Joint Committee on Statutory Instruments Fourth Report


APPENDIX IX

First Memorandum by the Scottish Office

COUNTRYSIDE PREMIUM SCHEME (SCOTLAND) REGULATIONS 1997 (S.I. 1997/330)

  1. This memorandum is submitted to the Joint Committee on Statutory Instruments in response to their letter of 19 March in which they asked for an explanation of the following points arising in connection with the Countryside Premium Scheme (Scotland) Regulations 1997 (S.I. 1997/330) ("the Regulations").

  2. As respects regulation 12(3):

    (a)   explain the purpose and effect of sub-paragraph (a) and in particular indicate whether it is designed to give effect to Article 20(3) of Commission Regulation No. 746/96;

    (b)   if it is so designed, explain how it does so; and

    (c)   explain the purpose and effect of the words "insofar as permitted by Article 20(2) of the Commission Regulation" in sub-paragraph (b) given that Article 20(2) imposes no substantive restriction on the system of penalties that may be adopted by Member States.

The first and second points

  3. Regulation 12(1)(a) follows the wording of section 98(2)(d)(i) of the Environment Act 1995. That wording is appropriate insofar as the regulation provides for the withholding and recovery of grant payable under the Regulations which is not approved as part of an agri-environmental programme under Council Regulation (EEC) No. 2078/92. However, in relation to grant payable under the Regulations which is so approved Commission Regulation No.746/96 applies.

  4. Article 20(3) of Commission Regulation No. 746/96 provides for the exclusion from all aid under Council Regulation (EEC) No. 2078/92 of a farmer who has made a false declaration either intentionally or as a result of gross negligence. The provision makes no reference to materiality. It appears therefore that Article 20(3) holds open the prospect of exclusion albeit that a declaration is not false in a material respect i.e. that it is sufficient to trigger the requirement to exclude that a declaration is false and was made intentionally or as a result of gross negligence.

  5. Accordingly it was considered that the words "in a material respect" which appear in regulation 12(1)(a) would, if attached to the withholding or recovery of aid under the Council Regulation, represent a gloss on the provisions of Article 20(3). Sub-paragraph (a) of regulation 12(3) removes that gloss.

The third point

  6. The words "insofar as permitted by Article 20(2) of the Commission Regulation" reflect the view that the second sentence of Article 20(2) and in particular the words "shall be commensurate with their purpose" can be read as imposing a substantive restriction on the system of penalties that may be adopted by the Member States.

24th March 1997

Second Memorandum by the Scottish Office

  1. This Memorandum is submitted to the Joint Committee on Statutory Instruments in response to their letter of 11 June in which they asked for an explanation of the following points arising in connection with the Countryside Premium (Scotland Regulations 1997 (S.I. 1997/330) ("the Regulations").

  2. (1) Given, as regards regulation 12, that -

    (a)   Commission Regulation (EC) No. 746/96, Article 20.3 penalises a farmer who makes a false declaration intentionally or as a result of gross negligence by excluding him from aid;

    (b)   Article 20.3 is directly applicable in the United Kingdom; and

    (c)   regulation 12(1) applies to a case falling within Article 20.3 as well as to other cases of aid regulated by the Regulations,

explain why regulation 12(1) applies to cases within article 20.3 as well as to other cases.

   (2) Explain why, so far as regulation 12 purports to apply to cases within Article 20.3, paragraphs (1) and (2) do not restrict the power to cases where the above statement is made intentionally or is the result of gross negligence.

Introduction

  3. The Regulations were made by the Secretary of State in exercise of the powers conferred on him by section 98(1) and (2) of the Environment Act 1995 ("the 1995 Act"). Insofar as the Regulations could not have been made under those powers they are made in exercise of the powers contained in section 2(2) of the European Communities Act 1972 ("the 1972 Act").

  4. Notwithstanding that use is made of the powers contained in section 2(2) of the 1972 Act the position is that the Regulations are made primarily under the "domestic" powers contained in the 1995 Act. In exercise of those "domestic" powers the Regulations provide for the payment of grants within the scope of section 98(1) of the 1995 Act. Some but not all of the grants falling within the scope of that section and provided for by the Regulations were approved by Commission Decision (C(89)97) of 23 January 1997 made under Council Regulation (EEC) No. 2078/92 ("the Council Regulation"). To the extent that the grants provided for by the Regulations made in exercise of the "domestic" powers are thus approved such grants are considered also to be aid under the Council Regulation and thus subject to Commission Regulation (EC) No. 746/96 ("the Commission Regulation") including in particular Article 20.3 of the Commission Regulation.

  5. The view taken therefore is that while grant provided for under the Regulations may be aid and as such subject to the directly applicable provisions of Article 20.3 it remains nevertheless grant within the scope of section 98(1) of the 1995 Act and is therefore provided for under the powers contained in that "domestic" legislation. The drafting approach adopted in the Regulations was to utilise powers under section 2(2) of the 1972 Act only where the "domestic" powers were not sufficient to enable provisions necessary in implement of the Commission Regulation to be made in relation to grant representing aid under the Council Regulation or where, and to the extent that, provisions made in exercise of the "domestic" powers were inconsistent with the provisions of the Commission Regulation.

The first point

  6. Section 98(2)(d) of the 1995 Act provides -

  "Regulations made under this section may -

   . . .   

    (d)   make provision for or in connection with the recovery of any sums paid by way of grant, or the withholding of any further payments of grant, in cases where the applicant for the grant -

      (i)   in making the application, or in furnishing any information in connection with the application, had made a statement which was false or misleading in a material respect;

   . . . "

  7. Regulation 12(1) reflects the wording of section 98(2)(d) of the 1995 Act. Given that, as explained above, all grants provided for under the Regulations are considered to fall within the scope of section 98(1) and that regulation 12(1) was made under the powers contained in the 1995 Act it follows that it will, subject to any qualification made in exercise of the powers conferred by section 2(2) of the 1972 Act, apply to all cases including cases to which Article 20.3 applies.

The second point

  8. In relation to cases to which Article 20.3 applies it is considered that the wording of regulation 12(1) was inconsistent with the directly applicable Community law represented by the provisions of that Article only in the respect that the words "in a material respect" which appear at the end of regulation (12(1)(a), following the wording of section 98(2)(d)(i) of the 1995 Act represented a gloss on the provisions of Article 20.3. Accordingly, as explained in the Memorandum of 24 March submitted in response to the Committee's letter of 19 March, regulation 12(3)(a) removes that gloss.

  9. Since regulation 12(1) was not otherwise considered to be inconsistent with the directly applicable Community law represented by the provisions of Article 20.3 it was on the drafting approach explained above (paragraph 5) considered that it was unnecessary to make any further provision in exercise of the powers contained in section 2(2) of the 1972 Act in respect of that Article beyond that contained in regulation 12(3)(a). In particular the view is taken that the provisions of regulation 12(1), as qualified by regulation 12(3)(a), under which it is provided that the Secretary of State may withhold payment where an applicant has made a statement which is false or misleading are not in conflict with Article 20(3). In accordance with the provisions of that Article the Secretary of State must withhold payment where such statement is a false declaration made intentionally or as a result of gross negligence. As explained regulation 12(3)(a) does what is considered necessary to remove a gloss which would otherwise have prevented the provisions of regulation 12(1) made in exercise of the "domestic" power from co-existing with the directly applicable provision of Community law.

16th June 1997


 
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