(1)

Regulation (EC) No 1059/2003 of the European Parliament and of the Council (4) establishes a common statistical classification of territorial units (Nomenclature of territorial units for statistics, referred to as ‘NUTS’) in order to enable the collection, compilation and dissemination of harmonised regional statistics in the European Union.

(2)

The Commission, in collaboration with the Organisation for Economic Cooperation and Development, has defined a number of basic and most relevant territorial typologies to classify the statistical units established by Regulation (EC) No 1059/2003.

(3)

The European Statistical System already uses those typologies, in particular the degree of urbanisation, which includes the definition of cities.

(4)

The codification of the typologies is necessary in order to set out unambiguous definitions of and conditions for territorial types, ensuring their harmonised and transparent application and making the typologies stable in order to support the compilation and dissemination of European statistics. Those statistical typologies are without prejudice to the identification of specific areas for Union policies.

(5)

A system of statistical grids should apply to calculate and attribute the territorial types to the regions and areas in question, since those types depend on the population distribution and density in grid cells of one square kilometre.

(6)

A number of minor aspects of the local administrative units (LAU) should also be clarified to simplify terminology and the delivery mechanism of the lists of LAU from the Member States to the Commission (Eurostat).

(7)

In order to adapt to corresponding developments in the Member States, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of amending, in accordance with the information communicated by Member States, the NUTS classification in Annex I, the list of existing administrative units in Annex II and the list of LAU in Annex III to Regulation (EC) No 1059/2003. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (5). In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(8)

In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission in respect of the application of territorial typologies and the time series the Member States are to transmit to the Commission in case of any amendment to the NUTS classification. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (6).

(9)

Since the objective of this Regulation, namely the harmonisation of regional classification, cannot be sufficiently achieved by the Member States but can rather be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective.

(10)

Regulation (EC) No 1059/2003 should therefore be amended accordingly,

(1)

Article 1 is replaced by the following:

(2)

in Article 2, paragraph 5 is deleted;

(3)

Article 3 is amended as follows:

(4)

Article 4 is replaced by the following:

(5)

the following Articles are inserted:

(*1)  Commission Regulation (EU) No 1089/2010 of 23 November 2010 implementing Directive 2007/2/EC of the European Parliament and of the Council as regards interoperability of spatial data sets and services (OJ L 323, 8.12.2010, p. 11).’;"

(6)

Article 5 is amended as follows:

(7)

Article 7 is replaced by the following:

(8)

the following Article is inserted:

(9)

Article 8 is deleted;

(10)

the title of Annex III is replaced by the following:

‘LOCAL ADMINISTRATIVE UNITS’.

(1)

The 21st Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) took place in Paris from 30 November to 12 December 2015. At that Conference, an international agreement (‘the Paris Agreement’) was adopted to strengthen the global response to climate change. The Paris Agreement, inter alia, sets out a long-term goal in line with the objective to keep the global temperature increase well below 2 °C above pre-industrial levels and to pursue efforts to keep it to 1,5 °C above pre-industrial levels. The Paris Agreement was approved on behalf of the Union by Council Decision (EU) 2016/1841 (3). The Paris Agreement entered into force on 4 November 2016. In order to achieve the objectives of the Paris Agreement, all sectors will need to contribute and the Parties will prepare, communicate and maintain successive Nationally Determined Contributions (‘NDCs’). Action should therefore also be taken through the International Civil Aviation Organisation (‘ICAO’) to reduce emissions from international aviation.

(2)

Environmental protection is one of the most important challenges facing the Union. The environmental objectives of the Union as referred to in Article 191 of the Treaty on the Functioning of the European Union, are preserving, protecting and improving the quality of the environment; protecting human health; prudent and rational utilisation of natural resources; and promoting measures at international level to deal with regional or worldwide environmental problems, and in particular combating climate change.

(3)

A binding target of at least a 40 % domestic reduction in economy-wide greenhouse gas emissions by 2030 compared to 1990 was set by the European Council in its conclusions of 23-24 October 2014. The Council on 6 March 2015 formally approved this contribution by the Union and its Member States as their intended NDC under the Paris Agreement. In its conclusions of October 2014, the European Council stated that the target is to be delivered collectively by the Union in the most cost-effective manner possible, with the reductions in the European Union Emissions Trading System (‘EU ETS’) and non-ETS sectors amounting to 43 % and 30 % respectively by 2030 compared to 2005. All sectors of the economy should contribute to achieving those emission reductions. The Commission should facilitate exchanges among Member States on best practice and lessons learned in the sector of low-emission mobility.

(4)

A well-functioning, reformed EU ETS with an enhanced instrument to stabilise the market will be the main European instrument to achieve the 40 % reduction target referred to in the European Council conclusions of October 2014, with a linear factor and free allocation beyond 2020. Those provisions should be consistent with the Union's climate objectives and its commitments under the Paris Agreement. The auction share should be expressed as a percentage figure in Directive 2003/87/EC of the European Parliament and of the Council (4), to enhance planning certainty as regards investment decisions, to increase transparency, to minimise carbon leakage, and to render the overall system simpler and more easily understandable. As part of its regular reporting under Regulation (EU) No 525/2013 of the European Parliament and of the Council (5), the Commission should also assess the outcome of the 2018 Facilitative Dialogue. The provisions of Directive 2003/87/EC should be kept under review in light of international developments and efforts undertaken to achieve the objectives of the Paris Agreement, including the first global stocktake in 2023, and subsequent global stocktakes every five years thereafter, intended to inform successive NDCs.

(5)

The Union and its Member States have been endeavouring to make progress towards reaching an international agreement to reduce greenhouse gas impacts from aviation since 1997 and they have legislation in place since 2008 to limit the climate change impacts from aviation activities through the EU ETS that has been in operation since 2005. The Court of Justice of the European Union ruled in its judgment of 21 December 2011 (6) that the inclusion of aviation activities in the EU ETS pursuant to Directive 2008/101/EC of the European Parliament and of the Council (7) does not violate international law. In order to facilitate progress at the ICAO, the Union has twice adopted time-bound derogations to the EU ETS so as to limit compliance obligations to emissions from flights between aerodromes situated in the European Economic Area (‘EEA’), with equal treatment on routes of aircraft operators wherever they are based. The most recent derogation from the EU ETS, laid down in Regulation (EU) No 421/2014 of the European Parliament and of the Council (8), limited compliance obligations to intra-EEA flights between 2013 and 2016, and envisaged potential changes to the scope of the system as regards activity to and from aerodromes situated outside the EEA from 1 January 2017 onwards following the review set out in that Regulation.

(6)

The ICAO's work on a market-based measure for international aviation emissions is one element of the so-called ‘basket of measures’ for achieving the aspirational goal of carbon neutral growth from 2020 (‘CNG 2020’), and should be complemented by advances in air traffic management and propulsion technologies. Continued development of research strategies and programmes will be essential to technological innovation and operational improvements needed in order to go beyond the CNG 2020 goal and to achieve sector-wide absolute emission reductions.

(7)

Several measures have been adopted at Union level which aim at preventing the fragmentation of European airspace in order to enhance the flow of air traffic and control of airspace usage, thereby reducing emissions. Member States have recommitted themselves to implementing the Single European Sky concept, taking account of the expected growth in the volume of air traffic in the coming years. In order to achieve progress with air traffic management, the implementation of Single European Sky ATM Research (SESAR) Joint Undertaking needs to be accelerated. Other measures such as the use of GNSS for satellite-based navigation, Joint Technology Initiatives such as Clean Sky I and Clean Sky II and Union research programs, such as Horizon 2020 and its successors, will also contribute to improving efficiency and to reducing aviation emissions.

(8)

In light of the resolution adopted at the ICAO's 39th Assembly in October 2016 on the implementation of a global market-based measure from 2021 to offset international aviation emissions above 2020 levels, the adoption of Standards and Recommended Practices (‘SARPs’) by the ICAO to complement that resolution and to implement the global system is planned for 2018. However, its concrete operationalisation will require action by the ICAO Parties at domestic level. Also, governance arrangements need to be developed by the ICAO, including a registry system. In that context, in order to promote momentum in the ICAO and to facilitate the operationalisation of the ICAO scheme, the current derogation from the EU ETS obligations for flights to and from third countries should be extended until 31 December 2023, subject to review, to allow the experience necessary for the implementation of the ICAO scheme to be gathered. As a result of the extension of the derogation, the amount of allowances to be auctioned and issued for free, including from the special reserve, should remain proportional to the reduction of the surrender obligation. From 1 January 2021 onwards, the number of allowances allocated to aircraft operators should be reduced annually in line with the linear reduction factor applicable to all other sectors in the EU ETS, subject to the review in view of the implementation of the ICAO scheme. The review will be prepared in full accordance with the better regulation guidelines, with adequate consultations with all stakeholders including Member States. Allowances not allocated from the special reserve should continue to be cancelled.

(9)

Revenues generated from the auctioning of allowances, or their equivalent in financial value, should be used to tackle climate change in the Union and third countries, inter alia, to reduce greenhouse gas emissions, to adapt to the impacts of climate change in the Union and third countries, especially developing countries, to fund research and development for mitigation and adaptation, including in the fields of aeronautics, air transport and sustainable alternative aviation fuels, to reduce emissions through low-emission transport and to cover the cost of administering the EU ETS. Special consideration should be given by Member States that use those revenues for co-financing research and innovation to programmes or initiatives under the Ninth Research Framework Programme (‘FP9’). Ensuring transparency on the use of revenues generated from the auctioning of allowances under Directive 2003/87/EC through the submission of reports by Member States in accordance with Article 17 of Regulation (EU) No 525/2013 is essential to meeting Union commitments.

(10)

The environmental integrity of the EU ETS should be safeguarded against the risk of obligations lapsing for aircraft operators and other operators regulated by a Member State. Therefore, allowances issued by such a Member State should only be useable if the obligations to surrender allowances for emissions are not at risk of lapsing in a way that results in undermining the environmental integrity of the EU ETS. The Commission should be granted the power to take the measures necessary to protect the environmental integrity of the EU ETS accordingly. Such measures should be in place until they are no longer necessary due to a change in circumstances.

(11)

Given that key features of the global market-based measure have yet to be developed and that its implementation depends on domestic legislation laid down by participating States and regions, the Commission should report regularly to the European Parliament and to the Council on progress in the ICAO negotiations, in particular on relevant instruments adopted through the ICAO, including SARPs, the actions taken by third countries to implement the global market-based measure to apply to emissions for the period 2021-2035, efforts to establish ambitious and binding measures to achieve the aviation industry's long-term goal of halving aviation CO2 emissions relative to 2005 levels by 2050 and other relevant international developments and applicable instruments, such as rules under the UNFCCC and the Paris Agreement on carbon markets and accounting. Once there is clarity about the nature and content of the ICAO's instruments and in advance of the start of the ICAO's global market-based measure, the Commission should present a report in which it should consider how to implement those instruments in Union law through a revision of Directive 2003/87/EC. The Commission should further consider the rules applicable to intra-EEA flights, as appropriate. In so doing, the Commission in its report should reflect the need to ensure consistency with Union law, in particular to avoid any distortion of competition and to minimise any undue administrative burden for Member States and aircraft operators.The Commission should accompany its report with a proposal, where appropriate, to the European Parliament and to the Council consistent with ensuring the contribution of aviation to the Union's 2030 economy-wide greenhouse gas reduction commitment.

(12)

To prepare for the implementation of the ICAO's global market-based measure, it is necessary to have relevant data available regarding the emissions from aviation activities as early as possible. Those emissions should be monitored, reported and verified in accordance with the same principles as those applicable to the monitoring, reporting and verification of emissions from aviation activities under Directive 2003/87/EC. Accordingly, the Commission should adopt provisions on monitoring, reporting and verification for the purpose of implementing the ICAO's global market-based measure that avoid any distortion of competition. Those provisions should be consistent with the principles contained in the regulation referred to in Article 14(1) of Directive 2003/87/EC and should ensure that the emissions reports submitted are verified in accordance with the verification principles and criteria referred to in Article 15 of that Directive. Those provisions should be adopted in accordance with the procedure applicable to monitoring, reporting and verification under Directive 2003/87/EC.

(13)

Aviation also has an impact on the climate through the release of nitrogen oxides, water vapour and sulphate and soot particles at high altitudes, which could have a significant climate effect, according to scientific research. The Intergovernmental Panel on Climate Change has estimated that the total climate impact of aviation is currently two to four times higher than the effect of its past carbon dioxide emissions alone. Pending scientific progress, all impacts of aviation should be addressed to the extent possible. In Directive 2008/101/EC a Commission proposal on nitrogen oxides was envisaged in 2008. Despite the technical and political difficulties involved, the Commission should speed up its work in that regard. Research on the formation of condensation trails, also known as contrails, on their evolution into cirrus clouds, on the smaller direct effects of sulphate aerosols and soot, and on effective mitigation measures, including operational and technical measures, should also be promoted.

(14)

By way of simplification and in order to lighten administrative tasks, aircraft operators with emissions lower than 3 000 tonnes of CO2 per annum from intra-EEA flights should benefit from the use of the small emitters tool approved under Commission Regulation (EU) No 606/2010 (9) for the verification of their emissions. No-commercial aircraft operators emitting less than 1 000 tonnes of CO2 per annum should continue to be considered to meet the requirements of Directive 2003/87/EC for another 10 years, during which measures should be developed so that in the future all operators contribute to emission reductions.

(15)

Since the objectives of this Regulation, namely to extend the current limitations of scope for aviation activities until 31 December 2023 and to prepare to implement a global market-based measure from 2021, cannot be sufficiently achieved by the Member States but can rather, by reason of its scale or effects, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(16)

It is essential to ensure legal certainty for aircraft operators and national authorities in view of the surrender deadline of 30 April 2018 specified in Directive 2003/87/EC. Accordingly, this Regulation should enter into force on the day of its publication in the Official Journal of the European Union.

(17)

Directive 2003/87/EC should therefore be amended accordingly,

(1)

in Article 3c, the following paragraph is inserted:

(2)

in Article 3d, paragraph 2 is replaced by the following:

(3)

in Article 3d, paragraph 4 is replaced by the following:

(4)

in Article 12, paragraph 3 is replaced by the following:

(5)

in Article 12, the following paragraph is inserted before paragraph 3a:

(6)

Article 28a is amended as follows:

(7)

the following Articles are inserted:

(8)

in Article 30, the following paragraph is added:

(9)

in point (k) of Annex I, the year ‘2020’ is replaced by ‘2030’.

(1)

In order to ensure legal certainty and harmonised and non-discriminatory implementation of support to young farmers, it is necessary to provide that in the context of rural development the ‘date of setting up’, referred to in Regulation (EU) No 1305/2013 of the European Parliament and of the Council (5) and in other relevant rules, means the date when the applicant performs or completes an action related to the setting up for the first time and that the application for support is to be submitted at the latest 24 months after that date. Moreover, experience from the negotiations of the programmes has shown that the rules for the joint setting up of young farmers and the thresholds for access to support required under Article 19(4) of Regulation (EU) No 1305/2013 should be clarified, and that the provisions on the duration of the business plan should be streamlined.

(2)

In order to facilitate implementation of advisory and training services by Member States' Managing Authorities, the status of beneficiary under that measure should be extended to those authorities, while at the same time ensuring that the provider of the service is chosen by a body functionally independent from those authorities and that checks are carried out at the level of the provider of advice or training.

(3)

With a view to incentivising participation in quality schemes, farmers or groups of farmers taking part in such schemes in the five years preceding the application for support should be eligible for a maximum duration of five years, while duly taking into account the time of the initial participation in the scheme.

(4)

In order to be sufficiently attractive to the private sector, it is essential that financial instruments are designed and implemented in a flexible and transparent manner. However, experience has shown that certain measure-specific eligibility rules limit the uptake of financial instruments in the rural development programmes, as well as the flexible use of financial instruments by fund managers. Therefore, it is appropriate to provide that certain measure-specific eligibility rules do not apply to financial instruments. For the same reason, it is also appropriate to provide that start-up aid to young farmers under Article 19 of Regulation (EU) No 1305/2013 may also be provided in the form of financial instruments. In view of those changes, it should be provided that, where support for investments under Article 17 of Regulation (EU) No 1305/2013 is granted in the form of financial instruments, the investment must contribute to one or more Union priorities for rural development.

(5)

In order to reduce administrative burden in relation to the implementation of the principle of no double funding in relation to greening, Member States should be given the possibility of applying a fixed, average deduction to all beneficiaries concerned carrying out the type of operation or sub-measure concerned.

(6)

Nowadays farmers are exposed to increasing economic risks as a consequence of market developments. However, those economic risks do not affect all agricultural sectors equally. Consequently, Member States should have the possibility, in duly justified cases, to help farmers by means of a sector-specific income stabilisation tool, in particular for sectors affected by a severe income drop, which would have a significant economic impact for a specific rural area, provided that the drop in income exceeds a threshold of at least 20 %. In order to ensure that the sector-specific income stabilisation tool is effective and adapted to Member States' specific circumstances, it should be possible for them to define, in their rural development programmes, the income to be taken into account for the activation of the tool, in a flexible manner. At the same time, and in order to promote the use of insurance by farmers, the threshold for the drop in production applicable for insurance should be reduced to 20 %. In addition, in order to monitor the expenditure made under the sector-specific income stabilisation tool and insurance, the content of the financial plan of the programme should be adapted.

(7)

The specific reporting requirement for the risk management measure in 2018 referred to in Article 36(5) of Regulation (EU) No 1305/2013 is already covered by the report to the European Parliament and the Council on the monitoring and evaluation of the common agricultural policy (CAP) referred to in Article 110(5) of Regulation (EU) No 1306/2013 of the European Parliament and of the Council (6). Therefore, the second subparagraph of Article 36(5) of Regulation (EU) No 1305/2013 should be deleted.

(8)

With regard to mutual funds for farmers of all sectors, it appears that the prohibition of any contribution by public funds to initial capital stock laid down in Article 38(3) and Article 39(4) of Regulation (EU) No 1305/2013 hinders the effective functioning of those funds. That prohibition should therefore be deleted. It is also appropriate to expand the areas that can be covered by financial contributions to mutual funds, so that contributions can supplement the annual payments into the funds, as well as relate to their initial capital stock.

(9)

Support for investments for the restoration of production potential after natural disasters and catastrophic events under point (b) of Article 18(1) and point (d) of Article 24(1) of Regulation (EU) No 1305/2013 is usually granted to all eligible applicants. Therefore, Member States should not be obliged to define selection criteria for restoration operations. Moreover, in duly justified cases, where it is not possible to define selection criteria due to the nature of the operations, Member States should be allowed to define alternative selection methods.

(10)

Article 59 of Regulation (EU) No 1305/2013 defines the maximum European Agricultural Fund for Rural Development (EAFRD) contribution rates. In order to ease the pressure on the national budget of some Member States and to accelerate much-needed investments in Cyprus, the maximum contribution rate of 100 % referred to in point (f) of Article 59(4) of that Regulation should be extended until the programme closure. In addition, a reference to the specific contribution rate introduced in Regulation (EU) No 1303/2013 of the European Parliament and of the Council (7) for the new financial instrument referred to in point (c) of Article 38(1) of Regulation (EU) No 1303/2013 should be mentioned in Article 59(4) of Regulation (EU) No 1305/2013.

(11)

Pursuant to Article 60(1) of Regulation (EU) No 1305/2013, in cases of emergency measures due to natural disasters, eligibility of expenditure relating to programme changes may start from the date when the natural disaster occurred. That possibility to make eligible expenditure made before the submission of a programme amendment should be extended to other circumstances, such as catastrophic events or a significant and sudden change in the socioeconomic conditions of the Member State or region.

(12)

Pursuant to the second subparagraph of Article 60(2) of Regulation (EU) No 1305/2013, in respect of investments in the agricultural sector, only expenditure incurred after the submission of an application is eligible. In cases, however, where the investment is related to emergency measures due to natural disasters, catastrophic events or adverse climatic events or a significant and sudden change in the socioeconomic conditions of the Member State or region, Member States should be given the possibility to provide in their programmes that expenditure incurred after the occurrence of the event is eligible, in order to ensure their flexible and timely reaction to such events. In order to provide efficient support to emergency operations undertaken by the Member States in response to events which occurred in recent years, that possibility should apply from 1 January 2016.

(13)

In order to increase the use of the simplified cost options referred to in points (b) to (d) of Article 67(1) of Regulation (EU) No 1303/2013, it is necessary to limit the EAFRD-specific rules laid down in Article 62(2) of Regulation (EU) No 1305/2013 to aid granted in accordance with points (a) and (b) of Article 21(1), concerning income foregone and maintenance costs, and with Articles 28 to 31, 33 and 34 of Regulation (EU) No 1305/2013.

(14)

Article 74 of Regulation (EU) No 1305/2013 requires the Member States to consult the Monitoring Committee of the rural development programme on the selection criteria within four months from the approval of the programme. This creates an indirect obligation for the Member States to have defined all the selection criteria by that date even for the calls for applications which will be launched subsequently. In order to reduce unnecessary administrative burden, whilst ensuring that financial resources are used in the best possible way, Member States should be allowed to define the selection criteria and to ask for the opinion of the Monitoring Committee at any time before the publication of the calls for applications.

(15)

With a view to increasing the use of crop, animal and plant insurance, and of mutual funds and the income stabilisation tool, the maximum percentage of initial public support should be increased from 65 % to 70 %.

(16)

Financial discipline is used to ensure that the budget for the European Agricultural Guarantee Fund (EAGF) complies with the respective annual ceilings of the multiannual financial framework and to establish the reserve for crises in the agricultural sector. Given the technical character of the determination of the adjustment rate for direct payments and its inherent links with the Commission's estimates of expenditure set out in its annual draft budget, the procedure for setting the adjustment rate should be simplified by authorising the Commission to adopt it in accordance with the advisory procedure.

(17)

In order to harmonise the rules on automatic decommitment set out in Article 87 of Regulation (EU) No 1303/2013 and Article 38 of Regulation (EU) No 1306/2013, the date by which Member States have to send to the Commission information on exceptions to the decommitment referred to in Article 38(3) of Regulation (EU) No 1306/2013 should be adapted.

(18)

In order to provide for legal clarity as regards the treatment of the recoveries generated from the temporary reductions under Article 41(2) of Regulation (EU) No 1306/2013, the latter should be included in the list of sources of the assigned revenue under Article 43 of that Regulation.

(19)

In the interests of administrative simplification, it is appropriate to increase the threshold below which Member States may decide not to pursue recovery of undue payments from EUR 150 to EUR 250 provided that the Member State applies an equal or higher threshold for not pursuing national debts.

(20)

It is appropriate to ensure that the refusal or recovery of payments as a result of non-compliance with public procurement rules reflects the gravity of such non-compliance and respects the principle of proportionality, as expressed, for example, in the relevant guidelines established by the Commission for financial corrections to be made to expenditure financed by the Union under shared management for non-compliance with such rules. It is further appropriate to clarify that such non-compliance affects the legality and regularity of the transactions only up to the level of the part of the aid not to be paid or to be withdrawn.

(21)

In order to reduce administrative burden for small farmers, a further derogation should be introduced, exempting small farmers from declaring parcels on which a payment application is not made.

(22)

Having regard to practical and specific difficulties that the harmonisation of the payment deadlines for area-related payments between the EAGF and the EAFRD has given rise to, the transitional period should be extended by one more year. However, as regards area-related rural development measures, in order to maintain farmers' cash-flow, payments of advances before 16 October should remain possible.

(23)

In order to accommodate the diversity of agricultural systems across the Union, it is appropriate to allow Member States to consider ploughing up, which is relevant for the agronomic and environmental aspects, as a criterion to be used for the classification of permanent grassland.

(24)

Certain shrubs or trees which are not directly grazed by animals may nevertheless produce animal feed. Member States should be allowed to include those shrubs or trees in permanent grassland where grasses and other herbaceous forage remain predominant, in the whole or in part of their territory.

(25)

In order to clarify the classification prior to 2018 of land lying fallow as arable land, where it had been in place for five years or more, and provide certainty to the farmers concerned, Member States should be able to maintain its classification as arable land in 2018.

(26)

Land which can be grazed, where grasses and other herbaceous forage are not predominant or are absent, and where the grazing practices are neither traditional in character nor important for the conservation of biotopes and habitats, may nevertheless have relevant grazing value in certain areas. Member States should be allowed to consider those areas as permanent grassland in the whole or in part of their territory.

(27)

The experience gained in the first years of implementation of Regulation (EU) No 1307/2013 of the European Parliament and of the Council (8) has shown that certain Member States applying the single area payment scheme did not use the entire amount of the funds available under the budgetary ceilings laid down in Commission Implementing Regulation (EU) 2015/1089 (9). Member States applying the basic payment scheme already have the possibility, within certain limits, of distributing payment entitlements for a higher value than the amount available for their basic payment scheme in order to ensure a more efficient use of the funds. Member States applying the single area payment scheme should also be allowed, within the same common limits and without prejudice to the respect of the net ceilings for direct payments, to calculate the necessary amount by which their single area payment scheme ceiling may be increased.

(28)

Certain Member States operate national fiscal or social security registers in which farmers are registered for their agricultural activities. Those Member States should be able to exclude from eligibility for direct payments farmers who are not registered accordingly.

(29)

As experience acquired in the past showed that support was in a number of cases granted to natural or legal persons whose business purpose was not, or was only marginally, targeted at an agricultural activity, Regulation (EU) No 1307/2013 introduced the active farmer clause. Pursuant thereto, Member States are to refrain from granting direct payments to certain persons unless such persons can demonstrate that their agricultural activity is not marginal. However, subsequent experience shows that implementing the three criteria for being regarded as an active farmer, listed in the third subparagraph of Article 9(2) of Regulation (EU) No 1307/2013, has proven difficult for many Member States. In order to reduce the administrative burden associated with the implementation of those three criteria, Member States should have the possibility to decide that only one or two of them are made available to demonstrate that a person is an active farmer.

(30)

Moreover, the experience of some Member States is that the difficulties and the administrative costs of implementing the elements relating to the list of activities or businesses as provided for in Article 9(2) of Regulation (EU) No 1307/2013, has outweighed the benefit of excluding a very limited number of non-active beneficiaries from the direct support schemes. When a Member State considers this to be the case, it should be able to discontinue the application of Article 9 thereof in relation to the list of activities or businesses.

(31)

It is appropriate to make explicit that Article 11 of Regulation (EU) No 1307/2013 allows Member States to review, on an annual basis, their decisions on the reduction of the part of the basic payment to be granted to farmers which exceeds EUR 150 000, provided that such a review does not lead to a reduction of the amounts available for rural development.

(32)

To allow Member States to adapt support under the CAP to their specific needs, they should be given appropriate opportunities to review their decision on transferring funds from their direct payments ceiling to their rural development programmes and vice versa. They should therefore be given the possibility to review their decision also with effect from calendar year 2019, provided that any such decision does not entail a decrease in the amounts assigned to rural development.

(33)

In addition to using a linear reduction of the value of payment entitlements under the basic payment scheme to replenish national or regional reserves to facilitate the participation of young farmers and farmers commencing their agricultural activity in the support scheme, Member States should also be allowed to use the same mechanism to finance measures taken to prevent land from being abandoned and to compensate farmers for specific disadvantages.

(34)

To simplify and improve consistency between the rules applicable to greening measures, the exemption from the ecological focus area obligation applicable to holdings cultivating leguminous crops as a sole crop or in combination with grasses or other herbaceous forage or land lying fallow on more than 75 % of arable land pursuant to point (a) of Article 46(4) of Regulation (EU) No 1307/2013 should be extended to the obligation of crop diversification.

(35)

To ensure consistency in the way several types of crops are considered, on account of their substantial share in areas, in relation to the crop diversification requirement, the flexibility in applying the rules of crop diversification under Article 44(2) of Regulation (EU) No 1307/2013 should be extended to include the cultivation of crops under water for a significant part of the year or for a significant part of the crop cycle.

(36)

In order to streamline the existing exemptions from the crop diversification obligation set out in points (a) and (b) of Article 44(3) of Regulation (EU) No 1307/2013, applicable to land predominantly used for the production of grasses or other herbaceous forage, or for cultivation of leguminous crops or the cultivation of crops under water, or which is predominantly land lying fallow or permanent grassland, and so as to provide for equal treatment of all farmers with the same land use proportions, the upper limit of 30 hectares of arable land should no longer be applicable.

(37)

In order to take account of the agronomic specificity of Triticum spelta, it should be considered as a distinct crop for the purpose of Article 44 of Regulation (EU) No 1307/2013.

(38)

In order to streamline the existing exemptions from the ecological focus area obligation set out in points (a) and (b) of Article 46(4) of Regulation (EU) No 1307/2013, applicable to land predominantly used for the production of grasses or other herbaceous forage, or for cultivation of leguminous crops or the cultivation of crops under water, or which is predominantly land lying fallow or permanent grassland, the upper limit of 30 hectares of arable land should no longer be applicable.

(39)

Given the potential for indirect environmental benefits for biodiversity that may be provided by certain permanent crops, the list of ecological focus area types set out in Article 46 of Regulation (EU) No 1307/2013 should be extended to include Miscanthus and Silphium perfoliatum. Considering that the type of vegetation coverage may positively affect the biodiversity contribution of land lying fallow, land lying fallow for melliferous plants should be recognised as a distinct ecological focus area type. Consequently, weighting factors should be established for Miscanthus, Silphium perfoliatum and land lying fallow for melliferous plants. Weighting factors should be established in such a way as to reflect their different importance for biodiversity. The introduction of additional ecological focus area types requires the existing weighting factors for areas with nitrogen-fixing crops and for areas with short rotation coppice to be adapted so as to reflect the new balance between all ecological focus area types.

(40)

Experience gained with the application of the support scheme for young farmers under Article 50 of Regulation (EU) No 1307/2013 has shown that, in some cases, young farmers cannot benefit from the full five years of support. While the focus of that support remains on new economic activity by young people starting their farming activities, Member States should facilitate the access of young farmers to the full five years of payment for young farmers also in cases where young farmers have not applied for support immediately after setting up.

(41)

Some Member States have assessed that the payment provided to young farmers under Article 50 of Regulation (EU) No 1307/2013 is insufficient to adequately respond to the financial challenges of the initial establishment and the structural adjustment of agricultural holdings set up by young farmers. To further enhance the prospects for participation of young farmers in farming, Member States should have the possibility to decide to increase the percentage applied to calculate the amount of the payment for young farmers in the range of 25 % to 50 % and irrespective of the calculation method applied. Such decision should be without prejudice to the 2 % limit of their national ceiling for direct payments to finance the payment for young farmers.

(42)

In order to enhance clarity with regard to the responsibilities of Member States as far as the production limiting character of voluntary coupled support is concerned, it is appropriate to reformulate Article 52(5) and (6) of Regulation (EU) No 1307/2013. As the reformulation reflects the current practice since 1 January 2015 with regard to the provisions concerned, it is appropriate that it should apply from claim year 2015.

(43)

In order to ensure the greatest possible consistency between Union schemes targeting sectors that, in certain years, are marked by structural market imbalances, the Commission should be empowered to adopt delegated acts allowing Member States to decide that voluntary coupled support can continue to be paid until 2020 on the basis of the production units for which such support was granted in a past reference period.

(44)

In order to enhance the flexibility with regard to voluntary coupled support, annual review by the Member States of their support decisions should be allowed with effect from claim year 2019.

(45)

One of the major obstacles to the formation of producer organisations, mainly in Member States which are lagging behind as regards the degree of organisation, appears to be the lack of mutual trust and past experiences. In this context, coaching, whereby producer organisations which are functioning show the way to other producer organisations, producer groups or individual producers of fruit and vegetables, could offset that obstacle and should thus be included among the objectives of producer organisations in the fruit and vegetables sector.

(46)

In addition to withdrawals for free distribution, it is also appropriate to provide financial support for coaching actions intended to encourage producers to set up organisations meeting the criteria to be recognised in order to benefit from full Union financing within the operational programmes of existing producer organisations.

(47)

Crisis prevention and management measures should be extended to cover replenishment of mutual funds which could as new instruments help to combat crises, and to promotion and communication in order to diversify and consolidate the fruit and vegetables markets.

(48)

In order to simplify the current procedure of first authorising Member States to grant additional national financial assistance to producer organisations in regions of the Union where the degree of organisation is particularly low and second reimbursing a part of the national financial assistance if further conditions are complied with, a new system should be established for Member States where the degree of organisation is significantly below the Union average. In order to ensure a smooth transition from the current procedure to the new system, a transitional period of one year should be provided for. The new system should therefore become applicable from 1 January 2019.

(49)

In order to ensure protection for wine spirits with a geographical indication against risks of misappropriation of reputation, Member States should be allowed to apply the rules on authorisations for vine plantings suitable for producing wines with a geographical indication also to wines suitable for producing wine spirits with a geographical indication.

(50)

The use of contracts in the milk and milk products sector may help to reinforce the responsibility of operators and to increase their awareness of the need to better take into account the signals of the market, to improve price transmission and to adapt supply to demand, as well as to help to avoid certain unfair commercial practices. In order to incentivise the use of such contracts in the milk and milk products sector as well as in other sectors, producers, producer organisations or association of producer organisations should have the right to request a written contract, even if the Member State concerned has not made the use of such contracts compulsory.

(51)

While the parties to a contract for the delivery of raw milk are free to negotiate the elements of such contracts, Member States who make the use of contracts compulsory have been granted the opportunity to impose certain contract clauses, in particular their minimum duration. With a view to enabling the parties to achieve contractual clarity on the delivered quantities and prices, Member States should also have the possibility of imposing on the parties the obligation to agree on a relationship between a delivered quantity and the price payable for that delivery.

(52)

Producer organisations and their associations can play useful roles in concentrating supply, in improving the marketing, planning and adjusting of production to demand, optimising production costs and stabilising producer prices, carrying out research, promoting best practices and providing technical assistance, managing by-products and risk management tools available to their members, thereby contributing to strengthening the position of producers in the food chain. Their activities, including the contractual negotiations for the supply of agricultural products by such producer organisations and their associations when concentrating supply and placing the products of their members on the market, therefore contribute to the fulfilment of the objectives of the CAP set out in Article 39 of the Treaty on the Functioning of the European Union (TFEU), since they strengthen the position of farmers in the food supply chain and can contribute to a better functioning of the food supply chain. The reform of the CAP in 2013 reinforced the role of producer organisations. By way of derogation from Article 101 TFEU, the possibility to carry out activities such as production planning, cost optimisation, placing producer members' products on the market and conducting contractual negotiations should therefore be explicitly regulated as a right of recognised producer organisations in all sectors for which Regulation (EU) No 1308/2013 of the European Parliament and of the Council (10) establishes a common organisation of the markets. That derogation should only cover producer organisations which genuinely exercise an activity aimed at economic integration and which concentrate supply and place products of their members on the market. However, in addition to the application of Article 102 TFEU to such producer organisations, safeguards should be put in place in order to ensure that such activities do not exclude competition or jeopardise the objectives set out in Article 39 TFEU. Competition authorities should have the right to intervene in such cases and decide that such activities should, for the future, be modified, discontinued or not take place at all. Until the adoption of the decision of the competition authority, the activities carried out by producer organisations should be considered legal. Associations of producer organisations recognised under Article 156(1) of Regulation (EU) No 1308/2013 should be able to rely, for the activities that they carry out themselves, on that derogation to the same extent and under the same conditions as producer organisations.

(53)

Producer organisations are recognised in a specific sector referred to in Article 1(2) of Regulation (EU) No 1308/2013. However, as producer organisations may operate in more than one sector and in the interest of avoiding administrative burden by obliging them to create several producer organisations for recognition purposes, it should be possible for a producer organisation to obtain more than one recognition. However, in such cases, the producer organisation in question should fulfil the conditions of recognition for each of the sectors concerned.

(54)

Taking note of the role which interbranch organisations can play for the better functioning of the food supply chain, the list of possible objectives which such interbranch organisations may pursue should be extended to cover also measures to prevent and manage risks related to animal health, plant-protection and the environment.

(55)

Interbranch organisations are recognised in a specific sector referred to in Article 1(2) of Regulation (EU) No 1308/2013. However, as interbranch organisations may operate in more than one sector and, in the interest of avoiding administrative burden by obliging them to create several interbranch organisations for recognition purposes, it should be possible for an interbranch organisation to obtain more than one recognition. However, in such cases, the interbranch organisation should fulfil the conditions of recognition for each of the sectors concerned.

(56)

In order to facilitate better transmission of market signals and strengthen linkages between producer prices and value added throughout the supply chain, farmers, including associations of farmers, should be allowed to agree with their first purchaser on value-sharing clauses, including market bonuses and losses. As interbranch organisations can play an important part in allowing dialogue between actors in the supply chain and in promoting best practices and market transparency, they should be allowed to establish standard value-sharing clauses. However, the use of value-sharing clauses by farmers, associations of farmers and their first purchaser should remain voluntary.

(57)

The experience gained through the application of Article 188 of Regulation (EU) No 1308/2013 has proven that the need to adopt implementing acts for the management of simple, mathematical processes linked to the way quotas are allocated is cumbersome and resource-intensive without any specific advantage linked to such an approach. The Commission has, in fact, no margin of discretion in this context considering that the related formula is already fixed by Article 7(2) of Commission Regulation (EC) No 1301/2006 (11). In order to reduce the related administrative burden and streamline the process it should be provided that the Commission makes the results of the allocation of the tariff quotas public through an appropriate web-publication. Moreover a specific provision should be included providing that Member States should only issue licences following the publication of the allocation results by the Commission.

(58)

In order to ensure the effective use by farmers' or producer organisations or their associations of Article 209 of Regulation (EU) No 1308/2013, the possibility to request the opinion of the Commission on the compatibility of agreements, decisions and concerted practices of farmers' or producer organisations or their associations with the objectives set out in Article 39 TFEU should be introduced.

(59)

In order to ensure that the provisions in Regulation (EU) No 1308/2013 allowing collective agreements and decisions to temporarily stabilise the sectors concerned in times of severe imbalance in markets can be implemented in an effective and timely manner, the possibilities for such collective actions should be extended to farmers and associations of farmers. Furthermore, such temporary measures should no longer be authorised as a means of last resort but could complement Union action in the context of public intervention, private storage and the exceptional measures envisaged by Regulation (EU) No 1308/2013.

(60)

As it is appropriate to continue to help the milk and milk products sector in its transition as a result of the end of the quota system and to encourage it to respond more effectively to market and price fluctuations, the provisions in Regulation (EU) No 1308/2013 reinforcing the contractual arrangements in the milk and milk products sector should no longer have an end date.

(61)

Agricultural markets should be transparent and information about prices should be accessible and useful to all those involved.

(62)

The experience gained through the application of Section A of Part II of Annex VIII to Regulation (EU) No 1308/2013 has proven that the need to adopt implementing acts for the approval of limited increases in wine enrichment limits, which are technical and uncontroversial in nature, is cumbersome and resource-intensive without any specific advantage resulting from such an approach. In order to reduce the related administrative burden and streamline the process it should be provided that Member States that decide to make use of that derogation are to notify the Commission of any such decisions.

(63)

Regulation (EU) No 652/2014 of the European Parliament and of the Council (12) provides for the possibility to divide budgetary commitments into annual instalments only in the case of approval of multiannual programmes for the eradication, control and surveillance of animal diseases and zoonoses, for survey programmes concerning the presence of pests and for programmes concerning the control of pests in outermost regions of the Union. In the interest of simplification and in order to reduce the administrative burden, that possibility should be extended to the other actions provided for in that Regulation.

(64)

In order to enable the amendments provided for in this Regulation to be applied from 1 January 2018, it should enter into force on the day following that of its publication in the Official Journal of the European Union.

(65)

Regulations (EU) No 1305/2013, (EU) No 1306/2013, (EU) No 1307/2013, (EU) No 1308/2013 and (EU) No 652/2014 should therefore be amended accordingly,

(1)

in Article 2(1), the second subparagraph is amended as follows:

(2)

in Article 8(1), point (h)(ii) is replaced by the following:

(3)

in Article 14, paragraph 4 is replaced by the following:

(4)

Article 15 is amended as follows:

(5)

Article 16 is amended as follows:

(6)

Article 17 is amended as follows:

(7)

Article 19 is amended as follows:

(8)

in Article 20, the following paragraph is added:

(9)

Article 23 is amended as follows:

(10)

Article 28 is amended as follows:

(11)

Article 29 is amended as follows:

(12)

in Article 30(1), the second subparagraph is replaced by the following:

‘When calculating the payments related to the support referred to in the first subparagraph, Member States shall deduct the amount necessary in order to exclude double funding of the practices referred to in Article 43 of Regulation (EU) No 1307/2013. Member States may calculate the deduction as a fixed, average amount applied to all beneficiaries concerned carrying out the sub-measures concerned.’;

(13)

Article 31 is amended as follows:

(14)

in Article 33, paragraph 1 is replaced by the following:

(15)

Article 36 is amended as follows:

(16)

in Article 37(1), the first subparagraph is replaced by the following:

(17)

Article 38 is amended as follows:

(18)

Article 39 is amended as follows:

(19)

the following Article is inserted:

(20)

Article 45 is amended as follows:

(21)

Article 49 is amended as follows:

(22)

in Article 59, paragraph 4 is amended as follows:

(23)

Article 60 is amended as follows:

(24)

in Article 62, paragraph 2 is replaced by the following:

(25)

in Article 66(1), point (b) is deleted;

(26)

in Article 74, point (a) is replaced by the following:

(27)

Annex II is amended in accordance with Annex I to this Regulation.

(1)

Article 26 is amended as follows:

(2)

in Article 38, paragraph 3 is replaced by the following:

(3)

in Article 43(1), point (a) is replaced by the following:

(4)

in Article 54(3), point (a)(ii) is replaced by the following:

(5)

in Article 63(1), the following subparagraph is added:

‘Where the non-compliance concerns national or Union rules on public procurement, the part of the aid not to be paid or to be withdrawn shall be determined on the basis of the gravity of the non-compliance and in accordance with the principle of proportionality. The legality and regularity of the transaction shall only be affected up to the level of the part of the aid not to be paid or to be withdrawn.’;

(6)

in Article 72, paragraph 2 is replaced by the following:

(7)

the third and fourth subparagraphs of Article 75(1) are replaced by the following:

‘Notwithstanding the first and second subparagraphs of this paragraph, Member States may:

With regard to support granted under rural development, as referred to in Article 67(2), the first and second subparagraphs of this paragraph shall apply in respect of the aid applications or payment claims submitted from claim year 2019.’.

(1)

Article 4 is amended as follows:

(2)

in Article 6(2), the following subparagraph is added:

‘Where a Member State makes use of the option provided for in the second subparagraph of Article 36(4), the national ceiling set out in Annex II for that Member State for the respective year may be exceeded by the amount calculated in accordance with that subparagraph.’;

(3)

Article 9 is amended as follows:

(4)

in Article 11, paragraph 6 is replaced by the following:

(5)

Article 14 is amended as follows:

(6)

in Article 31(1), point (g) is replaced by the following:

(7)

in Article 36(4), the following subparagraphs are added:

‘For each Member State, the amount calculated in accordance with the first subparagraph of this paragraph may be increased by a maximum of 3 % of the relevant annual national ceiling set out in Annex II after deduction of the amount resulting from the application of Article 47(1) for the relevant year. When a Member State applies such an increase, that increase shall be taken into account by the Commission when setting the annual national ceiling for the single area payment scheme pursuant to the first subparagraph of this paragraph. For that purpose, Member States shall notify the Commission by 31 January 2018 of the annual percentages by which the amount calculated pursuant to paragraph 1 of this Article is to be increased each calendar year from 2018.

Member States may review their decision referred to in the second subparagraph of this paragraph on an annual basis and shall notify the Commission of any decision based on such review by 1 August of the year preceding its application.’;

(8)

Article 44 is amended as follows:

(9)

Article 46 is amended as follows:

(10)

Article 50 is amended as follows:

(11)

Article 52 is amended as follows:

(12)

in Article 53, paragraph 6 is replaced by the following:

(13)

Article 70 is amended as follows:

(14)

Annex X is amended in accordance with Annex II to this Regulation.

(1)

Article 33 is amended as follows:

(2)

in Article 34, paragraph 4 is replaced by the following:

(3)

Article 35 is replaced by the following:

(4)

in Article 37, point (d)(ii) is replaced by the following:

(5)

in the first paragraph of Article 38, point (i) is replaced by the following:

(6)

in Article 62, the following paragraph is added:

(7)

Article 64 is amended as follows:

(8)

Article 148 is amended as follows:

(9)

in Article 149, paragraph 1 is replaced by the following:

(10)

Article 152 is amended as follows:

(11)

Article 154 is amended as follows:

(12)

Article 157 is amended as follows:

(13)

in Article 159, the heading is replaced by the following:

‘Mandatory recognition’;

(14)

Article 161 is amended as follows:

(15)

Article 168 is amended as follows:

(16)

Articles 169, 170 and 171 are deleted;

(17)

the following Section is inserted:

(18)

in Article 184, paragraph 1 is replaced by the following:

(19)

Article 188 is replaced by the following:

(20)

Article 209 is amended as follows:

(21)

Article 222 is amended as follows:

(22)

in Article 232, paragraph 2 is deleted;

(23)

Annexes VII and VIII are amended in accordance with Annex III to this Regulation.

(1)

in Article 4, the following paragraph is added:

(2)

in Article 13, paragraph 5 is deleted;

(3)

in Article 22, paragraph 5 is deleted;

(4)

in Article 27, paragraph 5 is deleted.

(a)

point 11(a) and (b) of Article 3 shall apply from 1 January 2015;

(b)

point 23(b) of Article 1 shall apply from 1 January 2016; and

(c)

point 3 of Article 4 shall apply from 1 January 2019.