Role of Regulators and Compliance with European Law: Discussion

I draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. The opening statements submitted to the committee will be published on the committee's website after this meeting.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

At the request of the broadcasting and recording services witnesses and those in the Public Gallery are asked to ensure that for the duration of the meeting their mobile phones are switched off completely or switched to airplane, safe or flight mode, depending on their device, and not just to silent.

Today's meeting will consider the role of the regulators and compliance with European law, and to assist us in our discussion I am pleased to welcome from the European Commission, Directorate on the Environment, Mr. Aurel Ciobanu Dordea; Mr. Gerry Kiely and Mr. Jorge Rodríguez Romero; from the Environmental Protection Agency, EPA, Ms Laura Burke, Mr. Gerard O'Leary and Mr. David Flynn; from the Commission for Energy Regulation, CER, Dr. Paul McGowan, commissioner, and Ms Sheenagh Rooney; from the Department of Housing, Planning and Local Government, Ms Maria Graham and Mr. Pat Duggan. The legal adviser for Sinn Féin is Mr. Matthias Kelly Queen's Counsel and for Fianna Fáil, Mr. Conleth Bradley, Senior Counsel.

We will begin with questions from the committee to the witnesses.

Mr. Aurel Ciobanu-Dordea

Contrary to what I said outside to the Chairman I would like to have the privilege of making an introductory statement of three or four minutes.

We will facilitate that and then move to questions and answers with the other witnesses.

Mr. Matthias Kelly

Before we proceed I would like to clarify that I am not a legal adviser to Sinn Féin. I am an independent Queen's Counsel who happened to give advice to Sinn Féin on this issue. There is a difference.

There is a subtle difference. I stand corrected.

Mr. Kelly is not the legal adviser to Sinn Féin, he has given them legal advice.

Mr. Matthias Kelly

Yes.

Fair enough. That is all right with me. I invite Mr. Dordea to speak.

Mr. Aurel Ciobanu-Dordea

I thank the Chairman. Good afternoon ladies and gentlemen, distinguished Members of the Irish Houses of Parliament. It is a privilege for us to be here today and to make ourselves and our knowledge and understanding available to the distinguished members of this parliamentary committee. This is a matter of importance in Ireland. We understand this very well. It is also very important for the European Commission and it is also important across the European Union because water is a basic element of life and is vital for the balanced and sustainable development of our societies.

We are also deeply respectful of the current political process in Ireland, involving the Parliament, the Government, and large swathes of Irish society because we believe that any legal rule and obligation must be understood properly and perceived as profitable for the society in which it applies. There is no simple obligation by constraint. The rules must be understood, as well as their sense and the overarching objectives they serve. There is no blind compliance and no theoretical or abstract compliance in itself. There are objectives of societal importance and they must be understood and accepted by large majorities of our societies.

This is the situation in this case where several obligations and rules of the EU Water Framework Directive are at stake. The circumstances predominating in Ireland are very important. The EU Water Framework Directive is not intended to be applied in an abstract world. It must be applied in the concrete circumstances of each EU member state and in this case in Ireland, with the geographical and environmental peculiarities, with the social, economic and political peculiarities and characteristics of Ireland. We believe that the Water Framework Directive is a sufficiently flexible instrument, allowing member states to comply with its obligations while paying utmost attention to the particulars of their economies, societies and societal interests. This is why it is called a framework and it is a directive.

We have been mindful of the fact that this distinguished committee has paid attention in past hearings to the challenges faced by the Irish water system, an infrastructure which is in serious need of upgrade and where the level of leakage is high. There is clear evidence that previous water pricing policies have been ineffective in providing both the revenues to ensure the necessary levels of investment and the incentives to citizens to use water efficiently. Ireland's non-compliance with the Urban Wastewater Treatment Directive, as illustrated also by the measure taken today by the political college of the European Commission in Brussels, and with the Drinking Water Directive, are cases in point. We have been mindful of the conclusions of the expert committee that was engaged to make some recommendations and to explore the matters for the attention of the parliamentary committee. We have also noticed that the expert committee noted that Ireland is a long way from achieving a good status in its waters under the Water Framework Directive and that no overall improvement in water quality was recorded between 2009 and 2015. The services of the European Commission endorse the findings of the committee which we believe are objective.

Against this backdrop the fundamental questions which deserve an earnest public debate and appropriate solutions are, one, how to secure equal access to good quality and healthy drinking water and good quality water services for all citizens whether vulnerable children or elderly people, rich or poor, working or unemployed.

Ensuring healthy drinking water means protecting the health of Irish citizens. This is of paramount importance and does not apply only to the health of an abstract Irish citizen. It applies to every individual who lives on the territory of the Republic of Ireland and benefits from water services. The second important question is how to avoid wasteful expenses for the public purse, generated by significant leaks and malfunctions, and to address the inability to provide drinking water of sufficient quality. I am sure Irish lawmakers and citizens have a very clear understanding of how careful spending of the public budget can lead to the utmost benefit being reaped.

A third crucial question is how to secure the smart investments required for upgrading the water sector as a public service. The water framework directive is a flexible instrument allowing the public authorities of each EU country to ask these questions in a way that best fits the local circumstances. Water pricing policy must comply with the cornerstone principles of cost recovery and polluter pays, but there is wide scope for adaptation to specific societal and economic circumstances. The paramount argument in this respect is taken straight from the directive, and is that national authorities are allowed to take into account, when establishing differentiated water tariffs, the variation in economic and social conditions in their respective jurisdictions. Therefore, there is room for social tariffs for vulnerable citizens.

The recovery of costs must ensure the water sector meets its serious needs in terms of both maintenance and investment in water and wastewater infrastructure. In order to comply with the polluter pays principle and for the charges for excessive or wasteful use to attain their purpose, the consumption of water for normal use should be set at a reasonable level and the charges for excessive or wasteful use should be dissuasive. This entails the ability to objectively and consistently measure the amount of water used.

The European Commission and its services remain at the disposal of Irish authorities during this hearing, after this hearing and throughout the deliberative process for any further exchanges that are necessary.

I understand that the representatives from the Commission are here with the full authority of the Commissioner and represent the Commission's views. We are working through the recommendations of the expert commission report. If we accept the commission's recommendation that, in the future, we should pay for normal water usage through general taxation, we would like as generous a daily allowance as possible up to the point where excessive usage kicks in. What is the Commission's view of the expert commission's proposal? Does it comply with Article 9 and does it fit in with the polluter pays principle? If so, at what point would a personal allowance meet excessive usage? We would want to give the general allowance but also stay within the confines of the water framework directive.

If Ireland reverts to the previous system whereby water infrastructure is funded through general taxation, what does the Commission do next? Would we automatically face infringement proceedings? What would the process be? In such a scenario, can Mr. Ciobanu-Dordea give a range of possible fines the European Court of Justice could impose? Can he outline the likely fines related to the case he referenced, in which the Commission is taking Ireland to the European Court of Justice in respect of urban wastewater? Finally, has Ireland used or forfeited its derogation under the water framework directive in the past?

Mr. Aurel Ciobanu-Dordea

Can the Deputy repeat the last question?

In the opinion of Mr. Ciobanu-Dordea, has Ireland used or forfeited its derogation under the water framework directive in the past?

Mr. Aurel Ciobanu-Dordea

The Deputy has asked a series of questions of fundamental importance. We are indeed here on behalf of our Commissioner, Karmenu Vella, who is in charge of environmental, fisheries and maritime affairs. We officially represent the European Commission and are not here in a private capacity. The Commission appreciates the findings of, and the process and analysis performed by, the expert committee. One might wish to be more nuanced about various recommendations but it is not our purpose, at this stage of the deliberation in Ireland, to act as a review body for the recommendations of the expert committee. We need to leave room for the experts to exchange views and for politicians to discuss the issues with the public and to deliberate. It is not the role of the European Commission to act as a professor who reviews the debate at every stage. We are a public authority, entrusted with specific competences, but we also have to pay attention to the principle of subsidiarity and there is room for the application of subsidiarity when applying the EU water framework directive.

When making a deliberation about the new system the Irish authorities should have a careful look at the broad picture. What is Ireland's situation in terms of the provisions and quality of water services and access to services for all citizens? Which are the positive and less positive sides of the water system in Ireland? We have drawn the attention of the Irish authorities to a few serious shortcomings, such as the 45% leak rate. This is significant and was also mentioned by representatives of Irish Water.

In addition, in a large number of agglomerations the secondary and tertiary treatment of urban wastewater is not appropriate to a significant extent. Also, the need for investment in modernising the system, bringing it up to speed and making it able to expand and to provide ever finer services for a society in development are fairly significant, amounting to €13 billion. The solution that must be developed must allow for the consistent appropriate funding over a longer period of time of a system in dire need of upgrading and modernisation.

The formula that is developed is, first and foremost, in the hands of the Irish authorities but I would also draw the committee's attention to the following because it has asked about the charge for excessive usage. We believe that one cannot discuss only such a charge and one needs to discuss also the charge for normal use. One needs to define the objective parameters based on objective criteria on the basis of which one can establish what means normal use. We would draw the committee's attention also to the fact that when one speaks about normal and excessive, one needs to have a reference, that is, what would be the reference, tool or instrument that would allow any careful public authority to identify who is consuming excessively and who is consuming normally on the ground. We believe that this brings into the discussion the problem of metering. We note that good progress was made in past years by the Irish authorities, in particular, by Irish Water, in advancing the problem of metering.

We are also aware of the public sensitivities and the concerns, and even protests, that have been expressed in Irish society against this and this is why we appreciate so much the reflection time and discussion that is being organised by the Irish authorities. We believe that the discussion, if possible, can be run also based on objective arguments. No public discussion is only based on objective arguments and only on facts and figures. Emotions are also at stake and reactions and subjective aspects are hugely at stake as well, but there must be a grain of truth and some objective elements at the basis of it. There must be an awareness that when discussing charges, as a short-cut we say, "water charges", in fact, it is not about charges for the water itself but for the water services which every citizen must enjoy to the protection of his or her health.

Of course, there is plenty of water in Ireland. It rains a lot and the ground of Ireland is also rich in water resources, but few drink water straight from the collection of rainwater. Nobody uses a straw to drink water from the ground. One needs abstraction. One needs processing, filtration and elimination of carcinogenic elements. We are aware that ever more chemical substances are identified as having carcinogenic potential or are simply damaging to human health and the providers of water services must be able to identify, select and eliminate from the water provided such substances. The adequate processing of urban wastewater treatment is ever more important for the economy and for the society as well. Drinking water, as I have mentioned, and also other elements, such as compliance with the Nitrates Directives and the relationship with agricultural activities, may come into play. I say "the relationship with agricultural activities" because there must be no opposition between the concerns for water quality and agricultural activities. Solutions are possible in order to reconcile both interests.

The distinguished Deputy asked me also about the infringement procedures. Certainly nobody would authorise a civil servant to say whether Ireland or whatever member state would be in infringement if it proceeds in one way or another simply because this is a prerogative of the political college of the Commission and I cannot anticipate the judgment. Of course, there is a political judgment, but it will be based on objective elements. I can tell the committee, because this is no matter of secrecy and no matter of discretion, there are objective elements to say that currently Ireland is not complying with the Water Framework Directive since it suspended the application of the water charges. We believe also that as the situation evolves on different fronts of the water infrastructure, the situation becomes tighter and tighter. There are such objective elements to making such a decision.

I am bound by the committee to be honest and draw its attention to certain matters. In the public perception, matters get mixed up. People say that if one sends a member state to the Court of Justice then this is for fines. The first judgment of the Court of Justice that will declare a member state in violation of a certain rule of EU law is not a judgment that applies fines. The member state will have 18 months from that judgment in order to present a programme of compliance and to comply with that judgment in principle, and only a second referral by the European Commission of that member state to the Court of Justice in Luxembourg will lead to fines. Therefore, there is time before fines are applied and we believe it is in the vital interest not only of Ireland and of Irish society but of any member state, not to waste time and to litigate with the Damocles sword of the fines at the end of the road but rather to think about and act on complying.

Of course, sometimes solutions are easier at hand. Other times a situation is more complex and more delicate, and more investments are required or certain deliberations are more difficult. The Commission, not because it is warm-hearted but because it is its obligation to do so, understands these realities and understands the differences between the member states. There is a single line or thread for all member states, but there are also national specificities. We are ready to engage with the Irish authorities on any compliance path and commitment leading to lasting solutions to the water infrastructure that serve the Irish citizen. I will stop there.

I ask Mr. Ciobanu-Dordea for clarity. He stated we are not in compliance with the Water Framework Directive at present. Where do we stand on the derogation under the directive that we previously held? Does that still apply to Ireland?

Mr. Aurel Ciobanu-Dordea

We understand that in the first generation of the river basin management plans - I am sorry for the technical language - in 2009, Ireland, like other member states, filed with the European Commission, according to the obligations in this directive, river basin management plans where it indicated that it intends to apply water charges to fund the water infrastructure and the investment and to secure the sustainability of the system. This means that the use of Article 9(4) is no longer possible. We are aware that this is also a sensitive issue and polemics are possible as well and we are also well aware that the committee has interviewed or heard from authorities from Northern Ireland and Scotland.

Scotland and Wales, but not Northern Ireland.

Mr. Aurel Ciobanu-Dordea

Okay. Scotland and Wales. I would like to point out the difference in situations between Ireland and Scotland.

I am conscious of the time. In fairness, I want to get other people in.

Mr. Aurel Ciobanu-Dordea

In principle, we believe the use of Article 9(4) is not possible.

The Irish public needs to know this. Does the derogation apply?

I want to go ahead. I have an interpretation of it, but I want to go ahead. If I may, will the witnesses be as tight as they can with their answers? We want to get everyone in if we can. I call Deputy Cowen.

I will be brief. I have specific questions. If the witness could be likewise, we will get through all we need to get through here today. To lead on from the previous question, does Mr. Ciobanu-Dordea accept that we had a derogation from domestic water charges under Article 9 of the EU framework directive in 2000? That is the first question. Second, what is his and the Commission's definition of "established practice" as it relates to the delivery of water services and as mentioned in the Water Framework Directive? I will move on to the river basin management plan of 2010, which Mr. Ciobanu-Dordea mentioned and which he believes constitutes the loss of the initial interpretation - if he confirms it existed - of the directive dating back to 2000. If that is the case, is Mr. Ciobanu-Dordea implying that there is a shift in his interpretation of established practice? What is his view on the legality of the suspension period that we are in currently? We still feel we can meet the objectives of the Water Framework Directive with the suspension in place. Has the Commission been in contact with the CER or the EPA about its contention, belief and opinion that we are in contravention of the EU framework directive?

Mr. Aurel Ciobanu-Dordea

May I kindly ask Deputy Cowen to spell out the full name of the entity?

It is the energy regulator, which has been charged with the responsibility to act on behalf of the public in the implementation of the framework directive.

Mr. Aurel Ciobanu-Dordea

The Deputy's first question was whether Ireland had a derogation. It is not for the European Commission to grant the derogation but for each member state to demonstrate that it meets the elements to claim the application of this derogation. Of course, if the Commission challenges-----

The Commission did not challenge it.

Mr. Aurel Ciobanu-Dordea

We have not challenged it-----

It has not, so it has accepted it.

Mr. Aurel Ciobanu-Dordea

-----in the past. We have accepted that it could have applied. However, at that moment, before the filing of the first river basin management plans, the problem of the derogation was not that actual. It became actual for each member state when it filed its plans.

Mr. Ciobanu-Dordea does accept that we were not challenged in our interpretation of the derogation based on the directive in 2000. Mr. Ciobanu-Dordea has answered it.

Mr. Aurel Ciobanu-Dordea

Yes, but-----

The Commission did not challenge it.

Mr. Aurel Ciobanu-Dordea

Yes.

That is fine. That is all I wanted to know. I do not mean to be confrontational. I just mean to establish facts about the Commission's opinions and our opinions and how they are implemented, and ultimately the courts will decide if they are asked to arbitrate.

Mr. Aurel Ciobanu-Dordea

Of course.

What is the Commission's definition of established practice?

Mr. Aurel Ciobanu-Dordea

May I comment? Yes, I am coming to the Deputy's question about established practice.

Will Mr. Ciobanu-Dordea go straight to it, if he does not mind?

Mr. Aurel Ciobanu-Dordea

The river basin management plans that, for instance, demonstrate-----

Established practice.

Mr. Aurel Ciobanu-Dordea

-----the application interrupt an established practice, so one no longer has an established practice.

Therefore, the Commission accepted the interpretation of the established practice initially but sought to shift its interpretation of it when it got the river basin management plan. Is that correct?

Mr. Aurel Ciobanu-Dordea

No. We did not shift our interpretation.

What is the Commission's interpretation of it?

Mr. Aurel Ciobanu-Dordea

We noticed the Irish authorities have changed policy and have taken the decision to apply water charges and not make use of paragraph (4).

What is the Commission's definition of paragraph (4)? What is its definition of established practice? Prior to-----

Mr. Aurel Ciobanu-Dordea

Here I would rather turn to my colleague, Mr. Jorge Rodríguez Romero.

Mr. Jorge Rodríguez Romero

Good afternoon. The term "established practice" is only used in paragraph 4 of Article 9 of the Water Framework Directive and it has certain conditions attached to it. It has a derogation from the obligations to establish a water pricing policy as in Article 9.1. Among these conditions is the requirement that the member states report the reasons for not fully applying paragraph 1 in the river basin management plans. We consider that Article 9(4) is applied at the moment when the river basin management plan is adopted. That is when any recourse to this exemption should have been done, if appropriate.

Established practice in my mind and that of the Irish Government and people at that time was that it was paid for out of general taxation. The Commission decided to change its interpretation of it on submission of the river basin management plan, which is its right to do so if it so wishes. We do not agree. If there is to be an adjudication on it, it is beyond our control. That is all I will say on it.

What is the Commission's interpretation of the legality of the suspension period considering that, in our opinion, it too relates back to the initial derogation and the objectives in it and our establishment of an established practice based on it being paid for out of taxation in 2000? The Commission would question the legality of this period if it were to follow on from what Mr. Ciobanu-Dordea just said.

Mr. Aurel Ciobanu-Dordea

Yes, and I have already replied to the Deputy's question about the legality of the suspension when I said that currently we believe that Ireland is not in compliance with the Water Framework Directive because of the suspension of the water charges.

We disagree on the implementation of the directive and the basis by which the Commission arrives at that conclusion and believe we are on solid ground in terms of the basis for our conclusion. Finally, saying what he said and interpreting-----

Mr. Aurel Ciobanu-Dordea

May I continue my answer?

I have heard enough, to be honest. However, considering the comments Mr. Ciobanu-Dordea just made, has the Commission been in touch with the CER and the EPA?

Mr. Aurel Ciobanu-Dordea

As a matter of general co-operation that we have with all the national authorities in the member states, we have been, but not on this subject in particular.

Not on this particular subject.

Mr. Aurel Ciobanu-Dordea

I will briefly draw the Deputy's attention to the fact that Article 9.4 allows member states to invoke an established practice where doing so does not compromise the purposes and the achievement of the objectives of this directive. The Deputy heard me pointing to a number of objective elements that show the distance between the current situation and the purposes and achievement of the objectives of this directive.

That is where we differ.

I wish to move on.

I will put further questions later.

Does Mr. Bradley wish to offer a follow-on answer to or comment on Deputy Cowen's point?

Mr. Conleth Bradley

I appreciate Mr. Ciobanu-Dordea's answer, which was interesting and useful. The objective of the Water Framework Directive, as he outlined, is about quality, not quantity. The terms of Article 9.4 are interesting. The reporting of the non-compliance or the derogation is in the report on the river basin management plan, but the reference to an established practice is an important point. I am sure that Mr. Ciobanu-Dordea is not that familiar with established practice under Irish law. There are key dates for ascertaining the established practice. The beginning was 1962, when the Public Health (Ireland) Act 1896 was amended. Other keystone dates are 1983, 1997, 2013 and 2016. To ascertain established practice, one must examine the range of the established practice. When the directive came into force, the established practice was not to charge. As Members will know well, the history of established practice in Ireland is tied into local government and the responsibility of elected members versus the executive. In my respectful view, it is clear that the established practice applies in the way that I have described, that being, the established practice on the key date was not to charge.

Mr. Ciobanu-Dordea referred to the river basin management plans. That relates to the reportage aspect of Article 9.4. The key phrase is "established practice".

I wish to mention another matter relating to Article 9. Mr. Ciobanu-Dordea will be aware of a recent decision of the European Court of Justice, ECJ, involving a hydroelectric plan. The Commission took Germany to the ECJ in an infringement action and lost. Important principles arose from that case. I accept that it was about a hydroelectric plan, but it was the first challenge under the Water Framework Directive. That decision has been recently upheld in a case taken by the Commission against Austria, where the ECJ again confirmed what Mr. Ciobanu-Dordea has correctly set out, namely, the margin of appreciation or discretion that is given to a member state.

This is about quality, not quantity, and the margin of appreciation given to a member state. It is important that the Commission be aware of this, which I am sure it is. That margin of appreciation was emphasised in the ECJ decision.

I thank Mr. Bradley. This conversation is important to us, so I am fine with letting it flow because it is core to our deliberation, but if possible, can the witnesses keep comments as tight as possible? Next are Deputies Ó Broin and Murphy, if that is okay, but I would like Mr. Ciobanu-Dordea to answer that.

Mr. Aurel Ciobanu-Dordea

My-----

He will get a chance to come back in.

He wanted to come back in, so I will let him.

I do not know whether it is appropriate to raise a point of order, but I have a problem with what is happening. No matter how eminent or qualified, a legal person's interpretation of something that the Commission is stating is just that. We could-----

Just like the officials' view.

No, it is not.

Yes, it is, because they are not judges.

(Interruptions).

Excuse me, but this is an important point and I would appreciate the opportunity to finish it. We could have a whole bunch of legal opinions lined up one way or the other. The Commission plays a role, which therefore gives its view importance in the process. The only arbiter of that is the ECJ.

(Interruptions).

With due respect to every other legal opinion, it would not be accurate to allow someone to attend and equate the two as equal. We are not as a country under any implication of Mr. Bradley's opinion. We would be under an implication of where the Commission would go with its opinion, and we would have to defend that. There is a question mark over the work of this committee if we allow at every point legal opinion on something on which we have asked the Commission to give its weighted opinion. We are going down a wrong road.

(Interruptions).

Allow me to reply, le bhur dtoil.

It is essential that there be some clarification from the Chairman.

First, the committee was invited to propose witnesses. I listened to all of that and took it on board 100%. We all agreed which witnesses could attend. They were invited, and I thank them for attending.

Second, if one witness - and this has been the practice since our meetings commenced - wishes to make a comment or contribution, he or she is fully entitled to do so, and I welcome that.

As far as I am concerned, that is the end of the story. If Deputy Brophy wants to invite a witness, as he has done previously, that will be considered and-----

That is not the point that I made.

I am not finished.

That is not the point that I made.

I did not interrupt you. I am not finished. It is incumbent on me to do the best I can to provide for fairness, balance and different opinions. It is for the committee to decide. My role is to do my best, which I am doing, to facilitate that. I am very comfortable with, and thank Mr. Bradley for, his contribution. It is up to us as adults and individuals as to how we interpret it.

With due respect-----

I am sorry, but-----

No. With due respect, I object to your last comment because there was an undertone to it.

There was no undertone to it.

(Interruptions).

I am sorry, but I object. I am making the point, which the Chairman is misinterpreting, that I have no problem with legal representatives attending as witnesses, but we should recognise the difference between the view being expressed by the Commission and the view being expressed by legal or other experts. Given the way in which the Chairman allowed the initial interjection, my point was on the contribution, nothing else.

It is for the Chairman to allow interjections.

I have heard Deputy Brophy's point, but I want to proceed because I am conscious of our time.

(Interruptions).

I have made my ruling. I call Deputy Cowen.

I would like to respond as someone whose party invited Mr. Bradley. For many months, Deputy Brophy's party asked us to substantiate our contention-----

(Interruptions).

-----about the EU framework directive. We have never publicised that. When this committee sought its content, we made that available to it. We are here today to enforce that in as best a way as we can because it is our belief that the Dáil may accept a recommendation from this committee to revert to a non-charging regime and allow water charges and services to be paid for by the customer, namely, the State. We have every right to make this committee aware of the sound legal advice that backs up the contention that we have held for some time. I did not abuse that advice by making it public. I brought it to this committee, where it deserves to be, in order that the committee could make an informed decision and the Dáil would ultimately make the right decision.

I am with Deputy Cowen on that. If Deputy Ó Broin waits one second, I will proceed. I am comfortable and happy with the process that I have proposed and I am working through it. I do not intend to offend or upset anyone, but this is the process that we have always followed. I appreciate and am grateful for everyone's contribution.

Next are Deputies Ó Broin and Murphy. The witnesses should try to keep their answers as tight as they can because I want to allow as many members as possible to ask questions.

As there are lots of really important questions members want to ask, I urge everyone to be as succinct as possible.

One of the reasons Article 9.4 of the Water Framework Directive is so contentious is it has become a central part of the public debate on whether discontinuing domestic water charges is a viable policy option. There have been newspaper articles arguing that if we abolish domestic water charges, we will face immediate and very substantial fines from the European Court of Justice and the European Commission. Therefore, we understand all of this is important for ourselves and the public. I have three sets of questions for the Commission and Mr. Bradley and Mr. Kelly because I am interested in their respective views.

What is really crucial is that Article 9.4, as outlined, sets out two criteria. The first is the idea of established practice, while the second is the achievement of the objectives of the directive as outlined in Article 1. I am a little confused as to the Commission's position because between 2010 and 2014, in both public and on the record comments, it seemed to have changed its position. I will outline what I mean by that and then seek a response.

In 2010, when he was a Labour Party Member of the European Parliament Deputy Alan Kelly asked a parliamentary question of the then Commissioner and was told very clearly "where this is an established practice at the time of the adoption of the directive". The interpretation of the part of the answer by many people is that established practice, as per the water framework directive, means whatever the established practice of the member state was at the time the directive was passed in 2000. There is nothing in that answer that relates to whether a member state chose to invoke the derogation in its 2009 river basin management plan. That is reinforced by a subsequent communication to Ms Lynn Boylan, MEP, from the Directorate-General for the Environment in 2014. She asked whether it was possible to reinvoke Article 9.4, despite the fact that it had not been used in 2009. The answer was as follows: "On the basis of-----

Mr. Aurel Ciobanu-Dordea

The response was from the European Commission.

Yes, absolutely. It read: "On the basis of the information reported to the Commission, Ireland has not made use of Article 9(4)" in its first river basin management plan, as we know. It went on to state that should Ireland wish to rely on the provisions of Article 9.4 in its second river basin management plan, a justification would need to be provided in that plan, including drafts, in order that the public could effectively comment thereon. Like all member states, if Ireland invokes Article 9.4, the Commission "shall carefully consider whether the conditions of this flexibility provision are met at that stage". Let us fast-forward to 2016, bearing in mind that this had been the position of the Commission in all correspondence with MEPs who had asked the question between 2014 and 2016. In 2016 the Commission started to insert a new argument. In a reply to Ms Marian Harkin, MEP, it stated, as the representatives present have outlined, that if Ireland did not invoke Article 9.4 in its first river basin management plan, it could not do so in the second. These were three Commission responses, in the first two of which it was very clear that established practice was whatever it was when the water framework directive was enacted and that member states could apply to invoke the provisions of Article 9.4, although there was no guarantee that its request would be granted because it would have to be assessed in the context of the second river basin management plan. Why did the Commission change its position in 2016 from that adopted between 2010 to 2014, as outlined in the documents referenced?

I will pose my other two questions now to save time. The second issue concerns the new position of the Commission. It does not involve invoking established practice but talks about a "clear commitment" to introduce water charges in the river basin management plan of 2009. I am interested in knowing, from a legal point of view, whether established practice is the same as a "clear commitment" to introduce water charges. Clearly, if this matter ends up in the European Court of Justice, that will be a relevant question and the answer to it will be one this committee will need to assess.

My third question relates to the other part of Article 9.4 which refers to the objectives of Article 1 of the directive. The directive is really about these core objectives. That is part of the point Mr. Bradley was making. If a member state, in its river basin management plan and its accompanying investment plan for water infrastructure, is demonstrating that it is meeting the objectives set out in Article 1 of the directive, how could it be in breach of the directive and how could enforcement proceedings be taken against it? That is why the German case is so important. If I understood the ruling of the European Court of Justice correctly, it stated that, notwithstanding the fact that there was not full-cost recovery or adherence to the polluter pays principle in that particular water use case, because there was no evidence that the non-charging for water use was having any negative impact in achieving the objectives of Article 1, there was no case to be heard. As Mr. Bradley said, that decision has been upheld in subsequent judgments. I would like to hear the views of the delegates in that regard.

There are two jurisdictions that do not have in place the type of domestic funding regime the Commission clearly prefers, one of which is Scotland. Representatives from that country outlined their rationale to the committee. As we know, the other jurisdiction is Northern Ireland. Are there infringement proceedings pending against either of these jurisdictions for not having the cost-recovery and polluter pays model that the delegates have outlined? Does the Commission have any intention of bringing proceedings against them? If not, how can it state they can do it but Ireland cannot?

Mr. Aurel Ciobanu-Dordea

I thank the Deputy for his very elaborate set of questions. In response to the contributions of Mr. Bradley and Deputy Eoin Ó Broin - I also said this at the beginning of my contribution - we should go beyond the legal discussion. This is not just a legalistic issue between attorneys and lawyers; it is about much more than that. I am not trying to relativise the objectivity of law and the rules, but it is more than just a discussion about what is meant by established practice. I hope my remarks will not be deemed inappropriate, but we must think about the international custom, a concept lawyers understand well. Let us say we have a rule that has been applied for a long number of years and we have behaviour that has been repeated for a long number of years until it becomes a rule and it is considered to be a consequence of application. If an actor or player intervenes and changes the rules, this changes the established practice. One has it until one changes the practice. One can then no longer claim the international customary law and-----

That is not what the Commission stated in 2014. I ask Mr Ciobanu-Dordea to explain the change.

Mr. Aurel Ciobanu-Dordea

We have not changed it, but I can see the point being made. The Deputy is challenging us for being inconsistent, but, frankly, I do not see where there is any inconsistency. We took note of the change in policy and think this is sound. The second-----

I am sorry; I want to interject because this is very important and I want to provide clarity on where the inconsistency lies. If the Commission had been applying the principles it has been applying since 2016, the reply in 2014 would have stated Ireland could not invoke Article 9.4 because it had not included it in the 2009 river basin management plan and that, therefore, it no longer had that entitlement. However, what the Commission stated at that stage was that if Ireland was going to invoke the article, it would have to outline the reasons for so doing and that the matter would be considered in the context of the second river basin management plan.

Mr. Aurel Ciobanu-Dordea

Yes. We have said we will look into it.

The Commission then shifted its position in 2016 and stated it was not an option and that Ireland would be in breach of the directive if it sought to do so at that stage.

Mr. Aurel Ciobanu-Dordea

No, we were neutral between 2010 and 2014 but are now being more explicit. This is not a contradiction in our position-----

It is more explicit or more political?

Mr. Aurel Ciobanu-Dordea

No, more explicit. We are now saying there is a problem with invoking the provision owing to the change of practice. Once one changes the practice-----

That practice had changed before the advice was received in 2014. The practice had changed, according to the Commission, in the 2009 river basin management plan.

Mr. Aurel Ciobanu-Dordea

Yes. At best, the position expressed can be described as neutral. That is what I think and it is not my purpose to enter into a polemic-----

The corollary is that the Commission's new position is not neutral. Therefore, it is political.

Mr. Aurel Ciobanu-Dordea

No.

I would like to move on because we have reached an impasse.

Mr. Aurel Ciobanu-Dordea

I draw attention to the fact that the judgment of the European Court of Justice mentioned concerns something very different from the issues we are debating. It concerns the definition of water services and is about the meaning of an expression which is not at stake in the Irish debate.

I do not want to go deeper into that particular argument.

Mr. Aurel Ciobanu-Dordea

Yes.

It is not our space.

It is a feeder question.

I know, which is why I am asking the Deputy to move on to his other questions.

The issue is how one interprets what is precedent and the change made as a result. I ask the Deputy to put his other two questions.

How can a member state that has demonstrated in a river basin management plan that it can meet the objectives of Article 1 and has an investment plan to support it through general taxation and Government borrowing be in breach of the directive? I would like to hear the views of Mr. Kelly and Mr. Bradley on the matter in the context of the German case, in particular. It is important for members to hear the details of the case because it is ECJ case law.

Mr. Matthias Kelly

The purpose of the water directive can be seen in the recital to it. It begins, "Water is not a commercial product like any other", and goes on to refer to "diverse conditions". It continues:

This Directive aims at maintaining and improving the aquatic environment in the Community. This purpose is primarily concerned with the quality of the waters concerned ... The ultimate aim of this Directive is to achieve the elimination of priority hazardous substances and contribute to achieving concentrations in the marine environment near background values for naturally occurring substances.

The directive recognises that member states can and should look at diverse national considerations. When the derogation in Article 9.4 of the directive was introduced, it was known colloquially as the "Irish derogation". It was introduced specifically to meet conditions in Ireland where water had not historically been charged for in this way. When the Commission first proposed the derogation, it also proposed full cost recovery, but that was dropped during the conciliation process. That was recognised in the German case as significant. It is. It is not about cost recovery. The purpose of the directive is to improve the quality of water and deliver high quality water services. It is not about cost recovery. It is up to Ireland or any other country to demonstrate that it has an established practice to which large numbers of people are continuing to adhere. That should be relatively easy in the case of Ireland because it has had this established practice. In my view as a lawyer, a country does not cease to have an established practice. Despite some of the comments made, I am not a member of any political party here or anywhere else. I gave independent legal advice. The established practice in a country will remain in place until it can successfully put something else in place. Under the Irish system, it is subsidised from general taxation. That is how it is seen from the point of view of the public. People are not reaching into their pockets to pay for water. If that is to be changed, something else has to be put in place, but nothing else has successfully been put in place. That is why it is quite clear that the use of the derogation continues to be available to Ireland.

As I set out in the note I was asked to prepare for the committee, an unsuccessful attempt to change an established practice means the practice in question has not been changed. By definition and as a matter of logic, it continues. While it is true that the Commission may do A, B, C and D, we live in a system of democracy governed by the rule of law. The Commission does not have its way. If, for example, the Commission says "no" and means "no", we have a legal system to test this under which certain procedures must be gone through. I know from my experience of litigating before the court that it does not always agree - far from it - with the Commission. The Commission regularly loses cases before the court. The mere fact that the Commission is taking a particular view should not influence this committee to believe this view will prevail - far from it - because it is a long process. The Commission has to come back, set out its position fully, notify Ireland of it, hear what Ireland has to say, take account of it and be satisfied that it impedes or compromises the purpose of the directive. The Commission will have an uphill task on the latter consideration alone. It is going to be rather difficult. It would then have to satisfy the court that Ireland was in breach of the directive. As I said, this needs to be considered in the context of basic principles and established practice. As a lawyer, I would find it very difficult to understand how it could be said the established practice was not still in operation, given what had happened. It is still in operation in Ireland.

I thank Mr. Kelly and appreciate his contribution. He also outlined his thinking in the submission he provided for the committee.

Mr. Matthias Kelly

Yes.

There were four key areas in the submission: polluter pays incentives, efficient use, full recovery not being part of the directive and established practice. Mr. Kelly's view is that we are in compliance by virtue of these four factors. I ask Mr. Bradley to be brief in his response because I want to move on. We are being a little narrow. This is important.

Mr. Conleth Bradley

I will be brief. I accept Mr. Ciobanu-Dordea's emphasis on the margin of appreciation given, but it has to be the margin of appreciation given to the member state. It cannot be the Commission's, as it cannot have it every way. There is either a margin of appreciation or there is not. I said the German case involved hydroelectric issues. The points of principle established by the European Court of Justice in that case are important. If anybody wants to read them, they are set out in paragraphs 47 and 51 of the judgment. These important points of principle apply to the discussion we are having. I will summarise them. Article 9 does not state there is an absolute requirement to bring in charges. Article 9 which is about river basin management has to be read in the context of Articles 4, 5 and 11. The committee can look at this later because I do not propose to go into the details of it now. When the European Court of Justice considers these matters, it looks at them from an holistic perspective. Mr. Ciobanu-Dordea is absolutely correct when he says this is about quality rather than quantity. When we consider Article 9.4 of the directive which refers to "established practices", we must look at how Ireland dealt with water services from 1962 to 2016. I will not go back to the Public Health (Ireland) Act 1878. Everybody is looking at key dates. When the directive was in force, charging was done by way of general taxation as an established practice. Everyone who has worked in a local authority will know what went on between the elected members and the executive in the case of service charges.

Mr. Ciobanu-Dordea can come in-----

He should be allowed to answer in the interests of fairness. We need to see a balanced response.

Mr. Aurel Ciobanu-Dordea

I will be very brief. There needs to be a fair reading of Article 9.4 in order that readers will not lure themselves into wrongful interpretations. I draw the attention of the distinguished members of the committee and those who are observing the meeting to the fact that Article 9.4 makes it clear that the concept of established practice can come into play "where this does not compromise the purposes and the achievement of the objectives of this Directive". I also draw their attention to two additional simple and clear elements of the directive. The obligation to introduce water charges was to be met by 2010. More importantly, the objectives of the directive were to be attained by 2015. I want to see future river basin management plans that will show how these objectives which have not been attained were attained two years ago. I want to see those plans. I rest my case.

Well put. I thank Deputy Paul Murphy and everybody else for their patience.

It sounds like we are at the European Court of Justice already. It is nothing personal when I say I do not believe the European Commission is respecting the political process here. It is doing the very opposite. I refer to the letters sent to the expert commission and the Minister, Deputy Simon Coveney. I suggest Mr. Ciobanu-Dordea's presentation was designed to state we did not have political choices. The message is that the political choice not to have water charge made by the people through boycott and protest and in last year's general election is not legitimate and cannot be upheld without fines.

I fundamentally disagree with that.

I will go through questions one by one to try to make it more concise and in order that we do not lose them. First, I return to the question of inconsistency. I think two different questions were mixed up a bit in the witness's response. Let us forget about what the Irish Government is doing in saying whether it has water charges or not. That does not matter. Let us forget about what we define as established practice, etc. The difference between the answers in 2010 and 2016 is very substantial. It does not relate to anything that the Irish Government is doing. It relates to a different interpretation of the European Commission on Article 9.4 of the water framework directive. I seek clarity on why this changed and an admission that it did change.

The answer to Deputy Alan Kelly in 2010 was as follows: "Article 9.4 provides the possibility for Member States not to apply the provisions of Article 9.1 to a given water-use activity, where this is an established practice at the time of adoption of the directive". That answer defines that article 9.4 kicks in "where this is an established practice at the time of adoption of the directive". In other words, that was in 2003. The answer given in 2016 to Marian Harkin, MEP, effectively said that the current practice is to have water charges. We can get into a debate separately about that. In 2010, it clearly said "at the time of adoption of the directive". In 2016, it effectively said at the current time. Why has that changed?

Mr. Aurel Ciobanu-Dordea

The Deputy said that the European Commission is not respecting the political process. If I would like to be polemical with the Deputy, I would say that the Deputy thinks that every opinion that is provided upon request of the Irish authorities is an interference with the political process. However, I do not want to be polemical and I cannot afford to be polemical with the Deputy. Nevertheless, I still draw his attention to the fact that the Commission responded to the invitation of the Irish authorities to state our opinion, to be here as witnesses and to be interrogated. The second answer is that we did not change any interpretation of the established practice element or of Article 9.4. The situation has evolved in time and the essential element is the fact that that concretely on the ground the practice has changed.

That is not the point.

Mr. Aurel Ciobanu-Dordea

That is my point.

Yes, but there is inconsistency in the witness's answers that he is simply not acknowledging. In 2010, it clearly says that it kicks in when this is an established practice at the time of the adoption of the directive.

Mr. Aurel Ciobanu-Dordea

I would also draw attention to the fact that it was not sufficient that the practice was in place in 2000 when the directive was adopted or brought into force.

But that was the answer that was given in 2010.

Mr. Aurel Ciobanu-Dordea

It must continue to be so all along the application of the directive.

Okay, then the answer has changed. That is fine. At least we have an acknowledgement that the answer has changed.

The second point relates to established practice. Why does the Deputy think the word "established" exists in Article 9.4? What the witness explained as established is just a matter of practice or of something changing. If something changes over time, there is a different practice. However, it did not just say "practice". It said "established practice". For example, I have never paid water charges in this country. There are many people in this country who have never paid water charges.

The Deputy paid property tax.

Did the Deputy ever pay water tax?

I have never paid water charges in this country.

Mr. Aurel Ciobanu-Dordea

I would draw attention-----

Therefore there is not an established practice of water charges in this country.

Mr. Aurel Ciobanu-Dordea

I understand the Deputy's views, but I cannot but repeat my invitation to read the sentence to its very end.

I have read it to the very end.

Mr. Aurel Ciobanu-Dordea

It ends as follows: a member state can invoke an established practice "where this does not compromise the purposes and the achievement of the objectives of this directive". As we do not really interfere in the debate, we let the committee judge whether the objectives of this directive are attained with half of the population of Ireland-----

With respect, that is a different answer that is given-----

Mr. Aurel Ciobanu-Dordea

-----not being served in terms of urban waste water treatment.

That is disingenuous because the Commission has said that the established practice is gone. The witness can try to shift on to a different argument.

I will ask the third question and then move on. We are not getting clear answers because the witness is attempting to move on to a different ground of argument. The Commission has said that established practice has gone. Let us engage on it. Let us be political because I agree that the Commission is a political body that makes political choices. Is the European Commission in favour of water charging? Is it in favour of water privatisation? Is it the case that the troika agreement with Greece included an agreement for the privatisation of two Greek public water companies in Athens and Thessaloniki? Is it the case that the troika agreement with Portugal included the privatisation of water services?

Mr. Aurel Ciobanu-Dordea

I thank the Deputy for his remarks. They are very important ones. The Commission is a political body but nobody is above the rule of law. Also, in its political decisions, the Commission does not and cannot go beyond the law. I am not aware of the details of the IMF agreement with Greece but I point the Deputy to the treaty provision that says that the property regime of the member states is not interfered with by the provision of the treaties. We cannot impose one philosophy or another. We do not have a doctrine in favour or against the privatisation of the water services.

My general point is that we bring to the committee's attention for its deliberation elements of relevance to the political judgment. We do not impose any solution. We are not in favour of or against water charges. However, we point to the fact that the overwhelming majority of the continental member states of the European Union have water charges and metering in different forms and with different degrees of flexibility. This proves that the system works. The system is not overwhelming in terms of the financial burden for the consumer and the citizen who receives the water services. We are bound by the reality that any retour en arrière or return to the status quo ante will mean the return to a system that did not function properly. I will use a comparison. In terms of secondary urban waste water treatment, Scotland is okay up to 98% of the population. In Ireland, that level is only 53.1% of the population. This is only one indicator of the challenges of the system. The committee has to make a judgment and a decision against a backdrop of these concrete elements.

My head is spinning from "established practice". Mr. Ciobanu-Dordea seems to be saying that if a practice has continued in a country for many years and then there is a proposal to change it, it suddenly ceases to be established practice and the proposal becomes established practice. Why is the word "established" used? It is not "changed practice", but "established practice". Does the witness not take Deputy Kelly's point that if there is an established practice, it remains so until something workable is put in its place? Clearly that has not happened in Ireland. Without getting too far into the complexities of this, is the witness saying that to meet the objectives of Article 9.4 there has to be a system of individual payment?

Reference has been made to the polluter pays principle. If taxpayers generally are paying, then the polluter pays principle surely is satisfied. Where does it say, imply or direct that there must be individual charging? If that is indeed what the directive implies and if there is something in the directive that says as much, has the Commission taken any legal action against Northern Ireland? Northern Ireland does not have an individual charging system. Has the Commission taken any legal action against Scotland? Are we the only people against whom legal action is being taken? The Commission officials have said, rightly, that no one is above the law, but no one is below it either.

What is the relevance of the directive to metering? Does the directive encompass the provision of metering or would district metering be sufficient? Do we need any kind of metering at all?

Mr. Aurel Ciobanu-Dordea

I will invite my colleague, Mr. Rodríguez Romero, to comment. He might be more pedagogical than I can be, I hope.

Mr. Jorge Rodríguez Romero

I will try. Article 9.4 is an exemption to an obligation. Exemptions have to be interpreted narrowly. Article 9.4 provides for an exemption to an obligation to establish a water pricing policy in accordance with the cost recovery principle and the polluter pays principle, the latter principle being part of the treaty, by the way. The exemption, therefore, needs to be interpreted narrowly.

The context relates to before the first river basin management plan was adopted. We wrote that to apply Article 9.4, we believe that it must have been established practice by the time of adoption of the directive and the practice must have been consistently maintained until the adoption of the river basin management plan. Then, in respect of that river basin management plan, the member states would have to give the reasons for not applying a water pricing policy according to the cost recovery and polluter pays principles as long as they met the objectives of the Water Framework Directive.

It is a pity that Mr. Murphy has left the room. This is the sense of the addition that we made in 2010 to the established practice at the time of the adoption of the directive. The idea was to avoid member states abolishing water charges in 2006, for example, and then claiming that the situation was established practice. It is not a symmetrical issue. It has to be interpreted narrowly because it is an exemption.

Mr. Aurel Ciobanu-Dordea

It recognises long-standing experiences and behaviours.

Mr. Jorge Rodríguez Romero

The question of metering has been raised. We made our intervention on metering at the beginning in the context of the recommendations from the expert commission. The expert commission recommends that a charge for wasteful use of water is implemented in Ireland. It is for the country to consider how to do it. What we are saying is that the only way to do that is to implement metering. Metering for domestic use is general practice in the whole of the EU, with few exceptions. The committee has invited representatives from exempted areas to give evidence to the committee recently. This applies in Scotland, for example, as well as some parts of England and Wales and Northern Ireland as well. The rest of the EU is using metering generally for domestic households. It is generalised.

It is a well-established practice, if I may use the term, to promote conservation and to have a fair water charging system in place. Deputy O'Dea referred to Scotland and Northern Ireland. My colleague, Mr. Ciobanu-Dordea, referred to the need to avoid looking at the obligations of the Water Framework Directive in isolation. Article 9 is in place to support the achievement of the objectives of the directive. That is why, as Mr. Bradley mentioned, it is part of the programme of measures relating to water pricing policy. I say as much because of comments relating to whether the Commission could reproach Scotland and Northern Ireland as regards the water services if they have compliance that is close to 100%. Urban wastewater treatment directive compliance is close to 100% in those countries. This is not the case in Ireland.

Mr. Rodríguez Romero says the use of metering is generalised. My question is whether, to comply with the EU directive, there is any requirement for individual metering. The fact that it is generalised does not necessarily mean there is any requirement to have individual meters.

The Commission representatives are suggesting, by admitting that the Commission is not taking action against Scotland, that individual charging is not really essential under the directive to comply with the objectives of the directive. Is that the case?

Mr. Jorge Rodríguez Romero

Sorry, I did not understand the last part.

I am saying that if the Commission is not pursuing Scotland, then what the Commission is saying, basically, is that applying individual charges on householders is not required under the EU directive.

Mr. Jorge Rodríguez Romero

One of the obligations of the water pricing policy is to provide adequate incentives for users to use water resources efficiently. This cannot relate to anything other than water quantity, by the way. Metering is a well-established practice throughout the EU to provide adequate incentives. We can provide incentives to use water resources efficiently by implementing metering.

Is there any evidence-----

Mr. Jorge Rodríguez Romero

There is, however, provision to depart from the obligations of the directive, having regard to the social, environmental and economic effects of the recovery and the geographic and climatic conditions of the region or regions affected.

Correct me if I am wrong. The average rate of metering throughout the EU is 65% of domestic households. Is that the case?

Mr. Aurel Ciobanu-Dordea

No, it must be far higher.

Mr. Jorge Rodríguez Romero

A total of 26 members states use meter-related pricing for domestic households generally. This does not mean that every individual household is metered. One of the issues raised in previous discussions in this committee related to how old buildings are difficult to fit with new meters.

I want to go back to Deputy O'Dea, because I jumped in there. Do you want to finish, Deputy?

I think Mr. Bradley is keen to comment.

Mr. Conleth Bradley

Deputy O'Dea asked an important question. I want to offer clarification. There is no requirement for charging for individual householders in the directive. I believe that question was asked. Deputy O'Dea gave the example of Scotland. I understand that the answer to that question is "Yes".

Mr. Aurel Ciobanu-Dordea

There is no explicit requirement in the directive, but Article 9.1 of the directive, as my colleague pointed out clearly, requires that member states shall ensure that by 2010 water pricing policies provide adequate incentives for users to use water resources efficiently. The best and most widely used incentive to regulate resources efficiently is metering. This is what we are saying.

Is there any other form of conservation, other than metering or charges, in the Commission's book at all?

Obviously Scotland and Northern Ireland have it. Why can Ireland not have it, in addition to the established practice? I rest my case.

Mr. Aurel Ciobanu-Dordea

I understand the sense of the Deputy's question. He compares Ireland's situation with Northern Ireland or Scotland and asks why the Commission is tough with Ireland but not as tough with Northern Ireland or Scotland.

Not necessarily tough. They have a form of conservation.

Mr. Aurel Ciobanu-Dordea

As my colleague stated, we are not looking in isolation as to whether Ireland has charges or meters. That is not the point. The point is the general performance and the attainment of the objectives of a smart water policy. When we look at the general objectives-----

That is why we are here.

Mr. Aurel Ciobanu-Dordea

-----we see that in Northern Ireland they have attained it and in Scotland they are close to attaining it. Ireland is still halfway on the road.

That is why it is our obligation to come up with a policy that meets the framework directive and that does not necessarily involve a charging regime. That is our right and prerogative as an independent State, taking cognisance of the directive and allowing for the framework to be implemented the way we see fit.

In fairness, only one person directs this meeting, namely the Chairman. However, Chairman, you are not. Please chair the meeting. There is a list of speakers.

Yes, there is a list. I call Deputy Jan O'Sullivan.

I am next on the list. I thank the delegation for attending the meeting.

Mr. Aurel Ciobanu-Dordea said he is available to the committee for further consultation should we have any further questions later. If he is willing, I suggest that, when we get to the point where we may have a draft proposal, we can ask Mr. Aurel Ciobanu-Dordea some questions at that stage. If there are fines, they are decided on by the European court but are based on objective elements. Can we run by Mr. Aurel Ciobanu-Dordea the committee's recommendations to see, from the objective facts, whether they would be in compliance with EU directives?

In his letter to the Minister for Housing, Planning, Community and Local Government, Deputy Simon Coveney, as well as in his letter to the expert group, Mr. Aurel Ciobanu-Dordea referred to the principle of the polluter pays as being fundamental to the directive. We have heard other interpretations around this, such as we can have a derogation because of established practice. However, I am sure we also have to comply with the fundamental intentions of the directive, part of which is the polluter pays principle. Will Mr. Aurel Ciobanu-Dordea clarify if the polluter pays principle has to be part of any solution we come up with? He has been clear that there is a certain amount of discretion to the member state to comply. Ultimately, we all have to comply.

The expert commission report stated excessive or wasteful use of water will be discouraged by applying a tariff for such use and, therefore, is consistent with the polluter pays principle. There is a general view in this committee, as well as in the expert report, that there should not be a charge for normal use but that there should be a charge for excessive use. In Scotland, there is a charge for water services. It is taken in through the household tax which varies in accordance with the size of the house. Does that protect a country like Scotland? Scottish Water was at the committee recently and informed us it has district metering. It can use the information from that to pinpoint where there may be excessive use in a particular district and approach those who may be causing excessive use. Scottish Water has a system in place to deal with excessive use and it also has a system of paying in place.

In my view, the Scottish situation is totally different from the Irish situation where we are proposing to have no charge whatsoever. Is there any other way of charging for excessive use if one does not have meters? If the outcome of this committee is that there should be a normal household free allowance, paid by the State through central taxation, but that excessive use should be paid for by the individual, then we are obviously not adopting the Scottish model because we will not have a general payment through local taxes. Maybe that will be an option. How can we actually comply with the polluter pays principle if we do not have meters? Is there any other way?

In his presentation, Mr. Aurel Ciobanu-Dordea spoke about room for social tariffs. Will he elaborate on this? Does that mean allowances could be made for households with illnesses which require extra water?

Mr. Aurel Ciobanu-Dordea

We can confirm that the principle that the polluter pays is mandated by European law and by the directive. It is normal in general in environmental practice. It is among the environmental rules and should be part of the solution. We would also like to point out the fact that in practice it is hard to imagine how one would identify excessive use in the absence of metering. It would also be difficult to identify for each individual whether his or her consumption is normal, is excessive or is below the norm. One needs metering.

We understood from the depositions of other regional authorities that the committee heard, as well as from our experience with other member states, that in practice there can be strategic or structured approaches. One starts with applying district metering to identify which areas suffer most of the leaks. Afterwards, one can tighten the net gradually until one goes into individual metering. We acknowledge the fact that introducing district metering is a significant contribution to controlling the leaks.

We would also draw the committee's attention to the fact that controlling or curbing leaks is not the only purpose of this. The level of consumption must be determined as well. It is hard to imagine how compliance in the case of each citizen and how a level of consumption could be calculated with fair precision in the absence of metering. We also have to be aware of the fact that consumption patterns can have common trends but also can have significant variables. For example, one family has a swimming pool while most other families do not. Some families might have large gardens and want to water their gardens but others cannot afford to have large gardens. How does one distinguish between these families? Is it fair that somebody living in a dwelling on the fifth floor of the building pays the same amount of charges as someone who has a large garden or a swimming pool? Is that realistic? We believe metering allows public authorities to distinguish between these different situations. This means fairness and equality which are generally accepted principles of law. In practice, the introduction of metering should not be politically seen as outrageous.

It recognises the individuality of each consumer.

I will come to the matter of the social tariff by confirming that there is an explicit mandate in the directive allowing for social tariffs. If I may be allowed to add, I would say that the directive does not impose a certain level of the charges. The level of the charges is left in the hands of the member states. Ireland can start low and progressively advance towards higher charges.

I would like to highlight one important difference between Scotland and Ireland. In Scotland, with its tax that is dependent on the value of the property but which is highlighted specifically on each consumer's bill, they secure full cost recovery. They pay £430 to £450 a year, which is far more than was paid in Ireland when the previous system was in force. Securing cost recovery, therefore, is an important element. If Ireland secures cost recovery and a practical application of the polluter pays principle, many issues can be discussed but the objectives of the directive are of paramount importance. That is why, and not wishing to soak everything in a fuzzy political discussion, we would still like to draw members' attention to the fact that a broader policy and political discussion must take place and the full picture be considered.

Would it be Mr. Ciobanu-Dordea's view that the general taxpayer should not pay for excessive use of water? If the proposal is that it is all paid for out of general taxation-----

Mr. Aurel Ciobanu-Dordea

Can the Deputy repeat the question?

I am talking about the issue of fairness and the proposal that water should be paid entirely out of public taxation without any way of determining and charging for excessive use. Mr. Ciobanu-Dordea might not have an opinion on that because it is probably a political question.

Mr. Aurel Ciobanu-Dordea

I will formulate the position as follows. I repeat the disclaimer made at the outset that any infringement decision is a prerogative of the College of the European Commission. However, for the current discussion I would say it is difficult to identify the arguments that would convince somebody that such an indistinct system sits well with the water framework directive. If there are elements that can be explained properly by the Irish authorities, and I am not the oracular mouse who tells the ultimate truth, perhaps we do not see them here but it is very difficult to perceive them, and it is not prima facie the casethat we are seeing this.

We have reflected a good deal on the matter. It is important to see how this system would secure, in a credible way and for a relatively long period of time, an investment of €13 billion. Would the Irish authorities make a commitment to make such an investment from the public purse in a short or longer amount of time? How would the €13 million be procured by the public purse? What will happen when in three or four years time such investments will compete with other investments that are equally important to this society? How will this be preserved in terms of the integrity of continuous investment in a safe water system that is fundamental for the health of Irish consumers. I know the word "consumers" is not liked but beyond citizens, they are consumers as well, and this does not diminish their status. They are entitled to the best, not to have halomethanes in drinking water.

A question was asked earlier on the opinions of the various contributors but our job is to listen to the opinions of people who have come before this committee. We will have to make a judgment individually and also as a committee regarding those opinions. I value any opinions this committee gets from either side.

It is clear from listening to the contributions of the Commission representatives that any reasonable and common sense reading of what they have outlined is that the Commission's position has been inconsistent, that it changed between 2010 and 2016 and, in my view, is now an openly and nakedly political position.

I have two questions, and Mr. Ciobanu-Dordea might answer the first one. Regarding the German case, the European Court of Justice held that the failure to put in place a pricing policy on a specific matter without any complaint that has resulted in a failure to meet the objectives of section 9.1 or the directive as a whole was not sufficient to establish a breach of Germany's obligations. Am I right in taking from that that the lack of a pricing policy did not make Germany in breach of the obligations?

My second question is to the same three gentlemen. Am I correct in saying that the question of full recovery of costs was in the original draft directive but it is not in the actual directive?

Mr. Matthias Kelly

With regard to the first question, the short answer is "Yes". In other words, in the German case the absence of full price recovery did not render Germany in breach of the obligations.

With regard to whether full cost recovery was in the original proposed directive, it was, and it was withdrawn following conciliation at the Parliament. That is recognised in the document I was looking at from the European Parliament which I will read into the record. It is A5-2000-0214 and the relevant part states:

Water pricing is a sensitive issue for number of Member States that have particular regimes for exempting certain categories of users. However, in the conciliation the attention focused on Ireland. It is the only member state that does not charge households according to water and sewage volume but finances these services via taxation. At the end of the conciliation it was agreed to provide for the Member States to be able to opt out from the obligation of cost recovery if this is based on "established national practices".

That is why, when I spoke earlier, I spoke about it being the Irish exemption. There was a clear recognition by all involved at the time that Ireland had an established practice. There was acceptance that Ireland could continue to have that established practice, which is why full cost recovery was dropped from the directive as we now have it.

Mr. Conleth Bradley

I will agree with my friend. I will add that the German case, for me, emphasises the margin of appreciation in terms of cost recovery and its implementation. Margin of appreciation is effectively the discretion given to the member state. The decision in the German case has been criticised by leading academics, but it reinforces the outcome of the decision in the sense that it emphasises the margin of appreciation that is left to the member state. The Commission representatives have supported this today.

I would finally add that it must be looked at holistically in respect of Articles 4, 9, 11 and 5. It has to be looked at in the round and that is what the court did.

Mr. Jorge Rodríguez Romero

To summarise the German case, the court said the absence of a water pricing policy for a given water use is not in itself a breach because there is an exemption in Article 9.4 which allows member states, under certain conditions, not to apply water pricing policies to certain water use activities. This is the reasoning. This does not apply to domestic water pricing in the Germany's case because Germany has a generalised system of domestic water pricing based on metering and usually a tariff which has a fixed part and a variable part. It has a full cost recovery obligation in its law. I am talking about full cost recovery.

Legal archaeology, which we can carry out, sometimes helps us to understand and interpret what the intentions of the legislator were, but there is no hard obligation to recover 100% of costs in the Water Framework Directive. There is a principle of cost recovery and there is an obligation to establish cost recovery but there is some flexibility in the last paragraph of Article 9(1) which states that member state may take account of social and economic considerations and climatic conditions. It is for Ireland to find a solid way to have a consistent system that justifies, and can achieve, the goals of the Water Framework Directive and can consistently deliver funding for the required water infrastructure.

Ms Maria Graham

I will come in on a point of information. At this point members are exploring three options. In synopsis, the existing regime which includes a suspension, charges funded entirely from taxation and a scenario based on the expert commission report. From the evolving conversation there are obviously very different perspectives on that and there are risks associated with what would be a compliant funding model. I did not want to get into that precisely, but simply for information I will say that the focus has been on what we said in the first river basin management plan. We are now in the process of doing the second river basin management plan and we are close to going out to public consultation on that. It will reflect that the Oireachtas is seized with looking at this issue at this stage, and then we will be finalising those plans. In those final plans we, as I state, will have to set out how whatever model has been chosen following the process is in compliance. That will have to take account the risks associated with different models, which members are informing themselves of. That timeline is due during the course of this year and by the end of 2017 we will be finalising the second cycle river basin management plans.

I thank the Chairman and I also thank all the witnesses that have contributed to the debate. Compliance with the Water Framework Directive is critical to this committee's ultimate recommendations and whatever policy the Government of the day will adopt. One of my questions to Ms Graham and the Department of Housing, Planning, Community and Local Government was if a legal risk assessment been carried out with the advice of the Attorney General in respect of compliance under both the Water Services Act 2014, which I would presume had the approval of the Attorney General as it has been enacted, and under the current suspension regime? Is she looking forward, in the river basin management plan, at further risk assessments? That is a critical point to make.

Taking account of the obligation that we as policy-makers have and that we as a country have, I will ask some questions of the Commission. With regard to consistency of how EU members are treated, are the witnesses satisfied that the Irish State is being treated consistently in terms of our obligations? We have heard about cases being taken to the European Court of Justice, ECJ. Are we being treated consistently? The impression may have been given that we are being targeted in some way by the Commission. I would like the witnesses to reassure the committee that is not the case. Will they give their view on that?

What are the witnesses' views on the fairest way to treat excessive use or waste of water resources? They have mentioned metering, but what is the view across the Commission and the EU member states? What is generally considered the fairest way to capture and to charge, or to treat in whatever way, people that waste or use water excessively?

There was a lot of debate around the derogation and whether it can still be applied in Ireland's case. Listening to the difference in views, I believe that the ECJ may well ultimately determine the outcome of that. The Commission has made clear to the committee its view under EU law, and the delegates need not reiterate it for me. As a member state we have bought in to the Commission as an authority and we, as committee members, should take careful cognisance of what it has said in regard to derogation. If the current water policy regime, that is the suspension of charges, continues, is it increasingly likely that further cases will be taken to the ECJ against Ireland?

A delegation from the Environmental Protection Agency is here today. In our whole debate about water services provision it is important that the EPA, as our environmental regulator, expresses a view. Taking account of another case taken against Ireland, where 38 urban centres around the country, large towns and cities, are now before the ECJ, is the EPA satisfied that the current Irish Water capital plan is adequate to address the issues in that case? Would it have any concerns regarding the sustainability of those capital plans should there be changes to how they are resourced in the future?

We have listened to some legal opinions here today. I welcome legal opinion, even though I might not always agree with it. It helps to inform the debate. Under the Water Services Act 2014, it was clear that Ireland was compliant with our obligations. I would like to hear if the legal experts share the view that Ireland would be less likely to be compliant if water services continue to be funded from general taxation and no charge levied? I would like to put their view on that on the record. If they think we would continue to be compliant without charges, why do they think that would be the case?

Mr. Aurel Ciobanu-Dordea

On the important matter of equal treatment, it might sound like a general reassurance to the committee but we have constantly paid attention, probably historically from the beginning of the institution, to this crucial matter of equal treatment. It is important not only that member states are treated equally and fairly but that they see this fairness and equality in action. That is why the Commission is deploying, at least in the area of the environment, particular attention to equal treatment. Of course one has individual situations in one member state or another and then one has to deal with that particular situation but one has also general obligations defined by EU law and deadlines applicable to all member states. In order to secure full equal treatment we are dealing with all the member states at the same time and are moving forward or on the contrary, holding back when that is necessary, cases concerning all member states for which this situation is relevant. This represents a particular challenge. When one has to deal with 12 or 15 cases at the same time it is not simple. It is not a case of me writing three paragraphs on a sheet of paper and tomorrow we go to court or something like that. As members can well imagine from the work of this Parliament and the work of any public authority, one needs to prepare things properly. I can reassure the committee and if it is necessary we can provide examples to it - I do not know them by heart but we can provide them in writing - illustrating that we strive for equal treatment. I think we achieve equal treatment and that we do not treat Ireland in any particular way compared with other member states. Because certain examples have been brought here which some read as illustrative of discrimination, I have tried in my explanations to the committee to point out why the situation in Ireland is not comparable with that in Scotland or in very few other jurisdictions, principally Northern Ireland, because their performance in terms of the general efficiency of the system is different compared with the situation in Ireland and the directive points towards taking care of the broader picture. When one makes the assessment one must pay attention to how the general system functions. The parameters of the different engines show that the functioning is sometimes significantly different. That is why of course the situation is significantly more challenging for Ireland but it is possible to find solutions in the framework of the directive.

A question was asked about what fairer way than metering exists to measure excessive use . To the best of our knowledge, there is no other solution. Nobody has pointed that out, although I am open to being shown by anyone what practical tool, instrument, formula or system can be put in place that is fairer than metering and that identifies the behaviour of individual citizens better than individual metering. Let me repeat that it is perfectly understandable and acceptable to roll out a programme that like the satellite imagery narrows down - it starts with a more general image and makes it finer so that it increases the granularity. In order to fight with most of the leaks, one can start with district measurement and thereafter increase the granularity until it rolls out a general system of individual metering. I will stop there. I am not sure if I have noted well all the questions that have been asked.

I indicated earlier that we believe the implication of the current situation, with the suspension of the water charges and the wider context of the situation, makes things of such a nature that we believe undoubtedly Ireland is not in compliance with the Water Framework Directive. We are very much supportive of an adequate process of reflection and deliberation in Ireland that is persuasive for the majority of Irish citizens. We hope that such a deliberation, no matter how heated it can become, and it is legitimate and understandable - it is an important societal matter - will lead to the right outcomes, because if people do not care about their own health, what do they care about? If they do not agree that they deserve and require protection of their own health, what do they want more than that? This is of paramount societal importance.

Ms Maria Graham

Senator Coffey asked about a legal review that had been undertaken by the Department. We have an ongoing engagement in terms of the legal issues arising from funding and compliance with the Water Framework Directive. As models evolve, different legal and policy considerations come into play. Without prejudice to what might become the final view when one takes into account all of those complex dimensions, the Department has formed the view at this stage that a regime in line with the Water Services Act 2014 would clearly be compliant with the Water Framework Directive. A scenario where the domestic segment of water costs was entirely funded by taxation would, more likely than not, be found to be non-compliant with Article 9. The approach recommended by the expert commission would potentially be compliant with the Water Framework Directive, depending on matters such as what constitutes normal usage.

We have obviously noted the contents of the letter from Commissioner Vella. Ultimately, following the Oireachtas deliberations, the approach to funding compliance with Article 9 will need to be set out in the second cycle river basin management plan. Any bundle of measures adopted or that would be considered for adoption in that regard would have to achieve the purposes and objectives of the directive, and that obviously includes things such as the promotion of sustainable water use and enhanced protection and improvement of the aquatic environment. That involves, in substance, policy analysis as well as legal issues. In finalising the plans we will engage on any of the legal issues arising with the Office of the Attorney General.

I wish to briefly get the Department's view on derogation. I understand the difficulty with sharing the advice of the Attorney General but what is the Department's position - I do not ask about the Minister - on derogation? We have heard different views expressed today. The Commission holds a very strong view, namely, that derogation no longer applies and we have heard legal opinion that it possibly does still apply. Does the Department have a view on derogation and where we currently are in that regard?

Ms Maria Graham

I think it would be fair to say that there have been a number of answers to parliamentary questions by the Department that indicated that Article 9 required us to set out in the first river basin management plans how we were going to comply with the provisions and in those river basin management plans, we indicated that we were bringing in charging.

We did not seek to use the derogation in those river basin management plans. It is a separate question whether we could have used it or not, but we did not use it. Subsequently, the Water Services Act 2014 was brought in and established a charging regime. We then moved to the second cycle plans. I do not think that the Department has previously said that we thought we could rely on a derogation under article 9.4.

Would the EPA like to come in there?

Ms Laura Burke

Yes. We have no role with regard to setting water policy, water charging, metering or related matters, so I will leave that debate to others. On Senator Coffey's questions with regard to Irish Water and capital investment, we are focused on the delivery of safe and secure water and ultimately the protection of the environment from wastewater impacts. That is what we focus on. Our assessment of Irish Water is based on the achievement and delivery of those objectives. It is very straightforward. During the period 2014 to 2017 the EPA's remedial action list dropped below 100 supplies for the first time, and the number of people on boil water notices is now less than 5,000. We also have national strategies in place to deal with key issues such as lead, trihalomethanes and pesticides. Our assessment of Irish Water's plan suggests that all schemes on the current remedial action list will be removed by the end of 2020, with many scheduled for completion within the next two years. That covers the drinking water side of things.

With regard to wastewater, the news is less encouraging. We have not seen the same level of improvements and performance, and we are seeing increasing delays to the reported completion dates of projects such as the elimination of discharges of raw sewage from 43 identified sites. Many of those schemes are now two years behind the original planned dates. This is not new - it was in our annual report on wastewater. We have also said that Irish Water needs a greater focus on improving operational effectiveness of its existing infrastructure, but there also must be an acceleration of investment in new infrastructure for both drinking water and wastewater treatment. I should highlight to the committee that the EPA has been raising this since 2006, so it is not a new message. The state of the infrastructure has been identified by us in many reports over the years. My colleague, Gerard O'Leary, might talk about the specific points of the ambitions of the plan out to 2021.

Mr. Gerard O'Leary

Chairman, we have supplied our presentation. I am going to read aspects of slide 17, which maps out where we were in 2014, where we were in 2016 and where we are today.

The existence of the boil water notice shows that the reality today is that the water quality is not good. That has been dropping, as Ms Burke pointed out, and there is a projection to get to zero by the end of 2020.

We have gone further and analysed all of the public water supplies. We are trying to identify where the issues are likely to be tomorrow and where the water supplies are not resilient enough. The 99 schemes currently in place represent 770,000 people who are at risk of being on some form of water restriction. We are playing catch up on 16 years of backlog, and that is also the picture with the urban wastewater treatment directive. Many of the deadlines were 2000 and 2005. The year 2000 was for the larger supplies. From the presentation it can be seen that the largest plant that we have in the country, at Ringsend, does not comply, which brings down our average. We are running at about 50%, whereas the rest of Europe, on the basic and urban wastewater, are in the 90%+ bracket. I am reluctant to speak too much about the stats because if Ringsend was compliant we would be in the 90% bracket as well. However, as Ms Burke pointed out, there were 43 years when if one flushed the toilet everything went into the aquatic environment.

From an EPA point of view we do not want those smaller areas left behind, because although they are small areas they have a lot of tourists. If I was to pick one, for example where I live in Wexford, there are playgrounds in Kilmore Quay adjacent to sites where there is raw sewage. We are keen that the job gets finished for the urban wastewater treatment directive. There is a greater list of 124, encompassing the small and the big. The whole preamble to the urban wastewater treatment directive was the protection of public health. In the case of urban wastewater there are 124 areas on the list.

The EPA has made a critical intervention. Much of the debate that we have had today is around compliance, and there is no doubt that the EPA is working in the interests of protecting human health and environment, especially with regard to water provision and water services. It is a message for our committee, and I do not mind putting it on the record, that irrespective of where we stand on the derogation debate we have a much larger obligation to human health. Leaving aside member state obligations aside, we have obligations to our citizens. Much of the debate today, if we are honest about it, has been about getting off the hook in terms of charges and in terms of derogation. What the EPA have outlined today is what the committee members should be focused on, and that is how we improve our environment, our water provision, and how they are sustained into the future with regards capital investment.

That is a very valuable point, Senator, and thank you for your contribution. I also thank the EPA for its contribution, which has been very helpful.

Mr. Conleth Bradley

Given Senator Coffey's last statement perhaps he wants to withdraw the legal question.

I would like to hear how Mr. Bradley thinks we can be compliant.

Mr. Conleth Bradley

Before one looks at Article 9.4 one has to have an understanding of what Article 9 is about. Article 9.4 is the derogation from Article 9. One must have an understanding of what the obligations are under Article 9. The European Court of Justice has said, and it is common case today, that charging per se is not the issue, because it has to be seen in a wider context. The European Court of Justice has said that if a member state has wide discretion they also have broader obligations. The management of the river basin comes into it. That is the context within which to look at this. We should sort out our understanding of Article 9 and then assess whether Article 9.4 kicks in. My understanding of article 9 is that it is not dispostive of the issue of water charging. I think that is the best way to look at it. Perhaps that is in ease of the Senator's previous statement as well.

Mr. Matthias Kelly

I agree with what Mr. Bradley is saying. There is a wide margin of appreciation. The question is whether Ireland can be compliant without water charges, and the answer is yes, provided that Ireland meets the objectives. One of the core objectives is to ensure a clean water supply. It is not prescriptive about how that is achieved or how the public finances are arranged to do that. It could be done through general taxation, as is the established practice and as is done, for example, to some extent in Scotland.

Mr. Kelly mentioned the words "established practice" and whether we are going to accept that or not. Does he believe that the established practice in Ireland heretofore has been successful, given the amount of compliance issues we have, and the failures and the breakdowns and the boil notices and the leaking of water of almost 50%? Does he think that the established practice is sustainable? That is a very critical point for this committee.

Mr. Matthias Kelly

Perhaps the Senator is speaking about a different established practice.

I am talking about the established practice of how we maintain our water services in this country. Given the argument that Mr. Kelly has made, is that sustainable in terms of providing adequate water supply, a clean environment and clean water?

Mr. Matthias Kelly

If, as Mr. O'Leary has pointed out to the Senator, practices are permitted to arise whereby sewage is discharged directly into the sea perhaps the enforcement should be looked at.

Is it the case that Mr. Kelly believes that the established practice has been successful but that enforcement has not been? Is that the case? I am quite confused. He is pointing the finger at enforcement but is saying that the established practice should continue in this country.

Mr. Matthias Kelly

I think we are at cross purposes. What I am saying is that in terms of what Mr. O'Leary was saying about sewage being discharged directly into the sea, the problem was, perhaps, a lack of proper enforcement to begin with.

That is a fair statement.

Mr. Matthias Kelly

I am not criticising the agency rather I am saying that is what has been happening and, perhaps, it ought to have been addressed earlier. The directive it is not hung-up nor is it prescriptive.

It is a legal argument, but it is not really sustainable in terms of our environmental responsibilities.

Mr. Matthias Kelly

If the Senator does not want me to answer, that is fine.

Mr. Gerard O'Leary

The directive came into force in 1991. We were given responsibility for drinking water and urban wastewater in 2008. In regard to drinking water, during that period, through an intervention funded by the Department of the Environment e.coli, has been reduced in public water supply by 90%. That intervention involved the putting in place of a chlorine monitoring alarm - which is approximately 7,000 for every public water supply - which was very difficult to do. Some of the issues that we are dealing with now, such as trihalomethanes, require serious investment. In regard to urban wastewater, every year we have published reports setting out where the issues are in relation to urban wastewater, to the point of frustration. The EPA is not the economic regulator. In our last report, for the first time after almost 20 years of publishing reports on urban wastewater, we mapped investment in our wastewater infrastructure. That report is publicly available. There has been a huge drop in investment in that area. With respect, enforcement is not the issue. We have prosecuted on four or five occasions where there have been breaches. Systematic failure leads to infringement cases by the European Commission, such as the one announced today. The information about which I am speaking dates back to 2013. It is information that we have made available to the general public. Again, with respect, the information has been available, and not only since yesterday or today. We can deal with situations of kit malfunction but in situations where a kit has not even been installed it is a funding issue.

Thank you. We need to move on.

Many of the core issues I wanted to raise have been addressed. However, I would like clarification on some points. Returning to the Scottish Water situation and a comment made earlier, which seemed to me to be enlightening in light of the Scottish Water's contribution to the committee, Scottish Water has the second most expensive water supply in Europe. It was indicated that there was an element of compliance in what Scottish Water was doing because cost recovery is built into its charge. It would appear to me, therefore, that in regard to a non-metered system to be in compliance with the directive a cost recovery component is essential. This is achieved by Scottish Water and, therefore, Scotland, by way of high charges for the supply of water to everybody. In other words, it is required to actively discriminate against people who could have lower water bills to ensure that cost recovery is built in to its charge. Perhaps the witnesses would confirm if my understanding of that is correct.

On established practice, which I appreciate has been dealt with in some detail already, my understanding is that if something is established practice it is possible to have a derogation on that basis, unless the State ends that practice. I am speaking about a sovereign state introducing legislation through its Parliament to change a practice. It was previously an established practice in this country not to pay equal wages to men and women but we ended that practice by way of legislation. Once a state has introduced legislation to change something it ceases to be established practice. We move on and effectively the derogation lapses. The references to proposals and so on were grossly misleading. We legislated to introduce charges and we levied them. The majority of people paid them. I presume, regardless of what percentage of people paid and so on, when a sovereign state, through its Parliament, ends an established practice then effectively the derogation lapses. That is my understanding of why established practice would not be possible in this context. The witnesses may put forward a technical legal argument in that regard but as I understand it that is why established practice has lapsed in this instance. I would also like the witnesses to respond on whether my view in this regard is correct.

I appreciate that any decision which initiates legal action or fines or charges against the Irish State will be, at the end of the day, a collective decision for the Commission. However, the witnesses, as people who have held senior positions within the Commission structure for many years, must have some indication or idea of the level of fines Ireland could expect to have levied on it if found to be in breach of the directive. In my estimation. the level of fine we could expect to have levied on us would be in the millions and there would be a daily recurring fine that would be very substantial as well. I appreciate that this will be adjudicated eventually by the European Court of Justice, with the Commission and the Irish State being the protagonists. In other instances, I have been no friend of how the Commission does its business. However, I believe that the opinion of witnesses, as Commission representatives, is valuable in this instance because it is not just another opinion but a real guide for us of the implications of what the Irish State could be facing. I would welcome if the witnesses could give us some type of indication as to the real costs might be in terms if Ireland were to fall foul of the directive.

Mr. Jorge Rodríguez Romero

I will address the question on Scotland and established practice and try to clarify the position. The Scottish system is very different from any other system in the EU of which I am aware. Under this system citizens receive a bill setting out the amount they are being charged for water, which money is paid directly to Scottish Water to enable it to operate water services to the level established by Scottish ministers and overseen by the regulator. This system is based on full cost recovery and as a result Scotland meets the requirements of the urban wastewater treatment directive and the drinking water directive 100%. This system is working for Scotland. Whatever the legalities in terms of the flexibility provided for under Article 9.1 or the de facto 9.4, this system works for Scotland. Ireland, given its situation, has to find a way to fund its water service to a level that is considered acceptable to society and the authorities, that is sustainable in the long term. The water framework directive provides the flexibility to adapt this system to the reality of the country.

We have insisted on this quite a number of times.

On the issue of established practice, if I understood the Deputy correctly, I agree with him. I will try to explain it again, because Deputy Healy-Rae also referred to the issue of whether we have changed our approach. I have tried to explain why we have not changed our approach and I will try to do it again, if the Chairman allows me. One of the conditions to apply Article 9.4 is that it is an established practice. An established practice at the time of adoption of the directive is taken over until the adoption of the river basin management plan in 2009. It is in that river basin management plan that the Commission receives the explanation of why the application of Article 9.4 would not prevent the member state from achieving the objectives of the directive. This has not been applied in Ireland because Ireland, in the river basin management plan, decided to go another route. However, this does not prevent Ireland from finding a way of providing a sustainable solution for its domestic water funding. It should not prevent the finding of a solution that is adequate to the situation in Ireland.

I will hand over to Mr. Ciobanu-Dordea for the last question.

Mr. Aurel Ciobanu-Dordea

We cannot venture into speculating about the amounts but it is clear that it will be a significant amount if the violation is sustained in time. It will be a significant amount and in the order of millions or perhaps more than millions. It could be tens of millions. One should pay attention again to the fact that this violation will be compounded by other violations that are more advanced such as those relating to the urban waste water treatment directive. The figures would be aggregated with other cases that are also related to malfunctions of the Irish system. In other words, if a clear and effective solution that is not expensive is identified - it does not have to be an expensive solution like the one in Scotland - and applied, this will bring enormous direct and indirect benefits to the public purse and the citizen. It will solve the problems, bring benefits to the consumers and it will also - these are the indirect benefits - avoid or spare Ireland huge fines.

Mr. McGowan wanted to come in. Then we will hear from Mr. Bradley.

Dr. Paul McGowan

I would like to refer to some of the previous points that were made and perhaps follow up on Mr. O'Leary's intervention on investment. It is important to remember that it is acknowledged that there has been an historic lack of investment in the water infrastructure and the intent behind the charging regime was to address it. As the economic regulator, we have to hold Irish Water to account to ensure that it delivers service improvements and reduces its costs at the same time. I reiterate my earlier point which was that the funding must be available and secure to do that. We cannot hold Irish Water to account for a five-year business plan if the basis for that business plan, which would be secure funding, is not available. I wanted to reiterate that point and to follow up on the points made by the EPA.

Mr. Conleth Bradley

Article 9.4 states:

Member States shall not ... breach ... this Directive if they decide in accordance with established practice not to apply the provisions of paragraph 1, second sentence, and for that purpose, the relevant provisions of paragraph 2, for a given water-use activity [for example, a household], where this does not compromise the purposes and the achievement of the objectives of [the] Directive.

We have to ask what are the objectives and the purpose of the directive. Colleagues from the Commission today have emphasised that it is about quality and not quantity and they have also emphasised the margin of appreciation that is given to member states. I respectfully suggest that paragraph 4 of Article 9 is not how the Commission categorise it but is as set out in the terms of the paragraph. The final sentence in the paragraph provides that "Member States shall report the reasons for not fully applying paragraph 1, second sentence, in the river basin management plans". That is where the reporting requirement comes in. The requirement is to report when the member state is going to derogate. The key phrase, in my respectful submission, is "the achievement of the objectives of [the] Directive".

I thank Mr. Bradley for that contribution. He can, of course, respectfully suggest it, but the point I would make is that it is his legal opinion. He obviously is entitled to give it, but the committee has to make a decision that will go to the Dáil and the Oireachtas for implementation. I believe we have to be much more conscious of the fact that, as a result of a decision that is politically expedient or anything else, we cannot put this State's finances at risk of tens of millions of euro in fines based on what might be an opinion or a decision. As a committee, we have a very serious body of work to do. We take it very seriously and are working on it every single week. However, it is vitally important that the view of the Commission, which would be the initial instigator of a possible levy, be given significant weight. The other opinions, legal or otherwise, which we receive from those who attend the committee are important. Fundamentally, however, we must take on board in our recommendations both what we want to see politically and what are the implications and risks to our nation.

That was a great wind-up to the meeting by the Deputy. I thank him very much. I also thank, in particular, the representatives from the European Commission for taking the time to attend. They can see that we have a big challenge and that we are taking it very seriously. As all the Deputies and Senators have said, we are incredibly committed to getting the best result we can for the Irish people, from a health point of view and every other way. We also want to ensure that everything we do is legal and that we do not cause any issues from that perspective. We appreciate big time the representatives coming here. I also thank those from the EPA, the Commission for Energy Regulation and the Department of Housing, Planning, Community and Local Government and, in particular, Mr. Kiely and Mr. Bradley for their contributions, which were much appreciated.

The joint committee adjourned at 4.20 p.m. until 12 noon on Tuesday, 22 February 2017.