C-356/95

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OPINION OF MR LÉGER — CASE C-356/95

5. The defendant contended that the court the third sentence of the second sub- should dismiss the action, arguing that Mem- paragraph of Article 2(2) of Regulation ber States enjoyed a broad discretion in this N o 1765/92, has designated not its matter and that it would have been impos- entire territory, but — as in the case of sible to distinguish between Naturräume the Federal Republic of Germany — from a legal point of view. merely particular parts of it as base area regions, entitled in principle, under the first subparagraph of Article 3(1) of Regulation N o 1765/92, to establish the whole territory of a particular base area region also as a production region with 6. By judgment of 6 October 1994 the Ver- a uniform average cereals yield? In the waltungsgericht dismissed Mr Witt's action. situation described, in which cases do "the specific characteristics that influ- ence yields such as soil fertility" require a more extensive division of base area regions into individual production regions with different average cereals 7. O n 18 November 1994 the plaintiff yields?' appealed against that judgment to the Oberverwaltungsgericht, which, considering that the result of the case depended on the compatibility of the decision at issue with the first subparagraph of Article 3(1) of the Regulation and being uncertain how this provision should be interpreted, submitted Law the following two questions to the Court for a preliminary ruling:

'(1) Is a Member State entitled, under the Community provisions first subparagraph of Article 3(1) of Council Regulation (EEC) N o 1765/92 of 30 June 1992 establishing a support system for producers of certain arable crops, to establish separate production regions without indicating the "criteria" used for this purpose?

10. In order to attain these objectives the Community legislature replaced the previous price support systems, under which artifi- cially high prices were maintained by inter- 12. Two types of support system exist for vention mechanisms, by new systems based producers of arable crops: a 'general scheme' on the principles of controlling supply and for producers and a 'simplified scheme' for reducing prices, accompanied by direct aid to small producers. 8 As regards the general farmers. 4 scheme, the intention of the Community leg- islature to make the award of compensatory payments subject to the strict obligation to set aside a certain amount of land is clearly stated. 9 However, no set-aside obligation is imposed on small producers. 1 0

11. In concrete terms, the first consequence of the reform of the CAP was to separate partially (the case of cereals) or totally (the 5 — Paragraph 17 of the Commission's observations. 6 — Fifth recital in the preamble to the contested Regulation. 7 — Ibid., 13th recital. 'Compensatory payment' should be taken to mean 'aid for arable crops or land set-aside'. 8 — Ibid., 11th and 12th recitals, and Article 8. 3 — Second recital in the preamble to the contested Regulation. 9 — Ibid., 13th and Hth recitals. 4 — Ibid. 10 — Ibid., 16th recital, and Article 2(5).

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O P I N I O N OF MR LÉGER — CASE C-356/95

13. Title I of the Regulation is devoted to with the highest and the year with the lowest compensatory payments. yield. >2

18. The first subparagraph of Article 3(2) of 14. Articles 2 and 3 lay down exhaustively the Regulation states that: the general rules governing the award of compensatory payments.

11 — This w i s the scheme chosen by the Federal Republic of 12 — These yields are also referred to as 'historic yields'. Germany. 13 — Emphasis added.

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WITT v AMT FÜR L A N D - U N D WASSERWIRTSCHAFT

zones, which are of a minimum size and landwirtschaftlicher Kulturpflanzen allow for specific characteristics that influence (Kulturpflanzen-Ausgleichszahlungs- yields such as soil fertility, including where Verordnung) (German decree relating to a appropriate due differentiation between irri- support system for producers of certain gated and non-irrigated areas. These regions arable crops) of 3 December 1992 , é defines must not cross the boundaries of the base each German Land as a base area region. area regions mentioned in the second sub- paragraph of Article 2 ' . 1 4

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OPINION OF MR LÉGER — CASE C-356/95

tation criteria'. 1 7 Due to the impossibility of 'a Member State [is] entitled under the first creating divisions according to the specific subparagraph of Article 3(1) of Council criteria laid down in the abovementioned Regulation (EEC) N o 1765/92 of 30 June Article 3(1), the solution adopted by the 1992, establishing a support system for pro- competent regional authorities in order to ducers of certain arable crops, to establish determine the production region within this separate production regions without indicat- Land was therefore to adopt the objective ing the "criteria" used for this purpose'. criterion of the administrative frontiers of Land Schleswig-Holstein.

25. O n 4 August 1992 the Federal Minister for Food, Agriculture and Forestry sent the 28. That provision states expressly that each German regionalization plan to the Commis- Member State shall draw up a regionalization sion, accompanied by 37 pages of explana- plan setting out the criteria for the establish- tions supplied by the Länder. ment of separate production regions.

26. The Commission did not find anything to criticize about the plan. According to the Commission, the yields per hectare adopted in the various Länder correspond to the fig- ures confirmed by the statistics, both at 29. The wording of the text is clear. Once a Länder level and at federal level. 18 Member State opts for a regionalized system of compensatory payment, I 9 it must draw up a regionalization plan setting out the cri- teria for the establishment of separate pro- duction regions. Replies to the questions

32. Indeed, the national court tells us that there is scarcely any doubt that the actual 35. However, in my view, a second reading wording of the first subparagraph of Article of the first question, based on a more 3(1) of Regulation N o 1765/92 requires detailed analysis of the grounds of the order Member States to indicate the criteria •which for reference, is possible. enabled them to define the separate produc- tion regions. 20

36. Indeed, having arrived at the two above- 33. Furthermore, it would seem to me that mentioned conclusions, 24 the national court the national court accepts that the regional- adds that the criteria in question do not ization plan supporting the choices made by appear in the annex to the contested national the Federal Republic of Germany in desig- provision and that it is indeed this absence of nating the base area regions as production any mention which causes it to doubt the regions was indeed sent to the Commis- proper application of Article 3(1) of the sion 21 and that it acknowledges that the Regulation. 25 German competent authorities did indeed adopt certain criteria in drawing it up. In this particular case, it is the quite objective and indisputable criterion of the territorial boundaries of the Land. 22 It is precisely the choice of this criterion which is the subject of its inquiry in its second preliminary ques- 37. I must therefore conclude 26 that in sub- tion. 23 mitting this question the precise intention of the national court is to ascertain whether the criteria adopted by a Member State for establishing different production regions should appear only in the regionalization plan intended for scrutiny by the Commis- 34. So, if the Court considers only the strict sion and therefore whether the Community wording of the question, it will run the risk regulation allows these criteria to be omitted of not providing the national court with any

40. Paragraph 4 states: 'The Commission shall examine the regionalization plans sub- 43. This interpretation is confirmed by the mitted by the Member States and shall fifth recital of the contested Regulation, ensure that each plan is based on appropri- which reads as follows: ate, objective criteria and is consistent with available historical information. The Com- mission may object to pUns which are not compatible with the aforementioned relevant criteria in particular with the average yield of the Member State. In this case the plans shall be subject to adjustment by the Member '... such compensatory payments should State concerned after consultation with the reflect the specific structural characteristics Commission'. 2S that influence yield and ... the drawing up of a regionalization plan based on objective cri- teria should be left to the Member States; ... uniform average yields should be established by the regionalization plans; ... these plans must be consistent with the average yields of 41. Paragraph 5 states: 'The regionalization each region achieved in a given period; a spe- plan may be revised by the Member State cific procedure should be provided in order to examine these plans at Community level'.

27 — Emphasis added. 28 — Emphasis added. 29 — Emphasis added.

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WITT y AMT FÜR LAND-UND WASSERWIRTSCHAFT

44. The contested Regulation does not, production regions and for having the base however, contain any provision requiring area region identical to the production Member States to set out, in their national region is that there are no reliable statistics implementing legislation, the criteria they on the historical yields of the various Natur- adopted when drawing up their regionaliza- räume of the Land. The administrative bor- tion plans. ders of the Land were therefore taken as the criterion since this was both objective and provided reliable statistics, both regarding the areas of cultivated land and land lying fallow and the average historical yields of the various arable crops. 45. The answer to this question should accordingly be in the affirmative.

51. The only precise and clearly binding cri­ terion laid down appears at the end of the first subparagraph of Article 3(1), which states: 'These regions must not cross the 55. Secondly, the interpretation of those boundaries of the base area regions men­ provisions which I propose is quite in tioned in the second subparagraph of Article accordance with the objectives pursued by 2'. O n the other hand, an analysis of Article the reform of the CAP carried out in 1992. 3(4) shows that the other factors indicated in The Community legislature, as we have the same subparagraph 3 1 are not binding. seen, 3 4 wanted to separate market policy from incomes policy. In addition, it wished to make entitlement to aid payable to farm­ ers of certain arable crops closely dependent on the yield obtained in a particular region over a specified period. 3 5 The regionaliza­ tion plan submitted by Land Schleswig- Holstein meets these requirements precisely. 52. For paragraph (4) expressly provides that the Commission is only responsible for ensuring that a regionalization plan is 'based on appropriate, objective criteria and is con­ sistent with available historical information'.

56. To conclude, I would say that the broad discretion which a Member State has in establishing production regions is limited only by the express obligation to explain its choice by supplying evidence that it is based on appropriate, objective criteria and is consistent with available historical 53. O n the other hand, non-observance of information 3 6 and not to include in its the other criteria mentioned above 3 2 is not inevitably censured by the Commission.

57. The plaintiff maintains also that the regionalization plan drawn up by the authorities of Land Schleswig-Holstein has resulted in a loss of income for him, which 59. On the other hand, it is indisputable that would not have been the case if they had the administrative criterion adopted by the taken as their basis the statistics on the his- regional authorities of Land Schleswig- torical yields of the various arable crops Holstein is an objective criterion and that the which existed for the Land's three large statistics on the historical yields obtained in Naturräume. 3S According to the plaintiff, that region, as supplied by the German the criteria which he puts forward would authorities, are reliable. Indeed, these two have been more appropriate. factors have not been disputed. In conse- quence, I must conclude that the Federal Republic of Germany has complied with the obligations laid down in Article 3(1), (3) and (4) of the contested Regulation.

(1) The first subparagraph of Article 3(1) of Council Regulation (EEC) N o 1765/92 of 30 June 1992 establishing a support system for producers of certain arable crops is to be interpreted as authorizing a Member State to establish dif- ferent production regions without indicating the 'criteria' used for that pur- pose in the national legislation implementing the Community provisions.

(2) In circumstances such as those of the present case, the first subparagraph of Article 3(1), cited above, is to be interpreted as meaning that a Member State which has designated not its entire territory but merely particular parts of it as its base area regions under the second subparagraph of Article 2(2) of the aforementioned Regulation may designate the base area region also as a pro- duction region, without further division. Taking into account the criterion of 'specific characteristics that influence yields', which requires a more extensive division of base area regions into individual production regions with different average cereal yields, is justified only where that criterion is more appropriate.

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