JUDGMENT OF THE COURT (First Chamber)
6 June 2018 (*)
(Reference for a preliminary ruling — Common agricultural policy — EAFRD financing — Regulation (EC) No 1122/2009 — Support for rural development — Non-compliance with cross-compliance rules — Reductions and exclusions — Aggregation of reductions)
In Case C‑667/16,
REQUEST for a preliminary ruling under Article 267 TFEU from the College van Beroep voor het bedrijfsleven (Administrative Court of Appeal for Trade and Industry, Netherlands), made by decision of 20 December 2016, received at the Court on 23 December 2016, in the proceedings
M.N.J.P.W. Nooren,
J.M.F.D.C. Nooren,
the heirs of M.N.F.M. Nooren,
v
Staatssecretaris van Economische Zaken
THE COURT (First Chamber),
composed of R. Silva de Lapuerta, President of the Chamber, C.G. Fernlund, J.‑C. Bonichot, A. Arabadjiev and S. Rodin (rapporteur), Judges,
Advocate General: H. Saugmandsgaard Øe,
Registrar: I. Illéssy, Administrator,
having regard to the written procedure and further to the hearing on 7 November 2017,
after considering the observations submitted on behalf of:
–        the Netherlands Government, by M. Gijzen and M.K. Bulterman, acting as Agents,
–        the European Commission, by A. Bouquet and A. Sauka, acting as Agents,
after hearing the Opinion of the Advocate General at the sitting on 21 February 2018,
gives the following
Judgment
1        This request for a preliminary ruling concerns the interpretation of Articles 70 to 72 of Commission Regulation (EC) No 1122/2009 of 30 November 2009 laying down detailed rules for the implementation of Council Regulation (EC) No 73/2009 as regards cross-compliance, modulation and the integrated administration and control system, under the direct support schemes for farmers provided for by that Regulation, as well as for the implementation of Council Regulation (EC) No 1234/2007 as regards cross-compliance under the support scheme provided for the wine sector (OJ 2009 L 316, p. 65).
2        The request has been made in proceedings between, on the one hand, M.N.J.P.W. and J.M.F.D.C. Nooren, the heirs of M.N.F.M. Nooren, and, on the other, the Staatssecretaris van Economische Zaken (State Secretary for Economic Affairs, Netherlands) concerning a reduction of agricultural subsidies by reason of non-compliance with cross-compliance rules for the protection of calves.
Legal context
3        Article 23 of Council Regulation (EC) No 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, amending Regulations (EC) No 1290/2005, (EC) No 247/2006, (EC) No 378/2007 and repealing Regulation (EC) No 1782/2003 (OJ 2009 L 30, p. 16), entitled ‘Reduction of or exclusion from payments in the event of non-compliance with cross-compliance rules’, provides in the first subparagraph of paragraph 1:
‘Where the statutory management requirements or good agricultural and environmental conditions are not complied with at any time in a given calendar year (hereinafter referred to as “the calendar year concerned”), and the non-compliance in question is the result of an act or omission directly attributable to the farmer who submitted the aid application in the calendar year concerned, the total amount of direct payments granted or to be granted, following application of Articles 7, 10 and 11 to that farmer, shall be reduced or excluded in accordance with the detailed rules laid down in Article 24.’
4        Article 24 of that regulation, entitled ‘Detailed rules on reductions and exclusions in the event of non-compliance with cross-compliance rules’, provides:
‘1.      Detailed rules for the reductions and exclusions referred to in Article 23 shall be laid down in accordance with the procedure referred to in Article 141(2). In this context, account shall be taken of the severity, extent, permanence and repetition of the non-compliance found as well as of the criteria set out in paragraphs 2, 3 and 4 of this Article.
2.      In the case of negligence, the percentage of reduction shall not exceed 5% and, in the case of repeated non-compliance, 15%.
…
3.      In the case of intentional non-compliance, the percentage of reduction shall not in principle be less than 20% and may go as far as total exclusion from one or several aid schemes and apply for one or more calendar years.
4.      In any case, the total amount of reductions and exclusions for one calendar year shall not be more than the total amount referred to in Article 23(1).’
5        Article 70 of Regulation No 1122/2009, entitled ‘General principles and definitions’, which appears in Chapter III of Title IV of Part II of that regulation, entitled ‘Findings in relation to cross-compliance’, provides in paragraph 6:
‘Where more than one case of non-compliance with regard to various acts or standards of the same area of cross-compliance have been determined, those cases shall, for the purposes of the fixing of the reduction in accordance with Articles 71(1) and 72(1), be considered as one non-compliance.’
6        Article 71 of that regulation, which appears in that Chapter III, entitled ‘Application of reductions in the case of negligence’, is worded as follows:
‘1.      Without prejudice to Article 77, where a non-compliance determined results from the negligence of the farmer, a reduction shall be applied. That reduction shall, as a general rule, be 3% of the total amount as referred to in Article 70(8).
However, the paying agency may, on the basis of the assessment provided by the competent control authority in the evaluation part of the control report in accordance with Article 54(1)(c), decide either to reduce that percentage to 1% or to increase it to 5% of that total amount or, in the cases referred to in the second subparagraph of Article 54(1)(c), not to impose any reductions at all.
…
6.      In the case where a repeated non-compliance is determined together with another non-compliance or another repeated non-compliance, the resulting percentage reductions shall be added together. Without prejudice to the third subparagraph of paragraph 5, the maximum reduction shall, however, not exceed 15% of the total amount referred to in Article 70(8).’
7        Article 72 of that regulation, contained in the same Chapter III and entitled ‘Application of reductions and exclusions in cases of intentional non-compliance’, states in paragraph 1:
‘Without prejudice to Article 77, where the non-compliance determined has been committed intentionally by the farmer, the reduction to be applied to the total amount referred to in Article 70(8) shall, as a general rule, be 20% of that total amount.
However, the paying agency may, on the basis of the assessment provided by the competent control authority in the evaluation part of the control report in accordance with Article 54(1)(c), decide to reduce that percentage to no less than 15% or, where appropriate, to increase that percentage to up to 100% of that total amount.’
The dispute in the main proceedings and the questions referred for a preliminary ruling
8        Mr Nooren, a livestock farmer, applied for direct payments in the form of aid for the year 2011. During that year, inspectors from the Algemene Inspectiedienst (General Inspection Service, Netherlands) established on ten occasions in their reports infringements of a number of obligations committed by Mr Nooren in relation to the protection of calves.
9        By decision of 18 September 2014, the State Secretary for Economic Affairs, after having recalculated on several occasions the reduction of the total amount of direct payments granted or to be granted to the interested party, fixed that reduction at 55%.
10      That reduction consists of, first, a 15% reduction for various instances of non-compliance due to negligence and, second, a reduction of 40% for intentional non-compliance.
11      The applicants in the main proceedings brought an action before the referring court against the decision of 18 September 2014.
12      That court takes the view that those reductions of 15% and of 40% have been correctly determined.
13      The applicants in the main proceedings submit that the total reduction of the amount of direct payments cannot exceed 15%. The State Secretary for Economic Affairs contends that the reduction applied in this case correctly amounts to 55%, which represents an accumulation of reductions of 15% and of 40%.
14      According to the referring court, Articles 70 to 72 of Regulation No 1122/2009 do not make it possible to determine whether the reductions of the total amount of direct payments in the event of negligent non-compliance or intentional non-compliance may be added together or whether the State Secretary for Economic Affairs acted correctly in law in setting the amount of the total reduction at 55%.
15      In those circumstances, the College van Beroep voor het bedrijfsleven (Administrative Court of Appeal for Trade and Industry, Netherlands) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
‘(1)      Has the EU legislature provided for the possibility, in Articles 70, 71 and 72 of Regulation No 1122/2009, in situations such as that in the main proceedings, in which there are multiple instances of non-compliance within the same area of cross-compliance, of aggregating the reductions of aid for repeated and unrepeated instances of negligent non-compliance with cross-compliance requirements, on the one hand, and for instances of intentional non-compliance with cross-compliance conditions, on the other?
(2)      If so, which article or article section provides the basis for this and what is the calculation rule for such aggregation?
(3)      If not, can a basis for this be found elsewhere under EU law?’
Consideration of the questions referred
The first and second questions
16      By its first and second questions, which it is appropriate to examine together, the referring court asks, in essence, whether Articles 70 to 72 of Regulation No 1122/2009 must be interpreted as meaning that, in a situation such as that in the main proceedings, in which there have been found to be multiple instances of non-compliance within the same area, it is appropriate to aggregate, on the one hand, the reduction of the total amount of the direct payments granted or to be granted, applicable to instances of negligent non-compliance and, on the other hand, the reduction applicable to instances of intentional non-compliance.
17      Articles 70 to 72 of Regulation No 1122/2009 lay down, inter alia, the detailed rules for the application of Articles 23 and 24 of Regulation No 73/2009. Consequently, in order to answer the first and second questions, it is necessary to consider, at the outset, the requirements laid down in Articles 23 and 24 of Regulation No 73/2009.
18      Article 23(1), first subparagraph, of Regulation No 73/2009 provides for a reduction, in accordance with the detailed rules laid down in Article 24 of that regulation, of the total amount of direct payments granted or to be granted to a farmer who has submitted an aid application in the case where the statutory management requirements or good agricultural and environmental conditions are not complied with during the calendar year in which the aid application was submitted and the non-compliance in question is the result of an act or omission directly attributable to that farmer (see, to that effect, judgment of 13 December 2012, Maatschap L.A. en D.A.B. Langestraat en P. Langestraat-Troost, C‑11/12, EU:C:2012:808, paragraph 22).
19      It is clear from the wording of that provision that every act and omission leads, in principle, to a reduction of the total amount of direct payments granted or to be granted to a farmer, that reduction being subject to the detailed rules provided for in Article 24 of that regulation.
20      Article 24 of Regulation No 73/2009 states, in paragraph 2, that the percentage of reduction in the case of negligence is not to exceed 5% or, in the case of repeated non-compliance with the cross-compliance rules, 15%. Paragraph 3 of that article provides that, in the case of intentional non-compliance with those rules, the percentage of reduction is not to be less than 20% and may go as far as total exclusion from one or several aid schemes and may apply for one or more calendar years. Paragraph 4 of that article provides that, in any case, the total amount of reductions and exclusions for one calendar year is not to be more than the total amount referred to in Article 23(1) of Regulation No 73/2009.
21      Thus, Article 24 of Regulation No 73/2009 lays down different limits for reductions and exclusions of direct payments granted or to be granted for instances of negligent and intentional non-compliance with cross-compliance rules and a maximum limit for all cases in a calendar year.
22      Detailed rules for the application of paragraphs 2 and 3 of that article are, in accordance with paragraph 1 thereof, defined respectively in Articles 71 and 72 of Regulation No 1122/2009, the first of which is entitled ‘Application of reductions in the case of negligence’ and the second ‘Application of reductions and exclusions in cases of intentional non-compliance’.
23      Since Article 71 of Regulation No 1122/2009 applies to instances of negligence and Article 72 of that regulation applies to instances of intentional non-compliance, neither of those articles is, in itself, sufficient to cover a situation, such as that at issue in the main proceedings, which includes cases of intentional non-compliance together with cases of non-compliance due to negligence.
24      In addition, Article 71(6) of Regulation No 1122/2009 provides that, in the case where a repeated non-compliance is determined together with another non-compliance or another repeated non-compliance, the resulting percentage reductions are to be added together, provided that the maximum reduction does not exceed 15% of the total amount referred to in Article 70(8) of that regulation, without prejudice to the third subparagraph of paragraph 5 of Article 71. By contrast, as regards instances of intentional non-compliance, Article 72(1) of that regulation provides for a reduction of 20%, which may, however, be reduced to 15% or adjusted up to 100% of the total amount of direct payments that have been, or are to be, granted.
25      It follows that, if Article 71(6) of the regulation were to cover, in itself, as the applicants in the main proceedings submit, a situation such as that at issue in the main proceedings, the percentage reduction of the total amount of direct payments that have been, or are to be, granted would not exceed 15%, which is the minimum percentage if a single case of intentional non-compliance is determined, and would remain below 20%, which is the percentage to be applied generally in such a case.
26      Such an interpretation would, first of all, as the Advocate General has observed in point 37 of his Opinion, deprive Article 72 of Regulation No 1122/2009 of its practical effect. Next, it would be contrary to the objective pursued by that regulation, which, according to paragraph 35 of the judgment of 13 December 2012, Maatschap L.A. en D.A.B. Langestraat en P. Langestraat-Troost (C‑11/12, EU:C:2012:808), is to promote compliance with cross-compliance rules. Finally, it would be contrary to Article 23(1) of Regulation No 73/2009, which requires that every act and omission is to lead, in principle, to a reduction in the total amount of direct payments granted or to be granted, and Article 24(1) of that regulation, which requires national authorities to take into account, inter alia, the seriousness of non-compliance with cross-compliance rules.
27      Similarly, Article 72(1) of Regulation No 1122/2009 cannot, as the Advocate General has observed in point 51 of his Opinion, cover by itself a situation such as that at issue in the main proceedings, not only because of the title of that article, but also because of the wording of that provision, which mentions only the case of non-compliance ‘committed intentionally’.
28      Moreover, according to the wording of Article 70(6) of Regulation No 1122/2009, several cases of non-compliance with regard to various acts or standards of the same area are to be regarded as one non-compliance for the purposes of fixing the reduction in accordance with Article 71(1) and Article 72(1) of that regulation.
29      It follows from that provision, read in conjunction with Articles 71 and 72 of that regulation, that, on the one hand, several cases of negligent non-compliance within the same area are to be regarded as a single case of non-compliance, and that, on the other hand, cases of intentional non-compliance within the same area are also to be regarded as a single case of intentional non-compliance.
30      It follows that, in a situation such as that at issue in the main proceedings, it is necessary to determine the percentage of the reduction of the total amount of direct payments that have been, or are to be, granted for the cases of negligent non-compliance under Article 71 of Regulation No 1122/2009 and, at the same time, to determine the percentage of that reduction for cases of intentional non-compliance pursuant to Article 72 of Regulation No 1122/2009.
31      Subsequently, apart from Article 24(4) of Regulation No 73/2009, which provides for a maximum limit for all reductions and exclusions for one calendar year and in the absence of any other provision in Regulations No 73/2009 and No 1122/2009, for all the incidences of negligent non-compliance and intentional non-compliance, it is necessary to add together the two percentages established in accordance with Articles 71 and 72 of Regulation No 1122/2009.
32      It follows from all of the foregoing that the answer to the first and second questions is that Articles 70 to 72 of Regulation No 1122/2009, read in conjunction with Articles 23 and 24 of Regulation No 73/2009, must be interpreted as meaning that, in a situation such as that in the main proceedings, in which there have been found to be multiple instances of non-compliance within the same area, the reduction of the total amount of direct payments that have been, or are to be, granted that is applicable to instances of negligent non-compliance, on the one hand, and the reduction that is applicable to instances of intentional non-compliance, on the other hand, must be aggregated, with the total amount of reductions for one calendar year having to be fixed in compliance with the principle of proportionality and without exceeding the total amount referred to in Article 23(1) of Regulation No 73/2009.
The third question
33      Since the third question is submitted as a subsidiary question, in the event of a negative reply to the first and second questions, there is no need to answer that third question.
Costs
34      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national 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 (First Chamber) hereby rules:
Articles 70 to 72 of Commission Regulation (EC) No 1122/2009 of 30 November 2009 laying down detailed rules for the implementation of Council Regulation (EC) No 73/2009 as regards cross-compliance, modulation and the integrated administration and control system, under the direct support schemes for farmers provided for by that Regulation, as well as for the implementation of Council Regulation (EC) No 1234/2007 as regards cross-compliance under the support scheme provided for the wine sector, read in conjunction with Articles 23 and 24 of Council Regulation (EC) No 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, amending Regulations (EC) No 1290/2005, (EC) No 247/2006, (EC) No 378/2007 and repealing Regulation (EC) No 1782/2003, must be interpreted as meaning that, in a situation such as that in the main proceedings, in which there have been found to be multiple instances of non-compliance within the same area, the reduction of the total amount of direct payments that have been, or are to be, granted that is applicable to instances of negligent non-compliance, on the one hand, and the reduction that is applicable to instances of intentional non-compliance, on the other hand, must be aggregated, with the total amount of reductions for one calendar year having to be fixed in compliance with the principle of proportionality and without exceeding the total amount referred to in Article 23(1) of Regulation No 73/2009.
[Signatures]
*      Language of the case: Dutch.