1999/658/ECSC: Commission Decision of 8 July 1999 on the measure which Germany is planning to implement for Neue Maxhütte Stahlwerke GmbH i.K. (notified under document number C(1999) 2269) (Text with EEA relevance) (Only the German text is authentic)
Date: 1999-07-08
Institutions: European Commission
Subjects: ECSC Treaty, Germany, State aid, control of State aid, iron and steel industry

6. 10. 1999

EN

Official Journal of the European Communities

L 259/23

COMMISSION DECISION

of 8 July 1999

on the measure which Germany is planning to implement for Neue Maxhütte Stahlwerke
GmbH i.K.

(notified under document number C(1999) 2269)

(Only the German text is authentic)

(Text with EEA relevance)

(1999/658/ECSC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Coal and
Steel Community, and in particular Article 4(c) thereof,

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof, read in conjunc-
tion with Protocol 14,

Having regard to Commission Decision No 2496/96/ECSC of
18 December 1996 establishing Community rules for state aid
to the steel industry (hereinafter referred to as the ‘steel aid
code’) (1),

Having called on interested parties to submit their comments
pursuant to those provisions (2) and having regard to those
comments,

(3)

(4)

Whereas:

I. Procedure

(1)

By letter dated 5 May 1998, the German authorities
notified the Commission of two measures which the
Land of Bavaria planned to implement
for Neue
Maxhütte Stahlwerke GmbH (hereinafter referred to as
‘NMH’):

(a) payment of an amount of DEM 697 700 to reim-
burse costs incurred by NMH in 1994 to secure a
slag heap on its premises against partial collapse;

(b) exemption for NMH from the cost of

further
protective measures for the slag heap to the amount
of DEM 2 213 274

As indicated in paragraphs 7 to 12, the German author-
ities take the view that these measures do not constitute
aid. Notification was carried out pursuant to Article 86
of the ECSC Treaty, read in conjunction with Article 6(2)
of the steel aid code, which obliges the Member States to
inform the Commission of any transfers of
state
irrespective of whether they constitute aid.
resources,

(2)

The German authorities provided the Commission with
supplementary information by letters dated 30 June, 13
August, 15 October and l December 1998. By letter

dated 1 February 1999, the Commission informed the
German authorities of its decision to initiate the pro-
cedure laid down in Article 6(5) of the steel aid code in
respect of the aforementioned measures.

The decision to initiate the procedure was published in
the Official Journal of the European Communities (3). The
Commission called on interested parties to submit their
comments. These comments were then forwarded to the
German authorities, which were invited to respond.

II. Detailed description of the measures

Under an agreement of 4 November 1987 between the
Land of Bavaria, Thyssen Edelstahlwerke AG, Thyssen
Stahl AG, Lech-Stahlwerke GmbH, Saarstahl Völklingen
GmbH, Krupp Stahl AG, Klöckner Stahl GmbH and
Mannesmann Röhrenwerke AG (hereinafter referred to
as the ‘agreement’), the activities of the bankrupt Eisen-
werkgesellschaft Maximilianshütte mbH Sulzbach-Rosen-
berg were continued under the newly created NMH.

(5)

The agreement contains the following provision:

‘5.5 The installations are taken over
free of old
burdens. Where a takeover free of old burdens is im-
possible, the Land of Bavaria will ensure that MHN (i. e.
NMH) will not be affected by the resultant economic
responsibilities.’

(6)

(7)

This provision constitutes a derogation from general
German law, under which the owner is responsible for
his site.

In 1994 large cracks and displacement were discovered
on the southern slope of the slag heap on the site of
NMH. Experts (Geotechnisches Büro Prof. Dr Schuler
and Dr-Ing. Gödecke) reported that these developments
could lead to an immediate partial collapse. A protective
embankment alongside the southern base of the heap
had to be constructed out of slag as a temporary
measure. The work was carried out by NMH in 1994 at
a total cost of DEM 697 700.

(1) OJ L 338, 28.12.1996, p. 42.
(2) OJ C 108, 17.4.1999, p. 9.

(3) See footnote 2.

L 259/24

EN

Official Journal of the European Communities

6. 10. 1999

(8)

(9)

In 1996 new cracks were discovered on the southern
slope of the slag heap. According to a report by the
same experts dated 23 September 1997, these cracks
could cause a further partial collapse of the southern
slope. In order to stabilise the slag heap, it was decided
to enlarge and reinforce the embankment built in 1994.

In September 1997 the Land of Bavaria therefore
ordered NMH to carry out the necessary construction
work. After the latter refused, arguing that this was the
Land's responsibility under Article 5.5 of the agreement,
the Land of Bavaria decided to carry out these activities
itself on the basis of the applicable legislation, under
which, in cases of imminent danger, the State can carry
out such measures itself on behalf of the owner (‘Ersatz-
vornahme’).

(10)

In that connection, the Land of Bavaria commissioned in
March 1998 Geotechnisches Büro Prof. Dr Schuler and
Dr-Ing. Gödecke to supervise operations and MH Dienst-
leistungen GmbH & Co KG to carry out the building
work. The total cost of the work, which was completed
in November 1998, was DEM 2 213 274.

The German authorities have provided evidence that the
amount of the building contractor's invoice was lower
than the initial estimate. The invoice was approved by
Geotechnisches Büro.

(11) According to the notification, the slag heap had been
used as a dump before Maximilianshütte was declared
bankrupt. The threat of collapse was therefore entirely
due to this dumping and, consequently, the damage had
to be considered as resulting from an old environmental
burden. Even though NMH had used 500 tonnes of slag
to build a road on the southern slope in order to view
the endangered zone, this had had no impact on the
physical degradation of the heap that made the protec-
tive measures necessary. (1) The German authorities also
confirmed that the use of the heap had not resulted in
any economic benefit for NMH as it would normally
have sold the 500 tonnes of slag which it had used to
construct the road.

(12)

it approved the agreement

Consequently,
the German authorities regard NMH's
the agreement, and the
claim under Article 5.5 of
amount of its claim, as justified. They would remind the
Commission that
in its
Decision of 27 June 1989 (not published) and that, in
Decision 95/422/ECSC of 4 April 1995 (2) concerning
proposed aid to NMH, it confirmed that this clause did
not constitute aid. This is also confirmed in point 3.2.2.
of the Community guidelines on state aid for environ-
mental protection (hereinafter referred to as the ‘guideli-
nes’) (3). The German authorities therefore contend that

(1) Confirmed by a report by Dr-Ing. Gödecke of Geotechnisches Büro
Prof. Dr Schuler and Dr-Ing. Gödecke dated 23 September 1997
(attached to the notification).
(2) OJ L 253, 21.10.1995, p. 22.
(3) OJ C 72, 10.3.1994, p. 3.

the measures do not constitute state aid. They therefore
intend:

(a) to reimburse NMH an amount of DEM 697 700 for

the first set of measures;

(b) to exempt NMH from the cost of the second set of
measures, which now amounts to DEM 2 213 274.

(13) However,

in their

correspondence,

the
subsequent
German authorities admitted that large parts of the slag
heap were used for dumping slag and waste, as well as
for recovery activities (preparation of slag for road
construction). They claim though that these activities
took place on the other side of the heap and that the
southern slope was unaffected. Therefore they continued
to regard the possible collapse of the southern slope as
being due entirely to old burdens.

(14) On 9 December 1998 the Commission initiated
proceedings under Article 6(5) of the steel aid code on
the following grounds:

1.

it doubted that no slag had been dumped on the
southern slope;

2.

3.

it was concerned that activities on other parts of the
slag heap might have an impact on the southern
slope;

it took the view that NMH was using the slag heap,
which should be seen as a single site, and had derived
economic benefit from that use. Financing had been
used to maintain a dump used by NMH, and this was
contrary to the ‘polluter pays’ principle.

(15)

The Commission therefore took the view that the meas-
ures constituted state aid within the meaning of Article
1 of the steel aid code.

III. Comments from interested parties

(16)

The Commission received comments from three inter-
ested parties:

1. Mr Zager of the environmental group ‘B.I.Rosenberg’
stated that NMH had used the heap for disposal and
recovery but could not confirm whether NMH was
using or had used the southern slope;

2. the UK Steel Association argued that no aid should
be granted for activities carried out under
the
responsibility and at the risk of NMH;

3. Federazione Imprese Siderurgiche Italiane (Federac-
ciai) maintained that, in view of the impossibility of
recovering incompatible aid of DEM 74 million from
NMH, no further injections of capital should be
authorised for the company.

6. 10. 1999

EN

Official Journal of the European Communities

L 259/25

IV. Comments from the German authorities

(17)

The German authorities reaffirmed their position that
NMH had not disposed of slag on the southern slope of
the heap.

(18) On the basis of evidence in the form of maps and
photographs illustrating that the heap covered a site of
21 hectares, the German authorities contend that the
parts used by NMH for disposal and recovery activities
are remote from the southern slope. As such, these
activities could not affect the situation there. They also
confirm that the experts who looked into the effects of
the use of slag for road construction purposes were
aware of these activities but that this did not alter their
findings.

(19) Accordingly,

the German authorities dispute

the
Commission's conclusion that the heap constitutes a
single, indivisible site. They consider that, although one
part of the heap was used, Article 5.5 of the agreement
continues therefore to apply to the other part.

V. Assessment of the measure

(20) NMH falls within the scope of Article 80 of the ECSC
Treaty because it manufactures products listed in Annex
I to that Treaty and pays levies pursuant to Article 49,
with the result that the ECSC Treaty and the steel aid
code apply.

(21)

Pursuant to Article 3 of the steel aid code, aid for
environmental protection may be deemed compatible
with the common market if it complies with the rules
laid down in the guidelines,
in conformity with the
criteria for their application to the ECSC steel industry
outlined in the Annex to the steel aid code.

(22)

Point 3.2.2. of the guidelines states:

‘The rules for investment aid in general also apply to aid
for investment to repair past damage to the environ-
ment, for example, by making polluted industrial sites
again fit for use. In cases where the person responsible
for the pollution cannot be identified or called to
account, aid for rehabilitating such areas may not fall
under Article 92(1) of the EC Treaty in that it does not
confer a gratuitous financial benefit on particular firms
or industries. Such cases will be examined on their
merits.’

(23)

These provisions are designed to prevent existing indus-
trial sites being abandoned where potential acquirers are
not protected against claims arising from former use of
(part of) such sites.

95/422/EGSC unequivocably does (1) with the Commis-
sion confirming that measures taken pursuant to Article
5.5 do not constitute aid. The Commission took into
consideration the high and incalculable risk of being
held liable for contamination caused in the past by a
different management. Without such an agreement there
would, therefore, be no possibility of selling such land,
with the result that many industrial sites would never be
re-used. Accordingly, in taking over the economic risk
resulting from past contamination, the State is merely
serving the public interest without conferring any
economic benefit on the purchaser of the land. Since
Article 5.5 of the agreement concerns land and installa-
tions contaminated in the past, this did not constitute
state aid.

(24) However, under the guidelines, application of

those
provisions still needs to be assessed on the merits of this
particular case. It needs to be established that the condi-
tions set out in point 3.2.2. have been met, namely that
(a) NMH has not caused the pollution or damage itself
and (b) the measures do not constitute a gratuitous
financial benefit for NMH.

(25) On the basis of the information provided by the German
authorities and the comments of third parties, it can be
concluded that NMH did not dispose of slag on the
southern slope of the heap. There is no evidence to
support the conclusion that the use of slag for road
construction purposes had any impact on the southern
part of the site. Nor does the information provided by
the German authorities support
the conclusion that
activities on other parts of the slag heap had a negative
impact on the condition of the southern slope. The parts
of the heap used for disposal and recovery activities are
several hundred metres distant
from the endangered
zone and no link can be established between those
activities and the degradation of the site.

(26)

The German authorities have demonstrated that the use
of 500 tonnes of slag to construct a road, this being the
only activity that NMH carried out on the southern
slope, did not confer any economic benefit on the
company since the slag would otherwise have been sold
by NMH to road constructors.

(27)

The information provided by the German authorities
demonstrates that the site, covering 21 hectares, is large
and that the individual activities there are carried out
independently of one another.

As stated in the decision to initiate the procedure, the
Commission approved the agreement by Decision of 27
June 1989 (not published). While this Decision did not
contain a specific assessment of Article 5.5, Decision

Under these circumstances, the Commission concludes
that the heap is not indivisible.

(1) Paragraph 12 above; see paragraph 9 of the Decision.

L 259/26

EN

Official Journal of the European Communities

6. 10. 1999

In spite of the economic benefits accruing to NMH as a
result of use of the heap (disposal facilities, revenue from
recovered waste), point 3.2.2. of the guidelines applies.
The fact
that part of an industrial site is used for
economic purposes and, as such, does not fall within the
scope of Article 5.5 of the agreement does not mean
that this Article does not apply to the remainder of the
site. A conclusion to the contrary would be excessive
and would run counter to the objective of such a provi-
sion and Community policy.

VI. Conclusions

(28)

The Commission concludes that the measures which
Germany is planning to implement for Neue Maxhütte
Stahlwerke GmbH i.K., namely:

(a) payment of an amount of DEM 697 700 to reim-
burse costs incurred by NMH in 1994 to secure a
slag heap on its premises against partial collapse;

(b) exemption for NMH from the cost of

further
protective measures for the slag heap to the amount
of DEM 2 213 274,

relate to old environmental burdens. Under Article 3 of
the steel aid code and point 3.2.2. of the guidelines, and

in the light of precedents, the Commission is therefore
of the opinion that the measures do not constitute aid,

HAS DECIDED AS FOLLOWS:

Article 1

The measure which Germany is planning to implement for
Neue Maxhütte Stahlwerke GmbH i.K.
to the amount of
DEM 2 911 274 (EUR 1 488 190) does not constitute aid
within the meaning of Article 4(c) of the ECSC Treaty.

Implementation of the measure is therefore authorised.

This Decision is addressed to the Federal Republic of Germany.

Article 2

Done at Brussels, 8 July 1999.

For the Commission

Karel VAN MIERT

Member of the Commission