European Court Rejects EU Attempt to Promote Farm Subsidy Transparency
Wednesday, November 10, 2010
On the same day that the European Court of Auditors published an Annual Report documenting cases of fraud in the area of European Union agricultural subsidy programs, the European Court of Justice ruled that the German government’s publication on a website of data naming the beneficiaries of EU agricultural subsidies and indicating the precise amounts received by them constitutes an interference with the right of those beneficiaries to protect their private life. Obviously, the ECJ’s decision disappointed advocates for increased transparency and accountability in EU spending programs.
According to the EU Court of Auditors’ Annual Report, the stated objectives of the EU’s common agricultural policy are to increase agricultural productivity; to ensure a fair standard of living for the agricultural community; to stabilize markets; to assure the availability of supplies; and to ensure that supplies reach consumers at reasonable prices.
The EU budget finances the common agricultural policy expenditure mainly through two Funds: the European Agricultural Guarantee Fund (the “EAGF”), which fully finances EU direct aid and market measures, and the European Agricultural Fund for Rural Development, which co-finances at varying rates rural development programs (the “EAFRD”).
Only farmers are eligible for EU area aid. A farmer is defined to be a person who carries out an agricultural activity. An agricultural activity is defined as the production, rearing or growing of agricultural products including harvesting, milking, breeding animals and keeping animals for farming purposes, or maintaining the land in good agricultural and environmental condition (“GAEC”). According to the relevant EU rules, if the applicant does not carry on any other agricultural activity, the maintenance of land in GAEC constitutes the minimum agricultural activity required of the applicant to be eligible for aid.
Expenditure under both funds is channeled through some 80 national or regional paying agencies. Before these paying agencies can claim any expenditure from the EU budget, they must be accredited on the basis of criteria laid down by the EU Commission. These paying agencies make payments to the beneficiaries. Prior to doing so, they must, either directly or through delegated bodies, verify the eligibility of the aid applications. The accounts and payments of the paying agencies are examined by independent audit bodies (“certification bodies”), which report to the EU Commission in February of the following year.
According to the Annual Report, in 2009, out of 241 transactions examined by the EU Court of Auditors, 66, or 27%, were affected by error. In the EAGF, out of 148 transactions sampled, 35, or 24%, were affected by errors. With regard to EAFRD, out of 80 transactions sampled, 25, or 31%, were affected by errors.
The Annual Report provides an example of an “error” involving fraud in the Single Area Payment Scheme (“SAPS”), a direct aid arrangement that provides for the payment of uniform amounts per eligible hectare of agricultural land. SAPS is currently applied in ten of the new EU Member States and, in 2009, accounted for 3.723 million euros in expenditures.
In the highlighted example, a SAPS payment was made to a beneficiary without any proof that the aid recipient was carrying out an agricultural activity. The beneficiary, a limited company owned by a municipality, made a SAPS claim for more than 530 hectares of meadows and pasture parcels. No proof could be provided to the auditors that the company qualified for aid by carrying out an agricultural activity (i.e., either producing or growing agricultural products; rearing or keeping animals for farming purposes; or maintaining land in good agricultural condition). As a result, the payment of the aid, in the amount of 30,000 euros, was not justified.
The Court of Auditors emphasized in the Annual Report that it considers this type of case to be a further example of the problem that the Court of Auditors had already pointed out in its 2008 Annual Report. This makes even more unfortunate the European Court of Justice’s rejection of an EU law designed to introduce some transparency and accountability in the area of agricultural subsidies.
EU law pertaining to expenditures made under the common agricultural policy provides that Member States are to ensure the annual publication of the names of beneficiaries of the EAGF and EAFRD and of the amounts received by each beneficiary under each of those Funds.
The website of the German Federal Office for Agriculture and Food (the “Bundesanstalt”) makes available to the public the names of beneficiaries of aid from the EAGF and the EAFRD, the place in which those beneficiaries are established or reside, and the postcode of that place, in addition to the annual amounts received. This site also has a search tool.
For 2008, Volker und Markus Schecke GbR, an agricultural firm, and Hartmut Eifert, a full-time farmer, applied to the competent local authorities for funds from the EAGF or the EAFRD. Their respective applications were approved by decisions of December 2008.
Claiming that the listing of their names and other information on the website of the Bundesanstalt violated their right to private life, Volker und Markus Schecke GbR and Hartmut Eifert petitioned the Administrative Court in Wiesbaden, Germany to prohibit the publication. In turn, the German national court requested the European Court of Justice to examine whether the European Union rules which impose on the Bundesanstalt the obligation to publish those data amount to an unjustified interference with the fundamental right to the protection of personal data.
According to a press release explaining the ECJ’s decision, the ECJ decided that publication on a website of data naming the beneficiaries of EAGF and EAFRD aid and indicating the precise amounts received by them constitutes, by reason of the fact that the data is available to third parties, an interference with the right of those beneficiaries to respect for their private life, in general, and to the protection of their personal data, in particular. According to the ECJ, in order to be justified, such interference must be provided for by law, must respect the essence of those rights and, subject to compliance with the principle of proportionality, must be necessary and genuinely meet objectives of general interest recognized by the European Union or the need to protect the rights and freedoms of others.
In this context, the ECJ acknowledged that, in a democratic society, taxpayers have a right to be kept informed of the use made of public funds. However, in the opinion of the ECJ, the fact remains that the striking of a proper balance between the various interests involved made it necessary for the EU institutions concerned, before adopting the disputed provisions, to ascertain whether publication via a publicly accessible website in each Member State of data naming each of the beneficiaries concerned and the precise amounts received by each of them from the EAGF and the EAFRD--with no distinction being drawn according to the duration, frequency or nature and amount of the aid received--did not go beyond what was necessary for achieving the legitimate aims pursued. As far as individual natural persons benefiting from aid under the EAGF and the EAFRD are concerned, the ECJ decided that it did not appear that the Council of the European Union and the EU Commission sought to strike such a balance.
Accordingly, the Court concluded that, by imposing an obligation to publish personal data relating to each natural person who was a beneficiary of aid under the EAGF and the EAFRD, without drawing a distinction based on relevant criteria, such as the periods during which those persons received such aid, the frequency of such aid or the nature and amount thereof, the Council and the Commission exceeded the limits imposed by compliance with the principle of proportionality. To that extent, the ECJ declared invalid certain provisions of one applicable EU regulation and declared another applicable EU regulation invalid in its entirety.
Acknowledging the large number of publications which have taken place in the Member States on the basis of rules which were regarded as being valid, the ECJ decided that no actions could be brought to challenge the effects of the publication of the lists of beneficiaries of EAGF and EAFRD aid carried out by the national authorities during the period prior to the date on which the judgment in the present cases was delivered.
Now, EU authorities must go back to the drawing board and adopt regulations that narrowly tailor the information that may be published about EAGF and EAFRD recipients in a manner that does not violate their right to their private life.
Jim Kelly is the President of Solidarity Center for Law and Justice, P.C., a public interest civil and human rights law firm based in Atlanta, Georgia. The opinions expressed herein are his own.
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