Emissions Trading, National Allocation Plans, Subsidiarity and Exceedance of Powers: Cases T-183/07 and T-263/07

The European states love to pontificate about reducing greenhouse gas emissions. Yet doing something practical to really reduce them is a different matter. The Commission tried to do something to reduce those emissions but in Case T-183/07 Poland v. Commission and T-263/07 Estonia v. Commission suffered yet another set back in the Court of First Instance. But when doing something it helps to get it right and to act legally. In fact, the judgments are really damning of the cavalier way the Commission treated the member States in question.

Directive 2003/87/EC of the European Parliament and of the Council of October 13th 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community sets up an EC wide scheme for greenhouse gas emission allowance trading within the EU. It provides that, for each five-year period, each member State should develop a national allocation plan (NAP) stating the total quantity of allowances that it intends to allocate for that period and how it proposes to allocate them. The plan should be based on objective and transparent criteria, including the criteria listed in the Directive, taking due account of comments from the public. It is to be published and notified to the Commission and to the other member States. The Commission may reject it or any aspect of it if it considers the NAP to be incompatible with the criteria listed in the Directive. The member State must not decide upon the total quantity of allowances that it is allocating for the period concerned and must not initiate the process for the allocation of those allowances to the operator of each installation, until proposed amendments are accepted by the Commission.

In 2006 Poland and Estonia notified the Commission of their NAPs for the period from 2008 to 2012. The Commission decided in 2007 that those NAPs were incompatible with the criteria in the Directive and decided that the total annual quantities of emission allowances should be reduced, respectively to 26.7% and 47.8% less than those proposed by those two member States.

Both Poland and Estonia sought annulment of the Commission decisions before the Court of First Instance on the grounds, essentially, that the Commission had exceeded its powers in rejecting their NAPS.

The Court of First Instance agreed with Poland and Estonia. It held that the Commission had exceeded its powers of review of NAPS conferred upon it by Directive 2003/87/EC.

The Court of First Instance recalled that administrative measures must be adopted in compliance with the competences attributed to various administrative bodies and that in principle, according to Article 249 EC, when the directive in question does not prescribe the form and methods for achieving a particular result, the freedom of action of the member States as to the choice of the appropriate forms and methods for achieving that result remains complete. It follows that, where there is no EC rule prescribing clearly and precisely the form and methods that must be employed by the member State, the Commission has the burden, when exercising its supervisory power, pursuant in particular to Articles 211 EC and 226 EC, of proving to the required legal standard that the instruments used by the member State in that respect are contrary to EU law (Case T‑374/04 Germany v Commission [2007] ECR II‑4431, paragraph 78) (For our post on that case, see here).

The Court made a rare reference to the principle of subsidiarity enshrined in the second paragraph of Article 5 EC and stated that such a principle binds the EU institutions in the exercise of their legislative functions. According to that principle, in areas which do not fall within its exclusive competence the EU is to take action only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the member States and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the Community. In the case of environmental protection, which is governed by Articles 174 EC to 176 EC, where the EU and the member States share competence, the EU, that is to say the Commission in the present case, has the burden of proving to what extent the powers of the Member State and, therefore, its freedom of action, are limited in light of Article 10 and the criteria set out in the Directive (Germany v Commission, paragraph 79).

The Court held that the Directive provides in its Article 9(1) and (3) and from Article 11(2) that the member State alone has the power, first, to draw up the national allocation plan, and, secondly, to take final decisions fixing the total quantity of allowances which it will allocate for each five-year period and the distribution of that quantity amongst economic operators. The Member State enjoys a certain room for manoeuvre in choosing the measures which it considers the most appropriate to attain, in the specific context of the national energy market, the result prescribed by the Directive (T-374/04 Germany v Commission, paragraph 80).

As to the Commission's powers to review the national NAP submitted to it, the Court held that those powers were circumscribed by Article 9(3) of the Directive. Thus the Commission is authorized to verify the conformity of the NAP notified by the member State with the criteria set out in Annex III and the provisions of Article 10 of the Directive and to reject that plan on the grounds of incompatibility with those criteria and those provisions, by reasoned decision.

The Court of First Instance went on to describe its own powers of review of the Commission's decisions. It held that the Commission has a discretion in so far as that review causes it to make its own complex economic and ecological assessments having regard to the general objective of reducing greenhouse gases by means of an economically efficient and effective system of trading allowances (Article 1 and recital 5 of the Directive). Consequently, the Court conducts a full review as to whether the Commission applied properly the relevant rules of law. On the other hand, the Court of First Instance cannot take the place of the Commission on issues where the latter must carry out complex economic and ecological assessments in this context: It must confine itself to verifying that the measure in question is not vitiated by a manifest error or a misuse of powers, that the competent authority did not clearly exceed the bounds of its discretion and that the procedural guarantees, which are of particularly fundamental importance in this context, have been fully observed (T-374/04 Germany v Commission, at paragraphs 80 and 81; Case T‑13/99 Pfizer Animal Health v Council [2002] ECR II‑3305, paragraphs 166 and 171; Case T‑70/99 Alpharma v Council [2002] ECR II‑3495, paragraphs 177 and 182; and Case T‑392/02 Solvay Pharmaceuticals v Council [2003] ECR II‑4555, paragraphs 126 and 188).

The Court held that by rejecting the NAP on the basis of reasoning which consists only in the evocation of doubts as to the reliability of the data used by Estonia and Poland, the Commission exceeded its powers. The Commission has no power under the Directive to replace the data provided by the Member States with its own data obtained from its own assessment method. If the Commission could use a single method of assessing NAPs for all the Member States it would confer upon itself a veritable power of uniformisation in the context of implementing the allowance trading system and arrogate to itself a central role in the drawing up of NAPs. The Directive, according to the Court, simply does not allow for that.

Moreover, the Court of First Instance held that by imposing in the contested decisions allowance ceilings above which the NAP would be regarded as incompatible with the assessment criteria, the Commission substituted itself, in practice, for the member States concerned. Therefore, those decisions have the effect of encroaching on the exclusive competence which the Directive confers on the member States in deciding the total quantity of allowances which they will allocate in respect of each five-year period as from 1 January 2008.

In Case T-263/07, the Court also struck down the Commission's decision for being in breach of the principle of sound administration. That happens relatively rarely.

It held that the guarantees conferred by the EU legal order in administrative proceedings include, in particular, the duty of the competent institution to examine carefully and impartially all the relevant aspects of the individual case (Case T‑44/90 La Cinq v Commission [1992] ECR II‑1, paragraph 86; Case T‑7/92 Asia Motor France and Others v Commission [1993] ECR II‑669, paragraph 34; Case T‑31/99 ABB Asea Brown Boveri v Commission [2002] ECR II‑1881, paragraph 99).

The Court held that the Commission had failed to examine the Estonian NAP properly to see if it included, in the total quantity of allowances to be allocated, a ‘reserve’ of allowances. Estonia claimed its NAP did so, while the Commission claimed in the decision that it did not. The Court held that the results set out by the Commission in its decision were simply not reconcilable with the figures provided if a proper examination of them had been made.

Comments

[Ashley]

I find this article very interesting. Also i want to share with you this page that i found ones looking for information. I hope you find it useful http://www.zintro.com/topic?name=Emissions+Trading

Ashley.

[gucci belts]

I really liked the post and the stories are really thanks for sharing the informative post.

[new louis vuitton belt]

observation - recently one can notice an increase towards multilinguism (irish becomes official language after 35 years from accession

[buy jeans]

Directive 2003/87/EC of the European Parliament and of the Council of October 13th 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community sets up an EC wide scheme for greenhouse gas emission allowance trading within the EU. It provides that, for each five-year period, each member State should develop a national allocation plan (NAP) stating the total quantity of allowances that it intends to allocate for that period and how it proposes to allocate them. The plan should be based on objective and transparent criteria, including the criteria listed in the Directive, taking due account of comments from the public. It is to be published and notified to the Commission and to the other member States. The Commission may reject it or any aspect of it if it considers the NAP to be incompatible with the criteria listed in the Directive. The member State must not decide upon the total quantity of allowances that it is allocating for the period concerned and must not initiate the process for the allocation of those allowances to the operator of each installation, until proposed amendments are accepted by the Commission.

[opatija ferienwohnungen]

A good scheme for the greenhouse gas emission....

[Generic Viagra]

One thing for sure. Most of the policies about Greenhouse Gas Emission won't be fulfilled because There are a lot of European countries that they can afford to reduce production or they don't have the time to research ways to decrease it in the estimated time. It is a lot easier to Buy Viagra in a Gas Station than solving that problem.

[cheap designer handbags]

I can't believe how much of this I just wasn't aware of. Thank you for bringing more information to this topic for me. I'm truly grateful and really impressed. http://www.taobao-trade.com.

[Sam Alex Woods]

Hi,
Really your blog provide very interesting as well as very helpful information... really I agree with you... Thanks for sharing this great information. Keep posting such an interesting blog post.

Thanks!
http://www.raymeds.com/

[zygor guides]

wow great i have read many articles about this topic and everytime i learn something new i dont think it will ever stop always new info , Thanks for all of your hard work!

[Apcalis Oral Jelly]

I have never ever come across such a wonderful piece of information. Today I am proud to say that I have finally gain knowledge on this topic and here on I shall also spread the same preaching ahead so that the world become a better place to live in.

[Generic Viagra]

Your portrayed the topic well.. Especially the concluding paragraph and the mid section made a good read... keep posting...All the best

[replica watches]

When I visit this good webiste,Just to say,I am glad to read so good article in the webstie.Well,OK.I have to say,what a wonderful blog it is.thank you for your sharing so good articles in the website.I like it very much.It is very interesting in it.Look forward to reading so good articles in the website.I will reommenda a watch to you http://www.replicawatch-uk.com/47-cartier,
I hope you will like it ,very much.

[asics shoes]

the capital of the zhou dynasty and burial site so far have not sure,http://www.asicsusashoes.com/

[mbt shoes]

zhou's treasure was found very many. But this doesn't mean that we decide,http://www.mbtusasale.com/

[ugg australia]

has a set of complete system redlining civilization. http://www.uggsaleaustralia.com/

[Viagra Online]

Every time i come here i see something very new.The creativity of your blogs is best.This is something very best on your part.The art of doing of writing things is excellent.Keep posting articles like these.A very good article post.I must appreciate you knowledge about the subject.Thanks for sharing the relevant stuff, I was searching since a very long time.

[Keyword discovery]

This blog give information about several advantages and merits of the above mentioned.I am glad for your sincere efforts.

[Chanel Handbags]

IT IS hard to look at the Capitol in Washington, DC, without a frisson of excitement

[savsuns]

So far thousands if not hundreds of thousand Singaporean had complained about housing policy and instead review his own policy, he is pointing the 'GUN' to WP as irresponsible. I think Mr Mah should have a self-reflection and not living in his own world.
Lasix Generic

[Buy Toprol]

I want to share my experience with Buy Toprol. The company is honest and correct. Recently I did not receive one of my orders and they sent me again by their own cost. The pills are as original or as other generic.

[air jordan 6]

I am a blog beginner. I am also interested in such kind information. You provide me a good example. Thanks very much. I will keep on reading your blogs.

[Продажа недвижимости в испании]

It won't truly have success, I consider this way.

[sex shop]

This can't work in fact, that is exactly what I consider.

[muebles madrid]

This won't work in reality, that is what I suppose.

[Hogan]

It is indeed wonderful to read your article. I appreciate your style.