Argo Kalda Mardi talu (Common agricultural policy - Direct payments - Opinion) [2018] EUECJ C-435/17

BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!

(Request for a preliminary ruling from the Tartu Halduskohus (Administrative Court, Tartu, Estonia))

(Reference for a preliminary ruling — Common agricultural policy — Direct payments — Regulation (EU) No 1306/2013 — Cross-compliance system — Standards for good agricultural and environmental condition — Administrative penalties — Member States margin of discretion — National rules requiring farmers to preserve archaeological structures — Compatibility with EU law)

1. The common agricultural policy (‘the CAP’) provides, amongst other measures, for the payment of EU support to farmers. In order to benefit from such payments farmers must comply with certain rules known generally as the cross-compliance system. It is a requirement of those rules that farmers, inter alia, maintain land eligible for financial support in good agricultural and environmental condition. In this reference for a preliminary ruling the Tartu Halduskohus (Administrative Court, Tartu, Estonia) seeks to ascertain whether it is compatible with the cross-compliance rules in Regulation (EU) No 1306/2013 (2) for Member States to require farmers to preserve archaeological structures located on farmland and whether it is legitimate to impose an administrative penalty if such a structure is dismantled. The referring court also wishes to know whether a beneficiary of EU support must comply with the requirement to maintain land in good agricultural and environmental condition as regards his entire holding or solely in relation to the specific agricultural area for which financial support is requested.

2. Regulation (EU) No 1307/2013 (3) establishes, inter alia, common rules on payments granted directly to farmers (also known as ‘direct payments’). (4)

3. Article 4(1) of Regulation No 1307/2013 includes the following definitions: ‘farmer’ means a natural or legal person, or a group of natural or legal persons, regardless of the status granted to such a group and its members by national law, whose holding is situated within, inter alia, the territory of the Member States; (5) a ‘holding’ is all the units used for agricultural activities and managed by a farmer situated within the territory of the same Member State; (6) and an ‘agricultural area’ is any area taken up by arable land, permanent grassland and permanent pasture, or permanent crops. (7)

4. Regulation No 1306/2013 lays down rules on matters including the cross-compliance system. (8) The words ‘farmer’ (Article 2(a)); ‘agricultural activity’ (Article 2(b)); ‘agricultural area’ (Article 2(c)); and ‘direct payments’ (Article 2(e)) have the same meaning as the corresponding terms in Regulation No 1307/2013. The word ‘holding’ in Article 2(d) means the same as ‘holding’ in Regulation No 1307/2013, save as provided in Article 91(3) of Regulation No 1306/2013 regarding the cross-compliance system. Article 72(1)(a) of Regulation No 1306/2013 provides that each year, a beneficiary is to submit a payment claim for the relevant area indicating, where applicable, all the agricultural parcels on the holding, as well as the non-agricultural area for which support is claimed. (9)

5. The rules set out in Title VI of Regulation No 1306/2013 govern cross-compliance. The general principle in Article 91(1) states that where a beneficiary fails to comply with those rules an administrative penalty is to be imposed. (10) Under Article 91(2), such an administrative penalty applies where the non-compliance is the result of an act or omission directly attributable to the beneficiary concerned and where one or both of the following conditions are met: (a) the non-compliance is related to the agricultural activity of the beneficiary; (b) the area of the holding of the beneficiary is concerned.

6. In accordance with Article 93(1)(a) of Regulation No 1306/2013, the rules on cross-compliance include, inter alia, meeting the standards established at national level for good agricultural and environmental condition of land level as listed in Annex II to Regulation No 1306/2013.

7. Pursuant to Article 94, Member States must ensure that all agricultural areas (including land which is no longer used for production purposes) is maintained in good agricultural and environmental condition. Member States are to define, at national or regional level, minimum standards for good agricultural and environmental condition of land that beneficiaries must respect on the basis of Annex II to Regulation No 1306/2013, taking into account the specific characteristics of the areas concerned, including soil and climatic condition, existing farming systems, land use, crop rotation, farming practices, and farm structures. In so doing Member States are not to define minimum requirements which are not established in Annex II. (11)

8. Article 97 states that the administrative penalty laid down in Article 91 is to be imposed where the rules on cross-compliance are not met at any time in a given calendar year, and where the non-compliance in question is directly attributable to the beneficiary who submitted the aid application or the payment claim in the calendar year concerned.

9. Annex II to Regulation No 1306/2013 is entitled ‘Rules on cross-compliance pursuant to Article 93’. It uses the acronym ‘GAEC’ to mean ‘Standards for good agricultural and environmental condition of land’. The table in Annex II includes the following entry:

10. Commission Delegated Regulation (EU) No 640/2014 (12) lays down provisions which supplement certain elements of Regulation No 1306/2013, inter alia those relating to identifying administrative penalties and determining the specific rate to be imposed, as well as the basis for calculating aid, and includes rules on how to deal with certain cases in which eligible areas contain landscape features or trees. (13) Pursuant to Article 5(1) and (2) of Delegated Regulation No 640/2014, in order to ensure compliance with the CAP measures Member States are to establish systems to identify agricultural parcels and must ensure that such parcels that are declared are clearly identified. (14) Specific provision is made for landscape features subject to the requirements and standards listed in Annex II to Regulation No 1306/2013 which form part of the total area of an agricultural parcel. Such features are considered to be part of the eligible area of that parcel under Article 9(2) of Delegated Regulation No 640/2014. (15) In accordance with Article 39(1) of that regulation, where non-compliance results from a beneficiary’s negligence, the reduction applied is as a general rule to be 3% of the total amount of the direct payments at issue.

11. Pursuant to national rules, a beneficiary of a direct payment within the meaning of Article 92 of Regulation No 1306/2013 must comply with the requirement to maintain land in good agricultural and environmental condition as regards his agricultural activities and in relation to all land in his holding. That includes retaining landscape features and carrying out minimum amount of maintenance work. (16) An archaeological structure — such as, for example, a burial ground, must be preserved. For that purpose the following may be classified as an archaeological structure: ‘sites of ancient, medieval and modern settlements, fortresses, refuges, places of worship, burial grounds, ancient fields, cup-marked stones, roads, bridges, harbour sites, and sites related to early industry.

12. In 2016 Argo Kalda Mardi talu (Argo Kalda’s Mardi farm: ‘Mardi talu’) applied for a single area payment and a payment for agricultural practices beneficial to the climate and the environment. On 2 November 2016 Põllumajanduse Registrite ja Informatsiooni Amet (Agricultural Registers and Information Office, ‘PRIA’) carried out an on-site check of Mardi talu’s agricultural unit. In the report made following that site check PRIA stated, ‘in field No 46 — on edge of field … archaeological monument — cairn, the stones have been moved to the edge of the field, existing brushwood has been removed. Photographs.’

13. On 24 November 2016 PRIA informed Mardi talu that it had infringed national legislation laying down requirements for maintaining land in good agricultural and environmental condition (‘the national measures at issue’). Accordingly, an administrative penalty was imposed and the aid which Mardi talu had requested was reduced by 3%. On 30 November 2016 Mardi talu challenged PRIA’s finding, it countered that since the cairn was unmarked in the open air and was not on agricultural land but on the margin of the field area, it had not breached the national measures at issue.

14. PRIA replied on 7 December 2016, stating that, in accordance with Article 72(1)(a) of Regulation No 1306/2013, those rules had also to be complied with in respect of land which lies outside the boundaries of the field area and for which no aid was requested. By a decision dated 15 December 2016 PRIA awarded Mardi talu a single area payment of EUR 82 606.88. An administrative penalty was then imposed and that payment was accordingly reduced by 3% (EUR 2 554.94). Pursuant to a second decision of the same date PRIA granted Mardi talu a payment of EUR 37 549.94 for agricultural practices beneficial for the climate and the environment. That payment was likewise reduced by 3% (EUR 1 161.34) following imposition of an administrative penalty.

15. On 17 January 2017 Mardi talu submitted a complaint to PRIA seeking the annulment of both decisions in so far as an administrative penalty had been impose and the payments granted had been reduced by 3%. PRIA rejected that complaint by a decision dated 20 February 2017.

16. On 23 March 2017 Mardi talu instituted proceedings before the referring court seeking: (i) annulment of the administrative penalties imposed by virtue of the two decisions of 15 December 2017; (ii) an order to pay the sums deducted; and (iii) annulment of the decision of 20 February 2017. Mardi talu made a number of points in support of its action, including that there had been no infringement of the cross-compliance rules. The pile of stones was not a funeral cairn: it had been collected in a field management operation. The area of the alleged breach was not land that Mardi talu used for agricultural production and no payment had been applied for in respect of that land.

17. PRIA countered that evidence of an archaeological structure had been registered on 6 January 1998 and was confirmed in the ‘Hansapõld’ field cadastral unit on the basis of the State registry data on cultural monuments. PRIA also relied on material provided by the Heritage Protection Office in confirming the archaeological status of the funeral cairn. The land where the cairn was located formed part of Mardi talu’s holding. The obligation under national law to protect archaeological structures applied not only to land cultivated for agricultural production for which aid was requested, but to the entire agricultural holding.

18. The referring court states that under national rules an archaeological structure, a burial ground, ancient field, cup-marked stone, road or bridge must be preserved, and that ancient, medieval and modern burial grounds are all archaeological structures for the purposes of those rules. That court is of the view that the aim of the national rules at issue is to protect cairns located in Estonia as monuments. It is common ground that Mardi talu was not using the land where the cairn was situated as agricultural land and that the cairn was on the margin of the parcel that was indeed used for agricultural production. However, it is unclear whether the aim of the relevant EU legislation, notably Regulation No 1306/2013, is to preserve funeral cairns as archaeological structures. Annex II to Regulation No 1306/2013 gives the impression that, in respect of the environment, climate change and good agricultural condition of land, the retention of landscape features is listed with a view to protecting the environment as an ecological and biological system, rather than in order to preserve cultural and historical structures.

19. Accordingly, the referring court requests a preliminary ruling on the following questions:

‘(1) Is a requirement to preserve cairns, established by a Member State for an applicant for a single area payment and a payment for agricultural practices beneficial for the climate and the environment, for the breach of which a reduction of the payment by 3% is imposed as an administrative penalty laid down by Article 39 of [Delegated Regulation No 640/2014], compatible with Article 93(1) and Article 94 of [Regulation No 1306/2013] and the minimum standards laid down in Annex II to that regulation?

(2) If the answer to Question 1 is “No”, must, in accordance with Article 72(1)(a), Article 91(1) and (2), Article 93(1) and Article 94 of [Regulation No 1306/2013] and [Article 4(1) of Regulation No 1307/2013], an applicant for a single area payment and a payment for agricultural practices beneficial for the climate and the environment comply with the requirements of good agricultural and environmental condition on the whole of his holding or solely on the agricultural area in respect of which the payment is specifically applied for, in order to exclude the imposition of an administrative penalty?’

20. Written observations have been submitted by Argo Kalda Mardi talu, the Estonian Government and the European Commission. The Court decided to proceed without a hearing.

21. The referring court seeks to ascertain by Question 1 whether national rules which require the preservation of archaeological structures, in this case a funeral cairn, are compatible with the requirements in Regulation No 1306/2013 concerning standards for good agricultural and environmental condition of land, in particular the retention of landscape features (‘GAEC 7’), and whether the administrative penalty imposed for dismantling and moving such a structure was therefore permissible.

22. Mardi talu submits that whilst Member States have a margin of discretion, the cross-compliance provisions in Regulation No 1306/2013 do not extend to protecting a Member State’s cultural heritage. Thus, where an archaeological structure is not part of the eco-system or biological environment it does not fall within the scope of the cross-compliance rules in that regulation. The imposition of an administrative penalty and the resulting reduction in the aid granted to Mardi talu was therefore contrary to EU law.

24. I also consider that the national rules at issue are compatible with EU law.

25. It is common ground that Mardi talu as the beneficiary of EU support falls within the scope of the cross-compliance provisions in Title VI of Regulation No 1306/2013 in so far as it is a farmer of a holding carrying out agricultural activities within the meaning of Regulation No 1307/2013.

26. The standards for good agricultural and environmental condition of land mentioned in Article 93(1) and listed in Annex II are not defined comprehensively in Regulation No 1306/2013. The GAEC 7 standard which refers to the retention of landscape features sets out a non-exhaustive list of such features. In the absence of a definition in Regulation No 1306/2013, that term must be interpreted taking into account its usual meaning and the context in which it is used. (18)

27. The legislative context does not include qualifying words, such as the ‘natural’ landscape features or ‘agricultural’ landscape features. It is therefore consistent with that context to construe the words ‘retention of landscape features’ as including potentially all the visible features of an area of countryside or land. That would cover buildings or other man-made interventions on the landscape, as well as those features which result from the natural contours of the landscape (such as mountains, rivers or grassland). It seems to me that that view is compatible with GAEC 7 and Annex II to Regulation No 1306/2013, which includes elements that are the result of human intervention, such as hedges, ponds, ditches, terraces and field margins. The term ‘landscape features’ points to those elements by which certain areas of the countryside can be identified. In so far as the GAEC standards also apply to the environmental condition of land, it is not necessary to demonstrate that those elements are used for agricultural purposes. Nor is it a requirement that the good environmental condition of land concerns solely the eco-system of the biological environment.

28. The text of point GAEC 7 in Annex II to Regulation No 1306/2013 suggests that the area of land itself should be kept generally in good condition. In such circumstances it may be the case that purely aesthetic considerations apply or that a Member State wishes to retain features of cultural or historic value in its landscape.

29. The first subparagraph of Article 94 of Regulation No 1306/2013 affords Member States a wide margin of discretion. They must ensure that all of the agricultural area, including land which is no longer used for production purposes, is maintained in good agricultural and environmental condition. Thus, whether the cairn was situated on land used for agricultural purposes or on an adjoining plot is not strictly relevant provided that it was on land that comprised Mardi talu’s holding as defined in Article 91(3)(a) of that regulation.

30. Pursuant to Article 94 of Regulation No 1306/2013, it is the Member States that define at national or regional level the minimum standards for good agricultural and environmental condition of land on the basis of Annex II. Thus, it is permissible for Member States to lay down requirements regarding their cultural heritage where they consider it appropriate so to do. In so far as such requirements concern either the good agricultural or environmental condition of land, they are also compatible with Annex II to Regulation No 1306/2013.

31. That view is consistent with the general aim of Regulation No 1306/2013, expressed in recital 54, to contribute to the development of sustainable agriculture through better awareness on the part of beneficiaries of the need to respect the basic standards concerning, inter alia, the good agricultural and environmental condition of land. Furthermore, Member States may wish to preserve archaeological structures for reasons other than the aesthetic or the benefits to cultural heritage. It may — for example — be the case that such structures contribute to preventing soil erosion and maintaining soil organic matter. Archaeological structure(s) may also host birds, insects and plants and may thus constitute a thriving eco-system.

32. Finally, it seems to me that the Court’s ruling in Horvath (19) provides helpful guidance here. In that case the Court was asked whether a Member State may include among the GAEC standards in Regulation (EC) No 1782/2003 (20) requirements relating to the maintenance of visible rights of way. The Court held that whilst Member States were obliged to comply with the requirements listed in Annex IV to Regulation No 1782/2003, they nonetheless retained a certain discretion with regard to determining those requirements. The phrase ‘good agricultural and environmental condition’ indicated that Member States might adopt GAEC requirements for environmental purposes. Thus an obligation to maintain a landscape feature which did not pursue an agricultural objective but concerned the environment constituted a GAEC requirement. (21)

33. Landscape features are physical elements of the environment. As the Court explained, ‘the requirements relating to the retention of those features must contribute to their preservation as such. The maintenance obligations are capable of contributing to the retention of such rights of way as physical elements of the environment. … It follows that an obligation deriving from those standards may have the environmental objective of avoiding deterioration of habitats …’ The Court acknowledged that the landscape features at issue in that case were also capable of helping to preserve habitats. (22)

34. In summary, in my view the concept of ‘environment’ as used in the cross-compliance context should not be understood narrowly so as to cover only the immediate biological surroundings in which farming activity takes place. As the Court has already indicated in Horvath, landscape features that do not directly contribute to the processes of the farming industry are nevertheless an integral part of the rural countryside; and their preservation may properly form part of the cross-compliance obligations that farmers are required to respect in return for the direct aid that they receive from the EU budget and hence from the EU taxpayer. (23)

35. Thus, EU law does not preclude a Member State from including the preservation of archaeological monuments, such as a stone funeral cairn, as part of the standards for the good agricultural and environmental condition of land for the purposes of point GAEC 7 in Annex II to Regulation No 1306/2013.

36. That being the case, I am of the view that the administrative penalty was permissible.

37. The referring court has stated that the removal of the cairn was contrary to the relevant national rules. Thus, Mardi talu infringed the cross-compliance rules within the meaning of Article 93 of Regulation No 1306/2013. The conditions which trigger the imposition of an administrative penalty laid down in Article 91(1) and (2) therefore applied. In accordance with Article 39(1) of Delegated Regulation No 640/2014 the appropriate reduction was 3% (the minimum amount provided) of the total amount of aid.

38. I therefore conclude that pursuant to Articles 93 and 94 of Regulation No 1306/2013, a Member State may include requirements relating to the preservation of archaeological structures, such as a stone funeral cairn, in its rules relating to the GAEC standards listed in Annex II to that regulation, in as much as those requirements contribute to the preservation of such structures as landscape features or, as the case may be, to avoiding habitat deterioration. Where a beneficiary of a direct payment fails to comply with the rules on cross-compliance, in particular by not preserving an archaeological monument as required by national rules, it is compatible with the provisions of Title VI of Regulation No 1306/2013 to apply the appropriate administrative penalty in accordance with Article 39 of Delegated Regulation No 640/2014.

39. Question 2 concerns the interpretation of the area of the‘holding’ of the beneficiary concerned. The referring court seeks to ascertain whether a beneficiary must comply with the requirements of good agricultural and environmental condition on his entire holding or solely on the specific agricultural area for which aid has been requested.

40. That court states that Mardi talu did not use the land on which the cairn stood as agricultural land, and that no aid was requested in relation to that plot. The cairn was on the margin of the parcel for which aid was requested. Those facts are not disputed by the beneficiary, save for the location of the cairn. Mardi talu maintains that the referring court’s description of the facts in that respect is incorrect, as the funeral cairn had been erected on land adjoining the plot for which aid was requested. The stones had been there for decades rendering that land unsuitable for agricultural use.

41. The referring court states that Question 2 arises only in case of a negative answer to its first question. However, it seems to me (as the Estonian Government and the Commission submit) that that question is actually relevant in the case of a positive response. I shall therefore consider the second question with a view to providing a full reply to the issues raised in the order for reference.

42. It is common ground that the cairn was situated on the farm of Mardi talu, the beneficiary for the purposes of the cross-compliance rules. It is also not in dispute that the site of the cairn was not an agricultural production unit for which aid was sought.

43. It seems to me that a beneficiary must necessarily comply with the cross-compliance rules in relation to the entire holding, rather than solely for the specific area used for agricultural production for which aid is requested. I have already hinted that that reflects my reading of Article 72(1)(a) read together with the cross-compliance rules in Title VI of Regulation No 1306/2013. (24)

44. Article 91(2)(b) states that an administrative penalty only applies where non-compliance is the result of an act or omission directly attributable to the beneficiary concerned and where one or both of two conditions are met: (a) the non-compliance is related to the agricultural activity of the beneficiary (which is not the case here); (b) the area of the holding of the beneficiary is concerned. The ‘holding’ is defined in Article 91(3)(a) as meaning all the production units and areas managed by the beneficiary situated within the territory of the same Member State. (25) That wording indicates that the activities of the beneficiary in relation to the entire holding are relevant to the competent authorities’ assessment as to whether the cross-compliance rules are respected in any particular case.

45. That view is underpinned by recital 53 of Regulation No 1306/2013, which states that Regulation No 1782/2003 established the principle that the full payment to beneficiaries of certain financial support under the CAP should be linked to compliance rules relating to, inter alia, land management. Under the resulting ‘cross-compliance’ system Member States are to impose penalties by way of reduction or exclusion of aid. Recital 54 adds that the cross-compliance system incorporates in the CAP basic standards concerning, for example the environment, climate change and good agricultural and environmental condition of land confirming the wide scope of those rules.

46. Those objectives cover broad aims which are not subject to express limitation. That is not surprising. It would be difficult to justify paying public money in direct aid to farmers for certain plots of land which form part of their general holding, whilst tolerating activities that are detrimental to the environment as a whole on other plots on the same holding that are not used for agricultural purposes.

47. The legislative history of Regulation No 1306/2013 sheds further light on the aims of the rules. The sequence of legislative acts is as follows. Regulation No 1782/2003 (which was replaced by Regulation (EC) No 73/2009 (26)) established the principle that the full payment of aid to beneficiaries under the CAP should be linked to a system of cross-compliance. A number of separate instruments were then adopted laying down the legislative framework for the CAP in the period from 2014 to 2020 including Regulation No 1306/2013 and Regulation No 1307/2013, which repealed and replaced Regulation No 73/2009. Regulation No 1306/2013 lays down rules that were previously set out in Regulation No 73/2009 in particular the rules to guarantee compliance with the obligations laid down by direct payment provisions, including checks and the application of administrative measures and administrative penalties in the case of non-compliance, the rules related to cross-compliance such as the statutory management requirements, the good agricultural and environmental condition, the monitoring and evaluation of relevant measures and the rules related to the payment of advances and the recovery of undue payments. (27)

48. In the explanatory memorandum to its proposal for what became Regulation No 1782/2003 setting out its views on a long term perspective for sustainable agriculture, under the heading ‘Reinforcement of environmental, food safety, animal health and welfare and occupational safety standards’, the Commission stated:

‘Compulsory cross-compliance will apply to statutory European standards in the field of environment, food safety, animal health and welfare and occupational safety related to the farm level. As a necessary complement to decoupling in order to avoid land abandonment and subsequent environmental problems, beneficiaries of direct payments will also be obliged to maintain all agricultural land in good agricultural condition.

This will be applied as a whole-farm approach, and sanctions will be applicable to any case of non-compliance on a beneficiary’s farm. It will apply to all sectors and apply to used as well as unused agricultural land.

Farmers receiving the single farm payment or other direct payments under the CAP who do not comply with these statutory standards will be subject to a system of sanctions. The penalty will take the form of a partial or full reduction of the aid (depending on the severity of the case).’ (28)

49. In a later study on the impact of environmental agreements on the CAP it was noted that ‘cross-compliance is one key element of the 2003 CAP reform. The introduction of compulsory cross-compliance means that from 1 January 2005 farmers in receipt of direct payments will be required to respect a set of statutory management requirements (SMRs), as set out in Annex III to Regulation No 1782/2003, and maintain eligible land in good agricultural and environmental condition (GAEC), in line with the framework established by Annex IV to the same regulation. Cross-compliance requirements refer to the whole farm, and also to land and farm branches without direct payments. Non-compliance will lead to determined reductions of direct payments, with 3% (1% to 5%) in the case of a first breach, and 15% to 100% where non-compliance is intentional, depending on the severity, extent, permanence and repetition of non-compliance. Thus, both existing statutory requirements as well as GAEC standards will be enforced through controls within the direct payment system’. (29)

50. Finally, the explanatory memorandum to the Commission’s proposal for Regulation No 1306/2013 notes: ‘Farmers, who are together with foresters the main land managers, will need to be supported in adopting and maintaining farming systems and practices that are particularly favourable to environmental and climate objectives because market prices do not reflect the provision of such public goods. It will also be essential to best harness the diverse potential of rural areas and thus contribute to inclusive growth and cohesion.’ (30)

51. The legislative history indicates that within the context of the CAP, farmers are considered to have obligations which extend beyond agricultural production. They also have a role as guardians of the environment (‘land managers’) in relation to the land which comprises their holding. Thus, the provenance of the cross-compliance rules supports a reading of Regulation No 1306/2013 which construes ‘holding’ as referring to the beneficiary’s entire holding.

52. That might be said to be sufficient to conclude the matter. Nevertheless, for the sake of completeness I shall also briefly consider whether the detailed legislative scheme similarly supports the view that the word ‘holding’ includes land which is not the subject of the aid application.

53. The body of legislation is very complex. It includes Delegated Regulation No 640/2014 which must of course be interpreted in a coherent manner with Regulation No 1306/2013, the enabling regulation. (31) In addition to the terms ‘holding’ and ‘agricultural area’ the latter regulation uses the expression ‘agricultural parcel’ defined in Article 67(4)(a) of Regulation No 1306/2013. That provision is part of Chapter II ‘Integrated administration and control system’ which is in Title V of Regulation No 1306/2013, headed ‘Control systems and penalties’. Those provisions comprise the elements introduced to monitor effectively the distribution of EU aid paid to farmers. (32)

54. Delegated Regulation No 640/2014 introduces a number of detailed technical measures. Inter alia, it sets out the basis for calculating aid, including rules on how to deal with certain cases in which eligible areas contain landscape features or trees (Article 1(h)). Where Member States award single area payments they must ensure that each agricultural parcel declared by a beneficiary is reliably identified, in a manner which enables it to be located and measured (Article 5(2)) in order to enable the competent authorities to carry out the necessary checks.

55. Article 9(2) of Delegated Regulation No 640/2014 provides that any landscape features that fall within Annex II to Regulation No 1306/2013 which form part of the total area of the agricultural parcel are to be considered as part of the eligible area of that parcel. (33)

56. However, the issue here is not whether the site where the cairn was located was eligible for aid. Rather, it is whether the national rules that require the cairn’s preservation as a condition for CAP aid regarding the adjoining plot on whose margins the cairn was located (34) are compatible with EU law. Thus, whether the cairn was located on an agricultural parcel that was itself eligible for EU aid for the purposes of Article 9(2) of Delegated Regulation No 640/2014 cannot affect the proper interpretation of ‘holding’ for the purposes of Articles 2(d) and 91(3) of Regulation No 1306/2013.

57. That said, at a practical level it might be helpful if the referring court established whether the land where the cairn was situated was identified by Mardi talu as part of an eligible area of an agricultural parcel for the purposes of Delegated Regulation No 640/2014. If that were found to be the case, it would be inconsistent with such a finding to determine that no administrative penalty could be imposed regarding the land where the cairn was located simply because that plot was not used for agricultural production. Mardi talu would otherwise be attempting to have its cake and to eat it. Where a farmer identifies the site of an archaeological structure as an agricultural parcel for the purposes of requesting aid, he cannot simultaneously claim that administrative penalties cannot apply to his activities on that land because it is not used for agricultural production.

58. I add that the contrary interpretation (limiting cross-compliance obligations to the parcels of land within a holding that are actually being farmed) would make it all too easy for the unscrupulous to circumvent those obligations. Thus, in year 1 a farmer might refrain from including a parcel of land containing an inconvenient landscape feature (a millennial tree, say, or the remains of an Iron Age fort) in his claim for direct aid. Unhampered by the financial penalty that would be incurred by deliberately breaching a cross-compliance obligation, the farmer then cuts down the tree, or bulldozes the fort. He clears the debris off his land, thereby increasing his available acreage for production and his potential profit line. Then, in year 2, he includes that parcel of land in his claim for direct aid as land that is being farmed. When the situation is thus stated, it becomes plain why the system put in place by the EU legislator only functions correctly if the cross-complaints obligations pertain to all the parcels of land comprising the beneficiary’s holding, whether or not they are actually being farmed at any particular point.

59. It follows that in my view, for the purposes of Article 72(1)(a) and the cross-compliance rules in Title VI of Regulation No 1306/2013, a beneficiary must comply with the requirements of the good agricultural and environmental condition in relation to his entire holding, not solely as regards the specific agricultural area for which aid has been requested.

60. In the light of all the foregoing considerations, I am of the opinion that the Court should answer the question posed by the Tartu Halduskohus (Administrative Court, Tartu, Estonia) as follows:

– Pursuant to Articles 93 and 94 of 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, a Member State may include requirements relating to the preservation of archaeological structures, such as a stone funeral cairn, in its rules relating to the standards for good agricultural and environmental condition of land (GAEC) listed in Annex II to that regulation, in as much as those requirements contribute to the preservation of such structures as landscape features or as the case may be, to avoiding habitat deterioration.

– Where a beneficiary of a direct payment fails to comply with the rules on cross-compliance, in particular by not preserving an archaeological monument as required by national rules, it is compatible with the provisions of Title VI of Regulation No 1306/2013 to apply the appropriate administrative penalty in accordance with Article 39 of Commission Delegated Regulation (EU) No 640/2014 of 11 March 2014 supplementing Regulation No 1306/2013 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.

– For the purposes of Article 72(1)(a) and the cross-compliance rules in Title VI of Regulation No 1306/2013, a beneficiary must comply with the requirements of the good agricultural and environmental condition in relation to his entire holding, not solely as regards the specific agricultural area for which aid has been requested.

2 Regulation 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).

3 Regulation of the European Parliament and of the Council of 17 December 2013 establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy and repealing Council Regulation (EC) No 637/2008 and Council Regulation (EC) No 73/2009 (OJ 2013 L 347, p. 608).

4 The common rules under Regulation No 1307/2013 apply to the support schemes listed in Annex I to that regulation known as direct payments. Those include the single area payment scheme (Article 1(a)). That scheme is a transitional, simplified income support scheme for farmers offered at the date of accession to the Member States that joined the European Union in 2004 to facilitate the implementation of direct payments. I shall refer to direct payments made to beneficiaries under the common rules as ‘aid’ for the purposes of this Opinion.

8 Recital 53 states that Regulation No 1306/2013 establishes the principle that the full payment of financial support to a beneficiary should be linked to the cross-compliance rules. Recital 54 confirms that those rules incorporate basic standards including those concerning good agricultural and environmental condition of land. See also Article 1(d) of Regulation No 1306/2013.

9 Article 67(4) of Regulation No 1306/2013 defines ‘agricultural parcel’ as ‘a continuous area of land, declared by one farmer, which does not cover more than one single crop group; however, where a separate declaration of the use of an area within a crop group is required in the context of Regulation (EU) No 1307/2013, that specific use shall if necessary further limit the agricultural parcel. …’

10 Under Article 92 of Regulation No 1306/2013, a beneficiary is a person in receipt of direct payments.

11 Recital 58 states that the cross-compliance system laid down in Regulation No 1306/2013 is wider in scope than that in previous legislation (see further point 47 below). The system ‘… should therefore include a framework within which Member States are to adopt national standards of good agricultural and environmental condition. The Union framework should also include rules to better address water, soil, carbon stock, biodiversity and landscape issues as well as minimum level of maintenance of the land.’

12 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 (OJ 2014 L 181, p. 48).

14 As defined in Article 67(4) of Regulation No 1306/2013; see also recitals 43 to 45 of that regulation.

16 In its order for reference the referring court has set out Paragraph 8 of Regulation No 32 of the Minister for Rural Affairs of 17 April 2015, ‘General requirements for obtaining direct payments, single area payment, climate and environment support and support for young farmers’.

17 The referring court sets out in the order for reference Paragraph 3(9) of Regulation No 4 of the Minister for Agriculture of 14 January 2015, ‘Requirements for maintaining land in a good agricultural and environmental state’, which refers to Paragraph 3(2) of the Muinsuskaitseseadus (the Law on heritage conservation).

18 See amongst many, judgments of 10 May 2001, Rundgren, C‑389/99, EU:C:2001:264, paragraph 41, and of 16 July 2009, Horvath, C‑428/07, EU:C:2009:458, paragraph 34.

20 Council Regulation of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers and amending Regulations (EEC) No 2019/93, (EC) No 1452/2001, (EC) No 1453/2001, (EC) No 1454/2001, (EC) No 1868/94, (EC) No 1251/1999, (EC) No 1254/1999, (EC) No 1673/2000, (EEC) No 2358/71 and (EC) No 2529/2001 (OJ 2003 L 270, p. 1).

21 Judgment of 16 July 2009, Horvath, C‑428/07, EU:C:2009:458, paragraphs 26, 27 and 32.

22 Judgment of 16 July 2009, Horvath, C‑428/07, EU:C:2009:458, paragraphs 41 to 43.

23 See, for example, judgment of 9 June 2016, Planes Bresco, C‑333/15 and C‑334/15, EU:C:2016:426, paragraph 47.

25 Article 2(d) of Regulation No 1306/2013 defines holding by reference to Article 4(1)(b) of Regulation No 1307/2013, save where the cross compliance rules in Title VI of Regulation No 1306/2013 apply. See points 4 to 8 above.

26 Council Regulation of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, amending Regulations (EC) No 1290/2005, (EC) No 247/2006, (EC) No 378/2007 and repealing Regulation (EC) No 1782/2003 (OJ 2009 L 30, p. 16).

28 Proposal for a Council Regulation establishing common rules for direct support schemes under the common agricultural policy and support schemes for producers of certain crops of 21 January 2003 COM(2003) 23 final, p. 10 (my emphasis).

29 Gay, S.H., Osterburg, B., Baldock, D., and Zdanowicz, A., ‘Recent evolution of the EU Common Agricultural Policy (CAP): state of play and environmental potential’, March 2005, p. 36 (my emphasis).

30 Proposal of the European Commission of 12 October 2011, COM(2011) 628 final/2, p. 3.

31 I consider the relationship between Council regulations and Commission implementing regulations in greater detail in my Opinion in Teglgaard and Fløjstrupgård, C‑239/17, EU:C:2018:328, points 38 to 46.

Area	Main Issue	Requirements and standards
Environment, climate change, good agricultural condition of land	Landscape, minimum level of maintenance	GAEC 7	Retention of landscape features, including where appropriate, hedges, ponds, ditches, trees in line, in group or isolated, field margins and terraces, and including a ban on cutting hedges and trees during the bird breeding and rearing season and, as an option, measures for avoiding invasive plant species

	[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	Court of Justice of the European Communities (including Court of First Instance Decisions)
You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Argo Kalda Mardi talu (Common agricultural policy - Direct payments - Opinion) [2018] EUECJ C-435/17_O (07 June 2018) URL: http://www.bailii.org/eu/cases/EUECJ/2018/C43517_O.html Cite as: ECLI:EU:C:2018:410, [2018] EUECJ C-435/17_O, EU:C:2018:410

Court of Justice of the European Communities (including Court of First Instance Decisions)