The issue of limits on construction of new on-shore wind turbines was examined by the CJEU. Have technical provisions been introduced without notification of the European Commission, and does this mean that Polish courts are required to refuse to apply them?
Eco-Wind Construction, C-727/17
The Wind Farm Investments Act of 20 May 2016 introduced restrictions on locations of new wind farms, stating that they must be located a minimum of ten times their height (measured from the ground to the highest point, including the rotor and blades) from residential structures and areas of special natural value (art. 4).
In practice this means that no new on-shore wind turbines will be built and hampers not only planned investments but also those already at an advanced stage of development. The only investments not covered by the new legislation are those for which a construction permit was issued before the legislation came into force and which commence operation within three years.
This led to a dispute and a request for a preliminary ruling to the CJEU by the Province Administrative Court in Kielce, case C-727/17 Eco-Wind Construction.
The Province Administrative Court was concerned about whether the Polish laws in question conflicted with EU law. The Province Administrative Court asked the CJEU for interpretation of the following EU directives:
- Directive 2015/1535 laying down a procedure for provision of information in the field of technical regulations and of rules in Information Society services,
- Directive 2006/123 on services in the internal market,
- Directive 2009/28 on the promotion of the use of energy from renewable sources.
Technical notification – Directive 2015/1535
Free flow of goods within the EU means that it is prohibited to introduce quantitative restrictions between member states. As the technical provisions enacted by member states can lead to quantitative restrictions, Directive 2015/1535 requires member states to submit prior notification of envisaged provisions to the European Commission (before they come into effect). Failure to submit notification of technical provisions renders them ineffective with respect to an entity, which means that an entity can cite failure to submit notification and a national court is required to refuse to apply a technical regulation for which notification has not been submitted.
In the meaning of the directive, “technical regulations” are for instance technical specifications and other requirements or rules on services, including the relevant administrative provisions, the observance of which is compulsory, de jure or de facto, in the case of marketing, provision of a service, establishment of a service operator, or use in a member state or a major part thereof.
As requirements on location of wind turbines in fact restrict trade in equipment used to manufacture a wind turbine (the potential for location of wind turbines is estimated to have been restricted to 1 per cent of Poland) the Province Administrative Court asked the CJEU for interpretation regarding the necessity for technical notification regarding the provisions in question in the act, as notification regarding the act was not submitted according to the procedure provided for in Directive 2015/1535.
Notification – Service Directive 2006/123
Under the Service Directive, territorial restrictions between providers are prohibited. The Province Administrative Court considered limits on geographical distance laid down in the act to be territorial restrictions in the meaning of the directive, although they do not mention specifically the distance between providers producing electricity using wind turbines. In the view of the Province Administrative Court, these territorial restrictions might de facto lead to a limit on geographical distance between various providers which are in competition.
For this reason, the Province Administrative Court was concerned whether notification of the act might have to be submitted to the European Commission according to the procedure provided for in the Service Directive as a territorial restriction between providers.
Directive 2009/28 on the promotion of the use of energy from renewable sources
Under the directive, each member state is required to ensure that the share of energy from renewable sources in gross final consumption of energy in 2020 is at least the target set for that state. The target specified for Poland is 15%. In addition, all of the national provisions on authorisation, certification and licencing procedures with regard to power stations producing electricity, heating and cooling from renewable sources and the associated transmission and distribution network infrastructure shall be proportionate and necessary.
For this reason, the Province Administrative Court has serious concerns regarding whether provisions imposing restrictions on location of wind turbines might endanger the target of a 15% share of renewable energy in the gross final consumption of energy in 2020 in Poland. In this context, the Province Administrative Court considers the national provisions to be a breach of the principle of sincere cooperation provided for in the TFEU. Under this rule, member states are required to refrain from any measure which could jeopardise the attainment of the Union’s objectives.
The Province Administrative Court also pointed out that in the statement of reasons for the legislative proposal there are insufficient arguments that the solutions it implements are vital for the sake of public interest and do not exceed the extent necessary to attain the legislator’s objective (proportionality). In the court’s view the cause cited in the statement of reasons being preservation of health and the environment, and interests of residents, is not a convincing argument in view of the essential characteristic of wind farms, i.e. being environmentally friendly. There are also less severe systems, such as the solution used in the majority of European countries of a link between the required distance between wind turbines and residential buildings and the type of technology used or noise pollution standards.
The implications of the CJEU judgment
This CJEU ruling can have serious implications for the wind farm sector in Poland. The new legislation has led to suspension of a range of investments which are at an advanced stage for which construction permits were not issued prior to the geographical distance restrictions taking effect. If the act is found to breach EU law, investments of this kind might be allowed to go ahead at least in areas in which local zoning plans have been passed allowing construction of wind farms which at the moment are useless to investors due to the geographical distance rules.
Above all, under established CJEU case law, where no notification is given, technical regulations are ineffective with respect to entities, and a national court is required to refuse to apply them. Thus if the CJEU finds the restrictions on location of wind farms in Poland to be technical regulations, then national courts should consider them ineffective as of the moment the restrictions take effect. Also, even if notification of the regulations was given according to the technical notification procedure following a CJEU ruling finding the provisions in the act to be technical in nature, (a new bill would be required because notification regarding existing technical regulations is not possible) there are serious doubts whether the solutions introduced in the act are in the overriding public interest and are proportional. If there is no overriding public interest or the provisions are not proportional, as a rule the European Commission would not approve the technical regulations.
These provisions might also be prohibited under the Service Directive or Directive On Promotion Of Use Of Renewable Energy.
In our view, the CJEU ruling in the Eco-Wind Constructions case could have huge implications for the future of wind farm investments in Poland. The judgment is expected in the latter half of 2019.
Incidentally, the government is drafting a proposal for an amendment to the Renewable Energy Act of 20 February 2015, which also includes changes to provisions on wind farm investments. Although favourable for the wind farm sector, the proposal will not solve the problem raised in the request for a preliminary ruling. If passed, the new regulations will restore the previous rules on levying the appropriate real estate tax for wind farms (on the value of the structural elements of the wind farm) or extend the period for completion of investments for which construction permits have been issued. There will be no change to the geographical distance rules.
Agnieszka Kraińska, legal adviser, EU Law practice, Wardyński & Partners
Radosław Wasiak, adwokat, Energy Law practice, Wardyński & Partners