RFG response to new general approval and guidance for freight facility access contracts

(RFG comments are shown in italic)
Background  
4) Access contracts relating to access to and the provision of services at many freight facilities do not require ORR’s approval given the exemption provided from that requirement by The Railways (Class & Miscellaneous Exemptions) Order 1994. Where that exemption does not apply, access contracts will need approval from ORR. If they are not approved, they will be void.
 
It should be clarified whether, if a facility is not exempt under RCMEO is it now mandatory that a FOC must enter into an access contract with a facility owner? There appears to be some uncertainty on this.
 
Expansion from ports and terminals to all freight facilities 
 
5) Our Ports & Terminals GA provides our approval without requiring a specific application to us, of access contracts and amendments to them, under certain conditions, at such facilities. In light of applications we have received for our specific approval of access to sidings where our Ports & Terminals GA does not apply, we propose to introduce a new, wider-ranging, freight facility GA. We also need to revise it to take into account recent legislative changes. The new GA will replace the current Ports & Terminals GA. It will provide greater flexibility for freight facility owners and their customers to enter into access contracts at freight facilities, reducing the associated transaction costs and timescales.  
 
6) Light Maintenance Depots and Heavy Maintenance Depots are not in the scope of the proposed GA. Light Maintenance Depots have a different access regime and Heavy Maintenance Depots are outside the scope of the Railways Act 1993 (the Act).  
 
Although we support the aims of creating a wider GA including sidings, this creates a specific difficulty as several service providers at port and inland terminals provide static refuelling facilities for the use of FOCs. As such under current licencing regulations, they must hold an LMD licence or licence exemption. This conflicts with paragraph 6 above and must be clarified.
 
Proposed changes
 
7) We have also taken the opportunity to consider whether certain terms within the Ports & Terminals GA should be brought forward into the proposed GA. These are identified below and we explain our reasons for these changes. 
 
Duration of contracts  
 
8) We are considering whether freight facility access contracts approved under the proposed GA should be allowed to have long term durations. Currently, we allow for the duration of these contracts under our Ports & Terminals GA for up to five years. We took our lead for this maximum duration from provisions on the duration of framework agreements in The Railways Infrastructure (Access & Management) Regulations 2005. These Regulations are superseded by The Railways (Access, Management and Licensing of Railway Undertakings) Regulations 2016 (the 2016 Regulations).  
 
9) The 2016 Regulations create a distinction between Infrastructure Managers and service providers. Infrastructure Managers are bodies such as Network Rail Infrastructure Limited (Network Rail), HS1 and Crossrail. Regulation 21(1), (7), (8) and (9) of the 2016 Regulations relate to the duration of framework agreements between an Infrastructure Manager and an ‘applicant’ seeking infrastructure capacity. There is no similar restriction on freight facility access contracts between a service provider and its access beneficiaries, but we apply our existing policy of requiring justification for long term access contracts. 
 
10) Therefore we are proposing that longer contracts can be generally approved, with certain restrictions. There will be a limit of ten years and for contracts longer than five years there must be a corresponding track access contract with the Infrastructure Manager (in most cases that will be Network Rail) of the same or greater length of the freight facility access contract. This is to ensure that the parties have mainline network capacity for the services for the whole of the contract. This also allows ORR to retain our overview of longer access contracts through track access contracts we approve.  
 
Q1. Is the proposal to allow contracts of longer duration under the proposed GA suitable? If not, how long a duration should be allowed and why?  
We support this change.
 
Consultations 
 
11) We updated the provisions for consultations in the proposed GA to make it clearer and to refer to our established policy on track access consultations. While this policy refers to Network Rail’s obligations, it gives a framework for facility owners to use for their own consultations. 
We support this change.
 
Office of Rail and Road 
 
12) We have updated references to “Office of Rail Regulation” to “Office of Rail and Road” throughout the GA. This reflects our change of name, which came into effect in October 2015. 
Refinement of definitions 
 
13) Definitions given in the Interpretation clause as being the same as in the Network Code and model freight contracts have been removed to reduce the number of definitions in the GA itself. The new paragraph 4 states that all terms used which are defined in the Act, Network Code and model freight contracts have the same meaning in the GA. 
We support this change.
 
Explanatory notes 
14) We removed the explanatory notes as in our view, they did not add any value to the GA, and would expect applicants to refer to our guidance when using the GA. 
 
Redactions 
15) We have not included in our proposed GA a reference to confidentiality exclusions. We will consider any requested redactions to any and all contracts before placing them on our website and public register under section 71(2) of the Act. 
 
Q2. Do you have any comments on the other proposed changes to the GA, or any amendments we have not included which you think we should consider? 
 
Terms in freight facility access contracts
 
16) While there is no model contract for freight facility access contracts, we would expect such contracts to include standard access terms such as conditions precedent, expiry date, charging and performance regimes, a use-it-or-lose-it provision, and termination provisions for non-use.
 
17) We expect the same terms and conditions to be offered to all access beneficiaries at the same facility or for there to be good reasons where a service provider differs from that approach. Where agreement over terms of access and the provision of services cannot be reached between a service provider and a prospective access beneficiary, an application can be made to ORR under section 17 of the Railways Act 1993 (the Act) or, where the Act does not apply, regulation 32 of the 2016 Regulations. 
 
We support this approach, subject to a flexible and pragmatic approach being taken.  For example, performance regimes may not be enforced by facility operators, and if facilities are not close to capacity then certain provisions may not need to be expressed in detail.  
 
Proposed guidance module 
18) We have also taken this opportunity to consult on a new guidance module for freight facility access contracts, as we do not currently have guidance for such contracts. This guidance sets out how we will deal with applications for new contracts and amendments to existing contracts. 
 
The guidance module is a useful guide and covers the main points. The following comments have been received from users;


•There is still ongoing inconsistency in ORR terminology between Facility Access Contract and Facility Access Agreement
 
•Para 11. This seems to answer the question in paragraph 4 above in that “Operators are advised to enter into ORR approved facility access agreements”. The ORR does not state that they must enter…..
 
•Para 12. This is unwise see paragraph 6 above as terminals offering refuelling facilities offer this service as a minor part of their operation. A Facility Access Contract is far more appropriate and relevant than a Depot Access Contract in these circumstances. 
 
•Para 15. The matter of disputes is well made and is likely to be an unexpected cost for those entering into a new FAC. Only recently has the ADC commenced charging the levy to non-FOC service providers and this has only occurred for holders of FCTACs. Thus far the holders of FACs, despite reference to ADRR in the contracts, have not been required to pay the levy. This is likely to change.
 
Q3. Would the proposed guidance be useful to you when making an application or when considering the regulatory regime for your facility? Are there any changes or additions to the guidance you think we should consider?  
 
Business Impact assessment 
 
19) We are required to review the impact of any regulatory changes on businesses. We have included a short survey for consultees to help us assess the potential impact of these proposals on businesses. We also welcome any additional comments on how these proposals would affect your business.
 
No further comments.