Part 5: Water Section 88: Water abstraction: no compensation for certain licence modifications New section 61ZA No compensation where modification to protect environment: England
New section 61ZA provides that permanent abstraction licences in England only can be varied or revoked on or after 1 January 2028 without the payment of compensation if the Secretary of State is satisfied that the revocation or variation is necessary having regard to a relevant environmental objective; or to otherwise protect the water environment from damage. This section extends the circumstances in which a permanent abstraction licence can be varied or revoked without the payment of compensation to protect the environment. Section 27 of the Water Act 2003 permits the revocation or variation of a licence without the payment of compensation in order to protect from "serious damage" to the water environment.
	Subsection (1) sets out the circumstances where the section applies. Paragraph (a) sets out that the section applies to licences that are revoked or varied on or after 1 January 2028 pursuant to a direction made by the Secretary of State following a licence change proposal by the Environment Agency (section 54) or the owner of a fishing right affected by the licence (section 56). This date will allow time for the catchment-based approach to water resources to embed and produce solutions. (Defra proposed a stronger catchment focus following the catchment based approach in its Water Abstraction Plan , which involves working with abstractors and other local stakeholders to develop solutions to abstraction issues at a catchment level.) Paragraph (b) sets out the environmental reasons why a licence may be varied or revoked without paying compensation. These are that the Secretary of State is satisfied the change is needed in relation to "a relevant environmental objective" or "to otherwise protect the water environment from damage". The reference to ‘damage’ includes damage caused by low flow levels in a river due to unsustainable abstraction. Low flow levels could be a factor taken into account in a decision to revoke or vary an abstraction licence. (Subsections (2), (4) and (5) define the terms "relevant licence", "water environment" and "relevant environmental objective" respectively.)
	Subsection (2) defines the term "relevant licence" used in subsection (1)(a). A relevant licence is a licence (a) that allows abstraction in England only, and (b) that does not have a time-limit – that is, one that would remain in force indefinitely unless revoked, commonly known as a permanent licence. As a result, licences that allow abstraction in Wales and licences with a time-limit are not affected by the provisions.
	Subsection (3) provides that, where a licence is changed under this section, no compensation is payable under section 61 to the licence holder.
	Subsection (4) defines the term "water environment" used in subsection (1)(b)(ii). The water environment is any inland waters (including lakes, ponds, rivers or other watercourses with dry bottoms, channels or beds); any water contained in rocks underground (commonly known as groundwater); and the underground rocks themselves (commonly known as aquifers). It includes both natural and man-made features. It also refers to the plants and animals that are dependent on any of this water or these physical features.
	Subsection (5) defines the term "relevant environmental objective" used in subsection (1)(b)(i). A relevant environmental objective is an environmental objective as defined in the regulations that implemented the Water Framework Directive in England. In England, environmental objectives are set in relation to each water body in a river basin district by the Environment Agency, after public consultation, and approved by the Secretary of State. Environmental objectives include achieving compliance with protected area objectives, preventing any deterioration in the status of water bodies; and protecting, enhancing or restoring water bodies with the aim of achieving "good status". There are three pieces of secondary legislation that implemented the Water Framework Directive in England. There are separate regulations for the Solway Tweed River Basin District and the Northumbria River Basin District, which both span England and Scotland, and a further statutory instrument for all other River Basin Districts in England and Wales.