Court of Justice of the European Communities (including Court of First Instance Decisions)

JUDGMENT OF THE COURT (Third Chamber)
16 September 2004 (1)

v

THE COURT (Third Chamber),

after hearing the Opinion of the Advocate General at the sitting on 27 May 2004,

gives the following

Judgment

1. This reference for a preliminary ruling concerns the interpretation of Article 9 of Council Regulation (EEC) No 1765/92 of 30 June 1992 establishing a support system for producers of certain arable crops (OJ 1992 L 181, p. 12) and Article 7 of Council Regulation (EC) No 1251/1999 of 17 May 1999 establishing a support system for producers of certain arable crops (OJ 1999 L 160, p. 1).
2. The reference was made in the course of proceedings between Mr Gschoßmann, a farmer, and the Amt für Landwirtschaft und Flurneuordnung Süd (Office for Agriculture and Land Reorganisation South, -˜the Office-™) concerning a claim for repayment of compensatory payments.

Legal background
3. According to the second recital in the preamble to Regulation No 1765/92, the support system for producers of arable crops established by that regulation has the purpose of ensuring better market balances by approximating Community prices to the prices of the world market and compensating the loss of income caused by that alignment by a compensatory payment for producers.
4. Regulation No 1765/92 thus provides for the grant of compensatory payments for areas down to arable crops or subject to set-aside. Article 9 of the regulation, however, excludes certain land from those payments:
-˜Applications for the compensatory payment and for fulfilling the set-aside obligations may not be made in respect of land which was under permanent pasture, permanent crops, forest, or non-agricultural uses on 31 December 1991.-™
5. That regulation was implemented inter alia by Commission Regulation (EEC) No 2780/92 of 24 September 1992 on the conditions for the grant of compensatory payments under the support system for producers of certain arable crops (OJ 1992 L 281, p. 5).
6. Point II of Annex I to Regulation No 2780/92, as amended by Commission Regulation (EC) No 1959/94 of 27 July 1994 (OJ 1994 L 198, p. 93), defines permanent crops as follows:
-˜Non-rotational crops other than permanent pasture that occupy the ground for five years or longer and yield repeated harvests with the exception of the multi-annual arable crops referred to in Annex II.-™
7. Regulation No 2780/92 was replaced by Commission Regulation (EC) No 658/96 of 9 April 1996 (OJ 1996 L 91, p. 46). The definition of -˜permanent crops-™, which appears in point 2 of Annex I to the latter regulation, remained essentially the same however, namely:
-˜Non-rotational crops other than permanent pasture that occupy the ground for five years or longer and yield repeated harvests, with the exception of multi-annual crops.-™
8. Regulation No 1765/92 was replaced by Regulation No 1251/1999, the first paragraph of Article 7 of which provides as follows:
-˜Applications for payments may not be made in respect of land that on 31 December 1991 was under permanent pasture, permanent crops or trees or was used for non-agricultural purposes.-™
9. The detailed rules for the application of Regulation No 1251/1999 are contained in Commission Regulation (EC) No 2316/1999 of 22 October 1999 (OJ 1999 L 280, p. 43), which replaced Regulation No 658/96. The definition of -˜permanent crops-™ in point 2 of Annex I to Regulation No 2316/1999 corresponds to that in point 2 of Annex I to Regulation No 658/96, namely:
-˜Non-rotational crops other than permanent pasture that occupy the land for five years or longer and yield repeated harvests, with the exception of multiannual crops.-™

The main proceedings and the questions referred for a preliminary ruling
10. Mr Gschoßmann received compensatory payments from the Office for land which he formerly cultivated as fruit plantations with apple trees.
11. According to the order for reference, that land was divided into three categories:
- on the land in the first category, apple trees were still there on 31 December 1991 and were no longer sprayed with pesticides. The apples were not harvested in 1991. A decision had already been made to clear the land in question, and this was subsequently done;
- on the land in the second category, the trees had already been felled by the qualifying date, but had not been removed, which meant that the land could not be used. Only later were the trees cleared away;
- on the land in the third category, the trees had already been felled and removed, but the land had not yet been allocated to a new use.
12. By decision of 15 June 2001, the Office sought partial repayment of the compensatory payments, on the ground that the land in question fell within the exception laid down in Article 9 of Regulation No 1765/92 and Article 7 of Regulation No 1251/1999, in that on 31 December 1991 it -˜was under -¦ permanent crops -¦ or non-agricultural uses-™.
13. Since it was uncertain as to the scope of the Community provisions concerned, the Verwaltungsgericht Halle decided to stay the proceedings and refer the following questions to the Court for a preliminary ruling:
-˜1. Does being under permanent crops within the meaning of Article 9 of [Regulation No 1765/92] or Article 7 of [Regulation No 1251/1999] require that the plants on the land, in this case apple trees, are cultivated?
2. Is the land still under permanent crops if the owner or tenant does not use insecticides during the growing season and thereafter no longer harvests the trees?
3. If the answer to Question 2 is in the negative, does the land cease to be under permanent crops if the owner or tenant decides to fell the apple trees on it in the near future but does not then carry out that intention before the qualifying date? Is the answer different if before the qualifying date another undertaking is contracted to carry out the clearing?
4. If the answer to Question 3 is also in the negative, does the land cease to be under permanent crops if the owner or tenant has felled the trees, with no intention of planting new trees; in other words, in such a case is the deadline for clearing, 31 December 1991, also the relevant deadline for the purposes of the support system?
5. If the answer to Question 4 is also in the negative, does the land cease to be under permanent crops if it is cleared of the felled trees before the qualifying date to prepare it for use as arable land?
6. Should any of the above circumstances mean that the land ceases to be under permanent crops, the question arises whether, once it is no longer under permanent crops, the land is to be classified as being used for non-agricultural purposes on the qualifying date, within the meaning of either of the above regulations, and if so, is any of the aforesaid circumstances capable of causing it no longer to be so classified?-™

The questions referred for a preliminary ruling
Questions 1 and 2
14. By its first and second questions, which should be examined together, the national court asks whether Article 9 of Regulation No 1765/92 and Article 7 of Regulation No 1251/1999 must be interpreted as meaning that the exclusion of land under permanent crops from compensation payments requires that the land in question has been cultivated, and in particular that insecticides have been used during the growing period and harvests have been made.
15. As the Commission and the Advocate General, in point 16 et seq. of his Opinion, have observed, Article 9 of Regulation No 1765/92 and Article 7 of Regulation No 1251/1999 refer merely to the land being under permanent pasture, permanent crops, forest, or non-agricultural uses, without requiring it actually to be cultivated.
16. After all, permanent pasture and forest may be used as such without the land being cultivated. In those circumstances, in the absence of any contrary indication in the relevant Community provisions, it would be inconsistent to require land to be cultivated where it is under permanent crops but not where it is under permanent pasture or forest.
17. Moreover, a requirement that the land be cultivated would be difficult to reconcile with the Community legislature-™s concern, expressed in the 17th recital in the preamble to Regulation No 1765/92 and the 26th recital in the preamble to Regulation No 1251/1999, to exclude from compensatory payments land which was not cultivated immediately before the entry into force of the support system in question. To require land to be cultivated in order for it to be excluded from compensatory payments would have the consequence of making eligible land which was not sown with a crop before 31 December 1991 but was converted into arable land with the sole purpose of receiving those payments.
18. Since, to be excluded from receiving compensatory payments, it suffices that the land in question was under permanent crops, without necessarily being cultivated, a fortiori there is no requirement that insecticides must have been used or crops harvested.
19. The answer to Questions 1 and 2 must therefore be that Article 9 of Regulation No 1765/92 and Article 7 of Regulation No 1251/1999 must be interpreted as meaning that, for land under permanent crops to be excluded from compensatory payments, there is no requirement that the land has been cultivated, and in particular that insecticides have been used or crops harvested.
Questions 3, 4 and 5
20. By its third, fourth and fifth questions, which are closely connected, the national court essentially asks whether Article 9 of Regulation No 1765/92 and Article 7 of Regulation No 1251/1999 must be interpreted as meaning that land ceases to be under permanent crops, in the case of apple production, at the time when the producer decides to fell the apple trees or have that done by a contractor, the time of actual felling of the apple trees, or the time when the felled trees are removed.
21. Since it is clear from the answer to Question 1 that, to be excluded from receiving compensatory payments, it suffices that the land was under permanent crops, without necessarily being cultivated, that condition is clearly no longer satisfied, in the case of fruit plantations, once the fruit trees have been felled but not removed.
22. On the other hand, the mere decision to fell the trees, without that decision being put into practice, does not mean that the land ceases to be under permanent crops.
23. The answer to Questions 3, 4 and 5 must therefore be that Article 9 of Regulation No 1765/92 and Article 7 of Regulation No 1251/1999 must be interpreted as meaning that the land ceases to be under permanent crops, in the case of apple production, once the apple trees have been felled, even if they have not been removed. However, the mere decision to fell the trees, without that decision being put into practice, does not mean that the land ceases to be under permanent crops.
Question 6
24. By its sixth question the national court asks whether Article 9 of Regulation No 1765/92 and Article 7 of Regulation No 1251/1999 must be interpreted as meaning that, where land has ceased to be under permanent crops, it must be regarded as being used for non-agricultural purposes.
25. As the Advocate General observes in point 25 of his Opinion, agricultural use of land presumes that the land is used for the production of plants or animals.
26. Consequently, land which has ceased to be under permanent crops may be regarded as being used for non-agricultural purposes only if it is shown that it is not used for the production of other plants or animals. It is for the national court to ascertain whether that condition was satisfied in the present case.
27. The answer to Question 6 must therefore be that Article 9 of Regulation No 1765/92 and Article 7 of Regulation No 1251/1999 must be interpreted as meaning that land which has ceased to be under permanent crops must be regarded as being used for non-agricultural purposes if is shown that it is not intended for the production of other plants or animals.

Costs
28. Since 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.




On those grounds, the Court (Third Chamber) rules as follows:
1. Article 9 of Council Regulation (EEC) No 1765/92 of 30 June 1992 establishing a support system for producers of certain arable crops and Article 7 of Council Regulation (EC) No 1251/1999 of 17 May 1999 establishing a support system for producers of certain arable crops must be interpreted as meaning that, for land under permanent crops to be excluded from compensatory payments, there is no requirement that the land has been cultivated, and in particular that insecticides have been used or crops harvested.
2. Article 9 of Regulation No 1765/92 and Article 7 of Regulation No 1251/1999 must be interpreted as meaning that the land ceases to be under permanent crops, in the case of apple production, once the apple trees have been felled, even if they have not been removed. However, the mere decision to fell the trees, without that decision being put into practice, does not mean that the land ceases to be under permanent crops.
3. Article 9 of Regulation No 1765/92 and Article 7 of Regulation No 1251/1999 must be interpreted as meaning that land which has ceased to be under permanent crops must be regarded as being used for non-agricultural purposes if is shown that it is not intended for the production of other plants or animals.

Signatures.

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1 - Language of the case: German.