OPAL Gastransport & Co. KG, operates the OPAL, an approximately 470 kilometers long pipeline, which runs south from the Nord Stream landing point in Lubmin, near Greifswald, as far as the Czech Republic. Along the route, the natural gas pipeline with a transport capacity of 36 billion cubic metres of gas per year, goes trough Germany.
First European Commission decision concerning the OPAL pipeline
The European Commission issued its previous decision, approving the decision of the German regulator to release a part of the OPAL pipeline capacity, from third party access (TPA) rule on the 12th of June, 2009, no. C (2009) 4694, on the basis of art. 22 of Directive 2003/55/EU of the European Parliament, and of the Council of the 26th of June, 2003, concerning common rules for the internal market in natural gas, and repealing Directive 98/30/EC. Presently, the legal basis to issue a decision on exemption from TPA is art. 36 of Directive 2009/73/EU of the European Parliament and the Council, concerning common rules for the internal gas market.
In 2009, the European Commission consented to exclusion of the transit part of the OPAL gas pipeline capacity (i.e. capacity from Germany to the Czech Republic) from the TPA principle, by more than 50% (even 100% on the condition of introducing a gas release programme – the sale of 3 million m3 of gas annually, through an auction). Since the gas release programme was never introduced, OPAL is still excluded from the TPA at 50%, and utilised (by Gazprom) below actual capacity.
Gazprom sought European Commission consent to full exclusion of the OPAL pipeline from the TPA, and the receipt of long-term use (until 2033) of the entire pipeline capacity. The basic argument in this case was de facto the lack of interest in free capacity in the pipeline from third parties.
Second European Commission decision on the OPAL pipeline
In May, 2016, the German regulator submitted a letter to the European Commission (on the basis of a quadrilateral agreement concluded by the German Federal Network Agency, OPAL Gastransport GmbH & Co. KG, PAO Gazprom, and OOO Gazprom Export, which was signed back in 2013, but not effective at the time, and concluded again with mainly the same contents in May, 2016) to approve the proposal for greater use of OPAL capacity (a greater release without the need to hold an auction).
On the 28th of October, 2016, the European Commission announced a decision on the OPAL gas pipeline. According to a published press release, it was decided to:
- set a level of (exempted from the TPA rule) OPAL capacity at 50%;
- 20% of OPAL capacity (in the case of demand) is to be sold to third parties at auctions on the German Gaspool hub. Gazprom (and other companies with a dominant position on the Czech market) may seek such capacity, only at a certain base price. If great demand is documented, the level of sales to third parties may be increased;
- as a consequence, the European Commission enabled the remainder of at least 30% of capacity to be sold through an auction, without additional conditions, and/or limitations, which means that Gazprom may reserve it increasing its share in OPAL capacity, to at least 80%.
The character of the European Commission’s decision
A decision to release gas pipelines from internal market principles (including the TPA rule) is made upon individual request by the regulatory body of the given Member State. If the legally cited infrastructure is located in two Member States, a decision from two regulators is required. Additionally, the Agency for Co-operation of Energy Regulatory Bodies may provide an advisory opinion, which may serve as a basis for a decision by regulatory bodies. A regulatory body immediately provides the Commission with a copy of each request for release, at the time of its receipt. A decision is immediately reported by a relevant body to the Commission, together with all vital pertinent information. Such information may be presented to the Commission, in the form of a summary, in order for a decision to be made.
Subsequently, the European Commission may approve, reject, or modify a decision of the regulatory bodies, within two months of a submitted notification.
Legal procedure to challenge the European Commission’s decision
The European Commission decision may be challenged on the basis of art. 263(1) TFEU which allows to challenge documents which are ‘legislative acts, and acts which ‘produce legal effects, vis-a-vis a third party’.
Art. 263 TFEU distinguishes the applicants who may challenge Union acts, into privileged, semi-privileged, and non-privileged applicants. Privileged applicants are those who have an interest – this includes Member State, European Parliament, the Council of European Union and European Commission. Semi-privileged applicants – In cases where their prerogatives (rights or interests) are affected, Article 263 states that the Court of Auditors, by the European Central Bank and by the Committee of the Regions, can commence an action. Non-privileged applicants – article 263 provides any natural or legal persons (in effect individuals or businesses) can bring an action in three circumstances:
- where the applicant is the addressee of the act; or
- where the act is of ‘direct or individual’ concern to the applicant; or
- where there is a ‘regulatory act’, which is of direct concern to the applicant, not entailing implementing measures.
Examples of grounds for bringing a challenge:
- Lack of competence – where a union body has acted in an area where they don’t have the power to;
- Infringement of an essential procedural requirement – for example, the council failing to consult the European Parliament, e.g. Roquette Freres v Council (139/79);
- Infringement of the treaty of any rule of law relating to its application – this rule often overlaps with others, and the court has explained that it can include a breach of one of the general principles of European law, e.g. Nold v Commission (4/73);
- Misuse of powers – this ground will be relevant where an institution has used its power(s) for a purpose other than they were intended.
In the case of the OPAL decision, approval of the EC may violate the EU’s Third Energy Package (more specifically, Directive 2009/73/EC) of rules barring pipeline operators from discriminating against rival companies. The European Commission decision may infringe the following provisions:
- 36 sec. 1 (a) of Directive 2009/73/EC, which states that the investment must enhance competition in gas supply and enhance the security of supply;
- 36 sec. 1 (e) of Directive 2009/73/EC, which states that the exemption from the provisions of Articles 9, 32, 33 and 34 and Article 41(6), (8) and (10) of the Directive, must not be detrimental to competition or the effective functioning of the internal market in natural gas, or the efficient functioning of the regulated system to which the infrastructure is connected;
- 102 of TFEU (abuse of a dominant position within the internal market);
- 49 of TFEU (infringement on the freedom of establishment of entrepreneurs and the conducting of business activity in a Member State);
- 24 sec. 3 of the Treaty on European Union, which determines that the Member States shall support the EU's external and security policy actively, and unreservedly, in a spirit of loyalty and mutual solidarity, and shall comply with the EU's action in this area.
The proceedings provided for in art. 263 TFEU shall be instituted within two months of the publication of the measure, or of its notification to the plaintiff, or, in the absence thereof, of the day on which it came to the knowledge of the latter, as the case may be. After a time limit expires, an unchallenged decision becomes definitive. If the action is well founded, the Court of Justice of the European Union shall declare the act concerned to be void. However, the Court shall, if it considers this necessary, state which of the effects of the act which it has declared void, shall be considered as definitive.