Contents
Judgment of the Court (Eighth Chamber)4 July 2024note(Reference for a preliminary ruling — Direct payments to farmers under support schemes within the framework of the common agricultural policy — Financing, management and monitoring of the common agricultural policy — Permanent public grassland — Conditions for access to direct payments for farmers — Animals must belong to the farmers’ own agricultural holding)In Case C‑708/22,REQUEST for a preliminary ruling under Article 267 TFEU from the Tribunal Supremo (Supreme Court, Spain), made by decision of 21 October 2022, received at the Court on 16 November 2022, in the proceedingsAsociación Española de Productores de Vacuno de Carne – AsoprovacvAdministración General del Estado,THE COURT (Eighth Chamber),composed of N. Piçarra, President of the Chamber, N. Jääskinen and M. Gavalec (Rapporteur), Judges,Advocate General: J. Kokott,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:– Asociación Española de Productores de Vacuno de Carne – Asoprovac, by M.J. Marcén Castán, J.C. Martín Aranda, abogados, and J.M. Rico Maesso, procurador,– the Spanish Government, by L. Aguilera Ruiz, acting as Agent,– the European Commission, by A.C. Becker, C. Calvo Langdon and E. Sanfrutos Cano, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following
Judgment
1This request for a preliminary ruling concerns the interpretation of Article 4 and Article 32(2) of Regulation (EU) No 1307/2013 of the European Parliament and of the Council of 17 December 2013 establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy and repealing Council Regulation (EC) No 637/2008 and Council Regulation (EC) No 73/2009 (OJ 2013 L 347, p. 608) and of Article 60 of Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008 (OJ 2013 L 347, p. 549).
2The request has been made in proceedings between, on the one hand, Asociación Española de Productores de Vacuno de Carne – Asoprovac, a Spanish association of beef cattle producers and, on the other hand, the Administración General del Estado (General State Administration, Spain) concerning the legality of a royal decree establishing that permanent public common grassland must be grazed by animals belonging to the holding owned by the farmer applying for financial support under the single area payment scheme.
Legal context
European Union law
Regulation No 1306/2013
3Under the heading ‘Protection of the financial interests of the Union’, Article 58 of Regulation No 1306/2013, repealed by Regulation (EU) 2021/2116 of the European Parliament and of the Council of 2 December 2021 on the financing, management and monitoring of the common agricultural policy and repealing Regulation (EU) No 1306/2013 (OJ 2021 L 435, p. 187), but applicable ratione temporis to the dispute in the main proceedings, provided, in paragraph 1 thereof:‘Member States shall, within the framework of the [common agricultural policy (CAP)], adopt all legislative, regulatory and administrative provisions and take any other measures necessary to ensure effective protection of the financial interests of the Union, in particular to:(a) check the legality and regularity of operations financed by the Funds;(b) ensure effective prevention against fraud, especially in areas with a higher level of risk, and which will act as a deterrent, having regard to the costs and benefits as well as the proportionality of the measures;(c) prevent, detect and correct irregularities and fraud;(d) impose penalties which are effective, dissuasive and proportionate in accordance with Union law, or failing this, national law, and bring legal proceedings to that effect, as necessary;(e) recover undue payments plus interest, and bring legal proceedings to that effect as necessary.’
4Article 60 of that regulation, entitled ‘Circumvention clause’, stated:‘Without prejudice to specific provisions, no advantage provided for under sectoral agricultural legislation shall be granted in favour of a natural or legal person in respect of whom it is established that the conditions required for obtaining such advantages were created artificially, contrary to the objectives of that legislation.’
Regulation No 1307/2013
5Under the heading ‘Definitions and related provisions’, Article 4 of Regulation No 1307/2013, repealed by Regulation (EU) 2021/2115 of the European Parliament and of the Council of 2 December 2021 establishing rules on support for strategic plans to be drawn up by Member States under the common agricultural policy (CAP Strategic Plans) and financed by the European Agricultural Guarantee Fund (EAGF) and by the European Agricultural Fund for Rural Development (EAFRD) and repealing Regulations (EU) No 1305/2013 and (EU) No 1307/2013 (OJ 2021 L 435, p. 1), but applicable ratione temporis to the dispute in the main proceedings, provided:1.For the purposes of this Regulation, the following definitions shall apply:…(b) “holding” means all the units used for agricultural activities and managed by a farmer situated within the territory of the same Member State;(c) “agricultural activity” means:(i) production, rearing or growing of agricultural products, including harvesting, milking, breeding animals, and keeping animals for farming purposes,(ii) maintaining an agricultural area in a state which makes it suitable for grazing or cultivation without preparatory action going beyond usual agricultural methods and machineries, based on criteria established by Member States on the basis of a framework established by the [European] Commission, or(iii) carrying out a minimum activity, defined by Member States, on agricultural areas naturally kept in a state suitable for grazing or cultivation;…(e) “agricultural area” means any area taken up by arable land, permanent grassland and permanent pasture, or permanent crops;…2.Member States shall:(a) establish criteria to be met by farmers in order to fulfil the obligation to maintain an agricultural area in a state suitable for grazing or cultivation, as referred to in point (c)(ii) of paragraph 1;(b) where applicable in a Member State, define the minimum activity to be carried out on agricultural areas naturally kept in a state suitable for grazing or cultivation, as referred to in point (c)(iii) of paragraph 1;…3.In order to ensure legal certainty, the Commission shall be empowered to adopt delegated acts … establishing:(a) the framework within which Member States are to establish the criteria to be met by farmers in order to fulfil the obligation to maintain an agricultural area in a state suitable for grazing or cultivation, as referred to in point (c)(ii) of paragraph 1;…’
6Article 32(1) to (2) of that regulation, that article being entitled ‘Activation of payment entitlements’, state:1. Support under the basic payment scheme shall be granted to farmers, by means of declaration in accordance with Article 33(1), upon activation of a payment entitlement per eligible hectare in the Member State where it has been allocated. …2.For the purposes of this Title, “eligible hectare” means:(a) any agricultural area of the holding, including areas that were not in good agricultural condition on 30 June 2003 in Member States acceding to the Union on 1 May 2004 that opted upon accession to apply the single area payment scheme, that is used for an agricultural activity or, where the area is also used for non-agricultural activities, is predominantly used for agricultural activities; ……’
Delegated Regulation (EU) No 639/2014
7Recital 4 of Commission Delegated Regulation (EU) No 639/2014 of 11 March 2014 supplementing Regulation (EU) No 1307/2013 of the European Parliament and of the Council establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy and amending Annex X to that Regulation (OJ 2014 L 181, p. 1), repealed by Commission Delegated Regulation (EU) 2022/2529 of 17 October 2022 (OJ 2022 L 328, p. 74), but applicable ratione temporis to the dispute in the main proceedings, was worded as follows:‘In line with the case-law of the Court of Justice of the European Union, it is appropriate to clarify that Member States, when adopting measures to implement Union law, should exercise their discretion in compliance with certain principles, including in particular the principle of non-discrimination.’
8Article 4 of that delegated regulation, which is entitled ‘Framework for criteria on maintaining the agricultural area in a state suitable for grazing or cultivation’, provides:1.For the purposes of the point (ii) of Article 4(1)(c) of Regulation (EU) No 1307/2013, the criteria that farmers are to meet in order to fulfil the obligation to maintain the agricultural area in a state suitable for grazing or cultivation without preparatory action going beyond usual agricultural methods and machineries shall be established by Member States in either or both of the following ways:(a) Member States require at least one annual activity to be carried out by a farmer. Where justified for environmental reasons, Member States may decide to recognise also activities that are carried out only every second year;(b) Member States set out the characteristics to be met by an agricultural area in order to be deemed maintained in a state suitable for grazing or cultivation.2. When establishing criteria referred to in paragraph 1, Member States may distinguish between different types of agricultural areas.’
Spanish law
9Article 11(2) and (3) of Real Decreto 1075/2014, sobre la aplicación a partir de 2015 de los pagos directos a la agricultura y a la ganadería y otros regímenes de ayuda, así como sobre la gestión y control de los pagos directos y de los pagos al desarrollo rural (Royal Decree 1075/2014 on the application from 2015 of direct payments to agriculture, livestock farming and other support schemes and on the management and control of direct payments and payments for rural development) of 19 December 2014 (BOE No 307 of 20 December 2014, p. 103644), as amended by Real Decreto 41/2021, por el que se establecen las disposiciones específicas para la aplicación en los años 2021 y 2022 de los Reales Decretos 1075/2014, 1076/2014, 1077/2014 y 1078/2014, todos ellos de 19 de diciembre, dictados para la aplicación en España de la Política Agrícola Común (Royal Decree 41/2021 laying down specific provisions for the application in 2021 and 2022 of Royal Decrees 1075/2014, 1076/2014, 1077/2014 and 1078/2014 of 19 December 2014, enacted for the application of the common agricultural policy in Spain) of 26 January 2021 (BOE No 23 of 27 January 2021, p. 7955), provided:(2) For each plot or enclosure, the applicant shall indicate in his aid or her application the intended crop or use or, where appropriate, indicate that the enclosure is subject to maintenance work. The application shall explicitly state whether the grassland enclosures are to be used for production based on grazing or, in the case of pasture, based on grazing or mowing, or whether they are to be used solely for maintenance based on the activities referred to in Annex IV.In the case of permanent public common grassland, only production based on grazing by animals belonging to the applicant’s own holding shall be authorised, with the exception of (i) animals belonging to the authority which owns that pasture, (ii) animals belonging to market intermediaries, and (iii) animals belonging to livestock farmers who do not certify having used the pasture, as the case may be, in accordance with the conditions under which the beneficiaries of that pasture were granted its use on a municipal basis, or in accordance with the conditions, duly attested in the relevant instrument, to which the use of that pasture was subject as a private or public property. In certain circumstances, the competent authorities of the autonomous communities may also authorise production based on the mowing of public common pasture, provided that it is established that such mowing is for the use of the aid applicant who owns the holding as part of the agricultural activity actually carried out by that applicant. The maintenance activities listed in Annex IV are not permitted under any circumstances.3. The applicant shall indicate explicitly and accurately in the application that the declared crops, uses and maintenance activities are a true and accurate reflection of the applicant’s agricultural activity. Where administrative, on-the-spot or follow-up checks by the competent authority reveal that the crops or the activities consisting in the use or maintenance of the areas have not been carried out and that the declarations are false, inaccurate or negligent and that irregularity has also affected compliance with the requirements relating to the agricultural activity on the areas concerned, the competent authority may consider the aid eligibility conditions to have been artificially created and the aid shall be subject to the penalty system referred to in Article 102.’
The dispute in the main proceedings and the questions referred for a preliminary ruling
10Asoprovac brought an action before the Tribunal Supremo (Supreme Court, Spain) seeking the annulment of the fifth paragraph of the first final provision of Royal Decree 41/2021, which amends Article 11(2) and (3) of Royal Decree 1075/2014.
11In support of its action, that association claimed, inter alia, that the requirement that the animals grazing on the permanent public common pasture must be from the aid applicant’s holding is new and that it infringes Regulation No 1307/2013 and Regulation No 1306/2013.
12In the first place, Article 11(2) and (3) of Royal Decree 1075/2014, as amended by Royal Decree 41/2021, infringes Articles 4 and 32 of Regulation No 1307/2013 and Article 4 of Delegated Regulation No 639/2014 on the ground that the Spanish State lays down conditions of eligibility for direct-area aid in addition to those laid down in EU legislation.
13In the second place, that national legislation infringes Article 60 of Regulation No 1306/2013 and the Court’s case-law on the artificial creation of conditions for access to aid, since it establishes an irrebuttable presumption of fraud and excludes farmers engaged in intensive cattle rearing from benefiting from that aid.
14In the third place, that national legislation discriminates between farmers engaged in intensive cattle rearing in two ways. First, it discriminates between farmers from Spain and farmers from other Member States of the European Union and, second, it discriminates between Spanish farmers themselves, depending on whether they graze their cattle on permanent public common pasture or on private pasture.
15In those circumstances, the Tribunal Supremo (Supreme Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:(1) Are Articles 4 and 32(2) of [Regulation No 1307/2013] and Article 60 of [Regulation No 1306/2013] to be interpreted as precluding a national provision like [(Royal Decree 41/2021)] which, in order to prevent the creation of artificial conditions in relation to the grant of a concession of permanent public common pastureland to beneficiaries who do not use that pastureland, provides that grazing activity is to be permitted only if it is carried out with animals belonging to the holding?(2) Is Article 60 of [Regulation No 1306/2013], relating to the creation of artificial conditions for obtaining support, to be interpreted as precluding a national provision like Royal Decree 41/2021, which establishes a presumption that the conditions for access to support were artificially created in cases where the agricultural activity of grazing on permanent public common pastureland is carried out with animals which do not belong to the aid applicant’s own holding?(3) Is Article 4(1)(c) of [Regulation No 1307/2013] to be interpreted as precluding a national provision like [Royal Decree 1075/2014] …, pursuant to which the grazing of agricultural areas may not be classified as the maintenance of those areas in a state suitable for grazing?(4) Is Article 4(1)(c) of [Regulation No 1307/2013] to be interpreted as precluding a national provision like Royal Decree 1075/2014 …, pursuant to which persons who merely hold a non-exclusive grazing right over farmland that is not owned by them, and who assign that right to a third party so that the latter may use [grassland] to graze livestock, do not carry out an agricultural activity as provided for in Article 4(1)(c)(i)?(5) Is Article 4(1)(b) and (c) of [Regulation No 1307/2013] to be interpreted as precluding a national provision like Royal Decree 1075/2014 …, pursuant to which persons who merely hold a non-exclusive grazing right over common farmland which is not owned by them cannot be treated as managers of the pastureland to which that grazing right applies for the purposes of carrying out the maintenance of those agricultural areas in a state suitable for grazing?’
Consideration of the questions referred
The first question
16By its first question, the referring court asks, in essence, whether Article 4 and Article 32(2) of Regulation No 1307/2013 must be interpreted as precluding national legislation which, in order to avoid the artificial creation of conditions for obtaining aid in relation to the grant of a concession on permanent public common pasture to farmers who do not use that pasture, requires that the activity of grazing on that pasture be carried out by animals belonging to the holding of the farmer who applies for the aid.
17In accordance with Article 32(1) of Regulation No 1307/2013, support under the basic payment scheme is to be granted to farmers, by means of declaration in accordance with Article 33(1) of that regulation, upon activation of a payment entitlement per ‘eligible hectare’ in the Member State where it has been allocated.
18The concept of ‘eligible hectare’, which is defined in Article 32(2) of that regulation, covers, in essence, any agricultural area of the holding that is used for an agricultural activity. It follows that, in order to be able to be submitted in support of an application for financial support under the direct payment scheme provided for by EU law, a hectare must satisfy three conditions, namely it must constitute an agricultural area, an agricultural activity must be carried out on that area, and that area must be allocated to a holding.
19In that regard, it should be noted first of all that the concept of ‘agricultural area’ is defined in Article 4(1)(e) of that regulation as any area taken up by arable land, permanent grassland and permanent pasture, or permanent crops.
20Next, Article 4(1)(c) of Regulation No 1307/2013 defines the concept of ‘agricultural activity’ as covering, in essence, three types of activity, namely (i) production, rearing or growing of agricultural products, including harvesting, milking, breeding animals, and keeping animals for farming purposes, (ii) maintaining an agricultural area in a state which makes it suitable for grazing or cultivation without preparatory action going beyond usual agricultural methods, based on criteria established by Member States, and (iii) carrying out a minimum activity on agricultural areas naturally kept in a state suitable for grazing.
21Thus, where the farmer does not carry out any of the three activities referred to in Article 4(1)(c) of Regulation No 1307/2013 on the declared agricultural area, or carries out only a negligible activity on that area, he or she cannot be regarded as carrying out an agricultural activity on it.
22However, that article is silent as to whether that agricultural activity must be carried out by the farmer who applies for the aid himself or herself or whether that activity may be carried out by a third party in the context of a transfer of a non-exclusive right of grazing on a permanent public common pasture.
23Finally, the concept of ‘holding’ is defined in Article 4(1)(b) of Regulation No 1307/2013 as consisting of all the units used for agricultural activities and managed by a farmer situated within the territory of the same Member State.
24The Court has thus held that production units managed by a farmer include not only agricultural land, but also animals used for grazing, provided that the farmer has sufficient control over those animals for the purposes of carrying out his or her agricultural activity, that being a matter for the competent national court to assess, taking into account all the circumstances of the case before it (see, to that effect, judgment of 7 April 2022, Avio Lucos, C‑176/20, EU:C:2022:274, paragraph 36).
25The concept of management does not imply that the farmer has unlimited control over the area in question, or animals in question when using those animals for agricultural purposes, but presupposes the existence of sufficient autonomy on the part of that farmer for the purposes of carrying out his or her agricultural activity (see, to that effect, judgments of 14 October 2010, Landkreis Bad Dürkheim, C‑61/09, EU:C:2010:606, paragraphs 61 and 62, and of 7 April 2022, Avio Lucos, C‑116/20, EU:C:2022:273, paragraph 49).
26The farmer must therefore be able to exercise a certain degree of decision-making power when using the area concerned for the purposes of his or her agricultural activity (judgment of 7 April 2022, Avio Lucos, C‑116/20, EU:C:2022:273, paragraph 50 and the case-law cited).
27Therefore, in order to be eligible under the direct payment scheme laid down in Article 32 of Regulation No 1307/2013, the farmer must have some decision-making power over the agricultural area which he or she declares in support of his or her application as to the use of the area concerned for the purposes of carrying out his or her agricultural activity. In that context, the mere transfer to a third-party breeder of a non-exclusive right of grazing on a permanent public common pasture, by which the farmer who applies for the aid does not maintain any decision-making power over the activity carried out on that pasture by the animals of a third-party breeder, cannot be regarded, as such, as an ‘agricultural activity’ within the meaning of Article 4(1)(c) of that regulation.
28In the present case, it follows from the first subparagraph of Article 11(2) of Royal Decree 1075/2014, as amended by Royal Decree 41/2021, that the applicant is to declare in his or her aid application the intended use for the declared enclosure or plot, that is to say, more specifically, in the case of grassland, the use of grazing. The second subparagraph of that provision provides, in essence, that, in the case of permanent public common pasture, in principle, only production based on the activity of grazing by animals belonging to the applicant’s own holding is to be authorised.
29By requiring that the activity of grazing be carried out by animals belonging to the applicant’s own holding, it does not appear that the Spanish authorities have established additional eligibility conditions in relation to those laid down in Article 32(2) of Regulation No 1307/2013, as set out in paragraph 18 above. On the contrary, that requirement appears to fall within the definition of a holding, since that national legislation merely recalls that the applicant must have sufficient control over those animals for the purposes of carrying out his or her agricultural activity, without, however, requiring him or her to hold a right of ownership over those animals.
30That said, it must be observed that, in view of the discretion which they enjoy with respect to support schemes under the CAP, Member States must, as is apparent from the Court’s case-law, exercise that discretion in accordance with the objectives pursued by EU legislation and the general principles of EU law, in particular the principle of proportionality, which requires that measures implemented through provisions must be appropriate for attaining the objective pursued and must not go beyond what is necessary to achieve it (see, to that effect, judgment of 7 April 2022, Avio Lucos, C‑176/20, EU:C:2022:274, paragraphs 40 and 42).
31In that regard, although it is for the referring court to ascertain whether that principle has been complied with in the context of the national legislation at issue in the main proceedings, it should be noted that, as is apparent both from the information provided by the referring court and from the observations of the Spanish Government and the Commission, that requirement was imposed in order, first, to combat abusive practices and fraud and, second, to ensure a fair standard of living for the agricultural community. In view of the very nature of the pasture in question, namely the often mountainous areas on which animals belonging to different holdings can graze and move freely, it is particularly difficult to ensure not only that grazing is effective but above all to determine which farmers actually carry out the agricultural activity of grazing on that permanent public common pasture.
32In the present case, those two objectives correspond to those pursued by EU legislation. First, Article 39(1)(b) TFEU states that the support schemes under the CAP provide for direct income support, which is intended to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture.
33Second, as the Spanish Government and the Commission noted in their written observations, that national legislation was adopted in order to implement Article 58(1) of Regulation No 1306/2013, which authorises the Member States to adopt the legislative, regulatory and administrative measures necessary to ensure effective protection of the financial interests of the Union and, more specifically, to ensure the legality and regularity of operations financed by the EU Funds, as well as to ensure effective prevention against fraud, especially in areas with a higher level of risk.
34As regards the suitability of the national legislation at issue in the main proceedings in achieving such objectives, it is sufficient to note, subject to the verifications which it is for the referring court to carry out, that that legislation appears appropriate for achieving them, since it seeks, as is apparent from paragraph 31 above, to ensure that the agricultural activity of grazing is actually carried out on that permanent public common pasture.
35The requirement referred to in paragraph 29 above also does not appear to go beyond what is necessary to achieve those objectives, which it is for the referring court to ascertain, since it merely requires the agricultural activity of grazing on that permanent public common pasture to be carried out by animals belonging to the applicant’s own holding, without, however, requiring the applicant to have a right of ownership over those animals.
36In the light of the foregoing reasons, the answer to the first question is that Article 4 and Article 32(2) of Regulation No 1307/2013 must be interpreted as not precluding national legislation which, in order to avoid artificially creating conditions for obtaining aid in relation to the grant of a concession on permanent public common pasture to farmers who do not use that pasture, requires that the activity of grazing on that pasture be carried out by animals belonging to the holding of the farmer who applies for the aid.
The second question
37By its second question, the referring court asks, in essence, whether Article 60 of Regulation No 1306/2013 must be interpreted as precluding national legislation which, in order to avoid artificially creating conditions for obtaining aid in relation to the grant of a concession on permanent public common pasture to farmers who do not use that pasture, requires that the activity of grazing on that pasture be carried out by animals belonging to the holding of the farmer who applies for the aid.
38Under Article 60 of that regulation, without prejudice to specific provisions, no advantage provided for under sectoral agricultural legislation is to be granted in favour of a natural or legal person in respect of whom it is established that the conditions required for obtaining such advantages were created artificially, contrary to the objectives of that legislation.
39In the light of that wording, Article 60 of the regulation essentially repeats the earlier provisions, which codify existing case-law according to which it is not possible to rely on EU law fraudulently or abusively (see, to that effect, judgments of 7 April 2022, Avio Lucos, C‑176/20, EU:C:2022:274, paragraph 68, and of 9 February 2023, Druvnieks, C‑668/21, EU:C:2023:82, paragraph 31).
40It is settled case-law that the scope of EU regulations must not be extended to cover abusive practices on the part of a trader (judgment of 7 April 2022, Avio Lucos, C‑176/20, EU:C:2022:274, paragraph 69 and the case-law cited).
41The Court has ruled that evidence of an abusive practice on the part of the potential beneficiary of support requires, first, a combination of objective circumstances in which, despite formal observance of the conditions laid down by the relevant rules, the purpose of those rules has not been achieved, and, second, a subjective element consisting in the intention to obtain an advantage from the EU rules by creating artificially the conditions laid down for obtaining it (judgment of 7 April 2022, Avio Lucos, C‑176/20, EU:C:2022:274, paragraph 70 and the case-law cited).
42Furthermore, it is for the national court to establish the existence of those two elements, evidence of which must be adduced in accordance with the rules of national law, provided that the effectiveness of EU law is not thereby undermined (judgment of 7 April 2022, Avio Lucos, C‑176/20, EU:C:2022:274, paragraph 71 and the case-law cited).
43It follows that national legislation which lays down, generally and independently of any analysis of the specific circumstances, a presumption that the conditions for access to support are artificially created in cases where the agricultural activity of grazing on permanent public common pasture is carried out with animals which do not belong to the aid applicant’s own holding is contrary to Article 60 of Regulation No 1306/2013.
44In the present case, subject to verification by the referring court, the national legislation at issue in the main proceedings does not establish a presumption that the conditions for access to the support referred to in Article 60 have been artificially created.
45As is apparent from the order for reference, the first subparagraph of Article 11(2) of Royal Decree 1075/2014, as amended by Royal Decree 41/2021, provides, in essence, that the applicant is to declare in his or her aid application the intended use for the declared enclosure or plot, that is to say, more specifically, in the case of grassland, the use of grazing. The second subparagraph of Article 11(2) of that royal decree provides, in essence, that, in the case of permanent public common pasture, in principle, only production based on the activity of grazing by animals belonging to the applicant’s own holding is to be authorised. Article 11(3) leaves it to the competent administrative authority to assess, in specific circumstances, whether a declaration is false, inaccurate or negligent, and whether that irregularity has affected compliance with the requirements relating to the agricultural activity on the areas concerned, so that it may consider that the aid eligibility conditions have been artificially created.
46As has been recalled in paragraph 33 above, that legislation was adopted in the context of the implementation of Article 58(1) of Regulation 1306/2013, which authorises the Member States to adopt, within the framework of the CAP, the legislative, regulatory and administrative measures necessary to ensure effective protection of the financial interests of the Union, and, more particularly, to ensure the legality and regularity of operations financed by the Funds, as well as to ensure effective prevention against fraud, especially in areas with a higher level of risk.
47In the light of the foregoing reasons, the answer to the second question is that Article 60 of Regulation No 1306/2013 must be interpreted as not precluding national legislation which, in order to avoid artificially creating conditions for obtaining aid in relation to the grant of a concession on permanent public common pasture to farmers who do not use that pasture, requires that the activity of grazing on that pasture be carried out by animals belonging to the holding of the farmer who applies for the aid.
The third question
48By its third question, the referring court asks, in essence, whether Article 4(1)(c) of Regulation No 1307/2013 must be interpreted as precluding national legislation which excludes the activity of grazing on permanent public common pasture from being classified as the activity of maintaining those areas in a state suitable for grazing.
49In that regard, it should be noted that the referring court raises the question in the light of point (ii) of that provision, which provides, in essence, that the concept of ‘agricultural activity’ covers the maintenance of an agricultural area in a state which makes it suitable for grazing without preparatory action going beyond usual agricultural methods based on criteria established by Member States on the basis of a framework established by the Commission.
50Article 4(1)(c)(ii) of Regulation No 1307/2013 must be read in conjunction with Article 4(2)(a) of that regulation, which states that Member States are to establish the criteria that farmers are to meet in order to fulfil the obligation to maintain the agricultural area in a state suitable for grazing or cultivation.
51Since the activity of maintenance is not defined in those provisions or in any other provision of that regulation, the Member States enjoy a margin of discretion in establishing the criteria relating to the maintenance of an agricultural area in a state suitable for grazing.
52As for the question whether that margin of discretion includes the possibility, for a Member State, to exclude, in its national legislation, the activity of grazing on agricultural areas as an activity of maintaining those areas in a state suitable for grazing, it should also be noted that Article 4(3)(a) of Regulation No 1307/2013 provides that, in order to ensure legal certainty, the Commission is empowered to adopt delegated acts in order to establish the framework within which Member States must establish the criteria that farmers are to meet in order to fulfil the obligation to maintain the agricultural area in a state suitable for grazing.
53Delegated Regulation No 639/2014, which was adopted for that purpose, while stating, in recital 4 thereof, that Member States, when adopting measures to implement EU law, should exercise their discretion in compliance, inter alia, with the principle of non-discrimination, is limited in providing, in Article 4(1) thereof, that Member States are to establish the criteria that farmers are to meet in order to fulfil the obligation to maintain the agricultural area in a state suitable for grazing or cultivation, without preparatory action going beyond usual agricultural practices or machineries, in either or both of the following ways: namely, in essence, by requiring the farmer to carry out at least one annual activity and/or by setting out the characteristics to be met by an agricultural area in order to be deemed maintained in a state suitable for grazing or cultivation. Paragraph 2 of that article provides that, when defining those criteria, Member States may distinguish between different types of agricultural areas.
54It follows that, although the activity of maintenance must, in principle, be carried out by the farmer on a given agricultural area at least once a year, Article 4 of Delegated Regulation No 639/2014 does not prohibit a Member State from excluding the activity of grazing on a permanent public common pasture from being classified as an activity of maintaining those areas in a state suitable for grazing.
55That interpretation is consistent with the objective recalled in paragraph 33 above of protecting the financial interests of the European Union by combating irregularities and fraud. In view of the very nature of the pasture in question, referred to in paragraph 31 above, namely the often mountainous areas on which animals belonging to different holdings can graze and move freely, it is particularly difficult, if not impossible, to verify on the same permanent public common pasture which farmers actually carry out the agricultural activity of grazing and which carry out the maintenance of those areas in a state suitable for grazing, since those two activities are essentially identical.
56In the light of the foregoing reasons, Article 4(1)(c)(ii) of Regulation No 1307/2013 must be interpreted as not precluding national legislation which excludes the activity of grazing on permanent public common pasture from being classified as an activity of maintaining those areas in a state suitable for grazing.
The fourth and fifth questions
57By its fourth and fifth questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 4(1)(b) and (c) of Regulation No 1307/2013 must be interpreted as precluding national legislation under which a person who merely holds a non-exclusive grazing right over permanent public common pasture and who assigns that right to a third-party breeder in order for that breeder to carry out the activity of grazing by means of his or her own animals, does not carry out an agricultural activity within the meaning of Article 4(1)(c)(i) of that regulation and cannot be regarded as managing that grassland for the purpose of carrying out an activity of maintaining that area in a state suitable for grazing, within the meaning of Article 4(1)(c)(ii) of that regulation.
58In the first place, under Article 4(1)(c)(i) of Regulation No 1307/2013, the concept of ‘agricultural activity’ covers the production, rearing or growing of agricultural products including milking, breeding animals and keeping animals for farming purposes.
59It follows that that provision does not expressly exclude from the concept of ‘agricultural activity’ the transfer of a non-exclusive right of grazing over permanent public common pasture to a third-party breeder in order for that farmer to carry out the activity of grazing by means of his or her own animals.
60However, and as has been pointed out in paragraph 27 above, in order to be eligible under the direct payment scheme laid down in Article 32 of Regulation No 1307/2013, the farmer must have some decision-making power over the agricultural area which he or she declares in support of his or her application as to the use of the area concerned for the purposes of carrying out his or her agricultural activity, which means that he or she has sufficient control and autonomy for the purposes of carrying out his or her agricultural activity.
61Therefore, the transfer to a third-party breeder of a non-exclusive right of grazing on a permanent public common pasture, by which the farmer who applies for the aid does not retain any decision-making power over the activity carried out on that pasture by the animals of a third-party breeder, cannot be regarded as an ‘agricultural activity’ within the meaning of Article 4(1)(c) of that regulation.
62In the second place, it is apparent from Article 4(1)(c)(ii) of Regulation No 1307/2013 that the concept of ‘agricultural activity’ covers the activity of maintaining an agricultural area in a state suitable for grazing on the basis of criteria established by Member States on the basis of a framework established by the Commission.
63However, that provision does not expressly exclude from the concept of ‘agricultural activity’ the transfer of a non-exclusive right of grazing over permanent public common pasture to a third-party breeder in order for that farmer to carry out the activity of grazing by means of his or her own animals.
64Nevertheless, and as noted in paragraph 18 above, grazing must be carried out as part of a holding, which means that the farmer transferring a right has sufficient control over the animals for the purposes of carrying out his or her agricultural activity.
65It does not appear from the information provided by the referring court that the transfer of a non-exclusive right to graze on that grassland is accompanied by provisions which maintain sufficient control of the farmer transferring that right over the activity of grazing and over the animals of the third-party breeder, allowing the court to examine whether that farmer carries out the activity of maintaining an agricultural area in a state suitable for grazing.
66In the light of the foregoing reasons, the answer to the fourth and fifth questions is that Article 4(1)(b) and (c) of Regulation No 1307/2013 must be interpreted as not precluding national legislation under which a person who merely holds a non-exclusive right to graze on permanent public common pasture and who assigns that right to a third-party breeder in order for that breeder to carry out the activity of grazing by means of his or her own animals does not carry out an agricultural activity within the meaning of Article 4(1)(c)(i) of that regulation and cannot be regarded as managing that grassland for the purpose of carrying out an activity of maintaining that area in a state suitable for grazing, within the meaning of Article 4(1)(c)(ii) of that regulation.
Costs
67Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
Operative part
On those grounds, the Court (Eighth Chamber) hereby rules:
1.Article 4 and Article 32(2) of Regulation (EU) No 1307/2013 of the European Parliament and of the Council of 17 December 2013 establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy and repealing Council Regulation (EC) No 637/2008 and Council Regulation (EC) No 73/2009must be interpreted as not precluding national legislation which, in order to avoid artificially creating conditions for obtaining aid in relation to the grant of a concession on permanent public common pasture to farmers who do not use that pasture, requires that the activity of grazing on that pasture be carried out by animals belonging to the holding of the farmer who applies for the aid.
2.Article 60 of Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008must be interpreted as not precluding national legislation which, in order to avoid artificially creating conditions for obtaining aid in relation to the grant of a concession on permanent public common pasture to farmers who do not use that pasture, requires that the activity of grazing on that pasture be carried out by animals belonging to the holding of the farmer who applies for the aid.
3.Article 4(1)(c)(ii) of Regulation No 1307/2013must be interpreted as not precluding national legislation which excludes the activity of grazing on permanent public common pasture from being classified as an activity of maintaining those areas in a state suitable for grazing.
4.Article 4(1)(b) and (c) of Regulation No 1307/2013must be interpreted as not precluding national legislation under which a person who merely holds a non-exclusive grazing right over permanent public common pasture and who assigns that right to a third-party breeder in order for that breeder to carry out the activity of grazing by means of his or her own animals does not carry out an agricultural activity within the meaning of Article 4(1)(c)(i) of that regulation and cannot be regarded as managing that grassland for the purpose of carrying out an activity of maintaining that area in a state suitable for grazing, within the meaning of Article 4(1)(c)(ii) of that regulation.
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