EFTA Surveillance Authority Decision No 378/06/COL of 6 December 2006 on the maps of assisted areas and levels of aid (Iceland)
Date: 2006-07-19
Institutions: EFTA Surveillance Authority
Subjects: Iceland, State aid, control of State aid, development aid, investment aid, less-favoured region, regional aid

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Official Journal of the European Union

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EFTA SURVEILLANCE AUTHORITY DECISION

No 378/06/COL

of 6 December 2006

on the maps of assisted areas and levels of aid (Iceland)

THE EFTA SURVEILLANCE AUTHORITY (1),

Having regard to the Agreement on the European Economic
Area (2),
in particular to Articles 61 to 63 and Protocol 26
thereof,

Having regard to the Agreement between the EFTA States on
the Establishment of a Surveillance Authority and a Court of
Justice (3), in particular to Article 24 thereof,

Having regard to Article 1(3) in Part I and Article 4(3) of Part II
of Protocol 3 to the Surveillance and Court Agreement,

Having regard to the Authority’s Guidelines (4) on the appli-
cation and interpretation of Articles 61 and 62 of the EEA
Agreement, and in particular Chapter 25.B on ‘National
Regional Aid 2007-2013’ thereof,

Whereas:

I. FACTS

1. Procedure

By letter of 10 July 2006 from the Icelandic Mission to the
European Union forwarding a letter
from the Ministry of
Finance dated 7 July 2006, both received and registered by
the Authority on 11 July 2006 (Event No: 380966),
the
Icelandic authorities notified, pursuant to Article 1(3) of Part I
of Protocol 3 to the Surveillance and Court Agreement, a new
map of assisted areas and levels of aid in Iceland to be
applicable from 1 January 2007 to 31 December 2013. The
notification was based on a new NUTS classification of Iceland
into two NUTS III regions and was submitted with the reser-
vation that Eurostat accepted the proposal of
the Icelandic
Government to adopt such new classification.

(1) Hereinafter referred to as the Authority.
(2) Hereinafter referred to as the EEA Agreement.
(3) Hereinafter referred to as the Surveillance and Court Agreement.
(4) Guidelines on the application and interpretation of Articles 61 and
62 of
the EEA Agreement and Article 1 of Protocol 3 to the
Surveillance and Court Agreement, adopted and issued by the
EFTA Surveillance Authority on 19 January 1994, published in OJ
L 231, 3.9.1994 and in EEA Supplement No 32 of the same date.
The Guidelines were last amended on 25 October 2006. Hereinafter
referred to as the State Aid Guidelines. The State Aid Guidelines
are accessible on: http://www.eftasurv.int/fieldsofwork/fieldstateaid/
guidelines/

By letter of 13 July 2006 (Event No: 381227), the Authority
informed the Icelandic authorities that without the confirmation
that Eurostat had formally accepted the proposal that Iceland be
classified as two NUTS III regions, the Authority was unable to
define its position on the proposed map.

By letter of 20 October 2006 from the Icelandic Mission to the
European Union forwarding a letter
from the Ministry of
Finance of 20 October 2006, both received and registered by
the Authority on 25 October 2006 (Event No: 395420), the
Icelandic authorities notified the Authority an amendment to
the notification of a regional aid map for Iceland for 2007-
2013.

By letter of 25 October 2006 (Event No: 396970),
the
Authority asked the Icelandic authorities to provide some addi-
tional information.

By letter of 16 November 2006 (Event No: 398727) from the
Ministry of Finance, complementary information was provided
to the Authority.

2. Background

By letter of 6 April 2006 from the Authority to the Icelandic
Mission to the European Union (Event No: 369212),
the
Icelandic authorities were informed that
the Authority had
adopted new guidelines on national regional aid for 2007-
2013 in the form of a new Chapter 25.B of the State Aid
Guidelines.

Furthermore, the Authority proposed, under Article 1(1) in Part
I of Protocol 3 to the Surveillance and Court Agreement, that
the Icelandic authorities accept the appropriate measures set out
in Chapter 25.B.8 of the State Aid Guidelines (5).

By letter of 11 April 2006 from the Icelandic Mission to the
European Union, received and registered by the Authority on
12 April 2006 (Event No: 369986), the Icelandic authorities
accepted the proposed appropriate measures.

The new Chapter 25.B of the State Aid Guidelines establishes
investment aid may be granted to further the
that national
economic development of certain disadvantaged regions. For
the EFTA States to be able to grant such aid, a map of
assisted areas has to be notified and approved by the Authority.

(5) Paragraph 92.

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The new Chapter 25.B of the State Aid Guidelines provides that
low population density regions, at the outset defined as NUTS
level III (6) regions with less than 12,5 inhabitants per square
kilometre, would qualify for inclusion in the map. Iceland is
however, according to the current NUTS classification system
defined as such as a NUTS III region (as well as a NUTS I and a
NUTS II region). The population density of Iceland is less than
12,5 inhabitants per square kilometre (7). In the light of the
special population pattern in Iceland,
the Authority has
decided to determine the population coverage for Iceland on
the basis of NUTS IV regions with low population density.
31,6 % of
in such regions
having a population of less than 12,5 inhabitants per square
kilometre. The national population coverage for Iceland is thus
31,6 %.

the Icelandic population lives

However,
in view of a forthcoming reform of the Icelandic
NUTS classification, the Authority has expressly provided in
the new Chapter 25.B of the State Aid Guidelines (8) that the
map of assisted areas could be defined with reference to NUTS
region be
should more than one NUTS III
III
introduced in Iceland.

regions,

The areas included have a total population of 96 010 inha-
bitants and an average population density of 0,95 inhabitants
per square kilometre (9). The population living in those areas
represents 31,4 % of the total Icelandic population.

The proposed map of assisted areas for 1 January 2007-
the six NUTS IV regions
31 December 2007 consists of
mentioned here above as illustrated by the map enclosed
under Annex 1 to this decision.

An overview of the municipalities covered by the regional aid
map for the period 1 January 2007-31 December 2007 is given
in Annex 2 to this Decision.

3.1.2. A i d c e i l i n g s

The Icelandic authorities propose that all areas included in the
map should benefit
from the maximum aid intensities as
provided in the Authority’s guidelines on regional aid.

By letter of 25 October 2006 from the Icelandic authorities, the
Authority was informed that Eurostat had approved the new
NUTS classification for Iceland based on two NUTS III regions
as from 1 January 2008.

Table 1 below shows the notified aid intensities.

3. Description of the proposed maps

Geographical area

The Icelandic authorities have notified two maps of assisted
is based on two successive NUTS classifications:
areas that
one based on the current NUTS classification for the period
from 1 January 2007 to 31 December 2007, and one based
on the new NUTS classification for the period from 1 January
2008 to 31 December 2013.

Table 1

General Aid
Ceiling
(GGE) (*)

Supplement for
medium-sized
enterprises (1)
(GGE)

Supplement
for small
enterprises (1)
(GGE)

All eligible areas 15 %

10 %

20 %

(*) Gross grant equivalent.
(1) As defined in Annex 1 of Commission Regulation (EC) No 364/2004 of
25 February 2004 amending Regulation (EC) No 70/2001, OJ L 63,
28.2.2004, p. 22 incorporated in the EEA Agreement through Annex XV,
the EEA Joint Committee No 131/2004 of
point 1(f) by decision of
24.9.2004 (OJ L 64, 10.3.2005, p. 67 and EEA Supplement No 12, p. 42),
or any successor regulation.

3.1. Proposed map for period 1 January 2007-31 December 2007

3.2. Proposed map for period 1 January 2008-31 December 2013

3.1.1. M e t h o d o l o g y a n d c o v e r a g e

3.2.1. M e t h o d o l o g y a n d c o v e r a g e

square

kilometre: Austurland, Norðurland

In Iceland, six NUTS IV regions have less than 12,5 inhabitants
eystra,
per
Norðurland vestra, Suðurland, Vestfirðir and Vesturland. All
those NUTS IV regions are proposed eligible for national
regional aid.

(6) As defined in ‘Statistical regions in the EFTA countries in the
candidate countries’, 2001 edition by the Commission of
the
European Communities and the Statistical office of the European
Communities.

(7) The actual figure is 2,9 inhabitants per square kilometre.
(8) Paragraph 21.

By letter of 9 June 2006, the Icelandic authorities have formally
requested that Eurostat adopt a new NUTS classification for
Iceland as two NUTS III regions. Those two NUTS III regions
are the Capital region (Höfuðborgarsvæði) on the one hand, and
Iceland outside of the capital region (Landsbyggð) on the other
hand. The NUTS III region ‘Iceland outside the Capital region’
corresponds to the North West, North East and South electoral
districts.

(9) The population figures are based on the estimated population data

on 1 October 2006.

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By letter of 27 September 2006,
Eurostat
division of
into force on 1 January 2008.

the Director General of
the new
that
Iceland into two NUTS III regions would enter

informed the Icelandic authorities

The areas included have a total population of 113 485 inha-
bitants and an average population density of 1,2 inhabitants per
square kilometre (10). The population living in those areas
represents 37,5 % of the total Icelandic population.

The proposed map of assisted areas for 2008-2013 consists of
the three rural electoral districts, as illustrated by the map
enclosed under Annex 3 to this Decision.

An overview of the municipalities covered by the regional aid
map for the period 1 January 2008-31 December 2013 is given
in Annex 4 to this decision.

the authorisation of
However,
with the guidelines on regional aid,
granting of aid under the regional aid schemes.

the map establishes,

together
the framework for

in

to

the

accepting

the
accepted

appropriate measures,
notify,

Icelandic
By
accordance with
Government
Article 1(3)
in Part I of Protocol 3 to the Surveillance and
Court Agreement, a single regional aid map (12). The notification
dated 7 July 2006 (Event No: 380966), as modified by the
Amendment of 25 October 2006 (Event No: 395420), and as
completed by letter of 16 November 2006 constitutes a
complete notification. The Icelandic authorities have thereby
fulfilled their obligations under the acceptance of the appro-
priate measures and Article 1(3) in Part I of Protocol 3 to the
Surveillance and Court Agreement. Consequently, in line with
Chapter 25.B.7, paragraph 86, the Authority will assess the
in
notification in accordance with the procedure set out
Article 1(3)
in Part I of Protocol 3 to the Surveillance and
Court Agreement.

3.2.2. A i d c e i l i n g s

The Icelandic authorities propose that all areas included in the
map should benefit from the maximum aid intensities.

The Authority’s examination of the notification is based on the
criteria set out in Chapter 25.B.3-4 of the State Aid Guidelines.

Table 2 below shows the notified aid intensities.

Table 2

Geographical area

General Aid
Ceiling
(GGE) (*)

Supplement for
medium-sized
enterprises (1)
(GGE)

Supplement
for small
enterprises (1)
(GGE)

All eligible areas 15 %

10 %

20 %

(*) Gross grant equivalent.
(1) As defined in Annex 1 of Commission Regulation (EC) No 364/2004 of
25 February 2004 amending Regulation (EC) No 70/2001, OJ L 63,
28.2.2004, p. 22 incorporated in the EEA Agreement through Annex XV,
point 1(f) by decision of
the EEA Joint Committee No 131/2004 of
24.9.2004 (OJ L 64, 10.3.2005, p. 67 and EEA Supplement No 12, p. 42),
or any successor regulation.

II. APPRECIATION

1. Notification formalities

Chapter 25.B.7 of the State Aid Guidelines (11) states that ‘the
regions of an EFTA State eligible for regional
investment aid
under the derogations and the ceilings on the intensity of aid
for initial investment approved for each region together form an
EFTA State’s regional aid map’.

The establishment of the map itself does not involve any direct
aid in the meaning of Article 61(1) of the EEA Agreement.

2. Application of the relevant State aid rules

2.1. Regional aid map 1 January 2007-31 December 2007

2.1.1. M e t h o d o l o g y a n d c o v e r a g e

In accordance with Chapter 25.B.3.3.2 of
the State Aid
Guidelines, the Icelandic authorities have proposed a method
based on NUTS IV geographic regions with a population
density of less than 12,5 inhabitants per square kilometre.

The Authority notes that the proposed assisted area has a total
population of 96 010 people and a population density of 0,95
inhabitants per square kilometre. The proposed map of the
assisted areas is covering 31,4 % of the total population in
Iceland. The total population coverage of 31,4 % proposed as
eligible by the Icelandic authorities does not exceed the national
population ceiling set in Chapter 25.B.3.3.1 at 31,6 % (13).

The Authority finds that this part of the proposal meets the
relevant criteria of Chapter 25 of the State Aid Guidelines.

2.1.2. A i d c e i l i n g s

The Icelandic authorities have proposed general maximal aid
ceilings for all the areas covered by the regional aid map to
be 15 % GGE for large enterprises with a supplement of 10 %
for medium-sized enterprises and 20 % for small enterprises.

(10) The population figures are based on the estimated population data

on 1 April 2006.

(11) Paragraph 81.

(12) Paragraph 85.
(13) Paragraph 21.

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Such approach is in line with the terms of Chapter 25.B.4.1.2
of the State Aid Guidelines (14) which provides: ‘The low popu-
lation density regions (corresponding to NUTS III
level or
smaller) and NUTS III regions or parts thereof which share a
land border with a country which is not a Member State of the
European Economic Area or EFTA, are always eligible for an aid
intensity of 15 % GGE’. (emphasis added)

Such approach is in line with the terms of Chapter 25.B.4.1.2
of the State Aid Guidelines (18) which provides: ‘The low popu-
lation density regions (corresponding to NUTS III
level or
smaller) and NUTS III regions or parts thereof which share a
land border with a country which is not a Member State of the
European Economic Area or EFTA, are always eligible for an aid
intensity of 15 % GGE’. (emphasis added)

The State Aid guidelines further provide (15) that ‘in the case of
aid awarded to small and medium-sized enterprises, the ceilings
in Section 25.B.4.1.2, may be increased by 20 % GGE for aid
granted to small enterprises and by 10 % GGE for aid granted
to medium-sized enterprises’.

The State Aid Guidelines (19) further provide that ‘in the case of
aid awarded to small and medium-sized enterprises, the ceilings
in Section 25.B.4.1.2, may be increased by 20 % GGE for aid
granted to small enterprises and by 10 % GGE for aid granted
to medium-sized enterprises’.

The Authority therefore concludes that the maximum aid inten-
sities for regional investment aid, as proposed by the Icelandic
authorities, are in accordance with the State Aid Guidelines.

2.2. Regional aid map 1 January 2008-31 December 2013

2.2.1. M e t h o d o l o g y a n d c o v e r a g e

In accordance with Chapter 25.B.3.3.2 of
the State Aid
Guidelines, the Icelandic authorities have proposed a method
based on NUTS III geographic regions with a population
density of less than 12,5 inhabitants per square kilometre.

The Authority notes that the proposed assisted area has a total
population of 113 485 people and a population density of 1,2
inhabitants per square kilometre. The proposed map of the
assisted areas is covering 37,5 % of the total population in
Iceland. The total population coverage of 37,5 % proposed as
eligible by the Icelandic authorities exceeds the national popu-
lation ceiling referred to in Chapter 25.B.3.3.1 (16). However, the
Authority provided for a possibility to re-assess the total popu-
lation coverage for Iceland in case the classification is amended
by introducing more than one NUTS III region (17). The higher
population coverage is therefore acceptable.

The Authority finds that this part of the proposal meets the
relevant criteria of Chapter 25 of the State Aid Guidelines.

2.2.2. A i d c e i l i n g s

The Icelandic authorities have proposed general maximal aid
ceilings for all the areas covered by the regional aid map to
be 15 % GGE for large enterprises with a supplement of 10 %
for medium-sized enterprises and 20 % for small enterprises.

(14) Paragraph 37.
(15) Paragraph 38.
(16) Paragraph 21.
(17) Paragraph 37.

The Authority therefore concludes that the maximum aid inten-
sities for regional investment aid, as proposed by the Icelandic
authorities, are in accordance with the State Aid Guidelines.

3. Scope of the Decision and cumulation of aid

The maps of assisted areas shall
in principle apply from
1 January 2007 to 31 December 2013. It may, however, as
provided by Chapter 25.B.7 of the State Aid Guidelines (20), be
subject to mid-term review in 2010.

The decision does not restrict the powers of the Authority to
review the maps in accordance with Article 1(1) in Part I of
Protocol 3 to the Surveillance and Court Agreement if necessary
before the end of the period referred to above.

The Icelandic authorities are reminded that when applying
regional aid schemes to shipbuilding, the aid ceiling of 12,5 %
for the Article 61(3)(c) regions may not be exceeded, according
to Chapter 24.B.3.3.6 of the State Aid Guidelines (21) read in
conjunction with Chapter 45.B of the State Aid Guidelines.

The proposed aid ceilings are cumulative, i.e. they refer to the
upper limit for regional investment aid from all public sources
awarded to a particular investment project.

Furthermore, regional
investment aid shall not be cumulated
the same eligible
with de minimis
expenses in order to circumvent the maximum aid intensities
laid down in the State Aid Guidelines.

in respect of

support

Any regional aid scheme which is not group exempted and
which comes into force after 31 December 2006 (22) shall be
notified to the Authority in accordance with Article 1(3) in Part
I of Protocol 3 to the Surveillance and Court Agreement.

(18) Paragraph 37.
(19) Paragraph 38.
(20) Paragraph 89.
(21) Paragraph 26(c).
(22) Paragraph 11 and 90 of Chapter 25.B of the State Aid Guidelines.

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the Icelandic authorities are reminded that,

in
Furthermore,
accordance with Chapter 25.B.8 of the State Aid Guidelines,
any existing regional aid scheme including investment aid to
be granted after 31 December 2006 shall,
if not group
exempted, be amended as need be and shall be notified to
the Authority in accordance with Article 1(3)
I of
Protocol 3 to the Surveillance and Court Agreement.

in Part

4. Conclusion

in Chapter 25.B of

The notified maps of assisted areas reflect the requirements set
out
the State Aid Guidelines and the
Authority can approve the maps of regions eligible for aid
under Article 61(3)(c) of the EEA Agreement,

HAS ADOPTED THIS DECISION:

Article 1

The EFTA Surveillance Authority has decided to approve the
proposal
for the maps of assisted areas and maximum aid
intensities in Iceland as notified to the Authority by letter of
10 July 2006 (Event No: 380966), amended by letter of
25 October 2006 (Event No: 395420) and completed by
letter of 16 November 2006. Annexes 1 and 3 to this
Decision, which show the regional aid maps for Iceland for,
respectively, the period 1 January 2007-31 December 2007
(Annex 1) and for the period 1 January 2008-31 December
2013 (Annex 3) form an integral part of Chapter 25.B of the

State Aid Guidelines. Annexes 2 and 4 to this Decision list all
municipalities eligible for regional aid for the period 1 January
2007-31 December 2007 (Annex 2) and for
the period
1 January 2008-31 December 2013 (Annex 4).

Article 2

Without prejudice to Article 1(1) in Part I of Protocol 3 to the
Surveillance and Court Agreement, the maps of areas eligible for
investment aid should be applicable from 1 January
regional
2007 until 31 December 2013.

Article 3

This Decision is addressed to the Republic of Iceland.

Article 4

Only the English text is authentic.

Done at Brussels, 6 December 2006.

For the EFTA Surveillance Authority

Bjørn T. GRYDELAND
President

Kristján Andri STEFÁNSSON
College Member

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ANNEX 2

LIST OF MUNICIPALITIES INCLUDED IN THE REGIONAL AID MAP FOR THE PERIOD
1 JANUARY 2007-31 DECEMBER 2007

NUTS IV Regions

Municipalities

West Region (Vesturland)

Akraneskaupstaður

Hvalfjarðarsveit

Skorradalshreppur

Borgarbyggð

Grundarfjarðarbær

Helgafellssveit

Stykkishólmsbær

Eyja- og Miklaholtshreppur

Snæfellsbær

Dalabyggð

Westfjord Region (Vestfirðir)

Bolungarvíkurkaupstaður

Ísafjarðarbær

Reykhólahreppur

Tálknafjarðarhreppur

Vesturbyggð

Súðavíkurhreppur

Árneshreppur

Kaldrananeshreppur

Bæjarhreppur

Strandabyggð

North-West Region (Norðurland-vestra)

Sveitarfélagið Skagafjörður

Húnaþing vestra

Blönduóssbær

Húnavatnshreppur

Höfðahreppur

Skagabyggð

Akrahreppur

North-East Region (Norðurland-eystra)

Akureyrarkaupstaður

Norðurþing

Fjallabyggð

Dalvíkurbyggð

Grímseyjarhreppur

Arnarneshreppur

Eyjafjarðarsveit

Hörgárbyggð

Svalbarðsstrandarhreppur

Grýtubakkahreppur

Skútustaðahreppur

Aðaldælahreppur

Tjörneshreppur

Þingeyjarsveit

Svalbarðshreppur

Langanesbyggð

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NUTS IV Regions

Municipalities

East Region (Austurland)

Seyðisfjarðarkaupstaður

South Region (Suðurland)

Fjarðabyggð

Vopnafjarðarhreppur

Fljótsdalshreppur

Borgarfjarðarhreppur

Breiðdalshreppur

Djúpavogshreppur

Fljótsdalshérað

Sveitarfélagið Hornafjörður

Vestmannaeyjabær

Sveitarfélagið Árborg

Mýrdalshreppur

Skaftárhreppur

Ásahreppur

Rangárþing eystra

Rangárþing ytra

Hrunamannahreppur

Hveragerðisbær

Sveitarfélagið Ölfus

Grímsnes- og Grafningshreppur

Skeiða- og Gnúpverjahreppur

Bláskógabyggð

Flóahreppur

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ANNEX 3

REGIONAL AID MAP FOR THE PERIOD 1 JANUARY 2008-31 DECEMBER 2013

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ANNEX 4

LIST OF MUNICIPALITIES INCLUDED IN THE REGIONAL AID MAP FOR THE PERIOD
1 JANUARY 2008-31 DECEMBER 2013

NUTS III Region — Iceland outside the Capital Region

Municipalities

North-West Electoral District

North-East Electoral District

Akraneskaupstaður
Hvalfjarðarsveit
Skorradalshreppur
Borgarbyggð
Grundarfjarðarbær
Helgafellssveit
Stykkishólmsbær
Eyja- og Miklaholtshreppur
Snæfellsbær
Dalabyggð
Bolungarvíkurkaupstaður
Ísafjarðarbær
Reykhólahreppur
Tálknafjarðarhreppur
Vesturbyggð
Súðavíkurhreppur
Árneshreppur
Kaldrananeshreppur
Bæjarhreppur
Strandabyggð
Sveitarfélagið Skagafjörður
Húnaþing vestra
Blönduósbær
Húnavatnshreppur
Höfðahreppur
Skagabyggð
Akrahreppur

Akureyrarkaupstaður
Norðurþing
Fjallabyggð
Dalvíkurbyggð
Grímseyjarhrepppur
Arnarneshreppur
Eyjafjarðarsveit
Hörgárbyggð
Svalbarðsstrandarhreppur
Grýtubakkahreppur
Skútustaðahreppur
Aðaldælahreppur
Tjörneshreppur
Þingeyjarsveit
Svalbarðshreppur
Langanesbyggð
Seyðisfjarðarkaupstaður
Fjarðabyggð
Vopnafjarðarhreppur
Fljótsdalshreppur
Borgarfjarðarhreppur
Breiðdalshreppur
Djúpavogshreppur
Fljótsdalshérað

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NUTS III Region — Iceland outside the Capital Region

Municipalities

South Electoral District

Reykjanesbær
Grindavíkurbær
Sandgerðisbær
Sveitarfélagið Garður
Sveitarfélagið Vogar
Sveitarfélagið Hornafjörður
Vestmannaeyjabær
Sveitarfélagið Árborg
Mýrdalshreppur
Skaftárhreppur
Ásahreppur
Rangárþing eystra
Rangárþing ytra
Hrunamannahreppur
Hveragerðisbær
Sveitarfélagið Ölfus
Grímsnes- og Grafningshreppur
Skeiða- og Gnúpverjahreppur
Bláskógabyggð
Flóahreppur