The impact of the Division’s PAN decision on the permissibility of nitrogen relevant activities?

Since the judgment of the European Court of Justice (“CJEU”) of 7 November 2018, which answered the preliminary questions referred by the Division, there had been doubts as to the soundness of the PAN. In this blog post, we will discuss in further detail the system introduced by the PAN, the specific defects of that system (according to the Division), the consequences of the PAN being declared non-binding, and give a first outlook on the future.

Firstly, however, it is important to note that despite the complex subject matter, the Division has provided a transparent assessment, including by way of graphical and schematic representation.

What is the PAN?

The PAN is an integrated programme relating to activities which emit nitrogen on Natura 2000 sites (“nitrogen deposition”). Activities of this kind may include expansions of animal husbandry farms, the construction of residential areas and roads, and industrial activities. Nitrogen deposition can have an adverse effect on nature, and in many Natura 2000 sites, the ‘critical deposition value’ for nitrogen for the specific habitat type on the relevant site has already been exceeded. In other words: in many areas, there is already too much nitrogen on the relevant Natura 2000 site.

On the one hand, the PAN intends to restore and preserve the Natura 2000 sites listed within, while on the other hand also creating room for economic activities. The PAN sets out a package of measures (restoration measures and PAN source-directed measures) that, together with autonomous developments, should lead to a reduction of nitrogen deposition on Natura 2000 sites. Part of that future room which is ‘gained’ through these reductions will then be made available for economic activities (“room for development”).

The PAN also intended to simplify the authorisation regime under the Habitats Directive (as implemented in the (previous) 1998 Nature Conservation Act (‘Nbw’) and the current Nature Conservation Act (‘Wnb’)). For a plan or project that may have significant effect on a Natura 2000 site, an appropriate assessment must be carried out to assess whether there is certainty that the plan or project (possibly with mitigating measures) will not impair ecological values. If, after an appropriate assessment, it cannot be said with certainty that ecological values will not be impaired, the plan or project may be implemented only if there are no alternative solutions, if there is an imperative reason of overriding public interest, and if compensating measures are taken (the “AIC test”). For the purposes of the PAN, a general appropriate assessment has been carried out to test in advance what activities may be developed. This means that individual activities do not require an appropriate assessment for nitrogen deposition: reference can be made to the PAN in these cases.

What are the substantive problems with the PAN?

Below, we will discuss the requirements set by the CJEU for the PAN, and whether the Division believes the PAN satisfies this substantive test in concrete terms.

CJEU

The CJEU is of the opinion that permitting activities on the basis of a programmatic approach such as the PAN is not principally in contravention of the law. However, this is true only if the associated appropriate assessment is scientifically sound and it is guaranteed that, from a scientific perspective, it is beyond reasonable doubt that ecological values will not be impaired. These requirements also apply to other appropriate assessments.

Certain projects may be exempted from the obligation to obtain a permit if they do not exceed a certain threshold or limit value for nitrogen deposition; the national court must however be convinced that these projects will not impair the ecological characteristics of the relevant Natura 2000 sites.

The appropriate assessment cannot take into account the expected advantages of measures not yet established at the time of the assessment. Furthermore, conservation measures, appropriate measures and autonomous developments can only play a role in the assessment of the conservation status of the ecological values, which means that the effects of those measures cannot be mitigated, and can therefore not be included as mitigating factors in the assessment of the effects of a project.

For more extensive analysis, and background to this decision, we refer to our earlier blog post.

The Division

In the present decision, the Division assessed the substance of the PAN based on the requirements set by the CJEU. It thereby concluded that the PAN does not meet the requirements set by the CJEU.

The Division held that the PAN incorrectly fails to take into account the difference between conservation measures, appropriate measures and autonomous developments on the one hand, and protective measures (within the meaning of the Habitats Directive) on the other. The PAN tars all the measures and advantages with the same brush, as it were. The Division disapproved of this, as only the positive effects of protective measures may be involved in an appropriate assessment of a nitrogen-emitting activity; the positive effects of any other measures and advantages may only play a role in the assessment of the conservation status of the ecological values (i.e. not in the appropriate assessment).

Moreover, the expected advantages of measures should be established at the time of that appropriate assessment. This was not the case for the PAN. Source-directed measures, restoration measures and autonomous developments involved in the appropriate assessment of the PAN had not been established at the time of that appropriate assessment. For example, the restoration measures had not yet been carried out, or had not been sufficiently identified. The PAN source-directed measures and autonomous developments had not yet come into force, had not yet manifested themselves, and moreover could not sufficiently be established at a hexagonal level (i.e. a one-hectare hexagonal area). The room for development had not yet manifested itself at the time of the appropriate assessment and could, therefore, not be issued in advance. The Division uses a strict assessment in terms of scientific soundness: there can be no “reasonable scientific doubt”. With reference to an earlier CJEU judgment, the Division uses the basic principle that a measure cannot be involved in an appropriate assessment if there is any scientific discussion as to the usefulness of the measure.

The Division held that the PAN had been adopted in contravention of the Habitats Directive. As stated above, Annex 2 to the PAN, article 2 of the (former) Decree on limit values for the programmatic approach to nitrogen, and article 2.12 of the Nature Conservation Decree were declared non-binding.

Impact of the PAN decision

The declaration that the PAN is non-binding will have huge impact on the granting of authorisations for activities causing nitrogen deposition on Natura 2000 sites where the critical deposition value for nitrogen has been exceeded. Below, we will discuss the consequences in various contexts.

Irrevocable orders based on the PAN

According to the Division, this decision will not affect irrevocable decisions that have come into force under the PAN. In itself, that is good news; however we note the following qualifications:

• On 30 January 2019, the Division referred questions to the CJEU for a preliminary rulingon the soundness of irrevocable decisions that are contrary to European law. The Division doubts whether decisions in contravention of Union law can be upheld. In the PAN decision, however, the Division holds that the irrevocable decisions will be upheld despite being contrary to the Habitats Directive. Therefore, the CJEU judgment based on that request is relevant.
• It follows from Article 5.4 Wnb that a competent authority may revoke or amend a permit granted in contravention of a statutory requirement. In addition, revocation is appropriate if the implementation of Article 6(2) of the Habitats Directive so requires. Administrative bodies may be able, on request or otherwise, to revoke an already irrevocable decision based on this decision.

Non-irrevocable permits

For non-irrevocable permits, the statutory Wnb system is used. This system applies to both existing and future permits. Each activity must incorporate a review of whether the activity may have significant effects for a Natura 2000 site.

This will be the case if a critical deposition value has been reached for a specific habitat in the relevant Natura 2000 site. In such event, an appropriate assessment must be carried out on the effects of the activity on the Natura 2000 site. If that assessment demonstrates with certainty that the activity for which the permit has been sought will not impair the ecological characteristics of the Natura 2000 site, the permit may be granted and the activity may be carried out. If, despite mitigating measures, the activity will still impair the relevant ecological values, the required permit may still be granted – however, it does have to pass the AIC test (standing for no Alternatives, Imperative reason of overriding public interest, and Compensation being provided for (for more information, see below)). We note that, in the event of the presence of prioritised species or habitats in the nature conservation area, the economic interest can only qualify as a public interest after approval by the European Commission (Article 2.8(5)(a) and (b) Wnb). If, after going through the AIC test, the permit still cannot be granted, the activity cannot be carried out.

Decision on continuation of existing projects

When considering decisions on the continuation of existing projects causing nitrogen deposition on Natura 2000 sites, three situations should be distinguished: (i) projects for which a permit had been granted before the Habitats Directive came into effect, (ii) projects that had been appropriately assessed before the PAN came into effect as an assessment framework, and (iii) projects that are permitted pursuant to the PAN.

For projects for which a permit had been granted before the Habitats Directive came into effect, the PAN decision will not lead to any changes. Pursuant to CJEU case law, in the decision-making process on the continuation of such a project, an appropriate assessment will still need to be carried out.

For projects that had been appropriately assessed before the PAN came into effect as an assessment framework, this decision will not lead to any changes. Pursuant to Article 2.8(2) Wnb, for continuation of the same project, reference can be made to the earlier appropriate assessment, to the extent that a new appropriate assessment would not reasonably bring any new insights or information to light.

For projects for which a permit had been granted pursuant to the PAN and subject to a decision on the continuation of the existing activity, this decision will indeed change the situation. The Division holds that since it has been established that the PAN was adopted in contravention of the Habitats Directive, it cannot be said that an appropriate assessment would not reasonably bring any new insights to light. Pursuant to (the current) Article 2.8 Wnb, these projects should still be appropriately assessed in the decision-making process concerning the continuation of the project.

Note: non-irrevocable zoning plans

A zoning plan is not subject to the PAN assessment framework. Spatial development, provided for by a zoning plan, which entails an increase of nitrogen deposition on a Natura 2000 site where the critical deposition value has been reached, should be appropriately assessed. This system remains unchanged.

Nevertheless, zoning plans in some cases make reference to the PAN rather than carrying out an appropriate assessment, namely in situations that were preceded by an Nbw or Wnb permit that had been granted subject to the PAN. To the extent that those zoning plans are not yet irrevocable, that substantiation cannot be upheld and an appropriate assessment will still need to be carried out.

Moreover, the Division states that, if a zoning plan has referred to the PAN rather than carrying out an appropriate assessment, and that zoning plan is to be re-adopted, an appropriate assessment will still need to be carried out. After all, pursuant to Article 2.8(2) Wnb, it cannot reasonably be assumed that a new appropriate assessment will not bring any new information or insights to light.

Exempted projects below limit values

Pursuant to the Decree on limit values for the programmatic approach to nitrogen, projects causing less than the limit value of 1 mole N/ha/yr (or, after reduction pursuant to Article 2(3) of the Decree on limit values for the programmatic approach to nitrogen, 0.05 mole N/ha/yr) on a Natura 2000 site for which a permit was required under the PAN, were exempt from the obligation to obtain a permit. Pursuant to that decision, projects below that limit value but causing more than 0.05 mole N/ha/yr do require notification (unless the limit value had been reduced to 0.05 mole N/ha/yr: in such event a higher deposition would require a permit and a notification would not be sufficient). For these projects, there is no irrevocable decision. As the Division has declared the Decree on limit values for the programmatic approach to nitrogen to be non-binding, projects pursuant to that decision are no longer exempt from the obligation to obtain a permit. By Letter to the Lower House dated 11 June 2019, the Minister of Agriculture, Nature and Food Quality indicated that the more than 3,300 activities registered under the exemption should still be granted an authorisation decision.

New insights on the requirements for an appropriate assessment

The decision is also relevant to decisions in which the PAN does not play a role, but an appropriate assessment must still be carried out. First, the decision shows that a strict distinction should be made between certain measures and advantages involved in the appropriate assessment. As stated above, only protective measures may be involved in the assessment of whether the adverse effects of an activity on ecological values of a Natura 2000 site can be prevented or mitigated. Other measures and advantages only play a role in the assessment of the conservation status of those ecological values.

Moreover, the decision makes it clear that, at the time of carrying out an appropriate assessment, there must not be any reasonable scientific doubt as to the expected advantages and effects of measures. This requirement may, in practice, cause some headaches. When is there no reasonable doubt? The specific scientists working in this field may play an important role here. 

Does the PAN still have any value?

The declaration that the PAN is non-binding does not necessarily mean that the PAN, as a whole, is a thing of the past. Aside from the fact that the Division may repair the defects found (which the Minister is focusing on; see the recent Letter to the Lower House dated 11 June 2019), the PAN still, in any event, has some useful aspects.

The Member State is still under an obligation to take measures to preserve, restore or prevent deterioration of ecological values (Article 6(1) and (2) of the Habitats Directive). The PAN makes the choices taken in this area by the competent authority transparent. Therefore, the PAN may be an adequate tool for implementation of those obligations.

The PAN used a system of priority projects, under which room for development was allocated to important projects with priority. That list of projects may still be useful: it may be advisable to give priority to projects with a demonstrable national or provincial social interest. Due to the potential scarcity of ‘nitrogen room’, however, the transparent allocation of that room (see by way of illustration this earlier blog post) should be given attention.

What is still possible for new decisions?

Note the hexagons

The Netherlands is entirely divided into one-hectare hexagons. The deposition of nitrogen is calculated for each hexagon. The favourable effects of measures on natural conservation areas must be quantified on a hexagonal level. This means that certain parts of the country may offer room for new projects; the Netherlands is not completely ‘locked down’.

Use of the AIC test as a solution?

The next question is whether the decision that the PAN is non-binding will now result in a complete prohibition on nitrogen-emitting activities in overloaded hexagons. For overloaded hexagons, where there is no room for development left even if mitigating measures are taken, there is still the possibility of an AIC test. The Provincial Executive may, under certain circumstances, permit an activity, even though there is no certainty that ecological values will not be impaired. This is possible if (i) there is no Alternative solution, (ii) there is an Imperative reason of overriding public interest and (iii) Compensating measures are taken.

A question that may arise in this respect is whether the interest of economically relevant activities – such as employment – constitutes an overriding public interest. Certain priority projects labelled as such on the basis of the PAN may qualify as projects of an overriding public interest. In such event, provided that the A and C elements of the AIC test are also complied with, a permit may still be granted for those projects.

Existing use

The decision will not have any direct impact on the exceptions from the obligation to obtain a permit under the Wnb in connection with the continuation of ‘existing use’ (for a summary of the exemptions, see this earlier blog post). For a change or expansion to existing use, the Nature Protection Regulation links to the appropriate assessment for the PAN (see Article 2.4(5)). It is therefore important, in the event of changes or expansions to existing use, to assess if and how the change may be effected. In this respect, earlier case law on existing use (including CJEU case law) may also play a role.

Going forward

In the Letter to the Lower House dated 11 June 2019 referred to above, the Minister of Agriculture, Nature and Food Quality explained how her Ministry intends to deal with the decision of the Division in the short, medium and long term. The decision has been made to bring in a team of experts to work with urgency on directions for solutions to the issues ensuing from the decision. For example, together with the cabinet, local governments and other social partners, these experts will work on the realisation of a new and future-proof approach to nitrogen.

For more information on the PAN, please refer to our previous blog posts on this subject.

An adaptation of this blog post was published in Bb 2019/50.

A Dutch translation of this blog can be found here