---

Baroness Byford: My Lords, I support the noble Baroness, Lady Miller of Chilthorne Domer. Throughout our discussions in Committee, we have returned to the crucial factor of wanting to have efficient use and conservation of water throughout the

24 Jun 2003 : Column 155

Bill. I shall not repeat what I said then except to encourage those who were unable to take part at Committee stage to support through these amendments a basic principle that we would all wish to see encompassed in the Bill.

Lord Whitty: My Lords, I think that we are all agreed on what we want to achieve here. As tabled, Amendment No. 36 might have the effect of narrowing the scope of the existing general duty. It might narrow the scope of the duty to secure proper use of water resources to relate only to abstractors to the exclusion of other users.

On the face of it, Amendments Nos. 160 and 160A are not very different. My interpretation of the difference is almost the opposite of the noble Baroness's. We emphasise that the Environment Agency has always been able to impose efficiency conditions, and has done so. We do not wish to include in the Bill anything to suggest that such decisions were not covered by previous legislation, as we do not believe that to be the case. Therefore, the clarification of inserting the word "including" implies that the provision has always existed, whereas if the words "in particular" are used, the clause is more likely to be interpreted as suggesting a new power.

We are all concerned that we register the matter in the Bill. However, the Government feel that Amendment No. 160 does it better and that past decisions would be less subject to the—admittedly remote—possibility of challenge if the provision were included in our form rather than that proposed in Amendment No. 160A.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his helpful reply. I am concerned that we get the matter right. The success of the first amendment of the noble Baroness, Lady Byford, on Report strengthens the Bill. In the light of that fact, in particular if the Minister is satisfied that the wording that the Government propose is satisfactory, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Baroness O'Cathain moved Amendment No. 37:

After Clause 30, insert the following new clause—

"APPEALS AGAINST ENFORCEMENT ORDERS
(1) Section 21 of the WIA (validity of enforcement orders) is amended as follows.
(2) At the end of paragraph (a) of subsection (1), there is omitted the word "or".
(3) After paragraph (b) of subsection (1), there is added—
"(c) that the making or confirmation of the order was based on an error of law or fact; or
(d) that in the circumstances of the case, the making or confirmation of the order was not reasonable."
(4) For subsection (2) there is substituted—
"(2) On any such application, the High Court may, if satisfied that any of the grounds set out in subsection (1) above are proved—

24 Jun 2003 : Column 156

(a) quash the order or any provision of the order; or
(b) vary the whole of the order, or any part of the order whether the application relates to that part of the order or not.""

The noble Baroness said: My Lords, Amendment No. 37 relates to enforcement orders. Although there is a right of appeal against competition related decisions made by Ofwat, there is no right of appeal against other enforcement decisions made by Ofwat and the Secretary of State. I believe that that needs to be rectified.

The amendment creates a right of appeal against enforcement decisions not related to competition that are made by Ofwat and the Secretary of State. That is part of a package of amendments on appeals. They aim to ensure that there are rights of appeal on the merits of the regulator's decisions to an independent person—possibly a member of the court of arbitrators—taking into account that there are already such rights in relation to the granting of abstraction licences and decisions on competition issues.

The amendment and other provisions replace our previous "jumbo" appeals amendment that we dealt with in Grand Committee. It was somewhat complex and caused confusion. I hope that this amendment clarifies the situation. Instead, specific amendments are proposed to provisions where regulatory decisions affect existing rights or are punitive. I beg to move.

Lord Borrie: My Lords, I support the amendment. As the noble Baroness, Lady O'Cathain, said, it is a substitute, as was another amendment we debated previously. Another amendment is yet to come in relation to the "jumbo" clause, as she put it. This approach is a major improvement.

Under Clause 30, significant powers are vested in the Environment Agency to deal with impounding or abstracting without a licence. Those powers are based on the subjective view of the agency. Clause 30 contains the words,

"where it appears to the Agency"—

—that there is a breach.

There is a double subjectivity. Where it appears to the agency that a company has not complied with a condition, an enforcement notice may be served. The condition is that,

"it appears that a breach . . . is causing or likely to cause significant damage".

There is a double subjective basis on which the Environment Agency can serve enforcement notices.

Non-compliance with an enforcement notice incurs potentially heavy sanctions. They are set out on page 35 of the Bill at proposed Section 25C: on summary conviction there is a fine of up to £20,000; on conviction there is an unlimited fine. One expects that a public authority such as the Environment Agency will act only from the highest motives. But let us suppose that the agency's exercise of a power is questionable. Can it be questioned at all? Under Section 21 of the Water Industry Act 1991, the only possible remedy that I can see for a company aggrieved by an enforcement notice is either unlawfulness or

24 Jun 2003 : Column 157

failure of the agency to comply with statutory procedures. However, as the power is expressed in very subjective terms, it is difficult, if not impossible, for any aggrieved company to cross the huge hurdle of demonstrating that the Environment Agency has acted unlawfully.

The amendment would add two grounds: error of law or fact, and unreasonable use of power. The latter can be argued and might restrain any possible excessive use of power by the Environment Agency. We should expect the agency normally to comply with proper procedures and law, to act in the public interest and to behave in an upright way. But some official, sometime, might behave otherwise, and there should be a better remedy or appeal, as the noble Baroness suggested.

Baroness Byford: My name is attached to this amendment. I urge the Government to consider it, as it is very reasonable. My noble friend has gone to much trouble to ensure that it does what she wishes it to do. The noble Lord, Lord Borrie, rightly said that it gives us a chance to see where there is an error of law or fact, and whether the agency is using unreasonable power. I shall not add anything, as the amendment speaks for itself. I am very grateful to the noble Lord, Lord Borrie, for his support. He does not always agree with amendments; therefore, on this occasion I am doubly grateful to him for his support.

Baroness Miller of Chilthorne Domer: My Lords, I, too, can be brief, as the noble Lord, Lord Borrie, has said what needs to be expressed. We have tried to amend the Bill at other points to ensure that the agency is accountable in various ways. This amendment also seeks to ensure that.

Lord Whitty: My Lords, there has been a slight misapprehension by my noble friend Lord Borrie and those who spoke after him. The amendment, which would insert a new clause after Clause 30, has no impact on the Environment Agency. It deals with appeals against Ofwat—in the regulatory sense under the Water Industry Act—not the powers of the Environment Agency, which appear later in the Bill.

The first part of the amendment is not necessary, and the second part is potentially dangerous. The first part adds nothing to the current provisions. The enforcement authority is already required to consult on the terms of its order. It is then required to give notice of its decision. An undertaker therefore has an opportunity to point out any error of law. If the regulator fails to take note of those representations, there are grounds for legal challenge. A company can question an enforcement order if it feels that it is unreasonable. Again, existing provisions give Ofwat a discretion not to issue an order if the breach is trivial or if the company has given an undertaking to Ofwat to remedy that breach. There are therefore already extensive, transparent safeguards to protect against arbitrary, unreasonable action by the regulator.

It is probably the second part of the amendment to which I object more strongly. It would allow the High

24 Jun 2003 : Column 158

Court to vary an enforcement order if a complaint was upheld. That would include parts of the order which had not been the subject of the company's application. That would not be appropriate. The court already has powers to wholly or partly quash an order because it is unlawful; it does not need any additional powers for that. But it would be unusual to ask the court to substitute its own interpretation of what are often very technical issues involved in any alleged contravention, especially if those issues had not been the subject of the application in the first place. Therefore, it is giving too wide powers to the court. The powers that the court needs it already has. With that in mind, I hope that the amendment will not be pursued.

---