Consultation: proposed amendments to the state aid rules to comply with the Aarhus Convention

In 2021, the Aarhus Convention Compliance Committee ("ACCC"), the enforcement body of the UN Aarhus Convention, found that the EU does not comply with the requirements of the Convention of a right to review measures taken and omissions to take measures in the area of state aid (see the decision here). The case was brought by two Austrian environmental organisations in the context of the clearance by the Commission of state aid to a nuclear power plant in Great Britain (the so-called Hinkley Point C decision). The Hinkley Point C decision was sought annulled by Austria before the General Court and since then by the CJEU but it was upheld by both courts (see the judgment by the General Court here and the judgment by the CJEU here).

The Regulation on the Application of the Provisions of the Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters to Union Institutions and Bodies (the "Regulation on the Aarhus Convention") implementing the Aarhus Convention in EU law contains an exemption for the decisions of the Commission in the area of competition law, including state aid law. In brief, the ACCC found that this exemption did not comply with the Aarhus Convention. The ACCC also found that the rights to review the state aid clearances of the Commission, to which the Commission had referred in the case brought in the context of the Hinkley Point C decision as mentioned above, did not give the right to a review guaranteed by the Convention. This is due, among other things, to the requirements as to standing of Article 263 TFEU and that the right to an indirect review does not ensure standing for environmental organisations in specific cases, and that it presupposes that the national court finds it necessary to refer preliminary questions about the legality of a Commission decision, see Article 267 TFEU.

In 2022, the Commission conducted a consultation on three possible solutions:

1. Amendment to the Regulation on the Aarhus Convention to remove the exemption for decisions in the area of state aid.
2. Amendment to the Code of Best Practices for the Conduct of State Aid Control Procedures (the "Code of Best Practices") by introducing a procedure corresponding to the internal review procedure in Article 10 of the Regulation on the Aarhus Convention but adjusted for the area of state aid.
3. Amendment to the Procedural Regulation by introducing a procedure corresponding to the internal review procedure in Article 10 of the Regulation on the Aarhus Convention but adjusted for the area of state aid.

Against this background, the Commission published its analysis in May 2023 of the amendments required as a result of the ACCC's criticism (see the analysis here). In July-September 2024, yet another consultation was conducted that was specifically aimed at businesses and authorities.

The current consultation was launched on 7 February 2025 and is about the following draft measures based on solution 2 to amend the Code of Best Practices and various general updates to the rules:

1. Amendment to the Code of Best Practices with a new point 11 introducing an internal review of final state aid decisions, made after completion of the formal investigation, which clear support including conditional clearances. This right to a review is granted to organisations that meet certain conditions including that their primary stated objective is to promote environmental protection within the framework of environmental legislation and that they have existed with this objective for at least two years. The right to a review does not apply to aid cleared under Article 107(2) TEUF or to aid cleared to remedy a serious disturbance in the economy of a Member State, see the final part of Article 107(3)(b) TEUF. A review must be requested no later than eight weeks after the publication of the state aid decision and, if possible, the Commission must finalise its review within 16 weeks or within 22 weeks. The same deadlines apply in the Regulation on the Aarhus Convention.
2. A box 6.8 is added to Annex I to Implementing Regulation 794/2004, which contains the standard form for the notification of state aid, where the Member States are to confirm that neither the activity that is the subject of the state aid nor any aspect of the notified state aid measure, which is inextricably linked to the objective of the aid, is contrary to EU environmental regulation. The intention is that this duty of information will make it possible for the Commission to abolish state aid clearance if it is based on incorrect information about compliance with EU environmental regulation.
3. A new Annex V to Implementing Regulation 794/2004 containing a form for requesting an internal review.

It appears from the preamble to the draft amendments to Implementing Regulation 794/2004 that, due to clarifications of the term "interested party" in the case law of the CJEU, amendments are also proposed to Annex IV which contains the form for submitting a complaint. This amendment does not seem to be part of the consultation material.

A general update of the Code of Best Practices is also proposed, including an extension of the pre-notification phase from six to 12 months and cancellation of the streamlined procedure for straightforward cases as it has never been used. A general update of Implementing Regulation 794/2004 is also proposed including changing the numbers of the articles to align with the Lisbon Treaty and updating the references to the 2015 Procedural Regulation.

The chosen solution is based on a self-declaration by Member States in connection with the notification of all aid measures. This will make compliance with EU environmental regulation a necessary element in any consideration for the granting of state aid requiring clearance by the Commission.

During the proceedings before the ACCC, the Commission pointed out that contravention of environmental regulation is possible in connection with the implementation of cleared aid and that the competence to ensure a right to a review is therefore at national level. The judgment by the CJEU in the Hinkley Point C case meant that this argumentation could not be used as the CJEU agreed with the plaintiff that the Commission cannot clear aid for an activity contrary to EU environmental regulation. In the amendments to the Code of Best Practices, the Commission restricts the right to an internal review accordingly by clarifying that what can be reviewed is whether the aided activity or aspects of the notified aid that are inextricably linked to the objective of the aid comply with EU environmental regulation. It means that the right to review contravention in connection with the actual implementation of the aid, for example in connection with environmental assessments, will still have to be granted in national legal systems. 

In the area of state aid, there is already a lot of process time in connection with the notification and clearance of aid that the Member States want to grant. This is why there will often be a political desire or a real need to grant the aid as soon as the Commission has cleared it, as was the case, for example, during the COVID breakout. This generally runs the risk that clearance may be challenged before the EU courts within eight weeks and ultimately annulled, which can result in the opening of a formal investigation or a new decision requiring repayment of the aid. This risk must be weighed against the desire to further the objective of the aid, and the result will often be in favour of granting and paying aid immediately without waiting for a possible challenge to the clearance. On the first analysis, the introduction of a right to an internal review for environmental organisations within eight weeks will not change this risk as the deadlines for bringing a decision before the General Court and requesting an internal review will run in parallel. It is written in the proposed amendment to the Code of Best Practices that organisations with a right to a review "may institute proceedings before the Court of Justice in accordance with the TFEU". The environmental organisations therefore have no privileged access to the EU courts and it consequently depends on a concrete assessment whether an organisation has standing.

It is emphasised in the 2023 analysis by the Commission that the internal review must be adapted to the area of state aid. There are certain key differences between the internal review proposed in the Code of Best Practices and the review set out in the Regulation on the Aarhus Convention. Firstly, the organisations given a right to a review are restricted to environmental organisations only. "Other members of the public" also have a right to a review under certain conditions in the Regulation on the Aarhus Convention. Secondly, the type of decision that can be challenged is specified, and certain authorities as to compatibility are not covered by the right to an internal review. It is explained in the 2023 analysis by the Commission that the internal review must be available for state aid for the development of projects or activities where there may be a risk of contravention of EU environmental regulation. This is why no right is given to an internal review of decisions made under the "crisis" authorities as to compatibility (Article 107(2)(b) TEUF and Article 107(3)(b) TEUF). Thirdly, the Code of Best Practices contains various documentation requirements and requirements as to the contents and the format of requests for internal reviews. Fourthly, the internal review with the Code of Best Practices is set out in a soft law document and not in a binding legal act. In its analysis from 2023, the Commission reported that solution 2 had been criticised for this very reason in the consultation conducted in 2022.

It will be interesting to see the reactions to the Commission's solution to ACCC's criticism of the EU's failure to comply with the Aarhus Convention.

The consultation will end on 21 March 2025.