ORDER OF THE COURT OF FIRST INSTANCE (Second Chamber)
23 September 2008 (*)
(Action for annulment – Directive 2003/87/EC – Scheme for greenhouse gas emission allowance trading – National allocation plan in respect of emission allowances for Poland for the period from 2008 to 2012 – Decision by the Commission not to raise objections subject to certain conditions – Competence of Member States in the individual allocation of emission allowances – Lack of direct concern – Inadmissibility)
In Case T‑193/07,
Gόrażdże Cement S.A., established in Chorula (Poland), represented by P. Muñiz, lawyer, and R. Forbes, Solicitor,
applicant,
v
Commission of the European Communities, represented by U. Wölker and D. Lawunmi, acting as Agents,
defendant,
APPLICATION for annulment of Commission Decision C(2007) 1295 final of 26 March 2007 concerning the national allocation plan for the allocation of greenhouse gas emission allowances notified by the Republic of Poland for the period from 2008 to 2012 in accordance with Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ 2003 L 275, p. 32),
THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Second Chamber),
composed of I. Pelikánová, President, K. Jürimäe (Rapporteur) and S. Soldevila Fragoso, Judges,
Registrar: E. Coulon,
makes the following
Order
Background to the case
1 The applicant, the cement producer Górażdże Cement S.A., is a joint stock company incorporated under Polish law.
2 On 30 June 2006, the Republic of Poland, acting pursuant to Article 9(1) of Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ 2003 L 275, p. 32) (‘the Directive’), notified the Commission of its national allocation plan for the period from 2008 to 2012 (‘the NAP’). According to the NAP, the Republic of Poland intended to allocate, for the period in question, an annual average total of 284.648332 million tonnes of CO2 equivalent (‘MteqCO2’).
3 On 26 March 2007, the Commission, acting pursuant to Article 9(3) of the Directive, adopted Decision C(2007) 1295 final concerning the NAP (‘the contested decision’). In that decision, the Commission concluded essentially that certain of the criteria listed in Annex III to the Directive had not been complied with and that the total annual quantity of emission allowances provided for by the NAP had to be reduced.
4 The operative part of the contested decision reads as follows:
‘Article 1
The following aspects of the [NAP] of [the Republic of] Poland for the first five‑year period mentioned in Article 11(2) of the Directive are incompatible respectively with:
1. criteria 1, 2 and 3 of Annex III to the Directive …
2. criterion 5 of Annex III to the Directive …
3. criterion 6 of Annex III to the Directive …
4. criterion 10 of Annex III to the Directive …
5. criterion 12 of Annex III to the Directive …
Article 2
No objections shall be raised to the [NAP], provided that the following amendments to the [NAP] are made in a non-discriminatory manner and notified to the Commission as soon as possible, taking into account the time‑scale necessary to carry out the national procedures without undue delay:
1. the total quantity to be allocated for the Community scheme is reduced by the sum of 76.132937 [MteqCO2] of allowances per year and the adjustment resulting from any lowering of the number of installations covered and one‑fifth of the total number of allowances [the Republic of] Poland decides to issue pursuant to Article 13(2) of the Directive; and the quantities allocated to additional combustion installations are determined in accordance with the general methodologies stated in the [NAP] and on the basis of substantiated and verified emission figures and exclusively relate to the expansion element of the installations concerned, with the total quantity being further reduced by any difference between the allocations to these installations and the 6.2884 million tonnes set aside annually for these installations; and the total quantity being increased in respect of emissions of project activities which were already operational in 2005 and resulted in 2005 in emission reductions or limitations in installations falling under the scope of the Directive to the extent that the resulting emission reductions or limitations due to these project activities have been substantiated and verified;
2. the allocations to installations do not go beyond their expected needs as a result of the application of bonuses for early action, biomass or co‑generation;
3. information is provided on the manner in which new entrants will be able to begin participating in the Community scheme, in a way that complies with the criteria of Annex III to the Directive and Article 10 thereof;
4. the quantity of allowances allocated to an installation that is listed in the [NAP] and operating in its territory is not subject to adjustments as a result of the closure of other installations within that territory;
5. the overall maximum amount of CERs and ERUs which may be used by operators in the Community scheme as a percentage of the allocation of the allowances to each installation is reduced to no more than 10%.
Article 3
1. The total average annual quantity of allowances of 208.515395 million tonnes, reduced by the sum of the adjustment resulting from any lowering of the number of installations covered and one-fifth of the total number of allowances [the Republic of] Poland decides to issue pursuant to Article 13(2) of the Directive, and further reduced by any difference between the allocations to additional combustion installations and the 6.2884 million tonnes set aside annually for these installations, and increased in respect of emissions of project activities which were already operational in 2005 and resulted in 2005 in emission reductions or limitations in installations falling under the scope of the Directive to the extent that the resulting emission reductions or limitations due to these project activities have been substantiated and verified and exclusively relate to the expansion element of the installations concerned, to be allocated by [the Republic of] Poland according to its [NAP] to installations listed therein and to new entrants shall not be exceeded.
2. The [NAP] may be amended without prior acceptance by the Commission if the amendment consists in modifications of the allocation of allowances to individual installations within the total quantity to be allocated to installations listed therein resulting from improvements to data quality or to change the share of the allocation of allowances free of charge in a non‑discriminatory manner within the limits set in Article 10 of the Directive.
3. Any amendments of the [NAP] made to correct the incompatibilities indicated in Article 1 of this Decision but deviating from those referred to in Article 2 must be notified as soon as possible, taking into account the time-scale necessary to carry out the national procedures without undue delay, and require prior acceptance by the Commission pursuant to Article 9(3) of the Directive. Any other amendments of the [NAP], apart from those made to comply with Article 2 of this Decision, are inadmissible.
Article 4
This Decision is addressed to the Republic of Poland.’
Procedure and forms of order sought
5 By application lodged at the Registry of the Court of First Instance on 5 June 2007, the applicant brought the present action.
6 By separate document lodged the same day, it applied for the case to be decided under the expedited procedure, on the basis of Article 76a of the Rules of Procedure of the Court of First Instance. On 21 June 2007, the Commission lodged its observations on that request.
7 By separate document, lodged at the Court Registry on 11 July 2007, the Commission raised an objection of inadmissibility under Article 114 of the Rules of Procedure. The applicant lodged its observations on that objection on 3 August 2007.
8 By decision of 6 September 2007, the Court of First Instance (Fifth Chamber) rejected the application for the expedited procedure.
9 The composition of the chambers of the Court of First Instance changed and the Judge-Rapporteur was assigned to the Second Chamber, to which this case was accordingly allocated.
10 The applicant claims that the Court should:
– reject the objection of inadmissibility or reserve its decision on admissibility for the final judgment;
– annul the contested decision;
– order the Commission to pay the costs.
11 The Commission contends that the Court should:
– dismiss the action as inadmissible;
– order the applicant to pay the costs.
Law
12 Under Article 114(1) of the Rules of Procedure, the Court of First Instance may give a decision on admissibility without considering the substance of the case, where a party has made an application to that effect. Under Article 114(3), unless the Court decides otherwise, the remainder of the proceedings is to be oral. In the present case, the Court considers that the information in the documents before it is sufficient and that there is no need to open the oral procedure.
Arguments of the parties
13 The Commission contends that the present action is inadmissible on the ground that the contested decision, addressed to the Republic of Poland, is not of direct and individual concern to the applicant within the meaning of the fourth paragraph of Article 230 EC.
14 In particular, referring inter alia to the order of 25 June 2007 in Case T‑130/06 Drax Power and Others v Commission, not published in the ECR (‘the Drax Power order’), the Commission argues that the applicant cannot be directly concerned by the contested decision. It states that, although the factual context underlying the Drax Power order is different from that in the present case, the fact remains that the general principles established in that order relating to the legal framework introduced by the Directive, the role of the Commission and the position of individual operators apply mutatis mutandis to the present case.
15 The applicant, for its part, submits that the contested decision is of direct and individual concern to it and that the Court must therefore hold the present action admissible.
16 Regarding the issue of whether the contested decision is of direct concern to it, the applicant submits, first, that in that decision the Commission fixed unilaterally the total quantity of allowances for the relevant period. Member States are accordingly bound by those quantities. The fact that the Republic of Poland is challenging the lawfulness of the contested decision (Case T‑183/07, pending before the Court of First Instance) shows that it has no intention of adopting a total quantity of allowances lower than that fixed by the Commission. Moreover, the comparison drawn by the Commission between the present dispute and decisions of the Commission not to institute infringement proceedings under Article 226 EC is not relevant because those decisions are not subject to judicial review. Lastly, the principles established in the Drax Power order may not be applied by analogy to the present case because, in that case, the total quantity of allowances initially notified by the United Kingdom of Great Britain and Northern Ireland had already been authorised by the Commission and, had the amendments submitted by that Member State been notified in time, the latter could have freely exercised its discretion and fixed the total quantity of allowances. That is not the situation in the present case because, in the contested decision, the Commission rejected the total quantity of allowances initially notified by the Republic of Poland.
17 Secondly, the applicant submits that the Member States do not enjoy discretion in allocating allowances to individual operators. The fact that the Commission has determined the total quantity of allowances means that the Member State’s discretion is curtailed. That discretion is, moreover, entirely theoretical since it has been eliminated by the Republic of Poland’s clear commitment to implement the reduction in the total quantity of allowances. Lastly, contrary to the Commission’s submissions, a decision by the Republic of Poland not to apply that reduction to the cement sector would infringe the principle of non-discrimination and criterion 5 of Annex III to the Directive.
18 Thirdly, the applicant takes the view that the possibility of amending the NAP, as provided for in Article 3(2) of the contested decision, does not preclude that decision from being of direct concern to it. The Member States’ discretion is limited by the Commission’s fixing of the total quantity of allowances and by the ensuing limitation at the individual allocation stage. The applicant further submits that, like decisions declaring a concentration to be compatible with the common market subject to conditions, the conditions in Article 3(2) of the contested decision do not prevent that decision from being of direct concern to it. The applicant adds in this regard that the possibilities for amendment are predefined and, therefore, cannot change the total quantity of allowances.
Findings of the Court
19 The fourth paragraph of Article 230 EC provides that ‘[a]ny natural or legal person may … institute proceedings against a decision … which, although in the form of … a decision addressed to another person, is of direct and individual concern to the former’.
20 Since the contested decision is addressed to the Republic of Poland, it is necessary to consider whether it is of direct concern to the applicant. In that regard it is appropriate to begin by noting the two cumulative criteria for direct concern within the meaning of the fourth paragraph of Article 230 EC that have been established in settled case-law.
21 First, the measure in question must directly affect the legal situation of the individual. Secondly, the measure must leave no discretion to its addressees entrusted with the task of implementing it, such implementation being purely automatic and resulting from Community rules alone without the application of other intermediate rules (Case C‑386/96 P Dreyfus v Commission [1998] ECR I‑2309, paragraph 43, and Case T‑69/99 DSTV v Commission [2000] ECR II‑4039, paragraph 24). The condition imposed by the second criterion is also fulfilled where the possibility for addressees not to give effect to the measure in question is purely theoretical and their intention to act in conformity with it is not in doubt (Dreyfus v Commission, paragraph 43; see also, to that effect, Case 11/82 Piraiki-Patraiki and Others v Commission [1985] ECR 207, paragraphs 8 to 10).
22 At this point it is appropriate to recall the respective roles and powers of the Commission and the Member States under the regime established by the Directive, in particular Articles 9 to 11 thereof. The case-law relating to the Directive must be taken into account, particularly the Drax Power order. It is true that the factual context of that case differs from that of this case. The decision at issue in Drax Power concerned a proposal for amendment to a NAP initially notified by the United Kingdom of Great Britain and Northern Ireland and already accepted by the Commission, subject to certain conditions. Nevertheless, the provisions of the Directive at issue in Drax Power are identical to those applicable in the present case, which means that the interpretation of those provisions by the Court in the Drax Power order cannot be disregarded in the assessment of the admissibility of the present action.
23 Accordingly, it must be borne in mind, first of all, that Article 1 of the Directive states that the fundamental purpose of the Directive is to establish a scheme for greenhouse gas emission allowance trading within the Community. That scheme is based on NAPs developed by the Member States in accordance with the criteria laid down by the Directive. Thus, each Member State was to develop a NAP for the five-year period beginning on 1 January 2008. Under Article 9(1) of the Directive, the NAP was to be published and notified to the Commission and to the other Member States at least 18 months before that date. The NAP was required to state the total quantity of allowances that the Member State ‘intend[ed] to allocate for that period and how it propose[d] to allocate them’.
24 Next, Article 9(3) of the Directive states that the Commission may, within three months of notification of a NAP, reject that NAP, or any aspect thereof, on the basis that the NAP is incompatible with the criteria listed in Annex III or with Article 10 of the Directive. The Directive does not make any other provision for rejection of a NAP. As the Court stated in Case T‑178/05 United Kingdom v Commission [2005] ECR II‑4807, paragraph 55, Article 9(3) of the Directive does not require the adoption of a decision of approval of a notified NAP by the Commission, so that, if it does not rule on the NAP within the time-limit laid down by that provision, the NAP must be considered to have been approved by it and may not then be amended unless the proposed amendments are first accepted by it in accordance with Article 9(3) of the Directive.
25 Lastly, the definitive decision on the total quantity of allowances to be allocated and the allocation of those allowances to the installations in question must be taken by each Member State pursuant to Article 11(2) of the Directive and on the basis of the NAPs developed pursuant to Article 9 of the Directive.
26 In other words, it is the Member State concerned which is responsible for implementing the NAP and for the allocation of the specific allowances to the individual installations. Under Article 11(2) of the Directive, the allocation of an allowance for an individual installation depends on the decision of the national authority, even if that authority must act in compliance with the NAP as approved by the Commission.
27 The Court therefore finds that it follows from the wording of the Directive and the objectives of the scheme it establishes that it is the decision of the national authorities taken pursuant to Article 11(2) of the Directive which affects the legal situation of the operators by allocating allowances to them (see, by analogy, Drax Power order, paragraph 53).
28 None of the arguments put forward by the applicant is such as to refute this finding.
29 First of all, as to the argument that the Commission, in the contested decision, unilaterally imposed on the Republic of Poland the total quantity of allowances to be allocated for the period in question, so that the Republic of Poland had no margin of discretion at the implementation stage of the NAP and was bound by that quantity, the Court would point out the following.
30 First, it has already been held that the adoption by a Member State of its definitive decision on the total quantity of allowances to be allocated and the allocation of those allowances to the installations in question, under Article 11(1) of the Directive, is subject to the condition contained in Article 9(3) of the Directive that any amendment proposed to the NAP must be accepted by the Commission (United Kingdom v Commission, cited in paragraph 24 above, paragraph 56). The second sentence of Article 9(3) of the Directive does not lay down any limit to the permissible amendments. Therefore, any amendments, whether proposed by the Member State of its own initiative or necessary to overcome any incompatibility in the NAP raised by the Commission, must be notified to the latter and accepted by it before the NAP as amended can form a valid basis for the definitive decision taken by the Member State under Article 11(2) of the Directive (see, by analogy, United Kingdom v Commission, paragraph 56).
31 Secondly, the first sentence of Article 9(1) of the Directive provides that, ‘[f]or each period referred to in Article 11(1) and (2), each Member State shall develop a national plan stating the total quantity of allowances that it intends to allocate for that period and how it proposes to allocate them’. It therefore follows from that article that a NAP states the total allowances that the Member State ‘intends’ to allocate for the period in question and how it ‘proposes’ to allocate them. The effect of that wording is that a Member State is not strictly bound by the NAP it has notified to the Commission and retains a margin of discretion in the implementation of the notified NAP, including in the allocation of individual emission allowances. Thus, the ultimate implementation of the NAP is always contingent on the adoption of a decision by the national authorities.
32 It should be noted in that regard that Article 176 EC provides that measures adopted pursuant to Article 175 EC, such as the Directive in the present case, are not to prevent any Member State from maintaining or introducing more stringent protective measures provided that such measures are compatible with the EC Treaty and are notified to the Commission. Given that the main purpose of the regime established by the Directive is to reduce greenhouse gas emissions (see Article 1 of the Directive and recitals 1 to 5 in its preamble), the Member State always remains free to make do with a lesser allocation of allowances, provided that such an allocation respects the conditions laid down by the Directive (Drax Power order, paragraphs 62 and 63).
33 The Court therefore considers that it follows both from the wording of the Directive and from the general structure and objectives of the scheme which it establishes (i) that a Member State remains entitled to propose amendments to its NAP after the NAP has been notified to the Commission, until such time as it has adopted its decision pursuant to Article 11(2) of the Directive (see, to that effect and by analogy, United Kingdom v Commission, cited in paragraph 24 above, paragraphs 61 and 63), and (ii) that there is nothing in certain circumstances to prevent such amendments from being intended to increase the total quantity of allowances to be allocated that is stated in the NAP initially notified.
34 Such a finding cannot be called into question on the ground that the Republic of Poland has brought an action, registered as Case T‑183/07, seeking annulment of the contested decision. Suffice it to note that, in the contested decision, the Commission does not adopt a position on the share of the total quantity of allowances that the Republic of Poland intended to allocate to the applicant. Consequently, no conclusion as to the final individual allocation decision to be taken by the Polish authorities pursuant to Article 11(2) of the Directive may be drawn from the fact that such an action has been brought by the addressee of the contested decision, namely the Republic of Poland.
35 It follows from the foregoing that the applicant’s argument alleging that, in the contested decision, the Commission fixed unilaterally the total quantity of allowances to be allocated for the period in question and that the Republic of Poland is bound by that quantity must be rejected.
36 The applicant argues, secondly, that the Member State in question does not have any discretion in allocating allowances to individual operators and, in this respect, that the Commission’s determination of the total quantity of allowances unavoidably restricts the Member State’s discretion when allowances for individual installations are being allocated. It adds that a reduction decision by the Member State which did not affect the cement sector would infringe the principle of non-discrimination.
37 The Court finds, however, that this line of argument is not such as to establish that the contested decision is of direct concern to the applicant. First of all, neither the Directive nor the contested decision effects an automatic allocation of the total quantity of allowances amongst the individual installations, in the sense that the reduction of 76.132937 MteqCO2 in the total annual quantity of emission allowances provided for by the NAP has taken the form of specific percentages or quantities of allowances allocated to the various individual Polish installations.
38 It should be noted in this regard that, in the scheme established by the Directive, under which it is for the Member States to allocate the allowances amongst the installations in question (see paragraph 23 above), the direct and definitive determination of the rights and obligations of the operators of those installations can result only from the decision by the Member State adopted pursuant to Article 11(2) of the Directive. Only a decision by the competent authority in Poland can amend the individual CO2 allowance initially envisaged by Poland for the applicant. Consequently, the contested decision did not bring about any change whatsoever in the applicant’s existing rights or legal situation.
39 Furthermore, under Article 3(2) of the contested decision, to which the applicant refers in support of its arguments (see paragraph 18 above), the Polish authorities were entitled to amend the NAP where the amendment concerned the allocation of allowances to certain installations, provided that the limits on the total quantity of allowances to be allocated to the individual installations were complied with. Legally then, there was nothing preventing the Polish authorities, in certain circumstances, from granting a request from the applicant for the same quantity of individual allowances as that allocated to it on the basis of the initial NAP.
40 This is the case, in respect of the allowances to be allocated individually to each installation, where, before the adoption of a definitive decision pursuant to Article 11(2) of the Directive, the public consultation referred to in that article discloses new information concerning an installation and, in the light of that information, the quantity of individual allowances to be allocated to that installation must accordingly be maintained or be changed in proportions differing from, or even in a direction opposite to, the amendment confirmed by the contested decision in regard to the total quantity of allowances to be allocated (see, to that effect and by analogy, United Kingdom v Commission, cited in paragraph 24 above, paragraph 58). Moreover, once the stage of allocating allowances by sector of activity has been reached, contrary to what the applicant maintains in reliance upon the principle of non-discrimination as referred to in criterion 5 of Annex III to the Directive, the possibility cannot be ruled out that in similar circumstances a Member State may decide to apply the reduction in allowances to be allocated to all but one of the sectors of activity to which the NAP relates. Lastly, it should be borne in mind that that consultation would be meaningless and public comment would be rendered purely academic if the amendments to the NAP which could be proposed after a decision by the Commission taken pursuant to Article 9(3) of the Directive were limited to those envisaged by the Commission (see, by analogy, United Kingdom v Commission, paragraph 57).
41 It follows that, as at the date when the present action was brought, the fear expressed by the applicant that the discrepancy between the total quantity of allowances approved in the contested decision and the total of the individual allowances provided for in the initial NAP will necessarily lead to a reduction in the number of its individual allowances refers to an entirely hypothetical event.
42 For the sake of completeness, even if the fear expressed by the applicant in its observations on the objection of inadmissibility raised by the Commission might have proved well founded, in that the Polish authorities did in fact allocate it a quantity of individual allowances lower than what was provided for in the initial NAP, that would not, however, result directly from the contested decision, but from the exercise of the available discretion by the Polish Government, which was not required to reduce the number of individual allowances allocated to the applicant, particularly not in proportions confirmed in the contested decision.
43 Thirdly, with respect to the applicant’s argument that, like decisions declaring a concentration to be compatible with the common market subject to conditions, a decision subject to conditions adopted by the Commission pursuant to Article 9(3) of the Directive, such as the one at issue in the present case, is capable of being of direct concern to it, suffice it to state that the control regime established by Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ 2004 L 24, p. 1), unlike that provided for by Article 9(3) of the Directive, requires an explicit authorisation conferring rights from the public authorities in order for the notified proposed concentration to be able to be implemented.
44 It follows from all of the foregoing that the arguments put forward by the applicant in order to establish that the Republic of Poland is bound by the quantity imposed unilaterally by the Commission in the contested decision and therefore enjoys no margin of discretion at the stage of implementation of its NAP must be rejected. Therefore, since the second cumulative criterion for direct concern within the meaning of Article 230 EC, as referred to in paragraph 21 above, has not been satisfied, the contested decision cannot be considered to be of direct concern to the applicant.
45 Consequently, the action must be dismissed in its entirety as inadmissible, without its being necessary to rule on the other grounds of inadmissibility put forward by the Commission.
Costs
46 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the Commission.
On those grounds,
THE COURT OF FIRST INSTANCE (Second Chamber)
hereby orders:
1. The action is dismissed as inadmissible.
2. Gόrażdże Cement S.A. shall bear its own costs and pay those incurred by the Commission.
Luxembourg, 23 September 2008.