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— exercise the powers conferred on it by the Council for the implementation of the rules laid down by the latter.' 'To ensure that the objectives set out in this Treaty are attained the Council shall, in accordance with the provisions of this Treaty: 4. The first paragraph of Article 268 EC provides:

1 — Original language: French. 'All items of revenue and expenditure of the 2 — OJ 2001 L 95, p. 8. Community, including those relating to the

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European Social Fund, shall be included in B — Regulations concerning the financing estimates to be drawn up for each financial of the common agricultural policy year and shall be shown in the budget.'

1. Regulation N o 25

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devolve upon the Community. The Fund Regulation (EC) No 1259/96 6 of 25 June shall accordingly finance: 1996 ('Regulation No 1883/78'):

(a) refunds on exports to third countries; 'Where, within the framework of a com- mon organisation of the market, a sum per unit is determined for an intervention measure, the resulting expenditure shall be met entirely by Community funds.'

(b) intervention aimed at stabilising mar- kets;

10. Article 3 of Regulation No 1883/78 provides as follows:

(c) common measures adopted in order to a t t a i n the objectives set out Article 39(1)(a) of the Treaty....' 'Where, within the framework of a com- mon organisation of the market, a sum per unit is not determined in respect of an intervention measure, the measure con- cerned shall be financed by the EAGGF, Guarantee Section, in accordance with the 2. Regulation (EEC) No 1883/78 provisions contained in Articles 4 to 8.'

— the Guidance Section.

'[w]hereas at the single market stage, in view of the fact that price systems are standardised and the agricultural policy is a 2. The Guarantee Section shall finance: Community policy, the financial con- sequences devolve upon the Community; whereas, in accordance with that principle as laid down in Article 2(2) of Regulation No 25, refunds on exports to third coun- tries, intervention aimed at stabilising agri- (a) refunds on exports to third countries; cultural markets... should be financed by the "Guarantee" section of the Fund in order to achieve the objectives set out in Article 33(1) of the Treaty'. (b) intervention intended to stabilise the agricultural market[s];

13. Article 1 of Regulation No 1258/1999 provides: (c) rural development measures outside Objective 1 programmes except the rural development Community initi- ative;

'1. The European Agricultural Guidance and Guarantee Fund (hereinafter called the "Fund") shall form part of the general budget of the European Communities. (d) the Community's financial contribu- tion towards specific veterinary meas- ures, inspection measures in the vet- 7 — OJ 1999 L 160, p. 103. erinary field and programmes for the I - 10338

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eradication and monitoring of animal 17 May 1999 on the common organisation diseases (veterinary measures) as well of the market in beef and veal 8 reads: as towards plant health measures;

OPINION OF MR MISCHO — CASE C-239/01

this situation is likely to continue, thereby of 19 January 2001, 10 which provided for disturbing or threatening to disturb the a purchase scheme, from 1 January 2001 to market, the necessary measures may be not later than 30 June 2001, for the taken. purpose of the destruction of animals more than 30 months old and mainly of animals not subject to screening for bovine spongi- form encephalopathy (BSE) when being slaughtered. 2. Detailed rules for the application of this article shall be adopted by the Commission in accordance with the procedure laid down in Article 43.' 2 0 . A r t i c l e 4 ( 2 ) of R e g u l a t i o n No 2777/2000 provided that, for each fully destroyed animal, the Community should co-finance 70% of the expenditure on 18. Under Article 45 of Regulation purchasing the animal at a flat rate, leaving No 1254/1999: 30% to be financed by the national auth- orities.

'Regulation (EC) No 1258/1999 and the provisions adopted in implementation 3. The contested regulation thereof shall apply to the products listed in Article 1.'

21. The contested regulation was adopted 2. Regulation (EC) No 2777/2000 on the basis of Article 38(2) of Regulation No 1254/1999.

19. On the basis of Article 38(2) of Regu- lation No 1254/1999, the Commission 22. It introduces a special new purchase adopted Regulation (EC) No 2777/2000 scheme for meat from certain categories of of 18 December 2000 adopting exceptional bovine animals aged more than 30 months measures for the beef market, 9amended by which have been tested for BSE, enabling Commission Regulation (EC) No 111/2001 Member States to store the meat instead of

'1. In the light of the tenders received under each individual invitation to tender and in accordance with the procedure laid down 24. Article 1(1) of the contested regulation in Article 43 of Regulation (EC) provides: No 1254/1999 a maximum buying-in price relating to the reference class shall be fixed. A different price may be set per Member State.

' 1 . Member States shall purchase chilled carcasses or half carcasses from bovine The maximum price shall not exceed the animals over 30 months of age of the trigger price plus EUR 14 per 100 kg following categories...' carcass weight.'

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27. Pursuant to Article 5 of the contested II — Written procedure and forms of regulation: order sought by the parties

28. In the application received by the Court Registry on 14 June 2001, the Federal Republic of Germany claims that the Court '1. The competent authority shall pay suc- should: cessful tenderers the price quoted in their tenders no later than 65 days after com- pletion of take-over of the products con- cerned.

— order the Federal Republic of Germany elements whose annulment is sought may to pay the costs. be severed from the remainder of the act. 11

31. The Commission states that, should the 1. Observations of the parlies application be granted, it supports the applicant's suggestion that the effects of the contested regulation be maintained pursuant to the second paragraph of Article 231 EC. 34. According to the German Government, the annulment of Article 5(5) of the con- tested regulation, in so far as it requires each Member State concerned to finance 30% of the price of meat purchased under 32. By order of 8 November 2001, the that regulation, in no way affects the President of the Court gave the Kingdom of special measures taken pursuant to the Denmark leave to intervene in support of contested regulation, which was in force the form of order sought by the Federal for a limited period up to 31 December Republic of Germany. 2001. Such partial annulment would have consequences only for the relationship between the Community and the Member States. In particular, partial annulment would lead to the application of the general rules concerning the financing of the com- mon agricultural policy and therefore the Community would have to reimburse the Member States for the portion of the I I I— Analysis finance which they had hitherto been (wrongly) charged.

A — Admissibility of the application 35. The German Government considers that, in those circumstances, the disputed element of the contested regulation can be severed from the remainder. The govern- ment adds that it has not been shown that 33. The Court put questions to the parties the Commission would not have adopted on the admissibility of the application in the light of the Court's case-law to the effect that the partial annulment of a 11 — See, most recently, Case C-29/99 Commission v Council Community act is possible only if the [2002] ECR I-11221, paragraphs 45 and 4 6 .

41. According to the Commission, if the 38. First, the Commission is very doubtful Court finds that the co-financing rule is not whether, if co-financing had not been 13 — Case C-376/98 [2000] ECR I-8419. See point 126 of the Opinion. 12—Joined Cases C-38/90 and C-151/90 [1992] ECR I-1781, 14 — Case C-378/00 [2003] ECR I-937. See points 134 to 137 of paragraph 34. the Opinion.

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actually severable from the remainder of ground that the decision was indivisible, the contested regulation, the application for the Court held as follows: partial annulment must be ruled inadmiss- ible.

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the Member States, required by the second 47. In addition, the Commission's argu- paragraph of Article 5(5), is severable from ment that it would probably not have the remainder of the regulation in the sense adopted the contested regulation as it that the annulment of that element would stands if co-financing had not been possible not alter the substance of the contested does not mean that the co-financing provi- regulation. sion cannot be regarded as severable from the remainder of the regulation.

16 — 'The Community beef market is currently going through a deep crisis due to a lack of consumer confidence in beef 18 — Paragraph 43. created by the appearance of new cases of bovine spongi- 19 — The objective nature of the criterion is also confirmed in form encephalopathy (BSE). Consumption as well as Case 37/71 Jamet v Commission [1972] ECR 483, in production have recently fallen to unprecedented levels which the Court held, in paragraph 11, that 'the elements followed by substantial reduction of producer prices...'. of the contested decision which are the subject of the 17 — '... it is appropriate to provide for a new special purchase application for annulment are inseparable from the whole scheme for meat from tested animals which would allow of the decision, so that, without them, the disputed Member States to store meat as an alternative to destruc- measure would not be capable of producing legal effects' tion as of 1 July 2001 at the latest...'. (emphasis added).

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revenue from sales reverts to the Member B — First plea in law: no legal basis States does not seem to me sufficient to conclude that co-financing is inseparably connected with the remainder of the con- tested regulation. 1. Arguments of the parties

50. This is a connection with a very limited aspect of the contested regulation, and that aspect itself does not concern the substance 53. With regard to the substance of the of the regulation. In addition, in the case, the German Government contends, as framework of the measures which it would its first plea in law, that the contested have to take under Article 233 EC in the regulation has no valid legal basis at all. event of partial annulment, it would not be The Commission had no power to provide impossible for the Commission to enact for compulsory co-financing by the provisions with the object of preventing Member States in an implementing regu- unjustified enrichment of the Member lation like the one in question. States.

56. Regulation No 1254/1999 provides for 59. According to the German Government, the exclusive financing by the Community the introduction of compulsory co-financ- of all the necessary support measures on the ing by the contested regulation also inter- beef market. This follows from the fact feres with the institutional balance between that, according to the 36th recital in the the Council and the Commission provided preamble to and Article 45 of Regulation for by Articles 202 EC and 211 EC. The No 1254/1999, expenditure incurred by the compulsory contribution of 30% imposed Member States as a result of the obligations on the Member States by Article 5(5) of the arising from the application of the regu- contested regulation does not constitute lation in question is to be financed by the implementation, but a modification, of an Community in accordance with Regulation essential rule of Regulation No 1254/1999. No 1258/1999.

60. On this point, the German Government 5 7 . Article 1(2)(b) of R e g u l a t i o n observes that, although the Commission is No 1258/1999 does not provide for the in principle authorised to provide for co-financing by Member States of inter- buying-in measures (as in the present case) vention intended to stabilise the agricul- by means of an implementing regulation, tural markets. In addition, it is clear from where that is required by changes in the the second recital in the preamble to that price structure of beef markets, it cannot regulation 20 that the cost of Community modify one of the foundations of the intervention measures is met entirely from Community beef markets, namely the the Community budget. 100% financing of support measures of that kind from the Community budget resources, as laid down by Regulation No 1254/1999.

67. The Commission adds that, although it- is true that intervention to stabilise the 63. Moreover, according to the Court's agricultural markets is generally financed settled case-law, the legality of a measure entirely by the Guarantee Section of the adopted in the area of the common agri- Fund, that was a matter of practice and not cultural policy can be affected only where a legal obligation. In p a r t i c u l a r , the measure is manifestly inappropriate or A r t i c l e 1 ( 2 ) ( b ) of R e g u l a t i o n where the institution enacting it has mani- No 1258/1999 could not be interpreted as festly exceeded its discretionary power. establishing any such obligation because it- did not provide expressly for finance to be provided entirely by the Community.

69. Should the Court not agree with the 72. Furthermore, according to the Com- Commission and consider that the Guar- mission, in the area of financial rules, as in antee Section of the Fund must finance any other, the Council has only to regulate agricultural intervention measures in their the general basic elements of the subject- entirety, the Commission contends in the matter and may properly delegate the alternative that the derogation from the power necessary for implementing them to legal obligation arising from Article 5(5) of the Commission. the contested regulation was necessary in the present case and was therefore covered by Article 38 of Regulation No 1254/1999. For timetable reasons, the additional costs caused to the Community by the new BSE crisis could not be taken into account when the budget for the 2001 financial year was 73. The Danish Government indicates that, prepared. The funds originally earmarked like the German Government, it does not for financing agricultural expenditure were dispute that, in the framework of its legis- therefore likely to be insufficient. lative function, the Council has power to adopt a measure derogating from the principle that the Community should pro- vide the entire finance for measures for the stabilisation of agricultural markets.

70. Third, the Commission claims that the 74. This fundamental principle had been applicant is mistaken in asserting that made explicit already by Regulation No 25, Article 5(5) of the contested regulation is which established the Fund and is still in an essential rule which, according to the force to this day, as confirmed by Court's case-law, is reserved for the Coun- A r t i c l e 1 ( 2 ) ( b ) of R e g u l a t i o n cil alone and which therefore cannot be No 1258/1999 and Article 2 of Regulation adopted by the Commission on the basis of No 1883/78. its implementing powers.

76. The Danish Government adds that, if the Commission's arguments were accepted, the Commission could theoreti- 79. I find the arguments of the German and cally have established a financing system Danish Governments more persuasive than whereby the Member States would have those of the Commission. had to pay 95% and the Community 5% of the expenditure on buying-in operations imposed on the Member States by the contested regulation. 80. The Court has consistently held that implementing measures adopted by the Commission must not be contrary to the basic legislation adopted by the Council, 22 77. In the opinion of the Danish Govern- which is nothing other than an expression ment, if the Commission had any such of the fundamental principle that a legal power to disregard the fundamental prin- rule of a particular level must respect and ciple of Community financing within the implement those of a higher level ('hiér- common organisations of markets, the archie des normes'). 23 effect would be, first, to upset the institu- tional balance within the Community and, second, to render the limit on common agricultural expenditure illusory, because the Community budget would no longer reflect the expenditure connected with the 81. The Commission contends that, in common agricultural policy. providing for compulsory co-financing in the contested regulation, it did not derogate from the basic legislation, which in this case was constituted by Regulation No 1 2 5 4 / 1 9 9 9 and R e g u l a t i o n No 1258/1999 (by reason of the reference 78. According to the Danish Government, to the latter in Article 45 of the former). if the Community budget does not provide for funds which can finance intervention measures such as those provided for by the 22 — See Case 121/83 Zuckerfabrik Franken [1984] ECR 2039, contested regulation, the Commission must paragraph 13; Case C-478/93 Netherhnds v Commission 1995] ECR I-3081, paragraph 31; and Case C-159/96 Portugal v Commission [1998] ECR I-7379, paragraph 41. seek to establish the financial basis necess- 23 — See, for example, Case C-303/94 Parliament v Council ary for financing the expenditure in con- [1996] ECR I-2943, paragraph 23, at the end.

85. Next, it must be observed that the Commission's argument amounts to saying that the 'conventional' intervention pur- chases provided for by Article 27 of 88. Under Article 1 (2)(b), '[t]he Guarantee Regulation No 1254/1999 must be entirely Section shall finance... intervention financed by the Guarantee Section of the intended to stabilise the agricultural mar- Fund, but that does not apply to 'ad hoc ket[s]'. On the other hand, Article 1 (2)(d) intervention buying-in' 25 permitted by provides that '[t]he Guarantee Section shall finance... the Community's financial con- 24 — Emphasis added. 25 — See the 31st recital in the preamble to Regulation No 1254/1999. 26 — Emphasis added.

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tribution towards specific veterinary meas- the question is whether it delegated it to the ures...'. 2 7 Commission, which, in my opinion, is not the case. Alternatively, it should also be noted that none of the measures referred to by the Commission relates to intervention purchases.

89. The phrase 'the Community's financial contribution' indicates that, in the cases referred to by point (d), the Community merely finances part of the expenditure. 91. Furthermore, I agree with the German This implies that other financial contribu- Government that the rules concerning the tions exist and that consequently there is question of principle as to who finances co-financing. The same phrase precisely measures relating to the common agricul- does not appear in Article l(2)(b) of the tural policy are 'rules essential to the regulation in question which, in my view, subject-matter in question' which, as the confirms that the Community provides the Court has previously held, 29 are reserved entire finance for the intervention referred for the Council. Such rules do not relate to to by that provision. this or that technical detail but form part of the fundamental aims of a policy.

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94. First of all, it is wrong to put the 97. The judgment in France and Ireland v question in those terms. Whether the prin- Commission, cited above, to which the ciple of Community financing of interven- Commission refers, does not contradict this tion measures is an essential rule depends conclusion. on the substance of the rule, and the adoption of a measure derogating tempor- arily from that rule does not mean that it becomes non-essential. To accept the Com- mission's argument would amount to per- mitting it to frustrate the principle that the adoption of essential rules cannot be del- 98. At paragraph 21 of that judgment the egated by means of renewing derogation Court observed that: measures for successive six-month periods. 30

'if the Commission were empowered under 95. Furthermore, the Court's settled case- the fifth indent of Article 6(7) of Regu- law stating that the concept of implemen- lation No 805/68, as amended, only to tation must be given a wide interpre- adopt measures already authorised under tation 31 does not justify the conclusion other provisions, the power thus conferred that the Commission had power to provide would essentially be ineffective in pursuing for co-financing in the present case. the aim of preventing market prices from spiralling downward...'.

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100. Furthermore, in view of the European 104. For all the reasons I have mentioned, I Parliament's and the Member States' think the Commission had no power to awareness of the BSE problem, the Com- provide for co-financing in the contested mission would probably have had no dif- regulation. Consequently, I consider the ficulty in obtaining the Parliament's con- first plea to be well founded and I propose sent to a new supplementary and amending that the application by the Federal Repub- budget. The Member States' contributions lic of Germany be granted. could also have taken the form of advances to be repaid in the framework of the budget for the following year.

101. The Commission adds that Article 38 C — Second plea in law: breach of of Regulation No 1254/1999 gives it an Articles 268 EC to 270 EC emergency power (Notkompetenz) for dealing with crisis situations.

105. Because of the conclusion I reached in connection with the first plea in law, I shall examine the German Government's second 102. Whilst that is undoubtedly the case, and third pleas only in the alternative. such a power does not justify the con- clusion that the basic principles of the delegation of authority, in particular the principle that measures adopted by the Commission must not derogate from the basic legislation adopted by the Council, no longer apply. 1. Arguments of the parties

103. Finally, with regard to the fact that Germany did not bring an action against 106. In its second plea in law, the German Regulation No 2777/2000, it is sufficient to Government submits that the imposition of observe, as the German Government rightly compulsory co-financing on the Member does, that the fact that the Commission States in the framework of the common acted in a certain way in the past does not organisation of the beef and veal markets is preclude a judicial review of a similar or contrary to various financial provisions of identical measure adopted at a later date. the Treaty.

107. Notwithstanding partial financing cial independence of the Member States, as from national budget resources, the sup- provided for in the first paragraph of port measures provided for by the con- Article 269 EC, because such co-financing tested regulation constitute Community aid is not an authorised source of 'own resour- and are therefore 'expenditure of the Com- ces' within the meaning of that article. munity' within the meaning of the first paragraph of Article 268 EC. By using the adjective 'all' (items of revenue and expen- diture), the said provision establishes the basic principle of the unity of the budget, as well as the basic conditions for the political weighting of revenue and expenditure in the budgetary procedure and for the demo- 110. In addition, the German Government cratic control of implementation of the contends that, if the Commission had budget. power to organise Community expenditure without it being financed entirely from the Community budget, the limit on own resources laid down by Articles 269 EC and 270 EC would not establish an effec- tive limitation of Community expenditure. 108. According to the German Govern- ment, the (partial) financing of Community expenditure by virtue of a compulsory rule of secondary Community law, by means of funds which do not form part of the Community budget plan is not compatible with the principle of the unity of the 111. The Commission replies that the Ger- Community budget. man Government's argument is based on the mistaken premiss that the portion of the expenditure on the purchase of meat which must be borne by the Member State in question pursuant to Article 5(5) of the contested regulation is Community aid, like the portion financed by the Community, 109. For the same reasons, Article 5(5) of and is therefore an item of Community the contested regulation is said to be expenditure within the meaning of the first contrary to the budgetary provision of the paragraph of Article 268 EC. first paragraph of Article 269 EC. The 'other revenue' to which that provision refers means only the revenue occasionally paid to the Commission in connection with its administrative work (such as fines and penalties) and which therefore does not originate from the budgetary resources of the Member States. Compulsory co-financ- 112. First, according to the Commission, ing by the Member States, as provided for the German Government is mistaken in by the Commission, is in any case contrary treating Community aid as Community to the principle of the Community's finan- expenditure. In reality, the Commission I - 10356

115. The Commission adds that, if the German Government's argument were 118. Furthermore, the fact that co-financ­ accepted, it would be not only the Com­ ing by the Member States is made com­ mission, but also the Council and the pulsory by a Community rule does not alter Parliament which would be unable to the nature of the funds contributed by the Member States. Such an obligation does not affect the source of the finance which, 33 — Joined Cases C-181/91 and C-248/91 Parliament v Coun­ in my view, is the only factor which ai and Commission [1993] F.CR I-3685, paragraphs 29 and 30, relating to special aid granted to Bangladesh in the determines whether finance is Community framework of collective action by the Member States and finance or not. financed directly by them, and Case C-316/91 Parliament v Council 11994] ECR I-625, paragraphs 38 and 39, relating to the financing of aid granted directly by the Member States m the framework of the Fourth ÁCP-UĽC Lomé Convention. 34 — Emphasis added.

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119. I think this is also confirmed by the financing of support measures on the beef judgments cited above in Parliament v and veal market from Community budget Council and Commission and Case resources. Likewise, the contested regu- C-316/91 Parliament v Council, to which lation does not state the reason for choos- the Commission has drawn attention and in ing a cost-sharing formula of 70%-30% for which, in both cases, the Court, in finding financing the support measures. that the expenditure in question was not expenditure of the Community, was guided essentially by the fact that the finance in question was directly provided by the Member States. 35

120. The German Government submits that the statement of reasons of the con- 122. The contested regulation met those tested regulation does not fulfil the require- requirements with regard to its Article 5(5), ments of Article 253 EC with regard to the which imposes the co-financing in question. statement of reasons concerning the First, the preamble to the contested regu- imposition of compulsory co-financing on lation, which refers to Regulation the Member States. In this connection the No 1254/1999, leaves no doubt that the fifth recital in the preamble to the contested whole of the contested regulation, includ- regulation merely states that the Commu- ing Article 5(5), is based on Article 38 of nity's own resources are limited. Therefore the said basic regulation. Second, the fifth the contested regulation does not show by recital in the preamble to the contested what right the Commission claims to be regulation contains a brief, but complete, able to modify, by a compulsory co-financ- outline of the considerations which led the ing measure, the principle of the 100% Commission to introduce compulsory co- financing. As the contested regulation was a measure having general application, it 35 — Paragraphs 29 and 38 respectively. was not necessary in the preamble to give

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details of the calculations which resulted in 125. It seems to me that, so far as com- the cost-sharing formula of 70%-30%. pulsory co-financing is concerned, the con- tested regulation meets the requirement to show the Commission's essential objective. The fifth recital in the preamble to the regulation reads:

124. The Court has consistently held that 'the scope of the obligation to state reasons depends on the nature of the measure in question and that, in the case of measures 126. Therefore the Commission explains in of general application, the statement of the contested regulation itself the reasons reasons may be confined to indicating the why, in its opinion, co-financing is necess- general situation which led to its adoption, ary. on the one hand, and the general objectives which it is intended to achieve, on the other. If the contested measure clearly discloses the essential objective pursued by the institution, it would be excessive to require a specific statement of reasons for the various technical choices made (see, inter alia, Case C-150/94 United Kingdom 127. On the other hand, with regard to the v Council [1998] ECR I-7235, paragraphs cost-sharing formula for co-financing, I 25 and 26).' 36 consider that to be a 'technical choice' within the meaning of the case-law cited above, in relation to which it would be 36 — See Case C-168/98 Luxembourg v Parliament and Council excessive to require a specific statement of [2000] ECR I-9131, paragraph 62. reasons.

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128. Therefore the German Government's has shown, the partial annulment of the third plea in law seems to me unfounded. contested regulation would have no effect on the measures already adopted under it. However, the German Government is not seeking the annulment of the provision of the contested regulation which creates rights for economic entities, namely, essen- tially, Article 5(1), which provides that 'the competent authority shall pay successful tenderers the price quoted in their tenders E — The parties' request to maintain the no later than 65 days after completion of effects of the contested regulation take-over of the products concerned'.

IV — Conclusion

135. In view of the foregoing observations, I propose that the Court should:

— annul Article 5(5) of Commission Regulation (EC) N o 690/2001 of 3 April 2001 on special market support measures in the beef sector, in so far as that provision requires each Member State concerned to finance 3 0 % of the price of the meat purchased under that regulation;

— dismiss the request to maintain the effects of the annulled provision;

— order the Commission to pay the costs.

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