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

(9A) (1) Infrastructure managers must not use income from infrastructure network management activities, including any such income that has been provided from public funds, for any purposes other than to finance the business of the infrastructure manager. (2) Financing the business of the infrastructure manager may include the servicing of the infrastructure manager’s loans and the payment of dividends to its shareholders provided that the income is not used to pay dividends to undertakings within a vertically integrated undertaking which exercise control over both a railway undertaking and the infrastructure manager. (3) Infrastructure managers must not grant loans to railway undertakings, either directly or indirectly. (4) Railway undertakings must not grant loans to infrastructure managers, either directly or indirectly. (5) Loans between legal entities of a vertically integrated undertaking may only be granted, disbursed and serviced at market rates and on conditions which reflect the individual risk profile of the entity concerned. (6) Other legal entities within a vertically integrated undertaking may only provide services to the infrastructure manager if those services are provided on a contractual basis and paid for at market rates or at prices which reflect the cost of production, plus a reasonable margin of profit. (7) Debts attributed to the infrastructure manager must be— (a) clearly separated from debts attributed to other legal entities within vertically integrated undertakings; and (b) serviced separately from debts attributed to other legal entities within vertically integrated undertakings, but, this does not prevent the final payment of debts being made via an undertaking which is part of a vertically integrated undertaking and which exercises control over both a railway undertaking and an infrastructure manager, or via another entity within the undertaking. (8) Within vertically integrated undertakings, the infrastructure manager must keep detailed records of any commercial and financial relations with the other legal entities within that undertaking. (9) In vertically integrated undertakings, the infrastructure manager and other legal entities must keep their accounts in a way that ensures fulfilment of the requirements of this regulation and allows for separate accounting and transparent financial circuits within the undertaking. (10) Where essential functions are performed by a charging or allocation body in accordance with regulation 14(9) or 19(4), the provisions of this regulation apply to that body and references in this regulation to an infrastructure manager, a railway undertaking or another legal entity of a vertically integrated undertaking are to be taken as references to the respective divisions of the undertaking in question. (11) In the case referred to in paragraph (10), compliance with the requirements set out in this regulation must be demonstrated in the separate accounts of the respective divisions of the undertaking. (12) This regulation does not apply to private infrastructure managers that are party to a public-private partnership concluded before 24th December 2016 where— (a) the infrastructure manager does not receive any public funds; and (b) any loans or financial guarantees operated by the infrastructure manager do not directly or indirectly benefit specific railway undertakings. (13) Loans between entities of a vertically integrated undertaking granted before 24th December 2016 may continue until their maturity, provided that they were contracted at market rates and that they are actually disbursed and serviced.

Coordination mechanisms

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After regulation 13 (network statement) insert—

(13A) (1) A main infrastructure manager must put in place appropriate coordination mechanisms to ensure that they coordinate, at least annually, with all interested railway undertakings as well as applicants referred to in regulation 12(3) regarding the matters set out in paragraph (3). (2) Where relevant a main infrastructure manager must invite representatives of users of the rail freight and passenger transport services, and national, local or regional authorities to participate in the coordination required by paragraph (1) and the Office of Rail and Road may participate as an observer. (3) The matters referred to in paragraph (1) are— (a) the needs of applicants related to the maintenance and development of the infrastructure capacity; (b) the content of the user-oriented performance targets contained in the agreement referred to in regulation 15(6) and of the incentives referred to in regulation 15(7) and their implementation; (c) the content and implementation of the network statement; (d) issues of intermodality and interoperability; (e) any other issues related to the conditions for access, the use of the infrastructure and the quality of the services of the infrastructure manager. (4) A main infrastructure manager must draw up and publish guidelines for the coordination required by paragraph (1) in consultation with interested parties and must publish on its website an overview of the activities undertaken pursuant to this regulation. (5) For the purposes of this regulation— (a) “national authorities” means the Secretary of State, the Scottish Ministers or the Welsh Ministers; (b) “local or regional authorities” includes a combined authority established under section 103(1) of the Local Democracy, Economic Development and Construction Act 2009. (13B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Independence of the essential functions

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• (1) In regulation 14 (establishing, determining and collecting charges) after paragraph (9) insert—

(9A) In paragraph (9) the infrastructure manager is not independent in its organisation or decision-making functions if, in particular— (a) a railway undertaking or any other legal entity exercises a decisive influence on the infrastructure manager in relation to the infrastructure charging elements of the essential functions, without prejudice to the charging framework and specific charging rules established pursuant to this regulation; (b) a railway undertaking or any other legal entity within the vertically integrated undertaking has decisive influence on appointments and dismissals of persons in charge of taking decisions on the infrastructure charging elements of the essential functions; or (c) the mobility of persons in charge of the infrastructure charging elements of the essential functions creates a conflict of interest.

• (2) In regulation 19 (capacity allocation) after paragraph (4) insert—

(4A) In paragraph (4) the infrastructure manager is not independent in its organisation or decision-making functions if, in particular— (a) a railway undertaking or any other legal entity exercises a decisive influence on the infrastructure manager in relation to the train path allocation elements of the essential functions, without prejudice to the allocation framework established pursuant to this regulation; (b) a railway undertaking or any other legal entity within the vertically integrated undertaking has decisive influence on appointments and dismissals of persons in charge of taking decisions on the train path allocation elements of the essential functions; or (c) the mobility of persons in charge of the train path allocation elements of the essential functions creates a conflict of interest.

Capacity rights

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In regulation 19 (capacity allocation)—

• (a) in paragraph (7)—

• (i) for “an international” substitute “a”; and

• (ii) at the end of the sentence insert “at least 18 months before the entry into force of the working timetable to which the request for capacity relates”; and

• (b) in paragraph (8)—

• (i) after “it must” insert “, without undue delay and at the latest within 10 days of receiving the notice,”; and

• (ii) in sub-paragraph (c) omit “international”.

Special measures to be taken in the event of disruption

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In regulation 30 (special measures to be taken in the event of disruption)—

• (a) after paragraph (2) insert—

(2A) In the event of disruption which has the potential to affect cross-border traffic, the infrastructure manager must share any relevant information with other infrastructure managers whose network or traffic may be affected and the infrastructure managers concerned must cooperate to restore cross-border traffic to normal.

• (b) after paragraph (3) insert—

(3A) Railway undertakings operating passenger services must put in place contingency plans and must ensure that these contingency plans are properly coordinated to provide passengers with assistance in the sense of Article 18 of Regulation (EC) No 1371/2007, in the event of major disruption to services.

Appeals to the regulatory body

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In regulation 32 (appeals to the regulatory body) in paragraph (2)—

• (a) at the end of sub-paragraph (f) omit “and”;

• (b) at the end of sub-paragraph (g) for the full stop substitute a semi-colon; and

• (c) after sub-paragraph (g) insert—

(h) traffic management; (i) renewal planning and scheduled or unscheduled maintenance; and (j) compliance with the requirements, including those regarding conflicts of interest, set out in regulations 8A, 8B, 8C, 9A, 14(9) and 19(4).

Regulatory decisions concerning passenger services

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• (1) In the heading to regulation 33 (regulatory decisions concerning international passenger services) omit “international”.

• (2) In regulation 33—

• (a) omit paragraphs (1) and (2);

• (b) in paragraph (3)—

• (i) for “The” at the beginning of the paragraph, substitute “At the request of a relevant party submitted within one month of receipt from the Office of Rail and Road of the information on the intended passenger service referred to in regulation 19(8), the”; and

• (ii) in sub-paragraph (a) omit “at the request of a relevant party and”;

• (c) in paragraph (4)(b) omit “international”;

• (d) in paragraphs (5) and (6)(b) for “paragraph (3)(a)” substitute “paragraph (3)”;

• (e) for paragraph (6)(d) substitute—

(d) provide the relevant parties and any railway undertaking seeking access for the purpose of operating a passenger service with— (i) the grounds for its decision; (ii) the conditions under which any of those parties may request a reconsideration of the decision or direction or both; and (iii) where paragraph (6)(c) applies, an indication of possible changes to the service which would ensure that the conditions to grant the right of access provided for in regulation 5 are met.

• (f) after paragraph (6) insert—

(6A) A request for a reconsideration in accordance with paragraph (6)(d)(ii) must be made within one month of receipt of the information referred to in paragraph (6)(d).

• (g) in paragraphs (7) and (8) after “(6)(d)” insert “(ii) and (6A)”.

Monitoring the rail services markets

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In regulation 34 (monitoring the rail services markets)—

• (a) in paragraph (1) after “rail services markets” insert “, including the market for high-speed passenger services and the activities of infrastructure managers in relation to the matters referred to in regulation 32(2)”;

• (b) in paragraph (2)(a) for “control” substitute “verify compliance with” and delete the word “and” at the end;

• (c) in paragraph 2(b) replace the full stop at the end with a semicolon; and

• (d) after paragraph (2)(b) insert—

(c) monitor the use of income referred to in regulation 9A(1), the servicing of debts and payment of dividends referred to in regulation 9A(2), the loans referred to in regulation 9A(5) and the debts referred to in regulation 9A(7); and (d) assess, and monitor the execution of any cooperation agreements concluded between an infrastructure manager and one or more railway undertakings and, where justified, may advise that a cooperation agreement should be terminated.

Audits

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In regulation 35 (audits)—

• (a) in paragraph (1) after “provisions laid down in regulation 9” insert “and the provisions on financial transparency laid down in regulation 9A”; and

• (b) after paragraph (3) insert—

(3A) In the case of vertically integrated undertakings, the powers of the Office of Rail and Road under this regulation extend to all legal entities within the vertically integrated undertaking.

Cooperation between regulatory bodies

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Enforcement of decisions, directions and notices

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In regulations 38 (enforcement of decisions, directions and notices), in paragraph (2)(a)(ii), for “regulation 32(2)(c) to (g)” substitute “regulation 32(2)(c) to (j)”.

SCHEDULE 4A — Basic Principles and Parameters of Contractual Agreements between Competent Authorities and Infrastructure Managers

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The contractual agreement referred to in regulation 15(6) must specify provisions of regulation 15(6) to (13) and include at least the following elements—

• (a) the scope of the agreement as regards infrastructure and service facilities, structured in accordance with Schedule 2 (services to be supplied to railways undertakings). It shall cover all aspects of infrastructure management, including maintenance and renewal of the infrastructure already in operation. Where appropriate, construction of new infrastructure may also be covered;

• (b) the structure of payments or funds allocated to the infrastructure services listed in Schedule 2, to maintenance and renewal and to dealing with existing maintenance and renewal backlogs. Where appropriate, the structure of payments or funds allocated to new infrastructure may be covered;

• (c) user-oriented performance targets, in the form of indicators and quality criteria covering elements such as:

• (i) train performance, such as in terms of line speed and reliability, and customer satisfaction,

• (ii) network capacity,

• (iii) asset management,

• (iv) activity volumes,

• (v) safety levels, and

• (vi) environmental protection;

• (d) the amount of possible maintenance backlog and the assets which will be phased out of use and therefore trigger different financial flows;

• (e) the incentives referred to in regulation 15(7), with the exception of those incentives implemented through regulatory measures in accordance with regulation 15(8)(b);

• (f) minimum reporting obligations for the infrastructure manager in terms of content and frequency of reporting, including information to be published annually;

• (g) the agreed duration of the agreement, which must be synchronised and consistent with the duration of the infrastructure manager's business plan, concession or licence, where appropriate, and the charging framework and rules set by the State;

• (h) rules for dealing with major disruptions of operations and emergency situations, including contingency plans and early termination of the contractual agreement, and timely information to users;

• (i) remedial measures to be taken if either of the parties is in breach of its contractual obligations, or in exceptional circumstances affecting the availability of public funding; this includes conditions and procedures for renegotiation and early termination.