Provisional text
OPINION OF ADVOCATE GENERAL
KOKOTT
delivered on 30 November 2023 (1)
Case C‑538/22
SB
v
Agrárminiszter
(Request for a preliminary ruling from the Fővárosi Törvényszék (Budapest High Court, Hungary))
(Reference for a preliminary ruling – Agriculture – Common Agricultural Policy – Regulation (EU) No 1307/2013 – Article 52 – Delegated Regulation (EU) No 639/2014 – Article 53(1) – Eligibility conditions for coupled support measures – Discretion of the Member State – Delegated Regulation (EU) No 640/2014 – Points 13 and 15 of the second subparagraph of Article 2(1) – Voluntary coupled support based on livestock aid applications under animal aid schemes – Livestock aid application – Articles 30 and 31 – Calculation of aid – Administrative penalties – Implementing Regulation (EU) No 809/2014 – Article 15(3) – Subsequent amendment of the aid application – Lack of authorisation – National rules on achievement of a suckler cow calving rate – Total refusal of coupled support where the calving rate is not reached)
I. Introduction
1. This reference for a preliminary ruling concerns an action before the Fővárosi Törvényszék (Budapest High Court, Hungary) brought by the farmer SB (‘the applicant’) against the refusal of the Agrárminiszter (Minister for Agriculture, Hungary) to grant ‘voluntary coupled support’ (2) or a premium for suckler cows. The applicant had not achieved the legally required reproduction rate – the ‘calving rate’ – for the number of animals declared in the application in the claim year.
2. The questions referred by the national court essentially seek to ascertain whether authorisation exists to refuse to grant the aid in its entirety or whether it should be reduced only proportionately, on the basis of the number of animals achieving the required calving rate.
3. In answering the first question referred for a preliminary ruling, a distinction must be drawn between the conditions for granting the aid, which the Member States have discretion to lay down, and the possible legal consequences of cases of non-compliance in its administration. Where the conditions for granting the aid are not satisfied, there is no entitlement to aid. A possible recalculation or proportionate reduction of the aid would then not be possible in this case from the outset.
II. Legal framework
A. European Union law
1. Regulation (EU) No 1306/2013
4. Article 63 of Regulation No 1306/2013, (3) provides, under the heading ‘Undue payments and administrative penalties’, inter alia as follows:
‘1. Where it is found that a beneficiary does not comply with the eligibility criteria, commitments or other obligations relating to the conditions for the granting of the aid or support, as provided for in the sectoral agricultural legislation, the aid shall not be paid or shall be withdrawn in full or in part and, where relevant, the corresponding payment entitlements as referred to in Article 21 of Regulation (EU) No 1307/2013 shall not be allocated or shall be withdrawn.
…’
2. Regulation (EU) No 1307/2013
5. The ‘General rules’ in Article 52 of Regulation No 1307/2013, (4) of Chapter 1, entitled ‘Voluntary coupled support’, state inter alia:
‘1. Member States may grant coupled support to farmers under the conditions laid down in this Chapter …
…
6. Coupled support is a production-limiting scheme that shall take the form of an annual payment based on fixed areas and yields or on a fixed number of animals and shall respect financial ceilings to be determined by Member States for each measure and notified to the Commission.
…’
3. Delegated Regulation (EU) No 639/2014
6. Article 53(1) of Delegated Regulation No 639/2014, (5) entitled ‘Conditions for granting the support’, is worded:
‘Member States shall lay down eligibility criteria for coupled support measures in compliance with the framework set out in Regulation (EU) No 1307/2013 and the conditions laid down in this Regulation.’
4. Delegated Regulation (EU) No 640/2014
7. Recitals 28 and 31 of Delegated Regulation No 640/2014, (6) are worded inter alia as follows:
‘(28) As far as aid applications under animal aid schemes or payment claims under animal-related support measures are concerned, non-compliances lead to the ineligibility of the animal concerned. Reductions should be provided for as from the first animal found with non-compliances but, irrespective of the level of the reduction, there should be a less harsh administrative penalty where three animals or less are found with non-compliances. In all other cases the severity of the administrative penalty should depend on the percentage of animals found with non-compliances.
…
(31) Refusals and withdrawals of support and administrative penalties should be established for rural development support measures having regard to the principles of dissuasiveness and proportionality. Refusals and withdrawals of support should be graded on the basis of the severity, extent, duration and reoccurrence of the non-compliance found. Refusals and withdrawals of support and administrative penalties should, with regard to the eligibility criteria, commitments and other obligations, take into account the particularities of the various support measures. In the case of serious non-compliance or in the case the beneficiary provided false evidence for the purpose of receiving the support, the support should be refused and an administrative penalty should be imposed. Administrative penalties should go as far as the total exclusion from one or several support measures or types of operations for a specified period.’
8. Article 2(1) of Delegated Regulation No 640/2014 provides inter alia the following definitions:
‘…
(2) “non-compliance” means:
(a) for eligibility criteria, commitments or other obligations relating to the conditions for the granting of the aid or support referred to in Article 67(2) of Regulation (EU) No 1306/2013, any non-respect of those eligibility criteria, commitments or other obligations; …
…
(13) “animal aid scheme” means a voluntary coupled support measure provided for in Chapter 1 of Title IV of Regulation (EU) No 1307/2013 where the annual payment to be granted within defined quantitative limits is based on a fixed number of animals;
…
(15) “livestock aid application” means the applications for the payment of aid where the annual payment to be granted within defined quantitative limits is based on a fixed number of animals under the voluntary coupled support provided for in Chapter 1 of Title IV of Regulation (EU) No 1307/2013;
(16) “declared animals” means animals subject to a livestock aid application under the animal aid scheme or subject to a payment claim for an animal-related support measure;
…
(18) “animal determined” means:
(a) for an animal aid scheme, an animal for which all conditions laid down in the rules for granting the aid have been met; or
(b) for an animal-related support measure, an animal identified by means of administrative or on-the-spot checks; …’
9. Article 30(1) to (3) of Delegated Regulation No 640/2014, entitled ‘Basis of calculation’, states:
‘1. In no case aid or support shall be granted for a number of animals greater than that shown in the aid application or in the payment claim.
2. Animals present on the holding shall only be considered as determined if they are identified in the aid application or in the payment claim. Identified animals may be replaced without the loss of the right to payment of the aid or support, provided that the beneficiary has not yet been informed by the competent authority of a non-compliance in the application or claim or has not yet been given notice of the authority’s intention to carry out an on-the-spot check. Where a Member State does not make use of the possibility of having a claimless system, in accordance with the rules laid down by the Commission on the basis of Article 78(b) of Regulation (EU) No 1306/2013, it shall ensure by any means that there are no doubts as to which animals are covered by the beneficiaries’ applications or claims.
3. Without prejudice to Article 31, if the number of animals declared in an aid application or payment claim exceeds that determined as a result of administrative checks or on-the-spot checks, the aid or support shall be calculated on the basis of the animals determined.’
10. Article 31(1) of Delegated Regulation No 640/2014, entitled ‘Administrative penalties in respect of declared animals under the animal aid schemes or animal-related support measures’, is worded:
‘Where, in respect of an aid application under an animal aid scheme or in respect of a payment claim under an animal-related support measure, a difference is found between the number of animals declared and that determined in accordance with Article 30(3), the total amount of aid or support to which the beneficiary is entitled under that aid scheme or support measure for the claim year concerned shall be reduced by the percentage to be established in accordance with paragraph 3 of this Article, if no more than three animals are found with non-compliances.’
5. Implementing Regulation (EU) No 809/2014
11. Article 15 of Implementing Regulation No 809/2014 (7) states, under the heading ‘Amendments to the single application or payment claim’, inter alia:
‘1. After the final date of submission of the single application or payment claim, individual agricultural parcels or individual payment entitlements may be added or adjusted in the single application or payment claim provided that the requirements under the direct payment schemes or rural development measures concerned are respected.
…
3. Where the competent authority has already informed the beneficiary of any case of non-compliance in the single application or payment claim or where it has given notice to the beneficiary of its intention to carry out an on-the-spot check or where an on-the-spot check reveals any non-compliance, amendments in accordance with paragraph 1 shall not be authorised in respect of the agricultural parcels affected by the non-compliance.
…’
12. Article 21(1) of Implementing Regulation No 809/2014 states, under the heading ‘Requirements pertaining to livestock aid application and to payment claims under animal-related support measures’, inter alia:
‘A livestock aid application as defined in point (15) of the second subparagraph of Article 2(1) of Delegated Regulation (EU) No 640/2014 … shall contain all information necessary to establish eligibility for the aid and/or support, and in particular:
…
(c) the number of animals of each type in respect of which a livestock aid application or a payment claim is being submitted and, for bovines, the identification code of the animals;
…’
B. National law
13. Paragraph 4 of A termeléshez kötött közvetlen támogatások igénybevételének szabályairól szóló 9/2015. (III. 13.) FM rendelet (Decree No 9/2015 of 13 March 2015 of the Minister for Agriculture on the scheme for direct coupled support; ‘Ministerial Decree No 9’) states inter alia as follows:
‘(2) The Public Treasury shall adopt the aid decision after performing the checks established … in [Commission] Delegated Regulation (EU) No 640/2014 … and having regard to the rules on reductions and other penalties provided for therein.
…’
14. Under Paragraph 7(3) of Ministerial Decree No 9, ‘the minimum number of animals eligible for aid … is one.’
15. Paragraph 11(1)(e) of Ministerial Decree No 9 is worded:
‘Farmers are entitled to receive the suckler cow premium … where more than 50% of the herd declared for the purposes of the aid comprises calves intended for meat production and at least 30% of the animals included in the aid application have calved during the year in question; calves born to mothers included in the aid application during the retention period must be held in the same herd as their mothers for at least one month from the date of their birth …’
III. Facts in the main proceedings, questions referred for a preliminary ruling and procedure before the Court
16. On 9 May 2019, the applicant submitted an application, to the first-tier authority responsible for agricultural support payments, for payment of coupled support for suckler cows (suckler cow premium) in respect of 11 animals.
17. On 25 June 2020, that authority refused the application for payment of the premium on the grounds that only three of the 11 animals had calved during the period in question, producing a calving rate of 27%, which did not meet the requirements in Paragraph 11(1)(e) of Ministerial Decree No 9. In such circumstances, none of the animals included in the application was eligible, nor did Article 31 of Delegated Regulation No 640/2014 apply.
18. In response to an administrative appeal lodged by the applicant, the Agrárminiszter confirmed the decision of the first-tier authority and declared that, since the calving rate of 30% had not been met among the animals included in the aid application, the number of eligible animals was zero, in accordance with Paragraph 7(3) of Ministerial Decree No 9.
19. The applicant brought before the referring court an action against the appeal decision. In support of his action, he claimed that the Agrárminiszter had infringed Articles 30 and 31 of Delegated Regulation No 640/2014 by failing to apply the legal consequences of those provisions or to apply the penalties and reductions in support provided for therein. In addition, it had not established the number of animals determined, within the meaning of point 18 of the second subparagraph of Article 2(1) of the regulation, nor the number of non-compliant animals, but simply had regard to the number of declared animals within the meaning of point 16 of the second subparagraph of Article 2(1) of Delegated Regulation No 640/2014. However, Article 30(3) of that regulation provides that the aid is to be calculated on the basis of the animals determined. Lastly, the applicant submits that 10 of the 11 suckler cows for which the application was made fulfilled the eligibility criteria, in particular the calving rate of 30%, and thus only a proportionate reduction of the aid, and not its total refusal, was possible.
20. The referring court has doubts as to whether the total refusal of the coupled support is compliant in particular with Articles 30 and 31 of Delegated Regulation No 640/2014 and therefore refers the following questions:
‘(1) Is the practice of a Member State compliant with Article 30(3) of [Delegated Regulation No 640/2014] …, having regard to recitals 28 and 31, points 16 and 18 of Article 2(1) and Article 31(1) to (3) thereof, if that practice establishes that where, under the aid eligibility criterion introduced by the Member State, the calving rate achieved for the number of declared animals is less than the rate required and stipulated for declared animals, the application for payment of coupled support for suckler cows must be refused in its entirety, even where the required calving rate is met by a smaller number of declared animals, because where the calving percentage is less than that required by the national legislation, the result is that none of the declared animals is eligible?
(2) If the response to the previous question is in the negative, in the present case, where the calving percentage achieved is less than that required by the national legislation, having regard to the requirements for a graded and proportionate approach established in recitals 28 and 31 of the aforesaid regulation and the articles of EU law cited in the first question referred for a preliminary ruling, must the number of eligible animals within the meaning of point 18 of Article 2(1) and Article 30(3) of the regulation be determined:
(a) by classing as eligible animals only those which have calved; or
(b) by classing as eligible animals those animals from among the declared animals which comprise the group in which the calving rate stipulated in the national legislation is reached?
(3) Having regard to Article 30(3) and Article 31(1) and (2) of Delegated Regulation No 640/2014 and the requirement for proportionality established in recital 31 thereof, must Article 31(3) of that regulation be interpreted as meaning that the penalty is to be determined on the basis of the ratio of the non-compliant to compliant animals, or on the basis of the ratio of the declared animals to the compliant animals, and also that the quotient thus obtained must still be multiplied by 100, in a percentage calculation?’
21. In addition to the applicant, the Hungarian Government and the European Commission also submitted written observations on those questions in the proceedings before the Court. In accordance with Article 76(2) of the Rules of Procedure of the Court of Justice, the Court did not consider it necessary to hold a hearing.
IV. Assessment
A. Subject matter of the first question
22. The first question concerns the interpretation of the provisions of EU law on voluntary coupled support based on livestock aid applications under animal aid schemes, (8) which Ministerial Decree No 9 was issued to implement. To that end, particular regard must be had to Regulation No 1307/2013 and its implementing Delegated Regulations Nos 639/2014 and 640/2014, and also Implementing Regulation No 809/2014.
23. Under Paragraph 11(1)(e) of Ministerial Decree No 9, entitlement to coupled aid for suckler cows presupposes, inter alia, that at least 30% of the animals of the herd declared for the purposes of the aid and included in the application have calved in the claim year. According to the information provided by the Hungarian Government, the purpose of the 30% calving rate is to create an incentive for farmers to maintain or even enlarge the size of their herd in the long term.
24. Pursuant to that provision, the Agrárminiszter refused the applicant’s aid application in its entirety on the ground that the 11 suckler cows shown therein had only achieved a calving rate of 27% in the claim year. The applicant does not dispute that, but seeks by his action to have the aid applied for granted to him in respect of only ten suckler cows, which had achieved the required calving rate of 30%. The applicant and the Hungarian Government submit that that rate is only the basis for calculating the amount of aid and therefore the aid may merely be reduced proportionately.
25. First, I will examine whether Member States may introduce such an aid scheme. In addition, clarification is required as to whether an application for coupled aid and the number of animals shown therein may be subsequently amended, as the applicant submits (see (B)).
26. Lastly, I will examine whether the provisions of EU law on the calculation of coupled aid and the imposition of administrative penalties merely allow for a reduction of the aid – rather than refusal thereof – in this case (see (C)).
B. Discretion of the Member States to lay down the conditions for granting coupled aid
27. Article 52(9) of Regulation No 1307/2013 empowers the Commission to adopt delegated acts, in accordance with Article 70 of that regulation, laying down, inter alia, the conditions for granting coupled support. Accordingly, under the heading ‘Conditions for granting support’, Article 53(1) of Delegated Regulation No 639/2014 provides that Member States are to lay down eligibility criteria for coupled support measures in compliance with the framework set out in Regulation No 1307/2013 and the conditions laid down in that delegated regulation.
28. In my view, in adopting the aid scheme in Paragraph 11(1)(e) of Ministerial Decree No 9, Hungary exercised the discretion accorded to it, in accordance with the applicable provisions of EU law. The criteria for granting coupled aid set out therein constitute ‘eligibility conditions’ within the meaning of paragraph 3(g) of Annex I to Delegated Regulation No 639/2014, (9) which have been notified to the Commission pursuant to Article 67(1) of that regulation. (10)
29. Paragraph 11(1)(e) of Ministerial Decree No 9 thus lays down, as the Commission also observes, the conditions for receiving the coupled aid provided for therein. Accordingly, the suckler cows shown in the application, that is to say the number of animals declared within the meaning of point 16 of the second subparagraph of Article 2(1) of Delegated Regulation No 640/2014, (11)must reach a calving rate of 30% in the claim year. That is therefore a condition for granting aid which is strictly linked to the number of animals declared in the application.
30. That understanding is confirmed both by the wording of Article 52(6) of Regulation No 1307/2013, under which the annual payment of coupled support is based, inter alia, on a fixed number of animals, and by the definitions, in points 13 and 15 of the second subparagraph of Article 2(1) of Delegated Regulation No 640/2014 which give it concrete expression, of an ‘animal aid scheme’ and an ‘livestock aid application’ based thereon. (12)
31. Accordingly, Paragraph 11(1)(e) of Ministerial Decree No 9 – with regard to the ‘animals declared’ in the aid application within the meaning of point 16 of the second subparagraph of Article 2(1) of Delegated Regulation No 640/2014 – is based on a fixed number of animals. This number alone should be taken as the basis for determining whether or not the calving rate of 30% was achieved in the claim year and whether the aid was to be granted.
32. The argument that Paragraph 11(1)(e) of Ministerial Decree No 9 does not lay down the conditions for granting the aid, but merely the basis for calculating the coupled aid on the basis of the number of ‘animals determined’ within the meaning of point 18 of the second subparagraph of Article 2(1) of Delegated Regulation No 640/2014, must therefore be rejected.
33. It is common ground that the applicant does not satisfy those conditions for the grant of coupled aid in terms of the number of animals applied for, namely 11 cows. The calving rate calculated on the basis of that number after the end of the claim year was only 27%.
34. Nevertheless, the applicant argues that he should be granted aid for at least 10 cows because they reached the calving rate of 30%. That argument implies in essence that the number of animals declared in the original aid application of 9 May 2019 should be reduced subsequently.
35. However, as the Commission rightly states, such subsequent correction is not possible in this case.
36. Under Article 15(3) of Implementing Regulation No 809/2014, in conjunction with Article 21(1)(c) thereof, amendments to the payment claims in respect of the affected agricultural parcels, including the number of animals shown therein, are not to be authorised where the competent authority has already informed the beneficiary of any case of non-compliance in the payment claim. Under point 2(a) of the second subparagraph of Article 2(1) of Delegated Regulation No 640/2014, any non-respect of those eligibility criteria is to be considered as such non-compliance. The competent authority informed the applicant accordingly on 25 June 2020, that is to say after the end of the claim year, when it rejected the aid application with reference to the failure to achieve the calving rate of 30%.
37. The provisions of EU law referred to above therefore do not preclude the decision of the Agrárminiszter, based on Paragraph 11(1)(e) of Ministerial Decree No 9, to refuse the applicant the requested aid in its entirety.
C. Inapplicability of Articles 30 and 31 of Delegated Regulation No 640/2014
38. Contrary to the submissions of the applicant and the Hungarian Government, and the doubts of the referring court, Articles 30 and 31 of Delegated Regulation No 640/2014 do not lead to a different conclusion. Those provisions do not concern the conditions for granting coupled aid, and therefore cannot limit the Member State’s discretion in that regard, nor are they applicable where a condition for granting aid of the present kind is not complied with.
1. Article 30 of Delegated Regulation No 640/2014
39. Article 30 of Delegated Regulation No 640/2014 does not, according to its heading (‘Basis of calculation’), lay down the conditions for granting coupled aid, but merely the criteria for the calculation thereof. Under Article 30(1), no aid may be granted for a number of animals greater than that shown in the aid application or in the payment claim. The first sentence of Article 30(2) requires that the number of animals present on the holding be determined and identified for that purpose in the aid application. If the number of animals declared in the aid application exceeds that determined as a result of administrative checks or on-the-spot checks, the aid application is, under Article 30(3), to be calculated on the basis of the number of animals determined. (13)
40. Those provisions therefore do not concern the eligibility condition laid down in Paragraph 11(1)(e) of Ministerial Decree No 9 relating to the number of animals declared in respect of a claim year, and are inapplicable.
41. The wording of Article 30(1) of Delegated Regulation No 640/2014 does not seem to rule out the possibility of aid being granted for fewer animals than that shown in the aid application or in the payment claim.
42. However, as set out in points 28 to 36 above, the subsequent reduction of the number of animals declared in the application, in this case from 11 to 10 suckler cows, would not be compliant with either the conditions for granting aid under the aid scheme laid down in Paragraph 11(1)(e) of Ministerial Decree No 9 or Article 15(3) of Implementing Regulation No 809/2014. Moreover, it would be contrary to the objective of that aid scheme, as emphasised by the Hungarian Government. The condition that at least 30% of the suckler cows declared in the aid application must calve in the claim year is intended to create an incentive for farmers to maintain or even enlarge the size of their herd in the long term (see point 23 above). However, neither that incentive effect nor the maintenance of the herd would be guaranteed if a farmer could subsequently reduce the number of animals declared in the aid application in order to achieve the prescribed calving rate.
2. Article 31 of Delegated Regulation No 640/2014
43. The provisions on administrative penalties laid down in Article 31 of Delegated Regulation No. 640/2014 are also not applicable and can therefore not lead to a percentage reduction of the amount of the aid claimed.
44. Under point 2(a) of the second subparagraph of Article 2(1) of Delegated Regulation No 640/2014, any non-respect of the eligibility criteria constitutes non-compliance (see point 36 above), which may in principle entail administrative penalties. Article 31(1) to (3) of that regulation takes the number of animals determined and non-compliances concerning individual animals as a basis to that end alone. (14) However, it is a requirement that the entitlement to aid basically exists.
45. However, for that purpose Paragraph 11(1)(e) of Ministerial Decree No 9 requires, as has been stated, that the number of suckler cows declared in the aid application achieves a calving rate of 30% in the claim year. That condition for granting aid is – in accordance with the requirements laid down in Article 52(6) of Regulation No 1307/2013, in conjunction with points 13 and 15 of the second subparagraph of Article 2(1) of Delegated Regulation No 640/2014 (see points 30 and 31 above) – thus herd-related and not (individual) animal-related.
46. A proportionate reduction of the aid according to the provisions of Article 31 of Delegated Regulation No 640/2014 is therefore not possible. Since this case concerns non-respect of an eligibility criterion, the principle of proportionality, which is given concrete expression by those provisions, (15) does not require a different conclusion. Aid may not be granted, even in part, if the conditions laid down in relation to it are not met.
D. Interim conclusion
47. It follows from the foregoing considerations that Article 30(3) and Article 31(1) to (3) of Delegated Regulation No 640/2014 do not preclude the decision-making practice at issue.
48. The answer to the first question must therefore be in the affirmative.
49. Consequently, it is likewise not necessary to answer the second and third questions referred with regard to the method for calculating the percentage reduction pursuant to Article 30(3) and Article 31(1) to (3) of Delegated Regulation No 640/2014.
V. Conclusion
50. I propose that the Court of Justice should answer the first question as follows:
The total refusal of an application for payment of coupled support for suckler cows on the ground that the calving rate laid down in national legislation has not been achieved in relation to the number of animals declared in the aid application is compliant with Article 30(3) and Article 31(1) to (3) of Commission Delegated Regulation (EU) No 640/2014 of 11 March 2014 supplementing Regulation (EU) No 1306/2013 of the European Parliament and of the Council with regard to the integrated administration and control system and conditions for refusal or withdrawal of payments and administrative penalties applicable to direct payments, rural development support and cross compliance, even if a subset of animals smaller than the number of animals declared do achieve that calving rate.