Phosphate rights: counting down and sitting still?

The Phosphate Rights Act was published in the Official Gazette on 9 June 2017. This law amends the Fertilizers Act with the introduction of a phosphate rights system for dairy farms. The law will enter into force on a date to be determined. This is because a royal decree is required.

This will only follow when there is prospect of obtaining a new derogation. And for that, phosphate production must again fall below the national ceiling this year. To achieve this, the Phosphate Reduction Plan 2017 Regulation has been promulgated, among other things. The binding nature of that Regulation is under a magnifying glass. What is the current state of affairs?

Interim injunction
Immediately after the announcement of the reduction plan, several dozen dairy farms summary proceedings started up. For those companies, the Regulation has been suspended by the District Court of The Hague (by judgment of 4 May 2017). That action was followed. Several hundred companies also claimed that their company was inoperative before the preliminary relief judge of the District Court of The Hague.

This led to court judgments on August 9 and 16† For these companies, the decommissioning was made dependent on a light test to be carried out by the Netherlands Enterprise Agency (RVO.nl). This test is used to determine whether the companies had entered into irreversible investment commitments before 2 July 2015.

Only a few dozen companies failed that test. The decision of the District Court of The Hague subsequently led to an influx of applications for a light test. Access to this no longer had to be enforced through summary proceedings.

Appeal
The decommissioning of the Regulation is not yet final for the dairy farms involved. The Minister of Economic Affairs has lodged an appeal against the judgments of the District Court of The Hague. The appeal against the judgments of 4 May was heard by the Court of Appeal on 18 September. The Court of Appeal has announced that it will render judgment on October 31, 2017.

The appeal in the other cases will be heard at a later date, but the judgment of the Court of Appeal of 31 October is of course guiding for the outcome. The minister has also announced that if he is successful, he will immediately again impose sums of money on the companies involved.

Space to still remove dairy cows or young stock is not offered. That is a recognized process risk. Meanwhile, the countdown to October 31 has begun. The judgment of the Court of Appeal is crucial for the follow-up, all the more so because a possible appeal in cassation this year will no longer lead to a judicial decision.

Call minister
The Minister of Economic Affairs regularly reports to the House of Representatives on the progress of phosphate reduction. As early as July, the House of Representatives was informed that good results had been achieved and that the objectives had been achieved. The challenge is to maintain those results.

In the letter of 18 September, the minister again reported to the House of Representatives. A reduction of 9,2 million kilos of phosphate has now been achieved. Within the feed track, the objectives have been amply achieved. There was a reasonable contribution from the stoppage scheme. The target has also been achieved with the Scheme (5,1 million kilos, against a target of 5 million). 

Nevertheless, the minister expresses his concerns. In the month of September, he observes an increase in the female herd of 10.000 LU† He therefore calls on the dairy farmers to maintain the results achieved. Otherwise, obtaining derogation from 2018 will be seriously jeopardized. So his call is: sit still.  

Common sense
Of course, it can be expected that he will do his utmost to achieve the objectives. All the more so because the 2017-2021 Coalition Agreement (page 44) stipulates that in order to be able to implement the 6th Nitrates Directive action program for the 2018-2021 period, a derogation must once again be obtained. The minister's appeal is understandable in this light. 

Apart from the call, there is a serious reason to think carefully about whether it is wise to supply dairy cattle again. For dairy farms that have been excluded from the scope of the Regulation, there is of course the litigation risk associated with the appeal procedures. In the meantime, however, the introduction of the phosphate rights system is also casting its shadow.

It makes no sense to supply dairy cattle now, for which no phosphate rights will be allocated next year. Incidentally, this can be different per company. It is certainly not unwise to go through this carefully with the business advisor for your own business situation.

Meanwhile, the countdown continues. You will of course read in a next blog how the judgment of the court will turn out.

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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