Karl und Georg Anwander Guterverwaltung (ommon agricultural policy (CAP) - Funding by the European Agricultural Fund for Rural Development (EAFRD) - Payments for areas facing natural or other specific constraints - Judgment) [2024] EUECJ C-239/23 (17 October 2024)

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	Court of Justice of the European Communities (including Court of First Instance Decisions)
You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Karl und Georg Anwander Guterverwaltung (ommon agricultural policy (CAP) - Funding by the European Agricultural Fund for Rural Development (EAFRD) - Payments for areas facing natural or other specific constraints - Judgment) [2024] EUECJ C-239/23 (17 October 2024) URL: http://www.bailii.org/eu/cases/EUECJ/2024/C23923.html Cite as: ECLI:EU:C:2024:888, EU:C:2024:888, [2024] EUECJ C-239/23

( Reference for a preliminary ruling - Common agricultural policy (CAP) - Funding by the European Agricultural Fund for Rural Development (EAFRD) - Regulation (EU) No 1305/2013 - Articles 31 and 32 - Payments for areas facing natural or other specific constraints - Mountain areas - Compensatory allowance - National administrative provisions excluding payment of that allowance for eligible areas situated in a region, of the same Member State, other than the region where the place of business of the agricultural holding is located - Provisions using the place of business of the agricultural holding as a condition for the grant of that compensatory allowance )

REQUEST for a preliminary ruling under Article 267 TFEU from the Verwaltungsgericht Sigmaringen (Administrative Court, Sigmaringen, Germany), made by decision of 28 March 2023, received at the Court on 17 April 2023, in the proceedings

composed of F. Biltgen, President of the First Chamber, acting as President of the Second Chamber, M.L. Arastey Sahún (Rapporteur), President of the Fifth Chamber, and J. Passer, Judge,

- the European Commission, by J. Aquilina, A.C. Becker and L. Radu Bouyon, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 25 April 2024,

1 This request for a preliminary ruling concerns the interpretation of Articles 31 and 32 of Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005 (OJ 2013 L 347, p. 487, and corrigendum OJ 2016 L 130, p. 1), as amended by Regulation (EU) 2017/2393 of the European Parliament and of the Council of 13 December 2017 (OJ 2017 L 350, p. 15) (‘Regulation No 1305/2013’).

2 The request has been made in proceedings between Karl und Georg Anwander GbR Güterverwaltung and the Land Baden-Württemberg (Land Baden-Württemberg, Germany), represented by the Landratsamt Ravensburg (administrative authorities of the District of Ravensburg, Germany), concerning the rejection, by those authorities, of the application for a compensatory allowance made by the applicant in the main proceedings, for 2019, in respect of agricultural land situated in the Freistaat Bayern (Land of Bavaria, Germany).

‘(7) In order to ensure the immediate start and efficient implementation of rural development programmes, support from the [European Agricultural Fund for Rural Development (EAFRD)] should be based on the existence of administrative framework conditions that are sound. Member States should therefore assess the applicability and fulfilment of certain ex ante conditionalities. Each Member State should prepare either a national rural development programme for its entire territory or a set of regional programmes or both a national programme and a set of regional programmes. Each programme should identify a strategy for meeting targets in relation to the Union priorities for rural development and a selection of measures. Programming should comply with Union priorities for rural development, whilst at the same time adapting to national contexts and complementing the other Union policies, in particular the agricultural market policy, the cohesion policy and the common fisheries policy. Member States which opt for preparing a set of regional programmes should also be able to prepare a national framework, without a separate budgetary allocation, in order to facilitate co-ordination among the regions in addressing nation-wide challenges.

(9) Rural development programmes should identify the needs of the area covered and describe a coherent strategy to meet them in the light of the Union priorities for rural development. That strategy should be based on the setting of targets. The links between the needs identified, the targets set and the choice of measures selected to meet them should be established. Rural development programmes should also contain all the information required to assess their conformity with the requirements of this Regulation.

(25) Payments to farmers in mountain areas or in other areas facing natural or other specific constraints should, by encouraging continued use of agricultural land, contribute to maintaining the countryside as well as to maintaining and promoting sustainable farming systems. In order to ensure the efficiency of such support, payments should compensate farmers for income foregone and additional costs linked to the disadvantage of the area concerned. In order to ensure the effective use of EAFRD resources, support should be limited to active farmers within the meaning of Article 9 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)].

(26) In order to ensure the efficient use of Union funds and equal treatment for farmers across the Union, mountain areas and areas facing natural or other specific constraints should be defined in accordance with objective criteria. In the case of areas facing natural constraints, those criteria should be bio-physical and underpinned by robust scientific evidence …

(50) A single Managing Authority should be responsible for the management and implementation of each rural development programme. Its duties should be specified in this Regulation …’.

‘This Regulation lays down general rules governing Union support for rural development, financed by the [EAFRD] and established by 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)]. It sets out the objectives to which rural development policy is to contribute and the relevant Union priorities for rural development. It outlines the strategic context for rural development policy and defines the measures to be adopted in order to implement rural development policy. In addition, it lays down rules on programming, networking, management, monitoring and evaluation on the basis of responsibilities shared between the Member States and the [European] Commission and rules to ensure coordination of the EAFRD with other Union instruments.’

5 Point (b) of the second subparagraph of Article 2(1) of Regulation No 1305/2013 defines the term ‘region’ as follows:

‘“region” means a territorial unit corresponding to level 1 or 2 of the Nomenclature of territorial units for statistics (NUTS level 1 and 2) within the meaning of Regulation (EC) No 1059/2003 of the European Parliament and of the Council [of 26 May 2003 on the establishment of a common classification of territorial units for statistics (NUTS) (OJ 2003 L 154, p. 1)]’.

‘The achievement of the objectives of rural development, which contribute to the Europe 2020 strategy for smart, sustainable and inclusive growth, shall be pursued through the following six Union priorities for rural development, which reflect the relevant Thematic Objectives of the [Common Strategic Framework (CSF)]:

(4) restoring, preserving and enhancing ecosystems related to agriculture and forestry, with a focus on the following areas:

(a) restoring, preserving and enhancing biodiversity, including in Natura 2000 areas, and in areas facing natural or other specific constraints, and high nature value farming, as well as the state of European landscapes.

‘A Member State may submit either a single programme for its entire territory or a set of regional programmes. Alternatively, in duly justified cases, it may submit a national programme and a set of regional programmes. If a Member State submits a national programme and a set of regional programmes, measures and/or types of operations shall be programmed either at national level or at regional level, and coherence between the strategies of the national and regional programmes shall be ensured.’

‘Each rural development measure shall be programmed to contribute specifically to the achievement of one or more Union priorities for rural development. An indicative list of measures of particular relevance to the Union priorities is set out in Annex VI.’

‘1. Payments to farmers in mountain areas and other areas facing natural or other specific constraints shall be granted annually per hectare of agricultural area in order to compensate farmers for all or part of the additional costs and income foregone related to the constraints for agricultural production in the area concerned.

2. Payments shall be granted to farmers who undertake to pursue their farming activity in the areas designated pursuant to Article 32 and are active farmers within the meaning of Article 9 of Regulation (EU) No 1307/2013, as applicable in the Member State concerned.

‘1. Member States shall, on the basis of paragraphs 2, 3 and 4, designate areas eligible for payments provided for in Article 31 under the following categories:

(b) areas, other than mountain areas, facing significant natural constraints; and

2. In order to be eligible for payments under Article 31, mountain areas shall be characterized by a considerable limitation of the possibilities for using the land and by an appreciable increase in production costs due to:

(a) the existence, because of altitude, of very difficult climatic conditions, the effect of which is to substantially shorten the growing season;

(b) at a lower altitude, the presence over the greater part of the area in question of slopes too steep for the use of machinery or requiring the use of very expensive special equipment, or a combination of these two factors, where the constraints resulting from each taken separately are less acute but the combination of the two gives rise to equivalent constraints.

3. In order to be eligible for payments under Article 31, areas, other than mountain areas, shall be considered to be facing significant natural constraints if at least 60% of the agricultural area meets at least one of the criteria listed in Annex III at the threshold value indicated.

Compliance with those conditions shall be ensured at the level of local administrative units (“LAU 2” level) or at the level of a clearly delineated local unit which covers a single clear contiguous geographical area with a definable economic and administrative identity.

When delimiting the areas concerned by this paragraph, Member States shall carry out a fine-tuning exercise, based on objective criteria, with the purpose of excluding areas in which significant natural constraints, referred to in the first subparagraph have been documented but have been overcome by investments or by economic activity, or by evidence of normal land productivity, or in which production methods or farming systems have offset the income loss or added costs referred to in Article 31(1).

‘Expenditure shall be eligible for an EAFRD contribution only where incurred for operations decided on by the Managing Authority of the programme in question or under its responsibility …’.

‘Member States shall designate, for each rural development programme, the following authorities:

(a) the Managing Authority, which may be either a public or private body acting at national or regional level, or the Member State itself when it carries out that task, to be in charge of the management of the programme concerned;

(b) the accredited paying agency within the meaning of Article 7 of Regulation (EU) No 1306/2013;

‘The Managing Authority shall be responsible for managing and implementing the programme in an efficient, effective and correct way …’.

14 Article 9 of Regulation No 1307/2013, entitled ‘Active farmer’, sets out the conditions which natural or legal persons or groups of such persons must meet in order to be regarded as active farmers within the meaning of that provision.

15 Paragraph 3(1) of the Grundgesetz für die Bundesrepublik Deutschland (Basic Law of the Federal Republic of Germany) of 23 May 1949 (BGBl. 1949 I, p. 1), in the version applicable to the dispute in the main proceedings, provides:

16 Paragraph 2 of the Verordnung über die Durchführung von Stützungsregelungen und des Integrierten Verwaltungs- und Kontrollsystems (Order of the Federal Ministry of Food and Agriculture, adopted in agreement with, inter alia, the Federal Ministries of Finance, and of Economic Affairs and Energy, on the implementation of support schemes and the Integrated Administration and Control System), of 24 February 2015 (BGBl. 2015 I, p. 166) (‘the InVeKoSV’), provides:

‘1. Unless otherwise provided for by this Order or by Paragraph 1(1), points 4 to 6, the competent authorities of the Land under the law of that Land (the competent authorities of the Land) in which the farmer has his place of business have territorial competence for the purposes of implementing this Order and the provisions referred to in Paragraph 1(1).

2. The relevant place of business for the purposes of determining the competent Land authority is, subject to an assumption of competence pursuant to subparagraph 3, the place covered by the tax office responsible for assessing the farmer’s income tax. In the case of legal persons, groups of persons and estates, the competent authority is the Land authority in whose area their management is situated.

3. If the farmer has only one establishment and that establishment is situated in a Land other than the one in which he has his place of business, the Land authority in whose area the establishment is situated, may, in agreement with the Land authority with territorial competence under subparagraph 2 and with the farmer’s consent, assume responsibility for applying this Order; the place of business shall then be the place of establishment.

17 Paragraph 1.1 of the Verwaltungsvorschrift des Ministeriums Ländlicher Raum zur Förderung landwirtschaftlicher Betriebe in Berggebieten und in bestimmten benachteiligten Gebieten (VwV Ausgleichszulage Landwirtschaft) (Administrative regulation of the Ministry of Rural Affairs on support for farms in mountain areas and in certain areas facing constraints) of 6 November 2019 (GABl. 2019, p. 389) (‘the VwV AZL’), as amended by the Verwaltungsvorschrift (Administrative regulation) of 15 November 2021 (GABl. 2021, p. 532), provides:

‘The objective of that support is to ensure the sustainable use of agricultural land through management in certain areas facing constraints (mountain areas, areas facing significant natural constraints, areas facing constraints for other specific reasons, except for mountain areas specified in the list of areas in force (see Paragraph 4), and thereby contribute to the conservation of the landscape and to the maintenance and promotion of sustainable management measures.’

‘Only active farmers within the meaning of Article 9 of Regulation [No 1307/2013] who themselves manage land in Baden-Württemberg in newly defined areas facing constraints, are eligible for support. Aid can be granted only to farmers whose place of business within the meaning of Paragraph 2 of the InVeKoSV, is situated in Baden-Württemberg and whose place of business is in an EU Member State.’

‘Compensation is granted only for land in newly defined eligible areas of Baden-Württemberg (see Paragraph 4.2).’

‘The following categories of area (areas facing constraints) are entered in the list of areas … and are relevant:

21 Paragraph 2 of the Richtlinie des Bayerischen Staatsministeriums für Ernährung, Landwirtschaft und Forsten zur Gewährung der Ausgleichszulage in benachteiligten Gebieten (AGZ) gemäß Verordnung (EU) Nr. 1305/2013 (Directive of the Bavarian State Ministry of Food, Agriculture and Forestry on the grant of the compensatory allowance in areas facing constraints pursuant to Regulation No 1305/2013) of 1 March 2019 (BayMBl. 2019 No 143; ‘the AGZ’), provides:

‘A compensatory allowance shall be granted in respect of land used for agricultural purposes situated in areas of Bavaria and facing constraints. The areas facing constraints have been determined at cadastral level by an opinion of the Bavarian Ministry of Food, Agriculture and Forestry of 29 November 2018 on the register of agricultural areas facing constraints within the meaning of Article 32 of Regulation [No 1305/2013]. The data on the land, set out in the integrated management and control system, shall contain the relevant information regarding membership of an area.’

- operate land used for agricultural purposes of at least 3 hectares in areas facing constraints in Bavaria,

- have its place of business, within the meaning of Paragraph 2 of the InVeKoSV, in Bavaria.

If the farmer is not subject to income tax in Germany or, in the case of legal persons, groups of persons and estates, if their management body is not situated in Germany, the majority of the land used for agricultural purposes, operated by the farmer in Germany, must be located in Bavaria …’.

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

23 The applicant in the main proceedings manages a dairy farming operation which is situated partly in the Land of Baden-Württemberg and partly in the Land of Bavaria. Its place of business is in Baden-Württemberg. It operates agricultural land of approximately 100 to 111 hectares in Baden-Württemberg and approximately 27 hectares in Bavaria, all of which are situated in a mountain area.

24 Land situated in Bavaria is classified as land eligible for EU aid for mountain areas and is eligible for a compensatory allowance of EUR 50 per hectare.

25 Until 2018, the applicant in the main proceedings obtained, from the competent authority of the Land of Baden-Württemberg, payment of the compensatory allowance which it had requested both for agricultural land situated in Baden-Württemberg and for agricultural land situated in Bavaria.

26 On 8 May 2019, the applicant submitted an application to that authority for a compensatory allowance, for 2019, in respect of the operation of agricultural land facing natural constraints, including land of approximately 27 hectares situated in Bavaria.

27 By decision of 5 December 2019, the administrative authorities of the district of Ravensburg granted a compensatory allowance in the amount of EUR 4 095.66 for the agricultural land situated in Baden-Württemberg. By contrast, the application of the applicant in the main proceedings was rejected as regards the land situated in Bavaria, on the ground that that land was not in Baden-Württemberg.

28 By decision of 11 May 2021, the Regierungspräsidium Tübingen (Tübingen regional authority, Germany) dismissed the appeal lodged by the applicant in the main proceedings against the decision of 5 December 2019.

29 On 17 June 2021, the applicant in the main proceedings brought an action before the Verwaltungsgericht Sigmaringen (Administrative Court, Sigmaringen, Germany), which is the referring court, seeking, first, annulment of the decision of 5 December 2019, as upheld by the decision of 11 May 2021, and, second, the grant of a compensatory allowance in the amount of EUR 1 371.26 in respect of the agricultural land eligible for payment of that allowance, for the mountain areas situated in Bavaria. In the alternative, it seeks a declaration that the rejection of the application for compensatory allowances for that land and the legal bases on which the rejection decision was adopted, namely paragraphs 2.1 and 3.2.1 of the VwV AZL, infringe Articles 31 and 32 of Regulation No 1305/2013.

30 The referring court has doubts as to the interpretation of the latter two articles and as to the extent of the margin of discretion available to the Member States, under that regulation, as regards determining or setting out the conditions for granting compensatory allowances such as those requested by the applicant in the main proceedings.

31 That court states in that regard, first, that, under German law, a large number of payments made by the State to third parties in respect of various forms of aid are granted not on a binding legal basis having the force of law, but in the light of ‘administrative provisions’ in the form a law within the administrative authorities, the only addressees of which are the officials of the administrative body concerned. Therefore, such administrative provisions are binding only on the competent administrative entity, which is why the binding effect of those provisions can only be indirect, in the sense that that entity is required, under the principle of equal treatment, enshrined in Paragraph 3(1) of the Basic Law of the Federal Republic of Germany, to treat the applicant for payment concerned in the same way as those applicants in respect of which that entity has already applied the content of those administrative provisions.

32 Second, the referring court states that the conditions for the grant of compensatory allowances for areas facing natural constraints provided for in Article 31 of Regulation No 1305/2013 are governed, both in Baden-Württemberg and in Bavaria, by administrative provisions which make the grant of such compensatory allowances conditional, respectively, on the place of business of the relevant farmer and the eligible land being located in the Land in which such an allowance has been requested.

33 That court observes that, since such a compensatory allowance can be requested only in the Land in which the relevant farmer’s place of business is located, it is not possible to submit an application in several Länder. In a situation such as the one before that court, in which the place of business of the applicant in the main proceedings is in Baden-Württemberg, that applicant can neither request compensatory allowances in that Land in respect of its agricultural land situated in Bavaria, nor submit an application for payment of those allowances to the Land of Bavaria in respect the abovementioned agricultural land.

34 In that context, the referring court is uncertain, first, as to the extent of the discretion which EU law confers on Member States when the conditions for the grant of compensatory allowances for areas eligible for aid under Article 31 of Regulation No 1305/2013 are determined, in particular in a situation such as that before that court, which concerns areas falling within the competence of two different Länder.

35 According to that court, the wording of the first subparagraph of Article 32(2) of that regulation and recital 26 thereof appear to indicate that Member States or their regions may, when designating the areas eligible for the grant of those compensatory allowances, use only criteria linked to the biophysical properties of the areas concerned, namely their natural characteristics. However, it is not apparent from that regulation that the Member States may apply criteria unrelated to the natural characteristics of those areas, since the fact that the regulation is directly applicable provides a strong argument that the Member States or their regions cannot use designation criteria which are not listed in Article 32.

36 Second, that court asks whether, where a Member State or a region of a Member State has decided to provide for a scheme for the payment of compensatory allowances to farmers situated in mountain areas and other areas facing natural or other specific constraints, Article 31(1) of Regulation No 1305/2013 confers on the farmers concerned a right, under EU law, to the grant of such a compensatory allowance. Although the wording of the first subparagraph of Article 31(1) and Article 31(2) of that regulation might support such an interpretation, it could, on the other hand, prove to be contrary to the general scheme of that regulation, which requires the existence of a rural development programme established by the Member States or by their regions, without, however, requiring them to include compensatory allowances in that regard in their respective programmes.

37 Third, the referring court asks whether EU law, and more specifically Regulation No 1305/2013, determines the necessary legal nature and scope of the measures implementing that law, adopted by the relevant Member State or region, which lay down the conditions of eligibility for the compensatory allowances provided for by those measures, in so far as the setting of eligibility criteria by means of administrative provisions, namely non-binding legal rules, could undermine the effectiveness of that regulation.

38 In those circumstances, the Verwaltungsgericht Sigmaringen (Administrative Court, Sigmaringen) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1) Is a national administrative regulation and support practice whereby the payment of a compensatory allowance for land in mountain areas and certain areas facing constraints is precluded solely because the land to be supported by the compensatory allowance is outside the region of the Member State, within the meaning of point (b) of the second subparagraph of Article 2(1) of Regulation [No 1305/2013], that grants the compensatory allowance compatible with the first subparagraph of Article 31(1), Article 31(2), Article 32(1)(a), the first subparagraph of Article 32(2) and the second and third subparagraphs of Article 32(3) of Regulation [No 1305/2013]? Is the place of business of the farmer managing the land a permissible criterion for differentiation in that regard?

(2) Is the first subparagraph of Article 31(1) of Regulation [No 1305/2013] to be interpreted as meaning that the rules of a Member State or a region of the Member State which has decided to grant payments to farmers in mountain areas and other areas facing constraints, within the meaning of Article 31(1) of Regulation [No 1305/2013], must be defined in such a way that the payment must also be granted in respect of land that has been classified as a mountain area or other area facing constraints, within the meaning of Article 32(1) of Regulation [No 1305/2013], by another Member State or another region of the same Member State which has also decided to grant payments to farmers in mountain areas and other areas facing constraints within the meaning of Article 31(1) of Regulation [No 1305/2013]?

(3) Are the first subparagraph of Article 31(1) and Article 31(2) of Regulation [No 1305/2013] to be interpreted as meaning that, in principle, a farmer derives directly from those provisions an entitlement under EU law to the grant of the payment (compensatory allowance) by the Member State or the region of the Member State if the farmer is an active farmer and manages land which has been classified as a mountain area or other area facing constraints, within the meaning of Article 32(1) of Regulation [No 1305/2013], by the Member State or the region of the Member State and the Member State concerned or the region thereof has decided to grant payments (compensatory allowances) within the meaning of the first subparagraph of Article 31(1) of Regulation (EU) [1305/2013]?

(a) Against whom is the entitlement under EU law derived from Article 31(1) of Regulation [No 1305/2013] directed? Is it always directed against the Member State itself or, in any event, against the region (point (b) of the second subparagraph of Article 2(1) of Regulation No 1305/2013) of the Member State if the region has decided, independently of the Member State, to grant compensatory allowances to farmers pursuant to Article 31 of Regulation [No 1305/2013]?

(b) Does the entitlement under EU law require, in principle, that the farmer meets further requirements in excess of those laid down in the first subparagraph of Article 31(1) and Article 31(2) of Regulation [No 1305/2013], which are stipulated by the Member State granting the compensatory allowance or the region thereof in its national implementing measures?’

Is the first subparagraph of Article 31(1) of Regulation [No 1305/2013] to be interpreted as meaning that the rules of a Member State or one of its regions laying down the conditions for the grant of the payment (compensatory allowance) within the meaning of the first subparagraph of Article 31(1) of Regulation [No 1305/2013] must have such legal status that farmers are entitled to the grant of the payment (compensatory allowance) if they meet the conditions for payment laid down by the Member State in question or the regions thereof, irrespective of the actual support practice of the Member State or the region thereof?’

39 By its first and second questions, which it is appropriate to examine together, the referring court asks, in essence, whether point (b) of the second subparagraph of Article 2(1), the first subparagraph of Article 31(1), Article 31(2), Article 32(1)(a), the first subparagraph of Article 32(2) and the second and third subparagraphs of Article 32(3) of Regulation No 1305/2013 must be interpreted as precluding legislation or an administrative practice of a Member State and/or a region of a Member State which, first, exclude the grant of a compensatory allowance to farmers situated in mountain areas and other areas facing natural or other specific constraints on the ground that the areas eligible for that allowance are situated outside the territory of the region of the Member State whose rural development programme provides for that allowance and, second, use, as a criterion for the grant of such an allowance, the place of business of the farmer who operates the area concerned.

40 In the first place, it should be noted that, as is apparent from Article 1(1) of Regulation No 1305/2013, the latter sets out the objectives to which rural development policy is to contribute and the relevant EU priorities for rural development. It outlines the strategic context for that policy and defines the measures to be adopted in order to implement it. In addition, it lays down rules on programming, networking, management, monitoring and evaluation on the basis of responsibilities shared between the Member States or their regions and the Commission and rules to ensure coordination of the EAFRD with other EU instruments.

41 On the basis of such a division of responsibilities, the Member States implement Regulation No 1305/2013 through their rural development support programmes. That regulation leaves it open to the Member States to adopt a set of measures to meet the Union priorities for rural development (see, to that effect, judgment of 1 December 2022, DELID, C-409/21, EU:C:2022:946, paragraph 25 and the case-law cited).

42 Each Member State must therefore establish a national rural development programme covering all its territory, a series of regional programmes or both a national programme and a series of regional programmes, which implement a strategy to meet the Union priorities for rural development (judgment of 1 December 2022, DELID, C-409/21, EU:C:2022:946, paragraph 26 and the case-law cited).

43 Regulation No 1305/2013 thus allows the Member States a margin of discretion as to the arrangements for implementing the aid for which it provides (judgment of 1 December 2022, DELID, C-409/21, EU:C:2022:946, paragraph 27 and the case-law cited).

44 That margin of discretion may concern, inter alia, the criteria for selecting projects, in order to ensure that financial resources for rural development are used in the best possible manner and to target measures under rural development programmes in accordance with the Union priorities for rural development, and with a view to ensuring the equal treatment of applicants (judgment of 1 December 2022, DELID, C-409/21, EU:C:2022:946, paragraph 28 and the case-law cited).

45 Those measures, which, as follows from Article 6(2) of Regulation No 1305/2013, read in the light of recital 7 of that regulation, may be programmed either at national or regional level, include, in accordance with the first subparagraph of Article 31(1) of Regulation No 1305/2013, payments to farmers whose holdings are situated in mountain areas and other areas facing natural or other specific constraints. Those payments are granted annually per hectare of agricultural area in order to compensate farmers for all or part of the additional costs and income foregone related to the constraints for agricultural production in the area concerned.

46 Mountain areas and other areas facing natural or other specific constraints for which a farmer may receive the payments referred to in paragraph 45 of the present judgment are thus designated, on the basis of Article 32 of that regulation, in the national or regional programmes concerned.

47 It follows that, where a Member State has opted to establish not a national programme but a series of regional programmes, it is for the regions concerned in that Member State, within the meaning of point (b) of the second subparagraph of Article 2(1) of Regulation No 1305/2013, to choose the measures to be adopted in order to achieve the objectives relating to rural development, including, where appropriate, the measure provided for in Article 31 of that regulation, and to incorporate them into their respective programmes.

48 The distinct and autonomous nature of the various regional programmes is, moreover, also highlighted by Article 65(2)(a) of that regulation, read in the light of recital 50 of that regulation, under which the Member States are to designate, for each rural development programme, a single managing authority, which, under Article 66(1) of Regulation No 1305/2013, is responsible for the efficient, effective and correct management and implementation of the programme.

49 Similarly, according to Article 60(2) of that regulation, expenditure is eligible for an EAFRD contribution only where incurred for operations decided on ‘by the Managing Authority of the programme in question or under its responsibility’.

50 Thus, where a regional programming of the measures concerned is adopted, it is inherent in the scheme of Regulation No 1305/2013 that the discretion enjoyed by the regions of the Member States, under Articles 31 and 32 of Regulation No 1305/2013, may be implemented solely in their regional programmes and, in that case, with regard only to the territory of the regional authority concerned.

51 In such a case, it is also consistent with that scheme that a region of a Member State can neither designate eligible areas, within the meaning of Article 32 of that regulation, nor grant the payment of compensatory allowances for such areas, under Article 31(2) of that regulation, outside its territory, since a territorial limitation on the grant of those allowances is inherent in that scheme.

52 In the second place, it is necessary to determine whether the place of business of the farmer seeking payment of a compensatory allowance under the first subparagraph of Article 31(1) and Article 31(2) of Regulation No 1305/2013 is a lawful criterion for whether or not to grant such an allowance.

53 First of all, it must be noted that it is apparent from the first subparagraph of Article 31(1) of that regulation that the payments to farmers in mountain areas and other areas facing natural or other specific constraints are granted annually per hectare of agricultural area, with Article 31(2) specifying that those payments are to be granted to farmers who undertake to pursue their farming activity in the areas designated pursuant to Article 32 of that regulation and who are active farmers within the meaning of Article 9 of Regulation No 1307/2013.

54 Next, it is apparent from Article 32(2) of Regulation No 1305/2013 that mountain areas eligible for such payments are characterised by a considerable limitation of the possibilities for using the land and by an appreciable increase in production costs due to the existence, because of altitude, of very difficult climatic conditions, the effect of which is to substantially shorten the growing season, or due to the presence, at a lower altitude, of steep slopes over the greater part of the area in question. In that latter case, the use of machinery is not possible or it is necessary to use very expensive special equipment, or a combination of those two factors, where the constraints resulting from each taken separately are less acute but the combination of the two gives rise to an equivalent constraint.

55 Lastly, it should be noted that Article 32(3) of Regulation No 1305/2013, read in conjunction with Annex III to that regulation, lists the characteristics enabling a designation of areas other than mountain areas eligible for compensatory allowances, namely, again, biophysical or natural criteria for the areas concerned.

56 While the first subparagraph of Article 32(3) of that regulation states that, for such areas, at least 60% of their agricultural area must meet at least one of the criteria listed in Annex III at the threshold value indicated, the third subparagraph of Article 32(3) of that regulation states that the delimitation of those areas requires Member States to carry out a fine-tuning exercise, based on objective criteria, with the purpose of excluding areas in which significant natural constraints, referred to in the first subparagraph, have been documented but have been overcome by investments or by economic activity, or by evidence of normal land productivity, or in which production methods or farming systems have offset the income loss or added costs referred to in Article 31(1) of that regulation.

57 In that regard, as follows from paragraph 43 of the present judgment, the Member States or their regions have a margin of discretion under Regulation No 1305/2013.

58 It appears, however, that the criteria for designating areas eligible for payment of a compensatory allowance to farmers situated in mountain areas and other areas facing natural or other specific constraints, laid down by Article 32 of that regulation, relate to the biophysical or natural characteristics of the areas concerned, namely objective factors resulting from the natural properties of the areas in question.

59 Such an interpretation is supported by recital 26 of Regulation No 1305/2013, according to which, ‘in order to ensure the efficient use of Union funds and equal treatment for farmers across the Union, mountain areas and areas facing natural or other specific constraints should be defined in accordance with objective criteria. In the case of areas facing natural constraints, those criteria should be bio-physical and underpinned by robust scientific evidence.’

60 However, it must be stated, first, that the place of business of the farmer seeking the payment of a compensatory allowance, provided for in the first subparagraph of Article 31(1) of Regulation No 1305/2013, is not one of the designation criteria set out in that regulation.

61 In that context, it should be stated, as the Commission does in its written observations, that the criterion of the location of a farmer’s place of business in a Member State or in a region of a Member State has no connection with the biophysical or natural characteristics of an area, which lead to its eligibility as a mountain area or area facing natural or other specific constraints.

62 Moreover, the questions referred are based, specifically, on the premiss that the agricultural land at issue in the main proceedings is situated in areas which the competent region, namely the Land of Bavaria, has in fact designated, pursuant to Article 32 of Regulation No 1305/2013, as areas eligible for the payments provided for in Article 31 of that regulation.

63 Second, in so far as the criterion of a farmer’s place of business constitutes an additional condition of eligibility laid down by the competent region in the exercise of its discretion referred to in paragraph 43 of the present judgment, it must be held that that criterion is liable to undermine the effectiveness of Articles 31 and 32 of Regulation No 1305/2013 and to infringe the principle of non-discrimination laid down in Article 40(2) TFEU, in a situation such as that at issue in the main proceedings, since that criterion deprives areas eligible for the payment of a compensatory allowance of such a payment solely on the ground that the place of business of the farmer concerned is situated in another region of the Member State concerned.

64 In that regard, as the Advocate General observes in point 57 of his Opinion, where a Member State or a region of a Member State, in its rural development programme, thus makes compensatory allowance payments for mountain areas or areas facing other constraints subject to compliance with a criterion relating to a farmer’s place of business, it sets aside, in the exercise of the discretion which is, moreover, afforded to it, the conditions exhaustively laid down in Regulation No 1305/2013 relating, first, to the designation of the areas eligible under the first subparagraph of Article 31(1) and Article 32 of that regulation and, second, to the active farmer status of the farmer seeking the payment of a compensatory allowance, provided for in Article 31(2) of that regulation, thereby undermining the effectiveness of those provisions and infringing the principle of non-discrimination laid down in Article 40(2) TFEU (see, by analogy, judgments of 25 October 2012, Ketelä, C-592/11, EU:C:2012:673, paragraph 44 and the case-law cited, and of 11 April 2024, Baramlay, C-6/23, EU:C:2024:294, paragraph 53).

65 In the light of the foregoing considerations, the answer to the first and second questions is that point (b) of the second subparagraph of Article 2(1), the first subparagraph of Article 31(1), Article 31(2), Article 32(1)(a), the first subparagraph of Article 32(2) and the second and third subparagraphs of Article 32(3) of Regulation No 1305/2013 must be interpreted as not precluding legislation or an administrative practice of a Member State and/or a region of a Member State which exclude the grant of a compensatory allowance to farmers situated in mountain areas and other areas facing natural or other specific constraints on the ground that the areas eligible for that allowance are situated outside the territory of the region of the Member State whose rural development programme provides for that allowance. However, the abovementioned provisions preclude the place of business of the farmer who operates the area in question from being used as a criterion for the grant of that allowance.

66 By the first part of the third question, the referring court asks, in essence, whether the first subparagraph of Article 31(1) and Article 31(2) of Regulation No 1305/2013 must be interpreted as meaning that it follows directly from those provisions, under EU law, that there is a right to payment of a compensatory allowance to farmers situated in mountain areas and other areas facing natural or other specific constraints, where a Member State or a region of a Member State provides, in its rural development programme, for the grant of such allowances for those types of area.

67 In that regard, it should be noted, as is apparent from paragraph 53 of the present judgment, that the first subparagraph of Article 31(1) of that regulation provides that payments to farmers whose holding is situated in mountain areas and other areas facing natural or other specific constraints ‘shall be granted’ annually per hectare of agricultural area, and that Article 31(2) states that those payments ‘shall be granted’ to farmers who undertake to pursue their farming activity in the areas designated pursuant to Article 32 of that regulation and who are active farmers within the meaning of Article 9 of Regulation No 1307/2013.

68 It is true that the Member States or their regions may, in principle, choose what to include in their rural development programmes or not. Furthermore, it must be noted that, as stated in the wording of Article 13 of Regulation No 1305/2013, the list of measures, set out in Annex VI to that regulation and of particular relevance to the EU priorities for rural development, is merely indicative (see, to that effect, judgment of 6 October 2021, Lauku atbalsta dienests (Business start-up aid in agriculture), C-119/20, EU:C:2021:817, paragraphs 60 and 61).

69 Furthermore, the payment of a compensatory allowance for mountain areas and other areas facing natural or other specific constraints, provided for in the first subparagraph of Article 31(1) and Article 31(2) of Regulation No 1305/2013, cannot be classified as a measure which the Member States or their regions must compulsorily integrate into their respective rural development programmes.

70 However, it follows from the wording of the first subparagraph of Article 31(1) and Article 31(2) of Regulation No 1305/2013 that, as the Advocate General observes, in essence, in points 65 and 67 of his Opinion, where a Member State or a region of a Member State makes provision, in its rural development programme, for payments in respect of mountain areas and other areas facing natural or other specific constraints, which have been designated as eligible areas, in accordance with Article 32 of that regulation, any ‘active farmer’, within the meaning of Article 9 of Regulation No 1307/2013, has a right to payment of such an allowance.

71 It follows that, where a Member State or a region of a Member State has opted, in the exercise of the discretion conferred on it by Regulation No 1305/2013, to draw up a rural development programme providing for the grant of a compensatory allowance for eligible designated areas, the unconditional nature of the wording of the first subparagraph of Article 31(1) and Article 31(2) of that regulation makes such a grant mandatory, so that, where such an option has been exercised, that discretion cannot be relied on in order not to grant the payment of such a compensatory allowance.

72 By contrast, where payment for mountain areas and other areas facing natural or other specific constraints is not provided for in the rural development programme concerned, no entitlement to payment of a compensatory allowance, under the first subparagraph of Article 31(1) and Article 31(2) of Regulation No 1305/2013, can arise for farmers operating agricultural land in those areas.

73 In the light of the foregoing considerations, the answer to the third question is that the first subparagraph of Article 31(1) and Article 31(2) of Regulation No 1305/2013 must be interpreted as meaning that it follows directly from those provisions, under EU law, that there is a right to payment of a compensatory allowance to farmers situated in mountain areas and other areas facing natural or other specific constraints, where a Member State or a region of a Member State makes provision, in its rural development programme, for the grant of such allowances for those types of area.

74 By the first sub-question of the second part of the third question, raised in the event that the first part of the third question is answered in the affirmative, the referring court asks, in essence, whether point (b) of the second subparagraph of Article 2(1) and Article 31(1) of Regulation No 1305/2013 must be interpreted as meaning that the right to payment of a compensatory allowance to farmers situated in mountain areas and other areas facing natural or other specific constraints can be invoked against the Member State or the region of the Member State concerned, where that Member State or that region, independently of that Member State, has decided to grant compensatory allowances to the areas situated on its territory which are eligible for those allowances.

75 As follows from paragraph 51 of the present judgment, it is inherent in the scheme of Regulation No 1305/2013 that a region of the Member State concerned can neither designate eligible areas, within the meaning of Article 32 of that regulation, nor grant compensatory allowances for such areas, in accordance with Article 31(2) of that regulation, outside its territory.

76 Accordingly, the right of an active farmer, within the meaning of Article 9 of Regulation No 1307/2013, to payment of a compensatory allowance under the first subparagraph of Article 31(1) and Article 31(2) of Regulation No 1305/2013 can be invoked only against the local authority which has decided, in its rural development programme, to grant the payment of compensatory allowances solely in respect of the eligible areas situated on its own territory.

77 In the light of the foregoing, the answer to the first sub-question of the second part of the third question is that point (b) of the second subparagraph of Article 2(1) and Article 31(1) of Regulation No 1305/2013 must be interpreted as meaning that the right to payment of a compensatory allowance to farmers situated in mountain areas and other areas facing natural or other specific constraints can be invoked against the Member State or the region of the Member State concerned, where that Member State or that region, independently of that Member State, has decided to grant compensatory allowances for the areas situated on its territory which are eligible for those allowances.

78 By the second sub-question of the second part of the third question, also asked in the event that the first part of that question is answered in the affirmative, the referring court asks, in essence, whether the first subparagraph of Article 31(1) and Article 31(2) of Regulation No 1305/2013 must be interpreted as precluding the Member State or the region of a Member State which, in its rural development programme, allows for the payment of a compensatory allowance to farmers situated in mountain areas and other areas facing natural or other specific constraints, from requiring the farmer concerned to fulfil conditions other than those laid down in those provisions.

79 On reading the order for reference, it appears that that question is submitted to the Court in addition to the first and second questions by which the referring court also asks whether the place of business of the farmer seeking payment of a compensatory allowance under the first subparagraph of Article 31(1) and Article 31(2) of Regulation No 1305/2013 is a lawful criterion for whether or not to grant such an allowance.

80 As follows from paragraph 64 of the present judgment, the first subparagraph of Article 31(1) and Article 32 of Regulation No 1305/2013 list restrictive conditions relating, first, to the designation of eligible areas and, second, to active farmer status, and the Member States or their regions may not depart from them in the exercise of the discretion conferred on those Member States or regions by that regulation.

81 Furthermore, it must be stated that that court also has not set out, for the purposes of resolving the dispute in the main proceedings, the conditions, other than that relating to the place of business, to which it seeks, more specifically, to refer in that second sub-question.

82 In that regard, while it is true that questions referred for a preliminary ruling on EU law enjoy a presumption of relevance, it must be emphasised that, in accordance with settled case-law, the justification for a reference for a preliminary ruling is not that it enables advisory opinions on general or hypothetical questions to be delivered but rather that it is necessary for the effective resolution of a dispute (judgment of 28 March 2017, Rosneft, C-72/15, EU:C:2017:236, paragraph 194 and the case-law cited).

83 In the present case, it follows from the answer given to the first and second questions that the condition relating to the requirement that the place of business of the agricultural holding must be situated in an area eligible for the compensatory allowance is contrary to Articles 31 and 32 of Regulation No 1305/2013. In those circumstances, it does not appear, on the basis of the information set out in the order for reference, that the referring court, in order to resolve the dispute in the main proceedings, also needs an assessment of other conditions that are imposed by the Member State or the region of the Member State which makes provision for the payment of a compensatory allowance in its rural development programme.

84 In the absence of further details in that regard, it follows that the second sub-question of the second part of the third question is inadmissible.

85 In the light of the answer given to the third question, there is no need to answer the fourth question.

86 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring 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.

1. Point (b) of the second subparagraph of Article 2(1), the first subparagraph of Article 31(1), Article 31(2), Article 32(1)(a), the first subparagraph of Article 32(2) and the second and third subparagraphs of Article 32(3) of Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005, as amended by Regulation (EU) 2017/2393 of the European Parliament and of the Council of 13 December 2017,

must be interpreted as not precluding legislation or an administrative practice of a Member State and/or a region of a Member State which exclude the grant of a compensatory allowance to farmers situated in mountain areas and other areas facing natural or other specific constraints on the ground that the areas eligible for that allowance are situated outside the territory of the region of the Member State whose rural development programme provides for that allowance. However, the abovementioned provisions preclude the place of business of the farmer who operates the area in question from being used as a criterion for the grant of that allowance.

2. The first subparagraph of Article 31(1) and Article 31(2) of Regulation No 1305/2013, as amended by Regulation 2017/2393,

must be interpreted as meaning that it follows directly from those provisions, under EU law, that there is a right to payment of a compensatory allowance to farmers situated in mountain areas and other areas facing natural or other specific constraints, where a Member State or a region of a Member State makes provision, in its rural development programme, for the grant of such allowances for those types of area.

3. Point (b) of the second subparagraph of Article 2(1) and Article 31(1) of Regulation No 1305/2013, as amended by Regulation 2017/2393,

must be interpreted as meaning that the right to payment of a compensatory allowance to farmers situated in mountain areas and other areas facing natural or other specific constraints can be invoked against the Member State or the region of the Member State concerned, where that Member State or that region, independently of that Member State, has decided to grant compensatory allowances for the areas situated on its territory which are eligible for those allowances.

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