Provisional text
OPINION OF ADVOCATE GENERAL
EMILIOU
delivered on 25 April 2024 (1)
Case C‑239/23
Karl und Georg Anwander GbR Güterverwaltung
v
Land Baden-Württemberg,
in the presence of:
Freistaat Bayern
(Request for a preliminary ruling from the Verwaltungsgericht Sigmaringen (Administrative Court of Sigmaringen, Germany))
(Reference for a preliminary ruling – Agriculture – Financing by the European Agricultural Fund for Rural Development (EAFRD) – Payments for areas facing natural or other specific constraints – Mountain areas – Compensatory allowance – Exclusion of payment for land in the neighbouring region in another administrative area)
I. Introduction
1. The beginning of 2024 will have been marked by demonstrations and blockades organised by farmers in several Member States of the European Union. (2) Although they were demanding conditions of fair competition between EU farmers and improved pay conditions, they were also denouncing a number of administrative delays preventing them from obtaining the promised aid in sufficient time, particularly under the common agricultural policy.
2. The present case is a further illustration of the practical difficulties that farmers may face.
3. Regulation (EU) No 1305/2013 (3) establishes a support scheme for rural development and provides that Member States may choose to compensate farmers whose land is in areas facing natural constraints. Although Germany has chosen to do so, determination of the conditions of eligibility and verification of compliance with them have been devolved to the Länder. Since none of the Länder are authorised to grant a payment for land which is not within the limits of its territory, each Land decides upon payment for the land within its territorial jurisdiction.
4. The situation appears somewhat Kafkaesque where, as in the main proceedings, although all the land of a farmer’s holding is eligible for payment of such compensation since it meets the substantive conditions laid down by each of the two Länder concerned, that farmer is prevented from obtaining compensation for the part of his or her land which is not in the Land of jurisdiction of the place of business of his or her holding, since an application for support can be made only in the Land in which the place of business of the holding is situated.
II. Legal framework
A. European Union law
1. Regulation No 1305/2013
5. Recitals 7, 9 and 26 of Regulation No 1305/2013 read as follows:
‘(7) In order to ensure the immediate start and efficient implementation of rural development programmes, support from the EAFRD should be based on the existence of administrative framework conditions that are sound. Member States should therefore assess the applicability and fulfilment of certain ex ante conditionalities. Each Member State should prepare either a national rural development programme for its entire territory or a set of regional programmes or both a national programme and a set of regional programmes. Each programme should identify a strategy for meeting targets in relation to the Union priorities for rural development and a selection of measures. Programming should comply with Union priorities for rural development, whilst at the same time adapting to national contexts and complementing the other Union policies, in particular the agricultural market policy, the cohesion policy and the common fisheries policy. Member States which opt for preparing a set of regional programmes should also be able to prepare a national framework, without a separate budgetary allocation, in order to facilitate co-ordination among the regions in addressing nation-wide challenges.
…
(9) Rural development programmes should identify the needs of the area covered and describe a coherent strategy to meet them in the light of the Union priorities for rural development. That strategy should be based on the setting of targets. The links between the needs identified, the targets set and the choice of measures selected to meet them should be established. Rural development programmes should also contain all the information required to assess their conformity with the requirements of this Regulation.
…
(26) In order to ensure the efficient use of Union funds and equal treatment for farmers across the Union, mountain areas and areas facing natural or other specific constraints should be defined in accordance with objective criteria. In the case of areas facing natural constraints, those criteria should be bio-physical and underpinned by robust scientific evidence. Transitional arrangements should be adopted in order to facilitate the phasing-out of payments in areas that, as a result of the application of these criteria, will no longer be considered to be areas facing natural constraints.’
6. Article 1(1) of that regulation provides:
‘This Regulation lays down general rules governing Union support for rural development, financed by the [EAFRD] and established by Regulation (EU) No 1306/2013 [of the European Parliament and of the Council of 17 December 2013 on the financing, management and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008 (OJ 2013 L 347, p.549)]. It sets out the objectives to which rural development policy is to contribute and the relevant Union priorities for rural development. It outlines the strategic context for rural development policy and defines the measures to be adopted in order to implement rural development policy. In addition, it lays down rules on programming, networking, management, monitoring and evaluation on the basis of responsibilities shared between the Member States and the Commission and rules to ensure coordination of the EAFRD with other Union instruments.’
7. Point 4(a) of the first paragraph of Article 5 of that regulation provides:
‘The achievement of the objectives of rural development, which contribute to the Europe 2020 strategy for smart, sustainable and inclusive growth, shall be pursued through the following six Union priorities for rural development, which reflect the relevant Thematic Objectives of the [Common Strategic Framework (CSF)]:
…
(4) restoring, preserving and enhancing ecosystems related to agriculture and forestry, with a focus on the following areas:
(a) restoring, preserving and enhancing biodiversity, including in Natura 2000 areas, and in areas facing natural or other specific constraints, and high nature value farming, as well as the state of European landscapes’.
8. Article 6(2) of the same regulation states:
‘A Member State may submit either a single programme for its entire territory or a set of regional programmes. Alternatively, in duly justified cases, it may submit a national programme and a set of regional programmes. If a Member State submits a national programme and a set of regional programmes, measures and/or types of operations shall be programmed either at national level, or at regional level, and coherence between the strategies of the national and regional programmes shall be ensured.’
9. Article 31(1) and (2) of Regulation No 1305/2013 provides:
‘1. Payments to farmers in mountain areas and other areas facing natural or other specific constraints shall be granted annually per hectare of agricultural area in order to compensate farmers for all or part of the additional costs and income foregone related to the constraints for agricultural production in the area concerned.
…
2. Payments shall be granted to farmers who undertake to pursue their farming activity in the areas designated pursuant to Article 32 and are active farmers within the meaning of Article 9 of Regulation [(EU) No 1307/2013 (4)], as applicable in the Member State concerned.’
10. Article 32 of Regulation No 1305/2013 is worded as follows:
‘1. Member States shall, on the basis of paragraphs 2, 3 and 4, designate areas eligible for payments provided for in Article 31 under the following categories:
(a) mountain areas;
(b) areas, other than mountain areas, facing significant natural constraints; and
(c) other areas affected by specific constraints.
2. In order to be eligible for payments under Article 31, mountain areas shall be characterized by a considerable limitation of the possibilities for using the land and by an appreciable increase in production costs due to:
(a) the existence, because of altitude, of very difficult climatic conditions, the effect of which is to substantially shorten the growing season;
(b) at a lower altitude, the presence over the greater part of the area in question of slopes too steep for the use of machinery or requiring the use of very expensive special equipment, or a combination of these two factors, where the constraints resulting from each taken separately are less acute but the combination of the two gives rise to … equivalent constraints.
…
3. In order to be eligible for payments under Article 31, areas, other than mountain areas, shall be considered to be facing significant natural constraints if, at least 60% of the agricultural area meets at least one of the criteria listed in Annex III at the threshold value indicated.
Compliance with those conditions shall be ensured at the level of local administrative units ("LAU 2" level) or at the level of a clearly delineated local unit which covers a single clear contiguous geographical area with a definable economic and administrative identity.
…’
2. Regulation No 1307/2013
11. Article 9(1) of Regulation No 1307/2013 states:
‘No direct payments shall be granted to natural or legal persons, or to groups of natural or legal persons, whose agricultural areas are mainly areas naturally kept in a state suitable for grazing or cultivation and who do not carry out on those areas the minimum activity defined by Member States in accordance with point (b) of Article 4(2).’
B. German law
1. Federal law
12. Paragraph 2 of the Verordnung über die Durchführung von Stützungsregelungen und des Integrierten Verwaltungs- und Kontrollsystems (Order on the implementation of support schemes and the Integrated Administration and Control System), of 24 February 2015, (5) provides:
‘1. Unless otherwise provided for by this Order or by Paragraph 1(1), points 4 to 6, the competent authorities of the Land under the law of that Land (the competent authorities of the Land) in which the farmer has his place of business have territorial competence for the purposes of implementing this Order and the provisions referred to in Paragraph 1(1).
2. The relevant place of business for the purposes of determining the competent Land authority is, subject to an assumption of competence pursuant to subparagraph 3, the place covered by the tax office responsible for assessing the farmer’s income tax. In the case of legal persons, groups of persons and estates, the competent authority is the Land authority in whose area their management is situated.
3. If the farmer has only one establishment and that establishment is situated in a Land other than the one in which he has his place of business, the Land authority in whose area the establishment is situated, may, in agreement with the Land authority with territorial competence under subparagraph 2 and with the farmer’s consent, assume responsibility for applying this Order; the place of business shall then be the place of establishment.
…’
2. Law of the Land Baden-Württemberg
13. Paragraph 1.1 of the Verwaltungsvorschrift des Ministeriums Ländlicher Raum zur Förderung landwirtschaftlicher Betriebe in Berggebieten und in bestimmten benachteiligten Gebieten (VwV Ausgleichszulage Landwirtschaft) (Administrative regulation of the Ministry of Rural Affairs on support for farms in mountain areas and in certain areas facing constraints) of 6 November 2019, (6) as amended by the Verwaltungsvorschrift (Administrative regulation) of 15 November 2021 (‘the VwV AZL’) (7) provides:
‘The objective of that support is to ensure the sustainable use of agricultural land through management in certain areas facing constraints (mountain areas, areas facing significant natural constraints, areas facing constraints for other specific reasons, except for mountain areas specified in the list of areas in force (see Paragraph 4 (of the VwV AZL)), and thereby contribute to the conservation of the landscape and to the maintenance and promotion of sustainable management measures.’
14. Paragraph 2.1 of the VwV AZL provides:
‘Only active farmers within the meaning of Article 9 of Regulation [No 1307/2013] who themselves manage land in Baden-Württemberg in newly defined areas facing constraints, are eligible for support. Aid can be granted only to farmers whose place of business within the meaning of Paragraph 2 of the InVeKoSV, is situated in Baden-Württemberg and whose place of business is in an EU Member State.’
15. Under Paragraph 3.2.1 of the VwV AZL:
‘Compensation is granted only for land in newly defined eligible areas of Baden-Württemberg (see Paragraph 4.2).’
16. Paragraph 4.2 of the VwV AZL provides:
‘The following categories of area (areas facing constraints) are entered in the list of areas … and are relevant:
- mountain areas,
- areas other than mountain areas facing significant natural constraints,
- other areas facing specific constraints.’
3. Law of the Land of Bavaria
17. The Richtlinie des Bayerischen Staatsministeriums für Ernährung, Landwirtschaft und Forsten zur Gewährung der Ausgleichszulage in benachteiligten Gebieten (AGZ) gemäß Verordnung (EU) Nr. 1305/2013 (Directive of the Bavarian State Ministry of Food, Agriculture and Forestry on the grant of the compensatory allowance in areas facing constraints pursuant to Regulation No 1305/2013) of 1 March 2019 (‘the AGZ’) (8) provides that a compensatory allowance may be allocated to Bavarian agricultural land facing constraints. In order to be eligible for the aid, farmers must manage agricultural land facing constraints in Bavaria with an area of at least three hectares and have their place of business in Bavaria.
III. Background to the dispute, the main proceedings and the questions referred for a preliminary ruling
18. Karl und Georg Anwander Güterverwaltung, the applicant in the main proceedings, is a dairy farming operation in the border area between the Land Baden-Württemberg and the Land of Bavaria in Germany. Its place of business is in the Land Baden-Württemberg. It has about 100 hectares in that Land and about 27 hectares of its holding in Bavaria. All of that land is situated in a mountain area.
19. The authorities of the Land Baden-Württemberg have classified the 100 hectares of the holding of the applicant in the main proceedings in the territory of that Land as land eligible for payment of a compensatory allowance because of the natural constraints faced by that land. The authorities of the Land of Bavaria have done likewise in respect of the 27 hectares of that holding situated in Bavaria.
20. Until 2018, the applicant in the main proceedings obtained the payment of the compensatory allowance from the competent authority of the Land Baden-Württemberg for all the land in its possession, including, therefore, the land situated in Bavaria.
21. On 8 May 2019, the applicant in the main proceedings applied to that authority for a compensatory allowance for 2019 for all its eligible land.
22. On 5 December 2019, the administrative services of the Land Baden-Württemberg granted to the applicant in the main proceedings a compensatory allowance of EUR 4 095.66 for the eligible land situated in that Land and rejected the application in respect of the land situated in Bavaria on the ground that it was not in Baden-Württemberg.
23. By decision of 11 May 2021, the Regierungspräsidium Tübingen (Tübingen regional authority, Germany) dismissed the appeal lodged by the applicant in the main proceedings against the decision of 5 December 2019.
24. On 17 June 2021, the applicant in the main proceedings brought an action before the referring court seeking, first, annulment of the decision of 5 December 2019, as upheld by the decision of 11 May 2021 and, second, grant of a compensatory allowance of EUR 1 371.26 for the eligible land in Bavaria. In the alternative, it seeks a declaration that the rejection of its application for support for that land and the underlying legal bases of the rejection (9) infringe Articles 31 and 32 of Regulation No 1305/2013.
25. The referring court has doubts, first of all, as to the interpretation of those two articles and the extent of the margin of discretion available to the Member States as regards the conditions for granting compensatory allowances such as those requested by the applicant in the main proceedings.
26. The referring court states, first, that a large number of subsidies are granted by various subdivisions of the Federal Republic of Germany or other holders of public authority in Germany by means of ‘administrative provisions’ addressed to the officials and collaborators of the administrative entity concerned, who establish the scope of the discretion afforded to that entity. Under national law, citizens cannot rely directly against the State on the rules contained in those administrative provisions, since they are not regarded as producing an external effect in respect of citizens. (10)
27. The referring court goes on to state that the substantive and procedural conditions for granting payments for areas facing natural constraints laid down in Article 31 of Regulation No 1305/2013 are governed by the administrative provisions of the Ministerium für Ländlichen Raum und Verbraucherschutz (Ministry for Rural Areas and Consumer Protection) of the Land Baden-Württemberg. It follows that, for an applicant to be eligible for such payments, it must have its place of business (11) in Baden-Württemberg, and the land in respect of which the compensatory allowance is requested must be in Baden-Württemberg and be designated by that Land as an area facing constraints. An application for support can be submitted only in the Land in which the applicant’s place of business is situated. Since the German administrative authorities compare the data in the various applications used by the Länder in order to check that the applicant has not already submitted an application for a compensatory allowance elsewhere, it is not possible to submit more than one application for support in different Länder. Such an application can be submitted only in the Land where the place of business is situated.
28. The referring court further states that it follows from the administrative practice of the Land of Bavaria, as regards the decisions to grant a compensatory allowance, that, in order to be eligible for such an allowance, the applicant must have its place of business in that Land and the land for which the allowance is requested, which must have been recognised by that Land as facing natural constraints, must also be in Bavaria. Therefore, an applicant whose land is in the territory of two Länder can only submit an application to the Land in which it has its place of business. The Bavarian administrative courts have already held that such a situation was not contrary to EU law, since no direct entitlement to the grant of a compensatory allowance by the competent authority of the Land results from Regulation No 1305/2013, and that that authority could therefore determine the procedure for granting the allowance and exclude from support land outside Bavaria. (12)
29. Thus, the applicant in the main proceedings finds itself in the following situation. Although it has land in two Länder and each of those Länder has designated that land as areas eligible for the grant of a compensatory allowance, the applicant in the main proceedings can only apply for the grant of such an allowance (1) in the Land in which it has its place of business and (2) only for land in that Land. As the regulations and administrative practices currently stand, the applicant cannot receive compensatory allowances from the Land Baden-Württemberg for its land in Bavaria and it cannot submit an application for such an allowance for that land in Bavaria.
30. The referring court is uncertain, first, as to the extent of the margin of discretion which EU law gives to the Member States when they determine the rules for granting support measures to farmers, in particular in a situation such as that at issue in the main proceedings which involves land situated in two areas falling within the competence of distinct local administrative authorities. Second, the referring court harbours doubts as to whether, where a Member State or region of it provides for the possibility of granting a compensatory allowance, a payment entitlement can be derived from Article 31(1) of Regulation No 1305/2013 which the citizen concerned can rely on. Third, the referring court states that the administrative provisions on which the support policy of each Land is based cannot be relied on directly by citizens and only the practice of the administrative authorities is binding in respect of those citizens. However, the possibility of contesting such a practice is limited only to reliance on the constitutionally guaranteed principle of equal treatment. In the event that Regulation No 1305/2013 does not establish a payment entitlement, that court asks whether Article 31(1) of that regulation determines the, according to its terms, ‘legal status’ of the measures adopted by the Member State, or by the region which decided to grant a compensatory allowance, establishing the conditions of eligibility for it.
31. In those circumstances, the Verwaltungsgericht Sigmaringen (Administrative Court, Sigmaringen, Germany) decided to stay the proceedings and, by order lodged at the Registry of the Court of Justice on 17 April 2023, to refer the following questions to the Court of Justice for a preliminary ruling:
‘(1) Is a national administrative regulation and support practice whereby the payment of a compensatory allowance for land in mountain areas and certain areas facing constraints is precluded solely because the land to be supported by the compensatory allowance is outside the region of the Member State, within the meaning of point (b) of the second subparagraph of Article 2(1) of Regulation [No 1305/2013], that grants the compensatory allowance compatible with the first subparagraph of Article 31(1), Article 31(2), Article 32(1)(a), the first subparagraph of Article 32(2) and the second and third subparagraphs of Article 32(3) of [that regulation]? Is the place of business of the farmer managing the land a permissible criterion for differentiation in that regard?
(2) Is the first subparagraph of Article 31(1) of Regulation [No 1305/2013] to be interpreted as meaning that the rules of a Member State or a region of the Member State which has decided to grant payments to farmers in mountain areas and other areas facing constraints, within the meaning of Article 31(1) of [that regulation], must be defined in such a way that the payment must also be granted in respect of land that has been classified as a mountain area or other area facing constraints, within the meaning of Article 32(1) of [that regulation], by another Member State or another region of the same Member State which has also decided to grant payments to farmers in mountain areas and other areas facing constraints within the meaning of Article 31(1) of [the regulation]?
(3) Are the first subparagraph of Article 31(1) and Article 31(2) of Regulation [No 1305/2013] to be interpreted as meaning that, in principle, a farmer derives directly from those provisions an entitlement under EU law to the grant of the payment (compensatory allowance) by the Member State or the region of the Member State if the farmer is an active farmer and manages land which has been classified as a mountain area or other area facing constraints, within the meaning of Article 32(1) of [that regulation], by the Member State or the region of the Member State and the Member State concerned or the region thereof has decided to grant payments (compensatory allowances) within the meaning of the first subparagraph of Article 31(1) of [the regulation]?
If that question is answered in the affirmative:
(a) Against whom is the entitlement under EU law derived from Article 31(1) of Regulation [No 1305/2013] directed? Is it always directed against the Member State itself or, in any event, against the region (point (b) of the second subparagraph of Article 2(1) of [that regulation]) of the Member State if the region has decided, independently of the Member State, to grant compensatory allowances to farmers pursuant to Article 31 of [the regulation]?
(b) Does the entitlement under EU law require, in principle, that the farmer meets further requirements in excess of those laid down in the first subparagraph of Article 31(1) and Article 31(2) of Regulation [No 1305/2013], which are stipulated by the Member State granting the compensatory allowance or the region thereof in its national implementing measures?
If Question 3 is answered in the negative:
(4) Is the first subparagraph of Article 31(1) of Regulation [No 1305/2013] to be interpreted as meaning that the rules of a Member State or one of its regions laying down the conditions for the grant of the payment (compensatory allowance) within the meaning of the first subparagraph of Article 31(1) of [that regulation] must have such legal status that farmers are entitled to the grant of the payment (compensatory allowance) if they meet the conditions for payment laid down by the Member State in question or the regions thereof, irrespective of the actual support practice of the Member State or the region thereof?’
32. Written observations were submitted by the applicant in the main proceedings, the Land Baden-Württemberg, the Land of Bavaria and the European Commission.
IV. Analysis
33. Before answering the questions for a preliminary ruling, I shall examine, briefly, the scheme established by Regulation No 1305/2013 for areas facing natural constraints such as mountain areas (A). I shall then answer the first two questions for a preliminary ruling which I shall address together (B). I shall conclude the analysis by my proposed answer to the third question (C), before setting out the reasons why, in my view, the fourth question does not require an answer (D).
A. The scheme established by Regulation No 1305/2013 for areas facing natural constraints
34. Regulation No 1305/2013 lays down general rules governing EU support for rural development financed by the EAFRD and sets out the objectives to which rural development policy is to contribute and the relevant Union priorities for rural development.(13)
35. That regulation also lays down rules on programming (14) ‘on the basis of responsibilities shared between the Member States and the Commission’. (15) EAFRD support is sought for the achievement of the objectives of rural development pursued through those priorities (16) by means of rural development support programmes defined by the Member States (17) implementing a strategy to meet the EU priorities as defined in Regulation No 1305/2013 through a set of measures defined in Title III of that regulation.
36. Those measures include payments to areas facing natural or other specific constraints. (18) Those payments contribute to the achievement of the EU priority for sustainable development consisting in ‘restoring, preserving and enhancing biodiversity’. (19) Regulation No 1305/2013 provides that those payments will be granted annually per hectare of agricultural area to farmers in such areas in order to ‘compensate farmers for all or part of the additional costs and income foregone related to the constraints for agricultural production in the area concerned’. (20) Payments are granted to farmers who are ‘active’ (21) and who undertake to pursue their farming activity in the areas designated pursuant to Article 32 of that regulation. (22) The regulation then fixes payments between minimum and maximum amounts (23) and provides for the possibility for the Member States of increasing them in certain cases (24) or of providing for their degressivity. (25) In principle, the eligibility of expenditure is determined on the basis of national rules. (26)
37. The designation by the Member States of land as being located in areas facing natural constraints and other specific constraints follows the principles laid down in Article 32 of Regulation No 1305/2013. It is apparent from those principles, in essence, that the designated mountain areas are characterised by ‘a considerable limitation of the possibilities for using the land and by an appreciable increase in production costs’. (27) In order to ensure the efficient use of EU funds supporting the action of Member States and equal treatment, those areas should be defined on the basis of objective criteria which are bio-physical and underpinned by robust scientific evidence. (28)
38. Therefore, Regulation No 1305/2013 undeniably leaves a wide margin of discretion to the Member States as to whether they wish to include in their programmes a compensation mechanism for farmers (29) whose land is in areas facing natural constraints and as to the arrangements for implementing the aid for which they provide (30) – whether they concern, for example, the specific implementation of the limitations in that regulation (such as the size of eligible holdings or their location), the amount of the aid or documentation requirements. (31)
39. Nonetheless, that wide margin of discretion is circumscribed, as I shall explain in the following sections.
B. The first and second questions referred
40. The referring court asks the Court, in essence, whether a situation in which a regional authority can limit the entitlement to payment of a compensatory allowance only to the eligible land of a farmer’s holding which is in the territory of the region where the place of business of that holding is situated is compatible with Articles 31 and 32 of that regulation (first question). The referring court also asks whether Articles 31 and 32 of Regulation No 1305/2013 require the authorities of a region to grant the payment for the land of that holding which has been designated as eligible for payment of a compensatory allowance by the authorities of another region in the territory of which that land is situated (second question).
41. Thus, the first two questions referred, which I propose to consider together, raise, by implication, the question whether the wide margin of discretion just described can justify a situation in which, although a Member State and its regions have provided, in their rural development programmes, for the possibility of granting payments pursuant to Article 31 of Regulation No 1305/2013 and although the implementation of that plan is, at least in part, delegated to the regional level under the authority of the Länder, an active farmer can apply for compensation only for eligible land in the Land in which the farmer has established his or her place of business, thereby excluding any possibility of compensation for that farmer’s land in the territory of another Land, even though that land is regarded by that other Land as eligible for such payments.
42. It is apparent from the request for a preliminary ruling that the Land Baden-Württemberg (32) gave a detailed description of the support programmes which it planned to adopt, in particular as regards compensatory allowances, in a Measures and Development Plan for Rural Areas in Baden-Württemberg 2014-2020 which was approved by the Commission. (33) The Land Baden-Württemberg explains that the amount of the payment is specific to the Land and cannot be transferred without further amendment to the land of other Länder with the same classification. Such an approach is also required in the context of the federal structure of Germany, since the Länder responsible for drawing up the national framework plan must be able to ensure that the aid procedure is conducted properly within their respective competences. The powers of the Land Baden-Württemberg are therefore limited to the territory of that Land. The practical organisation of support through the grant of compensatory allowances falls within the discretion of the Member States.
43. I shall examine, in the first place, whether the authorities of the Land Baden-Württemberg are competent to grant the compensatory allowance for the agricultural land of the applicant in the main proceedings in Bavaria.
44. I note at the outset that the fact that a Member State, by virtue of its internal organisation and structure, delegates to regional entities the power to decide to grant a compensatory allowance under the conditions laid down in Regulation No 1305/2013 cannot, quite clearly, be called into question, since the federal structure of the Member State concerned is an integral part of its national identity which the European Union is required to respect in accordance with Article 4(2) TEU. (34) Moreover, Regulation No 1305/2013 explicitly assigns the task of ensuring compliance with the conditions laid down in the first subparagraph of Article 32(3) of that regulation either to ‘local administrative units’, (35) or to clearly delineated local units which cover a single clear contiguous geographical area with a definable economic and administrative identity.(36) The EU legislature thereby encourages the level of implementation of the plan and of the decision-making on the grant of the payments provided for in Article 31 of that regulation to be as close as possible to the farmers concerned.
45. I would add that the designation of areas eligible for payments provided for in that Article 31 is not based solely on a purely geographical or topographical classification, but may necessitate the exercise of discretion in the light of specific regional circumstances.
46. The Member States are required to fine-tune that classification by excluding, for example, areas which, geographically, face significant natural constraints which have been overcome ‘by investments or by, economic activity, or by evidence of normal land productivity, or in which production methods or farming systems have offset the income loss or added costs’. (37) It is therefore quite conceivable that such discretion can be exercised more effectively at the regulatory and administrative level closest to the area concerned.
47. As the Land Baden-Württemberg explains in its observations, the principle of regulatory autonomy granted to the federal entities has the consequence that the criteria for classification of land in areas eligible for the payments provided for in Article 31 of Regulation No 1305/2013 may be assessed differently depending on the Land concerned and that land classified as a ‘mountain area’ by the Land of Bavaria may not meet the criteria adopted by the Land Baden-Württemberg. (38)
48. Each Land, first, assesses the appropriateness of providing for compensatory allowances pursuant to Article 31 of Regulation No 1305/2013, second, determines the conditions of eligibility in its territory and the amount of the payments per hectare of mountain area, which may therefore vary from one Land to another, and, finally, designates the areas concerned. Each Land thereby exercises, within the limits of its territorial sovereignty and financial autonomy, the discretion afforded by Articles 31 and 32 of that regulation for their implementation.
49. In such a situation, obliging the Baden-Württemberg authorities to pay the compensatory allowance to the applicant in the main proceedings for its agricultural land in Bavaria would raise, amongst other things, the question of determining the amount of that allowance and would infringe the principle of the division of powers within the German legal system.
50. For all those reasons, it follows from my reading of Regulation No 1305/2013 and, in particular, from the role that it assigns to regional authorities in planning for rural development and for the implementation and monitoring of the measures decided in the plans, at whatever level, that the first subparagraph of Article 31(1), Article 31(2), Article 32(1)(a), the first subparagraph of Article 32(2) and the second and third subparagraphs of Article 32(3) of that regulation must be interpreted as meaning that they do not preclude legislation which limits the power of the nationally designated regional authority to decide whether to grant the payments provided for in those provisions only to land falling within its regulatory competence.
51. It is necessary to examine, in the second place, the question of the criterion of the farm’s place of business as a factor limiting the territorial scope of the entitlement to payment of the compensatory allowance.
52. Although, as stated above, the EU legislature was concerned to respect the full competence of the Member States to designate the entities competent to grant the payments provided for in Article 31 of Regulation No 1305/2013, it also clearly required that an active farmer must be able to apply for the compensatory allowance provided for in respect of any area designated as eligible.
53. First, it is clear from the wording of Article 31 of Regulation No 1305/2013 that ‘payments to farmers […] shall be granted annually per hectare of agricultural area’ (39) (paragraph 1) and that ‘payments shall be granted to farmers who undertake to pursue their farming activity […] and are active’ (paragraph 2). (40) Accordingly, there is nothing to indicate that the EU legislature envisaged that certain areas which meet the conditions defined in that regulation cannot receive the relevant amount, where it is provided for. Second, limiting the payment only to areas falling within the competence of the Land in which the place of business is situated undermines the objective pursued by Regulation No 1305/2013, since the aid provided for areas facing natural constraints is in response to a EU priority for rural development. (41) Finally, the fact the farming of eligible areas cannot give rise to a compensatory allowance in circumstances such as those in the main proceedings also calls into question the coherence between the strategies of the national and regional programmes required by Regulation No 1305/2013. (42)
54. It would therefore be contrary to the intention of the EU legislature and to the objective pursued by Regulation No 1305/2013 to consider that that regulation does not preclude a national organisation of the conditions for granting the compensatory allowance provided for in article 31 of that regulation which has the effect of excluding part of the land otherwise perfectly eligible for those allowances, on the sole ground that the land is not exclusively in a contiguous geographical area falling within the competence of a single regional administrative authority. As the referring court states, the applicant in the main proceedings is unable to submit an application for support for its land in Bavaria, (43) since such an application can be made only to the authorities of the Land in which the place of business is situated and those authorities do not have competence in respect of the land situated outside that Land. Only a partial entitlement to payment is guaranteed. That is not provided for either by the letter or the spirit of Regulation No 1305/2013.
55. It is one thing to consider that the authorities of the Land Baden-Württemberg can be required to grant a payment pursuant to Article 31 of Regulation No 1305/2013, subject to compliance with the conditions laid down for that purpose in that regulation, only for land in the territory of that Land, and therefore falling within its competence.
56. It would be another thing to consider a situation where the location of the place of business alone determines the territorial scope of the payment entitlement and where such a right is excluded for the land of that same business which is not in the territory of the same regional administrative authority as the place of business to be compatible with Regulation No 1305/2013, even though that land meets all the conditions laid down in that regulation for eligibility for such a payment.
57. Where a Member State, where appropriate through its regions, chooses, in its rural development programme, to support it inter alia through the introduction of payments for areas facing natural constraints, it cannot, in exercising the margin of discretion which is, moreover, afforded to it, (44) set aside the conditions exhaustively laid down in Regulation No 1305/2013 consisting, first, in the designation of the area concerned as being eligible by virtue of its natural configuration and the constraints for agricultural production which such a configuration causes (Article 31(1) of that regulation, as specified in Article 32) and, second, in the farmer’s active status (45) (Article 31(2) of that regulation). Limiting the entitlement to payment for agricultural land in the territory of the Land of the place of business therefore adds a condition not laid down in Regulation No 1305/2013. That new condition, which is unrelated to the bio-physical criteria underpinned by scientific evidence advocated by the EU legislature, (46) directly undermines, as the Commission has pointed out, the effectiveness of the compensatory allowances provided for in that regulation for areas facing constraints, (47) which – I must reiterate – serve a specific rural development objective and one of the EU’s priorities. (48) The application of such a condition means that, as in the case in the main proceedings, land which meets all the conditions laid down in Regulation No 1305/2013 – in respect of which a regional authority has therefore established that it has all the characteristics required for eligibility for the allowance mechanism – are purely and simply excluded from the payment entitlement.
58. Since, in the situation in question in the main proceedings, it is common ground that the applicant’s land in Bavaria meets the conditions laid down in that Land for eligibility to a compensatory allowance under Articles 31 and 32 of Regulation No 1305/2013, it must be stated that those provisions preclude the place of business criterion from being used as a factor limiting the entitlement to payment of the compensatory allowance only for land located in the Land of the place of business.
59. In the light of the foregoing considerations, I propose that the Court’s answer to the first two questions for a preliminary ruling be that Articles 31 and 32 of Regulation No 1305/2013 must be interpreted as meaning that (1) they do not preclude legislation which limit the power of the nationally designated regional authority to decide whether to grant the payments provided for in those provisions only to agricultural land falling within its regulatory competence, and (2) they preclude national legislation which, by providing that only land designated as eligible by the Land in which the place of business of the active farmer concerned is located, may give rise to payment of the compensatory allowance, excludes any possibility of payment for the land of that business which has been declared eligible by another Land.
C. The third question referred
60. In essence, the referring court asks the Court whether Articles 31 and 32 of Regulation No 1305/2013 establish an active farmer’s entitlement to payment in respect of land situated in areas facing natural constraints within the meaning of those provisions where the Member State or the region concerned has chosen to introduce such a payment in its rural development plan and has designated that land as eligible for such a payment. If such an entitlement exists, the referring court also asks, first, before which authority the farmer can assert his or her right and, second, whether that right may be subject to further conditions in excess of those laid down in Regulation No 1305/2013.
61. The answer to that question can already be inferred, at least in part, from the developments in the analysis of the first two questions referred. Those parts of the answer must be supplemented by returning to the nature of Regulation No 1305/2013.
62. I would recall that it follows from Article 288 TFEU that a regulation is binding in its entirety and directly applicable in all Member States. Although, by virtue of the very nature of regulations and of their function in the system of sources of EU law, the provisions of regulations generally have immediate effect in the national legal systems, without the need for the national authorities to adopt implementing measures, some of their provisions may nevertheless require, for their application, the adoption of implementing measures by the Member States. (49) Member States may adopt implementing measures, subject to three conditions: (1) they must not obstruct the direct applicability of the regulation – which therefore remains – (2) they must not conceal its nature as an act of EU law and (3) they must limit themselves to specifying that they are acting in exercise of a discretion conferred on them under the regulation in question and that they adhere to the parameters laid down thereunder.(50)
63. Reference must be made to the relevant provisions of the regulation concerned, as interpreted in the light of the objectives pursued, in order to determine whether they prohibit, require or allow Member States to adopt certain implementing measures and, if that is the case, whether the measure concerned comes within the scope of the discretion that each Member State is recognised as having (51) Moreover, although certain implementing measures adopted by Member States are permitted, such implementation of EU law is subject, under Article 51(1) of the Charter of Fundamental Rights of the European Union, to compliance with the provisions of the Charter. Likewise, Member States are required to observe the general principles of EU law. (52)
64. However, it should not be necessary, in my view, to go so far when examining the procedures for exercising the discretion afforded to the German federal authorities, since the scheme applicable to areas facing natural constraints does not allow the Member States to adopt an implementing measure such as the one at issue in the main proceedings, which results in the limitation of an active farmer’s entitlement to payment only for eligible land in the territory of the Land of the place of business.
65. As regards Articles 31 and 32 of Regulation No 1305/2013, I have already stated, in connection with the first of them, that the payments intended for farmers ‘are granted’ to active farmers who undertake to pursue their farming activity in the designated areas, in order to compensate them for all or part of the additional costs and income foregone related to those constraints for agricultural production. The fact that the payments are granted to farmers who undertake to pursue their farming activity in the designated areas under Article 32 of that regulation and who are active follows unequivocally from Article 31(2) of that regulation.
66. The discretion of the Member States may be exercised, primarily, by choosing whether to include specific aid for areas facing natural constraints in their national programmes. Then, once that choice has been made, the Member States may also exercise their discretion, and therefore adopt implementing measures within the meaning of the case-law stated in points 62 and 63 of this Opinion, in calculating the additional costs and income foregone (second subparagraph of Article 31(1) of Regulation No 1305/2013), which the Member States may also differentiate (third subparagraph of Article 31(1) of that regulation). Likewise, the EU legislature has provided that the amount of the payments will be left to the discretion of the Member States between a minimum and maximum amount fixed by it and that they may apply degressivity (Article 31(3) and (4) of that regulation). As regards the designation of areas, the Member States will be called upon to assess the considerable limitation of the possibilities for using the land and the appreciable increase in production costs and to determine that that limitation and that increase are the result either of difficult climatic conditions linked to altitude, the effect of which is to substantially shorten the growing season, or of steep slopes making the use of machinery impossible or expensive (Article 32(2) of that regulation).
67. Therefore, although the choice of whether to opt for payments for areas facing natural constraints falls within the discretion of the Member States, once that choice has been made, it clearly follows, in my view, that the payment entitlement comes into being once the conditions laid down in Article 31(2) of Regulation No 1305/2013 have been met.
68. However, an implementing measure such as that adopted at federal level (53) and at regional levels exceeds the discretion afforded to the Member States in Regulation No 1305/2013 by not ensuring a payment entitlement for all the eligible land (54) of an active farmer and appears to me to run counter to the intention expressed by the EU legislature through that provision. (55)
69. Finally, I fail to see, as the Commission points out and, unless it were to be accepted that respect for the principle of equal treatment would be infringed, how the discretion which the Member States or their regions have in drawing up a programme may also confer on them the power not to grant a payment to active farmers requesting it, when such a payment is provided for in their rural development programme for areas which those States or regions have themselves designated as eligible land.
70. As to the question against whom the entitlement derived from Articles 31 and 32 of Regulation No 1305/2013 must be directed, the referring court, which is responsible for adjudicating on the legality of the decision at issue in the main proceedings rejecting the request for payment of the applicant in the main proceedings in respect of the eligible land situated in Bavaria, appears to me to be seeking confirmation that EU law did not require the competent authorities of the Land Baden-Württemberg to grant such a payment. That issue partly overlaps with that examined previously and I therefore refer to point 43 et seq. of this Opinion.
71. I would add that Regulation No 1305/2013 does not lay down rules determining with which authority a farmer may assert his or her payment entitlement. Since the procedure whereby a payment under Article 31 of that regulation is granted is not governed by that regulation, it is for the Member States to organise that procedure in accordance with the principle of procedural autonomy, on condition, however, that that procedure is not less favourable than that governing similar domestic situations (principle of equivalence) and that it does not make it excessively difficult or impossible in practice to exercise the rights conferred by the EU legal order (principle of effectiveness). (56)
72. It is therefore for national law to determine the entity before which an active farmer may assert his or her entitlement to payment for each part of his or her land which has been designated as eligible for that payment.
73. The principle of effectiveness does not require the payment entitlement to be claimed from a public authority which did not include in its programme such assistance for areas facing natural constraints or which, while having included such assistance, did not designate the land as eligible for payment, because, for example, of the assessment which it conducted as to the criteria required by Regulation No 1305/2013 or, as in the present case, because it does not fall within its territorial competence.
74. Nonetheless, once the entitlement comes into being, in respect of active farmers, from the time when the locally competent authority has decided, as part of the rural development programming, to implement measures provided for in Articles 31 and 32 of Regulation No 1305/2013 and has designated the areas concerned, the national legal remedies must be organised in compliance with the requirements stated in point 71 of this Opinion, in such a way as to enable those farmers to effectively assert their entitlement to payment for all the eligible land. (57) I also agree with the Commission that the application for payment may be subject to other conditions, provided that they are objective and not discriminatory and do not jeopardise the effectiveness of the payment entitlement. (58)
D. The fourth question referred
75. The referring court asks the Court, finally, whether the first subparagraph of Article 31(1) of Regulation No 1305/2013 is to be interpreted as meaning that the rules of a Member State or one of its regions laying down the conditions for the grant of the payment must have such ‘legal status’ that farmers are entitled to the grant of the payment (compensatory allowance) if they meet those conditions, irrespective of the actual support practice of the Member State or the region thereof.
76. The meaning of that question is, in part, clarified by the explanations of the referring court, which states that the administrative provisions on which the support policy of each Land is based cannot be relied on directly by citizens and only the practice of the administrative authorities is binding on those citizens. The possibility of contesting such a practice is, however, limited only to reliance on the constitutionally guaranteed principle of equal treatment. If Regulation No 1305/2013 does not establish a payment entitlement, that court asks whether Article 31(1) of that regulation determines, in its words, the ‘legal status’ required of the measures adopted by the Member State or the region which decided to grant a compensatory allowance laying down the conditions of eligibility for the allowance. It is apparent from the request for a preliminary ruling that that question is addressed to the Court only if the referring court were to grant the request of the applicant in the main proceedings regarding its land in Bavaria. (59)
77. Having regard to the answer which I propose should be given to the third question and since that fourth question is worded in the event that no entitlement to payment can be derived from Articles 31 and 32 of Regulation No 1305/2013, the Court should not be called upon to answer that question.
78. Even if the Court were to answer the third question in the negative, an answer to the fourth question referred is not, in my view, useful for the resolution of the dispute in the main proceedings. The referring court starts from the principle that the current support practice of the Land Baden-Württemberg is unlawful because of the ministry’s administrative provision and the manner in which the eligibility criteria are drawn up in it, which exclude any possibility of payment for land located in Bavaria. Since it is clear from my analysis of the first two questions for a preliminary ruling that EU law cannot require the authorities of the Land Baden-Württemberg to pay for the land situated in Bavaria and designated as eligible by the Bavarian authorities, the answer which the Court may give to the referring court with regard to the fourth question is not useful for the resolution of the dispute before it. There is therefore no need to answer the fourth question. (60)
V. Conclusion
79. In the light of all of the foregoing considerations, I propose that the Court answer the questions referred for a preliminary ruling by the Verwaltungsgericht Sigmaringen (Administrative Court, Sigmaringen, Germany) as follows:
Articles 31 and 32 of Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005, as amended by Regulation (EU) 2017/2393 of the European Parliament and of the Council of 13 December 2017, must be interpreted as meaning that
– they do not preclude legislation which limit the power of the nationally designated regional authority to decide whether to grant the payments provided for in those provisions only to agricultural land falling within its regulatory competence;
– they preclude national legislation which, by providing that only land designated as eligible by the Land in which the place of business of the active farmer concerned is located, may give rise to payment of the compensatory allowance, excludes any possibility of payment for the land of that business which has been declared eligible by another Land;
– an entitlement comes into being, in respect of active farmers, from the time when the locally competent authority has decided, as part of the rural development programming, to implement measures provided for in Articles 31 and 32 of Regulation No 1305/2013, as amended by Regulation 2017/2393, and has designated the areas concerned as being eligible. The national legal remedies must be organised in accordance with the procedural autonomy of the Member States, in such a way as to enable those farmers to effectively assert their entitlement to payment for all the eligible land. An application for payment may be subject to other conditions, provided that they are objective and not discriminatory and do not jeopardise the effectiveness of the entitlement to payment for all the eligible land.