C-463/93

ST. MARTINUS ELTEN v LANDWIRTSCHAFTSKAMMER RHEINLAND

OPINION OF ADVOCATE GENERAL RUIZ-JARABO COLOMER delivered on 23 May 1996 *

1. The Verwaltungsgericht Düsseldorf has hectares, 17.69 of which are situated in the referred the following question to the Court Netherlands and the remainder in Germany. of Justice for a preliminary ruling: The farm is a dairy farm and was leased before 1984 to a German farmer, Mr Jansen, whose farm also included 1.07 hectares of his own land.

'Could the milk reference quantity allocated on 2 April 1984 to a German milk producer with a farm in Germany and with leased land in Germany and the Netherlands who deliv- ers to a German purchaser be attached in part to the land leased by that milk producer In 1983 Mr Jansen delivered his milk pro- in the Netherlands, with the result that, on duction to a German dairy cooperative and termination of the lease, the corresponding he continued to do so until his death in 1989. reference quantity falls to the lessor, or could O n the basis of those deliveries the German the quota allocated to the German milk pro- authorities allocated him a reference quantity ducer be attached only to land in Germany?' of 182 000 kg.

Facts

3. After Mr Jansen's death, his daughter and sole heir, Elke Jansen, formed a civil partner- ship (GbR) with Mr Derksen with the object of jointly working their respective farms. The defendant Director of the Land- 2. According to the documents, the plaintiff wirtschaftskammer Rheinland, acting on in the main action, the Katholische Kirch- behalf of the Land, subsequently certified, engemeinde St. Martinus Elten, is a German by decision of 23 March 1990, that her parish which owns a farm of 20.2123 deceased father's reference quantity of 192 933 kg of milk had been transferred to Ms Jansen by inheritance with effect from 15 * Original language: Spanish. March 1989.

8. The defendant refused the application by decision of 19 March 1992 on the ground that, because of the allocation of total guar- anteed quantities to the Member States, the link between quota and the land used pro- 6. O n 13 December 1990 Mr Derksen pur- vided for by Community law was limited to chased by notarial act the land owned by Ms the territory of the respective Member State. Jansen, 1.07 hectares in area, and the milk According to the defendant, the transfer of quota which had been transferred to her by individual reference quantities together with inheritance. O n the same date he applied for the corresponding land could ensure the the transfer to himself of the milk quotas of consistent allocation of reference quantities Derksen and Jansen GbR. The defendant to each Member State only if the principle of authority granted the application and, by tying quotas to the land used was limited to separate decisions of 12 March 1991, national territory. As the land in issue was in confirmed the transfer to Mr Derksen of the the Netherlands, a German milk quota could reference quantities of 191 004 kg and not be tied to that land even if the farm man- 943 975 kg. agement changed hands between Germans.

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10. O n 11 June 1992 the plaintiff brought an action against that decision before the Ver- waltungsgericht Düsseldorf, seeking a certifi- 12. With the object of restoring so far as cate to the effect that a portion of the refer- possible a balance between supply and ence quantity formerly allocated to demand in relation to products of the milk Mr Jansen should be transferred to it. The sector, Regulation N o 856/84 introduced for grounds relied on were in essence those adduced in the previous administrative pro- cedure. 3 — In the version of Council Regulation (EEC) N o 590/85 of 26 February 1985 amending Regulation (EEC) N o 857/84 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) 804/68 in the milk and milk products sector (OJ 1985 L 68, p. 1). 1 — Regulation amending Regulation (EEC) N o 804/68 on the 4 — Regulation laying down detailed rules for the application of common organization of the market in milk and milk prod- the additional levy referred to in Article 5c or Regulation ucts (OJ 1984 L 90, p. 10). (EEC) N o 804/68 (OJ 1984 L 132, p. 11). 2 — Regulation adopting general rules for the application of the 5 — Regulation of 3 June 1988 laying down detailed rules for the levy referred to in Article 5c of Regulation (EEC) N o 804/68 application of the additional levy referred to in Article 5c of in the milk and milk products sector (OJ 1984 L 90, p. 13). Regulation (EEC) N o 804/68 (OJ 1988 L 139, p. 12).

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'Every producer of milk shall pay a levy on the quantities of milk and/or milk equivalent delivered to a purchaser which, during the twelve-month period in question, exceed a reference quantity to be determined.' '... the Member States may provide that on their territory the reference quantity referred to in paragraph 1 is to be equal to the quan- tity of milk or milk equivalent delivered ... 6 — Fourth and fifth recitals in the preamble. 7 — Council Regulation (EEC) No 804/68 of 27 June 1968 on the during the 1982 calendar year or the 1983 common organization of the market in milk and milk prod- calendar year, weighted by a percentage ucts (OJ, English Special Edition 1968 (I), p. 176). 8 — Council Regulation (EEC) No 1109/88 of 25 April 1988 (OJ established so as not to exceed the guaran- 1988 L 110, p. 27) amends Article 5c of Regulation No teed quantity defined in Article 5c of Regu- 804/68 and extends the system of additional levies to eight twelve-month periods. lation N o 804/68.'

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The Federal Republic of Germany opted for Article 7(4), as amended, provides as follows: formula A and chose 1983 as the reference year.

'In the case of rural leases due to expire, where the lessee is not entitled to an exten- sion of the lease on similar terms, Member 14. The transfer of reference quantities in States may provide that all or part of the ref- the event of the sale, lease or transfer of a erence quantity corresponding to the holding farm by inheritance is regulated by Article 7 or the part thereof which forms the subject of Regulation N o 857/84. As originally of the lease shall be put at the disposal of the worded, paragraph 1 of this provision estab- departing lessee if he intends to continue lished the principle of tying the quota to the milk production.' land as follows:

'For the purposes of applying Article 7 of Regulation (EEC) N o 857/84, and without 15. However, one year later Regulation N o prejudice to paragraph 3 of that article, the 590/85 amended Regulation N o 857/84 and following rules shall apply to the transfer of Article 7 was reworded. According to the reference quantities granted to producers ... sixth recital in the preamble to Regulation in application of formulas A ...: N o 590/85, the application of the said article 'may in certain cases lead to difficult situa- tions in the economic and social field; ... therefore it is appropriate, in order that a les- see whose lease of a holding is due to expire can continue milk production elsewhere, to 1. Where an entire holding is sold, leased authorize the Member States to put at his or transferred by inheritance, the corre- disposal all or part of the reference quantity sponding reference quantity shall be corresponding to the holding which he is transferred in full to the producer who leaving'. takes over the holding.

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2. Where one or several parts of a holding 17. Finally, Article 12(c) and (d) of Regu- is sold, leased or transferred by inherit- lation N o 857/84 define the terms ‘producer’ ance, the corresponding reference quan- and 'holding' respectively as follows: tity shall be distributed among the producers operating the holding in proportion to the areas used for milk production ....

'producer: a natural or legal person or group of natural or legal persons farm- ing a holding located within the geographical location of the Community:

18. In the order for reference the national court expresses doubt concerning the legality of the refusal by the defendant authority of the certificate requested by the plaintiff. The court observes firstly that, in accordance with the abovementioned Community regu- lations, German law lays down the principle of tying reference quantities to land even The plaintiff contends that the principle of where parts of a holding used for the pro- tying the quota to the land does not mean duction of milk revert to the lessor at the that milk quotas may be tied only to land end of a lease. Secondly, neither the German used for milk production within a Member nor the Community legislation applicable State nor does it mean that, in the case of a makes any distinction according to whether holding which extends over a national bor- the land which reverts to the lessor at the der, the milk quota tied to the land must end of the lease is in Germany or another count towards two different national guaran- Member State. Thirdly, it may be inferred teed milk quantities. Since the Federal from the definition of holding in Article Republic of Germany opted for formula A 12(d) of Regulation N o 857/84, according to and for 1983 as the reference year and as which a holding is 'all the production units Mr Jansen delivered his entire milk produc- operated by the producer and located within tion to a German cooperative in that year, the geographical territory of the Commu- that production served not only as the basis nity', that the location of some of the land in for allocating a certain reference quantity to another Member State is irrelevant for that him, but was also taken into account in the purpose. Finally, the national court states calculation of the national guaranteed quan- that the transfer of reference quantities tity for that Member State. The plaintiff adds beyond national frontiers may call into ques- that if the proportion of the quota corre- tion the allocation of guaranteed milk quan- sponding to the land of the holding situated tities fixed specifically for each Member in the Netherlands which had never been State. included in the national guaranteed quantity of that Member State were to be added to it now, the Netherlands would now be com- pelled to pay the Community a levy for exceeding the national guaranteed quantity without having been able to do anything to avoid the excess, which would be incompat- 19. The plaintiff in the main proceedings and ible with the purpose of Regulations Nos Mr A. Derksen, as an interested party, and 856/84 and 857/84 and would be contrary to also the Commission have submitted obser- the definition of 'holding' in Article 12(d) of vations to the Court. In addition the Regulation N o 857/84.

The Commission adds that this system takes account of the normal situation where pro- ducers deliver milk to enterprises in the Member State where their land is situated. If, however, exceptionally a producer delivered milk to an enterprise on the other side of the 21. The Commission contends that the border, as in the present case, those deliveries refusal by the German authority of the were included in the calculation of the total plaintiff's request for recognition of the guaranteed quantity of that Member State right, on termination of the lease, to part of and therefore it is not permissible to autho- the reference quantity in proportion to the rize the subsequent transfer of part of the land situated in the Netherlands on the individual reference quantity to another ground that the land in question was situated Member State, since the principle of allocat- in another Member State amounts to unequal ing the guaranteed quantity at Community treatment. level must be maintained. Otherwise produc- ers in the State to which the quota was trans- ferred would be placed at a disadvantage in relation to those of the State from which the quota was deducted.

the refusal by the national authorities to per- 25. In the Wachauf judgment the Court mit such transfer on the ground that part of stated: 'According to Article 7(1) of Regu- the land is in the Netherlands is, in the Com- lation N o 857/84, as amended by Council mission's opinion, unequal treatment for Regulation N o 590/85 ... "where a holding is which there is no justification. sold, leased or transferred by inheritance, all or part of the corresponding reference quan- tity ... shall be transferred to the purchaser, tenant or heir according to procedures to be determined." However, paragraph (4) of that article provides that "in the case of rural leases due to expire, where the lessee is not entitled to an extension of the lease on simi- 23. To reply to the question from the Ger- lar terms, Member States may provide that man national court, I shall first consider the all or part of the reference quantity corre- possibility of transferring to the lessor, sponding to the holding or the part thereof together with the land on the termination of which forms the subject of the lease shall be the lease, part of the reference quantity origi- put at the disposal of the departing lessee if nally allocated to Mr Jansen, and then go on he intends to continue milk production." It to examine the possible effect of the fact that is apparent from the provisions quoted, con- the land is situated in another Member State. sidered as a whole, that the Community leg- islature intended that at the end of the lease the reference quantity should in principle return to the lessor who retakes possession of the holding, subject, however, to the Member States' power to allocate all or part of the reference quantity to the departing lessee.' 10 24. O n the same day that the Council adopted Regulation N o 856/84 introducing the additional levy on quantities of milk exceeding a reference quantity, it also adopted Regulation N o 857/84, Article 7 of which laid down the general principle that every reference quantity (that is, the quantity exempt from the additional levy) should be The question in that case was whether transmitted together with the land which Article 5(3) of Regulation N o 1371/84 was gave rise to its allocation. According to the applicable to the surrender, upon the expiry interpretation given by the Court in the of the lease, of all the agricultural production Twijnstra judgment, 'the entire reference units leased, even though those units, as quantity scheme is based on the general prin- leased, had neither dairy cows nor the tech- ciple, set out in Article 7 of Regulation N o nical facilities necessary for milk production 857/84 ... that in the event of the transfer of and the lease provided for no obligation on part of a holding the reference quantity is the part of the lessee to engage in milk pro- allocated to the transferee in proportion to duction. the area transferred'. 9

28. I think that for various reasons the answer must be in the negative. Firstly, 26. In view of this case-law I am of the because the rule concerning the transfer of opinion, like Advocate General Mischo in reference quantities in force at the time when the Kühn case, 12 that when a stock-farming the lease between the plaintiff and Ms Elke tenant leaves a holding, in principle the refer- Jansen ended did not distinguish according ence quantities which were available to him to whether or not the entire holding was revert to the owner who, by granting a lease situated in one Member State. to another tenant, will transfer them to the latter, unless the Member States have exer- cised their option under Article 7(4) of Regulation N o 857/84 and point 4 of the first paragraph of Article 7 of Regulation N o 1546/88 and have provided that all or part of the reference quantity shall be put at the dis- posal of the departing lessee if he intends to 29. Secondly, as I have already said, the ref- erence quantity is transferred together with the holding, which is defined by Article 11 — Cited in footnote 10, paragraph 15. 12(d) of Regulation N o 857/84 specifically 12 — Case C-177/90 Kühn ν Landwirtschaftskammer Weser-Ems [1992] ECR I-35, in particular p. 1-55, point 43. for the purpose of that legislation as 'all the

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production units operated by the producer 32. Under that provision, the common orga- and located within the geographical territory nization of agricultural markets must be of the Community'. 'limited to pursuit of the objectives set out in Article 39 and shall exclude any discrimi- nation between producers or consumers within the Community'. This was inter- preted by the Court in the Graff judgment as follows:

In the same judgment the Court added that 'according to well-established case-law, the 31. Furthermore, I agree with the Commis- requirements flowing from the protection of sion that the defendant authority's refusal to fundamental rights and principles in the certify the transfer of part of the reference Community legal order are also binding on quantity previously allocated to Mr Jansen Member States when they implement Com- together with the part of the land recovered munity rules and the Member States must on the termination of the lease, on the therefore, as far as possible, apply those rules ground that the land in question is situated in accordance with those requirements. ... In in another Member State, amounts to dis- particular, Article 40(3) of the EEC Treaty criminatory treatment prohibited by the sec- covers all measures relating to the common ond subparagraph of Article 40(3) of the E C organization of agricultural markets, irre- Treaty. spective of the authority which lays them down. Consequently, it is also binding on

13 — Regulation of 14 June 1993 amending Regulation (EEC) N o 3950/92 establishing an additional levy in the sector of 14 — Case C-351/92 Graff v Hauptzollamt Köln Rheinau [1994] milk and milk products (OJ L 154, p. 30). ECR 1-3361, paragraph 15.

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36. Therefore, like the C o m m i s s i o n in its w r i t t e n observations, I take the view that the specific n a t u r e of t h e reference quantities system does n o t justify the difference in treatment b y the defendant b y reason of the place w h e r e the land is situated, and

15 — Cited in footnote 14, paragraphs 17 and 18. 16 — Case cited in footnote 14, point 13.

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that, on the termination of the lease, the reference quantity allocated in 1984 to the producer Mr Jansen, which forms part of the total guaranteed quantity of the Fed- eral Republic of Germany, must revert in part to the owner together with the land, although it is situated in another Member State, provided that such transfer com- plies with the general structure of the system, that is, it is made within the limit of the total guaranteed quantity for Germany.

I therefore propose that the question from the national court be answered as fol- lows: