Smartsource v Information Commissioner and a Group of 19 additional parties

Factual and Procedural Background

The opinion concerns the legal classification of water companies in England and Wales under the Environmental Information Regulations 2004 (EIR 2004). The central issue is whether water companies, specifically Water and Sewerage Companies (WASCs) and Water Only Companies (WOCs), qualify as public authorities under regulation 2(2)(c) or 2(2)(d) of the EIR 2004. The case examines the nature of the water companies’ functions, their relationship with the State, and the extent of regulatory control exercised over them. The context includes a comparison with Network Rail and reference to the Water Industry Act 1991, as well as consideration of relevant regulatory and statutory frameworks. The procedural posture involves an appeal against the Information Commissioner’s decision that water companies are not public authorities for the purposes of the EIR 2004.

Legal Issues Presented

1. Whether the water companies are public authorities under regulation 2(2)(c) of the EIR 2004, which covers bodies performing public administrative functions.
2. Whether the water companies fall within regulation 2(2)(d) of the EIR 2004, which includes bodies under the control of public authorities that have public responsibilities, exercise public functions, or provide public services relating to the environment.
3. Whether the water companies can be considered hybrid public authorities, being public authorities for some functions or information but not others.
4. The appropriate interpretation of the concept of "control" under regulation 2(2)(d).
5. The relevance and applicability of prior case law, including Griffin v South West Water Services Limited and Foster v British Gas, to the classification of water companies under the EIR 2004.

Arguments of the Parties

Appellant's Arguments

• Water companies perform inherently public functions as statutory undertakers appointed under the Water Industry Act 1991 and are subject to detailed statutory regulation.
• They provide a universal service and cannot refuse domestic customers or set their own prices, indicating a public service nature.
• The government has statutory obligations to ensure universal water service coverage and continuity in case of company failure, evidencing public function.
• Some functions of water companies involve regulatory, rule-making, or law enforcement powers, suggesting they carry out public administration.
• Water companies are under the control of public authorities such as the Secretary of State and OFWAT, and thus fall within regulation 2(2)(d).
• Reference to the EU Water Framework Directive and the example in Griffin v South West Water Services Limited support the position that water companies are public authorities.

Respondents' Arguments

• Water companies are private commercial entities incorporated under company law, independent of government control.
• The regulatory framework is extensive but represents regulation, not control, allowing water companies significant commercial freedom.
• Functions described as public are ancillary to the primary commercial purpose of supplying water and sewerage services.
• Control under regulation 2(2)(d) requires a decisive influence over both outcomes and means, which water companies do not fall under.
• Comparison with other regulated industries (e.g., pubs, pharmaceuticals) shows that regulation alone does not equate to being a public authority.
• The hybrid public authority concept is rejected as inconsistent with the statutory scheme of the EIR 2004.

Information Commissioner's Position

• Agrees that water companies are not carrying out functions of public administration under regulation 2(2)(c).
• Supports the view that water companies are not under the control of public authorities for the purposes of regulation 2(2)(d).
• Considers that water companies enjoy significant commercial freedom and independence from decisive regulatory interference.
• Raises the possibility of hybridity but ultimately aligns with the view that water companies are generally not public authorities.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analysed the characteristics of water companies against the definitions of public authorities under regulations 2(2)(c) and 2(2)(d) of the EIR 2004. It distinguished between regulation and control, emphasizing that while water companies are subject to extensive statutory regulation, this does not amount to control sufficient to classify them as public authorities.

Regarding regulation 2(2)(c), the court found that water companies are private commercial entities incorporated under company law, not creatures of statute, and their ancillary regulatory functions do not constitute functions of public administration. The court rejected the appellant’s arguments that statutory duties and the universal service obligation equate to public functions.

On regulation 2(2)(d), the court noted the requirement of a "decisive influence" or control by a public authority over the body. The court accepted submissions that the water companies enjoy significant commercial autonomy, including freedom to determine means to achieve regulatory outcomes, and thus are not controlled by the Secretary of State or OFWAT. The court found the DEFRA guidance and the Aarhus Convention’s interpretation helpful in distinguishing regulation from control.

The court critically assessed the precedent in Griffin, highlighting that the legal question there concerned the public service under control rather than the body itself, and that the context was different. The court also rejected the hybridity argument, concluding that the EIR 2004 does not contemplate an entity being a public authority for some purposes but not others.

Ultimately, the court concluded that the water companies are private commercial enterprises operating under a regulatory regime, and do not meet the criteria to be considered public authorities under the relevant regulations.

Holding and Implications

The court’s final decision is that the water companies in England and Wales are not public authorities for the purposes of the Environmental Information Regulations 2004 under either regulation 2(2)(c) or 2(2)(d).

This decision means that the water companies are not subject to the same obligations to disclose environmental information as public authorities under the EIR 2004. The ruling rests on the distinction between regulation and control, emphasizing the commercial independence of the companies despite statutory regulation. No new precedent was set beyond the interpretation of the EIR 2004 in this specific context, and the decision reflects the particular statutory and market framework governing the water industry post-privatization.