EUROPEAN COMMISSION Brussels, C(2009) Subject: State Aid / Austria (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 Lower Austria. 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 Ybbs and Erlauf to rise to the highest level in 30 years, several tributaries of the Danube 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.