61989J0215
REPORT FOR THE HEARING
in Case C-215/89 (
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)
I — Facts and written procedure
1. Applicable Community provisions
(a)
Council Regulation (EEC) No 1078/77 of 17 May 1977 introducing a system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds (OJ 1977 L 131, p. 1) set up inter alia a system of premiums (hereinafter: ‘conversion premiums’) for the conversion of dairy cattle to meat production.
Article 3(1) of that Regulation, as amended by Council Regulation (EEC) No 1041/78 of 22 May 1978 (OJ 1978 L 134, p. 9), is worded as follows:
‘To obtain the conversion premium, the producer must satisfy the competent authorities:
—
that he has delivered at least 50000 kilograms of milk or the equivalent in milk products during the 12 calendar months preceding the month of application, that he still has an appropriate number of dairy cows on his holding,
or
—
that he has at least 15 dairy cows, including in-calf heifers, on his holding.
This condition must be satisfied on the date of approval of the application; failing this, the premium shall be reduced accordingly.’
Article 7 of the same Regulation requires inter alia‘a definition of the terms “in numbers appropriate” and “corresponding quantities” in ... Article 3(1)’ to be laid down in accordance with the procedure under Article 30 of Regulation (EEC) No 804/68 (the ‘management committee procedure’)(indent (b)).
(b)
That was the legal basis on which Commission Regulation (EEC) No 1391/78 of 23 June 1978 laying down amended rules for the application of the system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds (OJ 1978 L 167, p. 45) was adopted. Article 1(3) of Regulation No 1391/78 provides as follows:
‘In determining the quantity of milk on which the premium will be calculated:
(a)
the following equivalences shall be applied to the dairy products disposed of by the producer in the 12 calendar months preceding the date when the application is lodged:
—
one kilogram of milk equals one litre of milk,
—
one kilogram of butter equals 23 litres of milk,
—
one kilogram of cheese equals 10 litres of milk,
—
one kilogram of milk fat equals 27 litres of milk;
(b)
the quantity of milk arrived at by applying point (a) shall, where appropriate, be reduced proportionally:
—
as provided for in ... Article 3(1) of Regulation (EEC) No 1078/77, where the number of dairy cows kept on the holding as recorded on the date of approval of the application is less than the appropriate number for the quantity of milk in question;
—
...’
2. Proceedings be/ore the German courts
Mr Friedel Eddelbiittel, who owns a farm, challenges a decision of the Bezirksregierung (district administration) Lüneburg demanding partial repayment by him of a premium granted to him for the conversion of a dairy herd to meat production. The decision to claim repayment is founded on a reduction of the premium on the ground that at the time of approval of the application Mr Eddelbiittel no longer held a stock of dairy cows corresponding to the milk quantity used as the basis for calculation of the premium.
On 29 March 1979 Mr Eddelbiittel submitted to the Bezirksregierung an application for the grant of a conversion premium, stating on the application form signed by him that the number of dairy cows kept on his holding at that time was 24 and that the quantity of milk marketed during the 12 months prior to the application was 113059 kg. On the same date, the Landwirtschaftskammer (Chamber of Agriculture), Hanover, certified the statements as correct and marked 26 head of dairy cattle. Ten of the animals described in the identity cards as dairy cows had, according to an invoice of 28 March 1979, been purchased by the plaintiff from a livestock dealer for a total of DM 14500. Those animals were slaughtered on 9 April 1979 in Stuttgart. In a declaration attached to the application the plaintiff stated that he had discontinued the marketing of milk on 30 March 1979.
By a decision of 27 April 1979 the Bezirksregierung approved the application ‘with effect from 29 March 1979’ and provisionally fixed the quantity of milk qualifying for the premium at 113059 litres. By a decision dated 15 May 1979, as amended by a revised decision of 18 July 1979, the Bezirksregierung granted the plaintiff the first instalment of the conversion premium, amounting to DM 40390.31 (60% of the total premium of DM 67317.19) and paid him that sum.
The Bezirksregierung subsequently learnt that before submitting the application Mr Eddelbiittel had sold some high-yielding dairy cows and replaced them with cull cows; accordingly, by a decision of 31 August 1981, it revoked its decision of 27 April 1979 approving the application and its decision of 15 May 1979 granting the premium and replaced them with a decision of approval bearing the same date which fixed the quantity of milk qualifying for the premium at 65951 litres, and with a decision, also of the same date, granting an initial instalment of the conversion premium amounting to DM 23993.68 (60% of the total premium of DM 39989.48). At the same time, it called upon Mr Eddelbiittel to repay, with interest, the excess amount of the first instalment of the premium, namely DM 16396.63. In justifying the decision, it pointed out inter alia that Mr Eddelbiittel had changed part of his dairy herd from which he had obtained the quantity of milk serving as the basis for his entitlement to the premium. At the time of the submission of the application, therefore, there was no longer an ‘appropriate’ stock of dairy cows for the purpose of the legislative provisions on which the grant of the premium must be based.
On 25 September Mr Eddelbiittel lodged an administrative appeal. In substance, he claimed that under the applicable Community provisions milk producers have the option of selling high-yielding cows and substituting animals of lower quality, and of applying for the premium at a later date.
The Bezirksregierung dismissed the administrative appeal by decision of 29 October 1981. In essence, it stated that, according to the intent of the relevant Community provisions, changes to livestock herds had no effect on the premium only if the new animals brought into the herd had the same yield as the animals disposed of. Having regard to the qualitative requirements, the only means of establishing whether, in the event of changes to a dairy herd, the herd was ‘appropriate’ at the time when the application was submitted was to take account of the actual yield of the marked animals.
On 11 November 1981 Mr Eddelbüttel brought proceedings before the Verwaltungsgericht (Administrative Court) Stade. The action was dismissed by judgment of 29 November 1983. The appeal lodged by Mr Eddelbüttel was dismissed by the Oberverwaltungsgericht (Higher Administrative Court) Lüneburg by judgment of 14 February 1985.
It was against that decision of the Oberverwaltungsgericht that Mr Eddelbüttel appealed on a point of law to the Bundesverwaltungsgericht (Federal Administrative Court). Taking the view that its decision was dependent on the interpretation of Community provisions, the Bundesverwaltungsgericht stayed the proceedings and referred the following questions to the Court of Justice for a preliminary ruling under Article 177 of the EEC Treaty:
‘Is the first indent of Article 1(3)(b) of Commission Regulation (EEC) No 1391/78 to be interpreted as meaning that in determining the quantity of milk a reduction may be made in circumstances where Article 3(1) of Council Regulation (EEC) No 1078/77 (as amended by Council Regulation (EEC) No 1041/78), cited in that indent, makes no provision for a reduced premium?
If the answer is in the affirmative, how is the word “appropriate” in the first indent of Anicie 1(3)(b) of Regulation (EEC) No 1391/78 to be interpreted?’
3. Written procedure be/ore the Court
The order of the Bundesverwaltungsgericht was lodged at the Court Registry on 10 July 1989.
In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the European Communities, written observations were submitted by Friedel Eddelbüttel, represented by Mr Petersen, Rechtsanwalt, Lüneburg, and by the Commission of the European Communities, represented by its Legal Adviser Dierk Booss, acting as Agent, assisted by Michael Schütte, Rechtsanwalt, Hamburg and Brussels.
Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided, by decision of 22 May 1990, to assign the case to the Third Chamber pursuant to Article 95 of the Rules of Procedure, and to open the oral procedure without any preparatory inquiry.
II — Written observations submitted to the Court
1.
Mr Eddelbüttel observes that Article 3(1) of Regulation No 1078/77, as amended by Regulation No 1041/78, sets out the conditions under which the conversion premium is to be granted and the circumstances in which there may be grounds for reducing it. Once there is an entitlement under Article 3(1) to payment of the full premium, Article 1(3)(b) of Regulation No 1391/78 cannot operate so as to reduce it.
According to Mr Eddelbüttel, that point is clear from the very wording of the provision. Since the quantity of milk must, where appropriate, be reduced in accordance with Articles 2 and 3 of Regulation No 1078/77, the conditions for reduction contained in those articles must first be fulfilled. Article 1(3)(b) of Regulation No 1391/78 simply lists additional conditions which must be met before a reduction may be made. It is hard to see why the phrase ‘where appropriate’ should be included in Article 1(3)(b) if a reduction depended solely on the fulfilment of the conditions in Article 1(3)(b) itself.
In Mr Eddelbiittel's opinion the above interpretation is the only one which is compatible with the basic aim of the premium: it is intended to provide an incentive for refraining from marketing milk and milk products, since wide participation by milk producers in the scheme is needed if the desired reduction of the relevant surpluses is to be attained. That participation will not, however, be forthcoming unless the premium is reduced only in limited cases — that is, by way of exception — so that milk producers are not deterred from submitting their applications. Consequently, it must be assumed that the provisions of Article 1(3)(b) do not afford a further opportunity for reducing the premium but, on the contrary, seek to restrict that possibility.
That interpretation is also corroborated by the fact that the Commission of the European Communities had to admit in early 1978 that the adoption of Regulation No 1078/77 had not had the expected result — that is to say, the number of milk producers who had applied for the premium fell short of the expected number. In those circumstances it is hardly likely that Regulation No 1391/78 was intended to restrict still further the granting of premiums.
Mr Eddelbiittel also argues that Regulation No 1391/78 is merely an implementing regulation, so that its purpose may legitimately be supposed to be simply to give substance to the basic legislation. However, the second indent of Article 3(1) of Regulation No 1078/77, as amended by Regulation No 1041/78, does not require such implementation because its wording is sufficiently precise. Since in this case the applicant had, on the relevant date of 29 March 1979, at least 15 dairy cows, including in-calf heifers, on his holding, the conditions for the grant of the full premium were satisfied.
If the above interpretation were to be rejected, the question would then arise how the ‘appropriate number [of dairy cows]’ within the meaning of Article 1(3)(b) of Regulation No 1391/78 is to be construed. The wording of that provision suggests that it is simply the number of dairy cows that is to be taken into account. If their milk yield were equally important this should have been expressly stated so as to avoid giving too broad a scope to the wording of Article 1(3)(b).
2.
The Commission takes the view that Article 1(3) of Regulation No 1391/78 must be regarded as implementing the last indent of Article 3(1) and Article 4 of Regulation No 1078/77, as amended by Regulation No 1041/78. In its view, that Article lays down, for the purpose of calculating the premium, the principle that the quantity delivered, on the basis of which the premium is calculated, must correspond to the appropriate number of dairy cows.
Council Regulation No 1041/78, although it is a higher-ranking measure, does not invalidate Regulation No 1391/78 in this regard. The Commission Regulation is based on the opinion of the Management Committee, in accordance with Article 7(b) of Regulation No 1078/77. However, Regulation No 1041/78 did not amend Anicie 7(b), which was therefore still valid at the time when Regulation No 1391/78 was adopted.
The Commission claims that there is no higher rule of law which prevents the application of Anicie 1(3) of Regulation No 1391/78. Anicie 1(3) therefore applies even on the assumption that Anicie 3(1) of the Council Regulation makes no express provision for reducing the premium in this case.
The Commission explains that the alternative condition contained in Regulation No 1078/77 does not deal with the level of the premium but simply establishes the right to submit an application. Even if that alternative condition (namely a herd of at least 15 dairy cows) is fulfilled, the premium is calculated by reference to deliveries during the previous 12 months, provided that proof is given that the dairy cows still held allow that quantity to be produced.
In the circumstances of the present case, the Commission takes the view that the second alternative under Anicie 3(1) of Regulation No 1078/77 is irrelevant because the plaintiff based his application for a conversion premium on the quantity of milk actually delivered, not on the number of cows held. It follows that the plaintiff must prove that the number of dairy cows held at the time of approval of the application enabled him to deliver the quantities shown in the application. If that is not possible the premium is reduced proportionally.
If, on the other hand, a premium is to be granted on the basis of the higher delivered quantities stated by the applicant, he must, in the Commission's opinion, demonstrate that the yield of each cow corresponds to the quantity shown in the application.
It would be incompatible with the aim of the regulation to allow a combination of the two alternatives, permitting the applicant merely to show that he had a minimum herd of 15 dairy cows in order to qualify for a premium granted on the basis of a far higher delivered quantity, when his herd obviously did not enable him to achieve that quantity.
The Commission points out that Regulation No 1078/77 is designed to encourage producers to convert their dairy herds to meat production. The premium thus serves as compensation for the initial loss of the income derived from milk deliveries. The regulation does not, however, seek to confer a subsidy on all livestock farmers who have dairy cows but to grant a premium to those who convert their holdings by replacing the herds which have hitherto enabled them to produce and deliver a given quantity of milk.
In the Commission's opinion, it is in order to take account of the changes in the quality of the herd that the regulation demands that an appropriate number of dairy cows be held, corresponding to the quantities delivered. That is clear both from Anicie 3(1) of Regulation No 1078/77, as amended by Regulation No 1041/78, and from Article 1(3) of Regulation No 1391/78. Since the number of cows no longer corresponds to the quantity delivered, the premium must be reduced accordingly.
The Commission concludes that in the absence of actual evidence of the yield of each cow the term ‘appropriate’ in Article 1(3)(b) of Regulation No 1391/78 must be interpreted as referring to the average yield of a cow in the Member State in question, increased by a 10% margin of error.
M. Zuleeg
Judge-Rapporteur
(
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)	Language of the case: German.