the commencement of section 55 of the Water Act 2003.

16B Commission’s power of veto following report: supplementary

(1) For the purposes of the law relating to defamation, absolute privilege attaches to any notice under subsection (4)(a), (6) or (9) of section 16A above.

(2) In giving any notice under subsection (4)(a) or (6) of section 16A above, or publishing any notice under subsection (9) of that section, the Commission must have regard to the following considerations before disclosing any information.

(3) The first consideration is the need to exclude from disclosure (so far as practicable) any information whose disclosure the Commission thinks is contrary to the public interest.

(4) The second consideration is the need to exclude from disclosure (so far as practicable)—

(a) commercial information whose disclosure the Commission thinks might significantly harm the legitimate business interests of the undertaking to which it relates; or

(b) information relating to the private affairs of an individual whose disclosure the Commission thinks might significantly harm the individual’s interests.

(5) The third consideration is the extent to which the disclosure of the information mentioned in subsection (4)(a) or (b) above is necessary for the purposes of the notice.

(6) The following sections of Part 3 of the Enterprise Act 2002 shall apply, with the modifications mentioned in subsections (7) and (8) below, for the purposes of any investigation by the Commission for the purposes of the exercise of its functions under section 16A above, as they apply for the purposes of any investigations on references under that Part—

(a) section 109 (attendance of witnesses and production of documents etc);

(b) section 110 (enforcement of powers under section 109: general);

(c) section 111 (penalties);

(d) section 112 (penalties: main procedural requirements);

(e) section 113 (payments and interest by instalments);

(f) section 114 (appeals in relation to penalties);

(g) section 115 (recovery of penalties); and

(h) section 116 (statement of policy).

(7) Section 110 shall, in its application by virtue of subsection (6) above, have effect as if—

(a) subsection (2) were omitted;

(b) in subsection (4), for the words “the publication of the report of the Commission on the reference concerned” there were substituted “the publication by the Commission of a notice under section 16A(9) of the Water Industry Act 1991 in connection with the reference concerned or, if no direction has been given by the Commission under section 16A(1) of that Act in connection with the reference concerned and within the period permitted for that purpose, the latest day on which it was possible to give such a direction within the permitted period”; and

(c) in subsection (9) the words from “or section” to “section 65(3))” were omitted.

(8) Section 111(5)(b) shall, in its application by virtue of subsection (6) above, have effect as if for sub-paragraph (ii) there were substituted—

“(ii) if earlier, the day on which a notice is published by the Commission under section 16A(9) of the Water Industry Act 1991 in connection with the reference concerned or, if no direction is given by the Commission under section 16A(1) of that Act in connection with the reference concerned and within the period permitted for that purpose, the latest day on which such a direction may be given within the permitted period.”

(9) Provisions of Part 3 of the Enterprise Act 2002 which have effect for the purposes of sections 109 to 116 of that Act (including, in particular, provisions relating to offences and the making of orders) shall, for the purposes of the application of those sections by virtue of subsection (6) above, have effect in relation to those sections as applied by virtue of that subsection.

(10) Accordingly, corresponding provisions of this Act shall not have effect in relation to those sections as applied by virtue of that subsection.”

Licensing of water suppliers

56 Licensing of other water suppliers

Schedule 4, which contains amendments to the WIA to provide for the licensing of suppliers of water other than water undertakers, is to have effect.

Part 3 Miscellaneous

The Drinking Water Inspectorate

57 The Chief Inspector of Drinking Water and the Drinking Water Inspectorate

(1) Section 86 of the WIA (which provides for the appointment of technical assessors for the enforcement of water quality) is amended as provided in subsections (2) to (8).

(2) In subsection (1), the words “as technical assessors” are omitted.

(3) After subsection (1) there is inserted—

“(1A) Subject to subsection (1B) below, the Secretary of State shall designate one such person as the Chief Inspector of Drinking Water.

(1B) If the function of the Secretary of State under subsection (1) above is transferred to any extent to the Assembly—

(a) subject to paragraph (b) below, the Assembly may designate one such person appointed by it as the Chief Inspector of Drinking Water for Wales; but

(b) if the person designated by the Assembly is the same as the person designated by the Secretary of State as the Chief Inspector of Drinking Water, he shall be known as such in both capacities.”

(4) In subsection (2), for “A person” there is substituted “An inspector”.

(5) In subsection (3)(a) and (b), for “a person” there is substituted “an inspector”.

(6) In subsection (4), for “person”, wherever it appears, there is substituted “inspector”.

(7) In subsection (6), for the words from “on summary conviction” to the end there is substituted—

“(a) on summary conviction, to a fine not exceeding £20,000;

(b) on conviction on indictment, to a fine.”

(8) After subsection (6) there is added—

“(7) Proceedings by the Secretary of State for an offence under this section or in relation to the quality and sufficiency of water supplied using a water undertaker’s supply system may be instituted and carried on in the name of the Chief Inspector of Drinking Water.

(8) Any such proceedings by the Assembly may be instituted and carried on in the name of the Chief Inspector of Drinking Water for Wales, if there is one (or, if subsection (1B)(b) above applies, in the name of the Chief Inspector of Drinking Water).

(9) In this section “inspector” means the Chief Inspector of Drinking Water or any other person appointed under subsection (1) above.”

(9) In section 219 of the WIA (general interpretation), after subsection (9) there is added—

“(10) If the Assembly designates a person as Chief Inspector of Drinking Water for Wales under section 86(1B) above, references in this Act to the Chief Inspector of Drinking Water, as respects anything to be done in relation to him, shall be taken as references to the person designated as the Chief Inspector of Drinking Water by the Secretary of State and also the person designated by the Assembly as the Chief Inspector of Drinking Water for Wales.”

(10) Subsection (7) does not have effect in relation to any offence committed before the commencement of that subsection.

Water fluoridation

58 Fluoridation of water supplies

(1) The WIA is amended as follows.

(2) For section 87 (fluoridation of water supplies at request of health authorities) there is substituted—

“87 Fluoridation of water supplies at request of relevant authorities

(1) If requested in writing to do so by a relevant authority, a water undertaker shall enter into arrangements with the relevant authority to increase the fluoride content of the water supplied by that undertaker to premises within the area specified in the arrangements.

(2) But a water undertaker shall not be required by subsection (1) above to enter into any such arrangements until an indemnity with respect to the arrangements has been given by virtue of section 90 below—

(a) to the water undertaker; and

(b) to any licensed water supplier which is entitled to one.

(3) In this section and the following provisions of this Chapter—

(a) references to a relevant authority—

(i) in relation to areas in England, are to a Strategic Health Authority established under section 8 of the National Health Service Act 1977;

(ii) in relation to areas in Wales, are to the Assembly; and

(b) references to water supplied by a water undertaker are to water supplied (whether by a water undertaker or a licensed water supplier) to premises using the supply system of that undertaker.

(4) The area specified in arrangements under this section may be—

(a) in relation to England, the whole or any part of the area of the Strategic Health Authority in question;

(b) in relation to Wales, such area comprising the whole or any part of Wales as the Assembly may determine.

(5) The arrangements shall be on such terms as may be agreed between the relevant authority and the water undertaker or, in the absence of agreement, determined in accordance with section 87B below.

(6) Those terms shall include provision—

(a) requiring the relevant authority to meet the reasonable capital and operating costs incurred by the water undertaker in giving effect to the arrangements;

(b) specifying circumstances in which the requirement to increase the fluoride content may be temporarily suspended; and

(c) for the variation of the arrangements at the request of the relevant authority.

(7) The relevant authority shall consult the Authority in relation to the terms to be included in any arrangements under this section (in particular, terms which affect the operation of the water undertaker’s supply system).

(8) If two or more relevant authorities request a particular water undertaker to enter into arrangements in respect of adjoining areas—

(a) the authorities shall co-operate with each other so as to secure that the arrangements (taken together) are operable and efficient; and

(b) if suitable terms are not agreed for all the arrangements, a combined reference may be made by the relevant authorities under section 87B below to enable the terms of each set of arrangements to be determined so that they are consistent.

(9) If a relevant authority requests a water undertaker to vary arrangements, the authority shall co-operate with any relevant authority for an adjoining area which has entered into arrangements with the same water undertaker so as to secure that following the variation the arrangements (taken together) will be operable and efficient.

(10) If suitable terms are not agreed for a variation mentioned in subsection (9), a combined reference may be made by the relevant authorities under section 87B below to enable the terms of the variation to be determined so that (following the variation) both sets of arrangements are consistent.

(11) Before carrying out the consultation required by subsection (1) of section 89 below in relation to a step mentioned in paragraph (a), (b) or (c) of subsection (2) of that section, a relevant authority shall consult the water undertaker in question as to whether the arrangements which would result from taking that step would be operable and efficient (or, where it is proposed to terminate the arrangements, as to whether it would be reasonably practicable to do so).

87A Target concentration of fluoride

(1) Arrangements under section 87(1) above shall include provision for securing that, so far as reasonably practicable, the concentration of fluoride in the water supplied to premises in the specified area is maintained at the general target concentration of one milligram per litre.

(2) But the arrangements may provide for the concentration in the specified area (or any part of it) to be lower than that if the relevant authority considers that it is not reasonably practicable to achieve the general target concentration in the specified area (or that part of it).

(3) Any such lower concentration must still be as high as is reasonably practicable in the circumstances.

(4) If, in relation to any area (“area A”), an order under section 88A(1) below specifies a general target concentration lower than that for which any arrangements effective there provide (or, by the previous operation of this subsection, are taken to provide), the arrangements shall have effect from the coming into force of the order as if they provided for the general target concentration specified in the order (subject to the operation again of subsections (2) and (3) above).

(5) If the result of the operation of subsection (4) above in relation to arrangements in area A is that in an area adjoining area A (“area B”) it is not reasonably practicable to maintain the concentration of fluoride in the water supplied by virtue of arrangements made in area B with the same water undertaker, the order shall be taken to extend also to area B so far as those arrangements are concerned, and subsection (4) above shall apply accordingly.

(6) An order under section 88A(1) below which in relation to any area specifies a general target concentration higher than that for which any arrangements effective there provide (or are taken to provide by virtue of subsection (4) or (5) above) does not have effect to increase the concentration for which the arrangements provide (or are taken to provide).

(7) In this section, “specified area” means the area specified in arrangements under section 87(1) above.

87B Fluoridation arrangements: determination of terms

(1) This section applies if a relevant authority and a water undertaker fail to agree—

(a) the terms of arrangements requested by the relevant authority pursuant to subsection (1) of section 87 above; or

(b) a variation in the terms of those arrangements following a request by the relevant authority pursuant to subsection (6)(c) of that section.

(2) In relation to areas in England (except where subsection (4) below applies)—

(a) the relevant authority may refer the matter to the Secretary of State for determination;

(b) following such a reference, the Secretary of State may—

(i) determine the terms of the arrangements as he sees fit; or

(ii) refer the matter for determination by such other person as he considers appropriate; and

(c) the determination of the Secretary of State or, as the case may be, the other person shall be final.

(3) In relation to areas in Wales (except where subsection (4) below applies)—

(a) the Assembly may—

(i) determine the terms of the arrangements itself as it sees fit; or

(ii) refer the matter for determination by such other person as it considers appropriate; and

(b) the determination of the Assembly or, as the case may be, the other person shall be final.

(4) Where the Assembly is one of the relevant authorities which has made a combined reference under section 87(8)(b) or (10) above—

(a) the terms of the arrangements shall be determined by a person appointed by the Secretary of State and the Assembly acting jointly; and

(b) the determination of that person shall be final.

(5) Following determination under this section of the terms to be included in any arrangements—

(a) the relevant authority shall give notice of the determination to the water undertaker in question; and

(b) the undertaker shall be deemed to have entered into the arrangements under section 87(1) above on the terms determined under this section with effect from the day after the date of the notice.

(6) References in this Chapter to arrangements entered into under section 87(1) above shall include arrangements deemed to have been entered into under that section by virtue of subsection (5)(b) above.

87C Fluoridation arrangements: compliance

(1) It shall be the duty of each water undertaker to comply with any arrangements entered into by it under section 87(1) above.

(2) Where, pursuant to any such arrangements, the fluoride content of any water is increased, the increase may be effected only by the addition of one or more of the following compounds of fluorine—

• hexafluorosilicic acid (H₂SiF₆)

• disodium hexafluorosilicate (Na₂SiF₆).

(3) Subject to subsection (4) below, water to which fluoride has been added pursuant to any such arrangements entered into by a water undertaker (with a view to its supply in an area) may be supplied by that or any other undertaker to premises in any other area (whether or not that other area is the subject of arrangements under section 87(1) above).

(4) Subsection (3) above applies if (and only if) the undertaker or undertakers concerned consider that it is necessary for the water to be supplied in the other area—

(a) for the purpose of dealing with any serious deficiency in supply; or

(b) in connection with the carrying out of any works (including cleaning and maintenance) by the undertaker concerned or, as the case may be, by the undertakers concerned, or by a licensed water supplier supplying water using its or their supply system.

(5) In this section—

(a) the reference, in subsection (3) above, to water to which fluoride has been added pursuant to arrangements includes a reference to water to which fluoride has been added by Scottish Water in exercise of the power conferred by section 1 of the Water (Fluoridation) Act 1985; and

(b) in relation to a supply of such water by a water undertaker, the reference, in subsection (4) above, to the water undertakers concerned shall have effect as references to the water undertaker and Scottish Water.

(6) In subsection (4) above, “serious deficiency in supply” means any existing or threatened serious deficiency in the supply of water (whether in quantity or quality) caused by an exceptional lack of rain or by any accident or unforeseen circumstances.

(7) Arrangements entered into under section 87(1) above shall remain in force until the relevant authority, after giving reasonable notice to the water undertaker, terminates them.

(8) But (except where it is reasonably practicable to terminate the arrangements separately), arrangements to which section 87(8)(a) or (b) applied may only be terminated by the relevant authorities acting jointly.”

(3) In section 88 (power to vary permitted fluoridation agents), in subsection (1), for “87(4)” there is substituted “87C(2)”.

(4) After section 88 there is inserted—

“88A Power to vary target concentration of fluoride

(1) The appropriate authority may by order made by statutory instrument provide that section 87A(1) above is to have effect as if for “one milligram per litre” there were substituted a lower concentration specified in the order.

(2) An order under subsection (1) above may make different provision for different geographical areas, or for some such areas and not others.

(3) A statutory instrument containing an order under subsection (1) above shall not be made by the Secretary of State (or by the Secretary of State and the Assembly acting jointly) unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.

(4) In subsection (1) above “appropriate authority”—

(a) in relation to an area which is partly in England and partly in Wales, means the Secretary of State and the Assembly acting jointly;

(b) in relation to an area which is wholly in England, means the Secretary of State; and

(c) in relation to an area which is wholly in Wales, means the Assembly.

(5) An order amending or revoking an order under subsection (1) above made by virtue of subsection (4)(a) above must also be made by the Secretary of State and the Assembly acting jointly.”

(5) For section 89 there is substituted—

“89 Consultation

(1) Before taking any step mentioned in subsection (2) below, a relevant authority shall—

(a) consult and ascertain opinion in accordance with regulations made by the appropriate authority; and

(b) comply with the requirements set out in regulations made by the appropriate authority.

(2) The steps are—

(a) requesting a water undertaker to enter into arrangements under section 87(1) above;

(b) requesting a water undertaker to vary any such arrangements in, or except in, prescribed circumstances or cases;

(c) giving notice to a water undertaker under section 87C(7) above to terminate any such arrangements;

(d) maintaining any such arrangements in prescribed circumstances.

(3) Regulations—

(a) under paragraph (a) of subsection (1) above shall include provision about the process which relevant authorities are to follow for the purposes of that paragraph;

(b) under paragraph (b) of that subsection shall include provision about the requirements which must be satisfied (with respect to the outcome of that process or otherwise) before a step mentioned in subsection (2) above may be taken.

(4) Subsection (1) above shall not apply in relation to a proposal by a relevant authority to take the step mentioned in subsection (2)(c) above if the appropriate authority so directs by an instrument in writing (and such a direction may apply either generally or in relation to a particular proposal).

(5) In this section “appropriate authority”—

(a) in a case where two or more relevant authorities (one of which is the Assembly) propose to request a particular water undertaker to take a step mentioned in subsection (2)(a), (b) or (c) in respect of arrangements in adjoining areas, means the Secretary of State and the Assembly acting jointly;

(b) in relation to England (except in a case to which paragraph (a) applies), means the Secretary of State; and

(c) in relation to Wales (except in a case to which paragraph (a) applies), means the Assembly.”

(6) For section 90 (indemnities in respect of fluoridation) there is substituted—

“90 Indemnities in respect of fluoridation

(1) The Secretary of State may, with the consent of the Treasury, agree to indemnify any water undertaker in respect of liabilities which it may incur in complying with arrangements entered into by it pursuant to section 87(1) above.

(2) The Secretary of State may also, with the consent of the Treasury, agree to indemnify any licensed water supplier in respect of liabilities which it may incur—

(a) in supplying water to which fluoride has been added by a water undertaker by virtue of any such arrangements;

(b) (if the licensee is introducing water into the water undertaker’s supply system) in complying with any obligation imposed on it by the undertaker in consequence of the arrangements.

(3) The Secretary of State may by regulations make provision with respect to—

(a) the matters in respect of which an indemnity may be given under subsection (1) or (2) above;

(b) the form and terms of any such indemnity; and

(c) such ancillary matters as he sees fit.

90A Review of fluoridation

(1) A relevant authority which has entered into arrangements under section 87(1) above shall—

(a) monitor the effects of the arrangemen