Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Council Regulation (EC) No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD)
Date: 2010-09-30
Institutions: European Commission
Subjects: EU financing arrangements, administrative check, aid to agriculture, management audit, rural development

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EUROPEAN COMMISSION 

Brussels, 30.9.2010 
COM(2010) 537 final 

2010/0266 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Council Regulation (EC) No 1698/2005 on support for rural development by 
the European Agricultural Fund for Rural Development (EAFRD)

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

1.1. 

Alignment to the Treaty on the Functioning of the European Union (TFEU) 

The  Treaty  on  the  Functioning  of  the  European  Union  (the  Treaty)  makes  a  distinction 
between  the  powers  delegated  to  the  Commission  to  adopt  non-legislative  acts  of  general 
application to supplement or amend certain non-essential elements of the legislative act as laid 
down  in  Article  290(1)  of  the  Treaty  (delegated  acts),  and  the  powers  conferred  upon  the 
Commission to adopt uniform conditions for implementing legally binding Union acts as laid 
down in Article 291(2) of the Treaty (implementing acts). 

In the case of delegated acts, the Legislator delegates to the Commission the power to adopt 
quasi-legislative acts. In the case of implementing acts, the context is very different. Indeed, 
Member States are primarily responsible for the implementation of legally binding acts of the 
European Union. However, if the application of the legislative act requires uniform conditions 
for its implementation the Commission is authorised to adopt these acts. 

The alignment exercise of Regulation (EC) No 1698/20051 on new rules of the Treaty is based 
on  a  classification  on  the  basis  of  the  new  philosophy-  a  sorting  between  measures  of 
implementing  nature  and  measures  of  delegated  nature-  of  the  current  Commission 
implementing  powers  which  were  adopted  on  the  basis  of  Regulations  (EC)  No  1974/2006 
and No 1975/2006. 

Following  this  exercise,  a  draft  proposal  for  amendment  of  Regulation  (EC)  No  1698/2005 
has been prepared. This project provides the Legislator with the power to define the essentials 
of  the  rural  development  policy.  The  general  guidelines  of  the  policy  and  the  general 
principles  that  underlie  it  are  determined  by  the  Legislator.  Thus,  the  objectives  of  that 
particular  policy  and  the  principles  of  strategic  approach,  programming,  complementarity, 
consistency  and  conformity  with  other  policies  of  the  Union  are  fixed  by  the  Legislator. 
Similarly,  the  Legislator  lays  down  the  principles  of  partnership,  subsidiarity  and  equality 
between men and women and non-discrimination. 

Pursuant  to  Article  290  of  the  Treaty,  the  Legislator  gives  the  Commission  the  task  to 
complete or modify certain non-essential elements of its scheme. A Commission delegated act 
may therefore determine the additional elements necessary for the proper functioning of the 
regime  established  by  the  Legislator.  Thus,  the  Commission  shall  adopt  delegated  acts  in 
order to adopt exceptions for the rule that no rural development support should be granted to 
schemes eligible for support under common market organisations (Article 5(6)). Similarly, the 
Legislator delegates to the Commission the power to adopt detailed conditions concerning all 
the measures and technical assistance in order to ensure their coherent application in line with 
the requirements of EU policy, priorities and law (Articles 20, 32, 36, 38, 52, 63 and 66). In 
addition, the Commission shall adopt delegated acts regarding detailed rules for the reductions 
and  exclusions  (Article  51(4)).  Furthermore,  the  Commission  shall  define  a  flexibility 
threshold  for  each  axis  (Article  70(1))  and  define  detailed  rules  for  other  forms  of  support 
than  non-repayable  direct  assistance  (Article  71(5)).  The  Commission  shall  fix  detailed 

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OJ L 277, 21.10.2005, p. 1. 

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control  rules  (Article  74(4)).  Finally,  the  Commission  shall  adopt  specific  transitional 
measures (Article 92(1)). 

Member States in accordance with Article 291 of the Treaty are responsible for implementing 
the  regime  established  by  the  Legislator.  However,  it  seems  necessary  to  ensure  uniform 
implementation  of  the  scheme  in  the  Member  States  in  order  to  avoid  distortions  of 
competition  or  discrimination  between  operators.  Therefore,  the  Legislator  gives  the 
Commission  powers  of  enforcement,  in  accordance  with  Article  291,  paragraph  2  of  the 
Treaty,  as  regards  the  uniform  conditions  for  the  presentation  of  rural  development 
programmes  (Article  18(3)),  programme  approval  (Article  18(4)),  approval  of  revision  of 
programmes  (Article  19(2)),  determination  of  changes  requiring  approval  by  Commission 
decision  (Article  19(2)),  longer  commitment  periods  (Articles  39(3),  40(2)  and  47(1)), 
specific provisions on designation of areas (Article 50(4)), the establishment and operation of 
the  national  rural  network  (Article  66(3)),  presentation  of  specific  annual  reports  (Article 
82(4)), a general framework of controls and a common monitoring and evaluation framework 
that Member states shall implement (Articles 74(4) and 80). 

1.2. 

Reduction of the number of summary reports and simplification of their content 
under strategic monitoring 

As  part  of  the  simplification  exercise  of  the  CAP  Member  States  requested  to  reduce  the 
number  of  reports  to  the  Commission.  Under  rural  development,  in  addition  to  annual 
progress reports, Member States are required to submit to the Commission summary reports 
setting out the progress made in implementing their national strategy plans and objectives and 
their contribution to the achievement of the Community strategic guidelines. 

Under the current rules, these summary reports are to be submitted each second year, starting 
from  2010  and  ending  in  2014,  i.e.  altogether  three  reports.  The  proposal  would  limit  the 
number of reports to two, the first one to be submitted in 2010 and the second one in 2015, the 
former in the context of mid-term evaluation and the latter of ex post evaluation. 

In  addition,  it  is  currently  required  that  the  report  summarises  the  previous  year's  annual 
progress reports. This requirement should be dropped, as it duplicates the work. 

As  a  consequence,  also  the  number  of  Commission  reports  summarising  the  main 
developments,  trends  and  challenges  relating  to  the  implementation  of  the  national  strategy 
plans and the Community strategic guidelines should be reduced to two, one in 2011 and the 
second one in 2016. 

1.3. 

Extension of the coverage of the measure for producer groups 

As  a  follow  up  to  the  Commission  Communication  on  a  Better  Functioning  Food  Supply 
Chain in Europe and the High Level Expert Group on Milk, the current provision to support 
the setting up and administrative operation of producer groups, which is already available for 
all sectors in the new Member States, should be extended to also cover EU-15. However, the 
possibility to support producer groups in the fruit and vegetable sector should not be allowed 
as possibilities to support their activities are available under Article 103b-103g of the single 
CMO.  

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1.4. 

Facilitating more tailor-made use of the advisory services 

Also as part of the simplification exercise of the CAP, Member States proposed to change the 
rules for use of advisory services. Currently the rules require that, as a minimum, the advisory 
service  to  farmers  should  cover  the  statutory  management  requirements  and  the  good 
agricultural and environmental conditions under cross-compliance as well as the occupational 
safety standards based on Union legislation. 

In order to facilitate more tailor-made use of the advisory services and to reflect the individual 
needs of the beneficiary, the advisory service provided would not need to cover all the aspects 
listed, but one or more of them. 

1.5. 

Continuous linear features and stepping stones 

According to Article 10 of the Habitats Directive, 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. 

These areas can play an important role for the coherence of Natura 2000 areas and relevant 
provisions  should  be  included  in  order  to  allow  Natura  2000  payments  for  these  nationally 
delimited nature protection areas if sufficient justification is provided linking them to Article 
10 of the Habitats Directive. In order to ensure that payments continue to be primarily used 
for  the  designated  Natura  2000  sites,  it  seems  to  be  appropriate  to  limit  their  proportion 
compared  to  the  Natura  2000  areas.  However,  this  provision  is  without  prejudice  to  the 
endeavours  of  Member  States  under  the  Habitats  Directive  related  to  encouraging  the 
management  of  landscape  features  which  are  of  major  importance  for  wild  fauna  and  flora 
and  does  not  prejudice  the  question  as  to  what  constitutes  an  adequate  implementation  of 
Article 10 of the Habitats Directive.  

1.6. 

Follow up of non-compliances of the cross-compliance  

Member State can decide to make use of the option to consider a non-compliance as minor or 
not  to  apply  a  reduction  or  exclusion  where  the  amount  concerned  is  less  than  EUR  100. 
Currently,  the  competent  control  authority  should,  in  the  following  year,  ensure  that  the 
farmer  remedies  the  findings  of  the  non-compliance  concerned. However,  in  the  view  of 
simplification and in order to ease the administrative burden, consideration should be given to 
simplifying the follow-up checks system.  

1.7. 

Introducing  incentive  element  for  measures  falling  under  Article  43  of  the 
Treaty 

In order to be considered compatible with the common market, any aid measure must contain 
some incentive element or require some counterpart on the part of the beneficiary. Aid which 
is  granted  retroactively  in  respect  of  activities  which  have  already  been  undertaken  by  the 
beneficiary cannot be considered to contain the necessary incentive element. However, for co-

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financed  Rural  Development  measures  approved  under  Article  43  of  the  Treaty,  there  is 
currently no requirement for an incentive effect laid down in the Union legislation, except in 
the case of top-ups to which, while approved as part of the programming and not needing a 
separate notification process, agricultural state aid rules apply. Therefore, retroactive granting 
of aid should be prohibited also for co-financed agricultural measures and a starting date of 
eligibility should be provided. 

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

•  Consultation of interested parties 

•  Collection and use of expertise 

There was no need for consultation of interested parties or for external expertise. 

•  Impact assessment 

No need of impact assessment. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

Identify  the  delegated  and  implementing  powers  of  the  Commission  in  Council 
Regulation  (EC)  No  1698/2005  and  establish  the  corresponding  procedure  for 
adoption of these acts.  

Additionally,  some  elements  of  simplification  are  introduced,  the  coverage  of 
support  for  setting  up  of  producer  groups  is  enlarged,  Natura  2000  support  is 
extended to areas referred to in Article 10 of Habitats Directive (92/43/EEC) and an 
incentive  element  is  introduced  for  measures  approved  under  Article  43  of  the 
Treaty. 

•  Legal basis 

Article 43 of the Treaty on the Functioning of the European Union. 

•  Subsidiarity principle 

The proposal falls under shared competence between the EU and the Member States 
and complies with the subsidiarity principle. 

•  Proportionality principle 

The proposal complies with the proportionality principle. 

•  Choice of instruments 

Proposed instrument: Regulation of the European Parliament and of the Council 

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Other means would not be adequate for the following reason: a Regulation must be 
amended by a Regulation. 

4. 

BUDGETARY IMPLICATION 

This measure does not involve any additional Union expenditure.  

5. 

ADDITIONAL INFORMATION 

•  Simplification 

The  amendments  concerning  cross-compliance,  strategic  reporting  and  the  use  of 
advisory  services  represent  an  important  simplification  and  contribute  to  ease  the 
administrative burden for the Member States. 

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2010/0266 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Council Regulation (EC) No 1698/2005 on support for rural development by 
the European Agricultural Fund for Rural Development (EAFRD) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union, and in particular the 
first subparagraph of Article 42 and Article 43(2) thereof, 

Having regard to the proposal from the European Commission2, 

After transmission of the proposal to the national Parliaments, 

Having regard to the opinion of the European Economic and Social Committee3, 

Having regard to the opinion of the Committee of the Regions4, 

Acting in accordance with the ordinary legislative procedure5, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

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Council Regulation (EC) No 1698/20056 confers powers on the Commission in order 
to implement some of the provisions of that Regulation. 

As a consequence of the entry into force of the Lisbon Treaty, the powers conferred 
under  Regulation  (EC)  No  1698/2005  upon  the  Commission  need  to  be  aligned  to 
Articles  290  and  291  of  the  Treaty  on  the  Functioning  of  the  European  Union  (the 
Treaty). 

The  Commission  should  have  the  power  to  adopt  delegated  acts  in  accordance  with 
Article  290  of  the  Treaty  in  order  to  supplement  or  amend  certain  non-essential 
elements of Regulation (EC) No 1698/2005. The elements for which that power may 
be exercised should be defined, as well as the conditions to which that delegation is to 
be subject. 

In  order  to  guarantee  a  uniform  application  of  Regulation  (EC)  No  1698/2005  in  all 
Member States, the Commission should be empowered to adopt implementing acts in 
accordance with Article 291 of the Treaty. Save where explicitly provided otherwise, 

OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […].  
OJ L 277, 21.10.2005, p. 1. 

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the  Commission  should  adopt  those  implementing  acts  in  accordance  with  the 
provisions  of  Regulation  (EU)  No  XX/XXXX  of  the  European  Parliament  and  the 
Council on…  

Some  of  the  provisions  on  rural  development  that  have  so  far  been  adopted  by  the 
Commission under the powers conferred on it by Regulation (EC) No 1698/2005 are 
considered of such importance that they should be incorporated in that Regulation. 

In  order  to  ensure  a  uniform  presentation  of  updates  of  national  strategy  plans  by 
Member States, the Commission should be able to set out uniform rules by means of 
implementing acts.  

(5) 

(6) 

(7)  Member  States  and  the  Commission  are  required  to  report  on  the  monitoring  of  the 
national and Community strategy. In order to reduce the administrative burden and to 
avoid duplication of work, the number of strategic summary reports submitted by each 
Member State should be reduced to two and their content simplified. 

(8) 

(9) 

(10) 

In order to ensure that the assessment of the rural development programmes submitted 
by  the  Member  States  in  accordance  with  Article  18(2)  of  Regulation  (EC) 
No 1698/2005  may  be  done  in  a  uniform  and  comparable  manner,  the  Commission 
should,  by  means  of  implementing  acts,  adopt  uniform  rules  for  the  presentation  of 
rural development programmes.  

In  the  interest  of  legal  certainty,  rural  development  programmes  should  be  approved 
by the Commission by means of implementing acts.  

In  order  to  ensure  transparency  and  efficiency  in  the  adoption  of  rural  development 
programmes, the Commission should be able to lay down the relevant procedures by 
means of implementing acts.  

(11)  The  Commission  should  also,  by  means  of  implementing  acts,  adopt  decisions  on 
requests to revise rural development programmes after the submission of such requests 
by Member State.  

(12) 

In  order  to  ensure  transparency  and  efficiency  in  the  revision  of  rural  development 
programmes,  the  Commission  should,  by  means  of  implementing  acts,  lay  down  the 
relevant procedures.  

(13)  The  use  of  advisory  services  should  help  farmers  to  assess  the  performance  of  their 
agricultural holding and identify necessary improvements with regard to the statutory 
management  requirements  and  the  good  agricultural  and  environmental  condition  as 
provided for in 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  farmers7  and  the  Community 
standards relating to occupational safety. Taking into account that the support for the 
use  of  advisory  services  has  been  available  already  for  several  years,  a  more  tailor-
made use should be facilitated, to better reflect the individual needs of the beneficiary. 

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OJ L 30, 31.1.2009, p. 16. 

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(14)  As  a  follow  up  to  the  Commission  Communication  on  a  Better  Functioning  Food 
Supply  Chain  in  Europe  and  the  High  Level  Expert  Group  on  Milk8,  the  current 
funding possibilities to support the setting up and administrative operation of producer 
groups  should  be  extended  to  all  Member  States.  However,  in  order  to  avoid  cases 
where  support  could  be  granted  simultaneously  from  different  sources,  support  for 
setting up of producer groups in the fruit and vegetables sector should be excluded. 

(15)  Multiannual commitments under certain measures should normally be undertaken as a 
general rule for a period between five and seven years. Where necessary and justified, 
the Commission should be able to approve rural development programmes that contain 
a longer period for particular types of commitments in order to take account of special 
circumstances in certain areas.  

(16)  Member  States  are  required  to  confirm  the  delimitation  of  mountain  areas  and  areas 
affected  by  specific  handicaps  and  to  delimitate  areas  affected  by  significant  natural 
handicaps. The Commission should by means of implementing acts define the specific 
provisions  according  to  which  these  areas  are  confirmed  or  delimitated  in  order  to 
ensure that this is done in accordance with uniform criteria by all Member States.  

(17)  Article  10  of  Council  Directive  92/43/EEC  of  21  May  1992  on  the  conservation  of 
natural habitats and of wild fauna and flora9, requires Member States, with a view to 
improve  the  ecological  coherence  of  the  Natura  2000  network,  to  endeavour  to 
encourage the management of features, 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. Such areas should be made eligible for Natura 
2000  payments.  However,  in  order  to  ensure  that  payments  continue  to  be  primarily 
used  for  the  designated  Natura  2000  sites,  it  is  appropriate  to  limit  their  proportion 
compared to Natura 2000 areas designated.  

(18)  Where a Member State decides to make use of the option to consider non-compliance 
as minor or not to apply a reduction or exclusion where the amount concerned is less 
than  EUR  100,  the  competent  control  authority  should,  in  the  following  year,  verify 
that the farmer remedies the findings of the non-compliance concerned. However, in 
order to ease the administrative burden, consideration should be given to simplifying 
the follow-up checks system. 

(19)  Each Member State is required to establish a national rural network. In order to ensure 
that the various national rural networks are set-up in a coherent and uniform manner, 
the  Commission  should,  by  means  of  implementing  acts,  fix  details  concerning  the 
establishment and the operation of those networks.  

(20) 

In  order  to  ensure  an  objective  and  transparent  distribution  of  commitment 
appropriations available to the Member States,  the  Commission  should,  by  means  of 
implementing  acts,  make  an  annual  breakdown  by  Member  State.  Given  the  special 
nature of those acts, the Commission should be empowered to adopt them without the 
assistance of the committee provided for in Regulation (EU) No XX/XXXX.  

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COM(2009) 591 of 28.10.2009. 
OJ L 206, 22.7.1992, p. 7. 

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(21) 

In order to be considered compatible with the internal market, any aid measure must 
contain  some  incentive  element  or  require  some  counterpart  on  the  part  of  the 
beneficiary. Aid which is granted retrospectively cannot be considered to contain the 
necessary  incentive  element.  Consequently,  in  respect  of measures  falling  within  the 
scope  of  Article  42  of  the  Treaty,  it  should  be  provided  that  support  is  excluded  for 
activities  that  have  already  been  undertaken  before  submission  of  an  application  for 
support. 

(22)  Member States should be required to undertake controls in accordance with the rules 
to be fixed by the Commission by means of delegated acts, notably regarding the type 
and  intensity  of  controls,  adapted  to  the  nature  of  the  different  rural  development 
measures.  The  Commission  should  further  be  empowered  to  fix,  by  means  of 
implementing  acts,  uniform  conditions  for  the  implementation  of  controls  by  the 
authorities of Member States in order to ensure a coherent execution of controls.  

(23)  A  common  monitoring  and  evaluation  network  should  be  drawn  up  in  cooperation 
between  the  Commission  and  the  Member  States.  In  the  interest  of  transparency,  it 
should be adopted by the Commission by means of implementing acts. 

(24)  The  Member  States  are  required  to  send  to  the  Commission  each  year  an  annual 
progress report on the implementation of their rural development programmes. Details 
concerning the annual progress reports for specific programmes for the national rural 
networks  should,  by  means  of  implementing  acts,  be  fixed  by  the  Commission,  in 
order to ensure a uniform and comparable content.  

(25)  An  information  system  to  permit  the  secure  exchange  of  data  of  common  interest 
between  the  Commission  and  each  Member  State  should  be  established.  The 
Commission should, by means of implementing acts, adopt uniform conditions for the 
operation of that system.  

(26)  Regulation (EC) No 1698/2005 should therefore be amended accordingly,  

HAVE ADOPTED THIS REGULATION: 

Article 1 

Regulation (EC) No 1698/2005 is amended as follows: 

(1) 

Article 5 is amended as follows: 

(a) 

paragraph 2 is replaced by the following: 

"2. 
The Commission and the Member States shall ensure that the assistance 
from  the  EAFRD  and  the  Member  States  is  consistent  with  the  activities, 
policies  and  priorities  of  the  Union.  The  assistance  of  the  EAFRD  shall  be 
consistent with  the objectives of Economic and Social Cohesion and those of 
the Union support instrument for fisheries in particular. In order to ensure that 
EAFRD  assistance  is  also  consistent  with  other  support  instruments  of  the 
Union, the Commission may, by means of delegated acts, lay down the specific 
Union measures with which such consistency is to be ensured." 

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(b)  paragraph 6 is replaced by the following: 

"6.  No  support  under  this  Regulation  shall  be  granted  to  schemes  eligible  for 
support under common market organisations. In order to take into account the 
specific circumstances in programming areas, the Commission may, by means 
of delegated acts, adopt exceptions from this rule." 

(2) 

In Article 12, the following paragraph is added: 

"3.  National  strategy  plans  may  be  updated  during  the  programming  period. 
The  Commission  may,  by  means  of  implementing  acts,  lay  down  rules 
concerning those updates." 

(3) 

In Article 13, paragraphs 1 and 2 are replaced by the following: 

"1. Each Member State shall submit to the Commission two summary reports 
setting  out  the  progress  made  in  implementing  its  national  strategy  plan  and 
objectives  and  its  contribution  to  the  achievement  of  Community  strategic 
guidelines.  The  first  report  shall  be  submitted  in  2010  and  the  second  one  in 
2015, no later than on 1 October. 

2. The report shall describe in particular: 

the  achievements  and  results  of  the  rural  development  programmes 

(a) 
relative to the indicators set out in the national strategy plan; 

(b) 

the results of the ongoing evaluation activities for each programme." 

(4) 

In Article 14(1), the first sub-paragraph is replaced by the following: 

"The  Commission  shall  present 
the  main 
two 
developments,  trends  and  challenges  relating  to  the  implementation  of  the 
national strategy plans and the Community strategic guidelines. The first report 
shall be presented in 2011 and the second in 2016." 

reports  summarising 

(5) 

Article 18 is amended as follows: 

(a) 

In paragraph 3 the following sub-paragraph is added: 

"In view of this assessment the Commission shall, by means of implementing 
acts,  adopt  uniform  conditions  for  the  presentation  of  rural  development 
programmes." 

(b) 

Paragraph 4 is replaced by the following: 

"4.  The  Commission  shall  approve  each  rural  development  programme  by 
means of implementing acts.  

It may also, by means of implementing acts, lay down the procedure for such 
approval." 

(6) 

In Article 19, paragraph 2 is replaced by the following: 

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"2. The Commission shall, by means of implementing acts, adopt decisions on 
requests to revise rural development programmes after the submission of such 
requests by the Member States.  

In  order  to  enable  the  Commission  to  apply  efficient  and  proportionate 
procedures,  the  Commission  may,  by  means  of  delegated  acts,  lay  down  the 
rules concerning the changes that do not require approval by the Commission 
or  require  approval  without  the  assistance  by  the  Committee  referred  to  in 
Article 91c.  

Procedural provisions for the submission, assessment and approval of changes 
shall be adopted by the Commission by means of implementing acts." 

(7) 

In Article 20(d), point (ii) is replaced by the following: 

"(ii) Supporting the setting up of producer groups;" 

(8) 

The following Article 20a is inserted before Subsection 1: 

"Article 20a 

Specific conditions 

In  order  to  ensure  an  efficient  and  targeted  use  of  funds  and  to  ensure  a 
coherent approach in the treatment of beneficiaries, the Commission shall, by 
means  of  delegated  acts,  adopt  specific  conditions  concerning  the  measures 
provided for in Article 20." 

(9) 

In Article 24(1), the second sub-paragraph is replaced by the following: 

"As a minimum, the advisory service to farmers shall cover one or more of the 
statutory  management  requirements  and  good  agricultural  and  environmental 
conditions  provided  for  in  Articles  5  and  6  of  and  Annexes  II  and  III  to 
Regulation  (EC)  No  73/2009  and,  where  relevant,  one  or  more  of  the 
occupational safety standards based on Union legislation." 

(10) 

In Article 32(1), point (b) is replaced by the following: 

"(b) be for Union food quality schemes, or for those recognised by the Member 
States which comply with precise criteria defined by the Commission by means 
of delegated acts in order to ensure coherence of this measure with EU policy 
and  priorities.  Schemes  whose  sole  purpose  is  to  provide  a  higher  level  of 
control of respect of obligatory standards under Union or national law shall not 
be eligible for support;" 

(11) 

In Article 33, the following paragraph is added: 

"The  support  shall  be  granted  to  the  producer  groups  consisting  of  operators 
actively  participating  in  a  food  quality  scheme  as  referred  to  in  Article  32. 
Professional  and/or  inter-professional  organisations  representing  one  or  more 
sectors cannot qualify as ‘producer groups’." 

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(12) 

In Article 35, paragraph 3 is replaced by the following: 

"3.  The  support  shall  be  granted  to  producer  groups  which  are  officially 
recognised by the Member State's competent authority by 31 December 2013. 
However, no support shall be granted for the setting up of producer groups in 
the fruit and vegetables sector." 

(13) 

The following Article 36a is inserted before Subsection 1: 

"Article 36a 

Specific conditions 

In  order  to  ensure  an  efficient  and  targeted  use  of  funds  and  to  ensure  a 
coherent approach in the treatment of beneficiaries, the Commission shall, by 
means  of  delegated  acts,  adopt  specific  conditions  concerning  the  measures 
provided for in Article 36." 

(14) 

In Article 38, paragraph 2 is replaced by the following: 

"2. Support shall be limited to the maximum amount laid down in the Annex I 
to this Regulation. In order to avoid overlapping between support provided for 
in  Article  20(c)(i)  and  support  provided  for  in  Article  36(a)(iii),  the 
Commission shall, by means of delegated acts, lay down the rules concerning 
the  disadvantages  related  to  specific  requirements  introduced  by  Directive 
2000/60/EC and fix the conditions as regards the amount of annual support for 
payments linked to that Directive." 

(15) 

In Article 39(3), the second sub-paragraph is replaced by the following: 

"These commitments shall be undertaken as a general rule for a period between 
five and seven years. Where necessary and justified, the Commission may, by 
means  of  implementing  acts,  approve  rural  development  programmes  that 
contain a longer period for particular types of commitments." 

(16) 

In Article 40(2), the second sub-paragraph is replaced by the following: 

"These commitments shall be undertaken as a general rule for a period between 
five and seven years. Where necessary and justified, the Commission may, by 
means  of  implementing  acts,  approve  rural  development  programmes  that 
contain a longer period for particular types of commitments." 

(17) 

In Article 41, the following paragraph is added: 

"For benefiting from such support the investments concerned must not lead to 
any  significant  increase  in  the  value  or  profitability  of  the  agricultural  or 
forestry holding." 

(18) 

In Article 43(1), the following sub-paragraph is added: 

"For  the  purposes  of  point  (c)  of  the  first  subparagraph,  ‘farmers’  means 
persons  who  devote  an  essential  part  of  their  working  time  to  agricultural 

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activities and derive from them a significant part of their income according to 
criteria to be defined by the Member State." 

(19) 

In Article 47(1), the second sub-paragraph is replaced by the following: 

"These commitments shall be undertaken as a general rule for a period between 
five and seven years. Where necessary and justified, the Commission may, by 
means  of  implementing  acts,  approve  rural  development  programmes  that 
contain a longer period for particular types of commitments." 

(20) 

In Article 49, the following paragraph is added: 

"For benefiting from such support the investments concerned must not lead to 
any  significant  increase  in  the  value  or  profitability  of  the  agricultural  or 
forestry holding." 

(21) 

Article 50 is amended as follows: 

(a) 

 Paragraphs 4 and 5 are replaced by the following: 

"4.  The  Commission  shall,  by  means  of  implementing  acts,  adopt  rules 
according to which the Member States shall, in their programmes: 

(a)  confirm  the  existing  delimitation  pursuant  to  paragraphs  2  and  3(b)  or 
amend it, or 

(b) delimitate the areas referred to in paragraph 3(a). 

5. The following agricultural areas shall be eligible for payments provided for 
in Article 36(a)(iii): 

(a)  Natura  2000  agricultural  areas  designated  pursuant 
2009/147/EC and 92/43/EEC; 

to  Directives 

(b)  other  delimited  nature  protection  areas  with  environmental  restrictions 
applicable to farming which contribute to the implementation of Article 10 of 
Directive 92/43/EEC; 

(c)  agricultural  areas  included  in  river  basin  management  plans  according  to 
Directive 2000/60/EC." 

(b) 

Paragraph 7 is replaced by the following: 

"7.  The  following  forest  areas  shall  be  eligible  for  payments  provided  for  in 
Article 36(b)(iv): 

(a)  Natura  2000  forest  areas  designated  pursuant  to  Directives  2009/147/EC 
and 92/43/EEC; 

(b)  other  delimited  nature  protection  areas  with  environmental  restrictions 
applicable  to  forests  which  contribute  to  the  implementation  of  Article  10  of 
Directive 92/43/EEC."  

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(c) 

The following paragraph is added: 

"9.  The  areas  referred  to  in  point  (b)  of  paragraph  5  and  in  point  (b)  of 
paragraph 7 of this Article shall, per rural development programme, not exceed 
5% of the Natura 2000 areas covered by its territorial scope." 

(22) 

Article 51 is amended as follows: 

(a) 

In paragraph 2, the third sub-paragraph is replaced by the following: 

"Where a Member State decides to make use of the option provided for in the 
second sub-paragraph, in the following year the competent authority shall take 
the actions required to verify that the beneficiary remedies the finding of non-
compliance concerned. The finding and the obligation to take remedial action 
shall be notified to the beneficiary." 

(b) 

In paragraph 4, the introductory phrase is replaced by the following: 

"In  order  to  ensure  the  coherent  application  of  reductions  and  exclusions  of 
payment  provided  for  in  this  Article,  the  Commission  shall,  by  means  of 
delegated acts, lay down the relevant rules for the application of the principles 
of  transparency  and  proportionality.  In  this  context  account  shall  be  taken  of 
the  severity,  extent,  permanence  and  repetition  of  non-compliance  found  as 
well as of the following criteria:" 

(23) 

The following Article 52a is inserted before Subsection 1: 

"Article 52a 

Specific conditions 

In  order  to  ensure  an  efficient  and  targeted  use  of  funds  and  to  ensure  a 
coherent approach in the treatment of beneficiaries, the Commission shall, by 
means  of  delegated  acts,  adopt  specific  conditions  concerning  the  measures 
provided for in Article 52."  

(24) 

In Article 53, the following paragraph is added: 

"For the purposes of this Article a ‘member of the farm household’ shall mean 
a natural or legal person or a group of natural or legal persons, whatever legal 
status  is  granted  to  the  group  and  its  members  in  national  law,  with  the 
exception of farm workers. Where a member of the farm household is a legal 
person  or  a  group  of  legal  persons,  that  member  must  exercise  agricultural 
activity on the farm at the time of the support application." 

(25) 

The following Article 63a is inserted: 

"Article 63a 

Specific conditions 

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In  order  to  ensure  an  efficient  and  targeted  use  of  funds  and  to  ensure  a 
coherent approach in the treatment of beneficiaries, the Commission shall, by 
means  of  delegated  acts,  adopt  specific  conditions  concerning  the  measures 
provided for in Article 63."  

(26) 

Article 66 is amended as follows: 

(a) 

In paragraph 2 the following sub-paragraph is added: 

"In  order  to  ensure  consistency  with  the  requirements  of  Union  policy, 
priorities  and  law,  the  Commission  may,  by  means  of  delegated  acts,  adopt 
conditions  on  the  contribution  rate  for  technical  assistance  in  case  of  rural 
the 
development  programmes  covering  both 
Convergence  Objective  and  regions  not  eligible  under  the  Convergence 
Objective,  and  conditions  on  the  allocation  of  funds  for  establishing  and 
operating the national rural network referred to in Article 68."  

regions  eligible  under 

(b) 

In paragraph 3 the third sub-paragraph is replaced by the following: 

"The  Commission  shall,  by  means  of  implementing  rules,  adopt  rules 
concerning the establishment and the operation of the national rural network." 

(27) 

In Article 69, paragraph 4 is replaced by the following: 

"The Commission shall, by means of implementing acts without the assistance 
of  the  Committee  referred  to  in  Article  91c,  make  an  annual  breakdown  by 
Member State of the amounts referred to in paragraph 1, after deduction of the 
amount referred to in paragraph 2, and taking into account: 

(a) the amounts reserved for regions eligible under the Convergence Objective; 

(b) past performance; and 

(c) particular situations and needs based on objective criteria." 

(28) 

In Article 70, paragraph 1 is replaced by the following: 

"1.  The  Decision  adopting  a  rural  development  programme  shall  set  the 
maximum  contribution  from  the  EAFRD  for  each  axis.  In  order  to  allow 
Member  States  a  certain  degree  of  flexibility  with  regards  to  minor  shifts  of 
EAFRD  funding  among  axes,  a  flexibility  threshold  shall  be  fixed  by  the 
Commission  by  means  of  delegated  acts.  The  Decision  shall  clearly  identify, 
where necessary, the appropriations allocated to the regions eligible under the 
Convergence Objective." 

(29) 

Article 71 is amended as follows:  

(a) 

In paragraph 1, the second sub-paragraph is replaced by the following second 
and third sub-paragraphs: 

"A new expenditure added at the moment of the modification of a programme 
referred to in Article 19 shall be eligible from the date of the reception by the 

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Commission of the request for modification of the programme. Member States 
shall  bear  the  responsibility  for  expenditure  between  the  date  on  which  their 
request for a programme modification is received by the Commission and the 
date of the decision approving the modification. 

In cases of emergency measures due to natural disasters the rural development 
programmes may provide that eligibility of expenditure relating to programme 
changes  may  start  from  a  date  earlier  than  the  date  referred  to  in  the  second 
sub-paragraph." 

(b) 

In paragraph 2, the following sub-paragraphs are added: 

"Support shall only be granted for expenditure incurred in respect of measures 
falling within the scope of Article 42 of the Treaty after an application has been 
submitted to the competent authority.  

However,  the  requirement  laid  down  in  the  second  subparagraph  shall  not 
apply in respect of the measures referred to in Article 20(a), Article 20(b)(vi), 
Article  20(c)(i)  and  (ii),  Article  20(d)(i)  to  (iii),  Article  36(a)(i)  to  (v)  and 
Article  36(b)(i), with  the  exception  of  establishment  costs  under  Article 
36(b)(i). 

(c) 

Paragraph 5 is replaced by the following: 

"5. Notwithstanding paragraph 3(b), the contribution from the EAFRD may be 
made in a form other than a non-repayable direct assistance. In order to ensure 
the efficient use and coherent implementation of the EAFRD and to secure the 
Union's financial interests, the Commission shall, by means of delegated acts, 
adopt specific conditions for the co-financing of interest rate subsidies and of 
other financial engineering instruments. 

(30) 

In Article 74, paragraph 4 is replaced by the following: 

"4.  Member States  shall undertake  controls in accordance with rules fixed by 
the  Commission,  by  means  of  delegated  acts,  regarding  the  principles  of 
controls, sanctions, exclusions and the recovery of undue payments, adapted to 
the  nature  of  the  different  rural  development  measures  in  order  to  ensure 
efficiency  in  their  application  and  equal  treatment  of  all  beneficiaries.  The 
Commission  shall,  by  means  of  implementing  acts,  lay  down  uniform 
conditions for the implementation of controls by the authorities of the Member 
States." 

(31) 

In Article 78, the following sub-paragraph is added: 

"For the purposes of point (f), ‘substantial proposal for changes’ shall cover the 
changes which require approval by the Commission by means of implementing 
acts, with the exception of the changes referred to in the second subparagraph 
of Article 19(2), as well as changes of financial breakdown by measure within 
an  axis,  changes  concerning  the  introduction  of  new  measures  and  types  of 
operations and the withdrawal of existing measures and types of operations." 

(32) 

Article 80 is replaced by the following: 

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"Article 80 

Common monitoring and evaluation framework 

The  common  monitoring  and  evaluation  framework  shall  be  drawn  up  in 
cooperation  between  the  Commission  and  the  Member  States  and  shall  be 
adopted  by  the  Commission  by  means  of  implementing  acts.  The  framework 
shall  specify  a  limited  number  of  common  indicators  applicable  to  each 
programme." 

(33) 

In Article 82, paragraph 4 is replaced by the following: 

"4.  The  Commission  shall,  by  means  of  implementing  acts,  adopt  rules 
concerning annual progress reports for specific programmes pursuant to Article 
66(3)." 

(34) 

In Article 86, the following paragraph is added: 

"9. In order to ensure that evaluations are carried out within the time schedule 
fixed  in  this  Article,  the  Commission  may,  by  means  of  delegated  acts,  lay 
down the appropriate penalties for the non-respect of these time schedules." 

(35) 

The following Article 89a is inserted in Title IX: 

“Article 89a 

Exchange of information and documents 

The  Commission,  in  collaboration  with  the  Member  States,  shall  establish  an 
information system to permit the secure exchange of data of common interest 
between  the  Commission  and  each  Member  State.  The  Commission  shall,  by 
means of implementing acts, adopt uniform conditions for the operation of that 
system." 

(36) 

Articles 90 and 91 are deleted. 

(37) 

The following Articles 91a, 91b and 91c are inserted: 

"Article 91a 

Commission powers 

Where  competences  are  conferred  on  the  Commission,  it  shall  act  in 
accordance  with  the  procedure  referred  to  in  Article  91b,  in  the  case  of 
delegated acts, and in accordance with the procedure referred to in Article 91c, 
in the case of implementing acts, save where explicitly provided otherwise in 
this Regulation." 

Article 91b 

Delegated acts 

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The  powers  to  adopt  the  delegated  acts  referred  to  in  this  Regulation 

1. 
shall be conferred on the Commission for an indeterminate period of time. 

As  soon  as  it  adopts  a  delegated  act,  the  Commission  shall  notify  it 
simultaneously to the European Parliament and to the Council. 

2.  The  delegation  of  power  may  be  revoked  at  any  time  by  the  European 
Parliament or by the Council. 

The  institution  which  has  commenced  an  internal  procedure  for  deciding 
whether to revoke the delegation of power shall endeavour to inform the other 
institution  and  the  Commission  within  a  reasonable  time  before  the  final 
decision  is  taken,  indicating  the  delegated  powers  which  could  be  subject  to 
revocation and possible reasons for a revocation. 

The  decision  of  revocation  shall  put  an  end  to  the  delegation  of  the  powers 
specified  in  that  decision.  It  shall  take  effect  immediately  or  at  a  later  date 
specified therein. It shall not affect the validity of the delegated acts already in 
force. It shall be published in the Official Journal of the European Union. 

3. The European Parliament or the Council may object to a delegated act within 
a  period  of  two  months  from  the  date  of  notification.  At  the  initiative  of  the 
European  Parliament  or  the  Council  this  period  shall  be  extended  by  [two] 
months. 

If,  on  expiry  of  that  period,  neither  the  European  Parliament  nor  the  Council 
has objected to the delegated act, it shall be published in the Official Journal of 
the European Union and shall enter into force at the date stated therein. 

The  delegated  act  may  be  published  in  the  Official  Journal  of  the  European 
Union  and  enter  into  force  before  the  expiry  of  that  period  if  the  European 
Parliament  and  the  Council  have  both  informed  the  Commission  of  their 
intention not to raise objections.  

If  the  European  Parliament  or  the  Council  objects  to  a  delegated  act,  the  act 
shall not enter into force. The institution that objects to the delegated act shall 
state the reasons for its objections. 

Article 91c 

Implementing acts – Committee 

[To be completed following the adoption of the Regulation laying down the rules and 
general  principles  concerning  mechanisms  for  control  envisaged  in  Article  291(2) 
TFEU, which is currently under discussion before the PE and the Council.] 

(38) 

In Article 92, paragraph 1 is replaced by the following: 

"1. Should specific measures be necessary to facilitate the transition from the 
system in force to that established by this Regulation, such measures shall be 
adopted by the Commission, by means of delegated acts." 

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(39) 

In Annex I, footnote reference (***) is replaced by the following: 

"(***) In order to take account of the special circumstances that exist in Malta, 
the Commission may , by means of delegated acts, set a minimum amount of 
aid for sectors of production in which total output is extremely small.” 

This Regulation shall enter into force on the third day following that of its publication in the 
Official Journal of the European Union. 

Article 2 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President

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FINANCIAL STATEMENT 

BUDGET HEADING: 
05 04 05 01  

AGRI/I1/Ares/2010/483446 
(JGS/TM) 

6.20.2010.6 
DATE: 15/07/2010 
APPROPRIATIONS 2010: 
CA: EUR 14 335 536 182 
PA: EUR 12 606 200 000 

TITLE: 
Draft Council Regulation amending Regulation (EC) No 1698/2005 on support for rural development 
by the European Agricultural Fund for Rural Development (EAFRD)  
LEGAL BASIS: -  
AIMS: 
To align Regulation 1698/2005 with the Lisbon Treaty and to implement a number simplification 
proposals as part of the simplification exercise of the CAP.  

1. 

2. 

3. 
4. 

5. 

FINANCIAL IMPLICATIONS (1)  

5.0 

5.1 

EXPENDITURE 
- CHARGED TO THE EC BUDGET 
(current prices) 
- NATIONAL AUTHORITIES 
- 
REVENUE 
- 
(LEVIES/CUSTOMS DUTIES) 
NATIONAL 
- 

OTHER 

OWN RESOURCES OF THE EC  

5.0.1  ESTIMATED EXPENDITURE (current prices) 

CA 
PA 

5.1.1  ESTIMATED REVENUE 
5.2  METHOD OF CALCULATION:- 
6.0 

12 MONTH 
PERIOD 

(EUR million) 
- 

CURRENT 
FINANCIAL 
YEAR 
2009 
(EUR million) 
- 

FOLLOWING 
FINANCIAL 
YEAR 
2010 
(EUR million) 
- 

- 

- 

- 

2011 

2012 

2013 

- 
- 
- 

- 
- 
- 

- 
- 
- 

CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE 
RELEVANT CHAPTER OF THE CURRENT BUDGET? 
CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF THE 
CURRENT BUDGET? 

6.1 

6.2  WILL A SUPPLEMENTARY BUDGET BE NECESSARY? 
6.3  WILL APPROPRIATIONS NEED TO BE ENTERED IN FUTURE BUDGETS? 
6.4 
OBSERVATIONS: 

OTHER 

YES NO  

YES NO 
YES NO 
YES NO 
(2) 

(1)  As  regards  commitment  appropriations,  the  modification  of  Regulation  1698/2005  will  not  have  any 
financial  impact  as  the  global  envelope  for  rural  development  remains  unchanged  as  well  as  its  annual 
breakdown.  For  payment  appropriations,  the  amendment  would  not  have  financial  impact  either  given  the 
nature  of  the  main  modifications  proposed:  alignment  with  the  Lisbon  Treaty  and  simplification  of  the 
administrative burden for Member States. Only in the case of three modifications (extension of the coverage 
of  support  to  administrative  operations  of  producer  groups,  extension  of  Natura  2000  to  certain  protection 
areas and introduction of incentive element for measures under Art. 43 of the Treaty) there might be a minor 
redistribution  of  payments  in  the  short  term  whose  relative  impact  on  the  evaluation  of  budget  needs  is 
insignificant. 

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