Select Committee on European Scrutiny Thirty-Sixth Report



15. EXTERNALISATION OF THE MANAGEMENT OF COMMUNITY PROGRAMMES

 

(23389)

7644/02

COM(01) 808

Amended draft Council Regulation laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes.

 

 

 

 

Legal base:

Article 308 EC; consultation; unanimity

Department:

HM Treasury

Basis of consideration:

EM of 30 April 2002 and Minister's letter of 27 June 2002

Previous Committee Report:

HC 152-xxxi (2001-02), paragraph 5 (22 May 2002)

To be discussed in Council:

No date set

Committee's assessment:

Legally and politically important

Committee's decision:

Cleared

 

Background

    1. As part of its process of reform, the Commission set out in December 1999 to develop a coherent and manageable policy of 'externalisation', i.e. the carrying out of executive tasks implementing Community policies by bodies other than the Commission. The objective is to allow the Commission's permanent staff to be assigned to its essential tasks, to regain control of executive and support activities and, generally, to improve efficiency.
    2. We considered an earlier version of the proposal on 18 July and 21 Novemiber 2001 and on 10 April 2002. We were concerned that the creation of bodies with legal personalities separate from the Commission might be inconsistent with the principle that recourse to an agency does not relieve the Commission of its responsibilities under the Treaty, particularly Article 274 EC.[47] We also expressed concern that the draft Regulation was far from clear on the question of which tasks may be delegated by the Commission to an agency.
    3. In its Opinion of 8 November 2001 the European Court of Auditors considered that general rules should be laid down under which the Commission would intervene if the agency acted contrary to the object of the Community programme in question, or more generally, acted unlawfully. The Court of Auditors further considered that while these procedures could be specified in the instrument of delegation, the general framework should be established by the draft Regulation.
    4. We considered the revised version of the proposal on 22 May 2002. We noted that the implementation of Community programmes entrusted to agencies was to be supervised by the Commission. Such supervision was to be exercised in accordance with the procedures set out in the instrument of delegation drawn up by the Commission under Article 6(3).
    5. We also noted that Article 21 no longer referred to the legality of acts of agencies being subject to review under Article 230 EC[48]. Instead, provision was made for a Member State or a person who was directly and individually concerned to refer an act of an agency to the Commission. The Minister explained that, although the Commission had given no explanation for the deletion of any reference to the possibility of challenges to the Court of Justice under Article 230 EC, such revision was logical since the Commission would remain legally liable for the acts carried out by an agency on its behalf and that Article 230 would therefore apply automatically.
    6. On the other hand, we noted that the Commission's own Explanatory Memorandum stated that it could not accept the suggestion that it be made liable in law for the acts of the agencies, because the agencies had their own legal personality. We were therefore concerned that the creation of separate legal personalities could prove to be a shield whereby the Commission could seek to avoid liabilities for activities carried out on its behalf, and we asked the Minister if she shared our concerns.
    7. The Minister's letter

    8. In her letter of 27 June 2002 the Financial Secretary to the Treasury (Ruth Kelly) answers these concerns. The Minister explains that she sought clarification of our concerns at the Council's Budget Committee. The Minister reports that the Council Legal Service has advised that Article 1 of the proposal[49] is sufficient to give the Commission full legal responsibility for the acts of an agency. The Minister further notes our concern over the absence of a provision making the Commission liable for the acts of its agents, but points out in response that the Council Legal Service has now confirmed that any claim in contract or delict made against an agency would be met through the general budget of the EC to the extent that the agency's budget had insufficient credits.
    9. In relation to our concern over the absence of any direct means of challenge under Article 230 EC against the acts of an agency, the Minister explains that the latest text[50] has re-instated a reference to that Article, in relation to the decisions of the Commission when a complaint is made against the acts of an agency. (The previous and present version had provided for the review by the Commission of any unlawful act of an agency). The Minister points out that the revised form of Article 21(5) now provides:
    10. "The Commission's decision to reject an action, whether explicit or implicit, shall be open to appeal to annul it before the Court of Justice, in accordance with Article 230 of the EC Treaty."

    11. The Minister comments that the effect of the provision is that, whereas it is not possible under the Treaty as it stands to make a direct challenge against an act of an executive agency[51], the Regulation now makes it quite clear that the Commission's exercise of its power to review may be challenged under Article 230 EC.
    12. Our other concern was over the vague scope of the power to delegate tasks to an agency. On this point, the Minister explains that the Government pressed for the Regulation to require the Commission to provide full details to the Council about any proposal to set up an executive agency. As a result, Article 3(4) of the Regulation requires the Commission to inform the budgetary authority[52] of any intention to have recourse to an executive whenever a Community programme is adopted. Article 13(6) requires the Commission to provide details of resources required for the operation of the agency as well as of any secondment of staff, and of any savings achieved through the delegation of a task to an agency.
    13. On this point the Minister comments as follows on the general power of the Council to supervise the use by the Commission of executive agencies:
    14. "In any case, the Council as part of the budgetary authority effectively has a veto over any decision to set up an agency via the budgetary exercise, as it has the power to delete the budget lines through which the running costs of an agency are subsidised."

    15. The Minister concludes by expressing her belief that the revised Regulation now contains sufficient safeguards to ensure that executive agencies will be set up effectively and that the Commission's responsibilities are clear. The Minister is grateful to the Committee for its contribution which, she says, "has ensured that we now have a much better proposal than would otherwise have been the case".
    16. Conclusion

    17. We are grateful to the Minister for her clear and helpful letter. We note the efforts which the Minister has made to secure improvements to the proposal on the two points we raised.
    18. We welcome the clear recognition that the private law liabilities of an agency must be met from the general budget of the EC in the event that the agency's budget proves insufficient, and we agree that, since Article 230 EC does not provide for any direct challenge to an act of an executive agency, the exercise of the Commission's power to deal with an act of one of its agencies should be made subject to the provisions of that Article.
    19. In the light of these further developments, and the Minister's explanation of them, we are content to clear the document.

 


47  "The Commission shall implement the budget...on its own responsibility and within the limits of the appropriations, having regard to the principles of sound financial management". Back

48  "The Court of Justice shall review the legality of acts adopted jointly by the European Parliament and the Council, of acts of the Council, of the Commission and of the ECB, other than recommendations and opinions, and of acts of the European Parliament intended to produce legal effects vis-à-vis third parties."  Back

49  "..the Commission, under its own control and responsibility, may entrust certain tasks relating to the management of Community programmes". Back

50  This text, a copy of which the Minister has supplied to the Committee, is currently available only in French. Back

51  This is presumably because agencies are to have a legal personality separate from the Commission, and thereby fall outside the range of institutions whose acts may be reviewed by the Court of Justice under Article 230 EC. Back

52  That is, the Council and the European Parliament. Back

 
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