EFTA Surveillance Authority decision of 30 June 2004 regarding environmental measures. Information from the Norwegian Government

Reference is made to the EFTA Surveillance Authority’s (The Authority) letter dated 30 June 2004 in which the Norwegian Government was informed about decision No 148/04/COL concluded on the same day.

In that decision the Authority concluded that the exemptions referred to in point 1 a) and b) constituted aid. Furthermore, the Authority concluded in point 8 of the decision that the incompatible aid must be recovered from the aid recipients from 6 February 2003 onwards. The recovery should be effected without delay and in accordance with the procedures of national law, provided that they allow the immediate and effective execution of the decision.

In point 9 of the decision, the Norwegian Government is requested to inform the Authority within two months from the receipt of the Authority’s decision of the measures taken to comply with that decision.

The Norwegian Government has decided to send an application for annulment of the Authority’s decision to the EFTA-court. It is however decided that no interim measures will be applied for. Hence the Norwegian Government will take the necessary steps to comply with the Authority’s decision pending the EFTA Court’s ruling.

In order to answer the Authority’s request the Customs and Excise Authority has looked into alternative ways to proceed to effectuate the Authority’s decision.

As recalled, the exemption for the production process in the industry was limited to production processes within SIC94 section C and D. These sections cover more than 30 000 undertakings. In addition undertakings in Zone V were exempted from the electricity tax.

In the period from 6 February 2003 onwards, the supplier of electricity (i.e. the then taxable person) invoiced his customers free of excise duty for the exempted use. As these figures were jointly reported to the Customs, the work of identifying the beneficiaries must be based upon information from the supplier of electricity. On this background the Customs need to contact the suppliers in order to provide an overview of which, and how many, activities within SIC94 section C and D actually received electricity free of excise duty. The quantity of delivered electricity in the relevant period of time (i.e. 6 February 2003 - 31 December 2003) will also be estimated.

The de minimis regulation will be applied in order to reduce the number of undertakings to contact. This may reduce the number of recipients to approximately 35 – 40 undertakings. In order to respect the ceiling in that Regulation, work will be initiated to map the de minimis aid previously granted to these undertakings. This work should be finalised before the Customs contacts the suppliers in order to reduce the workload on these suppliers and the Customs.

In the application of annulment to the EFTA Court the Norwegian Government contests inter alia the Authority’s conclusion in point 1 a) in the decision. In the alternative it will be submitted that at least part of the exempted use of electricity is justified, and thus not State aid.

The Authority’s recovery decision does not specify the actual amount to be recovered. This is to be inferred from the premises of the decision. However, the decision only refers to the aid found incompatible under point 1. a). As the Authority has not elaborated on whether part of the exempted use may be justified, taking account of the underlying objective of the tax, it is not clear whether such exempted use is to be included in the recovery order. This is the reason why this particular question will be included in the application to the EFTA-court.

The Norwegian Government will as mentioned above proceed to effectuate the Authority’s decision pending the outcome of that case. As part of Norway’s assessment of what amount to be recovered from the recipients, a conclusion will be made on how the decision will be interpreted.

The Norwegian Government estimate that the Authority’s decision will be effectuated as interpreted during the autumn, unless the EFTA Court annuls the Authority’s decision in the meantime. The Norwegian Government will as soon as this is done

inform the Authority of the measures taken.

Yours sincerely,