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Cite as: [2004] EUECJ C-424/2, [2004] EUECJ C-424/02

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JUDGMENT OF THE COURT (First Chamber)
15 July 2004 (1)

(Failure of a Member State to fulfil its obligations -� Directive 75/439/EEC -� Disposal of waste oils -� Priority to be given to the processing of waste oils by regeneration)

In Case C-424/02,

Commission of the European Communities, represented by X. Lewis and M. Konstantinidis, acting as Agents, with an address for service in Luxembourg,

applicant,

United Kingdom of Great Britain and Northern Ireland, represented by M. Bethell, acting as Agent, and by M. Demetriou, Barrister, with an address for service in Luxembourg,

defendant,

APPLICATION for a declaration that, by failing to adopt the laws, regulations or administrative provisions necessary to comply with Article 3(1) of Council Directive 75/439/EEC of 16 June 1975 on the disposal of waste oils (OJ 1975 L 194, p. 23), as amended by Directive 87/101/EEC of 22 December 1986 (OJ 1987 L 42, p. 43), requiring Member States to take the measures necessary to give priority to the processing of waste oils by regeneration or, in any event, by failing to notify such provisions to the Commission, the United Kingdom of Great Britain and Northern Ireland has failed to fulfil its obligations under that directive,

THE COURT (First Chamber),

composed of: P. Jann (President of the Chamber), A. Rosas, S. von Bahr, R. Silva de Lapuerta (Rapporteur) and K. Lenaerts, Judges,

Advocate General: C. Stix-Hackl,
Registrar: L. Hewlett, Principal Administrator,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 4 March 2004,

after hearing the Opinion of the Advocate General at the sitting on 1 April 2004,

gives the following

Judgment

By application lodged at the Court Registry on 22 November 2002, the Commission of the European Communities brought an action under Article 226 EC for a declaration that, by failing to adopt the laws, regulations or administrative provisions necessary to comply with Article 3(1) of Council Directive 75/439/EEC of 16 June 1975 on the disposal of waste oils (OJ 1975 L 194, p. 23), as amended by Council Directive 87/101/EEC of 22 December 1986 (OJ 1987 L 42, p. 43) (-�the Directive-�), requiring Member States to take the measures necessary to give priority to the processing of waste oils by regeneration, or in any event, by failing to notify such provisions to the Commission, the United Kingdom of Great Britain and Northern Ireland has failed to fulfil its obligations under that directive.

Legal background

Article 3 of the Directive provides:

Pursuant to Article 2 of Directive 87/101, Member States were required to take the measures necessary to comply with the directive with effect from 1 January 1990.

Pre-litigation procedure

Taking the view that Article 3(1) of the Directive had not been transposed into national law within the prescribed period, the Commission commenced an infringement procedure against the United Kingdom. After calling on that Member State to submit its observations, the Commission sent it a reasoned opinion on 21 December 2001.

In response to that reasoned opinion, the United Kingdom authorities, by letter of 20 February 2002, stated their willingness to comply fully with Article 3(1) of the Directive. In a second letter, of 15 May 2002, they pointed out obstacles to waste oil regeneration, namely, the importance of the market for recovered waste oil for use as fuel and the weak market for regenerated oil.

In those circumstances the Commission decided to bring the present action.

The action

Arguments of the parties

The Commission states that the United Kingdom admits that it has still to take measures to implement Article 3(1) of the Directive and to ensure that priority is given to the processing of waste oils by regeneration.

The Commission argues that a mere commitment to take effective measures to give priority to waste oil regeneration within the framework of the various possible options, and having regard to obstacles to regeneration, cannot in itself constitute measures to promote regeneration within the meaning of Article 3(1) of the Directive.

The Commission observes that mere examination of the different options and identification of the obstacles to regeneration do not constitute the measures required by the Directive. The acts of examining the options and identifying the obstacles to regeneration are merely prerequisites to establishing whether that provision applies in the event that regeneration is carried out.

The Commission claims that no concrete measures aimed at giving priority to the processing of waste oils have been introduced. The United Kingdom confined itself to studying what sort of measures could be introduced in the future to achieve that goal. Although it has identified financial constraints on encouraging processing of waste oils, it has not used the possibility offered by Articles 13 and 14 to grant indemnities to offset the costs involved. Moreover, the duty concession which applies in that sector in effect gives priority to oil combustion, which is contrary to the objective pursued by the Directive.

The United Kingdom Government submits that it has not failed to fulfil its obligations under Article 3(1) of the Directive. It claims to have identified and investigated a number of obstacles which inhibit the promotion of regeneration of waste oils. It is in the process of identifying the most appropriate measures, in view of those obstacles, to give priority to regeneration of waste oils.

The United Kingdom Government contends that Article 3(1) of the Directive does not impose an absolute obligation on Member States to take measures to give priority to waste oil regeneration. The duty to take such measures only applies -�where technical, economic and organisational constraints so allow-�. The scope of the duty mentioned in Article 3(1) of the Directive varies according to the circumstances in each Member State. The measures taken to investigate solutions for increasing regeneration of waste oils are tangible and appropriate measures aimed at giving priority to regeneration.

The United Kingdom Government states that Article 3(2) and (3) of the Directive further emphasise the limited scope of the duty laid down in Article 3(1). Those provisions impose alternative obligations on Member States in the event that constraints prevent them from giving priority to waste oil regeneration.

The United Kingdom Government points out that the competent authorities established that a number of obstacles inhibited them from giving priority to the regeneration of waste oil. The main constraints identified were of an economic nature, namely the strong market for recovered waste oil for use as a fuel and the weak market for regenerated base oil, together with operating and transport costs and marketing problems for this product.

The United Kingdom Government also claims that the national authorities have been investigating various measures to achieve increased processing of waste oil by regeneration. In particular, they have been engaged in further research with a view to establishing a specification for a waste oil regeneration facility in the United Kingdom, identifying alternative disposal routes for the regenerated product and identifying the best means of marketing regenerated oil.

The United Kingdom Government therefore takes the view that it will then be in a position to implement a structured plan to promote the regeneration of waste oil. Such an action programme constitutes a set of appropriate and proportionate measures aimed at implementing the obligations laid down in Article 3(1) of the Directive.

Findings of the Court

It must be borne in mind that, as the Court held in its judgment in Case C-102/97 Commission v Germany [1999] ECR I-5051, paragraph 35, one of the main objectives of the Directive was to give priority to the processing of waste oils by regeneration. That objective, expressed in the second recital in the preamble to the Directive, is inspired by the fact that regeneration is the most rational way of re-using waste oils in view of the energy savings which can be achieved.

In paragraph 36 of that judgment the Court also observed that the existence in a Member State of technical, economic and organisational constraints which prevent priority from being given to processing by regeneration makes it necessary to give effect to the subsidiary obligation, laid down in Article 3(2) of the Directive, to take the measures required to ensure that any combustion of waste oils is carried out under environmentally acceptable conditions, in accordance with the provisions of that directive. That obligation is itself made dependent on the condition -�that such combustion is technically, economically and organisationally feasible-�, which appears at the end of Article 3(2).

Only where waste oils are neither regenerated nor burned, on account of the constraints mentioned in Article 3(1) and (2) of the Directive, are Member States subject to the even more subsidiary obligation, laid down in paragraph 3 of the same article, to take the measures necessary to ensure their safe destruction or their controlled storage or tipping (see Commission v Germany, paragraph 37).

As regards the method to which priority is given, that is, the processing of waste oils by regeneration, it must be observed, as the Court held in paragraphs 38 and 39 of Commission v Germany, that the reference to -�technical, economic and organisational constraints-� in Article 3(1) of the Directive forms part of a provision giving general expression to the obligation imposed on Member States and that the Community legislature did not intend thereby to provide limited exceptions to a rule having general application, but to define the scope and content of a positive obligation to give priority to the processing of waste oils by regeneration.

It follows, as the Court has also pointed out, that the definition of such constraints cannot be left to the exclusive discretion of the Member States. Apart from being contrary to the principle of the uniform interpretation and application of Community law, interpretation by the Member States alone would make the compatibility of processing by regeneration with technical, economic and organisational constraints a condition the fulfilment of which would depend entirely on a policy assessment on the part of the Member State concerned (see Commission v Germany, paragraph 40).

As regards the argument put forward by the United Kingdom that the scope of the obligation contained in Article 3(1) of the Directive varies according to the circumstances in each Member State and that adverse circumstances prevailing in a Member State may constitute constraints of such an extreme nature that there is no duty to give priority to the regeneration of waste oils, it must be stated, as the Court observed in paragraph 43 of Commission v Germany, that if the technical, economic and organisational circumstances obtaining in a Member State were considered automatically to constitute constraints making it impossible to adopt the measures provided for in Article 3(1) of the Directive, that provision would be deprived of all practical effect, since the obligation imposed on Member States would be limited by maintenance of the status quo, with the result that Article 3(1) would not impose a genuine obligation to take the measures necessary for the processing of waste oils by regeneration.

Furthermore, in answer to the argument of the United Kingdom Government that the reference to -�technical, economic or organisational constraints-� means that the Community legislature recognises that Member States have a margin of discretion, it should be noted that the provision relating to constraints must be understood as an expression of the principle of proportionality; accordingly, Member States are under an obligation to take measures appropriate and proportionate to the objective of giving priority to the processing of waste oils by regeneration, which is to say that the limit to that positive obligation is the existence of the technical, economic and organisational constraints referred to in Article 3(1) of the Directive (Commission v Germany, paragraph 42).

While it is not for the Court to determine the measures which a Member State should have taken in order to implement Article 3(1) of the Directive, it none the less has a responsibility, in determining whether there are constraints within the meaning of that article, to consider whether it was possible to adopt measures aimed at giving priority to the processing of waste oils by regeneration and satisfying the criterion of technical, economic and organisational feasibility (Commission v Germany, paragraph 48).

Consequently, although it is acceptable that Member States first carry out studies and draw up reports in order to determine how waste oils should be disposed of, those preparatory steps must nevertheless be followed by tangible measures aimed at giving priority to regeneration, in order to comply with the obligation laid down by Article 3(1) of the Directive.

In this case it is clear that the United Kingdom has not adopted tangible measures aimed at giving priority to the processing of waste oils by regeneration. It has merely identified constraints, studied the market and investigated measures which might be taken.

It is worth adding that the Member States were to comply with the obligations arising from Article 3(1) of the Directive with effect from 1 January 1990. Furthermore, Article 3 of Directive 75/439, in its original 1975 version, already provided that Member States were to take the necessary measures to ensure that, as far as possible, the disposal of waste oils was carried out by recycling (regeneration and/or combustion other than for destruction). Those measures were to be taken as from 1977.

It is also common ground that over a prolonged period, that is, between the time-limit for implementation (1 January 1990) and the expiry of the two-month period laid down in the reasoned opinion of 21 December 2001, no action was undertaken by the United Kingdom to commence the process for adopting the measures necessary to ensure that priority was given to the use of regeneration for the processing of waste oils in accordance with the requirements in Article 3(1) of the Directive.

With regard to the United Kingdom-�s arguments which sought to establish the existence of economic constraints, in particular, because of the structure of the market for waste oils, it must be held that it was not until 2002 that a waste management plan was adopted in order to deal with that situation.

In view of the Member States-� obligations in the area in question, it must be observed that such steps do not constitute implementation of the obligation laid down in Article 3(1) of the Directive.

In any event, it is settled case-law that the question whether a Member State has failed to fulfil its obligations must be determined by reference to the situation prevailing in the Member State at the end of the period laid down in the reasoned opinion (see, in particular, Case C-147/00 Commission v France [2001] ECR I-�2387, paragraph 26; Case C-173/01 Commission v Greece [2002] ECR I-6129, paragraph 7; and Case C-114/02 Commission v France [2003] ECR I-3783, paragraph 9).

In those circumstances it must be held that, by failing to take the measures necessary under Article 3(1) of the Directive to give priority to the processing of waste oils by regeneration, the United Kingdom has failed to fulfil its obligations under that directive.

Costs

Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party-�s pleadings. Since the Commission has applied for costs and the United Kingdom has been unsuccessful, the United Kingdom must be ordered to pay the costs.

On those grounds,

THE COURT (First Chamber)

1. Declares that, by failing to take the measures necessary under Article 3(1) of Council Directive 75/439/EEC of 16 June 1975 on the disposal of waste oils, as amended by Council Directive 87/101/EEC of 22 December 1986, to give priority to the processing of waste oils by regeneration, the United Kingdom of Great Britain and Northern Ireland has failed to fulfil its obligations under that directive;

2. Orders the United Kingdom of Great Britain and Northern Ireland to pay the costs.

Jann	Rosas	von Bahr
Silva de Lapuerta		Lenaerts

R. Grass

P. Jann

Registrar

President of the First Chamber

1 -� Language of the case: English.