House of Commons - Scottish Affairs - Appendices to the Minutes of Evidence

Select Committee on Scottish Affairs Appendices to the Minutes of Evidence

APPENDIX 10

Memorandum from the Environment Agency

Letter to the Clerk of the Committee from the Abstraction Licence Review Programme Manager

I enclose a Memorandum in which I set out how the Licensing system in England and Wales works. I also enclose a copy of the Agency's Abstraction Charges Scheme, which is referred to in the section on Charges. I hope this Memorandum will suffice in answering your request for a brief potted history of regulation.

You also ask about water monitoring. The principal reasons for doing this are:

— for general management of rivers and underground waters;

— to assess available resources for in river needs, the environment, including river water quality and for sustainable abstraction;

— to be able to control the taking of water by eg setting proscribed flows to be passes downstream of abstraction points;

— to monitor actual abstraction and see that abstractors comply with licence conditions; and

— to assist with flood defence design and flood warning.

With regard to changes expected with the implementation of new legislation, I would refer you to the Government's decisions following consultation, published in March 1999, in the document "Taking Water Responsibly".

We can let you have some statistics and I am asking my colleague in our Bristol Head Office to let you have a copy of the most recent annual Return form which we send to the DETR—known as the Section 201 return. This shows by category of user, the total volume of water licensed for abstraction, and the total quantities actually abstracted. It breaks these down to show whether the water comes from surface sources, groundwaters or from tidal sources. I do not recall it showing consumption in the drinks industry as a separate category. However, my colleague in our Demand Management Centre has some information in this regard which should be useful to you and to the Committee[16].

Finally, you ask for views on the differences between the monitoring requirements of England and Wales, and Scotland. I do not feel we can comment with any authority as we have little or no experience of the Scottish systems.

Abstraction Licence Review Programme Manager

November 2000

WATER ABSTRACTION AND IMPOUNDMENT IN ENGLAND AND WALES

INTRODUCTION

1. Water is one of our most valuable resources. Normally, England and Wales have sufficient water to meet demands. However, resources are limited and they are not always in the right place at the right time. Demand for water is increasing; there is growing competition for the available resources. The Environment Agency is responsible for ensuring that water resources are managed effectively and for the benefit of everyone. We fulfil this role principally through a system of abstraction licensing. As a requirement under the Water Resources Act 1991, almost anyone who wants to take water from a surface (eg river, stream or canal) or underground source must obtain a licence to do so from us. Similarly, anyone wanting to impound water (eg construct a dam or lake that will be on-stream) must also obtain a licence from us.

Why are licences necessary?

2. The Environment Agency needs to ensure that water resources are safeguarded and that abstractions do not damage the environment. Without licences, persistent over abstraction could lead to shortages in water supply, increased river pollution by reducing dilution of pollutants, damage to fisheries and wildlife habitats and ultimately to the loss of rivers for our recreation and enjoyment. By licensing, we can control the level of abstraction to protect both water supplies and the environment.

GENERAL WATER RESOURCES MANAGEMENT

3. The Agency is charged with the general duty of managing water resources[17] in England and Wales[18]. The law sets down certain guidelines for this: for example, the Agency must pay special attention to:

— the costs and benefits of what it does;

— the aim of sustainable development;

— environmental considerations; and

4. To achieve this the Agency has a variety of legal powers. Foremost amongst these is the system of licensing abstractions and impoundments.

5. In addition the Agency can initiate proposals for establishing minimum acceptable flows in watercourses[21], has powers of enforcement and related powers of entry, has information gathering powers, may make special arrangements with water companies, and has powers to help it manage drought situations.

6. The Agency does not control or protect all water resource use. There are certain important exemptions from licensing control. However (apart from the small domestic and agricultural exemption) such use does not carry with it the corresponding protection from derogation which a licence gives. On the other hand the Agency must have regard to such uses when determining licence applications.

Sustainable development

7. The Agency has a duty, indeed it is its principle aim, to contribute towards attaining sustainable development[22]. One definition of this is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. The duty can be translated into positive steps to take when making decisions, giving advice, etc. The Government has produced a booklet setting out what it sees as the theory and practice of sustainable development[23] which the Agency must have regard to in exercising its functions.

Government advice on water management

8. The Government advice has sections dealing specifically with the different Agency functions. For water management the guidance[24] emphasises

— A strategic approach to catchment protection, through catchment management planning, so site specific activities are seen in a wider context, and are compatible with statutory designations.

— The need to work with natural river and coastal processes not against them wherever possible.

— Integration of technical, economic and environmental factors in decision-making.

— Proper consultation with agricultural, recreational, commercial, environmental and other interests affected by the Agency's activities.

9. The guidance endorses the objectives of the National Water Resource Strategy[25]. It encourages the Agency to influence local authority development plans[26], it is an "important consultee".

10. Drinking water supply is of primary concern, but it is recognised that as pressures on resources increase, the needs of this and other uses for abstracted water will need to be reconciled. The guidance encourages the Agency to work with abstraction towards this end, and to use its powers to encourage water conservation in areas of potential shortage (where economic to do so). It should also encourage development of new resources in a sustainable way where they are needed, though with regard for efficient water storage and leakage control.

Cost benefit considerations

11. The Agency must take into account the likely costs and benefits in the exercise (or non-exercise) of any of its powers.[27] The duty recognises that sustainable development involves both economic development and protecting and enhancing the environment. Costs include costs to any person or organisation or to the environment.

Water company arrangements

12. The Agency must, so far as reasonably practicable and so far as it considers appropriate for carrying out its water resources management functions, enter into and maintain arrangements with water companies to secure proper management or operation of their sources of supply, reservoirs or other works.[28]

13. Disputed matters may be referred to the Secretary of State or the Director General of Water Services.

14. The Agency must send a copy of the arrangements to the Secretary of State, who can enforce the obligations against the water company under s.18 Water Industry Act 1991.

15. Agreements may also be made with water companies (and others) under s.158 WRA 1991. Such agreements however tend to refer to detail which cannot satisfactorily go in a licence and are more an aid to enforcement.

European law

16. European law has had a more limited impact in water resources management than in other areas (like water quality). However its influence is already there, and is likely to grow.

17. The directives whose effects may be of direct concern to licensing staff relate to environmental impact assessment,[29] habitat protection[30] and disclosure of environmental information.[31]

Interpretation in appeals cases and by the courts

18. The water resources legislation is a statutory code. Appeal decisions by the Secretary of State provide some guidance on how it may be interpreted. A few cases get to the High Court (or beyond).

RESUME OF THE LICENSING SYSTEM IN ENGLAND AND WALES

How does the licensing system work?

19. A licence gives its holder a right to take water from the stated source every year, until it expires or the holder wishes to give up that right by cancelling it. A licence guarantees that no one else who would require a licence can lawfully take the share of water allocated to the licence holder without the consent of the licence holder. Moreover, a licence indemnifies its holder against any effect the authorised abstraction may have on other existing rights to abstract water. However, it does not guarantee the quality of the water or that the amount authorised for abstraction will always be available. This will often depend on weather conditions and other factors outside our control.

20. Except for some licences for less than 20 cubic metres per day applications will need to be advertised in the local press and London Gazette before being submitted. Notices also have to be served on the local water company and certain other bodies. Before granting a new licence, we look at the water requirements of the applicant to assess whether they are reasonable. We check that no 'protected rights' will be affected (a licence cannot be granted which will derogate from an existing right except with the specific consent of the person who holds that right). The potential effect of the abstraction on river flows and groundwater resources is assessed, as are effects on amenity value, public health, land drainage, navigation, fisheries and nature conservation. We also have regard to representatives made to us following public notification.

About the abstraction licence

An abstraction licence will generally state:

— how much water can be taken;

— when in the year water can be taken;

— what the water can be used for;

— the land where the water can be used;

— the name and address of the licensed abstractor;

— the duration of the licence;

— the source of supply, eg name of underground strata, river, etc;

— the means of abstraction, eg borehole, river intake;

— conditions to protect other interests and the water environment;

— the means by which abstraction is measured and records kept.

21. Conditions can be placed on licences to protect the available water resource and to ensure adequate flows or levels are available to maintain environmental stability. A common condition is that the abstraction must not result in the river flow being depleted below a pre-set or prescribed flow. If a licence is for the purpose of spray irrigation, there may be times, for example during a drought, when further restrictions are placed on abstraction. Indeed, under conditions of extreme water resource shortages abstraction for spray irrigation may be banned altogether. Winter abstractions into storage lagoons would, however, normally be exempt from these restrictions.

About the impounding licence

22. The process for obtaining an impounding licence is very similar to the process for obtaining an abstraction licence.

23. An impounding licence will authorise the construction of impounding works and will generally state:

— The description of the inland water to be impounded

— The point at which it may be impounded

— Conditions to protect other interests and the water environment, including any flow requirements to be passed down stream of the impounding works

— A description of the impounding works

Who requires a licence?

24. Anyone wanting to take water from a surface or underground source or wanting to impound water, must normally hold an abstraction or an impounding licence. There are a number of exceptions, the more common ones being:

— one-off abstractions up to 20 cubic metres (subject to our consent if greater than five cubic metres);

— abstraction of 20 cubic metres or less per day from a surface water source running through or bordering the abstractor's land, for domestic or agricultural purposes other than spray irrigation;

— abstraction of 20 cubic metres or less per day from underground strata for the domestic purposes of one household;

— land drainage;

— abstraction to test for the presence, quantity or quality of water (with Environmental Agency consent) in underground strata; and

— water used for fire fighting.

Note: 20 cubic metres is equivalent to 20,000 litres or approximately 4,400 gallons, and is about the capacity of two milk tankers.

How to obtain a licence

25. The applicant must be the occupier or prospective occupier of the land on which the abstraction point is located. In some circumstances a right of access may be adequate.

26. If the licence that is required is for a borehole or well then, in most cases, it will first be necessary for the applicant to obtain consent from us to construct and test pump the proposed source before they apply for a licence. Such consent enables the applicant to determine how much water may be available, whether taking it will have an effect on other abstractors and the environment and if it is suitable for their needs. The consent will specify where and how deep the borehole or well can be and how it should be tested.

27. The applicant will almost certainly be required to send us an environmental report with the application. The scope and content will be case dependent so we will discuss this with the applicant during pre application discussions.

28. Whatever the nature of the proposed abstraction, the first step towards obtaining a licence will be to contact us. The general outline of the procedure involved in obtaining a licence is shown in the flow diagram below.

29. In some cases, there are exceptions to this procedure and it is important that the applicant contacts us before contemplating any form of abstraction, reservoir construction or sinking a borehole.

30. Provided the Agency is supplied with all the required information, a decision on whether to grant a licence and the conditions to which it may be subject, should be made within three months although more complex applications may take longer. We can ask applicants for their agreement for a longer period for us to determine their application if necessary. If a licence is refused, or conditions placed on it that the applicant finds unacceptable, then there is a right of appeal to the Secretary of State for the Environment, if in England or to the National Assembly for Wales, if in Wales, within one month of our decision.

Taking over an existing abstraction licence

31. A person or company may be about to occupy land for which there is an existing licence to abstract water. If this is the case and they wish to continue to exercise the right to abstract water, they will need to "succeed" to the licence. They have up to 15 months from taking occupation to notify us that they want to succeed to the licence or a part of it. If we do not receive notice in time, they will lose the licence. Early contact with us is therefore important.

Charges

32. An application charge will normally be payable by an applicant for the work that the Environment Agency does in processing the application. If the licence is granted, they will also normally pay an annual charge for the amount of water they are authorised to abstract, (not for what they actually use). The level of annual charge will depend on what they use the water for, the source from which it is taken, and the season in which the water is taken. For spray irrigation, because the large difference from year to year in the quantities of water needed, it is possible to have charges calculated partly on the quantity of water licensed for abstraction and partly on the quantity used. This charging arrangement is called a two-part tariff and requires a special agreement. A copy of the Agency's Charges Scheme is attached. For an impounding licence, applicants will only have to pay an application charge—there are no annual charges.

What is the money used for?

33. Money raised from abstraction charges is used to fund all our costs in ensuring that water resources are properly managed. In addition to ensuring the proper use of water resources through the licensing system, money is spent on augmenting river flows, determining national and regional water resource strategies, and providing and maintaining a network of river and rainfall monitoring stations etc.

What if a licence holders needs change?

34. If at any time an abstractors requirements for water change, they can apply to vary their licence. Variations can have a considerable effect on a water source and are assessed as thoroughly as new licence applications. Variations such as changing the name on a licence or reductions in the amount of water authorised can usually be made without charge or the need for advertisement.

THE LICENSING SYSTEM IN MORE DETAIL

ENVIRONMENTAL DUTIES (INCLUDING UNDER EUROPEAN LAW)

The Agency's duties generally

35. The Agency has general and specific duties intended to benefit the environment. These arise from the Environment Act 1995[32] as well as other legislation, in particular under European Law[33]. Under the Environment Act 1995, the Agency's principal aim, subject to other statutory provisions and taking into account costs, is to discharge its functions so to protect or enhance the environment and overall to make a contribution towards achieving sustainable development[34].

36. The Government may also issue codes of practice giving practical guidance to the Agency about how to exercise these duties and to promote desirable practices in relation to them, and the Agency must have regard to what the code provides in discharging its duties[35]. There is such guidance in relation to conservation, access and recreation[36], and sustainable development.

General environmental responsibility

37. The Agency has a general discretionary[37] duty ("to such extent as it considers desirable") to promote (a) the conservation and enhancement of the natural beauty and amenity of inland and coastal waters and of land associated with such waters; (b) the conservation of flora and fauna which are dependent on an aquatic environment; and (c) the use of such waters and land for recreational purposes, in particular taking into account the needs of persons who are chronically sick or disabled[38].

Mandatory environmental duties

38. First, when the Agency is formulating or considering any proposals, other than in relation to its pollution control functions, it must exercise its powers over the proposals so as to further the conservation and enhancement[39] of natural beauty and the conservation of flora, fauna and geological or physiographical features of special interest[40]. On the other hand, exercise of the duty has to be consistent with the underlying purpose of what the Agency is doing (eg licensing) and with the objective of achieving sustainable development[41].

Duties in relation to sites of special interest

39. This applies to sites where the statutory nature conservation agencies[42] consider that land is of special interest[43] and may be affected by works or operations which the Agency may do or authorise[44]. They must notify the Agency accordingly. National Parks authorities[45] have a similar duty.

Habitats Directive

40. The Habitats Directive came into force in 1994. Its objective is comprehensive conservation of natural habitats and wild fauna and flora on land and at sea. It does for habitats and species generally what the earlier (1979) Birds Directive did for birds and bird habitats. It is closely modelled on the Birds Directive and (relevant for present purposes) particularly aims at the strict protection of special sites. Under the Birds Directive such sites are known as Special Protection Areas; the equivalent under the Habitats Directives are Special Areas of Conservation. They may be collectively referred to as European Sites and are supposed to establish a Europe-wide network of sites known as Natura 2000. The Habitats Directive altered the site protection provisions of the Birds Directive so that they both work in exactly the same way.

41. The Habitats Directive has been implemented in the UK by the Conservation (Natural Habitats &c.) Regulations 1994[46]. The key portion of these for present purposes are regs 47 to 53.

CONTROL OF ABSTRACTION AND IMPOUNDING

42. Like other licensing systems, water resources licensing works by making it an offence to abstract water, or to begin to construct or alter impounding works, without a licence or unless covered by one of various exceptions set out in the WRA 1991. An offence is a criminal matter and requires proof in court to the same standard as other crimes ("beyond reasonable doubt").

Requirement for a licence

43. The basic abstraction-without-a-licence offence is set out in s.24 WRA 1991. The corresponding rule relating to impounding is in s.25. These cover such details as confirming that an offence is also committed if a licence exists but conditions are not complied with, and the need for a licence and compliance with conditions on it also to construct or extend a well, borehole etc or to install or modify machinery to facilitate abstraction of additional quantities, etc.

44. For impoundments, the offence is against beginning to construct or alter impounding works. It is possible to apply for a combined abstraction and impounding licence[47]. As a matter of practice, however, the Agency will normally actually issue separate licences.

Exceptions to the requirements for a licence

45. There are various exceptions to the need for a licence. Some still require another form of authorisation[48] or notification[49].

Most of these exceptions are in s.26 to 33 WRA 1991. Crown application is at s.222[50] and the drought rules between s.73 and 81.

Entitlement to apply for a licence

46. Section 35 provides that the Agency "shall not entertain" a licence application unless the applicant either occupies the land where he proposes to abstract from or, in the case of inland waters (but not groundwater except where water on the surface is treated as being in underground strata[51] or in succession situations[52]) has a right of access to it.

47. There are special rules relating to entitlement to apply for licences to abstract from inland waters owned or managed by British Waterways (BW) (restricted to BW[53]) and for ecclesiastical property[54].

Publicity

48. Licence applications must normally be (a) advertised, (b) notified to specified bodies (eg the water undertaker for the area) and (c) be open to public inspection for a specified period[55]. This is the applicant's responsibility. The requirement may be waived, at the Agency's discretion, for small abstractions[56].

49. There are special provisions for the Agency to notify National Park authorities in appropriate cases[57].

Determination of licence applications

50. The Agency has a wide discretion in determining licence applications. It may put such conditions on licences as it considers appropriate or may refuse to grant a licence if it considers that is "necessary or expedient". Various constraints, however, apply.

Grant of licences

51. Licences may be valid until revoked or be time limited[58]. Agency policy is now to time limit most licences.

52. Licences have to contain other specified information, for example as to quantity, means of measurement, means of abstraction and (except in the case of water supply licences) detail (in practice on a map) as to where the water may be used[59].

53. The licence must also specify the name of the licence holder[60]. Being the holder of a licence and complying with the conditions on it gives that person a defence to claims by others affected by abstraction and/or impounding activity[61].

Involvement of the Secretary of State[62]

54. The Secretary of State may become directly involved in licence applications in the following circumstances.

— In the case of the Agency applying for licences itself. The Agency must always advise the Secretary of State. If the Secretary of State has no comment, the licence can go on actually to be granted by the Agency's own Board resolution.

Revocation and variation of licences

55. Licences may be revoked or varied, by the licence holder, the Agency, or the Secretary of State. Variations by the licence holder are normally[65] treated for publicity, determination etc. purposes like new licence applications[66]. Variations imposed on the licence holder at the instance of the Agency or Secretary of State involve procedures designed to protect the licence holder's interests[67], and compensation may be payable[68]. There is special provision for variation or revocation of licences at the instance of an owner of fishing rights[69].

56. The Habitats Directive may require the variation or revocation of licences in certain circumstances.

Succession to and other transfer of licences

57. Licence holders are individual entities (persons, companies etc.) but licences usually require use of water on particular land. This means there must be ways for them to be transferred when the licence holder moves away and someone else wants to make use of the licence. The principal mechanisms are the so-called "succession" rules which deal with changes to occupation of land over which a licence authorises use of water, including situations where a parcel of land is divided[70].

58. Where no land is specified, and/or where for other reasons it is desired to change the name of the licence holder, this may be achieved by variation. Whether this requires advertising etc. depends on the circumstances. Water company licences may sometimes be transferred under special amalgamation etc. schemes[71].

Charging for licences

59. The Agency's management of water resources is paid for by charging licence holders for what they are authorised to abstract under a national charging scheme approved by the Secretary of State.

60. Special arrangements ("two part tariffs") are available to spray irrigators to reflect the fact that irrigation may not always be needed; the charge is always payable on half the authorised quantity, and above that only to the extent that water is actually used.

61. Charges are calculated by reference to the type of use (whether this results in very low, low, medium or high loss of water), the season when abstraction takes place (winter, summer, or all year); the volume authorised to be abstracted; and a special charge factor depending on which of the Agency's eight regions the abstraction takes place in[72].

62. Some activities, although requiring a licence, are exempt from charges. These include groundwater abstractions for agricultural purposes (other than spray irrigation) of not more than 20m3/day and small hydropower related abstractions[73].

63. The Agency may suspend or revoke licences for non-payment of charges.[74]

64. The charges scheme has been laid down by the Secretary of State and is available as a separate document which the Agency publishes annually.

Licences of right

65. When the licensing system was introduced in 1965, people who could show they had been abstracting before then were allowed to receive licences based on what they had been doing, ie without the need to go through the normal application process. These licences were called "licences of right".

66. The Water Act 1989 similarly brought certain types of abstraction which had previously been exempt within the licensing "net". Pre-existing abstractions were entitled to licences of right (commonly known as "licences of entitlement") on a similar basis.

Derogation, compensation and indemnity

67. Rights to abstract are valuable and the law recognises that if these are curtailed, for example by issue of a licence which derogates from those rights, or if the Agency revokes or varies the licence, compensation should be paid. There is no liability to pay compensation where a licence has not been used for seven years.[75]

68. The liability to pay compensation falls first on the Agency, though the Secretary of State may choose to indemnify it.

Information gathering and disclosure

69. There is inevitable tension between:

— Licence holders (and holders of other consents, people who have applied for licences etc.) who like to keep information about their abstractions to themselves, and dealings with the Agency private.

— The Agency, which needs information about abstractions, whether licenced or not, in order to manage resources properly.

— The public, which has always been entitled (through Public Registers) to basic information about abstraction licences, but which society now regards as entitled to much wider information about activities which affect the environment.

70. This shift in attitudes, from a culture of secrecy to relative openness, is reflected in quite complex legal provisions, which can be difficult for the Agency (and similar public bodies in other fields) to interpret.[76] Essentially, the principle now is that information should be released unless there is good reason not to.

71. The Agency has power to require information about any abstractions[77]. It requires routine returns from licence holders. However the power can be used to require information about any abstraction, whether licensed or not.

72. The Licences Regulations require licence applicants to provide the Agency with certain information to enable it to determine applications sensibly.

Powers of entry, works powers etc.

73. In order to perform its functions effectively, both of water resources management and in other areas, the Agency needs powers which override the interests of private landowners. These "land and works" powers are wide, but relevant to water resources management are:

74. Agreements under s.158 and entry for enforcement purposes are the powers most frequently encountered in practice.

Canals

75. Canals throw up special problems in abstraction licensing. Mainly, this is due to the exemption from licensing granted to navigation, harbour or conservancy authorities where the abstraction or impoundment is in the course of, or results from, the operations of such bodies[85]. British Waterways (BW) is in a special position as it alone may apply for licences from inland waters it owns or manages[86].

DROUGHT

76. Shortage of rain inevitably causes resource management problems and the need to allocate water where society regards it as most needed (ie for public supply), and to prevent environmental damage.

77. The Agency and water companies have various ways of gaining appropriate control in drought situations. These are emergency drought orders, ordinary drought orders and environmental drought orders (all dealt with by the Secretary of State); and drought permits, and restrictions on spray irrigation[87] (which are dealt with by the Agency).

INSPECTION AND ENFORCEMENT

78. Enforcement is a vital part of the Agency's activities. In recent years, enforcement has become higher priority. There has been a shift in attitudes and awareness. Increasingly, water users and the general public expect water use to be controlled properly, and problems of over-abstraction put right.

79. The coming of the Environment Agency in 1996 has led to the need, in particular, to standardise the way it enforces the various regulatory activities it is responsible for.

The Agency has an Enforcement and Prosecution Policy.

In addition the Agency has an Investigations Manual. This gives more detail on investigating incidents and the legal procedure.

The Agency has also an Abstraction Metering Good Practice Manual.

Licence inspections

80. Enforcement officers make inspection visits:

— To ensure the licence holder understands what the licence says.

— To ensure the licence holder is complying with the conditions of the licence.

— To ensure that monitoring/measuring/metering arrangements are in place and working.

— To ensure that records of abstracted volumes are maintained to standards specified in the licence and show a true record of the abstraction operation.

— To ensure that the licence is being charged correctly ie in accordance with the charges scheme.

— To show that the Agency provides a positive and responsible presence in the field.

— To show that the Agency must, and will, enforce the licensing rules firmly, fairly and impartially.

The Environment Agency

November 2000

Annex A

Table 3.21

ABSTRACTION LICENCES IN FORCE AND NEW LICENCES DETERMINED: 1998

Licences in force		New Licences Determined
EA Region	1998	EA Region	1998
Anglian	10,700	Anglian	463
Midlands	6,243	Midlands	235
North East	4,679	North East	169
North West	3,767	North West	140
South West	11,136	South West	157
Southern	2,731	Southern	60
Thames	2,955	Thames	115
Wales	4,421	Wales	82
England & Wales	46,632	England & Wales	1,421