The Netherlands urgently needs to do more to prevent the deterioration – whether existing or threatened – of Natura 2000 areas due to nitrogen deposition. This was recently confirmed by the District Court of The Hague in a lawsuit filed by Greenpeace against the Dutch state (in Dutch). Under the Habitats Directive, the Netherlands must: (i) establish conservation measures for these nature areas (Article 6(1)), and (ii) take appropriate steps to prevent natural habitats and the habitats of species from deteriorating (Article 6(2)).

Also, on 18 December 2024, the highest administrative court, the Council of State, issued two rulings indicating that internal offsetting (intern salderen) will now require a permit. The court also clarified situations where using latent room in environmental permits for internal or external offsetting is not possible.

This article analyses recent developments in nitrogen-related case law and shares some observations on how these will affect the issuing of nature permits for individual projects. A permit will be required in more instances, but these rulings do not mean that the Netherlands is closed for business.

Click here for the original article in Dutch.

Ruling in Greenpeace v Dutch State

The Netherlands must take appropriate steps to prevent the deterioration – whether existing or threatened – or disturbance of nature conservation areas. The District Court of The Hague ruled that the state is acting unlawfully by failing to stop the deterioration of nitrogen-sensitive nature. While the Netherlands needs to do more, which specific steps are necessary is primarily a political decision. The court did not address that issue, but it held that the state must abide by its own agreements and legal principles, as in the Urgenda ruling. For their part, the Netherlands Environmental Assessment Agency and the National Institute for Public Health and Environment have already concluded that the measures established by the previous cabinet are insufficient for meeting the goals set for 2025 and 2030. Moreover, the Schoof government has reversed some of these measures without introducing concrete new ones.

An important factor remains that this ruling does not have direct consequences for the issuing of nature permits for individual projects. The assessment of those permits takes place within the framework of Article 6(3) of the Habitats Directive. Whether an individual project which causes nitrogen deposition in Natura 2000 areas is permitted must be assessed on its own merits. A nature permit is only granted when it is clear that the project will not adversely affect the natural characteristics of a Natura 2000 area. However, under certain circumstances (according to established case law – in Dutch), revoking or amending an irrevocable nature permit to prevent deterioration of Natura 2000 areas can be an appropriate step under Article 6(2) of the Habitats Directive. In this situation, the competent authority would have to balance the interests concerned.

Rendac and Amercentrale rulings

On 18 December 2024, the highest administrative court in the Netherlands (the Council of State's Administrative Jurisdiction Division) issued two rulings: Rendac (in Dutch) and Amercentrale (in Dutch). Unlike the Greenpeace v Dutch State ruling, these two decisions are of immediate relevance for many permit and enforcement procedures because the Council of State has changed its case law on internal offsetting. Until these rulings, internal offsetting was not subject to a permit requirement. The Council of State has now ruled that internal offsetting is – just like external offsetting – a mitigating measure. Therefore, the regime that applies to external offsetting will also apply to internal offsetting. From now on:

• internal offsetting can only be taken into account during permit issuance (since it is considered a mitigating measure);
• the "additionality requirement" also applies to internal offsetting.

Internal offsetting: mitigating measure to be included in the appropriate assessment

A nature permit can only be granted when it is certain that the project will not adversely affect the natural characteristics of Natura 2000 areas. If research shows that such effects can be ruled out in advance (through a preliminary assessment), the project can proceed without a nature permit. If not, a permit is required and significant effects must be ruled out in an appropriate nature assessment during the permitting process.

Until the change in case law mentioned above, a comparison was made in the preliminary assessment between the effects of the existing permitted situation (the reference situation) and the effects of the project after modification. In this comparison, the already permitted emissions/deposition in the reference situation were "set off" against the emissions/deposition in the modified situation (internal offsetting). In many cases, this comparison implied that adverse effects were ruled out. However, from now on, the effects of the project as a whole – that is, the entire project after modification (including the earlier permitted parts of the project) – need to be examined in the preliminary assessment. Offsetting with the reference situation will no longer be allowed in this phase. Logically, this will result more often in a permit being required with an appropriate assessment having to be carried out.

Since internal offsetting is used to mitigate the effects of the intended project by modifying or terminating parts of the existing permitted situation, it is considered a mitigating measure. Such measures can be included in the appropriate assessment. When doing so, the entire reference situation becomes part of the mitigating measure. Internal offsetting with the reference situation is, therefore, still possible. The Council of State further clarified the scope of the reference situation to be included in the mitigating measure. A distinction is made between the reference situation based on a nature permit and that situation based on an environmental permit. The clarification relates to the latter permit: latent (unused) residual room within the permit cannot be included in the reference situation. More specifically, this applies to room for nitrogen space that has not been realised or is no longer in use and which cannot be activated by resuming the activity without a nature permit.

Additionality requirement now also applies to internal offsetting

A new restriction that now applies to internal offsetting is the "additionality requirement". All mitigating measures must meet this requirement. In short, a measure cannot be included as a mitigating measure in an appropriate assessment when the measure is needed as a conservation measure (Article 6(1) of the Habitats Directive) or an appropriate step (Article 6(2) of the Habitats Directive). This implies that before internal offsetting can be used as a mitigating measure, why the measure is not necessary otherwise must be substantiated (as a conservation measure or appropriate step).

The specific measures to be taken are at the discretion of the competent authorities, which must be clear and concrete about the appropriate measures it has already taken or will take.

Observations: the Netherlands not closed for business

• By considering internal offsetting as a mitigating measure, a permit is required more quickly. Previously, a project's initiator sometimes had to settle for a "positive refusal" by the competent authority when using internal offsetting, and this made the future less certain and clear. Also, from a nature perspective, the "restriction" imposed by the Council of State on offsetting with latent, never-realised room for nitrogen in a previous environmental permit is logical– and not unexpected, since this prevents an actual increase in emissions/deposition compared to the existing situation.
• It is unclear when internal offsetting does, in fact, occur. It seems logical to assume that this only applies when a party modifies or terminates parts of the existing permitted situation in order to mitigate the effects of the intended (modified) project (to offset the adverse effects against each other). Internal offsetting occurs when the effects of the intended project are mitigated through external offsetting, and the already permitted project (as an existing right/status quo) continues unmodified.
• The exact role of the additionality requirement in the issuing of permits is not yet fully clear. It is evident that the competent authority must justify that revoking a nature permit is not the only appropriate measure, and which measures are or will be taken to achieve the necessary reduction in nitrogen deposition within a reasonable time. In various lower court rulings, high standards of justification are set for authorities. However, the Council of State case law does not provide grounds for such a high threshold.
• Also important is that a broad application of the additionality requirement means that in permit procedures, project initiators are confronted with – or even fall victim to – obligations that do not apply to them, but that rest on the relevant member state under the Habitats Directive. A project's initiator is not responsible for achieving a favourable conservation status of nature areas. The project should only not hinder it. Therefore, the Court of Justice of the EU considers a complementary assessment under Article 6(2) of the Habitats Directive in a permit procedure under Article 6(3) of the Habitats Directive "superfluous". Such an assessment is also not a requirement for permit issuance under Article 6(3) of the Habitats Directive. The additionality requirement, however, mixes these separate obligations. By doing so, the discussion about meeting the member state obligations under Articles 6(1) and 6(2) of the Habitats Directive is blended into the permit procedure for individual projects. It is highly questionable whether the PAS ruling of the Court of Justice of the EU requires this. In the PAS ruling, the additionality requirement was introduced to prevent double use of "unlabelled" measures from the PAS, since the PAS did not exclude a conservation measure or appropriate step from also being used as a mitigating measure. However, with the PAS no longer in effect, the risk of double use of such measures no longer exists.
• Since internal offsetting must be considered a mitigating measure, the Council of State noted that competent authorities can, like they did with external offsetting, develop policies concerning the amount of room for nitrogen from the reference situation allowed for internal offsetting. The Council of State mentioned the option of reducing this amount by modifying or terminating an existing permitted situation or part of it. That would be a risky approach. Initiators would then have no incentive at all to innovate. This would not only be bad for economic development in the Netherlands but could ultimately also have a negative effect on nature. Therefore, to qualify (or further clarify) the scope of internal offsetting and the application of the additionality requirement seems logical. This does not conflict with the obligations of the Netherlands under Article 6(2) of the Habitats Directive. Why would it be necessary during the permitting process of an individual project to assess the entire Dutch nitrogen problem and the obligations under Articles 6(1) and 6(2) of the Habitats Directive which can only be ad hoc? Such an assessment requires a well-thought-out, coherent, concrete and complete package of measures that effectively addresses the nitrogen problem.