REPORT on the proposal for a Council regulation on the establishment of a Joint Undertaking to develop the new generation European air traffic management system (SESAR)

27.10.2006 - (COM(2005)0602 – C6-0002/2006 – 2005/0235(CNS)) - *

Committee on Industry, Research and Energy
Rapporteur: Erna Hennicot-Schoepges
Draftsman (*): Philip Bradbourn, Committee on Transport and Tourism
(*) Enhanced cooperation between committees – Rule 47 of the Rules of Procedure

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the proposal for a Council regulation on the establishment of a Joint Undertaking to develop the new generation European air traffic management system (SESAR)

(COM(2005)0602 – C6-0002/2006 – 2005/0235(CNS))

(Consultation procedure)

The European Parliament,

–   having regard to the Commission proposal to the Council (COM(2005)0602)[1],

–   having regard to Article 171 of the EC Treaty, pursuant to which the Council consulted Parliament (C6‑0002/2006),

-   having regard to the opinion of the Committee on Legal Affairs on the proposed legal basis,

–   having regard to Rules 51 and 35 of its Rules of Procedure,

–   having regard to the report of the Committee on Industry, Research and Energy and the opinion of the Committee on Transport and Tourism (A6‑0382/2006),

1.  Approves the Commission proposal as amended;

2.  Calls on the Commission to alter its proposal accordingly, pursuant to Article 250(2) of the EC Treaty;

3.  Calls on the Council to notify Parliament if it intends to depart from the text approved by Parliament;

4.  Asks the Council to consult Parliament again if it intends to amend the Commission proposal substantially;

5.  Instructs its President to forward its position to the Council and Commission.

Text proposed by the Commission	Amendments by Parliament
Amendment 1 Citation 1
- Having regard to the Treaty establishing the European Community, and in particular Article 171 thereof,	- Having regard to the Treaty establishing the European Community, and in particular Articles 171 and 173 thereof,
Justification
In line with the applicable case-law, especially the judgments of 26 March 1987 (Case 45/86, Commission v. Council, ECR 1493), 11 February 1991 (Case 300/89, Commission v. Council, ECR I-2867) and 26 April 1996 (Case C-271/94, Parliament v. Council, ECR I-1689), this amendment aims to enable Parliament to be more fully involved in the creation, development and establishment of the Joint Undertaking.
Amendment 2 Recital 2
(2) The project to modernise air traffic management in Europe, hereinafter called the "SESAR project", is the technological element of the single European sky. It aims to give the Community high-performance air traffic control infrastructure which will enable the safe and environmentally friendly development of air transport, benefiting fully from the technological advances of programmes such as Galileo.	(2) The project to modernise air traffic management in Europe, hereinafter called the "SESAR project", is the technological element of the single European sky. It aims to give the Community high-performance air traffic control infrastructure which will enable the safe, energy efficient and environmentally friendly development of air transport, benefiting fully from the technological advances of programmes such as Galileo. It also aims to integrate both aircraft speed management, for reasons of energy efficiency, and intensive cooperation with weather forecasting services, so as to reduce the climate change impact of aviation.
Justification
The higher performance of ATM bears the potential to manage better adapted speed for saving kerosene consumption and allows to guide the planes on routes that are, according to weather forecast, less sensitive for the building of vapour contrails.
Amendment 3 Recital 3
(3) The SESAR project aims to integrate and coordinate activities which were previously undertaken in a dispersed and uncoordinated manner in the Community.	(3) The SESAR project aims to integrate and coordinate activities which were previously undertaken in a dispersed and uncoordinated manner in the Community, including the most remote and outlying regions thereof, referred to in Article 299(2) of the Treaty.
Justification
This amendment supplies legal clarification in line with the Treaty.
Amendment 4 Recital 6
(6) The definition phase will be followed by a phase to implement the plan to modernise air traffic management in the Community, which will consist of two successive steps: development (2008-2013) and deployment (2014-2020).	(6) The definition phase will be followed by two successive phases: a development phase (2008-2013) and a deployment phase (2014-2020).
Justification
This amendment should be considered in conjunction with the amendment to Article 1(1a) (new), whose justification makes the case for three distinct phases that are interdependent.
Amendment 5 Recital 6 a (new)
	(6a) Each phase should lay down the main elements of its content and for the deployment phase the legal provisions should be stated in a separate proposal.
Justification
This amendment should be considered together with Amendment to Article 1(1a) (new). The latter gives a fuller justification.
Amendment 6 Recital 7
(7) In accordance with Article 15(3) of Regulation (EC) No 550/2004, the route charges can provide income to finance projects aimed at supporting specific categories of airspace users and/or air navigation service providers in order to improve the collective air navigation structures, the supply of air navigation services and the use of airspace.	deleted
Justification
An additional levy on air navigation charges must be avoided. User charges will already contribute to the programme via Eurocontrol. A successful definition phase should deliver a clear business case triggering the necessary private investment (and public funding).
Amendment 7 Recital 11
(11) The public budget for the implementation phase of the SESAR project should be supplemented by contributions from the private sector.	(11) The public budget for the development and deployment phases of the SESAR project should be supplemented by contributions from the private sector. During the development phase these contributions should amount to 50% of the budget.
Justification
SESAR should allow industry to fully bring in its expertise. But if SESAR is to be an industry-led initiative, this has also to be reflected in the financing of the development phase.
Amendment 8 Recital 12
(12) Taking into account the number of players who will need to be involved in this process, and the financial resources and technical expertise needed, it is vital to set up a legal entity capable of ensuring the coordinated management of the funds assigned to the SESAR project during its implementation phase.	(12) Taking into account the number of players who will need to be involved in this process, and the financial resources and technical expertise needed, it is vital to set up a legal entity capable of ensuring the coordinated management of the funds assigned to the SESAR project during its development phase.
Justification
The Commission text is not clear in the sense that 'implementation' does not constitute a phase of its own. Implementation - according to the amendment to Article 1(1a) (new) - is present in all three phases.
Amendment 9 Recital 13
(13) This entity, which is responsible for managing a public research programme of European interest, must be considered as an international organisation within the meaning of the second indent of Article 15(10) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, and the second indent of Article 23(1) of Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products.	(13) This entity will be responsible for managing a public research programme of European interest within the meaning of the second indent of Article 15(10) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, and the second indent of Article 23(1) of Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products.
Justification
This amendment should be seen in the context of another amendment to Article 2(2) where it is argued that "joint undertakings" are not automatically recognised as 'international organisations'.
Amendment 10 Recital 14
(14) This entity should also be exempt from taxation by the Member States as regards taxes other than VAT and excise duty, and salaries paid to its staff should be exempt from any national income tax.	(14) This entity should also be exempt from taxation by the Member States as regards taxes other than VAT and excise duty, and salaries paid to its staff should be in line with the conditions of employment of other servants of the European Communities.
Justification
For reasons of legal and social consistency, it is important to clarify that wage levels should be in line with the 'Rules applicable to other servants of the European Communities'.
Amendment 11 Recital 15
(15) SESAR is a research and development project which justifies funding from the Community research and development framework programmes. It is therefore necessary to set up a Joint Undertaking under Article 171 of the Treaty in order to enable considerable progress to be made in the development of technologies relating to air traffic control systems during the development phase (2008-2013) phases.	(15) SESAR is a research and development project which justifies funding from the Community research and development framework programmes. It is therefore necessary to set up a Joint Undertaking under Articles 171 and 173 of the Treaty in order to enable considerable progress to be made in the development of technologies relating to air traffic control systems during the development phase (2008-2013).
Justification
This is in line with the twofold legal basis proposed, i.e. Articles 171 and 173 of the EC Treaty.
Amendment 12 Recital 17
(17) The main task of the Joint Undertaking must be to organise and coordinate the SESAR project by combining public and private sector funding and using external technical resources, provided by its members, and in particular Eurocontrol’s experience.	(17) The main task of the Joint Undertaking must be to organise and coordinate the SESAR project by combining public and private sector funding and using external technical resources, provided by its members, and in particular Eurocontrol’s experience and expertise.
Justification
The reference to EUROCONTROL’s experience has to be completed by mentioning the 40 years of civil and military expertise of this Organisation.
TRAN Amendment 13 Recital 17a (new)
	(17a) It is desirable for the private sector to be appropriately involved in all phases, especially in the development phase , so as to ensure the liability of private-sector participants during the deployment phase.
Justification
The industry can have some problems related their liability when install a new system if they are not appropriately involved in the development of the technological bases.
Amendment 14 Recital 20
(20) The rules for the organisation and operation of the Joint Undertaking should be laid down by drawing up the statutes of the Joint Undertaking.	(20) The rules for the organisation and operation of the Joint Undertaking and for the avoidance of conflicts of interests within the Joint Undertaking and the procedure for the appointment of its officials should be laid down by drawing up the statutes of the Joint Undertaking as set out in the Annex.
Justification
Two other amendments to Article 3(1) and to Annex, article 6(1) should be taken into account.
Amendment 15 Recital 20 a (new)
	(20a) The European Parliament should be granted observer status on the administrative board of the Joint Undertaking.
Justification
This amendment should be considered in conjunction with amendment to Annex, article 3(2), taking on board the position of the European Parliament of 6 September 2005 (see Barsi-Pataky report, A6-0212/2005 on the Galileo programme).
Amendment 16 Recital 20 b (new)
	(20b) Applications for the accession to the Joint Undertaking of new members should be welcomed, subject to the provisions of Article 1(3) of the Annex.
Justification
This amendment should be considered in conjunction with amendments to Article 5a (new), Annex, Article 1(3a) (new) and Annex, Article 4(1.
Amendment 17 Recital 22 a (new)
	(22a) The Commission should report to the European Parliament and the Council every three years on the application of this Regulation and, if appropriate, should propose amendment of it.
Justification
This amendment is to be considered in conjunction with amendment to Article 6a (new).
Amendment 18 Article 1, paragraph 1
1. In order to carry out the development activities of the implementation phase of the project to modernise air traffic management in Europe, hereinafter referred to as the “SESAR project”, a Joint Undertaking is hereby established, known as “SESAR Joint Undertaking” for a period ending on 31 December 2013.	1. A Joint Undertaking (hereinafter referred to as "the Joint Undertaking") is hereby established. Its primary objective shall be to manage the activities of the development phase of the project to modernise air traffic management (ATM) in Europe, hereinafter referred to as the “SESAR project”, for a period starting on the date on which the Council endorses the ATM Master Plan referred to in point (a) of paragraph 1a below, and ending at the end of the development phase.
Justification
This amendment seeks to render the Commission text clearer and to clarify the concepts employed as well the definition of the development phase.
Amendment 19 Article 1, paragraph 1 a (new)
	1a. The SESAR project shall consist of three phases:
	(a) a “definition phase” which aims to define the technical options and steps to be taken and the priorities in the modernisation programme as well as the operational implementation plans. It began in October 2005 and is expected to finish in December 2007, resulting in an ATM Master Plan. The ATM Master Plan is to be developed by a consortium of undertakings under the supervision of the Eurocontrol;
	(b) a “development phase” which will start on 1 January 2008, once the Council has endorsed the ATM Master Plan, acting on a proposal from the Commission and after consulting the European Parliament. The development phase will end on 31 December 2013;
	(c) a “deployment phase” which will start on 1 January 2014 and end on 31 December 2020 and will comprise large-scale production and implementation of the new ATM infrastructure. The Commission shall submit a proposal to the European Parliament and the Council, defining:
	(i) the transition from the development phase to the deployment phase,
	(ii) the reimbursement mechanisms which shall apply to any body succeeding the SESAR Joint Undertaking, and
	(iii) the transfer of selected tangible and intangible assets to the new body succeeding the SESAR Joint Undertaking.
Justification
For reasons of better regulation and clarity of responsibility, this Regulation should define the phases in terms of a time period and in terms of what ought to be achieved during the three phases, while paying attention to the responsibilities of legislators and other bodies concerned.
Amendment 20 Article 1, paragraph 1 b (new)
	1b. The scope, governance, funding and duration of the Joint Undertaking shall, where appropriate, be reviewed by the Council, in accordance with the development of the project and the ATM Master Plan. The Council shall take into account the assessment referred to in Article 6 and the provisions of Article 6a.
Justification
This amendment is a necessary legal provision, judging from the experience of the Galileo Joint Undertaking.
Amendment 21 Article 1, paragraph 2, introductory part
2. The aim of the Joint Undertaking shall be to ensure the modernisation of the European air traffic management system by federating research and development efforts in the Community. It shall be responsible in particular for carrying out the following tasks:	2. The aim of the Joint Undertaking shall be to ensure the modernisation of the European air traffic management system by coordinating and concentrating all relevant research and development. It shall be responsible in particular for carrying out the following tasks:
Justification
This follows from the previous amendments on the definition of the development phase.
Amendment 22 Article 1, paragraph 2, indent 1
- organising and coordinating the implementation of the SESAR project, in accordance with the plan to modernise air traffic management in Europe, hereinafter referred to as “the plan”, drawn up by Eurocontrol, by combining public and private sector funding;	- organising and coordinating the activities of the development phase of the SESAR project, in accordance with the ATM Master Plan resulting from the definition phase of the project managed by Eurocontrol, by combining and managing under a single structure public and private sector funding;
Justification
This follows from the previous amendments concerning the definition of the development phase.
Amendment 23 Article 1, paragraph 2, indent 2 a (new)
	- ensuring the necessary funding for the activities of the development phase in accordance with the ATM Master Plan;
Justification
The question of funding merits special mention.
Amendment 24 Article 1, paragraph 2, indent 2 b (new)
	- ensuring the involvement of the stakeholders in air traffic management in Europe, in both decision-making and funding;
Justification
This addition is needed because of the important role played, due to experience and accumulated knowledge, by air traffic management in Europe.
Amendment 25 Article 1, paragraph 3
3. The seat of the Joint Undertaking shall be located in Brussels.	3. The seat of the Joint Undertaking shall be established in accordance with Council Regulation (EC) No58/2003 of 19 December 2002 laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes1. _________________ 1 OJ L 11, 16.1.2003, p. 1.
Justification
The seat of the SESAR Joint Undertaking should not be decided by this Regulation. This decision should be taken by the European Council, in accordance with the principles underlying the decision on the seat of Agencies (see Council Reg. N°58/2003 of 19.12.2002) and other organs and services of the EC.
Amendment 26 Article 2, paragraph 2
2. The Joint Undertaking shall be recognised as an international organisation within the meaning of the second indent of Article 15(10) of Directive 77/388/EEC and the second indent of Article 23(1) of Directive 92/12/EEC.	deleted
Justification
Directive 77/388/EEC and Directive 92/12/EEC do not allow joint undertakings to be recognised as "international organisations", unless they are fully public bodies. A joint undertaking - involving both public and private sectors in its decision-making bodies - being endowed with the power to conclude international agreements will be a new development in the EU legal order, never experienced before in EC legislation.
Amendment 27 Article 2, paragraph 3
3. The Joint Undertaking shall be exempt from taxation by the Member States as regards taxes other than VAT and excise duty. In particular, it shall be exempt from the payment of registration fees and corporate or similar taxes. Salaries paid to staff of the Joint Undertaking shall be exempt from any national income tax.	3. The Joint Undertaking shall be exempt from taxation by the Member States as regards taxes other than VAT and excise duty. In particular, it shall be exempt from the payment of registration fees and corporate or similar taxes. Salaries shall be paid to staff of the Joint Undertaking pursuant to the conditions of employment of other servants of the European Communities.
Justification
For reasons of legal and social consistency, it is important to clarify that wage levels should be in line with the 'Rules applicable to other servants of the European Communities'.
Amendment 28 Article 3, paragraph 1
1. The statutes of the Joint Undertaking, as set out in the Annex hereto, are hereby adopted.	1. The statutes of the Joint Undertaking, as set out in the Annex hereto, which constitute an integral part of this Regulation, are hereby adopted.
Justification
It seeks to make the point that Annexes to a legal instrument are part and parcel of the legal proposal that they annexed to. A number of Court rulings have stressed this point, but for "joint undertakings" we have not had Court cases yet. Hence the need to stress this aspect.
Amendment 29 Article 3, paragraph 2
2. The statutes may be modified in accordance to the procedure referred to in paragraph 2 of Article 5, and in particular Articles 3, 4, 5, 6 and 8 thereof.	2. The statutes may be modified in accordance with the procedure referred to in Article 6a.
Justification
For reasons of clarity and following the guides on "better regulation", there should be one article in a legal proposal defining the procedure of any modification judged necessary by the EC institutions, not initiated or effectuated by an organ of a "joint undertaking". See also amendment to Art. 6a (new) of the Regulation.
Amendment 30 Article 4, paragraph 1, point (a)
a) contributions from its members in accordance with Article 1 of its statutes and	a) contributions from its members in accordance with Articles 1, 3 and 11 of its statutes.
Justification
The rapporteur has not yet seen any alternative mechanism imposing on the private sector its financial contribution. Yet a legal provision is proposed because it sets out the financial obligations of the private sector in a public-private partnership (PPP). It is only proper and desirable that these matters be debated in the EP and certain guidelines on PPPs be defined.
Amendment 31 Article 4, paragraph 1, point (b)
b) a possible levy on the air navigation charges within the meaning of the second indent of Article 15(3)(e) of Regulation (EC) No 550/2004. The Commission shall define, in accordance to the procedure referred to in paragraph 4 of Article 15 of Regulation (EC) No 550/2004, the procedures for collecting and using the this levy.	deleted
Justification
An additional levy on air navigation charges must be avoided. User charges will already contribute to the programme via Eurocontrol. A successful definition phase should deliver a clear business case triggering the necessary private investment (and public funding).
Amendment 32 Article 4, paragraph 3
3. All Community financial contributions to the Joint Undertaking shall cease upon expiry of the period mentioned in Article 1.	3. All Community financial contributions to the Joint Undertaking shall cease upon expiry of the development phase, unless otherwise decided by the European Parliament and the Council on the basis of a Commission proposal.
Justification
The option of an additional EC contribution should exist in a legal instrument. But an EC financial contribution should follow the proper and established budgetary procedure.
Amendment 33 Article 5, paragraph 1
1. The Single Sky Committee, established by Article 5 of Regulation (EC) No 549/2004, hereinafter referred to as “the Committee”, shall be informed on a regular basis about its work. To this end, the Commission shall put the SESAR project as an item on the agenda of the Committee’s meetings.	1. The Single Sky Committee, established by Article 5 of Regulation (EC) No 549/2004, hereinafter referred to as “the Committee”, shall be informed on a regular basis about the work of the Joint Undertaking. To this end, the Commission shall put the SESAR project as an item on the agenda of the Committee’s meetings.
Justification
Simple clarification is added.
Amendment 34 Article 5, paragraph 2 a (new)
	2a. The Commission's position in relation to decisions within the Administrative Board concerning technical adjustments to the ATM Master Plan shall be adopted in accordance with the procedure referred to in Article 3 of Decision 1999/468/EC.
Justification
This amendment should be considered in conjunction with the new Article 6a on the Review Clause. In other words, this amendment only mandates the Commission to adopt its position on the technical modifications of the ATM Master Plan, after invoking the "Advisory Procedure" of Comitology.
Amendment 35 Article 5 a (new)
	Article 5a
	Accession of new members
	The Commission shall report to the European Parliament and the Council on the accession of new members of the Joint Undertaking. The accession of new members, including members from third countries, shall be subject to the approval of the European Parliament and of the Council.
Justification
The legal provision is borrowed from the Galileo Joint Undertaking (Reg.(EC) N°876/2002), slightly amended as to the role of the European Parliament. It is a necessary condition for a public-private partnership (PPP), like the SESAR Joint Undertaking.
Amendment 36 Article 6
Every three years from the start of the activities of the Joint Undertaking and upon expiry of the term of the Joint Undertaking, the Commission shall carry out assessments on the implementation of this Regulation, the results obtained by the Joint Undertaking and its working methods.	Pursuant to Article 173 of the Treaty, from the start of the activities of the Joint Undertaking and upon expiry of the term of the Joint Undertaking, the Commission shall carry out assessments on the implementation of this Regulation, the results obtained by the Joint Undertaking and its working methods. The Commission shall submit to the European Parliament and the Council reports on the results of these assessments and on the conclusions to be drawn therefrom.
Justification
It must be ensured that Parliament and the Council are kept fully and constantly informed of the results and working methods of the Joint Undertaking.
The SESAR Joint Undertaking is a long-term project for which regular assessments are indispensable in order to identify shortcomings and delays at the earliest possible stage. Parliament's involvement in this process should be made clear.
Amendment 37 Article 6 a (new)
	Article 6a
	Review
	If the Commission considers it necessary or if either the European Parliament or the Council requests, under the comitology procedure, the revision of this Regulation or of the statutes of the Joint Undertaking , the Commission shall submit the appropriate legal proposal in accordance with the procedure laid down by the Treaty.
Justification
This is an important procedural amendment seeking to safeguard the European Parliament's prerogatives in Community legislation.
Amendment 38 Annex, Article 1, paragraph 2, indent 3
- any other public or private undertaking or body.	- any other public or private undertaking or body that has concluded at least one agreement with the Community in the field of air transport.
Justification
Given the PPP nature of the SESAR Joint Undertaking, there should be reasonable conditions attached to the membership of the Joint Undertaking. This amendment seeks to insert one condition, i.e. an agreement with the EC.
Amendment 39 Annex, Article 1, paragraph 3
3. Any request for accession pursuant to paragraph 2 shall be addressed to the Executive Director, who shall transmit it to the Administrative Board.	3. Any request for accession pursuant to paragraph 2 shall be addressed to the Executive Director, who shall transmit it to the Administrative Board.
The Administrative Board shall decide whether to accept or reject the request. If the request is accepted, the Executive Director shall negotiate the conditions of accession and submit them to the Administrative Board. These conditions may include, in particular, provisions relating to the financial contributions and representation within the Administrative Board.	The Administrative Board shall advise the Commission whether to accept or reject the request and the Commission, pursuant to the procedure set out in Article 5a, shall make a proposal to that effect. If the request is accepted, the Executive Director shall negotiate the conditions of accession and submit them to the Administrative Board. These conditions may include, in particular, provisions relating to the financial contributions and representation within the Administrative Board.
Justification
This is a necessary clarification deriving from the Regulation's new Article 5a (new) on the accession of new members. The procedure should be stated clearly, allowing no misinterpretation or creation of precedent. The EU Institutions are responsible for such questions, not its Joint Undertaking of a PPP nature, such as the SESAR.
Amendment 40 Annex, Article 1, paragraph 3 a (new)
	3a. In proposing whether to authorise negotiations on accession with a public or private undertaking or body, given the agreement referred to in the third indent of Article 1 (2) of the Annex, the Administrative Board shall take particular account of the following criteria:
	- documented knowledge and experience with air traffic management and/or with the manufacture of equipment and/or the provision of services for air traffic management;
	- the contribution that the undertaking or body can be expected to give to the execution of the ATM Master Plan;
	- the financial security of the undertaking or body;
	- any potential conflict of interests.
Justification
This is a follow up to the essential condition referred to in amendment to Art. 1(2), sub-paragraph 1a (new). It further clarifies the criteria and procedure. The Council's working group has agreed on a similar text. And this amendment should be considered in conjunction with the amendment to Article 5a (new).
Amendment 41 Annex, Article 3, paragraph 1, point (a a) (new)
	(aa) a representative of the military;
Justification
The representatives of the industry should be nominated by the relevant representative organisations at the European level. The representative of the Military should be nominated by the relevant representative organisation dealing with ATM at the European level.
Amendment 42 Annex, Article 3, paragraph 2
2. The representatives referred to in points (b), (c), (d), (e) and (f) of paragraph 1 are designated by the Industry Consultation Body, set up in accordance with Article 6 of Regulation (EC) No 549/2004.	2. The European Parliament shall have observer status on the Administrative Board.
Justification
The addition concerns the role of the European Parliament in a "joint undertaking" of a public-private partnership. The Observer status to be granted to the European parliament is justified on two grounds: Parliamentary monitoring of a PPP involved in transforming research funding into a public service and fulfilment of its budgetary role on equal grounds with the Council.
Amendment 43 Annex, Article 3, paragraph 2 a (new)
	2a. The Administrative Board shall be chaired by the Commission.
Justification
This is a necessary provision and is agreed on at the Council level.
Amendment 44 Annex, Article 4, paragraph 1
1. The representatives referred to in points (a) and (b) of Article 3(1) shall have the right to vote.	1. All representatives referred to in Article 3(1) shall have a weighted vote in proportion to their contribution to the funds of the Joint Undertaking and subject to the provisions of paragraph 2.
Justification
A new equilibrium of representation and weighting of votes are proposed and linked to the financial contribution of each representative in the Administrative Board.
Amendment 45 Annex, Article 4, paragraph 2
2. The members of the Joint Undertaking shall have a number of votes in proportion to their contribution to the funds of the Joint Undertaking. However, the Community and Eurocontrol shall each have at least 30% of the total number of votes and the air passengers’ representative referred to in point (b) of Article 3(1) shall have at least 10% of the total number of votes.	2. Pursuant to paragraph 1, the members of the Joint Undertaking shall have a number of votes in proportion to their contribution to the funds of the Joint Undertaking. However, the Community and Eurocontrol shall each have at least 30% of the total number of votes and the airspace users’ representative referred to in point (b) of Article 3(1) shall have at least 10% of the total number of votes.
Justification
This provides legal clarification.
Amendment 46 Annex, Article 4, paragraph 5
5. Any decision relating to the accession of new members - within the meaning of paragraph 2 of Article 1 - the appointment of the Executive Director and the dissolution of the Joint Undertaking shall require the positive opinion of the Community’s representative on the Administrative Board.	deleted
Justification
It follows from the rapporteur's amendment to Article 5 a (new) on accession of new members.
Amendment 47 Annex, Article 4, paragraph 5 a (new)
	5a. Decisions concerning the adoption of the ATM Master Plan and any relevant amendments to it shall require the favourable vote of all the founder members. Notwithstanding the provisions of paragraph 1, such decisions may not be taken where the representatives referred to in Article 3(1) (c) to (f) unanimously express disagreement.
Justification
This amendment concerns the need to ensure consistent decision-making when proposing modifications to the ATM Master Plan.
Amendment 48 Annex, Article 4, paragraph 5 b (new)
	5b. The ATM Master Plan shall be communicated and forwarded to the European Parliament.
Amendment 49 Annex, Article 5, paragraph 1, point (b)
b) deciding on the accession of new members;	b) proposing accession of new members;
Justification
This is to be consistent with amendments to Article 5 a (new) and to Annex, Art. 1(3) and Art. 4(5). The Administrative Board simply "proposes" - given the fulfilment of the criteria- and does not decide. It is up to the EU institutions to decide on the accession of new members.
Amendment 50 Annex, Article 5, paragraph 1, point (c)
c) appointing the Executive Director and approving the organisation chart;	c) appointing the Executive Director, subject to the procedure laid down in Article 6(1) and (2) of the Annex, and approving the organisation chart;
Justification
This should be considered in conjunction with the amendment to Annex, Article 6(1) and 6(1a)(new) on the procedure concerning the appointment of the Executive Director.
Amendment 51 Annex, Article 5 a (new)
	Article 5 a
	Avoidance of conflicts of interests
	1. Members of the Joint Undertaking or of the Administrative Board and staff of the Joint Undertaking shall not participate in the preparation of calls for public tender or the evaluation or awarding of contracts if they own or have partnership agreements with bodies that are potential candidates for calls for public tender or represent such bodies.
	2. Members of the Joint Undertaking and participants in the Administrative Board must disclose any direct or indirect personal or corporate interest in the outcome of the deliberations of the Administrative Board in relation to any matter on the agenda. This requirement also applies to the staff of the Joint Undertaking in relation to the tasks which are assigned to them.
	3. On the basis of any disclosures as mentioned in paragraph 2, the Administrative Board may decide to exclude members, participants or staff from making decisions or undertaking tasks where a conflict of interests is likely to arise. Excluded members, participants and staff shall have no access to information relating to matters where there is a potential conflict of interests.
Justification
This is the result of consultations undertaken by the rapporteur with the Council and Commission representatives on the need to clarifying the conflict of interest. The Council's working group has proposed the above text.
Amendment 52 Annex, Article 6, paragraph 1
1. The Executive Director shall be responsible for the day-to-day management of the Joint Undertaking and is its legal representative. He shall be appointed by the Administrative Board on a proposal from the European Commission. He shall perform his duties with complete independence.	1. The Executive Director shall be appointed by the Administrative Board on merit and on the basis of documented administrative and managerial skills, as well as relevant competence and experience, from a list of at least three candidates proposed by the Commission and Eurocontrol, based on the result of the public recruitment competition and after hearing the opinion of the representative appointed by the European Parliament. The Administrative Board shall take its decision by a majority of three-quarters of its members.
Justification
The legal provisions have been taken from the Gargani report (A6-0355/2005) adopted by the European Parliament on 13 December 2005 but still pending before the Council. The Commission proposal and said report concern the Term of Office of the Executive Director of the European GNSS Supervisory Authority. Hence it is only proper that the same legal procedure be applied to the Executive Director of the "SESAR Joint Undertaking".
Amendment 53 Annex, Article 6, paragraph 1 a (new)
	1a. The term of office of the Executive Director shall be five years. On a proposal from the Commission, after hearing the opinion of the representative appointed by the European Parliament and after an evaluation, it may be extended once for a period of no more than three years.
Justification
The legal provisions have been taken from the Gargani report (A6-0355/2005) adopted by the European Parliament on 13 December 2005 but still pending before the Council. The Commission proposal and said report concern the Term of Office of the Executive Director of the European GNSS Supervisory Authority. Hence it is only proper that the same legal procedure be applied to the Executive Director of the "SESAR Joint Undertaking".
Amendment 54 Annex, Article 8, introductory part
In order to carry out the tasks defined in Article 1 of the present Regulation, the Joint Undertaking shall conclude an agreement with Eurocontrol by which:	1. In order to carry out the tasks defined in Article 1 of the present Regulation, the Joint Undertaking shall conclude specific agreements with its members.
	1a. Eurocontrol’s role and contribution shall be defined in an agreement with the Joint Undertaking. This agreement shall:
Justification
Given the underlying logic of the amendment to Article 3, all members of the Joint Undertaking should conclude agreements.
Amendment 55 Annex, Article 8, points (a) and (b)
a) Eurocontrol shares the results of the definition phase with the Joint Undertaking;	a) establish the modalities of the transfer and the use of the results of the definition phase to the Joint Undertaking;
b) Eurocontrol is given responsibility for the following tasks, which result from implementing “the plan”, as well as the management of the relevant funds:	b) describe Eurocontrol’s tasks and responsibilities in the implementation of the ATM Master Plan, such as:
Justification
It seeks to clarify the role and responsibilities of Eurocontrol during the ‘development phase’.
Amendment 56 Annex, Article 11, paragraph 3, subparagraph 1
3. The members referred to in the second and third indents of Article 1(2) shall undertake to pay a minimum initial contribution of EUR 10 million within a period of one year from when their accession to the Joint Undertaking is accepted. This amount shall be reduced to EUR five million for members that subscribe to the Joint Undertaking within 12 months of its constitution.	3. The members referred to in the second and third indents of Article 1(2) shall undertake to pay a minimum initial contribution of EUR 10 million within a period of one year from when their accession to the Joint Undertaking is accepted.
Justification
This favourable clause is discriminatory with respect to the rest of members depicted in Article 1(1) concerning the founding members.
Amendment 57 Annex, Article 11, paragraph 3, subparagraph 2
In the case of undertakings, subscribing individually or collectively, which may be regarded as small or medium-sized enterprises within the meaning of the Commission recommendation of 6 May 2003 concerning the definition of small and medium-sized enterprises, this amount shall be reduced to EUR 250 000 regardless of when they become members.	In the case of undertakings, subscribing individually or collectively, which may be regarded as small or medium-sized enterprises within the meaning of the Commission recommendation of 6 May 2003 concerning the definition of small and medium-sized enterprises, this amount shall be reduced to EUR 250 000 regardless of when they become members. Founder members shall have the option of staggering this payment over several instalments, over a period to be agreed by the parties concerned.
Justification
SMEs do not have the resources to pay the sum of EUR 250 000 all at once: should they be obliged to do so, they will ask for a loan on the financial markets. As an SME's credit rating is generally lower than that of a big company, it is important to enable SMEs' maximum contribution to be divided into several instalments, thus increasing the chances of external funding, reducing the short-term financial burden and enhancing the probability of long-term returns.
Amendment 58 Annex, Article 11, paragraph 5
5. Contributions in kind are possible. They shall be subject to an evaluation of their value and their utility for carrying out the tasks of the Joint Undertaking.	5. Contributions in kind are permissible and shall be set out in the agreements referred to in Article 8 of this Annex. They shall be subject to an evaluation of their value and their utility for carrying out the tasks of the Joint Undertaking.
Justification
It follows from the amendment to Annex, Art. 8 (1).
Amendment 59 Annex, Article 17
Property rights	Property rights
The Joint Undertaking shall own all the tangible and intangible assets created or transferred to it for the implementation phase of the SESAR project.	The Joint Undertaking shall own all the tangible and intangible assets created by it or transferred to it for the development phase of the SESAR project in accordance with the membership agreements it concluded. The Joint Undertaking may grant access rights to the knowledge resulting from the project, in particular to its members but also to the Member States of the European Union and/or Eurocontrol for their own, non commercial purposes.
Justification
This is an important amendment that merits careful consideration because it lays down the legal provisions concerning property rights. A similar proposal has been made by the Council's working group.

• [1]  Not yet published in OJ.

EXPLANATORY STATEMENT

Background

In 2004 the ‘Single European Sky’ legislation laid the institutional and regulatory foundations for defragmented and interoperable air traffic control.

We are now in the implementation phase of Single Sky and it is becoming urgent to address the problem of developing the technologies required.

The European Commission has accordingly launched the European plan for modernising air traffic control (SESAR), in cooperation with the European Organisation for the Safety of Air Navigation (Eurocontrol) and, in principle, with financial support from the private sector. This configuration forms a public-private partnership (PPP) with a tripartite financial structure.

The aim of SESAR is to set up a joint undertaking to create a new-generation European air traffic management system.

Why is SESAR needed?

Estimates suggest that the volume of air traffic will double, if not triple, between now and 2025. The industry also contributes 220 thousand million euros to Europe’s GDP and employs 3.1 million people.

Bottlenecks in air transport infrastructure, particularly in the area of air traffic control (ATC), are unavoidable. This is all the more true as the present ATC systems are based on technologies that are 20 years old, if not older. In an age of satellite communication, Galileo and the high-speed network, pilots and their controllers are still communicating by radio.

The present system is capable of ensuring that air traffic control operates safely, but it is clearly approaching its limits. The ATC infrastructure is fragmented and only interoperable in part, so it cannot meet the challenges of the coming years: greater safety, increased traffic, energy efficiency and environmental constraints. There is a pressing need for innovation.

As the technology arm of Single European Sky, SESAR needs to:

· adapt air traffic control to the new technologies,

· ensure the safety and regulation of flights,

· organise air navigation services,

· define the respective roles and responsibilities of surveillance authorities and service providers.

Today there is a need to take advantage of navigation systems using real-time automated flight trajectories management. But the rapporteur goes beyond that and stresses the need for interoperability of the two systems, SESAR and Galileo.

Apart from the significant impact on flight safety, the environmental impact will also be considerable. The Commission estimates that greenhouse gas will be reduced by 4 to 6 % per flight.

Content of SESAR

The new-generation ATC systems will integrate complex links between aircraft and the ground and provide automated equipment for controllers and pilots. As air transport is essentially international, implementation cannot be achieved in an unsynchronised manner. With 60 different air traffic management (ATM) systems in place on the ground and about 5000 aircraft, SESAR will provide the missing legislation by which the European Union will, using the legislative instruments of Single Sky, effectively synchronise implementation of the new technology. SESAR emphatically delivers Community added value, as no one Member State is capable of developing a comparable system on its own.

The SESAR joint undertaking is thus the first European public-private partnership to be running with the participation of the European Community .

The project is organised in three stages.

The definition phase, launched in 2005 and running until 2007, sets out the ATM Master Plan, defining the technologies to be developed and methods of organisation. Funding of 60 million euros is provided by the European budget and Eurocontrol (50/50).

The development phase (2008-2013), in which systems will be designed and their critical components produced, is estimated at about 300 million euros a year (1/3 European budget, 1/3 Eurocontrol, 1/3 private sector).

The deployment phase (2014-2020) will, according to the Commission, be financed by the private sector and installed on a wide scale in Europe and the associated countries.

The rapporteur’s position

Your rapporteur points out that keeping to this timetable is of crucial importance to the programme’s impact.

The United States are also working on a new-generation ATM system. For the sake of European competitiveness it is important to preserve our technological lead.

The Commission proposal to set up the SESAR joint undertaking does, however, leave some fundamental issues unanswered, such as precise definition of the separate phases, safeguards for financial participation by the private sector, intellectual property rights, potential conflicts of interest, the statutes of the joint undertaking and their review, the procedure for the accession of new members and voting rights on the administrative board, and finally, the involvement of the European Parliament.

Your rapporteur considers that there is a need for some clarification in the definition of the three phases. The amendments clearly define the three phases of SESAR and confine the existence of the joint undertaking to the second phase. The Commission needs to put forward a legislative proposal establishing the third phase.

The rapporteur also underlines the importance of a review clause for the objective, governance and duration of the joint undertaking. In view of the problems with setting up Galileo, it is essential to prevent such obstacles from recurring.

On the admission of new members to the joint undertaking, the rapporteur calls for the approval of both Parliament and the Council. Given the PPP nature of the joint undertaking, it is also important to lay down specific conditions for access. There is a need to ensure that new members have previously concluded an agreement with the Union in the area of air traffic management. They should also produce documentation on their experience in the ATM field, their contribution to implementing the Master Plan, their financial contribution and potential conflicts of interest.

Funding

Since the first phase of the project is entirely funded by the European Union and Eurocontrol, there is a need to spell out the detail of the private sector’s contribution for the second phase. The Commission’s proposal on the constitution of the joint undertaking provides for financial participation by the private sector in the development phase of the programme by introducing a possible levy on flight navigation dues.

Phase	Years	Funding	Stakeholders
Definition	2005-2007	€60 million: Eurocontrol (€30 million) Community (€30 million )	Eurocontrol
Development	2008-2013	€300 million per year: Community (€100 million ) Eurocontrol (€100 million ) Industry and others (€100 million )	Joint Undertaking
Deployment	2014-2020	Industry	Industry

(Source COM(2005)0602, p.9)

As the above shows, the accession of private companies to the joint undertaking may lead to conflicts of interest. Such conflicts also arise when a member of the joint undertaking, whether private or public, is in a position to exploit his professional or official capacity. And public and private sector interests also differ fundamentally. While the programme presents an essentially commercial interest for the private sector, the public sector has to take on different aims that represent the general interest, and must act independently of industrial or commercial considerations.

One of the essential tasks of the joint undertaking is to prepare and carry out the invitations to tender required for the development phase. To avoid conflicts of interest, the joint undertaking’s members must be shielded from potential conflicts of interest. At the end of the procedure specific contracts, defining the substantial, technical and financial arrangements, will be adopted by the joint undertaking and its members.

The role of Eurocontrol, as a founder member of the joint undertaking, is also clarified. Specific agreements with the joint undertaking must define the arrangements for sharing and using the results of the definition phase.

Involvement of the European Parliament

The rapporteur points out that the proposal makes no mention of the budgetary control authority, when a large part of the joint undertaking’s activities are to be funded by the Community budget. Since it will be employing staff and receiving a Community subsidy, it would seem appropriate for the joint undertaking to comply with general budgetary procedures, so that its activities and administrative spending can be more effectively reviewed. Parliament should be consulted on the appointment of the executive director, changes in the statutes, and prolongation of the joint undertaking’s funding, and should have an observer on the administrative board.

Given the many and important tasks of the administrative board, there is a need for better balancing of those represented, in accordance with the following criteria: public bodies, intergovernmental organisations, and the private sector. Voting rights should be balanced and weighted in accordance with financial participation.

On the appointment of the executive director the Commission, after consulting the European Parliament representative, should present the administrative board with a list of three possible candidates. The mandate, for five years, should be renewable for a maximum period of three years.

Conclusions

· SESAR will be the first joint undertaking based on a public-private partnership (PPP) and will thus be setting a precedent.

· SESAR and Galileo are sister projects with set medium- and long-term objectives and financial returns.

· SESAR and the Single Sky legislation may provide a number of stable jobs and this opportunity is a further argument for its realisation.

OPINION OF THE COMMITTEE ON LEGAL AFFAIRS ON THE LEGAL BASIS

Mr Giles Chichester

Chairman

Committee on Industry, Research and Energy

BRUSSELS

Subject:           Legal basis of the Proposal for a Council Regulation on the establishment of a Joint Undertaking to develop the new generation European air traffic management system (SESAR) (COM(2005)0602 – C6‑0002/2006 – 2005/0235(CNS))[1]

Dear Mr Chairman,

By letter of 26 March 2006 you asked the Committee on Legal Affairs pursuant to Rule 35(2) to consider whether the legal basis of the above Commission proposal was valid and appropriate.

The Committee considered the above question at its meeting of 20 April 2006.

Your letter reads as follows:

"By this letter, I am seeking the opinion of your committee, pursuant to Rule 35 of the Rules of Procedure, concerning the appropriateness of the legal basis as proposed by the Commission for the above mentioned proposal on SESAR.

The ITRE rapporteur, Mrs Erna Hennicot-Schoepges, and the TRAN draftsman, Mr Philip Bradbourn, have discussed the appropriateness of the legal basis proposed, i.e. TEC article 171 (consultation), and they dispute the choice of the Commission on two grounds; namely its objective and its purpose.

First, the proposal has a single objective: "to ensure the modernisation of the European air traffic management system" (Art.1 (2)). Yet this objective is the same as the one stipulated in Regulation (EC) N° 551 of 10 March 2004 on the organisation and use of the air space in the context of the Single European Sky[2]. However, the four regulations that constitute the Single European Sky have as legal basis the TEC article 80(2) (co-decision).

Both the SESAR proposal and the Airspace Regulation share a derivative aim of modernisation. This is the restructuring of the European airspace in order to accommodate air traffic flow more efficiently and cost-effectively. However, they do not share the same procedural legal basis; the SESAR proposal is based on consultation but the Airspace regulation has been based on co-decision.

Second, the attainment of the overall objective is proposed to be accomplished by borrowing the method and the means from the proposal for the GALILEO programme on the implementation of the deployment and commercial operating phases (see COM (2004) 0477).

As regards the method, SESAR will be accomplished in these phases: Definition phase (2005-2007), Development phase (2008-2013) and Deployment phase (2014-2020). Yet the GALILEO programme entails the same three phases but at different time periods. However, SESAR will be decided by consultation and GALILEO be decided by co-decision.

As regards the means, SESAR will be financed by a three-party undertaking: EC budget, Eurocontrol and private sector. GALILEO is to be financed by the EC budget and the private sector. SESAR will be financed by the 7FP budget line (06.06 01) and the Trans-European transport network (06.03 01). Yet GALILEO's legal basis is based on the TENs (TEC article 156) and is a co-decision while SESAR's is a consultation.

The coordinators of the ITRE committee have unanimously expressed the view that the Committee on Legal Affairs should be consulted for the verification of the legal basis of the SESAR proposal. And the ITRE committee has reiterated the long standing position of the EP that Parliament's rights in the field of co-decision should not be endangered by risking to create a precedent by accepting SESAR's legal basis."

Appraisal

The relevant articles of the EC Treaty

The article used in the proposal for a directive as the legal basis is Article 171:

Article 171

The Community may set up joint undertakings or any other structure necessary for the efficient execution of Community research, technological development and demonstration programmes.

It should be noted that the first paragraph of Article 172 provides as follows:

"The Council, acting by qualified majority on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, shall adopt the provisions referred to in Article 171."

The article proposed as the legal basis by the ITRE committee is Article 80(2), which applies to the common transport policy:

Article 80

1.   The provisions of this title shall apply to transport by rail, road and inland waterway.

2.   The Council may, acting by a qualified majority, decide whether, to what extent and by what procedure appropriate provisions may be laid down for sea and air transport.

The procedural provisions of Article 71 shall apply.

The relevant Treaty articles relating to TENs (GALLILEO having been based on Article 156) are as follows:

Article 155

1. In order to achieve the objectives referred to in Article 154, the Community:

- shall establish a series of guidelines covering the objectives, priorities and broad lines of measures envisaged in the sphere of trans-European networks; these guidelines shall identify projects of common interest,

- shall implement any measures that may prove necessary to ensure the interoperability of the networks, in particular in the field of technical standardisation,

- may support projects of common interest supported by Member States, which are identified in the framework of the guidelines referred to in the first indent, particularly through feasibility studies, loan guarantees or interest-rate subsidies; the Community may also contribute, through the Cohesion Fund set up pursuant to Article 161, to the financing of specific projects in Member States in the area of transport infrastructure.

The Community's activities shall take into account the potential economic viability of the projects.

2. Member States shall, in liaison with the Commission, coordinate among themselves the policies pursued at national level which may have a significant impact on the achievement of the objectives referred to in Article 154. The Commission may, in close cooperation with the Member State, take any useful initiative to promote such coordination.

3. The Community may decide to cooperate with third countries to promote projects of mutual interest and to ensure the interoperability of networks.

Article 156

The guidelines and other measures referred to in Article 155(1) shall be adopted by the Council, acting in accordance with the procedure referred to in Article 251 and after consulting the Economic and Social Committee and the Committee of the Regions.

Guidelines and projects of common interest which relate to the territory of a Member State shall require the approval of the Member State concerned.

General remarks on legal basis

All Community acts must be founded upon a legal basis laid down in the Treaty (or in another legal act which they are intended to implement). The legal basis defines the Community's competence ratione materiae and specifies how that competence is to be exercised, namely the legislative instrument(s) which may be used and the decision-making procedure.

In view of the consequences of the legal basis, its choice is of basic importance, particularly for Parliament, since it determines what say, if any, Parliament has in the legislative process. However, according to the Court of Justice the choice of legal basis is not a subjective one, but "must be based on objective factors which are amenable to judicial review"[3], such as the aim and content of the measure in question[4]. Furthermore, the decisive factor should be the main object of a measure.[5] This means that Parliament's preference for codecision as opposed to consultation cannot override what appears from the analysis of the aim and content of the proposed measure.

According to the case-law of the Court of Justice, a general Treaty article constitutes a sufficient legal basis even though the measure in question also seeks, in a subordinate manner, to attain an aim sought by a specific Treaty article[6].

Analysis

The first question to be asked is what is the aim and content of the proposed measure. This can be ascertained by examining the recitals and provisions of the proposed regulation.

Recital (1) refers simply to the four regulations mentioned in ITRE's letter creating the single European sky.

Recital (2) describes the SESAR project to modernise air traffic control management in Europe as the "technological element of the single European Sky".

Recital (3) states that SESAR "aims to integrate and coordinate activities which were previously undertaken in a dispersed and uncoordinated manner in the Community".

Recitals (4), (5) and (6) explain that the definition phase of SESAR is already underway, being carried out by Eurocontrol and financed by the EC under the heading of trans-European networks and financed by Eurocontrol. The definition phase is to be followed by the development and deployment phases.

Recital (7) states how route charges can provide income to finance projects.

Recital (8) states that the EU will contribute to the development of space-based applications.

Recital (9) explains that by avoiding duplication of research and deployment activities, SESAR will not lead to an increase in air users' overall contribution to R&D.

Recital (10) explains that, following the Community's accession to Eurocontrol, a cooperation framework agreement has been signed for the implementation of the single European sky and for research and development in the field of air traffic control.

Recital (11) states that there should be contributions from the private sector to the budget for the implementation phase of SESAR.

Recital (12) states that in view of the number of players involved and the financial and technical resources and technical resources needed it is necessary to set a legal entity "capable of ensuring the coordinated management of the funds assigned to the SESAR project during its implementation phase".

Recitals (13) and (14) state that that entity should be regarded as being an international organisation for purposes of VAT and excise duty, whilst recital (14) proposes that it should be exempt from national tax other than VAT and excise duty and that its staff should be exempt from national income tax.

Recital (15) provides that since SESAR is a research and development project which justifies funding from the Community research and development framework programmes, it is necessary to "set up a Joint Undertaking under Article 171 of the Treaty in order to enable considerable progress to be made in the development of technologies relating to air traffic control systems during the development phase (2008-2013)".

Recital (16) mentions that "Article 4(g) of Decision 1692/96/EC of the European Parliament and the Council of 23 July 1996, on the guidelines on development of the Trans-European transport network, foresees the possibility to finance research and development activities".

Recital (17) deals with the "main task" of the Joint Undertaking: "to organise and coordinate the SESAR project by combining public and private sector funding and using external technical resources, provided by its members, and in particular Eurocontrol’s experience".

Recital (18) deals with the Joint Undertaking's seat.

Recital (19) provides for representation within the Joint Undertaking of airspace users, given that they bear the route charges and hence make a financial contribution to R&D in the air traffic management sector.

Recitals (20), (21) and (22), respectively, deal with the statutes of the Joint Undertaking, comitology and the need to set it up before the end of the definition phase.

As for the enacting terms, Article 1 deals with the establishment of the Joint Undertaking. More specifically, paragraph 2 deals with its aim:

The aim of the Joint Undertaking shall be to ensure the modernisation of the European air traffic management system by federating research and development efforts in the Community[7]. It shall be responsible in particular for carrying out the following tasks:

– organising and coordinating the implementation of the SESAR project, in accordance with the plan to modernise air traffic management in Europe, hereinafter referred to as 'the plan', drawn up by Eurocontrol, by combining public and private sector funding;

– updating the plan and verifying its execution;

– organising the technical work of research and development, validation and study, to be carried out under its authority;

– ensuring the supervision of activities related to the development of common products duly identified in 'the plan' and if necessary, to organise specific invitations to tender;"

Article 2 deals with the legal status of the Joint Undertaking, Article 3 with its statutes, Article 4 with sources of funding and Article 5 with comitology. Article 6 contains an assessment clause and Article 7 is concerned with entry into force. The Annex sets out the Joint Undertaking's statutes.

Conclusion

The assessment made by the rapporteur for the Industry Committee and the draftsman for the Transport Committee appears to be based on a misunderstanding. It is clear from the recitals and Article 1(2) that the aim of the proposal is not to ensure the "modernisation of the European air traffic management system", although it will be instrumental to that aim, but to set up a Joint Undertaking responsible for "federating research and development efforts in the Community". This is clear from Article 1(2) of the proposal and from the Joint Undertaking's tasks as set out therein (see above).

This also emerges from the recitals. Whereas recitals (1) to (11) provide the background to SESAR and set out its aims and the clarification that there should be no increase in air users' contribution to R&D, they are not reflected in substantive provisions. In contrast, the subsequent provisions make it clear that the objectives and purpose of the Joint Undertaking are to ensure the coordinated management of the funds assigned to the SESAR project during the implementation phase (recital (12)), to manage a public research programme of European interest (recital (13)), to enable progress to be made in the development of air traffic control technologies (recital (15)) and to organise and coordinate the SESAR project by combining public and private sector funding and using external technical resources, provided by its members, and in particular Eurocontrol’s experience (recital (16), which is described as the Joint Undertaking's "main task".

Although it is undeniable that the Joint Undertaking is desirable to "ensure the modernisation of the European air traffic management system", that is not the immediate aim of the proposed regulation to establish that Joint Undertaking. It may be contrasted with Regulation No 551/2004, referred to in the letter from the Chairman of the Industry Committee, which had as its objective and purpose the organisation and use of air space.

The main object of the proposal, within the meaning of the case-law, consists of establishing a joint undertaking for the efficient execution of Community research and technological development (see, inter alia, recital (9)), nothing more or less.

Consequently, the only legal basis possible is Article 171 (The Community may set up joint undertakings or any other structure necessary for the efficient execution of Community research, technological development and demonstration programmes.), since this is the only provision of the EC Treaty that provides for the setting up of joint undertakings for research and technological development. The fact that that provision provides only for consultation of Parliament, rather than codecision, is irrelevant.

At its meeting of 20 April 2006 the Committee on Legal Affairs accordingly decided, unanimously[8] to advise you that Article 171 of the EC Treaty constitutes the appropriate legal basis.

Yours sincerely,

Giuseppe Gargani

• [1]  Not yet published in the OJ.
• [2]  The Single European Sky is governed by four Regulations (EC): Nos. 549/2004 (the Framework Regulation); 550/2004 (the service provision Regulation); 551/2004 (the airspace Regulation) and 552/2004 (the interoperability Regulation).
• [3]  Case 45/86, Commission v. Council [1987] ECR 1439, para. 5.
• [4]  Case C-300/89, Commission v. Council [1991] ECR I-287, para. 10.
• [5]  Case C-377/98, Netherlands v. European Parliament and Council [2001] ECR I-7079, para. 27.
• [6]  Case C-377/98 Netherlands v. European Parliament and Council [2001] ECR I-7079, paras 27-28; Case C-491/01 British American Tobacco (Investments) and Imperial Tobacco [2002] ECR I-11453, paras 93-94.
• [7]  Emphasis supplied.
• [8]  The following were present for the vote Giuseppe Gargani (chairman), Andrzej Jan Szejna (vice-chairman), Katalin Lévai (vice-chairman), Diana Wallis (draftswoman), Maria Berger, Rosa Díez González, Adeline Hazan (for Nicola Zingaretti), Hans-Peter Mayer, Aloyzas Sakalas and Jaroslav Zvěřina.

OPINION OF THE COMMITTEE ON TRANSPORT AND TOURISM (20.9.2006)

for the Committee on Industry, Research and Energy

on the proposal for a Council regulation on the establishment of a Joint Undertaking to develop the new generation European air traffic management system (SESAR)
(COM(2005)0602 – C6‑0002/2006 – 2005/0235(CNS))

Draftsman(*): Philip Bradbourn

(*)  Enhanced cooperation between committees – Rule 47 of the Rules of Procedure

am

SHORT JUSTIFICATION

Commission proposal

According to projections air traffic in Europe will more than double in the next 20 years, and even triple in some regions. The development of an adequate infrastructure for air transport has become a major challenge for Europe: The fast growth of air transport already during the last decades was not accompanied by a substantial modernisation of the air traffic control system.

With the 'single European sky' legislation, adopted in 2004, the organisation of air navigation services was radically reformed: Roles and responsibilities of supervisory authorities and service providers were clearly defined and cross border blocks of airspace were established. This implies a major reorganisation of the sector.

The Commission now has submitted a proposal on a new generation European air traffic management system ("SESAR") and the establishment of a Joint Undertaking. SESAR is the technological element of the single European sky.

The proposal aims at developing technologies, methods of organisation and industrial components that are capable of ensuring the safety of air transport in the next 20 years. SESAR is first and foremost a research and development project and intended to integrate and coordinate research and development activities. It will allow the air traffic control equipment in the European Union to be standardised. The Commission aims to pursue this goal in the framework of a public-private partnership combining resources for a joint objective and proposes to create a Joint Undertaking (Article 171 of the EC Treaty).

SESAR is planned in three phases:

1. The definition phase (2005 - 2007):

In this phase the plan for the modernisation of air traffic management in Europe is to be drawn up: The technological steps are to be taken and the priorities for modernisation as well as the corresponding timetables are to be defined. This phase will require a budget of €60 million, half of which shall be provided by the Community from the TEN-T budget. The other half shall come from Eurocontrol.

2. The development phase (2008 - 2013):

In this phase the technological bases for the new generation of systems will be established. This phase requires a funding of €300 million per year: €100 million of Community funds (this phase ends with the financial framework 2007-2013), €100 million from Eurocontrol and €100 million from the industry. The Community funds would come from the research and development framework programmes and from the trans-European networks.

3. The deployment phase (2014 - 2020): The deployment phase will see the large-scale installation of the new systems and the implementation of the related functions. In the deployment phase the industry will be fully responsible for the financing.

Remarks

Your rapporteur in principle welcomes this Commission proposal. SESAR is a necessary component of the single European sky. However, several aspects of the draft Regulation as well as of the statutes require some clarification and redrafting.

Firstly, it has to be noted that industry has repeatedly expressed its commitment to SESAR as an integrated approach to the modernisation of the air traffic management system in Europe. In order to make SESAR a success, it must be ensured that all parties work closely together and that industry is appropriately involved in all phases. SESAR has to be an industry initiative and the private sector must consequently be enabled to acquire a sufficient number of voting rights in the administrative board. That is why your draftsman suggests reducing the number of voting rights for the Community: Its voting rights should be limited to 25% of the total number of votes. As to Eurocontrol, its role should be reconsidered: Eurocontrol should be a Member of the Administrative Board in a technical / advisory capacity only.

Secondly, on the question of financing the Commission envisages 1/3 Community funds, 1/3 Eurocontrol contributions and 1/3 from the industry in the development phase. Your rapporteur thinks public and private sector financing should be in equal measures during this particular phase and tables an amendment on this point. As for the deployment phase the Commission concept is plausible - this phase is to be financed completely by the industry.

The idea of an additional levy on air navigation charges should be dropped. Your rapporteur feels that user charges are sufficiently high. Via Eurocontrol funds user charges will already contribute to the financing of SESAR. On the basis of a successful definition phase, it should be possible to raise the necessary means from the private and public sectors without creating yet another levy.

It should be added that there are concerns about the legal base of this proposal: The Commission has chosen Article 171 of the Treaty (consultation procedure), because the legislative proposal concerns the establishment of a Joint Undertaking. On the other hand, the proposal shall ensure the modernisation of the European air traffic management system and is as such closely linked to the single European sky legislation, which was under co-decision. Whereas Parliament's Committee on Legal Affairs (JURI) did not see sufficient grounds for changing the legal base to co-decision, your rapporteur intends to further scrutinise this question in close contact with Mrs Hennicot-Schoepges, rapporteur of the lead Committee on Industry, Research and Energy (ITRE).

Finally your rapporteur suggests some amendments on the appointment of the Executive Director, the possibility of convening extraordinary meetings of the Administrative Board and on the definition of a majority in the Board. Given the importance of the SESAR project, it is also proposed to strengthen the role of the European Parliament by explicitly requesting progress reports from the European Commission every three years.

AMENDMENTS

The Committee on Transport and Tourism calls on the Committee on Industry, Research and Energy, as the committee responsible, to incorporate the following amendments in its report:

Text proposed by the Commission[1]	Amendments by Parliament
Amendment 1 Citation 1
- Having regard to the Treaty establishing the European Community, and in particular Article 171 thereof,	- Having regard to the Treaty establishing the European Community, and in particular Articles 171 and 173 thereof,
Justification
In line with the applicable case-law, especially the judgments of 26 March 1987 (Case 45/86, Commission v. Council, ECR 1493), 11 February 1991 (Case 300/89, Commission v. Council, ECR I-2867) and 26 April 1996 (Case C-271/94, Parliament v. Council, ECR I-1689), this amendment aims to enable Parliament to be more fully involved in the creation, development and establishment of the Joint Undertaking.
Amendment 2 Recital 3
(3) The SESAR project aims to integrate and coordinate activities which were previously undertaken in a dispersed and uncoordinated manner in the Community.	(3) The SESAR project aims to integrate and coordinate activities which were previously undertaken in a dispersed and uncoordinated manner in the Community, including the most remote and outlying regions thereof, as referred to in Article 299(2) of the Treaty.
Justification
This amendment supplies legal clarification in line with the Treaty.
Amendment 3 Recital 7
(7) In accordance with Article 15(3) of Regulation (EC) No 550/2004, the route charges can provide income to finance projects aimed at supporting specific categories of airspace users and/or air navigation service providers in order to improve the collective air navigation structures, the supply of air navigation services and the use of airspace.	deleted
Justification
An additional levy on air navigation charges must be avoided. User charges will already contribute to the programme via Eurocontrol. A successful definition phase should deliver a clear business case triggering the necessary private investment (and public funding).
Amendment 4 Recital 11
(11) The public budget for the implementation phase of the SESAR project should be supplemented by contributions from the private sector.	(11) The public budget for the implementation phase of the SESAR project should be supplemented by contributions from the private sector. During the development phase (2008-2013) these contributions should amount to 50% of the budget.
Justification
SESAR should allow industry to fully bring in its expertise. But if SESAR is to be an industry-led initiative, this has also to be reflected in the financing of the development phase.
Amendment 5 Recital 14
(14) This entity should also be exempt from taxation by the Member States as regards taxes other than VAT and excise duty, and salaries paid to its staff should be exempt from any national income tax.	(14) This entity should also be exempt from taxation by the Member States as regards taxes other than VAT and excise duty, and salaries paid to its staff should be in line with the conditions of employment of other servants of the European Communities.
Justification
For reasons of legal and social consistency, it is important to clarify that wage levels should be in line with the 'Rules applicable to other servants of the European Communities'.
Amendment 6 Recital 15
(15) SESAR is a research and development project which justifies funding from the Community research and development framework programmes. It is therefore necessary to set up a Joint Undertaking under Article 171 of the Treaty in order to enable considerable progress to be made in the development of technologies relating to air traffic control systems during the development phase (2008-2013) phases.	(15) SESAR is a research and development project which justifies funding from the Community research and development framework programmes. It is therefore necessary to set up a Joint Undertaking under Articles 171 and 173 of the Treaty in order to enable considerable progress to be made in the development of technologies relating to air traffic control systems during the development phase (2008-2013) phases.
Justification
This is in line with the twofold legal basis proposed, i.e. Articles 171 and 173 of the EC Treaty.
Amendment 7 Recital 17 a (new)
	(17a) It is desirable for the private sector to be appropriately involved in all phases, especially in the development phase (2008-2013), so as to ensure the liability of private-sector participants during the deployment phase (2014-2020).
Justification
The industry can have some problems related their liability when install a new system if they are not appropriately involved in the development of the technological bases.
Amendment 8 Article 2, paragraph 3
3. The Joint Undertaking shall be exempt from taxation by the Member States as regards taxes other than VAT and excise duty. In particular, it shall be exempt from the payment of registration fees and corporate or similar taxes. Salaries paid to staff of the Joint Undertaking shall be exempt from any national income tax.	3. The Joint Undertaking shall be exempt from taxation by the Member States as regards taxes other than VAT and excise duty. In particular, it shall be exempt from the payment of registration fees and corporate or similar taxes. Salaries shall be paid to staff of the Joint Undertaking pursuant to the conditions of employment of other servants of the European Communities.
Justification
For reasons of legal and social consistency, it is important to clarify that wage levels should be in line with the 'Rules applicable to other servants of the European Communities'.
Amendment 9 Article 4, paragraph 1, point (b)
b) a possible levy on the air navigation charges within the meaning of the second indent of Article 15(3)(e) of Regulation (EC) No 550/2004. The Commission shall define, in accordance to the procedure referred to in paragraph 4 of Article 15 of Regulation (EC) No 550/2004, the procedures for collecting and using the this levy.	deleted
Justification
An additional levy on air navigation charges must be avoided. User charges will already contribute to the programme via Eurocontrol. A successful definition phase should deliver a clear business case triggering the necessary private investment (and public funding).
Amendment 10 Article 4, paragraph 2
2. The Community’s contribution can be paid from the budget of the research and technological development and the trans-European networks framework programmes.	2. The Community’s contribution can be paid from the budget of the research and technological development.
Justification
The Trans-European Transport networks form a major tool for achieving the Lisbon Strategy and the objectives of the White Paper on Transport Policy. The agreed budget for TEN-T is already not sufficient to implement all existing priority projects.
Amendment 11 Article 6
Every three years from the start of the activities of the Joint Undertaking and upon expiry of the term of the Joint Undertaking, the Commission shall carry out assessments on the implementation of this Regulation, the results obtained by the Joint Undertaking and its working methods.	Pursuant to Article 173 of the Treaty, from the start of the activities of the Joint Undertaking and upon expiry of the term of the Joint Undertaking, the Commission shall carry out assessments on the implementation of this Regulation, the results obtained by the Joint Undertaking and its working methods. The Commission shall submit to the European Parliament and the Council reports on the results of these assessments and on the conclusions to be drawn therefrom.
Justification
It must be ensured that Parliament and the Council are kept fully and constantly informed of the results and working methods of the Joint Undertaking.
The SESAR Joint Undertaking is a long-term project for which regular assessments are indispensable in order to identify shortcomings and delays at the earliest possible stage. Parliament's involvement in this process should be made clear.
Amendment 12 Annex, article 3, paragraph 1, point (f a) (new)
	(fa) a representative of the relevant scientific institutions or scientific community, appointed by the representative organisation at European level.
Justification
This amendment takes account of the obvious need for scientific scrutiny.
Amendment 13 Annex, article 4, paragraph 2
2. The members of the Joint Undertaking shall have a number of votes in proportion to their contribution to the funds of the Joint Undertaking. However, the Community and Eurocontrol shall each have at least 30% of the total number of votes and the air passengers’ representative referred to in point (b) of Article 3(1) shall have at least 10% of the total number of votes.	2. Pursuant to Article 4(1), the members of the Joint Undertaking shall have a number of votes in proportion to their contribution to the funds of the Joint Undertaking. However, the Community and Eurocontrol shall each have at least 30% of the total number of votes, the air passengers’ representative referred to in point (b) of Article 3(1) shall have at least 10% of the total number of votes and the navigation service providers’ representative referred to in point (c) of Article 3(1) shall also have at least 10% of the total number of votes.
Justification
This provides legal clarification.
In view of the important role played by navigation service providers’ representatives it is important that they should have at least 10% of the total number of votes.
Amendment 14 Annex, article 4, paragraph 5 a (new)
	5a. Decisions concerning the adoption of the ATM Master Plan and any relevant amendments shall require the favourable vote of all the founder members. Notwithstanding the provisions of paragraph 1, such decisions may not be taken where the representatives referred to in Article 3(1) (c) to (fa) unanimously express disagreement.
Justification
This amendment concerns the need to ensure consistent decision-making when proposing modifications to the ATM Master Plan.
Amendment 15 Annex, article 5, paragraph 1, point (c)
(c) appointing the Executive Director and approving the organisation chart;	(c) appointing the Executive Director pursuant to Article 6(1) and approving the organisation chart;
Justification
This is a legal clarification consistent with the amendments tabled.
Amendment 16 Annex, article 5, paragraph 2, subparagraph 1
The Administrative Board shall meet at least twice a year. Extraordinary meetings shall be convened at the request of either one-third of the members of the Administrative Board representing at least 30% of the voting rights, at the request of the Community or of the Executive Director.	The Administrative Board shall meet at least twice a year. Extraordinary meetings shall be convened either at the request of one-third of the members of the Administrative Board representing at least 30% of the voting rights or at the request of the Executive Director.
Justification
The possibility of convening extraordinary meetings at request of one-third of the members of the Board should be sufficient for the Community. There should be no need for an additional proviso.
Amendment 17 Annex, article 6, paragraph 1
1. The Executive Director shall be responsible for the day-to-day management of the Joint Undertaking and is its legal representative. He shall be appointed by the Administrative Board on a proposal from the European Commission. He shall perform his duties with complete independence.	1. The Executive Director shall be responsible for the day-to-day management of the Joint Undertaking and is its legal representative. He shall be appointed by the Administrative Board on a proposal from the Commission, based on the results of the public recruitment competition. He shall perform his duties with complete independence.
Justification
The aim of this amendment is to reinforce the total openness and transparency of the appointment process, which should be based on the principle of appointing the best candidate after considering the merits of all.
Amendment 18 Annex, article 11, paragraph 3, subparagraph 2
In the case of undertakings, subscribing individually or collectively, which may be regarded as small or medium-sized enterprises within the meaning of the Commission recommendation of 6 May 2003 concerning the definition of small and medium-sized enterprises, this amount shall be reduced to EUR 250 000 regardless of when they become members.	In the case of undertakings, subscribing individually or collectively, which may be regarded as small or medium-sized enterprises within the meaning of the Commission recommendation of 6 May 2003 concerning the definition of small and medium-sized enterprises, this amount shall be reduced to EUR 250 000 regardless of when they become members. Founder members shall have the option of staggering this payment over several instalments, over a period to be agreed.
Justification
SMEs do not have the resources to pay the sum of EUR 250 000 all at once: should they be obliged to do so, they will ask for a loan on the financial markets. As an SME's credit rating is generally lower than that of a big company, it is important to enable SMEs' maximum contribution to be divided into several instalments, thus increasing the chances of external funding, reducing the short-term financial burden and enhancing the probability of long-term returns.
Amendment 19 Annex, article 11, paragraph 6
6. The Administrative Board shall propose to the Commission the level and the cost-base of the levy on the air navigation charges referred to in paragraph 1.	deleted
Justification
An additional levy on air navigation charges must be avoided. User charges will already contribute to the programme via Eurocontrol. A successful definition phase should deliver a clear business case triggering the necessary private investment (and public funding).

PROCEDURE

Title	Proposal for a Council regulation on the establishment of a Joint Undertaking to develop the new generation European air traffic management system (SESAR)
References	COM(2005)0602 – C6-0002/2006 – 2006/0235(CNS)]
Committee responsible	ITRE
Opinion by   Date announced in plenary	TRAN 17.1.2006
Enhanced cooperation – date announced in plenary	18.5.2006
Drafts(wo)man   Date appointed	Philip Bradbourn 6.2.2006
Previous drafts(wo)man
Discussed in committee	20.6.2006		13.9.2006
Date adopted	13.9.2006
Result of final vote	+: –: 0:	37 0 1
Members present for the final vote	Gabriele Albertini, Margrete Auken, Philip Bradbourn, Michael Cramer, Arūnas Degutis, Christine De Veyrac, Petr Duchoň, Saïd El Khadraoui, Robert Evans, Emanuel Jardim Fernandes, Luis de Grandes Pascual, Mathieu Grosch, Ewa Hedkvist Petersen, Jeanine Hennis-Plasschaert, Stanisław Jałowiecki, Georg Jarzembowski, Dieter-Lebrecht Koch, Jörg Leichtfried, Fernand Le Rachinel, Bogusław Liberadzki, Eva Lichtenberger, Erik Meijer, Robert Navarro, Janusz Onyszkiewicz, Josu Ortuondo Larrea, Willi Piecyk, Luís Queiró, Reinhard Rack, Renate Sommer, Dirk Sterckx, Ulrich Stockmann, Marta Vincenzi
Substitute(s) present for the final vote	Zsolt László Becsey, Guy Bono, Helmuth Markov, Willem Schuth, Luis Yañez-Barnuevo García
Substitute(s) under Rule 178(2) present for the final vote	Brian Simpson
Comments (available in one language only)	...

• [1]  Not yet published in OJ.

PROCEDURE

Title	Proposal for a Council regulation on the establishment of a Joint Undertaking to develop the new generation European air traffic management system (SESAR)
References	COM(2005)0602 – C6-0002/2006 – 2005/0235(CNS)
Date of consulting Parliament	4.1.2006
Committee responsible   Date announced in plenary	ITRE 17.1.2006
Committee(s) asked for opinion(s)   Date announced in plenary	BUDG 17.1.2006		TRAN 17.1.2006	JURI 17.1.2006
Not delivering opinion(s)   Date of decision	BUDG 23.3.2006
Enhanced cooperation   Date announced in plenary	TRAN 18.5.2006
Rapporteur(s)   Date appointed	Erna Hennicot-Schoepges 26.1.2006			Philip Bradbourn 6.2.2006
Previous rapporteur(s)
Simplified procedure – date of decision  Date of decision
Legal basis disputed   Date of JURI opinion			/	JURI 20.4.2006
Financial endowment amended   Date of BUDG opinion
Parliament to consult European Economic and Social Committee – date decided in plenary
Parliament to consult Committee of the Regions – date decided in plenary
Discussed in committee	19.4.2006		30.5.2006	11.9.2006	9.10.2006
Date adopted	23.10.2006
Result of final vote	+: –: 0:	38 0 0
Members present for the final vote	John Attard-Montalto, Jan Březina, Jerzy Buzek, Joan Calabuig Rull, Pilar del Castillo Vera, Jorgo Chatzimarkakis, Giles Chichester, Lena Ek, Nicole Fontaine, Norbert Glante, Umberto Guidoni, András Gyürk, Fiona Hall, David Hammerstein Mintz, Rebecca Harms, Erna Hennicot-Schoepges, Ján Hudacký, Romana Jordan Cizelj, Pia Elda Locatelli, Eluned Morgan, Reino Paasilinna, Miloslav Ransdorf, Vladimír Remek, Herbert Reul, Teresa Riera Madurell, Paul Rübig, Andres Tarand, Britta Thomsen, Patrizia Toia, Catherine Trautmann, Claude Turmes, Nikolaos Vakalis, Alejo Vidal-Quadras, Dominique Vlasto
Substitute(s) present for the final vote	Den Dover, Jan Christian Ehler, Lambert van Nistelrooij, Vittorio Prodi
Substitute(s) under Rule 178(2) present for the final vote
Date tabled	27.10.2006
Comments (available in one language only)	...