1 By order of 2 March 1990, which was received at the Court on 22 March 1990, the Supreme Court of Ireland referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question on the interpretation of Article 3a(3) of Council Regulation (EEC) No 857/84 of 31 March 1984 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1984 L 90, p. 13), as amended by Council Regulation (EEC) No 764/89 of 20 March 1989 (OJ 1989 L 84, p. 2).
2 That question was raised in the course of proceedings between Mr O' Brien and Ireland, the Attorney General and the Minister for Agriculture and Food concerning the conditions imposed by them on the allocation of a reference quantity under the rules governing the additional levy on milk.
3 Pursuant to Council Regulation No 1078/77 of 17 May 1977 introducing a system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds (OJ 1977 L 131, p. 1), Mr O' Brien, a farmer established in Ireland, gave a non-marketing undertaking for the period from 28 October 1979 to 27 October 1984. On 24 June 1989 he entered into joint venture arrangements with his brother whereby he was granted a licence over 60 acres of land belonging to his brother and adjoining his own holding, and a lease in respect of 40 cows. On the same day he entered into a partnership agreement with his brother whereby he was to use the cows and land as his contribution to the partnership capital.
4 On the same date Mr O' Brien applied to the competent Irish authorities for the allocation of a special reference quantity pursuant to Article 3a of Regulation No 857/84, as amended. On 28 August 1989, a special reference quantity of 39 803 gallons was provisionally awarded to him. However, the letter making the award stated that, in order to satisfy the conditions governing the definitive allocation of that quantity, he had to show that milk deliveries at the required level had been made from land operated at the end of the non-marketing period.
5 Considering that the imposition of that condition was contrary to Community rules, Mr O' Brien brought an action for a declaration that he was entitled to the grant of a special reference quantity for all the production units operated by him in the Community. In the course of those proceedings the Supreme Court of Ireland, before which the case came at last instance, decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling: "For the purposes of fulfilling the condition prescribed by Article 3a(3) of Council Regulation (EEC) No 857/84 (as inserted by Article 1 of Council Regulation (EEC) No 764/89) is it necessary that the milk the subject of the direct sales and/or deliveries relied on be produced exclusively from so much of the lands by reference to the produce of which the non-marketing or conversion premium was calculated as were still operated by the relevant producer at the end of the non-marketing or conversion period?"
6 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the relevant provisions of Community law, the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.
7 The question submitted essentially seeks to ascertain whether, for the purposes of the definitive allocation of a special reference quantity, Article 3a(3) of Regulation No 857/84, as amended, must be interpreted as meaning that only sales or deliveries of milk from the holding as constituted when it formed the subject of the non-marketing or conversion undertaking may be taken into account, or whether sales or deliveries of milk from production units added to the holding between the date of expiry of the non-marketing or conversion period and the date of the provisional allocation of the special reference quantity may also be taken into account.
8 Article 3a(1) of Regulation No 857/84, as amended by Regulation No 764/89, provides that producers whose period of non-marketing or conversion, pursuant to the undertaking given under Regulation (EEC) No 1078/77, expires after 31 December 1983 or 30 September 1983, as the case may be, may provisionally receive a special reference quantity on the terms laid down in subparagraphs (a), (b) and (c). Subparagraph (a) of that provision makes the provisional grant of a special reference quantity subject to the condition that the producers did not "transfer the whole of their dairy enterprise before the end of the non-marketing or conversion period;" subparagraph (b) of the same provision adds the further condition that producers should "establish in support of their request ... that they are able to produce on their holding up to the reference quantity requested."
9 Article 3a(3) provides as follows: "If, within two years from 29 March 1989, producers can prove to the satisfaction of the competent authority that they have actually resumed direct sales and/or deliveries, and that such direct sales and/or deliveries have attained during the previous 12 months a level equal to or greater than 80% of the provisional reference quantity, the special reference quantity shall be definitively allocated to the producers. ... The level of direct sales and/or actual deliveries shall be determined by taking into account production rate trends on the producer' s holding, seasonal conditions and any exceptional circumstances."
10 The detailed rules for the application of the additional levy were laid down in Commission Regulation (EEC) No 1546/88 of 3 June 1988 (OJ 1988 L 139, p. 12), as amended by Commission Regulation (EEC) No 1033/89 of 20 April 1989 (OJ 1989 L 110, p. 27). Those rules were adopted on the basis of the enabling provision contained in Article 5c(7) of the basic regulation, Council Regulation (EEC) No 804/68 of 27 June 1968 on the common organization of the markets in the milk and milk products sector (OJ, English Special Edition 1968 (I), p. 176), as amended by Council Regulation (EEC) No 856/84 of 31 March 1984 (OJ 1984 L 90, p. 10).
11 Under the terms of Article 3a(1) of Regulation No 1546/88, as amended, the request for the grant of a special reference quantity under Article 3(a)(1) of Regulation No 857/84, as amended, "shall be made by the producers concerned to the competent authority designated by the Member State, in accordance with the procedure laid down by it and provided that the producers can prove that they still operate, in whole or in part, the same holdings as those they operated at the time of the approval ... of their premium applications."
12 It follows from the combined provisions of Article 3a(1) of Regulation No 857/84, as amended, and of Article 3a(1) of Regulation No 1546/88, as amended, that the provisional allocation of a special reference quantity is subject to the condition that the producer in question still operates, in whole or in part, the same holding as that which he operated at the time of the approval of his premium application, that is to say the holding covered by his non-marketing or conversion undertaking. Such a producer can therefore claim entitlement to the provisional grant of a special reference quantity only if he continues to operate, at least in part, the holding covered by his undertaking under Regulation No 1078/77. He loses that entitlement where he has abandoned the operation of the whole of that holding.
13 As stated in the third recital in the preamble to Regulation No 1033/89, those rules seek to ensure "that applications may be submitted solely by producers in a position to operate at least in part the same production units as those they operated when applying for the premium for the non-marketing of milk or for the conversion of dairy herds."
14 It is against that background that the scope of Article 3a(3) of Regulation No 857/84, as amended, must be determined. The object of that provision is to prevent a special reference quantity from being definitively allocated to a producer who has not, within the period and at the levels prescribed, actually resumed sales or deliveries of milk in respect of which a special reference quantity was provisionally allocated to him.
15 However, no provision of Community law limits the sales or deliveries of milk which may be taken into account for the purposes of the definitive allocation of a special reference quantity solely to sales or deliveries of milk from the holding as constituted when it formed the subject of the non-marketing or conversion undertaking. Such a limitation would moreover defeat the provisions mentioned above under which producers retain their right to a special reference quantity where they dispose of part of their holding.
16 Consequently, it cannot be accepted that a producer who has disposed of part of his holding should be deprived of the possibility of obtaining a special reference quantity on the ground that the production capacity of the remaining part does not enable him to achieve the requisite level of sales or deliveries, even though he achieves that level if account is taken of his total production from the holding as constituted at the time of the provisional allocation of the special reference quantity.
17 The reply to the question submitted must therefore be that Article 3a(3) of Regulation No 857/84, as amended, must be interpreted as meaning that, for the purposes of the definitive allocation of a special reference quantity, account may also be taken of sales or deliveries of milk from production units added to the holding in question between the date of expiry of the period of non-marketing or conversion and the date of the provisional allocation of the special reference quantity, provided that the producer concerned is still operating, in whole or in part, the same holding as he operated at the time of the approval of his premium application.