Judge teaches State Secretary a lesson

At the request of one beef farm and several organic, land-based and conventional dairy farms, the preliminary relief judge of the District Court of The Hague was asked to review the 2017 Phosphate Reduction Plan Regulation on its sustainability in preliminary relief proceedings.

On 4 May 2017, the preliminary relief judge pronunciation done. The national, regional and trade press reported extensively on the outcome. You have therefore known for a long time how the summary proceedings ended. The State Secretary and the dairy sector are deliberating. The considerations of the court exceed the interests of the parties involved in the summary proceedings. It is therefore useful to examine the judgment of the preliminary relief judge. 

Non-milk-supplying companies: no legal interest
Shortly before the commencement of the summary proceedings, State Secretary Van Dam announced that non-dairy companies would be excluded from the scope of the Regulation. That actually happened on 1 May, and with retroactive effect.

This leads the preliminary relief judge to the conclusion that non-milk-supplying companies no longer have any legal interest in bringing proceedings. There is nothing to argue against. The preliminary relief judge does charge the costs of the proceedings to the State Secretary (because of the late time of the adjustment).

Milk supplying companies: disproportionate burden
The preliminary relief judge suspends the Regulation with regard to the milk-supplying companies that acted as plaintiff in the preliminary relief proceedings. The Scheme is being suspended because it imposes a disproportionate burden on the milk-supplying companies involved. Mainly because of the investments made. 

By July 2, 2015, the companies had made significant investments to expand their business. The companies had applied for the necessary permits, entered into financing commitments, entered into a building contract and had started or completed construction. However, the dairy herd was not yet at the target level. The preliminary relief judge considers that maintaining the derogation (deviation from the Nitrates Directive) is a justified public interest, but concludes that reducing livestock has such adverse consequences that the profitability of the companies is affected to a great extent.

If the investments cannot be used, financial obligations can no longer be met. That makes the intervention disproportionate. The surgery was not foreseeable. After all, the companies acted within the framework of the applicable regulations: the Act on Responsible Growth of Dairy Farming and the Order in Council for land-based growth of dairy farming. The lack of a suitable provision for emergency situations is heavily blamed by the preliminary relief judge on the State Secretary. This is a harbinger of a solution to the bottleneck problem in the system of phosphate rights. The Senate will debate this subject on 16 May. 

Organic companies: beyond the problem
The judge in preliminary relief proceedings gives special attention to organic farms. He is of the opinion that the proportionality of the Regulation is further endangered, because the Regulation aims to offer a solution in which organic farmers have no interest. After all, organic farmers keep their manure production under the standards of the Nitrates Directive and are not allowed to make use of the derogation. Organic dairy farming is thus excluded from the problem by the preliminary relief judge. 

Preliminary verdict
The preliminary relief judge mainly focuses on the disproportionate burden caused by the Regulation. The allegations that the Regulation is in conflict with Article 13 of the Agricultural Act, the principle of legality, the principles of good administration, Article 104 of the Constitution and anticipates unauthorized state aid will be rejected. A few things can be negotiated on that basis, but that does not detract from the result of the summary proceedings.

The Phosphate Reduction Plan 2017 Regulation has been immediately put out of action with regard to the parties involved, due to its undeniable ineffectiveness. The reasoning of the preliminary relief judge with regard to the disproportionality of the reduction measure is very solid. This is important for a possible appeal. An appeal must be lodged within 4 weeks. This appeal does not suspend the effect of the ruling, however. 

Dairy farms in similar circumstances
The ruling and the ineffectiveness only apply to the parties that actually participated in the summary proceedings. Dairy farms in similar circumstances must take action to benefit from the preliminary work that has now been done.

My advice is to write to the State Secretary invoking the summary judgment. In addition, decisions will soon follow on notifications of shortages and charges may be imposed. It also contains leads for challenging the Scheme.

Peter Goumans

Peter Goumans is a lawyer at Hekkelman. He focuses on the agricultural sector and closely follows developments in this sector. In his blogs he discusses legal issues in the agricultural sector.

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