Op-Ed: “The ‘Taxonomy Delegated Act’: Beyond what delegated legislation may do” by René Repasi

On Wednesday, 6 July, the European Parliament rejected the motion for a resolution on the Commission Delegated Regulation of 9 March 2022 amending Delegated Regulation (EU) 2021/2139 as regards economic activities in certain energy sectors and Delegated Regulation (EU) 2021/2178 as regards specific public disclosures for those economic activities, better known as the ‘taxonomy delegated act’. The motion for a resolution, which was adopted by a majority of the members of the responsible committees of the European Parliament (the committee on Economic and Monetary Affairs (ECON) and the committee on the Environment, Public Health and Food Safety (ENVI)) and which was therefore tabled for a vote to plenary, ‘objects to the Commission delegated regulation’. The rejection of the motion for a resolution has as a consequence that the Commission Delegated Regulation may enter into force provided that the Council does not object to it (which is rather unlikely). According to Article 290(2) TFEU, an objection needs to be adopted by the majority of the component members (which is reached at 353 votes in favour of the objection). The plenary vote of Wednesday failed to achieve this majority. Politically, this is bad news for protecting the climate. But also legally the contested Commission Delegated Regulation poses a meaningful challenge to the interinstitutional balance and the principle of democracy. The delegated regulation should therefore be legally challenged by the European Parliament in order to protect its institutional prerogatives.

The contested Commission Delegated Regulation

The contested Commission Delegated Regulation was based on Articles 8(4), 10(3) and 11(3) of Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment, better known as the ‘Taxonomy Regulation’. The purpose of this regulation is to establish ‘the criteria for determining whether an economic activity qualifies as environmentally sustainable for the purposes of establishing the degree to which an investment is environmentally sustainable’ (Article 1(1)). In the contested Commission Delegated Regulation the Commission came to the conclusion that ‘energy production from nuclear processes’ as well as ‘electricity generation from fossil gaseous fuels’ under certain conditions qualify as ‘environmentally sustainable economic activities’.

Legal challenges ahead

The Commission Delegated Regulation will now most likely be published in the Official Journal and enter into force. Yet, Austria and Luxembourg have already announced that, in the event an objection won’t be successful, they would raise an action for annulment under Article 263 TFEU in front of the Court of Justice of the EU. A legal argument can be made that,  including nuclear energy production in particular could ‘hamper the development and deployment of low-carbon alternatives’ and ‘lead to a lock-in of carbon-intensive assets, considering the economic lifetime of those assets’ precluded by Article 10(2)(b) and (c) of the Taxonomy Regulation, as cost-intensive investments in nuclear power production can prevent investments into renewable energies. Most importantly, the ‘do no significant harm’ principle under Article 17 of the Taxonomy Regulation seems to be violated by the inclusion of nuclear power production as this article considers ‘the long-term disposal of waste [which] may cause significant and long-term harm to the environment’ to be a ‘significant harm to environmental objectives’ (Article 17(1)(d)(iii)).

Protecting the Parliament’s prerogatives: Making political choices

Putting these legal arguments relating to the criteria defined by the Taxonomy Regulation aside, the Commission Delegated Regulation poses a significant challenge to the interinstitutional balance between the Commission, on the one hand, acting as ‘technocratic’ legislator, and the political legislator, the European Parliament and the Council, on the other hand. Moreover, the principle of democracy, as enshrined in Article 10 TEU, is affected by this delegated regulation. Bluntly said: whenever a decision requires political choices, it is up to the political legislator to take them, not the ‘technocratic legislator’. This principle was prominently stated by the Court of Justice in case C-355/10 of 5 September 2012 on the legality of Council Decision 2010/252/EU supplementing the Schengen Borders Code as regards the surveillance of the sea external borders. The Court of Justice struck down the implementing decision because it exceeded the limits of what can be delegated by the EU legislature. In paragraph 65 the Court clearly stated: ‘provisions which, in order to be adopted, require political choices falling within the responsibilities of the European Union legislature cannot be delegated.’ It is then exclusively up to the EU legislature to make these choices in accordance with the respective legislative procedures. They are the only democratically legitimate institutions to make such choices. Whenever political choices are necessary, we are in the domain of ‘essential elements’, which according to Article 290(2) TFEU are ‘reserved for the legislative act and accordingly shall not be the subject of a delegation of power’. In the judgment of 5 September 2012 the Court further explained that political choices are necessary when ‘the conflicting interests at issue [are] to be weighed up on the basis of a number of assessments’ (para. 76). This weighing exercise becomes pertinent where there is a broad range and variety of political convictions about a certain subject-matter.

With this judgment the Court of Justice protects the political prerogatives of the political EU institutions and in particular of the European Parliament against ‘technocratic’ legislation by the Commission that is encroaching upon their political prerogatives. The political prerogatives entail the right of Members of the European Parliament (MEP) to table amendments to a legal text and the possibility to vote by the majority of the members present. It might be argued that the right foreseen by Article 290(2) TFEU to revoke the delegation or to object to the delegated act is already enough of an expression of political choices. Yet, the lack of a right to amend a delegated act, the impossibility to only approve parts of a delegated act and object to others, and, in particular, the high majority threshold for both decisions, which is the majority of the component members, minimises the margin to make political choices. Both decisions under Article 290(2) TFEU can therefore qualify as an expression of political choices but the range of political choices that define the political prerogatives of the European Parliament is not limited to those expressions. This also explains why delegated acts may not be adopted in fields that require ‘political choices’ as stated by the Court of Justice.

The decision whether ‘energy production from nuclear processes’ or ‘electricity generation from fossil gaseous fuels’ can be considered ‘environmentally sustainable’ is such a decision that requires political choices. That can, in particular, be seen when looking at nuclear power production. The range of political convictions within the EU Member States is broad, ranging from a complete exit from nuclear power production in Germany to the intention to build new nuclear power plants in France and the Netherlands. This broad range of political opinions indicates the need for making political choices that cannot be made by means of delegated legislation.

Irrespective of whether one is convinced of nuclear power production or the energy generation from gaseous fuels to be environmentally sustainable or not, the institutional prerogative of the European Parliament and the Council to make political choices in accordance with the legislative procedures foreseen by the EU Treaties needs to be protected against delegated law-making that reduces the involvement of the political EU institutions to mere objections. These institutional prerogatives should be defended by the European Parliament by raising an action for annulment under Article 263 TFEU.

René Repasi is Professor of law at Erasmus School of Law, Erasmus University Rotterdam, and Member of the European Parliament (MEP) for the S&D group. He voted in favour of the motion for resolution objecting to the Commission Delegated Regulation.