Marcel Erpelding v Secretaire d'Etat a l'Agriculture et a la Viticulture. (Community Law ) [1988] EUECJ R-84/87 (17 May 1988)

Judgment 1 By judgment of 10 March 1987, which was received at the Court on 20 March 1987, the Conseil d' Etat ( State Council ) of the Grand Duchy of Luxembourg referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions on the interpretation and the validity of Council Regulation ( EEC ) No 857/84 of 31 March 1984 adopting general rules for the application of the levy referred to in Article 5c of Regulation ( EEC ) No 804/68 in the milk and milk products sector ( Official Journal 1984, L 90, p . 13 ), as supplemented by Commission Regulation ( EEC ) No 1371/84 of 16 May 1984 laying down detailed rules for the application of the additional levy referred to in Article 5c of Regulation ( EEC ) No 804/68 ( Official Journal 1984, L 132, p . 11 ). 2 Those questions were raised in an action brought by Mr Erpelding, a farmer, for the annulment of a decision of the State Secretary for Agriculture and Viticulture of the Grand Duchy of Luxembourg granting the applicant an additional individual milk reference quantity . 3 It is apparent from the documents before the Court that in accordance with a development plan approved by the Luxembourg Government, Mr Erpelding regularly increased the milk production of his holding from 1975, when it stood at 145 093 kilograms, to 1979 when it stood at 178 969 kilograms . However, from 1980 onwards his production fell from 139 969 kilgrams in 1980 to 84 567 kilograms in 1982 . The fall was attributable to the fact that Mr Erpelding' s dairy cows were affected with chronic mastitis, the cause of which could not be identified until the beginning of 1983 . The milk production of the holding was again cut at the end of 1983 by Canadian 'flu which affected some of Mr Erpelding' s cows . The farm' s dairy production only began to rise from 1985 during which year it reached 160 000 kilograms . 4 In the light of those facts Mr Erpelding asked the State Secretary for Agriculture and Viticulture to grant him an extra individual milk reference quantity requesting that for that purpose account should be taken of a notional reference quantity to be calculated by extrapolating the normal trend of his farm' s milk production during the 1975 to 1979 period . By decision of 28 January 1985 the State Secretary for Agriculture and Viticulture granted Mr Erpelding an additional quantity, added to his individual reference quantity, of 1 779 kilograms of milk, which corresponded to the difference between his production in 1981 and that in 1983 . 5 Mr Erpelding thereupon brought an action before the Conseil d' Etat of the Grand Duchy of Luxembourg for the annulment of the abovementioned decision in so far as its effect was to refuse him the benefit of an additional quantity calculated on the basis of his milk production during the 1975 to 1979 period . 6 Considering that the resolution of the dispute was dependent on the interpretation and the validity of the Community rules concerning additional milk levies, the Conseil d' Etat stayed proceedings and referred the following questions to the Court for a preliminary ruling : "Do Article 3 ( 3 ) of Council Regulation ( EEC ) No 857/84 of 31 March 1984 and Article 3 of Commission Regulation ( EEC ) No 1371/84 of 16 May 1984, by permitting a producer whose milk production during the reference year referred to under Article 2 of Regulation No 857/84 has been affected by exceptional events occurring before or during that year to obtain, on request, reference to another calendar reference year within the 1981 to 1983 period, preclude account from being taken, on equitable grounds and to avoid discrimination between producers, of production in a year prior to 1981 or of a notional production calculated by extrapolating the normal trend in his milk production during a period prior to the misfortune which befell the producer in question if his production has been substantially reduced as a result of an extraordinary event not involving fault on his part throughout the 1981 to 1983 period? If the first question is answered in the affirmative : Are Article 3 ( 3 ) of Regulation ( EEC ) No 857/84 and Article 3 of Regulation ( EEC ) No 1371/84 compatible with Article 39 ( a ) and ( b ) of the Treaty of Rome which guaranteed the rational development of agricultural production and the optimum utilization of the factors of production, in particular labour, and a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture, when, in the case of a milk producer whose farm has been affected by the exceptional events defined in the contested provisions not only in 1981 but also in 1982 and 1983, those provisions prevent the authorities of a Member State from choosing a reference year in which the situation of the farm in question was normal?" 7 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the relevant Community provisions, the Luxembourg implementing rules, the procedure and the observations submitted to the Court which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court . The relevant provisions 8 In order to give a proper answer to the national court' s questions it is appropriate first to set out the applicable Community rules . 9 Faced with constantly increasing milk production, by Regulation No 856/84 of 31 March 1984 amending Regulation No 804/68 on the common organization of the market in milk and milk products ( Official Journal 1984, L 90, p . 10 ) the Council introduced an additional levy payable, by virtue of Article 1 of that regulation, on the quantities of milk delivered in excess of a reference quantity to be determined; it is payable either by milk producers ( Formula A ) or by purchasers of milk or other milk products who are to pass it on to producers who have increased their deliveries, in proportion to their contribution to the purchaser' s reference quantity being exceeded ( Formula B ). 10 The procedure for calculating the reference quantity, that is to say the quantities exempt from the additional levy, was laid down by Council Regulation No 857/84, cited above . Pursuant to Article 2 ( 1 ), the reference quantity is to be equal to the quantity of milk or milk equivalent delivered or purchased during the 1981 calendar year, plus 1 %. However, under Article 2 ( 2 ), the Member States may provide that on their territory the reference quantity shall be equal to the quantity of milk or milk equivalent delivered or purchased during the 1982 or 1983 calendar year, weighted by a percentage established so as not to exceed the guaranteed quantity laid down for the Member State concerned . The Grand Duchy of Luxembourg opted for the year 1981 within formula B . 11 Derogations from those rules are envisaged, for certain special situations, in Articles 3, 4 and 4a of Regulation No 857/84 . Thus, under Article 3 Member States are authorized to grant special reference quantities to producers who have adopted milk production development plans under Council Directive 72/159/EEC of 17 April 1972 on the modernization of farms ( Official Journal, English Special Edition 1972 ( II ), p . 324 ) lodged before 1 March 1984 or to producers who have made investments without a development plan ( Article 3 ( 1 ) ) and to young farmers setting up after 31 December 1980 ( Article 3 ( 2 ) ). 12 Furthermore, the first subparagraph of Article 3 ( 3 ) of Regulation No 857/84 provides that "producers whose milk production during the reference year referred to under Article 2 has been affected by exceptional events occurring before or during that year shall obtain, on request, reference to another calendar reference year within the 1981 to 1983 period ". The second subparagraph of Article 3 ( 3 ) lists situations which may justify reference to another reference year . That list was supplemented by Article 3 of Commission Regulation No 1371/84, cited above . 13 Article 4 ( 1 ) of Regulation No 857/84 empowers the Member States, in order to complete the restructuring of milk production, inter alia to grant additional reference quantities to producers realizing a milk production development plan approved after the entry into force of Regulation No 857/84 under Directive 72/159/EEC and to producers undertaking farming as their main occupation . 14 Moreover, Article 4a, inserted by Council Regulation ( EEC ) No 590/85 of 26 February 1985 ( Official Journal 1985, L 68, p . 1 ), authorizes the Member States for a limited period to allocate non-utilized reference quantities of producers or purchasers to producers or purchasers in the same region and, if necessary, in other regions . Finally, Article 7 provides that where an undertaking is sold, leased or transferred by inheritance all or part of the corresponding reference quantity is to be transferred to the purchaser, tenant or heir . The first question 15 The first question essentially seeks to ascertain whether Council Regulation No 857/84 of 31 March 1984, as supplemented by Commission Regulation No 1371/84 of 16 May 1984, precludes a producer whose milk production has been affected by an exceptional event throughout the 1981 to 1983 period from obtaining reference either to the quantity of milk or milk equivalent which he delivered during a year prior to 1981 or to a notional quantity to be calculated by extrapolating the normal trend in his deliveries in a particular period prior to the occurrence of that exceptional event . 16 In this respect, Mr Erpelding maintains that it is consonant with the spirit of the rules under consideration to allow a producer who has been the victim of exceptional events during the three reference years ( 1981 to 1983 ) to request reference either to production in an earlier year or to a notional production calculated by extrapolation from the production of earlier years on the basis of a normal trend in the dairy production of the farm until the reference year in question . That interpretation, he argues, is the only way to ensure the effectiveness of the provisions in question and to avoid a breach of both the principle of proportionality and the principle of equal treatment . Furthermore, an exceptional situation, like that suffered by him, constitutes force majeure and thus justifies his receiving special treatment for reasons of fairness . 17 The French Government, the Luxembourg Government, the Council and the Commission disagree and point out that Article 3 ( 3 ) of Regulation No 857/84, which allows reference to another reference year within the 1981 to 1983 period, is of an exceptional nature and must therefore be interpreted strictly . Consequently, it precludes reference to a reference year outside that period or to a notional production calculated by extrapolation . However, the French and Luxembourg Governments and the Council and Commission observe that under various other provisions of the rules in question, in particular Article 3 ( 1 ), Article 4 ( 1 ) and Article 4a of Regulation No 857/84, subject to certain conditions, specific or additional quantities may be allocated to producers in situations like the one at issue in the main proceedings . 18 It should be noted that the structure and the purpose of the rules concerned indicate that they contain an exhaustive list of the situations in which reference quantities or individual quantities may be granted and set out precise rules concerning the determination of those quantities . Since none of those provisions makes it possible for producers to obtain reference to milk deliveries made by them outside the 1981 to 1983 period it must be held that such an option is excluded, even in cases where the persons concerned had no representative production throughout the period . 19 That interpretation is borne out by the fact that Article 3 ( 3 ) of Council Regulation No 857/84, as supplemented by Article 3 of Commission Regulation No 1371/84, which is the only provision that enables producers to choose a reference year other than that selected by the Member State concerned within the 1981 to 1983 period, expressly limits that option to one or other of the two remaining years in that period . 20 That interpretation cannot be considered to be incompatible with the requirements flowing from the concept of force majeure on the ground that a significant reduction in a producer' s production, without fault on his part, as a result of an extraordinary event, constitutes for him force majeure of which account should be taken by Community law . Although the Court has consistently held that force majeure may excuse an operator from certain legal consequences which, under the applicable rules, would normally flow from the non-occurrence of a fact or the non-compliance with an obligation it can never create for the benefit of that operator a right not provided for in the relevant rules . 21 It must, however, be stated that although that interpretation of the rules does not allow a producer' s individual quantities to be calculated on the basis of his deliveries outside the 1981-83 period, Member States are not thereby precluded from taking account, for the purposes of granting specific or additional quantities, of the situation of a producer who has had no representative production within that period, in so far as the person concerned falls within one or more of the cases specifically provided for by the regulation concerned . In particular, Article 4a of Regulation No 857/84 allows Member States to remedy the exceptional situation of individual producers on an annual basis and within the limit of the non-utilized reference quantities . 22 The answer to the first question should therefore be that Council Regulation No 857/84 of 31 March 1984, as supplemented by Commission Regulation No 1371/84 of 16 May 1984, precludes a producer whose milk production has been affected by an exceptional event throughout the 1981 to 1983 period from having reference made either to the quantity of milk or milk equivalent which he delivered in a year prior to 1981 or to a notional quantity to be calculated by extrapolating the normal trend in his deliveries during a certain period prior to the occurrence of that exceptional event . The second question 23 The purpose of the second question is to ascertain whether, in the light of the interpretation given in answer to the first question, the rules under consideration are valid . 24 Mr Erpelding maintains that the rules are invalid inasmuch as they make it impossible for producers who have been victims of an exceptional situation throughout the 1981 to 1983 period to choose a reference year outside that period . In that case the contested rules are incompatible with the objectives of the agricultural policy set out in Article 39 ( a ) and ( b ) of the Treaty, that is to say the rational development of agricultural production, the optimum utilization of the factors of production and the guarantee of a fair standard of living for the agricultural community . Furthermore, those rules breach the principles of proportionality and equality of treatment . 25 For its part, the Commission maintains that the rules under consideration are valid and points out that any system to curb production necessarily involves putting a stop to the expansion of production . Furthermore, the Court has acknowledged that the Community institutions enjoy a wide discretion regarding the drawing up of rules on the common organization of the markets and, in this case, that discretion has not been exceeded . 26 First, as regards the argument that Article 39 ( a ) and ( b ) of the Treaty have not been complied with, it should be noted that the purpose of the additional levy system is to re-establish, by limiting milk production, the balance between supply and demand in the milk market, which is characterized by structural surpluses . This measure, therefore, is within the ambit of the objectives of rational development of milk production and, by contributing to a stabilization of the income of the agricultural community affected, that of ensuring a fair standard of living for the agricultural community . The argument that Article 39 ( a ) and ( b ) have not been complied with cannot therefore be accepted . 27 As for the complaint that the principle of proportionality has been breached, the Court has consistently held that when a situation necessitates the evaluation of a complex economic situation, as is the case concerning the common agricultural policy, the Community legislature enjoys a wide discretion as to the nature and scope of the measures to be taken . The particular circumstances mentioned in the judgment making the reference do not make it possible to hold that the bounds of that discretion have been exceeded in this case . 28 By allowing producers whose milk production has significantly declined because of an exceptional event during the reference year selected by the Member State concerned to choose another reference year, but limiting that choice to years in the 1981 to 1983 period, the Community legislature has duly taken into consideration the special position of those operators, but at the same time has complied with the imperative requirements of legal certainty and the effectiveness of the additional levy system . Furthermore, it has allowed Member States, under certain conditions, to re-allocate non-utilized reference quantities to producers who are in a special position . It cannot, therefore, be accused of having imposed on operators burdens disproportionate to the objectives pursued by failing to take into account every conceivable circumstance, in particular those mentioned in the judgment making the reference . 29 For the same reasons it cannot be held that there has been any discrimination between producers within the Community, which is prohibited by Article 40 ( 3 ) of the Treaty . The Court has consistently held that that provision, as a specific expression of the general principle of equality, precludes comparable situations from being treated in a different manner unless the difference in treatment is objectively justified . 30 In this case it appears that the difference in treatment of which Mr Erpelding is complaining stems from the fact that by not allowing producers whose milk production has been significantly reduced throughout the 1981 to 1983 period to obtain an individual quantity based on a representative production, the rules affect that category of producers adversely in comparison with those who are able to rely on a representative production . However, such an effect is justified by the need to limit the number of years which may be taken as reference years, in the interests of both legal certainty and the effectiveness of the additional levy system . The resulting difference in treatment is therefore objectively justified and consequently may not be regarded as discriminatory within the definition of that concept as established by the Court . 31 The answer to the second question should therefore be that consideration of Council Regulation No 857/84 of 31 March 1984, as supplemented by Commission Regulation No 1371/84 of 16 May 1984, in the light of the circumstances referred to in the judgment making the reference has disclosed no factor of such a kind as to affect the validity of the rules in question . Costs 32 The costs incurred by the Luxembourg and French Governments and the Council and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable . As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings before the national court, the decision on costs is a matter for that court . On those grounds, THE COURT ( Fifth Chamber ), in answer to the questions submitted to it by the Conseil d' Etat of the Grand Duchy of Luxembourg by judgment of 10 March 1987, hereby rules : ( 1 ) Council Regulation No 857/84 of 31 March 1984, as supplemented by Commission Regulation No 1371/84 of 16 May 1984, precludes a producer whose milk production has been significantly affected by an exceptional event throughout the 1981 to 1983 period from having reference made either to the quantity of milk or milk equivalent which he delivered in a year prior to 1981 or to a notional quantity to be calculated by extrapolating the normal trend in his deliveries during a particular period prior to the occurrence of that exceptional event . ( 2 ) Consideration of Council Regulation No 857/84 of 31 March 1984, as supplemented by Commission Regulation No 1371/84 of 16 May 1984, in the light of the circumstances referred to in the judgment making the reference, has disclosed no factor of such a kind as to affect the validity of the rules in question . © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII