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Update: Draft EU Implementing Regulation on access to service facilities and use of rail-related services

  • United Kingdom
  • Transport - Rail

28-11-2017

Executive Summary

The European Commission has consulted on an implementing regulation which will provide additional detail for procedures and criteria to be followed by service facility operators in order to satisfy their obligations under Directive 2012/34/EC (the “Recast Directive”) in providing access to their respective service facilities to railway undertakings. The Recast Directive was implemented in the UK by The Railways (Access, Management and Licensing of Railway Undertakings) Regulations 2016 (the “2016 Regulations”).

Implementing regulations, when made, take direct effect from the effective date stated in them, without the need for further implementing legislation at a national level.

Background

Between 2001 and 2016, the European Parliament introduced four legislative rail packages with the aim of gradually opening up rail transport service markets for competition, making national railway systems interoperable and defining appropriate framework conditions for the development of a single European railway area.

The First, Second, Third and Fourth Rail Packages were designed with the aim of increasing the reliability and competitiveness of European railways and to include charging and capacity allocation rules, common provisions on licensing of railway undertakings, safety requirements and the creation of the European Agency for railways and rail regulatory bodies in each Member State as well as rail passenger rights.

The First Rail Package and Directive 2012/34/EC

The First Rail Package was adopted by the European Commission in 2001, and concerned the opening of the international freight market, establishing a general framework for the development of European railways, setting out the conditions for European freight operating licences and introducing a defined policy for capacity allocation and infrastructure charging. The First Rail Package was implemented into law in England and Wales (and Northern Ireland in respect of paragraph 1 to 3 of Schedule 1 only) in 2005 by virtue of The Railways Infrastructure (Access and Management) Regulations 2005 and The Railways (Licensing of Railway Undertakings) Regulations 2005.

In November 2012, the European Parliament issued the Recast Directive, which sought to repeal, consolidate and supplement the existing arrangements established by the First Rail Package and establish a single European Railway area. The Recast Directive was implemented into law in England and Wales (and Northern Ireland in respect of paragraph 5 of Schedule 1 only) with effect from 29 July 2016 by the 2016 Regulations. The 2016 Regulations replaced The Railways Infrastructure (Access and Management) Regulations 2005 and amended The Railways (Licensing of Railway Undertakings) Regulations 2005.

The Recast Directive included high-level provisions regarding the basis on which railway undertakings are to be entitled to access railway infrastructure (including railway infrastructure connecting with various defined categories of “service facility” (e.g. refuelling facilities, marshalling yards, freight terminals and maritime and inland port facilities which are linked to rail activities)1 (“Service Facilities”) and associated services provided at such Service Facilities.

However, the Recast Directive specifically reserved the right for the Commission to consult with regulatory bodies and operators of Service Facilities and thereafter adopt measures setting out the details of the procedure and criteria to be followed by operators and users in connection with requests for access to services supplied from the specified categories of Service Facility2.

What is the purpose of the new draft Implementing Regulation?

With reference to Article 13(9) of the Recast Directive (as referred to above), the Commission has consulted on a new implementing regulation on access to Service Facilities and use of rail-related services (the “Implementing Regulation”). Implementing regulations enable the Commission to set conditions that ensure all national governments of Member States implement EU laws in the same way, and accordingly are directly applicable in all EU countries without the need for further national implementing legislation.

As part of the consultation process, the Commission published a draft of the Implementing Regulation for comment by relevant regulatory bodies and operators3. The draft Implementing Regulation sets out various supplementary rules and procedures to the high level position established by the Recast Directive and the 2016 Regulations, with particular relevance for operators and users (or potential users) of Service Facilities.

What changes to the existing regime established by the Recast Directive and the 2016 Regulations are envisaged by the draft Implementing Regulation?

In its current draft form, and subject to the outcomes of the recent consultation process, the Implementing Regulation anticipates the introduction of the following additional measures in respect of the procedure and criteria to be followed for access to services supplied from the specified categories of Service Facility. These processes and procedures supplement the position established by the Recast Directive and the 2016 Regulations:

  • Exemptions: in order to avoid disproportionate burdens for operators of Service Facilities with minor importance, regulatory bodies will be able to exempt Service Facility operators from specific provisions of the Implementing Regulation if the regulatory body believes that the Service Facility in question is without strategic importance for the functioning of the market and the exemption would not have detrimental effects on the competitive situation in the railway transport services market. 
  • Service Facility Descriptions: operators of Service Facilities must establish a “service facility description” for the Service Facilities and services they are responsible for. A service facility description must include (amongst other things) the following information:
  • key contact details of the operator of the Service Facility;
  • a description of the technical characteristics of the Service Facility; and
  • information on procedures for requesting access to the Service Facility or services supplied in the facility or both, including deadlines for submitting requests, deadlines for acknowledgment of receipt of requests and time limits for handling those requests.
  • Publication of Service Facility description: operators of Service Facilities must make publicly available the service facility description free of charge, in one of the following ways:
  • by publishing it on their web portal or a common web portal and providing the infrastructure managers with a link to be included in the network statement (which is an existing feature of the 2016 Regulations);
  • by providing the infrastructure managers with the relevant and ready-to-be published information to the main infrastructure manager; and
  • infrastructure managers must specify in the network statement or on their web portal, the deadline to submit information or provide the link to be published in the network statement and must provide a template to be developed by the railway sector in cooperation with regulatory bodies that operators of Service Facilities may use to submit the information. ORR’s guidance on the 2016 Regulations4 already provides that its preference is for this information to be available through the relevant infrastructure manager’s network statement.
  • Additional Information: a regulatory body may request from operators of service facilities information on the nature and method of allocation of costs taken into account when calculating the charges for access to the Service Facility and supply of rail-related services. The regulatory body may require operators of Service Facilities to justify why they qualify their rail-related services as basic, additional or ancillary. Upon request, operators must provide indicative information on available Service Facility capacity.
  • Cooperation on allocation of Service Facility capacity and its use: applicants must submit their requests for access to Service Facilities and use of rail-related services in accordance with the deadlines set by operators of Service Facilities. Operators of Service Facilities and infrastructure managers will be required to cooperate with the aim of ensuring that the allocation of capacity on infrastructure and in Service Facilities is synchronised where necessary.
  • Requests for access to Service Facilities and use of rail-related services: requests may be made by railway undertakings and where provided for under national law or by a Service Facility operator, by other applicants. Applicants must indicate in their requests the Service Facility or the services the access to which they request, or both. Operators of Service Facilities may not make the supply of a service subject to mandatory purchase of other services which are not related to the service requested. Operators of a Service Facility must acknowledge receipt of a request without undue delay – if there is missing information required, the operator may set a deadline for submission of the outstanding information5.
  • Response to requests: where an offer has been made for access to Service Facilities, that offer must remain valid for a reasonable period of time which it specifies and which takes account of the business needs of the applicant.
  • Coordination procedure: operators of Service Facilities will be required to consider different options enabling them to accommodate conflicting requests for access to the Service Facility or supply of service in the Service Facility. Those options must, where necessary, encompass measures to maximise the capacity available in the facility, without additional investment in resources.
  • Priority criteria: operators of the Service Facility may determine priority criteria to allocate capacity in the case of conflicting requests for access to service facilities and use of rail-related services, where such requests cannot be accommodated after the coordination procedure.
  • Viable alternatives: when proposing alternatives the following criteria must be taken into account to the extent that they can be assessed by the operator of the Service Facility:
  • operational characteristics of the alternative Service Facility;
  • physical and technical characteristics of the alternative Service Facility;
  • impact on attractiveness and competitiveness of the railway transport service envisaged by the applicant; and
  • estimated additional cost for the applicant.

 As ORR has noted, ‘one significant point in this regard is the clarification that in scenarios where capacity is available, access cannot be denied simply by referring the applicant to some other ‘viable alternative’’.

  • Refusal of access:
  • Where no viable alternative exists and it is not possible to accommodate the request for capacity following the coordination procedure (see above), the operator of a Service Facility may refuse the request. The applicant may complain to the applicable regulatory body in the Member State in question (being the ORR in the UK) in accordance with Article 13(5) of the Recast Directive. Where an operator of the Service Facility and the applicant have jointly identified viable alternatives, the operator may refuse the request. Operators will need to justify in writing why the request could not be accommodated and must demonstrate to the regulatory body and the applicant, upon request, the reasons for the refusal, including the alternatives examined and the outcome of the coordination procedure. Operators may also refuse a new request for access if an applicant repeatedly fails to pay for the capacity already allocated and used.
  • This requirement for justification in writing in all cases is an extension of the position in the Recast Directive and the 2016 Regulations. At present, under the 2016 Regulations, a Service Facility operator is only obliged to provide written justification in respect of a refusal of access (and provide information about any viable alternative) if both elements of a two stage test are met, namely that:
    • the request relates to services referred to in paragraphs 2(a), (b), (c), (d), (e), (f) and (i) of Schedule 2 of the 2016 Regulations; and
    • the service provider is under the direct or indirect control of a dominant body or firm.

That said, it is noted that ORR guidance on the 2016 Regulations6 already stipulates that (notwithstanding the two stage test referred to above) ORR expects all service providers (whether or not they are under the direct or indirect control of a dominant body or firm) to ensure refusals are in writing and fully reasoned. As such, the Implementation Regulations do not substantially change the expected UK practice on this point.

  • Complaints: where an applicant complains to the applicable regulatory body in accordance with Article 13(5) of the Recast Directive, that body shall take account of the impact of its potential decision granting an appropriate part of the capacity to the applicant on at least the following elements where they are relevant:
  • the viability of the business models of other users of the Service Facility possibly affected;
  • overall volume of Service Facility capacity already allocated to other users possibly affected;
  • investments made into the Service Facility by other users possibly affected;
  • availability of viable alternatives to accommodate needs of other users possibly affected, including alternatives in other Member States in case of international train services; and
  • the viability of the business model of the operator of the Service Facility.
  • Optimum effective use of service facilities: regulatory bodies may request operators of Service Facilities under direct or indirect control of a controlling entity7 to take necessary measures to promote optimum effective use of the capacity available in their facility. Such measures must be transparent and non-discriminatory. These measures can include financial penalties to be paid by applicants that fail to use allocated capacity. They may also include an obligation upon operators of Service Facilities to require the surrender of capacity if applicants repeatedly and intentionally fail to use it or cause disturbances to the operation of the Service Facilities.
  • Unused facilities: a railway undertaking interested in using a Service Facility which has not been used for at least two consecutive years will need to express its interest in writing to the operator of the facility concerned and inform the applicable regulatory body. Where the owner of a Service Facility does not operate the facility, the operator will need to inform the owner about the expression of interest within 10 days following its receipt. The owner must also publicise on its web portal, a notice on the lease or rent of the Service Facility concerned and shall inform the regulatory body and the infrastructure manager to whose network the facility is connected. The publication must include all information necessary to enable interested undertakings to submit an offer to take over operation of the facility. This information will need to include:
  • the details of the selection procedure which shall be transparent and non-discriminatory;
  • the selection criteria;
  • characteristics of the technical equipment of the Service Facility; and
  • the address and time limit for submission of tenders which shall be at least 30 days from publication of the notice.

The Implementing Regulation helpfully adds additional detail to the Recast Directive and the 2016 Regulations regarding the process by which applications can be made for the lease or rent of unused Service Facilities. In particular, the Implementing Regulation clarifies the basis on which: (i) an owner of an unused Service Facility is obliged to publicise the availability of such unused Service Facility for lease or rent; and (ii) a service facility operator may object to such publication prior to it being made where a ‘reconversion’ process has been launched before any expression of interest was made.

Ticketing services in passenger stations: railway undertakings may request operators of Service Facilities to supply ticketing services in passenger stations (as already set out in 2016 Regulations) but the Implementing Regulations provide that this should also include ticket vending services provided at staffed ticket offices and the use of ticket selling machines installed in passenger stations. Those operators will not be obliged to supply these ticketing services or install such services, where they do not exist. However, where operators decide to offer the same services to others, they must supply them upon request to railway undertakings in a non-discriminatory manner.

Next steps in the Commission’s consultation process

The Commission sought feedback on the draft Implementing Regulation between 20 July and 17 August 2017, and received comments from various regulatory bodies (including the ORR in the UK), public authorities (including the UK Department for Transport) and relevant operators8.

Issues raised by the ORR as part of the consultation9 include:

  • a concern in relation to a potential inconsistency between the Recast Directive and the draft Implementing Regulation in that the former limits access rights to railway undertakings whereas the term “applicant” is used throughout the draft Implementing Regulation – with a consequent comment from the ORR that the Implementing Regulation should expressly provide at the outset that the provisions of the Implementing Regulation will only apply to applicants to the extent this is already provided for under national law (i.e. the 2016 Regulations), and, to the extent that national law does not provide for this, then the provisions of the Implementing Regulation will only apply to railway undertakings; and
  • the workability of the proposed timescales for entry of the Implementing Regulation into force in Member States, and a proposal that working to an effective date linked to the December 2020 network statement may be more appropriate.

The extent to which these concerns (and the issues raised by other consultees) are addressed by the Commission in its final iteration of the Implementing Regulation remains to be seen.

How will the new Implementing Regulation be impacted by Brexit?

The draft Implementing Regulation provides for entry into force in Member States in May 2019, after the UK is expected to formally leave the EU. It remains to be seen whether that remains the proposed date following the conclusion of the consultation. Until the date is finalised and pending the further development of the European Union (Withdrawal) Bill 2017-2019, it remains unclear to what extent (if any) the Implementing Regulation will take effect in UK domestic law.


1. For a full list of applicable Service Facilities, see paragraph 2 of Schedule 2 of the 2016 Regulations. It is noted that the Implementing Regulation is intended to continue to apply to maritime and inland port facilities which are linked to rail activities in addition to the existing provisions of Regulation (EU) 2017/352 (on the establishment of a framework for the provision of port services and common rules on the financial transparency of ports).

2. Directive 2012/34/EC, Art. 13(9)

3. See: https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-3670355_en

4. See: http://orr.gov.uk/__data/assets/pdf_file/0017/23570/guidance-on-new-access-and-management-regulations-december-2016.pdf

5. Note that Section 6(3) of the 2016 Regulations requires the operator of a Service Facility to respond to a request for access within a reasonable time as stipulated by the ORR. The ORR has confirmed in its guidance on the 2016 Regulations that it considers a reasonable timescale to be 10 working days, commencing on the day after the request is made (with an acknowledgement that operators may be expected to respond more quickly to ad hoc / unplanned requests). See: http://orr.gov.uk/__data/assets/pdf_file/0017/23570/guidance-on-new-access-and-management-regulations-december-2016.pdf

6. See: http://orr.gov.uk/__data/assets/pdf_file/0017/23570/guidance-on-new-access-and-management-regulations-december-2016.pdf

7. ‘Controlling Entity’ is defined in the Implementing Regulation as a body or firm, which exercises direct or indirect control over an operator of a service facility and is also active and holds a dominant position in national railway transport services markets for which the facility is used.

8. See: https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-3670355_en#initiative-recentfeedback

9. See: https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-3670355/feedback/F2387_en

 

 

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