ORDER OF THE COURT OF FIRST INSTANCE (First Chamber)
6 November 2007 (*)
(Action for annulment – Environment – Directive 2003/87/EC – Scheme for greenhouse gas emission allowance trading – Commission Decision approving the United Kingdom national allocation plan for emission allowances – Competence of the Member States as regards the individual allocation of emission allowances – Lack of direct and individual concern – Inadmissibility)
In Case T‑13/07,
Cemex UK Cement Ltd, established in Surrey (United Kingdom),
represented by D. Wyatt QC, S. Taylor, Solicitor, and S. Tromans and C. Thomann, Barristers,
applicant,
v
Commission of the European Communities, represented by U. Wölker and X. Lewis, acting as Agents,
defendant,
supported by
United Kingdom of Great Britain and Northern Ireland, represented by Z. Bryanston-Cross, acting as Agent,
intervener,
APPLICATION for the annulment of Commission Decision C(2006) 5618/4 of 29 November 2006 concerning the national allocation plan for the allocation of greenhouse gas emission allowances, notified by the United Kingdom 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 (First Chamber),
composed of J.D. Cooke, President, R. García-Valdecasas and V. Ciucă, Judges,
Registrar: E. Coulon,
makes the following
Order
Legal framework
1 Article 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’) states:
‘This Directive establishes a scheme for greenhouse gas emission allowance trading within the Community … in order to promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner.’
2 Article 9(1) of the directive provides that each Member State is to develop, for each period referred to in Article 11 of the directive, a national plan (‘NAP’) stating the total quantity of allowances that it intends to allocate for that period and how it proposes to allocate them.
3 Article 9(3) of the directive is worded as follows:
‘Within three months of notification of [an NAP] by a Member State under paragraph 1, the Commission may reject that [NAP], or any aspect thereof, on the basis that it is incompatible with the criteria listed in Annex III or with Article 10. The Member State shall only take a decision under Article 11(1) or (2) if proposed amendments are accepted by the Commission. Reasons shall be given for any rejection decision by the Commission.’
4 Article 11(2) of the directive states:
‘For the five-year period beginning 1 January 2008, and for each subsequent five-year period, each Member State shall decide upon the total quantity of allowances it will allocate for that period and initiate the process for the allocation of those allowances to the operator of each installation. This decision shall be taken at least 12 months before the beginning of the relevant period and be based on the Member State’s [NAP] developed pursuant to Article 9 and in accordance with Article 10, taking due account of comments from the public.’
5 Article 11(3) of the directive provides:
‘Decisions taken pursuant to paragraph 1 or 2 shall be in accordance with the requirements of the Treaty, in particular Articles 87 and 88 thereof. When deciding upon allocation, Member States shall take into account the need to provide access to allowances for new entrants.’
6 The criterion laid down in point 5 of Annex III to the directive is worded as follows:
‘The [NAP] shall not discriminate between companies or sectors in such a way as to unduly favour certain undertakings or activities in accordance with the requirements of the Treaty, in particular Articles 87 and 88 thereof.’
7 The criterion laid down in point 10 of Annex III to the directive provides that ‘the [NAP] shall contain a list of the installations covered by [the directive] with the quantities of allowances intended to be allocated to each’.
Facts
8 The applicant, Cemex UK Cement Ltd, a company incorporated under the law of England and Wales, is a subsidiary of Cemex España SA, a company incorporated under Spanish law, which produces and supplies cement, ready-mixed concrete and aggregates. The applicant operates a new cement plant at Rugby in the United Kingdom. The commissioning of that new installation started in February 2000 and finished in February 2003.
9 Following consultation with the public and the publication of a draft NAP, the United Kingdom notified an NAP to the Commission for phase II of the Community scheme for greenhouse gas emission allowance trading (2008 to 2012) by letter of 28 August 2006. Under the terms of that plan, the applicant was to receive an allowance of 935 418 tonnes of carbon dioxide.
10 By letter of 22 September 2006, the applicant informed the Commission that it considered that the methodology adopted by the United Kingdom in its NAP in determining the individual quantity of greenhouse gases to be allocated to it during the period concerned was incompatible with the directive.
11 The applicant complains that by giving it an allocation of only 935 418 tonnes of carbon dioxide under the NAP for the period between 2008 and 2012, the United Kingdom failed to take sufficient account of the fact that it was operating a new plant.
12 According to the applicant, the failure to allocate sufficient emission allowances to its plant at Rugby constitutes unlawful discrimination against it, in that the allocation of allowances for the period between 2008 and 2012 is based on a reference period for emissions which the United Kingdom knew to be unrepresentative, because it coincided with the period of commissioning of the plant in question (2000 to 2003).
13 That failure to allocate sufficient emission allowances restricts the right of establishment of the applicant’s parent company, Cemex España, in so far as it hinders or renders less attractive the exercise of a fundamental freedom by that parent company and cannot be justified by any overriding reason of the general interest. That failure to allocate sufficient emission allowances, combined with the corresponding over-allocation in favour of the applicant’s competitors, constitutes State aid in their favour, contrary to Articles 87 EC and 88 EC.
14 In the letter it sent to the Commission on 22 September 2006, the applicant argued that the Commission had infringed the principle of equal treatment on the ground that the United Kingdom NAP for the period between 2008 and 2012 did not make the necessary distinction between undertakings operating normally and those operating plants in the process of being commissioned, which are not in a comparable situation and should be treated differently.
15 In addition, the applicant stated that the Commission should have objected to the content of the NAP, which constitutes both an infringement of the right of establishment of the applicant, as a subsidiary of a Spanish company, and State aid in favour of the applicant’s competitors.
16 On 29 November 2006, the Commission adopted Decision C(2006) 5618/4 in accordance with the directive (‘the contested decision’). In that decision, the Commission took the view that, subject to certain matters which did not concern the applicant’s situation, the NAP notified by the United Kingdom was substantially compatible with the directive. The Commission accordingly did not call into question the elements of the NAP challenged by the applicant. The operative part of that decision is worded as follows:
‘Article 1
The following aspect of the [NAP] of the United Kingdom for the first five-year period mentioned in Article 11(2) of the Directive is incompatible with criterion l0 of Annex III to the Directive: concerning the listing of installations, the failure to specify installations situated within the territory of Gibraltar and the quantities of allowances intended to be allocated to each such installation.
Article 2
No objections shall be raised to the [NAP], provided that the following amendment to the [NAP] is 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: the installations situated within the territory of Gibraltar and the quantities of allowances intended to be allocated to them are listed; those quantities being determined taking into account independently verified emissions and changes in production and carbon intensity that are reasonably anticipated.
Article 3
1. The total average annual quantity of allowances of 246.2 million tonnes to be allocated by the United Kingdom according to its [NAP] to installations Iisted therein and to new entrants in the territory covered therein 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 reduce the share of the allocation of allowances free of charge within the limits set in Article 10 of the Directive.
3. Any other amendments of the [NAP], apart from those made to comply with Article 2 of this Decision, must be notified by the deadline of 31 December 2006 referred to in Article 11(2) of the Directive and require prior acceptance by the Commission pursuant to Article 9(3) of the Directive.
Article 4
This Decision is addressed to the United Kingdom of Great Britain and Northern Ireland.’
Procedure and forms of order sought
17 By application lodged at the Registry of the Court of First Instance on 12 January 2007, the applicant brought the present action. By a separate document lodged on the same date, it requested that the case be decided under an expedited procedure in accordance with Article 76a of the Rules of Procedure of the Court of First Instance. On 12 February 2007, the Commission lodged its observations on that application.
18 By a separate document, lodged at the Registry of the Court of First Instance on 13 March 2007, the Commission raised an objection of inadmissibility under Article 114(1) of the Rules of Procedure. The applicant lodged its observations on that objection on 10 April 2007.
19 By order of 8 May 2007, the President of the First Chamber of the Court of First Instance granted the United Kingdom leave to intervene in support of the Commission.
20 By decision of the First Chamber of the Court of First Instance of 19 June 2007, the application made under Article 76a was refused.
21 By letter lodged at the Registry of the Court of First Instance of 20 April 2007, Castle Cement Ltd sought leave to intervene in support of the Commission.
22 The applicant claims that the Court should:
– dismiss the objection of inadmissibility;
– annul the contested decision;
– order the Commission to pay the costs.
23 In its objection of inadmissibility, the Commission contends that the Court should:
– dismiss the action as inadmissible;
– order the applicant to pay the costs.
Law
24 Under Article 114(1) of the Rules of Procedure, the Court may, on the application of a party, rule on admissibility without considering the substance of the case. Pursuant to Article 114(3), unless the Court otherwise decides, the remainder of the proceedings is to be oral. In the present case, the Court considers that it has sufficient information from the documents on the file and that it is not necessary to open the oral procedure.
Arguments of the parties
25 The Commission pleads that the present action is inadmissible on the ground that the contested decision, which is addressed to the United Kingdom, is not of direct and individual concern to the applicant within the meaning of the fourth paragraph of Article 230 EC.
26 In the first place, as regards the requirement that an applicant be directly affected, the Commission submits that the applicant cannot be directly concerned by the contested decision, because the decision is not a precondition to the allocation of allowances to particular operators but a means for the Commission to ensure that the plan is compatible with the criteria listed in Annex III to the directive.
27 The Commission contends that the decision to allocate allowances to particular operators is a decision which falls to be taken by the Member States alone, which have a margin of discretion in that regard, and not by the Commission itself. This is reflected in Article 3(2) of the contested decision, which states that 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’.
28 The Commission submits that the Member States enjoy a wide margin of discretion as to the manner in which they decide to allocate the total emission allowances between individual operators, by virtue of Article 9 of the directive. The Commission is required only to ensure that the NAPs as a whole are consistent with the commonly-agreed criteria. No provision of the directive binds the Member States to allocate individual allowances exactly as indicated in the NAP submitted. In particular, the United Kingdom could have granted the applicant extra allowances in line with the general methodologies of the NAP, provided it kept within the total allowances allocated.
29 In the second place, the Commission submits that the applicant is not individually concerned by the contested decision. It is not in a situation which is comparable to that of the addressee of the contested decision, in this case, the United Kingdom.
30 The Commission contends that its decision does not affect the applicant by reason of a quality which is specific and peculiar to it. Persons other than the addressees of a decision can claim to be individually concerned only if the decision affects them by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons and by virtue of those factors distinguishes them individually just as in the case of the person addressed (judgment of 13 June 2006 in Case T-192/03 Atlantean v Commission, not published in the ECR, paragraph 41, and Joined Cases T-218/03 to T-240/03 Boyle and Others v Commission [2006] ECR II‑1699, paragraph 44).
31 The Commission takes the view that the applicant belongs to a category of operators which is so large that it cannot be considered to be a closed group of operators affected by the contested decision. The applicant has not shown in what way it is to be distinguished from the other operators concerned by the scheme for emission allowance trading. The Commission adds that the applicant’s individual situation was not examined, and could not have been examined, by the Commission during the adoption phase of the contested decision.
32 The Commission observes that, in the present case, the applicant is not referred to in either the contested decision or any of the annexes to it. Contrary to the situation which arose in Atlantean v Commission and Boyle and Others v Commission, paragraph 30 above, the contested decision, which relates to the total quantity of allowances, cannot be seen as a series of individual decisions relating to the emissions of particular operators, but expressed as an aggregate figure.
33 The applicant submits that it is directly and individually concerned by the contested decision.
34 In the first place, the applicant is directly concerned by the contested decision. Once an NAP has been approved by the Commission and has become definitive, the individual amounts of greenhouse gases allocated to economic operators, as set out in the NAP in question, become irrevocable. Thus, in the present case, when it notified its NAP to the Commission, the United Kingdom had already fixed, subject only to the Commission’s approval, the individual amount of greenhouse gases that was subsequently allocated to the applicant.
35 As regards the alleged discretion of the Member States in the allocation of allowances, the United Kingdom is bound to adopt the NAP in the form approved by the Commission. Accordingly, once that plan had been approved, the United Kingdom could no longer amend the methodology for determining the individual allowances laid down in it, subject to two very limited exceptions. The applicant states in that regard that, in view of their very restricted scope, those two exceptions could not allow the United Kingdom to amend the allowance allocated to the applicant’s Rugby installation.
36 In the second place, the applicant submits that it is individually concerned by the contested decision, since that decision approved the NAP put forward by the United Kingdom, on the basis of factors concerning the allocation of greenhouse gases to its Rugby installation, and irrevocably fixed that individual allocation with effect from 1 January 2007.
37 The applicant maintains that, contrary to what the Commission contends, the Commission was bound to consider the position of individual operators when examining the NAP notified by the United Kingdom. Moreover, on 22 September 2006, the applicant wrote to the Commission detailing its objections to the proposed allocation to its Rugby installation. By letter of 20 October 2006, the Commission informed the applicant that it had noted its arguments and would adopt its decision as regards the NAP within the prescribed period. In the letter sent by the Commission to the applicant on 15 January 2007, the Commission once again informed the applicant that it had taken account of its objections to the methodology to be applied to the cement sector.
Findings of the Court
38 The fourth paragraph of Article 230 EC provides that ‘any 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’.
39 As the contested decision is addressed to the United Kingdom, it is necessary to consider whether that decision is of direct concern to the applicant.
40 For that purpose, regard must first be had to the two cumulative criteria as to direct concern within the meaning of the fourth paragraph of Article 230 EC, as laid down by settled case-law.
41 First, the measure in question must directly affect the legal situation of the individual. Secondly, the measure must leave no discretion to the addressees of that measure entrusted with the task of implementing it, such implementation being purely automatic and resulting from Community rules 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 laid down by the second criterion is also satisfied where the possibility for the Member State not to give effect to the Community measure is purely theoretical and its intention to act in conformity with it is not in doubt (Dreyfus v Commission, paragraph 44; see also, to that effect, Case 11/82 Piraiki-Patraiki and Others v Commission [1985] ECR 207, paragraphs 8 to 10).
42 It is necessary, next, to have regard to the respective roles and powers of the Commission and the Member States under the scheme laid down by the directive and, in particular, by Articles 9 to 11.
43 The essential purpose of the directive is to establish, with effect from 1 January 2005, a Community system for trading in greenhouse gas emission allowances. That system is based on NAPs drawn up by the Member States pursuant to criteria laid down by the directive. Thus, each Member State was called upon to develop a first NAP for the three-year period beginning on 1 January 2005, then for the five-year period beginning on 1 January 2008, and for each subsequent five-year period thereafter. For each five-year period, the plan is to be published and notified to the Commission and to the other Member States at least 18 months before the beginning of the period concerned, pursuant to Article 9(1) of the directive. The NAP must indicate the total allowances which the Member State ‘intends to allocate for that period and how it proposes to allocate them’ (see paragraph 2 above and Case T-178/05 United Kingdom v Commission [2005] ECR II‑4807, paragraph 52).
44 It is clear from Article 9(3) of the directive that the Commission may, within three months of notification of an NAP, reject that NAP, or any aspect thereof, on the basis that it is incompatible with the criteria listed in Annex III or with Article 10 of the directive. The directive does not provide for any other grounds for rejecting an NAP. As the Court held in paragraph 55 of its judgment in United Kingdom v Commission, paragraph 43 above, Article 9(3) of the directive does not require the Commission to adopt a decision of approval of a notified NAP. If the Commission does not react to the NAP within the period laid down under that provision, the NAP is presumed to be compatible with the criteria laid down in Annex III and with Article 10 of the directive.
45 Each Member State is then obliged to make a definitive decision as to the total allowances to be allocated and the allocation of those allowances to the installations in question under Article 11(2) of the directive on the basis of the NAPs developed under Article 9 of the directive (see, to that effect, United Kingdom v Commission, paragraph 43 above, paragraph 53).
46 The Court therefore finds that it is clear from the wording of the directive and from the objectives of the scheme laid down under it, that it is the decision of the national authorities, taken in accordance with Article 11(2) of the directive, which affects the legal situation of the operators by allocating allowances to them.
47 It is the Member State which is responsible for the implementation of the NAP and for the allocation of specific allowances to individual installations. In accordance with Article 11(2) of the directive, the allocation of an allowance to an individual installation is a matter to be decided by the national authority, even though that authority must act in accordance with the NAP in the form approved by the Commission.
48 Prior to the adoption of the contested decision by the Commission, the NAP of the United Kingdom provided that the applicant was to receive an allocation of 935 418 tonnes of carbon dioxide (see paragraph 9 above). However, the contested decision does not affect the applicant’s legal position in that regard. The applicant is and remains the holder of the allowances which were allocated to it by the decision of the United Kingdom taken pursuant to Article 11(2) of the directive.
49 It should be emphasised in that regard that the contested decision does not adopt any position on the proposal by the United Kingdom to allocate the 935 418 tonnes of carbon dioxide to the applicant’s plant in Rugby. Accordingly, the adoption by the Commission of the contested decision was not preceded by any examination, even indirect, of the applicant’s situation. In its letters of 22 September 2006 and 15 January 2007, the Commission does not state that it took account of the particular situation of the applicant’s plant in Rugby. The Commission merely states that it has taken account of the objections concerning the cement sector.
50 It follows that the contested decision does not change the applicant’s legal situation in any way and that it cannot therefore be considered that it affects its legal situation directly, for the purposes of the first condition laid down in the case-law (see paragraph 41 above).
51 It should be pointed out in that regard that, under the scheme laid down by the directive, where it is for the Member States to allocate the allowances among the installations concerned (see paragraph 43 above), the definitive and direct determination of the rights and obligations of the operators of those installations can be brought about only by a decision of the Member State adopted pursuant to Article 11(2) of the directive. Accordingly, the contested decision did not change the applicant’s existing rights or its legal situation in any way.
52 Indeed, only a decision of the competent authority in the United Kingdom could alter the allocation of 935 418 tonnes of carbon dioxide to the applicant’s plant. Contrary to what the applicant contends (see paragraph 34 above), a Member State is always entitled to change its position on the allocation of allowances and to submit a proposal for the amendment of the NAP to the Commission (United Kingdom v Commission, paragraph 43 above, paragraph 61). On the date of the contested decision, that is to say, 29 November 2006, the United Kingdom was entitled to propose amendments to the NAP until 31 December 2006.
53 In addition, Article 9(1) of the directive provides that an NAP is to state the total allowances that the Member State ‘intends’ to allocate for the period under consideration and ‘how it proposes’ to allocate them (see paragraph 2 above). It follows from that wording that a Member State is not bound strictly by the NAP which it has notified to the Commission but retains a discretion in its implementation, in particular in the allocation of individual emission allowances. Moreover, where the Commission has already taken a decision on the NAP under Article 9(3) of the directive, the possibility cannot be ruled out that the subsequent approval by the Commission of amendments might be subject to conditions which the Member State may find unacceptable. In such a case, there is nothing to prevent the Member State from abandoning the proposed amendment and implementing its original NAP. Thus, the final implementation of the NAP always depends, at the stage of the individual allocation of emission allowances, on the adoption of a decision by the national authorities and it falls, if appropriate, to economic operators to challenge it before the national courts. In the present case, it is also clear from the documents in the file that at the same time as bringing proceedings before this Court the applicant challenged the decision which had been taken by the United Kingdom environmental authorities responsible for the implementation of the NAP, before the competent national court.
54 In that regard, it should be noted that Article 176 EC provides that measures, such as the directive, adopted pursuant to Article 175 EC are not to prevent any Member State from maintaining or introducing more stringent protective measures, provided that they are compatible with the Treaty and are notified to the Commission.
55 In the present case, since the principal objective of the scheme laid down under the directive is to reduce greenhouse gas emissions (see Article 1 of the directive and recitals 1 to 5 in the preamble), the Member State can always decide to accept a lower allocation of allowances, provided that such an allocation complies with the conditions laid down under the directive.
56 It follows from all of the above considerations that the applicant cannot be considered to be directly concerned, for the purposes of the fourth paragraph of Article 230 EC, by the contested decision and, accordingly, that the action must be dismissed in its entirety as inadmissible without it being necessary to give a ruling on the merits of the other pleas of inadmissibility put forward by the Commission.
57 In those circumstances, it is not necessary to give a ruling on the application for leave to intervene lodged by Castle Cement.
Costs
58 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs where these have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs, as applied for by the Commission.
On those grounds,
THE COURT OF FIRST INSTANCE (First Chamber)
hereby orders:
1. The action is dismissed as inadmissible.
2. It is unnecessary to give a ruling on the application for leave to intervene by Castle Cement Ltd.
3. Cemex UK Cement Ltd shall bear its own costs and pay those incurred by the Commission.
4. The United Kingdom of Great Britain and Northern Ireland shall bear its own costs.
Luxembourg, 6 November 2007.