Consultation Paper

Purpose and Scope

The purpose of this consultation is to ask stakeholders for any comments they may have on proposed amendments to the way that the UK delegation to the IGC ("the UK Delegation") operates. The aim of the amendments is to provide the Intergovernmental Commission (IGC) with statutory access to the resources and expertise to facilitate its role in carrying out the regulatory functions set out in The Channel Tunnel (International Arrangements) Order 2005 (SI 3207/2005) (“the Order”).

The scope of this consultation is restricted to the arrangements to be implemented within the UK concerning the regulation of the Channel Tunnel.  It does not affect the arrangements in place for the domestic rail industry in Great Britain.

Introduction

The Order implements, in relation to the Channel Tunnel, EC legislation and in particular Directive 2001/14/EC, which sets out a framework to increase the transparency of capacity allocation and charging processes.  Under the Order, the IGC is appointed as the regulatory body for the Channel Tunnel and its duties include acting as an appeal body where an applicant is aggrieved, for instance, as a result of decisions taken by Eurotunnel in relation to access to or the access charges for the Channel Tunnel.

The Government has become aware of the desirability of providing for further expertise to support the UK Delegation's contribution to the regulatory and appellate functions of the IGC under Directive 2001/14/EC. Following a review of the current arrangements in Great Britain, the Government is therefore proposing amendments to the Order that are intended to enhance the ability of the IGC to carry out the regulatory functions effectively by:

• enabling the Office of Rail Regulation (ORR [1] ) to provide independent, expert advice and assistance via the UK Delegation to the IGC in relation to the regulatory functions under the Order. This would facilitate a consistency in approach to rail regulatory issues in Great Britain, where ORR already fulfils these functions under Directive 2001/14/EC for the main line network and where it is the appeal body for CTRL, subject to some specific requirements on charging issues; and
• providing for the appointment by the Secretary of State of two members to the UK delegation following consultation with the ORR.

The proposed arrangements have been discussed with ORR and the members of the UK delegation. They have all indicated that they are content with the proposals. Although these new arrangements do not require formal agreement from the French Government, the UK delegation has also kept its French colleagues informed of its proposals and the reasoning behind them.

Background

The IGC was established in 1986 by Article 10 of the Treaty of Canterbury.  It provides a single body through which the British and French Governments jointly exercise their rights and obligations under the Channel Tunnel Concession Agreement.  At the time of its creation, and until the transposition of the European “First Rail Package” [2] of Directives establishing the single market in the rail freight sector, the role of the IGC was essentially that of monitoring the construction and operation of the Channel Tunnel, taking decisions in the name of the two Governments for the implementation of the Concession, and ensuring the coherent application of the safety and security regimes applying to the Tunnel.

The IGC was not established as a body incorporating permanently within itself the expertise necessary to carry out all its functions allocated pursuant to the Treaty; this was not considered necessary.  Instead, the Treaty provides that for the purposes of carrying out its functions the IGC is entitled to call on the assistance of the authorities of each Government or any body or expert of its choice.

The IGC comprises a UK and French delegation each of seven members, appointed by their respective Government.  Decisions of the IGC are taken by agreement between the two Heads of Delegation.  The Chair of the IGC alternates on an annual basis between the two Heads; since 1 April 2007 it has been held by France.  On 1 April 2008 it will revert to the UK.

Developments in European legislation led the British and French Governments to expand the role of the IGC to include that of regulatory body for the Channel Tunnel in accordance with the requirements of Article 30 of Directive 2001/14/EC. However, as noted above, the IGC as currently constituted lacks statutory access to all the expertise and resources which may assist it with carrying out all the regulatory functions allocated to it.

In the UK, the domestic rail regulator, the ORR, is an obvious source of advice and assistance that the IGC may wish to call upon when carrying out its regulatory functions.  The proposed amendments provide the ORR with the power and the duty to provide such advice and assistance to the IGC.   

Issues for Consideration

In order to enhance the ability of the IGC to carry out its regulatory functions, the Government is proposing to implement two measures contemplated by the proposed amendments to Statutory Instrument (SI) 2005/3207 (as set out in the draft amending SI attached at Annex 4) and further developed in a Memorandum of Understanding (MoU) between the ORR and the Department for Transport (DfT), attached at Annex 2.

Appointment of ORR members to UK Delegation of IGC

The first of these is to strengthen the internal resources of the IGC by providing that two of the members of the UK Delegation, including the Head of the UK Delegation, are appointed by the Secretary of State following consultation with the ORR. In the interests of transparency, it is proposed to amend the Order to make this a statutory requirement (see Annex 4).

These members (referred to below as "ORR members") will possess requisite expert knowledge relevant to the discharge of the regulatory functions of the IGC and will act independently of the UK Government. They will be able to seek advice and assistance from the ORR in relation to the performance of those functions. The MoU records that the Government will not seek to direct any decision of the ORR members connected with regulatory issues. It also sets out the terms of appointment of the ORR members, their roles and how they will carry them out. 

In line with these changes, and to ensure continuity, it is also proposed that the UK Secretariat will move to the offices of the ORR from the DfT.  Responsibility for the appointment of the UK Secretary and staffing of the Secretariat will also transfer to the ORR. These arrangements are explained further in section 8 of the MoU.

Involvement of ORR in regulatory matters

The second measure is to facilitate the IGC's access to external resources by creating a statutory duty for the ORR to advise and assist the IGC on matters relating to its regulatory functions as the IGC may require.  The ORR is the economic regulator for the domestic rail network and carries out the regulatory functions set out in Directive 2001/14/EC. As such, it has the necessary expertise and resources to advise and assist the IGC in the performance of its regulatory functions.

The scope of the advice and assistance that the ORR may be asked to provide by the IGC for the purpose of carrying out its regulatory functions is set out in the list at Annex 3.

Functions of UK Delegation members

Under the new proposals, the Head of UK Delegation will be appointed in consultation with the ORR, as will one other of the remaining six members of the UK delegation.  The other five members will be drawn from the Channel Tunnel Safety Authority (whose membership of the IGC is a stipulation of the Treaty of Canterbury), the Transport Security section of the DfT, the Foreign and Commonwealth Office, Her Majesty’s Revenue and Customs, and the Home Office.

The Head of Delegation will refer other, non-regulatory matters and decisions, such as safety and security issues in relation to the Channel Tunnel, for consideration and advice to the other members of the IGC where appropriate and without reference to the ORR. 

Decisions of the Intergovernmental Commission

The Order provides that a decision by the IGC in accordance with its regulatory functions is binding on all parties covered by that decision.  Where the decision contains a direction as to the remedial action to be taken, any party to whom the direction is addressed is under an obligation to comply with it. Further consideration is being given to whether amendments are required in respect of the enforcement of the IGC's decisions.

Interface with French authorities

The new arrangements will require collaboration and contacts with the French Mission de Contrôle des Affaires Ferroviaires (MCAF) established pursuant to Directive 2001/14/EC. Preliminary discussions with the French Government suggest that the French delegation to the IGC will call on MCAF for advice on similar regulatory matters.  In such circumstances, the ORR will want to discuss with MCAF any regulatory matters on which the IGC has been asked to decide and on which ORR has been asked to advise.  (Article 31 of Directive 2001/14/EC places a requirement upon regulatory bodies to exchange information about their work and decision-making principles and practice for the purpose of co-ordinating their decision-making principles across the Community.) 

Financial Arrangements

The proposed arrangements are not expected to have any financial impact; it is anticipated that, to the extent that these proposals could give rise to additional costs, these will be covered by the existing provision of the Concession Agreement under which the Concessionaires (Eurotunnel) meet the expenses of the IGC. In effect, it is proposed that the existing funding arrangements will simply transfer to ORR. The MoU outlines the procedure in the event that the Concessionaires fail to make the necessary payments.

Responses to this consultation

Consultees’ views are sought on the arrangements proposed above, on the draft SI and on the MoU, in particular focussing on the considerations below:

1. Do you consider that the proposed arrangements enhance the ability of the IGC to carry out its regulatory functions in relation to the Channel Tunnel effectively?
2. Are there any other measures that might be taken which you consider would make a positive contribution to the IGC’s ability to carry out its regulatory functions?
3. Do you have any concerns about the proposed transfer of the UK Secretariat to the ORR and if so, of what nature?

Responses to this consultation should be addressed to:

Deborah Phelan
Department for Transport
Rail Strategy and International
Fifth Floor
Great Minster House
76 Marsham Street
London
SW1P 4DR

Email: deborah.phelan@dft.gsi.gov.uk

The deadline for return of responses is 7 December 2007.  We cannot guarantee that responses received after this deadline will be taken into account.

A list of organisations/stakeholders that we have sent this consultation to is included in Annex 1. If you have any suggestions of others who may wish to be involved in the consultation process please let us know.

This consultation has been produced in accordance with the principles of the Government’s "Code of Practice on Consultation" which are included at Annex 5.

An Impact Assessment has not been produced because there are no impacts or administrative burdens on business, charities, the voluntary sector or the public sector.

A summary of responses to this consultation will be published on our website after the consultation period has closed.

According to the requirements of the Freedom of Information Act (2000), all information contained in your response to this consultation may be subject to publication or disclosure. This may include personal information such as your name and address. If you want your response or your name and address to remain confidential, you should explain why confidentiality is necessary. Your request will be granted only if it is it is consistent with Freedom of Information obligations. An automatic confidentiality disclaimer generated by your e-mail system will not be regarded as binding on the Department.

[1] ORR is the independent safety and economic statutory rail regulatory body for Britain’s railways. It was established on 5 July 2004 under the Railways and Transport Safety Act 2003, and succeeded the Rail Regulator.

[2] Directive 91/449/EEC on the development of the Community’s railways, as amended by Directive 2001/12/EC; Directive 95/18/EC on the licensing of railway undertakings, as amended by Directive 2001/13/EC; and Directive 2001/14/EC on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure.