EUROPEAN COMMISSION

Brussels, C(2009)

Subject: State Aid / (Niederösterreich) - Aid No N 424/2009 - Aid for the damage caused by natural disasters

Sir, The Commission wishes to inform Austria that, having examined the information supplied by your authorities on the aid referred to above, it has decided to raise no objections to the relevant aid as it is compatible with the EC Treaty. In taking this decision the Commission has relied on the following considerations:

1. PROCEDURE

(1) In accordance with Article 88 paragraph 3, the permanent representation of the Republic of Austria to the European Union notified the Commission of these measures by letter of 16.7.2009, registered on the same day.

(2) The notified measures concern aid to be granted in accordance with the Austrian framework scheme (Richtlinien für die Gewährung von Beihilfen zur Behebung von Katastrophenschäden des Landes Niederösterreich, "the framework schme") which the Commission approved, as regards damages to agricultural production, by Decision C(2005)6036 of 26.12.2005 (State aid case N 564a/2004).

2. DESCRIPTION

2.1. Title

(3) Aid for the damage caused by natural disasters.

2.2. Budget

(4) Estimated annual budget ca € 1.5 Million.

2.3. Duration

(5) One-off.

2.4. Recipients

(6) Agricultural producers.

B-1049 Brussels - Belgium Telephone: exchange 32 (0) 2 299.11.11. Telex: COMEU B 21877. Telegraphic address: COMEUR Brussels. 2.5. Aid measure

The framework scheme

(7) The framework scheme lays down the conditions and modalities of compensation to agricultural producers in the event of damage caused to agricultural production by flood, landslide, rockslide, mudflow, avalanches, earthquake, snow pressure and hurricane (Orkan). The framework scheme remains unchanged.

(8) The framework scheme stipulates that compensation may be granted to finance the replacement of buildings, stocks, canalisations and roads and to partially cover the value of crops destroyed, including losses due to the destruction of humus. Incurred losses and foregone profits associated with temporary interruptions of the production process, the loss of orders, customers and markets as well as other damages which would be classified as indirect forms of damage shall not be compensated under the framework scheme.

(9) The aid may never exceed 70 % of the eligible damage. The value of the eligible damage is assessed and verified using the same method as in the framework scheme approved by the Commission in State aid case N 564a/2004. The value of the eligible damage thus assessed and verified is corrected by deducting insurance payments and any other compensation for the same damage from this value of the damage.

(10) In order to receive compensation the farmer whose production has been affected has to contact the local fact-finding commission, which verifies the damage and assesses whether the conditions for granting the aid are met.

(11) As stated in the Commission Decision C(2005)6036 of 26.12.2005 (State aid case N 564a/2004) approving the framework scheme, the Austrian authorities have given assurances that every exceptional emergency situation giving rise to compensation to agricultural producers under the framework scheme would be individually notified to the Commission. No compensation would be paid until the Commission has approved the existence of a natural catastrophe in such an individually notified case.

(12) Regarding the replacement of the Community guidelines for State aid in the agriculture sector (OJ C 28 of 01.02.2000) by the Community guidelines for State aid in the agriculture and forestry sector 2007 to 2013 (OJ C 319 of 27.12.2006, hereinafter "the new Guidelines") on 01.01.2007 the Republic of Austria has given assurance by letter of 01.03.2007 that all effective measures would be taken to adapt the existing aid schemes to the conditions of the new Guidelines until 01.12.2007.

The exceptional emergency situations in summer 2009

(13) The notified aid concerns compensation for damages caused by floods, landslides and rockslides June and July 2009 in several areas of . According to the Austrian authorities between 22.6 and 2.7 2009 continuous and widespread rain caused practically all rivers in Lower Austria to flood. The floods covered large areas and the intense rain caused landslides and rockslides in many parts of the region. The worst damage occurred in the areas of Mostviertel, Industrieviertel and the southern part of Waldviertel. The continuing rain then caused further flooding in these areas and in parts of Weinviertel on the saturated ground.

(14) The hydrological services of the government of the Land Niederösterreich (“the hydrological services”) reported cumulative rainfall for 22-24.6.2009 from 168 to 217 mm, which statistically occurs from less than once in 20 to 50 years. This rain was 2 followed by more localised rainfall with thunderstorms between 25 and 27.6.2009 and 29.6.2006, with daily rain amounts from 20 to 50 mm, with hourly intensities of up to 30 mm. On 28.6.2009 continuous rainfall of up to over 100 mm in 24 hrs was registered in particular in the Mostviertel area. On 2.7.2009 a rain amount of between 50 and 60 mm per hour, the highest amount in 30 years, was measured in the measuring station Maria Langegg, The rainfall caused the rivers and Erlauf to rise to the highest level in 30 years, several tributaries of the to the highest level in 5 to 15 years and the Danube itself in Lower Austria to the highest level in 15 to 20 years. The reports of the hydrological services confirm that these conditions resulted in flooding, rockslides and landslides.

(15) Exceptional emergency situations were verified by the hydrological services for the administrative districts of Amstetten, Melk, Scheibbs, Lilienfeld, St. Pölten, Tulln, Baden, Bruck an der Leitha, Wien Umgebung, Wr. Neustadt, Neunkirchen, Krems, Gänserndorf, Zwettl, Hollabrunn and Horn.

(16) The Austrian authorities have specified that aid is available for damage caused by flooding, landslides and rockslides where the damage and has been verified by the local fact-finding commission, as provided in the Framework Scheme.

(17) According to the Austrian authorities the damage concerned grain, corn, alternative field cultures (such as sunflower, colza, soy and peas), sugar beet, potatoes, special cultures (especially vegetables, fruit gardens and vineyards), field fodder, and grassland in an area of ca. 8 500 ha. In a few cases farm animals were lost as well.

(18) The Austrian authorities have specified that the damage would be assessed and compensation granted according to the provisions of the framework scheme. The compensation would be 20 % of the assessed damage, or 50 % in proven particular cases of hardship. The Austrian authorities have explained that the cases of hardship are assessed on the basis of the social and economic situation of the farmer.

2.6 Legal basis

(19) §3 Katastrophenfondsgesetz 1996, BGBI. Nr. 201/1996 i.d.g.F; Richtlinien für die Gewährung von Beihilfen zur Behebung von Katastrophenschäden des Landes Niederösterreich.

2.7 Aid intensity

(20) Maximum 70 % of the eligible damage according to the framework scheme and maximum 50 % of the eligible damage in the notified cases of compensation.

3. ASSESSMENT

3.1. Presence of aid

(18) For Article 87(1) of the Treaty to apply, the measures must provide an economic benefit to an undertaking which it would not have received in its normal course of business, the aid must be granted to certain undertakings, the benefit must be granted by a Member State or through state resources and the aid must be capable of affecting trade perceptibly between Member States as well as distorting competition.

(19) These conditions would seem to be met.

3 (20) The measure is financed out of State resources. It benefits certain undertakings (farmers in parts of Austria). As these benefiting undertakings are active in a highly competitive international market, the measure distorts or threatens to distort1 competition and affects trade between Member States.

(21) Therefore, the measure constitutes aid and Article 87 (1) of the Treaty applies. Hence it must be examined whether derogation from the general principle of the incompatibility of State aid under Article 87(1) of the Treaty might be granted.

3.2. Aid to compensate farmers for losses caused by exceptional events

(22) The Austrian authorities have indicated that the notified aid would be granted under the framework scheme that stipulates the conditions for receiving the aid, the aid amounts and the method to calculate the losses and the compensation. With Decision C(2005)6036 of 26.12.2005 (State aid case N 564a/2004) the Commission approved the framework scheme under Section 11.2 of the Community guidelines for State aid in the agriculture sector (OJ C 28 of 1.2.2000, p. 2) hereinafter ‘the old Guidelines’). The framework scheme remains unchanged.

(23) The old Guidelines have been replaced on 1 January 2007 by Community Guidelines for State aid in the agriculture and forestry sector 2007 to 2013 (OJ C 319 of 27.12.2006, p. 1, hereinafter "the Guidelines"), which are applicable to new notifications received from 1.1.2007 onwards.

(24) As provided in point 196 of the Guidelines, all formerly approved framework schemes had to be adapted by 31.12.2007 at the latest in order to comply with the provisions of the Guidelines.

(25) Aid to make good the damage caused by natural disasters or exceptional occurrences is assessed under Chapter V.B.2 of the Guidelines.

(26) By letter of 01.03.2007 the Republic of Austria has given assurance that they will take all appropriate measures concerning the application of the new Guidelines.

(27) In comparison with the conditions laid down in point 11.2 of the Community guidelines for State aid in the agriculture sector (OJ C 28 of 01.02.2000), the conditions concerning aid to make good the damage caused by natural disasters or exceptional occurrences laid down in chapter V.B.2 of the new Guidelines have changed regarding the moment the aid should be paid out. In application of point 119 of the new guidelines the aid is not to be paid out more than four years following the event.

(28) The Commission takes note of the fact that the aid will be granted before 30.6.2010. According to national legislation (Katastrophenfondsgesetz 1996) this type of aid must be paid out within three years of the event. It follows that point 119 of the Guidelines concerning the moment the aid should be paid out is complied with.

1 According to the case law of the Court of Justice, improvement in the competitive position of an undertaking resulting from a State aid generally points to a distortion of competition compared with other competing undertakings not receiving such assistance, Case C-730/79, ECR 1980, p. 2671, paragraphs 11 and 12. 4 (29) The aid would therefore be granted on the basis of the approved framework scheme, and the present notification only communicates information on the existence and seriousness of the event in order to demonstrate the existence of a natural catastrophe. Hence the assessment is limited to verify the existence of a natural disaster, to check the direct link between the natural disaster and the aid measure and to control that there is no overcompensation.

(30) As laid out in point 121 of the Guidelines, the Commission has consistently held that the notions of ‘natural disaster’ and ‘exceptional occurrence’ contained in Article 87(2)(b) of the Treaty must be interpreted restrictively. Hitherto the Commission has accepted that earthquakes, avalanches, landslides and floods may constitute natural disasters provided that a sufficiently precise description can be established. Point 122 provides that the Commission will continue to evaluate proposals to grant aid in accordance with Article 87(2)(b) on a case-by-case basis, having regard to its previous practice in this field.

(31) Point 123 provides that once the existence of a natural disaster or an exceptional occurrence has been demonstrated, the Commission will permit aid of up to 100 % to compensate for material damage. Compensation should normally be calculated at the level of the individual beneficiary. In order to avoid over-compensation, any payments due, for example under insurance policies, should be deducted from the amount of aid. The Commission will also accept aid to compensate farmers for loss of income resulting from the destruction of the means of agricultural production, provided that there is no over- compensation.

The existence of a natural disaster

(32) The Austrian authorities have explained that the damage was caused by flooding, landslides and rockslides caused by rain, as indicated above in point 13 and 14. In the past the Commission has considered flooding, landslides and rockslides as natural disasters.

(33) From the hydrological reports provided by the Austrian authorities, and referred to in point 14 above, it would appear that the level of precipitation and its duration, as indicated by the Austrian authorities in the cited hydrological reports, were such as can be considered exceptional and apt to provoke severe and widespread flooding, land slides and rock slides. In this context the Commission notes in particular that the in large areas of Lower Austria the cumulative rain amounts between 22 and 24.6.2009 were the highest in 20 to 50 years and that they were followed by several days of more localised but exceptionally intensive precipitation. The Commission also takes note of the information from the Austrian authorities that the water levels in rivers in Lower Austria reached in some cases their highest levels in 30 years and that the water level in the Danube was at its highest in 15 to 20 years. Moreover, the damage concerned most of the territory of Lower Austria and about 8 500 ha of production land. Therefore the damage can be considered extensive.

(34) For the above reasons the exceptional emergency situations notified by the Austrian authorities should be considered natural disasters within the meaning of Article 87(2)b.

Direct link between the event and compensation and the level of compensation

(35) The Austrian authorities have specified that only damage done by flooding, land slides and rock slides subject to the present notification is eligible for compensation. This excludes damage caused directly by climatic events such as rain or any other event.

5 (36) The Austrian authorities have confirmed that the aid would be granted according to the framework scheme, notably in determining the damage, verifying the causal connection between the natural disaster and the damage occurred, and assessing and verifying the value the eligible damage at the level of the individual beneficiary. Furthermore, any payment due, for example under insurance policies, will be deducted from the amount of aid. The maximum aid rate allowable under that framework scheme is 70 % of the eligible costs. In the notified aid the aid rate is 20 % and up to 50 % in proven particular cases of hardship.

(37) Based on the above considerations, it appears that the aid can be granted only where there is a demonstrated direct and causal link between the notified exceptional emergency situations. Moreover, the natural disasters in question (floods, landslides and rockslides) are likely to cause damage or to destroy the cultures that according to the Austrian authorities are concerned (see point 17 above). The Commission also notes that the framework scheme excludes any indirect losses (see point 8 above). As to the aid rate, it will in no case be higher than 50 % of the eligible costs.

(38) Therefore it can be concluded that a direct link exists between the event and the losses and that overcompensation is excluded.

4. CONCLUSION

(39) As the measure complies with Chapter V.B.2 of the Guidelines, the measure may be considered to be compatible with the Common Market under Article 87 (2) (b) of the Treaty. The Commission has accordingly decided to consider the measure to be compatible with the EC Treaty.

(40) If this letter contains confidential information which should not be disclosed to third parties, please inform the Commission within fifteen working days of the date of receipt. If the Commission does not receive a reasoned request by that deadline, you will be deemed to agree to disclosure to third parties and to publication of the full text of the letter in the authentic language on the Internet site http://ec.europa.eu/community_law/state_aids/state_aids_texts_de.htm.

Your request should be sent by registered letter or fax to:

European Commission Directorate-General for Agriculture and Rural Development Directorate M.2 Office: Loi 130 /128 B-1049 Brussels

Fax No.: 0032.2.296 7672

Yours faithfully, For the Commission

Mariann FISCHER BOEL Member of the Commission 6