JUDGMENT OF THE COURT (First Chamber)

2 July 2015 ( *1 )

‛References for a preliminary ruling — Agriculture — Common agricultural policy — Single payment scheme — Regulation (EC) No 1782/2003 — Article 44(2) — Regulation (EC) No 73/2009 — Article 34(2)(a) — Concept of ‘eligible hectare’ — Areas surrounding runways, taxiways and stopways — Agricultural use — Lawfulness — Recovery of agricultural aid unduly allocated’

In Case C‑684/13,

REQUEST for a preliminary ruling under Article 267 TFEU, from the Vestre Landsret (Denmark), made by decision of 16 December 2013, received at the Court on 23 December 2013, in the proceedings

Johannes Demmer

Fødevareministeriets Klagecenter,

THE COURT (First Chamber),

composed of A. Tizzano, President of the Chamber, S. Rodin, A. Borg Barthet (Rapporteur), E. Levits and M. Berger, Judges,

Advocate General: N. Wahl,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

—

Mr Demmer, by G. Lund, advokat,

—

the Danish Government, by C. Thorning, acting as Agent, assisted by R. Holdgaard, advokat,

—

the Greek Government, by I. Chalkias and O. Tsirkinidou, acting as Agents,

—

the Polish Government, by B. Majczyna, acting as Agent,

—

the European Commission, by H. Kranenborg and L. Grønfeldt, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 26 February 2015,

gives the following

Judgment

This request for a preliminary ruling concerns the interpretation of Article 44(2) of Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers and amending Regulations (EEC) No 2019/93, (EC) No 1452/2001, (EC) No 1453/2001, (EC) No 1454/2001, (EC) 1868/94, (EC) No 1251/1999, (EC) No 1254/1999, (EC) No 1673/2000, (EEC) No 2358/71 and (EC) No 2529/2001 (OJ 2003 L 270, p. 1, corrigendum OJ 2004 L 94, p. 70), Articles 34(2)(a) and 137 of Council Regulation (EC) No 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, amending Regulations (EC) No 1290/2005, (EC) No 247/2006, (EC) No 378/2007 and repealing Regulation No 1782/2003 (OJ 2009 L 30, p. 16, corrigendum OJ 2010, L 43, p. 7), and also Article 73(4) and (5) of Commission Regulation No 796/2004 of 21 April 2004 laying down detailed rules for the implementation of cross-compliance, modulation and the integrated administration and control system provided for in Regulation No 1782/2003 (OJ 2004 L 141, p. 18), as amended by Commission Regulation (EC) No 2184/2005 of 23 December 2005 (OJ 2005 L 347, p. 61) (‘Regulation No 796/2004’).

The request has been made in proceedings between Mr Demmer and the Fødevareministeriets Klagecenter (Complaints Centre of the Ministry of Food, Agriculture and Fisheries) (‘the Klagecenter’), concerning the eligibility for aid, under the single payment scheme, of areas used for the production of feed pellets and situated around the runways, taxiways and stopways of Skrydstrup Air Base (Denmark) and Aalborg Airport (Denmark).

Legal context

Union law

Regulation No 1782/2003

Recital 21 in the preamble to Regulation No 1782/2003 stated:

‘The support schemes under the common agricultural policy provide for direct income support in particular with a view to ensuring a fair standard of living for the agricultural community. That objective is closely related to the maintenance of rural areas. …’

Article 1 of that regulation provides:

‘This Regulation establishes:

…

—

an income support for farmers (hereinafter referred to as the “single payment scheme”),

…’

Under Article 2(b) and (c) of that regulation:

‘(b)

“holding” means all the production units managed by a farmer situated within the territory of the same Member State,

(c)

“agricultural activity” means the production, rearing or growing of agricultural products including harvesting, milking, breeding animals and keeping animals for farming purposes, or maintaining the land in good agricultural and environmental condition as established under Article 5’.

The first subparagraph of Article 43(1) of that regulation provided:

‘Without prejudice to Article 48, a farmer shall receive a payment entitlement per hectare which is calculated by dividing the reference amount by the three-year average number of all hectares which in the reference period gave right to direct payments listed in Annex VI.’

Paragraphs 44(1) and (2) of Regulation No 1782/2003 provided as follows:

‘1. Any payment entitlement accompanied by an eligible hectare shall give right to the payment of the amount fixed by the payment entitlement.

2. “Eligible hectare” shall mean any agricultural area of the holding taken up by arable land and permanent pasture except areas under permanent crops, forests or used for non-agricultural activities.’

Regulation No 73/2009

Regulation (EU) No 73/2009 repealed and replaced Regulation No 1782/2003 as from 1 January 2009.

Recital 49 in the preamble to Regulation No 73/2009 stated:

‘In the initial allocation of payment entitlements by Member States, some errors led to particularly high payments to farmers. This non-compliance is normally the subject of financial correction until such time as corrective measures are taken. However, taking into account the time that has elapsed since the payment entitlements were first allocated, the necessary correction would lead to disproportionate legal and administrative constraints for Member States. In the interest of legal certainty, the allocation of such payments should therefore be regularised.’

Article 2 of that regulation set out the following definitions:

‘…

(b)

“holding” means all the production units managed by a farmer situated within the territory of the same Member State,

(c)

…

(h)

“agricultural area” means any area taken up by arable land, permanent pasture or permanent crops.’

Article 34 of that regulation provided:

‘1. Support under the single payment scheme shall be granted to farmers upon activation of a payment entitlement per eligible hectare. Activated payment entitlements shall give a right to the payment of the amounts fixed therein.

2. For the purposes of this Title, “eligible hectare” shall mean:

(a)

any agricultural area of the holding, and any area planted with short rotation coppice (CN code ex 0602 90 41) that is used for an agricultural activity or, where the area is used as well for non-agricultural activities, predominantly used for agricultural activities, …

…

The Commission, in accordance with the procedure referred to in Article 141(2), shall lay down detailed rules on the use of eligible hectares for non-agricultural activities.

Except in the case of force majeure or exceptional circumstances, hectares shall comply with the eligibility condition throughout the calendar year.’

Article 137 of Regulation No 73/2009 provides:

‘1. Payment entitlements allocated to farmers before 1 January 2009 shall be deemed legal and regular as from 1 January 2010.

2. Paragraph 1 shall not apply to payment entitlements allocated to farmers on the basis of factually incorrect applications except in cases where the error could not reasonably have been detected by the farmer.

…’

Regulation (EC) No 795/2004

Under Article 2(a) of Commission Regulation (EC) No 795/2004 of 21 April 2004 laying down detailed rules for the implementation of the single payment scheme provided for in Regulation No 1782/2003 (OJ 2004 L 141, p. 1), ‘agricultural area’ meant ‘the total area taken up by arable land, permanent pasture and permanent crops’.

Regulation (EC) No 370/2009

Recital 3 in the preamble to Commission Regulation (EC) No 370/2009 of 6 May 2009, amending Regulation (EC) No 795/2004 (OJ 2009 L 114, p. 3), states:

‘The provisions on eligibility as set out in Article 3b of Regulation … No 795/2004 are obsolete and should therefore be removed. However, Article 34(2)(a) of Regulation … No 73/2009 includes the use of eligible hectares for non-agricultural activities. A framework of criteria should be set for all Member States.’

Article 1(3) of Regulation No 370/2009 added an Article 3c to Regulation No 795/2004, worded as follows:

‘For the purposes of the application of Article 34(2)(a) of Regulation … No 73/2009, where an agricultural area of a holding is used as well for non-agricultural activities that area shall be considered as being used predominantly for agricultural activities, if the agricultural activity can be exercised without being significantly hampered by the intensity, nature, duration and timing of the non-agricultural activity.

Member States shall establish criteria for the implementation of the first subparagraph on their territory.’

Regulation No 370/2009 applied as from 1 January 2009, as provided for in Article 2 thereof.

Regulation No 796/2004

Under Article 2 of Regulation No 796/2004:

‘For the purpose of this Directive:

‘(1)

“Arable land” shall mean land cultivated for crop production and land under set-aside, or maintained in good agricultural and environmental condition …,

…

(2)

“Permanent pasture” shall mean land used to grow grasses or other herbaceous forage naturally (self-seeded) or through cultivation (sown) and that is not included in the crop rotation of the holding for five years or longer,

…’

Article 12 of that regulation provided:

‘1. The single application shall contain all information necessary to establish eligibility for the aid, in particular:

…

(d)

particulars permitting identification of all agricultural parcels on the holding, their area expressed in hectares to two decimal places, their location and, where applicable, their use and whether the agricultural parcel is irrigated,

...

(f)

a statement by the farmer that he is aware of the conditions pertaining to the aid in question

…

4. When submitting the application form, the farmer shall correct the pre-printed form referred to in paragraphs 2 and 3 if any amendments, in particular transfers of payment entitlements in accordance with Article 46 of Regulation … No 1782/2003, have occurred or if any of the information contained in the pre-printed forms is incorrect.

…’

Article 24 of Regulation No 796/2004 stated:

‘1. The administrative checks referred to in Article 23 of Regulation … No 1782/2003 shall permit the detection of irregularities, in particular the automated detection using computerised means, including cross-checks:

…

(c)

between the agricultural parcels as declared in the single application and the reference parcels as contained in the identification system for agricultural parcels to verify the eligibility for aid of the areas as such,

…’

Article 73 of that regulation stated:

‘1. If undue payment is made, the farmer shall repay the amount in question plus interest calculated in accordance with paragraph 3.

…

4. The repayment obligation referred to in paragraph 1 shall not apply if the payment was made by error of the competent authority or of another authority and if the error could not reasonably have been detected by the farmer.

However, where the error relates to factual elements relevant for the calculation of the payment concerned, the first subparagraph shall only apply if the decision to recover was not communicated within 12 months of the payment.

5. The repayment obligation referred to in paragraph 1 shall not apply if the period which elapsed between the date of the payment of the aid and that of the first notification to the beneficiary by the competent authority concerning the undue nature of the payment concerned is more than ten years.

However, the period referred to in the first subparagraph shall be limited to four years if the beneficiary acted in good faith.

…’

Article 73a of Regulation No 796/2004 provided:

‘1. Where, after payment entitlements have been allocated to farmers in accordance with Regulation … No 795/2004, it is established that certain payment entitlements have been allocated unduly, the farmer concerned shall give up the unduly allocated entitlements to the national reserve referred to in Article 42 of Regulation … No 1782/2003.

…

The entitlements allocated unduly shall be deemed not to have been allocated ab initio.

…

4. Undue amounts paid shall be recovered in accordance with Article 73.’

Danish law

It is apparent from the order for reference that in Denmark the requirements relating to airfield safety areas are laid down by the Trafikstyrelsen (Danish Transport Authority) through the ‘Civil Aviation Rules’ (Bestemmelser for Civil Luftfart, ‘BL’).

An airfield safety area (strip) is defined therein as an area where the aim is to reduce the risk of damage to taxiing aircraft should an aircraft veer off the runway, and to protect aircraft flying in that area on take-off and landing.

According to the referring court, the rules concerning the cultivation of safety areas is governed by the rules on civil aviation found in BL 3-16 of 31 January 2005 on measures to reduce the risk of collision between aircraft and birds or mammals at airfields, which provide inter alia:

‘5.2.2.

Parcels of land without hard surfacing, situated within the territory of the airfield up to the runway(s) and out to a distance of up to 150 m from the airfield boundaries:

(a)

The land shall be laid to grass …

…

5.2.3.

Parcels of land without hard surfacing, situated within the territory of the airfield at a distance of between 150 m and 300 m from the boundaries of the runway(s):

(a)

The land shall be laid to grass, except where the natural vegetation, for example in the form of heather, helps sufficiently to render the land unattractive for birds/mammals.

(b)

The land may be used for the cultivation of crops only after consultation with the adviser. The cultivation of all-year seed is not permitted. …

5.2.4.

Parcels of land without hard-surfacing, situated within the territory of the airfield at a distance of over 300 m from the boundaries of the runway(s), may be used for agriculture only after consultation with the adviser.

…

6.4.1.

In connection with the cultivation of the land, the following rules shall apply:

(a)

The grass must permanently be maintained at a height of at most 20 cm on the runway(s) and taxiway(s) without gravel or hard surfacing …

(b)

Outside the areas referred to in point (a) but within the areas covered by Paragraph 5.2.2, efforts must permanently be made to keep the grass at a height no lower than 20 cm and no higher than 40 cm …

…’

The dispute in the main proceedings and the questions referred for a preliminary ruling

On 21 December 1999 and 10 May 2000, Mr Demmer entered into agreements with Aalborg Airport (Aalborg Lufthavn) and Skrydstrup Air Base (Flyvestation Skrydstrup), respectively, for the lease of areas situated within the enclosures of the airport and the air base.

Under those agreements and subject to their terms, Mr Demmer, as lessee, obtained the right to cut and use the grass from the areas in question.

Under the lease agreement between Mr Demmer and Aalborg Airport, Mr Demmer was to inform the lessor when access to the leased land was sought. The same paragraph also granted the Danish Armed Forces unlimited rights to use, or to let others use, the leased land to hold military exercises of any kind.

That agreement further provided that fertilisation was to commence no earlier than April and that it had to be possible to stop any spreading immediately where continued spreading was considered to pose a risk to flight safety.

The lessee was further required to mow the grass before it became so high that it would, in the judgment of the local military authority, significantly impede military exercises.

Lastly, that agreement stipulated that, as from 1 January 2005, the lessee was required to use the land so as to establish a right to allocation of payment entitlements.

The agreement concluded with Skrydstrup Air Base stipulated that grass maintenance was to include the spreading of fertiliser and the mowing and rolling of the grass.

Mr Demmer was required inter alia to mow to a height of 15 centimetres along the runways and taxiways using implements which allow mowing as close as possible to the fittings. Mowing was to be carried out as required, at the request of the Air Traffic Control Service and, at the time of the final mowing in October/November, the grass was to be cut completely.

Regarding areas around the runway land, mowing was to be done as required, the first time in the period from 1 May to 15 July, with possible additional mowing as requested by the Air Traffic Control Service.

A request from the lessor for mowing of the runway and runway land was to be made with five working days’ notice. The grass mowing was to commence on the requested date and thereafter continue until completion of the work, with the cut grass to be removed immediately after mowing.

Moreover, rolling, which was to take place every spring and otherwise at the request of the Air Traffic Control Service, was to be carried out 30 metres each side of the main and parallel runways.

Mr Demmer was permitted to spread fertiliser as necessary with a view to using the cut grass, but not earlier than the end of March. The use of pesticides on the leased land was not permitted, however.