The public interest nature of WUOs means that most of the legislation provides for them to be subject to some form of regulatory oversight by a state regulator. However, apart from the role of the state in approving the establishment of WUOs (as described above,) the scope and nature of such oversight in the routine operation of WUOs varies greatly in the legislation reviewed.
Indeed, the question of regulatory oversight is invariably something of a delicate area when designing WUO legislation. As WUOs undertake public interest tasks, the state has a legitimate interest in ensuring their proper and lawful operation and that the rights of WUO participants are respected. After all, each WUO is likely to be in a quasi-monopoly position as regards the service it provides.
On the other hand, the WUO concept is predicated on the basis that WUOs are self-funding and controlled by their participants. The greater the state's regulatory 'oversight' powers, the greater is the risk that the WUO regulator will intrude upon the decision-making process of a WUO, and thus potentially diminish the role of its participants. Arguably, if the regulator's role is too intrusive, at a certain point a WUO will cease to operate as an autonomous body and will become a mere appendage of the regulator, perhaps a glorified fee collection mechanism.
Getting the balance right is a particularly important issue when WUOs are first introduced as part, for example, of a new government policy. Problems can arise if the state has no legal right to require information to be provided, let alone a right to audit the accounts of WUOs.[133] Given that WUOs will usually need to recover charges from participants, the latter may be reluctant to participate unless there is some form of state-backed regulatory oversight mechanism in place. Yet, particularly in cases where WUOs are a new concept, if the powers of the regulator are too extensive and too intrusive, participants may quite justifiably question the benefits of WUOs, if they fear that all decisions may be second-guessed by the regulator.
In contrast, in countries with a long and successful WUO tradition the supervisory role of the regulator can appear to be somewhat residual. It may be restricted to routine auditing activities, with power to step in and take action only if problems are detected. Germany provides a good example. The role of the regulator is limited to an auditing and residual legal supervisory function. Specifically, a decision of a WUO can only be challenged by the regulator in the courts if it is actually illegal. Elsewhere though, as may already be apparent, the state plays a more active role in overseeing the routine operation of WUOs.
Before examining the specific regulatory tasks conferred by the legislation on WUO regulators, the first question to be addressed is just who, or what, is the WUO regulator? The legislation provides a wide range of responses. These include: a regional government (as in the case of the Veneto Region in Italy), a ministry of water resources (such as the Dutch Ministry of Transport, Public Works and Water Management), a ministry of agriculture (the Ministry of Agriculture and Food in Albania), an agriculture sector agency (such as the Commissioner of Agrarian Services in Sri Lanka), a Prefect (in the case of France), an environment agency (the Environment Agency in England Wales) or a specific water or irrigation agency (such as the Punjab Irrigation and Drainage Authority or the Saskatchewan State Water Corporation). Generally speaking, the task of a WUO regulator is conferred on the state body responsible for water resources management in general, or the particular aspect of water management, such as irrigation, undertaken by the type of WUO that is subject to such regulatory oversight.
But even if a central government body (a ministry or department) has certain WUO oversight functions, it is not uncommon to find other regulatory responsibilities conferred on local state bodies or local representatives of the central state such as a prefect. Thus in Tunisia, both the Ministry of Agriculture and the Local Governor have a role in the regulation of WUOs (See Box G).
By way of contrast, in the German state of Lower Saxony the state's regulatory role has in practice been largely delegated to a third party. The Federal WUO law provides that the state governments are responsible for supervising WUOs and for determining which government authority in the state is to be endowed with the necessary regulatory powers. In Lower-Saxony, this power has been conferred on the Lankreise, or district authorities. However, these have in turn delegated the power of auditing WUOs to a non-government organization, the Federation of Water Users for Bremen, Lower-Saxony, and Saxony-Anhalt (Deutscher Bund der Verbandlichen Wasserwirtschaft Hannover, Wasserverbandstag Bremen, Niedersachsen, Sachsen-Anhalt) whose members are the very WUOs that it is mandated to audit and regulate.
|
Box G - Tunisian WUOs and the state In Tunisia WUOs are formally established by a decision of the Minister of Agriculture with the concurring advice of the relevant Groupement d'Intérêt Hydraulique or Hydraulic Interest Group (HIG). HIGs are administrative bodies entrusted with the preparation of studies for the implementation of waterworks as well as the monitoring of WUOs in their area of jurisdiction. However WUOs are also subject to the general supervision of the Local Gouverneur to whom they must each year submit their draft budget. The Local Gouverneur can adopt recommendations that must be discussed at the following meeting of the General Assembly. In case of malfunctioning of the WUO, the Local Gouverneur (with the advice of the relevant HIG) can summon a special meeting of the General Assembly to take the necessary steps to rectify the situation. If the steps taken are ineffective, the Local Gouverneur can suspend the Board of Directors and appoint a Managing Committee for a set period of time not to exceed six months, to manage the WUO until the General Assembly has elected a new Board of Directors. However it is the Ministry of Agriculture on the advice of the relevant HIG that has the authority to dissolve a WUO. |
Leaving aside the identity of the WUO regulator, the main regulatory tasks provided for in the legislation reviewed are mostly concerned with corporate governance[134], as follows.
As mentioned above, in several countries the legislation requires the WUO regulator to approve WUO budgets and the level of charges to be levied. Thus in France, the budget of each WUO must be approved by the Prefect of the Département in which the WUO's principal office is located. In Spain, this task is performed by the relevant Provincial Government, through its General Department of Irrigation (Departemento General de Irrigación). Similarly, in Colombia the National Institute for Land Development (Instituto Nacional de Adecuación de Tierras, INAT), approves the annual budget of each WUO and the level of charges to be levied on the WUO's participants.
Following on from the WUO regulator's role in the establishment of WUOs, it is also common for the legislation to require that amendments to governing documents be approved by the WUO regulator. This is only logical: if the WUO regulator has to approve the governing document at the outset, it makes no sense if this can subsequently be altered without its approval. Thus, for example, in El Salvador the legislation requires all proposed alterations to the governing document of a WUO to be first be approved by the WUO regulator, which in that country is the Ministry of Agriculture and Livestock.
It is quite common to find that a residual power is conferred on the WUO regulator to give directions to WUOs regarding the manner in which they fulfil their tasks. Of course the extent and scope of such directions may vary from country to country and probably need to be seen alongside the other powers conferred on the state. The legislation of England and Wales, for example, confers broad powers on the WUO regulator to 'give such general or specific directions as it considers reasonable for the guidance of internal drainage boards with respect to the exercise and performance by those boards of their powers and duties'[135] in order to ensure the efficient working and maintenance of existing drainage works and the construction of new works.
Similarly in South Africa, where as already seen the WUO regulator plays a significant role in the establishment of WUOs, the legislation also confers powers on it to issue directives which are binding on WUOs regarding the exercise of any of their powers and the admission of new participants. The law specifies that such directives may only be made on prior notice and after the WUO has had an opportunity to make comments. Once issued, such directives must be published in the 'Official Gazette'. Furthermore, in circumstances considered in more detail below, the WUO regulator can take over a power or duty of a WUO, or appoint a person to do so.
In Punjab Province, Pakistan the legislation permits the WUO regulator to give directions to WUOs where this is necessary in the 'public interest'. However, the legislation appears to go even further in that it provides that WUOs are subject to the 'overall control' of the WUO regulator.
In the legislation reviewed, the power of the WUO regulator to undertake technical supervision of a WUO's activities often relates to state-owned infrastructure transferred to such a WUO. Indeed in the Mexican legislation, regulatory oversight powers appear to be confined to this kind of technical supervision. It provides that the WUO regulator is responsible for supervising the operation, maintenance and management of infrastructure that has been transferred in use to WUOs. The regulator may also provide technical assistance to WUOs in carrying out their activities.
Similarly powers are conferred on the WUO regulator by the new Albanian legislation regarding the technical supervision of infrastructure transferred either in use or in ownership to WUOs. The WUO regulator is entitled to routinely request a WUO for information and documentation concerning the operation and maintenance of infrastructure that has been transferred to it. Furthermore, and bearing in mind the fact that the WUO legislation is contained in a sectoral irrigation and drainage law, a duly authorised officer appointed by the WUO regulator may enter upon and inspect infrastructure transferred to a WUO and may require it to undertake specified works where this is necessary:
(a) to ensure the proper maintenance of such infrastructure;
(b) to prevent damage or harm to that infrastructure;
(c) to prevent damage to state property or the property of third persons; or
(d) in the public interest.
In Nepal the legislation requires the WUO regulator to establish 'Monitoring Committees' to supervise the functioning of irrigation systems transferred to WUOs.
Most of the provisions on supervision seen in the legislation relate to legal and financial supervision in general and the performance of audits in particular. The case of Germany has already been mentioned. In Spain, the legislation requires the WUO regulator to undertake an annual audit and also confers upon the regulator a general right to audit WUOs either on its own initiative or on the request of an aggrieved person. In California the legislation requires a special 'State Controller', to supervise the accounts of each WUO, while in both Albania and Bulgaria, responsibility for undertaking regular and ad hoc audits of WUOs is conferred on the WUO regulator.
It should be noted that a specific power to audit and provide financial oversight of WUOs will generally be necessary in those cases where WUOs are established as bodies of public law on the basis of specific WUO legislation. On the other hand, a WUO set up as a private law body on the basis of legislation of general application may be subject to other legislative provisions regarding financial supervision, perhaps by another state agency.
A WUO regulator is also commonly given the power to call for information. For example, in accordance with the legislation of Andhra Pradesh, India the WUO regulator may, on its own initiative or on the basis of an application from a third party, examine the records of any WUO to verify their correctness and compliance with applicable legislation. If those records show that any decision of the WUO should be modified, reversed or annulled, the regulator is given the power to make appropriate orders. Similar provisions are found in the legislation of Punjab Province, Pakistan.
In a number of countries the legislation requires WUOs to provide annual reports or returns to the WUO regulator. Typical provisions are found in the WUO legislation of the Canadian Province of Saskatchewan which requires each WUO, within 90 days of the end of its 'fiscal year' to:
- prepare an annual report for the WUO regulator, in a specified form, in respect of 'business and affairs and the business and the affairs of its irrigation replacement fund during the fiscal year'; and
- forward the annual report and its audited financial statements to the regulator.
Similar provisions are found in the legislation of numerous other countries including Albania, Armenia and Bulgaria. In practice this is the main legal mechanism whereby WUO regulators can oversee the financial performance of WUOs. Such powers alone, however, tell only part of the story. What happens if the WUO regulator discovers evidence of malpractice within a WUO?
Some of the most intrusive powers conferred on WUO regulators with regard to WUOs are those that allow the regulator to intervene in a WUO which is failing or where evidence of malpractice has been discovered. Such a situation might come to light as a result of a routine audit, a request for information by the WUO regulator or following notification by a WUO participant or a third party. Once more, the question arises as to the appropriate relationship between the state and WUOs. To what extent should WUOs be left to sort out their own problems internally? To what extent and with what powers should the WUO regulator be entitled to intervene? Again, a range of legislative approaches are to be found.
In Spain the WUO regulator can fine, suspend and dismiss WUO officials for offences relating to the discharge of their duties, and can, ex officio or on the petition of an interested party, order the production of registers and accounts. Finally, the WUO regulator may assume direct control of a WUO in cases where this is deemed necessary.
Similarly broad powers are conferred on the WUO regulator in Punjab Province, Pakistan. The regulator may on its own initiative, or following the application of an aggrieved person, suspend the operation of a WUO if it is satisfied that the WUO is acting 'against the public interest' a term which is not further expanded upon. Furthermore, the WUO regulator may proceed to dissolve a WUO in a number of specified circumstances considered in more detail in Part 13 below.
In certain specified circumstances relating to substantive misconduct, the legislation in Andhra Pradesh State in India enables the WUO regulator, acting either on its own initiative or on the basis of an application by a third party, to remove from office members of a WUO management board including the WUO chairperson. The regulator may also appoint an officer to oversee the implementation of decisions taken by WUOs.
Elsewhere, the right of the WUO regulator to intervene is more limited and envisages a greater role for WUO participants. In Nepal, for example, the legislation provides that one third of the participants in a WUO can submit an application to the WUO regulator alleging that the WUO has failed to properly operate the irrigation system under its control. In such a case, the WUO regulator may dissolve the management board and call new elections.
According to the El Salvadorian legislation, the WUO regulator can participate in solving problems within a WUO only on the request of the management board, or with the approval of the general assembly. The Albanian legislation takes a graduated approach in response to concerns of excessive government interference. As already mentioned, Albanian WUOs are required to file an annual return together with a copy of their accounts with the WUO regulator. The latter is given the power to audit and inspect the records of a WUO at the request of a WUO participant or if following a review of the annual accounts there is prima facie evidence of financial malpractice or irregularities. If, during such an audit and inspection, the WUO regulator finds evidence of financial malpractice or that the WUO has not been operating legally, it may require the management board to call a meeting of the general assembly where the WUO regulator's findings can be presented to the WUO's participants. If, however, the management board fails to call such a meeting within 30 days, the regulator may order its suspension and may proceed to call a meeting of the general assembly itself. In such circumstances the WUO regulator may also appoint a temporary manager to run the WUO until such time as a new management board is appointed by the general assembly.
Finally, the most far-reaching power conferred on a WUO regulator is the power to order the dissolution of a failed WUO. This subject is considered in Part 13 below.
|
[133] This situation arose
in Albania in the mid 1990s when it was realised that the first WUOs had been
given too much independence. As a result, the Ministry of Agriculture and Food
had no legal powers to review the accounts of WUAs. This problem was remedied by
the Law on Irrigation and Drainage, 1999. [134] As distinct to the regulatory oversight and tasks having to do with resource management, such as, notably, the regulation of WUOs’ entitlements (rights) to water. This aspect of regulatory oversight is touched upon in Part Twelve, (a). [135] Section 7 Land Drainage Act, 1991. |
