New avenue to challenge State aid decisions on environmental grounds

On 12 May 2025, the European Commission adopted new State aid rules allowing non-governmental organisations (NGOs) to request the review of certain State aid decisions for compliance with EU environmental law. These changes aim to bring EU State aid rules in line with the obligations under the Aarhus Convention on access to justice in environmental matters.

What you need to know

• NGOs are now able to request that the European Commission reviews State aid decisions if they are independent, non-profit, and active on environmental matters (based on supporting evidence).
• Requests for reviews can concern final State aid decisions which declare aid compatible with the internal market (including conditional decisions). The review is not available for positive decisions concerning social aid, aid to make good damage from natural disasters or exceptional occurrences and aid to remedy a serious disturbance in a national economy.
• NGOs must show that the aided activity or any aspects of the aid measure, that are "indissolubly linked" to the object of the aid, infringe specific EU environmental rule(s).
• Requests must be submitted through a form within eight weeks from the publication of the decision in the Official Journal of the European Union (OJEU). The European Commission must respond within 16 weeks from the expiry of the eight-weeks deadline.
• Member States must now confirm, in their notification forms, that the aided activity and aspects of the aid that are indissolubly linked to its object do not breach EU environmental laws.
• A later finding by the European Commission or EU courts that an aid measure breaches EU environmental law may lead to a revocation of the State aid clearance decision (and possibly to recovery of State aid if had already been implemented).

Background

Access to justice in environmental matters under the Aarhus Convention

The EU and its Member States are parties to the Aarhus Convention on access to information, public participation in decision-making and access to justice in environmental matters. Under Article 9(3) of the convention, the public should have access to administrative or judicial review procedures to challenge acts or omissions which may infringe laws relating to the environment.

State aid to an activity in breach of EU environmental law cannot be authorised

In its Hinkley Point C ruling, the European Court of Justice (ECJ) clarified that the European Commission cannot authorise State aid for an activity which infringes EU environmental law. Accordingly, as part of the compatibility assessment, the European Commission must ascertain that the aided activity does not infringe those rules.

The issue

While the European Commission must check compliance with environmental laws, the public (including NGOs) have limited judicial and administrative avenues under the existing EU system to enforce that obligation: 

• Direct action for annulment: The admissibility criteria for directly challenging final positive decisions (i.e. decisions authorising State aid after the formal investigation under Article 108(2) of the Treaty on the Functioning of the European Union (TFEU)) before EU courts are strict and applicants must demonstrate a "direct and individual concern". In that context, the possibility for an NGO to argue that it has standing based on its own interest is construed very narrowly.
• Internal review: The EU Aarhus Regulation implements in EU law the obligations on access to justice under the Aarhus Convention and provides for administrative review procedures for acts or omissions of the EU institutions or bodies in relation to environmental matters. However, it excludes the internal review of decisions adopted by the European Commission in the area of competition law, including State aid law.

In 2015, two Austrian NGOs filed a communication to the Aarhus Convention Compliance Committee (ACCC) about the impossibility for them to challenge a decision authorising State aid for the development of a nuclear plant in Great Britain.

In 2021, the ACCC found that the EU was in breach of the Aarhus Convention in relation to final positive decisions of the European Commission authorising State aid. According to the ACCC, the available routes are insufficient in providing access to the public to judicial or administrative review of these decisions. 

In 2023, the European Commission identified several options to address the ACCC's findings with the aim of creating a new review procedure. Following a call for evidence and a targeted consultation in 2024, the European Commission consulted on its proposed new internal review procedure in early 2025.

The new internal review mechanism

On 12 May 2025, the European Commission introduced a new mechanism which allows NGOs to request that the European Commission conducts an internal review of certain State aid decisions to establish whether they breach EU environmental law. The new mechanism has been included in the revised versions of the Implementing Regulation 794/2004 and the State aid Best Practices Code (BPC) and will take effect two months after the publication of the amendments in the OJEU.

Eligible applicants

An NGO can request the review if: 

• it is an independent, non-profit legal person by a Member State's national law or practice; 
• its primary objective is the promotion of environmental protection under environmental law;
• it has existed and actively pursued this objective for over two years; and
• the subject matter of the review request falls within the scope of its objectives and activities.

NGOs must provide the supporting evidence listed in the BPC (including a copy of their by-laws and annual activity reports).

Material scope

Reviewable acts are final State aid decisions to close a formal investigation initiated under Article 108(2) TFEU by declaring that a measure is compatible with the internal market (positive decisions) or can be compatible under conditions (conditional decisions). 

The review can be requested for all grounds for compatibility under the TFEU for authorising State aid, except for final decisions concerning (i) social aid, (ii) aid to make good damage from natural disasters or exceptional occurrences and (iii) aid to remedy a serious disturbance in the economy of a Member State.

The review cannot concern decisions to not raise objections after a preliminary examination or decisions finding that the measure does not constitute aid.

Request content and the requirement for an indissoluble link

The requesting party must show based on supporting evidence that the aided activity or any aspects of the State aid measure that are "indissolubly linked" to the object of the aid breach one or several specific provisions of EU environmental law. EU environmental law is defined by Regulation 1367/2006 as EU legislation which contributes to the EU policy on the environment, i.e. preserving, protecting and improving the quality of the environment, protecting human health, the prudent and rational utilisation of natural resources, and promoting measures at international level to combat climate change. 

The European Commission is expected to issue guidance during Q4 2025 on the notion of "indissoluble link".

European Commission's assessment and response

The European Commission will assess:

• the admissibility of the review request;
• if admissibility is confirmed, the arguments that the State aid decision is contrary to EU environmental law, and
• whether the alleged breach results from an aspect of the aided activity and/or of the aid measure that is "indissolubly linked" to the object of the aid.

The Implementing Regulation and BPC do not set out the implications of a finding by the European Commission that the State aid breaches EU environmental rules. However, where the European Commission concludes that the aid breaches EU environmental rules, it could possibly revoke the decision (as State aid in breach of EU law provisions is deemed incompatible). Article 11 of the State aid Procedural Regulation allows it to revoke a decision where the decision was based on incorrect information provided during the procedure which was a determining factor for the decision.

Timeframe and procedure

Requests for an internal review must be submitted within eight weeks from the publication of the State aid decision in the OJEU. The European Commission must then respond within 16 weeks with a possible extension to 22 weeks in justified cases. The concerned Member State will be able to comment. 

The State aid decision will remain in force during the assessment.

The requests and the European Commission’s replies will be published on a dedicated website.

Judicial review

If the requesting party disagrees with the European Commission's reply, it may challenge it before the General Court. Proceedings before the EU courts do not have a suspensory effect.

New requirement in notification form

Member States must now confirm, in their notification forms, that the aided activity and aspects of the aid that are indissolubly linked to its object do not breach EU environmental laws.

Comments

The introduction of this new internal review mechanism marks a shift in how environmental compliance intersects with State aid approval processes. While rooted in the broader ambition of aligning EU law with the Aarhus Convention, these changes introduces new legal uncertainties and compliance challenges:

Increased burden on Member States and aid beneficiaries

The obligation to verify and confirm compliance with EU environmental laws places an additional burden on Member States and aid recipients. This requirement is now a critical component of the State aid risk assessment process, demanding more thorough documentation and potentially lengthier administrative reviews before aid can be approved or disbursed.

Additional risks for aided projects

The new rules expose aid measures to additional risks of legal challenges, in particular for large-scale or sensitive projects such as projects in the nuclear sector. The increased potential for judicial review may result in delays and have a chilling effect on investments.

Uncertainty around the concept of "indissoluble link"

The practical impact of this new avenue for public challenge will largely hinge on how the European Commission and, ultimately, the EU courts interpret the concept of an "indissoluble link". The scope of this concept will determine which aspects of an aid or activity can be challenged on the ground that they infringe EU environmental laws and ultimately how expansive the new tool is. Aspects such the method of financing the aid or the eligibility conditions for the aid likely constitute aspects that are inseparable from the aid. The upcoming ECJ judgment in the Paks II case and guidelines of the European Commission will hopefully shed light on this concept and provide important guidance for both national authorities and beneficiaries navigating these evolving requirements.