Opinion of the Advocate-General
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My Lords,
1 . This reference for a preliminary ruling is once again concerned with the interpretation of Community rules concerning the allocation of milk quotas to farmers whose level of milk production has been affected by exceptional events .
2 . It will be recalled that, with a view to curbing milk production, Council Regulation ( EEC ) No 856/84, which amended Regulation ( EEC ) No 804/68 on the common organization of the market in milk and milk products, introduced a levy, additional to the co-responsibility levy, on quantities of milk or milk equivalent delivered beyond a reference quantity to be determined ( Official Journal 1984, L 90, p . 10 ). In implementing the levy system, Member States were given a choice between two formulae . Under formula A, the levy is payable by the individual milk producer on the quantities of milk delivered by him to a purchaser which in the relevant 12-month period exceed the reference quantity attributed to him . Under formula B, it is the purchaser who pays the levy on the quantities delivered by producers which, in the relevant 12-month period, exceed a reference quantity to be determined . The sum of the reference quantities allocated in a Member State must not exceed a guaranteed total quantity equal to the quantity of milk or other milk products delivered in that Member State in 1981, plus 1 %.
3 . General rules for the application of the levy system and in particular the determination of reference quantities are laid down in Council Regulation ( EEC ) No 857/84 ( Official Journal 1984, L 90, p . 13 ). Where formula A is applied, the reference quantity allocated to a producer ( i.e . the quantity exempt from the additional levy ) is in principle to be equal to the quantity of milk or milk equivalent delivered by the producer during the 1981 calendar year ( Article 2(1 ) ). However, Member States may instead provide that the reference quantity shall be equal to the quantity of milk or milk equivalent delivered during the 1982 or the 1983 calendar year, weighted by a percentage established so as not to exceed the guaranteed total quantity for that Member State ( Article 2(2 ), first sentence ). The percentage referred to may, under conditions to be determined by the Commission according to the management committee procedure, be varied on the basis of the level of deliveries of certain categories of persons liable for the levy, of the trend in deliveries in certain regions between 1981 and 1983, or of the trend in deliveries of certain categories of persons liable during that period ( Article 2(2 ), second sentence ). Member States may moreover adapt the percentages referred to in Article 2(1 ) and ( 2 ) in order to ensure the application of Articles 3 and 4 ( Article 2(3 ) ).
4 . Article 3 is concerned with the allocation of reference quantities to producers in special situations . Article 3(3 ) deals with hardship cases, and provides that "producers whose milk production during the reference year referred to in 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 list of situations in Article 3(3 ) justifying the choice of an alternative reference year includes an epizootic ( outbreak of disease ) affecting all or part of the producer' s milk herd .
5 . Commission Regulation ( EEC ) No 1371/84 ( Official Journal 1984, L 132, p . 11 ) lays down detailed rules for the application of the additional levy . Article 2(1 ) sets out the factors which Member States must take into account if, in accordance with Article 2(2 ) of Regulation No 857/84, they vary the percentage for determining reference quantities . Article 3 makes certain additions to the list of special situations justifying the use of a different reference year under Article 3(3 ) of Regulation No 857/84 .
6 . In implementing the additional levy system, the Federal Republic of Germany chose to apply formula A and adopted 1983 as the reference year for the determination of individual quotas . The national implementing legislation, the Milch-Garantiemengen-Verordnung ( Milk ( Guaranteed Quantities ) Regulation ) of 25 May 1984, provided that the individual producer quota should correspond to the quantity of milk delivered to a purchaser in 1983, less 4 % ( paragraph 4(2 ), first sentence ). Where the quantity delivered in 1983 was higher than that delivered in 1981, the individual quota was reduced by up to a further 5 % in accordance with a calculation referred to as the "Steigerungsabzug" or abatement based on the increase in production ( paragraph 4(2 ), second sentence, as amended by a further national regulation of 27 September 1984 ).
7 . Mr Berkenheide, the plaintiff in the national proceedings, is a dairy farmer . According to the order for reference, in 1980, 1981, 1982 and 1983 he delivered to the purchasing dairy 114 306 kg, 105 970 kg, 102 472 kg and 121 721 kg of milk respectively . The milk quota allocated to him was calculated on the basis of his 1983 deliveries less 4 %, i.e . approximately 116 900 kg and, because his deliveries in 1983 were higher than in 1981, that quantity was reduced by a further 4.9 %. That resulted in a quota of 110 900 kg of milk .
8 . Mr Berkenheide appealed against that allocation, arguing that the further reduction of 4.9 % was not justified in his case and that he was therefore entitled to a quota of 116 900 kg . He pointed out that there had been an outbreak of mastitis on his farm in 1981 and 1982 and that a certificate of 20 May 1986 issued by the Landwirtschaftskammer Westfalen-Lippe recognized that his milk production in those years had been affected by an exceptional event within the meaning of Article 3(3 ) of Regulation No 857/84 . Mr Berkenheide argued that, for the purpose of the application of the further reduction provided for in the national legislation, Article 3(3 ) entitled him to refer not to his actual production in 1981, but to the quantity he would have produced if there had been no outbreak of mastitis . If reference were made to that notional figure, then it was clear that there was no increase in production between 1981 and 1983 and no place for a further reduction in his quota .
9 . Since it took the view that the proceedings raised an issue of Community law, the Finanzgericht ( Financial Court ) Duesseldorf referred the following question to the Court :
"Is it contrary with Article 3(3 ) of Council Regulation ( EEC ) No 857/84 of 31 March 1984 ( Official Journal 1984, L 90, p . 13 ) in conjunction with Article 3 of Commission Regulation ( EEC ) No 1371/84 of 16 May 1984 ( Official Journal 1984, L 132, p . 11 ) to interpret the second sentence of Paragraph 4(2 ) of the Milch-Garantiemengen-Verordnung ( Milk ( Guaranteed Quantities ) Regulation ) of 25 May 1984 ( Bundesgesetzblatt 1984 I, p . 720 ), as amended for the first time by the regulation of 27 September 1984 ( Bundesgesetzblatt 1984 I, p . 1255 ), so as to mean that if milk production in the 1981 calendar year was affected by an exceptional event ( an epizootic ) within the meaning of the abovementioned provisions of EEC law the quantity of milk which it is estimated that the milk-producer would have produced in 1981 had the event not occurred, rather than the quantity actually produced in 1981, is taken as the basis for calculating the "Steigerungsabzug" ( abatement based on the increase in production )?"
10 . As phrased, the question put by the national court seeks to establish the compatibility of a particular interpretation of a provision of national law with Community law . In the context of Article 177 of the Treaty the Court is of course not empowered to rule on such a question . However, the national court' s question can readily be understood as asking the Court to rule on whether, where a Member State chooses 1983 instead of 1981 as the reference year for the determination of individual reference quantities, and provides in its national implementing legislation for an additional reduction in the reference quantities of producers whose level of milk production in 1983 was higher than in 1981, Article 3(3 ) of Regulation No 857/84 must be interpreted as meaning that a producer may require that Member State, when determining whether his quota must be so reduced, to take account of the fact that in 1981 his milk production was affected by an exceptional event . In other words, can Article 3(3 ) be relied on by a producer in order to resist the application to him of the additional reduction?
11 . That question must in my view clearly be answered in the negative . Article 3(3 ) permits the producer to choose another reference year within the period 1981-83 where his milk production in the course of the reference year adopted by the Member State in question is affected by an exceptional event . However, in the present case, Mr Berkenheide does not seek to adopt an alternative reference year, and his milk production was in any event affected by an exceptional event ( i.e . the outbreak of mastitis ) not in 1983, the reference year adopted by the Federal Republic, but in 1981 and 1982 .
12 . That Article 3(3 ) of Regulation No 857/84 must be given a strict interpretation is confirmed by the Court' s case-law, in particular its judgment in Case 84/87 Erpelding v Secretary of State for Agriculture and Viticulture (( 1988 )) ECR 2647 . In that case a producer whose milk production was affected by an exceptional event ( as in the present case, an outbreak of mastitis ) throughout the period 1981-83 sought to have taken into account, for the determination of his quota, either the quantity delivered in a year prior to 1981, or the notional quantity which he would have delivered if the exceptional event had not occurred . The Court said that :
"It should be noted that the structure and 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" ( paragraph 18 ).
13 . It thus appears that Article 3(3 ) of Regulation No 857/84 cannot assist Mr Berkenheide . The Court, however, in a written question addressed to the German Government and the Commission, has asked whether the question raised by the national court should not be dealt with by reference to Article 2(2 ) of Regulation No 857/84, rather than Article 3(3 ), and both have answered in the affirmative . It will be recalled that under Article 2(2 ) a Member State may provide that the quota is to be equal to the quantity of milk delivered in 1982 or 1983, weighted by a percentage to ensure that the sum of the individual quotas does not exceed the total guaranteed quantity, and may vary that percentage on the basis of a number of factors including the trend in deliveries of certain categories of persons during the 1981-83 period . It was in application of Article 2(2 ) that the Federal Republic in its implementing legislation provided for an initial 4 % reduction in all quotas, and for a further reduction of up to 5 % in respect of producers whose milk production increased between 1981 and 1983 . It is essentially that further reduction which is at issue in this case .
14 . If it is re-phrased in terms of Article 2(2 ), the national court' s question can be understood as asking whether Article 2(2 ) of Regulation No 857/84 ( as supplemented by Article 2(1 ) of Commission Regulation No 1371/84 ) must be interpreted as meaning that where a Member State chooses 1983 as its reference year and makes use of the option referred to in the second sentence of Article 2(2 ) of Regulation No 857/84 to vary the percentage applied to determine the reference quantities for producers in such a way that it provides in its national implementing legislation for an additional reduction in the reference quantities of producers whose level of production was higher in 1983 than in 1981, a producer may require that Member State, when determining whether his reference quantity must be so reduced, to take account of the fact that in 1981 his milk production was affected by an exceptional event .
15 . In my view, that alternative question must also be answered in the negative . The second sentence of Article 2(2 ) gives a Member State the option of varying the percentage which it has previously adopted in order to ensure that the total guaranteed quantity is not exceeded . However, if a Member State exercises that option, it must do so by reference to one or more of the general, objective factors set out in Article 2(2 ) of Regulation No 857/84 and Article 2(1 ) of Regulation No 1371/84 . There is nothing in the language of these provisions to suggest that a Member State, when varying the percentage, is permitted to take account of the situation of individual producers .
16 . Such an interpretation is in my view also excluded by the scheme of the legislation taken as a whole . As already mentioned, in Case 84/87 Erpelding, cited above, the Court ruled that Regulation No 857/84 lays down precise rules concerning the determination of reference quantities : therefore in the absence of any indication to the contrary in Article 2(2 ), individual hardship situations must be left out of account in the context of that provision . Moreover, Article 3(3 ) already deals with hardship situations, and by giving to producers whose milk production in the reference year chosen by the Member State in question was affected by an exceptional event the choice of an alternative reference year within the 1981-83 period, the Community legislator has duly taken into account the special situation of those producers ( Case 84/87 Erpelding, paragraph 28 ).
17 . Finally, to permit Member States under Article 2(2 ) to take account of the individual position of producers such as Mr Berkenheide would in my view also risk compromising the legal certainty and the effectiveness of the levy system . I am therefore of the opinion that Article 2(2 ) of Regulation No 857/84, in conjunction with Article 2(1 ) of Regulation No 1371/84, cannot assist Mr Berkenheide to resist the application of the further reduction of quota provided for in the national legislation .
18 . Accordingly, the question referred by the national court should in my opinion be answered as follows :
"Both Article 3(3 ) of Council Regulation ( EEC ) No 857/84, in conjunction with Article 3 of Commission Regulation ( EEC ) No 1371/84, and Article 2(2 ) of Council Regulation No 857/84, in conjunction with Article 2(1 ) of Commission Regulation No 1371/84, must be interpreted as meaning that, where a Member State has chosen 1983 instead of 1981 as the reference year for the determination of individual reference quantities, and provides in its national implementing legislation for an additional reduction in the reference quantities of producers whose level of milk production in 1983 was higher than in 1981, a producer may not require that Member State, when applying to him that additional reduction, to take account of the fact that his milk production in 1981 was affected by an exceptional event ."
(*) Original language : English .
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