The Railways (Access, Management and Licensing of Railway Undertakings) Regulations 2016

Explanatory Note

(This note is not part of the Regulations)

These Regulations implement Directive 2012/34/EU of the European Parliament and of the Council of 21st November 2012, establishing a single European railway area (recast) (O.J. No. L 343, 14.12.12, p. 32) (“the Directive”). The Directive repeals three key EU measures: (1) Council Directive 91/440/EEC of 29th July 1991 on the development of the Community's railways (O.J. No. L 237, 24.8.91, p. 25); (2) Council Directive 95/18/EC of 19th June 1995 on the licensing of railway undertakings (O.J. No. L143, 27.6.95, p. 70); and (3) Directive 2001/14/EC of the European Parliament and of the Council of 26th February 2001 on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure (O.J. No. L 75, 5.03.01, p. 29), together with the various directives which amend them (listed in Annex IX of the Directive), and consolidates these provisions in one place.

The repealed EU measures were previously implemented in Great Britain (excluding the Channel Tunnel) by the Railways Infrastructure (Access and Management) Regulations 2005 (S.I. 2005/3049), amended by S.I. 2009/1122 and S.I. 2015/786, (“the Access and Management Regulations”) and the Railway (Licensing of Railway Undertakings) Regulations 2005 (S.I. 2005/3050) (“the Licensing Regulations”). They were implemented for the Channel Tunnel by the Channel Tunnel (International Arrangements) Order 2005 (S.I. 2005/3207), amended by S.I. 2008/2366 and S.I. 2009/2081. This instrument is revoked and replaced by the Channel Tunnel (International Arrangements) (Charging Framework and Transfer of Economic Regulation Functions) Order 2015 (S.I. 2015/785) (“the Channel Tunnel Order”), which transfers responsibility for the economic regulation of the Tunnel to the Office of Rail and Road and Autorité de Régulation des Activités Ferroviaires.

These Regulations implement the substantive changes required by the Directive by revoking and re-enacting the Access and Management Regulations with amendments, and by amending the Licensing Regulations. Subject to one exception these Regulations do not apply to Northern Ireland.

Part 1 contains preliminary provisions, including the scope of the Regulations (regulation 4).

Part 2 grants access rights to operators of all types of rail freight and international passenger services to the entire rail network in Great Britain, including access to terminals and ports linked to the rail network, and access to, and the supply of, the services listed in Schedule 2. The list of services has been expanded and clarified by the Directive, and rights of access to infrastructure now include access to infrastructure which connects service facilities. Regulation 6 imposes new obligations as to the rights to the supply of services, and when requests for these can be refused. Regulation 7 includes a new provision ensuring that cross-border agreements do not discriminate between railway undertakings or restrict their freedom to operate cross-border services.

Part 3 sets out the requirements about infrastructure management and the independence of railway undertakings. Regulation 10 imposes new provisions relating to organisational independence and separation of accounts where service providers are under direct or indirect control of dominant bodies or firms. Regulation 11 requires the Secretary of State and Scottish Ministers to publish an indicative railway infrastructure strategy by December 2019. Regulation 12 requires infrastructure managers to produce a business plan, and applicants are given the opportunity to comment on a draft. Railway undertakings must also draw up a business plan. Infrastructure managers are placed under a requirement to produce a network statement containing the information set out in regulation 13, the detailed content of which has been expanded since the earlier Directives. New provisions in this Part include a requirement that bodies which provide rail freight and passenger transport services publish separate accounts for both elements of their business, with strengthened provisions regarding the separate treatment of public funds provided for public services.

Part 4, together with Schedule 3 and the Channel Tunnel charging framework (set out in the Channel Tunnel Order), sets out the structure for the charging of fees for the use of railway infrastructure, and the charging principles. Regulation 14 requires infrastructure managers and service providers to charge fees which must be used to fund their business. Regulation 16 requires the establishment of performance schemes which may include penalties for poor performance and the payment of compensation arising from disruption. A dispute resolution system must be made available. Regulation 17 permits a charge to be imposed for regular non-usage of allocated train paths. Regulation 18 requires the infrastructure manager to cooperate with other infrastructure managers within the European Union to coordinate charging for services crossing more than one network. Schedule 3 sets out the principles of access charging and the calculation of the train operating costs to be calculated with reference to Commission Implementing Regulation (EU) 2015/909 (see paragraph 1). This means charges for the supply of such services must not exceed the costs of providing them, plus a reasonable profit. Paragraph 2 of this Schedule requires the infrastructure manager to evaluate the relevance of any mark-up charges for different market segments. Paragraph 7 of this Schedule imposes new principles to apply to performance schemes.

Part 5, together with Schedule 4, sets out the framework and timetable for the allocation of infrastructure capacity. The trading of capacity between applicants is prohibited, and allocation in the form of fixed train paths cannot be granted for longer than one timetable period. Regulations 26 to 28 set out the procedure that must be followed where an element of the railway infrastructure is congested, and regulation 29 provides a ‘use it or lose it’ provision in respect of allocated capacity.

Part 6 allocates certain regulatory functions to the Office of Rail and Road (“ORR”). Regulation 32 provides a right of appeal to the ORR for applicants aggrieved with various aspects of the allocation of capacity and the fees charged for its use, and requires the ORR to make a decision on such appeals within six weeks. Regulation 34 requires the ORR to monitor competition in the rail services market and to take appropriate action to deal with undesirable developments in the market either arising out of its own investigations, or from appeals which have been submitted. Regulation 35 gives the ORR the power to audit various bodies, and makes clear that its power to request information under section 80 of the Railways Act 1993 (c. 43) (as modified by regulation 36) includes a power to request the information listed in Schedule 5. Regulation 37 requires cooperation between regulatory bodies across the European Union.

Part 7 amends the Licensing Regulations to reflect amendments to the provisions which they implement, and also to update references to EU legislation as necessary.

Schedule 1 contains consequential amendments to the Railways Act 1993 and other miscellaneous provisions.

A full impact assessment of the effect that this instrument will have on the costs of business and the voluntary sector has been produced and is published with the Explanatory Memorandum and transposition note alongside the instrument at www.legislation.gov.uk.