The 2014 Storms

Brunel’s famous rail link to West Devon and Cornwall has finally reopened following the severing of the route by the February storms:-

http://www.bbc.co.uk/news/uk-england-devon-26874503

The collapse of the Dawlish sea wall leaving railway lines with sleepers still attached dangling helplessly in mid air, looking for all the world like broken model railway track, provided the most dramatic and striking images of the February storms. This was just one of several other incidents across the network, including landslips and flooding, which caused travel chaos.

From a legal perspective these events set several hares running. These are my initial thoughts on the issues raised and I hope to pursue these themes in more depth in the coming weeks and months.

 

COMPENSATION FOR TRAIN OPERATING COMPANIES

Aside from the repair costs an initial concern of Network Rail will be its liability to make compensation payments to the train operating companies (TOCs) under the track access agreements. All track access agreements contain a standard set of terms under the notorious Schedule 8 which requires Network Rail to compensate TOCs for losses resulting from unscheduled line closures, whether or not the closure arises from any fault on the part of Network Rail. Scheduled possessions for engineering work entitle TOCs to compensation under Schedule 4.

Track access agreements are governed by the Railways Act 1993 sections 17-22C:-

http://www.legislation.gov.uk/ukpga/1993/43/contents

Section 21 of the Act enables the Office of Rail Regulation to establish model contracts and this provides the mechanism by which schedule 8 is inserted. The regulator would not approve any contract which failed to include the schedule.

Schedule 8 payments have been a feature of track access agreements since privatization and, according to the Office of Rail Regulation (ORR), were introduced to offset the effects of the ‘vertical separation’ between infrastructure management and train operations. They ‘align the interests of the infrastructure manager with those of train operators’ by ensuring that the former has a financial incentive to minimize disruption. See ORR, Periodic Review 2013: Consultation on Schedules 4 and 8 possessions and performance regimes (November 2012) para [11]:-

http://orr.gov.uk/__data/assets/pdf_file/0017/476/sch-4-8-consultation-2012.pdf

Schedule 8 payments greatly increase the damage costs associated with repairing infrastructure. In Conarken Group Limited and Farrell Transport Limited v Network Rail Infrastructure Limited [2011] EWCA Civ 644; [2012] 1 All E.R. (Comm) 692, HGV drivers damaged a railway bridge and overhead power cables in two separate incidents. Although the damage did not arise from any fault on the part of Network Rail, they were required to pay substantial compensation to train operating companies under schedule 8. The haulage companies denied that they were liable to indemnify Network Rail in respect of these payments on the grounds that they constituted pure economic loss. The Court of Appeal rejected this argument and held that the loss was not purely economic in that it flowed directly and foreseeably from the physical damage; in other words it could be regarded as consequential loss (see Spartan Steel and Alloys v Martin [1973] Q.B. 27). The case attracted much comment in that it demonstrated how damaged costs can be multiplied by schedule 8 payments. It cost a mere £5,000 to repair the cables whereas schedule 8 payments amounted to £1m.

As regards acts of nature, as opposed to acts of HGV drivers, the financial implications for Network Rail are self evident and cannot be recovered from a third party; God or nature cannot be sued after all! In March 2012 ScotRail was reported to have received £2m in schedule 8 payments in respect of disruption caused by heavy snow and freezing temperatures in two successive winters:-

Damien Hendersen, ScotRail receives £2m for winter chaos, Scottish Herald (20 March 2012):-

http://www.heraldscotland.com/news/transport/scotrail-receives-2m-for-winter-chaos.17027982

In October 2013, just a few months before the storms, the ORR actually increased the level of schedule 8 payments to reflect higher passenger numbers. In the same report it acknowledged the vulnerability of the Dawlish sea wall and highlighted the need for extra investment in engineering on this stretch of line. See ORR, Periodic Review 2013: Final determination of Network Rail’s outputs and funding for 2014-19 (October 2013), paras [98] and [8.261] :-

http://orr.gov.uk/__data/assets/pdf_file/0011/452/pr13-final-determination.pdf

If climate change increases the prevalence of extreme weather and disruption on a hitherto unknown scale (accepting that we cannot yet attribute a specific event to climate change) the issue of schedule 8 payments may have to be revisited. The rationale behind the payments is clear in that they provide an incentive to repair damage as speedily as possible. However, at the same time they drain money from an organization which is already in debt and could, in the long run, affect its ability to effect repairs in an expeditious manner.

CLIMATE CHANGE ADAPTATION AND THE CLIMATE CHANGE ACT 2008

The collapse of the Dawlish sea-wall and the flooding and landslips on other parts of the network are just one example of the pressures that climate change places on infrastructure. Providers of vital infrastructure, such as power companies and the railways, are under a statutory duty to put programmes in place to increase the resilience of infrastructure to extreme weather events. This arises from Part IV of the Climate Change Act 2008 which places the Secretary of State under certain reporting requirements regarding climate change adaptation. In order to prepare these reports the Secretary of State is empowered under sections 62-62 to require infrastructure providers, such as Network Rail, to prepare reports on climate change adaptation. As might be expected Network Rail’s current report focuses on the need to strengthen embankments and coastal defences in addition to increasing the resilience of track to extremes of temperature. Curiously, the report also focuses on ‘opportunities’ and makes the point that longer and hotter summers could lead to additional tourist traffic! Of course, these reporting requirements are all very well but Network Rail can only act within its resources. Moreover, given that Network Rail has now be classified as an organ of government (at least for accounting purposes: see blog of 4 February 2014  on HS2 and Freedom of Information) the Treasury will have an even greater say regarding this issue. In the light of financial restrictions Network Rail will have to target its resources as effectively as possible. To this end it is investing in the latest computer modelling and forecasting techniques to identify where the greatest risks of flooding and landslips may occur.

For the relevant provisions of the Climate Change Act 2008 see:-

http://www.legislation.gov.uk/ukpga/2008/27/part/4

For the latest Network Rail climate change adaptation report see:-

http://archive.defra.gov.uk/environment/climate/documents/adapt-reports/06road-rail/network-rail.pdf

REVERSING BEECHING?

The Dawlish sea-wall collapse also highlighted the precarious nature of the only rail link to the western extremities of Devon and Cornwall. This has led to calls to open an alternative inland route; as the editorial of Rail 742 put it:-

We cannot leave the economy of an important but relatively impoverished English region hanging on by an 1846 thread any longer.

Astonishingly, the reopening of the old London South Western Railway inland route from Exeter St Davids via Okehampton and Tavistock is now under serious consideration. The route fell victim to Dr Beeching’s Axe in 1968 and until recently the prospect of reopening the line was a mere railway buff’s fantasy. However, this is not the only option. in 1937 the Great Western Railway obtained an act of Parliament (the Great Western Railway Act 1937) empowering it to build a short inland avoiding line in order to bypass the most vulnerable section of sea-wall (the vulnerability of this section of line has long been recognized). The line was never built due to the intervention of the Second World War but it provides another possibility. A third option, longer than the Dawlish avoiding line but shorter than the LSWR Okehampton route, is provided by the closed Teign Valley line.

From a legal perspective all these proposals raise the issue of which statutory procedures should be used to authorize the reopening (or building from scratch in the case of the Dawlish avoiding line) of alternative routes. In recent years there has been a renaissance of railway building thus one does not have to look far for precedents. The main options are as follows:-

Hybrid Bill

In recent years all major rail building projects have been authorized by the Hybrid Bill procedure. In the nineteenth century the rail network was built by means of the private Bill procedure. Projects were initiated entirely through private enterprise and there was little by way of central planning. Major rail building regimes are now largely guided by central government policy and use taxpayers’ money, albeit with major private sector  involvement. Thus it would no longer be appropriate to  utilize the private bill procedure in respect of such schemes. The Hybrid Bill procedure, as the name suggests, combines aspects of both public and private Bills. A Bill will be classified as a hybrid Bill if it is of national importance but has a particular impact on specific groups of people who can be differentiated from the general population. Large scale infrastructure projects are deemed to fall into this category in that, although they are of national importance, they have certain localized affects. To give an obvious example, property owners whose land stands in the path of the development and may be subject to compulsory purchase are closely affected in a manner which differentiates them from the general population.

In recent years all major rail building projects have utilized the Hybrid Bill procedure including:-

• The Channel Tunnel;
• High Speed 1;
• Cross Rail;
• High Speed 2.

A current project which, is more akin to the re-opening of the old London South Western Railway route in terms of scale and cost, concerns the re-opening of a section of the old Waverley Railway in the Scottish Borders. This project has shown that such schemes entail far more than clearing the old track bed and reinstating a couple of bridges and stations. This is because British Railways Board sold off sections of track-bed for development. In some cases this has entailed building an entirely new section of line on ‘virgin territory’ or using compulsory purchase powers to clear development from the track-bed. Moreover new road layouts etc have necessitated a multitude of new bridges. Given the national significance of the project and the public interest issues associated with acquiring land a decision was made to seek the authority of the Scottish Parliament to build the line. This resulted in the passing of the Waverley Railway (Scotland) Act 2006:-

http://www.legislation.gov.uk/asp/2006/13

As noted in my blog of 22 January 2014 the Supreme Court endorsed the use of the Hybrid Bill procedure for the authorization of large scale infrastructure projects in the recent case of R (on the application of Buckinghamshire County Council and others) (Appellants) v The Secretary of State for Transport (Respondent) [2014] UKSC 3. This affirmed that the use of the procedure is not incompatible with EU Directives on Environmental Impact Assessment. However, it is not the only mode of authorizing new rail projects and the following methods may also be considered:-

Transport and Works Act 1992

The Transport and Works Act 1992 empowers the Secretary of State to authorize certain rail infrastructure projects by way of statutory instrument following a detailed application procedure which affords interested parties the opportunity to raise objections. Where a project proves contentious the Secretary of State has the discretion to order a public local inquiry. Where the Secretary of State forms the view that the project is of national significance he must seek the approval of both House of Parliament by way of a resolution. Given that any new rail link in West Devon would provide a vital link between Devon and Cornwall and the rest of the country it is possible that such a scheme would fall into that category. For the full text of the Act see:-

http://www.legislation.gov.uk/ukpga/1992/42/contents

The Transport and Works Act has been used to authorize Chilterns Railways ‘Evergreen Project’ entailing the reopening of a new passenger route from Oxford to London Marylebone via Bicester: The Chiltern Railways (Bicester to Oxford Improvements Order) SI 2012/2679:-

http://www.legislation.gov.uk/uksi/2012/2679/contents/made

The project, costing some £100m, largely consists of upgrading existing track (sections of which have been closed to passenger traffic for 40 years); building a new ‘chord’ linking the Oxford to Bicester line to the main London Marylebone to Birmingham mainline in addition to assorted new stations, buildings and other items of infrastructure. In the longer term the scheme could form the first part of a more ambitious project to re-open the ‘Varsity Line’ between Oxford and Cambridge. See the Project Evergreen website for full details about the scheme and relevant documents pertaining to the Transport and Works Act application:-

http://www.chiltern-evergreen3.co.uk/

In 2013 a judicial review of the Secretary of State’s decision to authorize the scheme was sought on the basis that he had failed to carry out an assessment of the effects of the project in a Special Area of Conservation (SAC) pursuant to the Conservation of Habitats and Species Regulations SI 2010/490. The High Court ruled in favour of the Secretary of State and Chiltern Railways on the grounds that planning conditions attached to the decision would serve the purposes of the regulations:-

See Feeney v Secretary of State for Transport [2013] EWHC 1238 (Admin); [2013] Env. L.R. 34.

Overall, it seems that the Transport and Works Act is more likely to be used for smaller scale schemes where full Parliamentary scrutiny is not deemed necessary. The Evergreen Project makes much use of the existing track bed and it is not necessary to clear large areas of development from the route or to build new line on greenfield sites. The alternative routes into the West Country are likely to prove more complex and it is likely that Network Rail would wish to bring the full weight of Parliament behind the scheme by way of legislation.

Planning Act 2008

There were ambitious plans for the Planning Act when it was first implemented. The original intention was that it would provide a ‘one stop shop’ for all major infrastructure projects and do away with the need for individual hybrid Bills and the like. It was accompanied by the establishment of the short-lived Infrastructure Planning Commission (IPC) in an attempt to place such decisions at arm length from Government. The IPC was unpopular with the Conservative party from the start on the grounds that strategic decisions of this nature are political matters for determination by Government and should not be placed in the hands of yet another QUANGO. The IPC was done away with by the Coalition Government in 2010 as part of the coalition agreement.

Nevertheless, many of the key features of the original legislation remain including a streamlined application process which is now administered by the Planning Inspectorate. In common with the Transport and Works Act 1992 (T&WA 92), the Act prescribes the process which must be followed and provides opportunities for objectors and interested parties to express their views. Another feature which the procedure shares with the T&WA 92, is that the ultimate decision resides with the Secretary of State. Moreover, as regards rail projects, the use of the 2008 Act has been confined to smaller scale projects which have national significance (in terms of improving connectivity in the rail system) but have a relatively localised impact on persons and the natural environment. The only current rail scheme to be authorized under the process is a reconfiguration of the rail layout at Norton Bridge in Staffordshire including a new flyover over the West Coast mainline. For all documents pertaining to this application see:-

http://infrastructure.planningportal.gov.uk/projects/west-midlands/stafford-area-improvements-norton-bridge-railway/

Overall, there is little to choose between the T&WA 92 and the PA 2008 and there is much duplication. As noted above, it seems unlikely that the 92 Act would be used to authorize a major new rail building project entailing significant acquisition of land. It seems equally unlikely that the 2008 Act would be used for this purpose.

Further information regarding the Planning Act 2008 and the role of the Planning Inspectorate can be found via the National Infrastructure Planning Portal:-

http://infrastructure.planningportal.gov.uk/

CONCLUSIONS

The events of February of this year serve to highlight the increasing strain placed on national infrastructure by climate change. The latest sobering report of the Inter Governmental on Climate Change (IPCC) stated that climate change could lead to “severe, pervasive and irreversible impacts”:-

https://www.ipcc.ch/report/ar5/wg1/

 

This demands pragmatic (and some would doubtless say defeatist) measures such as climate change adaptation. Law will play a crucial role in ensuring that the rail operating companies make continued efforts to secure the resilience of the network and to provide the wherewithal to implement engineering solutions.