Provisional text

JUDGMENT OF THE COURT (Seventh Chamber)

28 April 2022 (*)

( Reference for a preliminary ruling – European Agricultural Fund for Rural Development (EAFRD) – Regulation (EU) No 1305/2013 – Support for rural development by the EAFRD – Article 30 – Natura 2000 payments – Scope – Application for support in respect of a micro-reserve created in a forest that is not part of the Natura 2000 network in order to contribute to the protection of a species of wild bird – Regulation (EU) No 702/2014 – Block exemption for certain types of aid to the agriculture and forestry sectors – Application to aid co-financed through EU resources – No application to undertakings in difficulty )

In Case C‐251/21,

REQUEST for a preliminary ruling under Article 267 TFEU from the Augstākā tiesa (Senāts) (Senate of the Supreme Court, Latvia), made by decision of 21 April 2021, received at the Court on the same date, in the proceedings

‘**Piltenes meži’ SIA**

v

**Lauku atbalsta dienests,**

THE COURT (Seventh Chamber),

composed of J. Passer (Rapporteur), President of the Chamber, F. Biltgen and N. Wahl, Judges,

Advocate General: A. Rantos,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–        the Latvian Government, by K. Pommere, J. Davidoviča and E. Bārdiņš, acting as Agents,

–        the European Commission, by V. Bottka, C. Hermes and A. Sauka, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

**Judgment**

1        This request for a preliminary ruling concerns the interpretation, first, of Article 30 of Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005 (OJ 2013 L 347, p. 487, and corrigendum OJ 2016 L 130, p. 1) and, second, Commission Regulation (EU) No 702/2014 of 25 June 2014 declaring certain categories of aid in the agricultural and forestry sectors and in rural areas compatible with the internal market in application of Articles 107 and 108 [TFEU] (OJ 2014 L 193, p. 1).

2        The request has been made in a dispute between ‘Piltenes meži’ SIA and the Lauku atbalsta dienests (Rural Support Service, Latvia) regarding a decision by which the Rural Support Service refused to grant it support to compensate it for costs and income foregone resulting from the existence, in a forest that it owned, of a micro-reserve created in order to contribute to the protection of a species of wild bird.

**Legal framework**

*EU law*

*Directive 92/43/EEC*

3        Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ 1992 L 206, p. 7) entered into force on 10 June 1992.

4        That directive states in Article 3(1) and (3):

‘1.      A coherent European ecological network of special areas of conservation shall be set up under the title Natura 2000. This network, composed of sites hosting the natural habitat types listed in Annex I and habitats of the species listed in Annex II, shall enable the natural habitat types and the species’ habitats concerned to be maintained or, where appropriate, restored at a favourable conservation status in their natural range.

The Natura 2000 network shall include the special protection areas classified by the Member States pursuant to [Council Directive 79/409/EEC of 2 April 1979 on the conservation of wild birds (OJ 1979 L 103, p. 1)].

...

3.      Where they consider it necessary, Member States shall endeavour to improve the ecological coherence of Natura 2000 by maintaining, and where appropriate developing, features of the landscape which are of major importance for wild fauna and flora, as referred to in Article 10.’

5        Article 10 of Directive 92/43 provides:

‘Member States shall endeavour, where they consider it necessary, in their land-use planning and development policies and, in particular, with a view to improving the ecological coherence of the Natura 2000 network, to encourage the management of features of the landscape which are of major importance for wild fauna and flora.

Such features are those which, by virtue of their linear and continuous structure (such as rivers with their banks or the traditional systems for marking field boundaries) or their function as stepping stones (such as ponds or small woods), are essential for the migration, dispersal and genetic exchange of wild species.’

*Directive 2009/147/EC*

6        Directive 2009/147/EC of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (OJ 2010 L 20, p. 7), which repealed and replaced Directive 79/409, entered into force on 15 February 2010.

7        Article 2 of Directive 2009/147 states that, ‘Member States shall take the requisite measures to maintain the population of the species [to which the directive applies] at a level which corresponds in particular to ecological, scientific and cultural requirements, while taking account of economic and recreational requirements, or to adapt the population of these species to that level’.

8        Article 3 of the directive provides:

‘1.      In the light of the requirements referred to in Article 2, Member States shall take the requisite measures to preserve, maintain or re-establish a sufficient diversity and area of habitats for all the species of birds [in question].

2.      The preservation, maintenance and re-establishment of biotopes and habitats shall include primarily the following measures:

(a)      creation of protected areas;

(b)      upkeep and management in accordance with the ecological needs of habitats inside and outside the protected zones;

...’

*Regulation No 1305/2013*

9        Regulation No 1305/2013 has been applicable since 1 January 2014.

10      Recitals 24 and 56 of that regulation read as follows:

‘(24)      Support should continue to be granted to farmers and forest holders to help address specific disadvantages in the areas concerned resulting from the implementation of [Directive 2009/147] and [Directive 92/43] and in order to contribute to the effective management of Natura 2000 sites. Support should also be made available to farmers to help address disadvantages in river basin areas resulting from the implementation of [Directive 2000/60/EC of the European Parliament and of the Council of 23 October 2000 establishing a framework for Community action in the field of water policy (OJ 2000 L 327, p. 1)]. ...

...

(56)      Articles 107, 108 and 109 TFEU should apply to the support for the rural development measures under this Regulation. Nevertheless, given the specific characteristics of the agricultural sector, those TFEU provisions should not apply to rural development measures concerning operations falling within the scope of Article 42 TFEU, that are carried out under and in conformity with this Regulation or to payments made by Member States, intended to provide additional national financing for rural development operations for which [European] Union support is granted and which fall within the scope of Article 42 TFEU.’

11      Title I of Regulation No 1305/2013, entitled ‘Objectives and strategy’, includes Article 1, entitled ‘Subject matter’, which provides in paragraph 1:

‘This Regulation lays down general rules governing Union support for rural development, financed by the European Agricultural Fund for Rural Development [(EAFRD)] ... . It sets out the objectives to which rural development policy is to contribute and the relevant Union priorities for rural development. It outlines the strategic context for rural development policy and defines the measures to be adopted in order to implement rural development policy. In addition, it lays down rules on programming, networking, management, monitoring and evaluation on the basis of responsibilities shared between the Member States and the [European] Commission and rules to ensure coordination of the EAFRD with other Union instruments.’

12      Title II of that regulation, entitled ‘Programming’, includes Article 6, entitled ‘Rural development programmes’, which provides:

‘1.      The EAFRD shall act in the Member States through rural development programmes. Those programmes shall implement a strategy to meet the Union priorities for rural development through a set of measures as defined in Title III. Support from the EAFRD shall be sought for the achievement of the objectives of rural development pursued through Union priorities.

2.      A Member State may submit either a single programme for its entire territory or a set of regional programmes. Alternatively, in duly justified cases, it may submit a national programme and a set of regional programmes. ...

3.      Member States with regional programmes may also submit, for approval ..., a national framework containing common elements for these programmes without a separate budgetary allocation.

National frameworks of Member States with regional programmes may also contain a table summarising, by region and by year, the total EAFRD contribution to the Member State concerned for the whole programming period.’

13      Title III of the regulation, entitled ‘Rural development support’, specifies, in Chapter I thereof, a set of measures which include the measure under Article 30 of that regulation, entitled ‘Natura 2000 and [Directive 2000/60] payments’, paragraphs 1, 2 and 6 of which read as follows:

‘1.      Support under this measure shall be granted annually per hectare of agricultural area or per hectare of forest in order to compensate beneficiaries for additional costs and income foregone resulting from disadvantages in the areas concerned, related to the implementation of [Directive 92/43] and [Directive 2009/147] and [Directive 2000/60].

...

2.      Support shall be granted to farmers and to private forest holders and associations of private forest holders. In duly justified cases it may also be granted to other land managers.

...

6.      The following areas shall be eligible for payments:

(a)      Natura 2000 agricultural and forest areas designated pursuant to Directives [92/43] and [2009/147];

(b)      other delimited nature protection areas with environmental restrictions applicable to farming or forests which contribute to the implementation of Article 10 of Directive [92/43], provided that, per rural development programme, those areas do not exceed 5% of the designated Natura 2000 areas covered by its territorial scope;

...’

14      Title VIII of Regulation No 1305/2013, entitled ‘Competition provisions’, includes Articles 81 and 82.

15      Under Article 81 of that regulation, entitled ‘State aid’:

‘1.      Save as otherwise provided for in this Title, Articles 107, 108 and 109 TFEU shall apply to support for rural development by Member States.

2.      Articles 107, 108 and 109 TFEU shall not apply to payments made by Member States pursuant to, and in conformity with, this Regulation, or to additional national financing referred to in Article 82, within the scope of Article 42 TFEU.’

16      Article 82 of the regulation, entitled ‘Additional national financing’, provides:

‘Payments made by Member States in relation to operations falling within the scope of Article 42 TFEU and intended to provide additional financing for rural development for which Union support is granted at any time during the programming period, shall be included by Member States in the rural development programme ... and, where they comply with the criteria under this Regulation, shall be approved by the Commission.’

*Regulation No 702/2014*

17      Regulation No 702/2014 entered into force on 1 July 2014.

18      Recitals 16 and 60 of that regulation read as follows:

‘(16)      Aid granted to undertakings in difficulty should be excluded from the scope of this Regulation, since such aid should be assessed under the Guidelines on State aid for rescuing and restructuring firms in difficulty ..., in order to avoid their circumvention, ...

...

(60)      Forestry is an integral part of rural development. The Commission has applied Articles 107 and 108 [TFEU] to undertakings active in the forestry sector in numerous decisions, in particular in the framework of the Community Guidelines on State aid in the agriculture and forestry sector 2007 to 2013. ... In the light of the considerable experience gained by the Commission in the context of applying those Guidelines to undertakings active in the forestry sector, it is appropriate, with a view to simplifying procedures but at the same time ensuring efficient supervision and Commission monitoring, that the Commission should also make use of the powers conferred on it by [Council Regulation (EC) No 994/98 of 7 May 1998 on the application of Articles 107 and 108 TFEU to certain categories of horizontal State aid (OJ 1998 L 142, p. 1)] as regards aid in favour of the forestry sector. According to the Commission’s experience aid granted in the forestry sector for measures that are part of the rural development programmes and which is either co-financed by the EAFRD or granted as an additional national financing to such co-financed measures does not significantly distort competition in the internal market. ... Clear conditions for the compatibility of such measures with the internal market should be defined in this Regulation. Those conditions should be consistent as far as possible with the rules laid down in Regulation No 1305/2013 and in the delegated and implementing acts adopted pursuant to that Regulation.’

19      Article 1 of Regulation No 702/2014, which is part of Chapter I, provides:

‘1.      This Regulation shall apply to the following categories of aid:

...

(e)      aid in favour of forestry.

...

3.      This Regulation shall not apply to aid in favour of:

(a)      the forestry sector which is not co-financed by the EAFRD or granted as additional national financing for such co-financed measures, ...

...

6.      This Regulation shall not apply to aid to undertakings in difficulty with the exception of:

(a)      aid to make good the damage caused by natural disasters ..., aid for the costs of the eradication of animal diseases ... and aid for removal and destruction of fallen stock ...

(b)      aid for the following events provided that the undertaking became an undertaking in difficulty due to losses or damages caused by the event in question:

(i)      to compensate for losses caused by an adverse climatic event which can be assimilated to a natural disaster ...

(ii)      aid for the costs of the eradication of plant pests and for making good the damage caused by animal diseases and plant pests ...

(iii)      aid for the restoration of damage to forests from fires, natural disasters, adverse climatic events which can be assimilated to a natural disaster, other adverse climatic events, plant pests, catastrophic events and climate change related events ...

...’

20      Article 2(14) of that regulation, which is also part of Chapter I, defines ‘undertaking in difficulty’ as follows:

‘“undertaking in difficulty” means an undertaking in respect of which at least one of the following circumstances occurs:

(a)      in the case of a limited liability company (other than [a small or medium-sized enterprise (SME)] that has been in existence for less than three years), where more than half of its subscribed share capital has disappeared as a result of accumulated losses. This is the case when deduction of accumulated losses from reserves (and all other elements generally considered as part of the own funds of the company) leads to a negative cumulative amount that exceeds half of the subscribed share capital. ...

...’

*Latvian law*

*The Law on the protection of species and habitats*

21      The Sugu un biotopu aizsardzības likums (Law on the protection of species and habitats) of 16 March 2000 (*Latvijas Vēstnesis*, 2000, No 121/122), includes Article 10, entitled ‘Right to compensation for land owners or users’, paragraph 2 of which states that ‘land owners shall be entitled to the compensation provided for by legislation for restrictions imposed on economic activities in micro-reserves’.

*The Law on agriculture and rural development*

22      The Lauksaimniecības un lauku attīstības likums (Law on agriculture and rural development) of 7 April 2004 (*Latvijas Vēstnesis*, 2004, No 64), includes Article 5, paragraphs 4, 7 and 8 of which read as follows:

‘4.      The detailed rules governing the grant of State and European Union support for agriculture and the detailed rules governing the grant of State and European Union support for rural development and fisheries shall be determined by the Council of Ministers. ...

...

7.      The detailed rules governing the administration and supervision of State and European Union support for agriculture and the detailed rules governing the administration and supervision of State and European Union support for rural development and fisheries shall be determined by the Council of Ministers.

8.      The Council of Ministers shall determine the detailed rules governing the administration of the European Agricultural Guarantee Fund, the [EAFRD] and the European Maritime and Fisheries Fund and the competences and duties of the authorities involved in the administration of those funds.’

*The Law on compensation for restrictions imposed on economic activities in protected areas*

23      The Likums ‘Par kompensāciju par saimnieciskās darbības ierobežojumiem aizsargājamās teritorijās’ (Law on compensation for restrictions imposed on economic activities in protected areas) of 4 April 2013 (*Latvijas Vēstnesis*, 2013, No 74), states, in Article 2(3), that ‘the payment of annual support for restrictions imposed on economic activities in micro-reserves may be granted in accordance with the procedures laid down by the rules governing the grant of support for agricultural development financed by the corresponding [EU] funds.’

24      That law also provides, in Article 4(2), that ‘compensation paid from EU funds shall be administered in accordance with the rules governing the grant of EU support.’

*Decree No 171/2015*

25      The Ministru kabineta noteikumi Nr. 171 ‘par valsts un Eiropas Savienības atbalsta piešķiršanu, administrēšanu un uzraudzību vides, klimata un lauku ainavas uzlabošanai 2014.–2020. gada plānošanas periodā’ (Decree No 171 of the Council of Ministers on the rules governing the grant, administration and supervision of State and EU support for improvements to the environment, climate and rural areas during the 2014-2020 programming period) of 7 April 2015 (*Latvijas Vēstnesis*, 2015, No 76, ‘Decree No 171/2015’), which was adopted on the basis of Article 5(4) and (7) of the Law on agriculture and rural development, provides in paragraph 1:

‘The present decree shall lay down the detailed rules governing the grant, administration and supervision of State and European Union support for rural development, in particular for improvements to the environment and rural areas implemented pursuant to:

1.1.      Regulation [No 1305/2013];

...

1.8.      Regulation [No 702/2014].

...’

26      Paragraph 2 of Decree No 171/2015 states:

‘Support for rural development to improve the environment, climate and rural areas shall be granted for the following measures ...:

...

2.3.      “Natura 2000 and Directive [2000/60] payments” under the measure “Compensation payments for Natura 2000 forest areas” ...

...

2.6.      “Grant of support under the measure ‘Compensation payments for Natura 2000 forest areas’”.

...’

27      Under paragraph 56 of Decree No 171/2015:

‘The eligible area shall be forest land (excluding bog):

56.1.      included in the list of [Natura 2000] areas in accordance with Article 30(6)(a) of Regulation No 1305/2013 ...

56.2.      located in a micro-reserve in accordance with Article 30(6)(b) of Regulation No 1305/2013 outside the Natura 2000 network or, if the Natura 2000 protection regime does not ensure the conservation of a species or a biotype, in a Natura 2000 area, and the micro-reserve has been created in accordance with the legislation laying down the detailed rules for creating and managing micro-reserves, their conservation and the designation of micro-reserves and their buffer areas.

...’

28      Paragraph 61 of that Decree provides:

‘In order to be granted support, the applicant shall meet the following conditions:

...

61.6.      in accordance with Article 2(14) of Regulation No 702/2014, none of the characteristics of an undertaking in difficulty is in evidence on the basis of the situation on 15 June of the current year, as provided for in the legislation laying down the detailed rules for the administration of the European Agricultural Guarantee Fund, the [EAFRD] and the European Maritime and Fisheries Fund and State and [EU] support for agriculture, rural development and fisheries during the 2014-2020 programming period.’

*Decree No 599 of 30 September 2014*

29      The Ministru kabineta noteikumi Nr. 599 ‘par Eiropas Lauksaimniecības garantiju fonda, Eiropas Lauksaimniecības fonda lauku attīstībai, Eiropas Jūrlietu un zivsaimniecība fonda, kā arī par valsts un Eiropas Savienības atbalsta lauksaimniecībai un lauku un zivsaimniecības attīstībai finansējuma administrēšanu 2014.–2020. gada plānošanas periodā’ (Decree No 599 of the Council of Ministers on the administration of the European Agricultural Guarantee Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund, and on the administration of State and EU support for agriculture, rural development and fisheries during the 2014-2020 programming period) of 30 September 2014 (*Latvijas Vēstnesis*, 2014, No 200), which was adopted on the basis of Article 5(7) to (9) of the Law on agriculture and rural development, provides in paragraph 53:

‘In accordance with Article 2(14) of Regulation No 702/2014, the Rural Support Service shall not grant support if, at the time of the application for support for measures requiring an assessment whether the applicant has the status of undertaking in difficulty, the applicant for aid fulfils at least one of the following characteristics:

53.1.      more than half of the subscribed share capital of a limited liability company (other than a small or medium-sized undertaking that has been in existence for less than three years) has disappeared as a result of accumulated losses, when deduction of accumulated losses from reserves and all other elements generally considered as part of the own funds of the company leads to a negative cumulative amount that exceeds half of the subscribed share capital, including any share premium ...

...’

**The dispute in the main proceedings and the questions referred for a preliminary ruling**

30      Piltenes meži ****is the owner of a forest of approximately 500 hectares in which an area with micro-reserve status within the meaning of the Latvian legislation transposing Directive 2009/147 is located. The micro-reserve was created by the competent Latvian authority in order to contribute to the protection of the western capercaillie (*Tetrao urogallus*), a species of wild bird.

31      On an unspecified date, Piltenes meži submitted an application for support for 2015 to the Rural Support Service, requesting the grant of a payment to compensate it for the costs and income foregone resulting from the existence of the micro-reserve.

32      By decision of 1 June 2016, confirmed by decision of 25 July 2016, the Rural Support Service refused that application for support on the ground that the applicable Latvian legislation precluded the grant of such a payment to an undertaking in difficulty, and that in this instance Piltenes meži had to be classified as such in so far as an examination of its annual report for 2014 showed that its losses represented more than 50% of its subscribed share capital.

33      By judgment of 24 March 2017, the Administratīvā rajona tiesa (District Administrative Court, Latvia) upheld the action brought by Piltenes meži against those two decisions.

34      By judgment of 30 November 2017, the Administratīvā apgabaltiesa (Regional Administrative Court, Latvia), hearing the case on appeal, rejected the application for support submitted by Piltenes meži, relying, in essence, on the following reasoning. First, it found that the payment claimed was not intended to be financed from State or local authority budgets, but through resources from an EU fund, namely the EAFRD. Second, it held that under the EU rules governing the EAFRD and the Latvian implementing legislation, those funds must be administered and allocated to undertakings in accordance with the EU rules on the supervision of State aid. Lastly, it observed that under those rules a grant of support like that applied for in the present case is precluded where the applicant is an undertaking in difficulty.

35      Piltenes meži lodged an appeal against that judgment, disputing in particular the findings that the payment it had claimed was to be considered as State support and that such State support could not be granted to an undertaking in difficulty.

36      In its order for reference, the Augstākā tiesa (Senāts) (Senate of the Supreme Court) asks, in essence, about the scope and the interrelationship of the provisions of EU law which the different Latvian rules applicable to the dispute before it are intended to implement, observing that the two courts called upon to adjudicate on this dispute at first instance and on appeal adopted different positions on that point.

37      Specifically, it enquires, first, whether support intended as compensation or reparation for costs and income foregone resulting from the existence, in forest areas that are not part of the Natura 2000 network, of micro-reserves created in order to contribute to the protection of species of wild birds covered by Directive 2009/147 may be considered as support falling within the scope of Article 30 of Regulation No 1305/2013.

38      It states in particular that such support could be considered to constitute reparation or compensation for a restriction of the right to property and the right to pursue an economic activity of the persons concerned, with a view to ensuring compliance with environmental rules, rather than as EU support or as State support. The Latvijas Republikas Satversmes tiesa (Constitutional Court, Latvia) has, moreover, ruled to that effect, in a judgment of 19 March 2014.

39      In so far as such support, which is intended to be financed not through the State budget, but through resources from an EU fund, falls within the scope of Article 30 of Regulation No 1305/2013, the referring court enquires, second, whether the grant of support may be made subject to the condition that applicants should not be undertakings in difficulty, as required by the Commission in Articles 1 and 2 of Regulation No 702/2014.

40      It holds in that regard that, even though by imposing that condition the Commission had the legitimate aim of preserving EU resources and ensuring their optimum use, Regulation No 702/2014 is nevertheless vitiated by a substantive defect in so far as the Commission did not balance the interests or, at least, did not ensure a fair balance between the objectives pursued by the Commission, on the one hand, and the right to property guaranteed in Article 17 of the Charter of Fundamental Rights of the European Union (‘the Charter’) and the general principles of equal treatment and proportionality, on the other. Unlike any other person on which a legal and economic constraint is imposed for environmental purposes, undertakings in difficulty are unjustly deprived, for reasons related to their economic and financial situation, of the benefit of the reparation or compensation which they may claim.

41      In those circumstances, the Augstākā tiesa (Senāts) (Senate of the Supreme Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘1.      Do payments for micro-reserves created in a forest area in pursuance of the objectives of Directive [2009/147] fall within the scope of Article 30(6) of Regulation [No 1305/2013]?

2.      Is the award of compensation for micro-reserves created in pursuance of the objectives of Directive [2009/147] subject to the restrictions which [Regulation No 702/2014] lays down in respect of payments for undertakings in difficulty?’

**The questions referred for a preliminary ruling**

*The first question*

42      By its first question, the referring court asks, in essence, whether Article 30 of Regulation No 1305/2013 must be interpreted as meaning, taking account of Article 30(6) in particular, that support applied for in respect of a micro-reserve created in a forest in pursuance of the objectives of Directive 2009/147 falls within the scope of Article 30.

43      In that regard, Article 30(1) of Regulation No 1305/2013 provides that support may be granted annually per hectare of agricultural area or per hectare of forest in order to compensate beneficiaries for additional costs and income foregone resulting from disadvantages in the areas concerned related to the implementation of Directives 92/43, 2000/60 and 2009/147.

44      In addition, Article 30(6) states, under points (a) and (b) respectively, that the areas which are eligible for such support payments include Natura 2000 agricultural and forest areas designated pursuant to Directives 92/43 and 2009/147 and other delimited nature protection areas with environmental restrictions applicable to farming or forests which contribute to the implementation of Article 10 of the first of those two directives.

45      In the present case, it is clear from the first question asked by the referring court and the statements made in the order for reference summarised in paragraphs 30, 31 and 37 above that the area covered by the application for support at issue in the main proceedings is a micro-reserve which was created in order to contribute to the protection of a species of wild bird, but in a forest which is not part of the Natura 2000 network.

46      It is evident that such an area is not eligible, under Article 30(6)(a) of Regulation No 1305/2013, for a support payment under Article 30. Article 30(6)(a) envisages such eligibility only for agricultural and forest areas within the meaning of that regulation or, as the case may be, the national legislation adopted in accordance with that regulation, which are situated in Natura 2000 areas designated pursuant to Directives 92/43 and 2009/147 (see, to that effect, judgment of 27 January 2022, *Sātiņi-S*, C‐234/20, EU:C:2022:56, paragraphs 27, 33, 35 and 37).

47      It follows that an area which is not part of the Natura 2000 network, such as the area at issue in the main proceedings, could in any event be eligible for such payment only pursuant to Article 30(6)(b) of Regulation No 1305/2013.

48      However, it cannot be determined from the wording of that provision in itself whether and, as the case may be, under what conditions that may be the case.

49      Therefore, in accordance with the settled case-law of the Court, in interpreting that provision, it is necessary to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part (judgments of 7 June 2005, *VEMW and Others*, C‐17/03, EU:C:2005:362, paragraph 41, and of 21 January 2021, *Germany* v *Esso Raffinage*, C‐471/18 P, EU:C:2021:48, paragraph 81).

50      It should be noted in that regard, first, that the areas which are eligible, under Article 30(6)(b) of Regulation No 1305/2013, for a support payment under Article 30 are nature protection areas, other than those that are part of the Natura 2000 network, with environmental restrictions applicable to farming or forests which contribute to the implementation of Article 10 of Directive 92/43.

51      Accordingly, the eligibility of those areas for such payment is subject to the condition that the area concerned is a nature protection area with environmental restrictions applicable to farming or forests.

52      In the present case, it is clear from the statements made in the order for reference referred to in paragraph 45 above that, without prejudice to the findings to be made by the referring court, the area at issue in the main proceedings fulfils that condition since it constitutes a nature area with environmental restrictions applicable to forests. More precisely, those statements indicate that the area is a micro-reserve which was created by the competent national authority in a forest that is not part of the Natura 2000 network in order to contribute to the protection of a species of wild bird, the existence of which results in costs and income foregone for the owner of that forest.

53      In addition, it follows from Article 30(6)(b) of Regulation No 1305/2013 that the area in respect of which support is claimed and the environmental restrictions to which that area is subject must contribute to the implementation of Article 10 of Directive 92/43.

54      In the present case, the referring court inter alia asks about the scope of that condition, as is apparent from the wording of its first question and the statements made in the order for reference summarised in paragraph 37 above.

55      Second, Article 10 of Directive 92/43, to which Article 30(6)(b) of Regulation No 1305/2013 refers, provides, in the first paragraph, that Member States are to endeavour with a view, in particular, to improving the ecological coherence of the Natura 2000 network, to encourage the management of features of the landscape which are of major importance for wild fauna and flora. It further states, in the second paragraph, that such features are those which, by virtue of their linear and continuous structure or their function as stepping stones, are essential for the migration, dispersal and genetic exchange of wild species.

56      Article 10 thus empowers Member States to adopt measures to improve the ecological coherence of the Natura 2000 network, as is also stated in Article 3(3) of Directive 92/43.

57      It is clear from Article 3(1) that that network is intended to include not only ‘special areas of conservation’ for natural habitats and habitats of animal and plant species listed respectively in Annex I and Annex II to that directive, but also ‘special protection areas’ classified by the Member States with the aim of contributing to the conservation of species of wild birds pursuant to Directive 79/409, now replaced by Directive 2009/147.

58      It follows that the measures which Member States are empowered to adopt pursuant to Article 10 of Directive 92/43 with a view to improving the ecological coherence of the Natura 2000 network may relate not only to habitats falling under Directive 92/43 but also to species of wild birds falling under Directive 2009/147, since in the latter case such measures are intended to supplement the measures referred to in Articles 2 and 3 of Directive 2009/147.

59      In the present case, it is apparent from the statements made in the order for reference referred to in paragraphs 45 and 52 above that, without prejudice to the findings to be made by the referring court, such is the aim of the micro-reserve at issue in the main proceedings and the environmental restrictions applicable to forests to which the micro-reserve is subject, as the creation of the micro-reserve and the introduction of those restrictions are intended to contribute to the protection of the western capercaillie (*Tetrao urogallus*), a species of wild bird falling under Directive 2009/147.

60      Third, as observed in paragraph 43 above, Article 30(1) of Regulation No 1305/2013 provides that the support under that provision seeks to compensate its beneficiary for additional costs and income foregone resulting from disadvantages in the area concerned related to the implementation of Directives 92/43, 2000/60 and 2009/147.

61      It is clear from that provision that such support may be granted inter alia where an area eligible for a payment under Article 30(6) of Regulation No 1305/2013 suffers disadvantages related to the implementation of Directive 2009/147, as both the Latvian Government and the Commission argued in their written observations.

62      Such support may therefore be granted to an area of that kind either if it suffers disadvantages resulting from a national measure for the protection of a species of wild bird adopted pursuant to Directive 2009/147 or if the measure was adopted under Article 10 of Directive 92/43, as was pointed out in paragraph 58 above.

63      Fourth, the general objective of strategic support for rural development pursued by Regulation No 1305/2013, as set out in Article 1(1) thereof, is achieved inter alia, as is clear from Article 6(1) of that regulation and Title III thereof, to which the latter provision refers, by the possibility given to Member States to adopt a set of measures to meet European Union priorities for rural development.

64      Those measures include the support provided for in Article 30 of Regulation No 1305/2013, the specific objective of which, according to recital 24 of that regulation, is to grant farmers and forest holders support to help them address specific disadvantages in the areas concerned resulting from the implementation of the EU directives for the protection of natural habitats, habitats of animal and plant species, those species themselves and waters.

65      That objective, which is worded such that it does not exclude a priori any kind of disadvantage related to the implementation of one of those directives, makes clear that the support provided for in Article 30 may be granted inter alia where such disadvantages relate to the implementation, in the area for which support is claimed, of environmental restrictions applicable to farming or forests which are intended to contribute to the protection of a species of wild bird falling under Directive 2009/147, irrespective of whether those restrictions stem from a national measure adopted pursuant to that directive itself or from Article 10 of Directive 92/43.

66      That objective therefore corroborates the interpretation of Article 30(6) of Regulation No 1305/2013 derived from the different textual and contextual elements analysed in paragraphs 50 to 62 above.

67      Since, as is clear from the statements summarised in paragraph 38 above, the referring court has also asked about the legal inferences which might have to be drawn from the reparatory or compensatory nature of support like that at issue in the main proceedings, having regard to the provisions of EU primary or secondary law on the grant of public aid, it should be stated, first, that, as was stated in paragraphs 43 and 60 above, the aim of Article 30 of Regulation No 1305/2013 is to allow support to be granted to compensate farmers and forest holders for costs and income foregone resulting from disadvantages related to the implementation of Directives 92/43, 2000/60 and 2009/147. The reparatory or compensatory nature of that support thus stems from its very aim, as intended by the EU legislature (see, to that effect, judgments of 30 March 2017, *Lingurár*, C‐315/16, EU:C:2017:244, paragraphs 26 and 28, and of 27 January 2022, *Sātiņi-S*, C‐234/20, EU:C:2022:56, paragraph 43) and cannot therefore call into question its classification as support which can be granted pursuant to the EU rules governing the EAFRD.

68      Second, according to the Court’s case-law, that reparatory or compensatory nature does not prevent such support, in so far as it is financed through State resources, from being able to be classified furthermore as ‘State aid’ for the purposes of Article 107(1) TFEU, provided that the other conditions governing the application of that provision are satisfied (see, to that effect, judgment of 27 January 2022, *Sātiņi-S*, C‐238/20, EU:C:2022:57, paragraphs 40 and 52).

69      In the light of all the foregoing considerations, the answer to the first question is that Article 30 of Regulation No 1305/2013 must be interpreted as meaning, taking account of Article 30(6) in particular, that support applied for in respect of a micro-reserve created in a forest in pursuance of the objectives of Directive 2009/147 falls within the scope of Article 30.

*The second question*

70      By its second question, the referring court asks, in essence, whether Regulation No 702/2014 must be interpreted as meaning that support applied for on the basis of Regulation No 1305/2013 in respect of a micro-reserve created in a forest in pursuance of the objectives of Directive 2009/147 by an undertaking in difficulty cannot be declared compatible with the internal market.

71      It should be noted as a preliminary point in that regard that the support in respect of which the referring court asks the Court about the interpretation of Regulation No 702/2014 is support which has been applied for under Article 30 of Regulation No 1305/2013. It is therefore support which is provided for by EU rules, namely those governing the EAFRD.

72      However, that support is intended to be granted to applicants not by the European Union directly, but through Member States and pursuant to the rural development programmes submitted by them and approved by the Commission, as is stated in Article 6(1) to (3) of Regulation No 1305/2013 and as the Court has already held with regard to both that regulation and the regulation which it repealed and replaced (see, to that effect, judgments of 30 March 2017, *Lingurár*, C‐315/16, EU:C:2017:244, paragraph 21, and of 6 October 2021, *Lauku atbalsta dienests (Business start-up aid in agriculture)*, C‐119/20, EU:C:2021:81*7*, paragraphs 54 to 56).

73      That mechanism itself reflects the responsibilities shared between the Member States and the Commission which, in accordance with Article 1(1) of Regulation No 1305/2013, shape European Union support for rural development financed by the EAFRD (see, to that effect, judgment of 6 October 2021, *Lauku atbalsta dienests (Business start-up aid in agriculture)*, C‐119/20, EU:C:2021:81*7*, paragraph 57); that support may take the form of not only financing from the EU budget, but also additional financing originating from State resources.

74      As is made clear in paragraph 68 above, that additional financing may be classified, in the light of the State origin of the resources earmarked for it, as State aid for the purposes of Article 107(1) TFEU, provided that the other conditions governing the application of that provision are satisfied. Such a classification in itself gives rise to the application of all the relevant provisions of EU law relating to State aid unless, in a specific case, the financing relates to operations falling within the scope of Article 42 TFEU, in which case it is not subject to those provisions, in accordance with Article 81(2) of Regulation No 1305/2013.

75      As regards financing from the EU budget, it should be noted that it is evident from Article 81(1) of Regulation No 1305/2013 and recital 56 of that regulation, in the light of which that provision should be read, that the EU legislature also intended to make such financing subject to the application of Articles 107 to 109 TFEU, unless it relates to operations falling within the scope of Article 42 TFEU, as is stated in Article 81(2) of that regulation.

76      That legislative choice, which, according to Article 1(1) of that regulation, seeks to ensure coordination of the EAFRD with other EU instruments, means that support for rural development co-financed through State resources and resources from the EU budget is fully subject to all the relevant provisions of EU law relating to State aid.

77      Those provisions include the rules of Regulation No 702/2014 in respect of which the referring court is seeking an interpretation in order to ascertain, in essence, whether support applied for by an undertaking in difficulty on the basis of Article 30 of Regulation No 1305/2013, in respect of a micro-reserve created in a forest in pursuance of the objectives of Directive 2009/147, falls within the scope of the exemption scheme established by that regulation.

78      In that regard, it should be stated, in the first place, that the purpose of Regulation No 702/2014, as is evident from its very title, is to declare compatible with the internal market certain categories of individual aid granted in the agricultural sector, in the forestry sector and in rural areas and, consequently, to exempt them from the general notification obligation under Article 108(3) TFEU, provided the individual aid fulfils all the conditions laid down by that regulation (see, to that effect, judgment of 20 May2021, *Azienda Sanitaria Provinciale di Catania*, C‐128/19, EU:C:2021:401, paragraph 47).

79      An exemption regulation of that kind does not prevent certain individual aid which comes under one of the categories set out therein, without fulfilling the conditions under which it can be declared compatible with the internal market on the basis of that exemption regulation, from nevertheless being able to be declared compatible with the internal market following a specific examination, provided that that aid has been the subject of prior notification to the Commission (see, to that effect, judgments of 5 March 2019, *Eesti Pagar*, C‐349/17, EU:C:2019:172, paragraphs 57, 59, 86 and 87, and of 20 May2021, *Azienda Sanitaria Provinciale di Catania*, C‐128/19, EU:C:2021:401, paragraph 42).

80      In the present case, however, it is not apparent from the order for reference that such prior notification was made.

81      In the second place, it is clear from Article 1(1)(e) of Regulation No 702/2014, read in conjunction with Article 1(3)(a) and clarified by recital 60 of that regulation, that the exemption established by that regulation applies to aid in favour of forestry, including aid which is co-financed by the EAFRD.

82      Regulation No 702/2014 therefore applies inter alia to support within the meaning of Article 30 of Regulation No 1305/2013 and, in particular, to support applied for under that provision in respect of a micro-reserve created in a forest in pursuance of the objectives of Directive 2009/147, such as the support at issue in the main proceedings.

83      Accordingly, in order to be able to be declared compatible with the internal market pursuant to Regulation No 702/2014 and to benefit from the exemption under that regulation, such aid must fulfil all the conditions to which the regulation makes that declaration of compatibility subject.

84      Those conditions include, under Article 1(6) of that regulation, the condition that the applicant for such aid must not be an undertaking in difficulty, subject to various exceptions, none of which appears to be relevant to the dispute in the main proceedings according to the order for reference, which it is, however, for the referring court to ascertain.

85      In addition, according to the definition of ‘undertaking in difficulty’ in Article 2(14) of that regulation, that notion includes limited liability companies more than half of whose subscribed share capital has disappeared as a result of accumulated losses, which is the criterion on the basis of which the competent national authority refused to grant the support at issue in the main proceedings, as is clear from the statements made in the order for reference summarised in paragraph 32 above.

86      It follows that Regulation No 702/2014 must be interpreted as meaning that aid in favour of forestry and, more specifically, support applied for on the basis of Article 30 of Regulation No 1305/2013 in respect of a micro-reserve created in a forest in pursuance of the objectives of Directive 2009/147 by an undertaking in difficulty within the meaning of Article 2(14) cannot be declared compatible with the internal market on the basis of Regulation No 702/2014.

87      Lastly, in the fourth place, in so far as the referring court seems to have doubts as to the validity of that exclusion in the light of the right to property and the general principles of equal treatment and proportionality, as is evident from the statements summarised in paragraph 40 above, it should be observed, first, that analysis of Regulation No 702/2014 shows that that exclusion is not based on the aim of preserving EU resources, which the referring court considers might have been unduly favoured at the expense of the abovementioned right and the abovementioned two general principles.

88      As is clear from recital 16 of that regulation, which explains the rationale for excluding undertakings in difficulty from benefitting from the exemption introduced by the regulation, subject to the exceptions mentioned in paragraph 84 above, that exclusion is intended to ensure that all aid which such undertakings apply for is examined exclusively and consistently in the light of a set of specific procedural and substantive rules which were introduced with the precise aim of taking due account of the particular situation of those undertakings. Accordingly, the sole aim and consequence of that exclusion is not to prohibit undertakings in difficulty in general from being granted aid in favour of forestry, as that possibility in fact remains open to them in accordance with those rules, but to render Regulation No 702/2014 inapplicable to such aid when applied for by those undertakings.

89      Second, it should be noted that those rules themselves seek to ensure that aid that may be granted to undertakings in difficulty complies with the conditions under which such aid may be declared compatible with the internal market, bearing in mind that the grant of such aid is not a right enjoyed by undertakings, since the grant of State aid is, in principle, prohibited by the FEU Treaty, but a possibility available to public authorities in cases where such aid pursues one of the objectives of common interest set out in Article 107(3) TFEU and fulfils the conditions laid down by the applicable legislation. It follows, in particular, that while Member States are empowered to grant support co-financed by the EAFRD on the basis of Article 30 of Regulation No 1305/2013, they are not required to do so, but, by contrast, enjoy a margin of discretion in that regard (see, to that effect, judgments of 6 October 2021, *Lauku atbalsta dienests (Business start-up aid in agriculture)*, C‐119/20, EU:C:2021:81*7*, paragraph 56; of 27 January 2022, *Sātiņi-S*, C‐234/20, EU:C:2022:56, paragraphs 40 and 66; and of 27 January 2022, *Sātiņi-S*, C‐238/20, EU:C:2022:57, paragraph 36).

90      However, that discretion must be exercised in adherence to the parameters laid down under that regulation (see, to that effect, judgment of 30 March 2017, *Lingurár*, C‐315/16, EU:C:2017:244, paragraph 18) and comply with the general principles of EU law (see, by analogy, with regard to funding granted on the basis of a European Union fund other than the EAFRD, judgment of 27 January 2022, *Zinātnes parks*, C‐347/20, EU:C:2022:59, paragraph 61).

91      Lastly, in that regard, the specific treatment given to undertakings in difficulty by Regulation No 702/2014 cannot, in itself, be considered capable of infringing the right to property guaranteed in Article 17 of the Charter or the general principles of equal treatment and proportionality.

92      The Court has already ruled that, because the right to property is not absolute, its exercise may, under the conditions laid down in Article 52(1) of the Charter, be subject to a restriction justified by an objective of general interest recognised by the European Union, such as one resulting from a national measure adopted for the purposes of protecting nature and the environment under Directives 92/43 or 2009/147, without in any event the person whose right to property is subject to such restriction having to be granted compensation and, more specifically, support on the basis of Article 30 of Regulation No 1305/2013 (see, to that effect, judgments of 27 January 2022, *Sātiņi-S*, C‐234/20, EU:C:2022:56, paragraphs 62 to 66, and of 27 January 2022, *Sātiņi-S*, C‐238/20, EU:C:2022:57, paragraphs 32 to 36). That said, in a situation where the effect of a national measure adopted for the purposes of protecting nature and the environment under Directives 92/43 or 2009/147 would be to cause a loss of value of the land in question, such that it would be tantamount to a deprivation of possessions, the owner of that land would be entitled, because it is a situation of implementation of EU law, to compensation under Article 17 of the Charter (see, to that effect, judgment of 9 June 2016, *Pesce and Others*, C‐78/16 and C‐79/16, EU:C:2016:428, paragraphs 85 and 86).

93      In addition, the fact that undertakings whose right to property is subject to such restriction resulting from a national measure adopted for the purposes of protecting nature and the environment under Directives 92/43 or 2009/147 may be granted aid whose compatibility with the internal market depends on different conditions according to whether or not they are in difficulty is justified by the difference in the situation of those two categories of undertakings having regard to the EU rules on State aid.

94      In view of the economic or financial difficulties faced by such undertakings, the examination of the compatibility with the internal market of aid granted to them may justifiably be made subject to specific conditions, allowing their difficulties and the potential effects of those difficulties to be taken into account (see by analogy, with regard to the non-applicability to undertakings in difficulty of an exemption regulation other than Regulation No 702/2014, judgment of 27 January 2022, *Zinātnes parks*, C‐347/20, EU:C:2022:59, paragraphs 46 to 49 and 57).

95      Furthermore, the non-applicability of the exemption under Regulation No 702/2014 to undertakings in difficulty does not appear to be contrary to the general principle of proportionality. Irrespective of whether it is appropriate, which is addressed in the preceding paragraph of this judgment, it cannot be considered as going beyond what is necessary to attain the objective pursued by it since, as was stated in paragraphs 79 and 88 above, it does not prevent those undertakings being granted aid for forestry or aid for undertakings in difficulty, provided such aid fulfils the conditions laid down by the rules on State aid applicable to such undertakings.

96      In the light of all these considerations, the answer to the second question is that Regulation No 702/2014 must be interpreted as meaning that support applied for on the basis of Regulation No 1305/2013 in respect of a micro-reserve created in a forest in pursuance of the objectives of Directive 2009/147 by an undertaking in difficulty within the meaning of Article 2(14) of Regulation No 702/2014 cannot be declared compatible with the internal market under that latter regulation.

**Costs**

97      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Seventh Chamber) hereby rules:

1.      **Article 30 of Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005 must be interpreted as meaning, taking account of Article 30(6) in particular, that support applied for in respect of a micro-reserve created in a forest in pursuance of the objectives of Directive 2009/147/EC of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds falls within the scope of Article 30.**

2.      **Commission Regulation (EU) No 702/2014 of 25 June 2014 declaring certain categories of aid in the agricultural and forestry sectors and in rural areas compatible with the internal market in application of Articles 107 and 108 [TFEU] must be interpreted as meaning that support applied for on the basis of Regulation No 1305/2013 in respect of a micro-reserve created in a forest in pursuance of the objectives of Directive 2009/147 by an undertaking in difficulty within the meaning of Article 2(14) of Regulation No 702/2014 cannot be declared compatible with the internal market under that latter regulation.**

[Signatures]

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*      Language of the case: Latvian.