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Regulations governing the information gathering of the Federation in connection with the granting of financial aid to local authorities and Länder according to the Investing in the Future Act in part unconstitutional
Press Release No. 85/2010 of 24 September 2010
Order of 7 September 2010
2 BvF 1/09
The package of measures adopted by the German Government in December 2008 entitled "Pact for Employment and Stability in Germany: Safeguarding Jobs, Strengthening the Forces of Growth and Modernising the Country" ('Stimulus Package II') provided, among other things, that the Federation support additional investments made by the local authorities and Länder (states). The package of measures was implemented by means of the Future Investments Act (Zukunftsinvestitionsgesetz - ZuInvG), which entered into force on 6 March 2009. According to that Act, the Federation will provide the Länder with financial aid for investment measures falling within the funding area for them to use as they see fit. The Administrative Agreement on the Implementation of the Future Investments Act reached between the Federation and the Länder contains the reporting and recording duties incumbent upon the Länder. § 7.1 ZuInvG contains a regulation governing the Federation's right to claim for repayment in the event of non-fulfilment of the requirements for promotion or in the event of the financial aid being put to inappropriate use.
Against this background, § 6a ZuInvG stipulates:
§ 6a Audit by the Bundesrechnungshof
(German Supreme Audit Institution)
In individual cases the Federation may demand further substantiation and may inspect books, records and other documents in the Länder and local authorities and conduct investigations on their premises. It shall thereby avoid a disproportionate amount of administrative effort. The German Supreme Audit Institution together with the respective Land audit institution shall examine, within the meaning of § 93 of the Federal Budget Code (em>Bundeshaushaltsordnung - BHO), whether the financial aid was used appropriately. It may also conduct investigations with the federal Länder and local authorities to that end.
The governments of Baden-Württemberg, North Rhine-Westphalia, the Saarland, the Free State of Bavaria, the Free State of Saxony and the Senate of the Free and Hanseatic City of Hamburg believe § 6a sentence 1, sentence 3 and sentence 4 ZuInvG to be unconstitutional and have applied, in the context of proceedings that concern the abstract review of a statute, for the challenged provisions to be declared void. They claim that the active rights of oversight and investigation on the premises which are accorded the Federation under these provisions lack a constitutional basis for such authority. They therefore violate the principle of budgetary autonomy of the Länder. In addition, the German Supreme Audit Institution is granted new independent audit rights which exceed its constitutionally determined audit remit, they claim.
The Second Senate of the Federal Constitutional Court held that the provisions set out in § 6a sentence 1 and sentence 4 ZuInvG are in part not compatible with the constitution on account of the lack of federal competence, whilst the provision set out in § 6a sentence 3 ZuInvG, which is also challenged, is in conformity with the Basic Law (Grundgesetz - GG).
In essence, the decision is based on the following considerations:
1. The powers provided to the Federation under § 6a sentence 1 ZuInvG regarding active information gathering in the Land administrations - including subordinate offices and local authority administrations - concern the principle of independence in budgetary matters of the Federation and the Länder pursuant to Article 109.1 GG and the fundamental jurisdiction of the Länder pursuant to Article 30 GG. The Federation therefore needs to have been granted competence in the matter under the constitution.
Such federal competence only exists insofar as the Federation is authorised according to § 6a sentence 1 ZuInvG to carry out those investigations on the relevant premises in the Länder and the local authorities which serve to examine a claim for repayment or liability according to § 7.1 ZuInvG and Article 104a.5 sentence 1 half-sentence 2 GG, provided that the existence of such a claim appears possible in a particular case on the basis of concrete facts. The legal provision is unconstitutional and void insofar as § 6a sentence 1 ZuInvG grants the Federation powers over and above that.
Article 104b.2 sentence 1 GG merely authorises the Federation to legislate details concerning the conditions under which it will grant financial aid to the Länder, in particular the types of investments to be promoted, but it does not authorise the Federation to introduce regulations granting it administrative powers vis-à-vis the Länder.
Further, the powers of the Federation regulated under § 6a sentence 1 ZuInvG cannot be established on the basis of Article 104b.2 sentence 2 and 104b.3 GG. According to Article 104b.2 sentence 2 GG, the duties of the Federation comprise periodic examination regarding the use to which the funds are being put; Article 104b.3 provides that the German Bundestag, the Federal Government and the Bundesrat are, at their request, to be informed about the implementation of the measures and about the improvements achieved. This comprises the obligee collating information and providing a summary report. The federal bodies do not themselves gather information by means of investigations, rather they are, according to the wording of the provision, to receive information. By contrast, § 6a sentence 1 ZuInvG grants the federal administration the authority to have records compiled at its own discretion and to have these presented, to inspect documents and to carry out investigations on the affected office's premises, during which it can require documents to be presented as well as information to be furnished. In addition, at the federal administration's discretion this information cannot only be demanded from the highest Land authorities, but also from every office, i.e. also from subordinate Land authorities and directly from local authorities. Article 104b.2 sentence 2 GG and 104b.3 GG do not grant the federal administration the competence regarding such active and direct information gathering.
Finally, § 6a sentence1 ZuInvG cannot be understood as one particular manifestation of federal supervisory powers pursuant to Article 84.3 GG, since it does not serve the uniformity of the exercise of the law by the Länder but rather the oversight of their administrative authorities' spending activities.
Nevertheless, according to Article 104a.5 GG the federal legislature has the option of granting the federal administration the powers to call in reports from the Land administrations, to obtain files and inspect documents for the purposes of determining whether a liability claim exists and on condition that such a claim appears possible on the basis of concrete facts; to that end the federal administration may also apply directly to subordinate authorities of the Länder and local authority administrations and carry out investigations on the relevant premises. An effective assertion of claims for repayment is necessary in cases where the funding has not been used appropriately. § 6a sentence 1 ZuInvG is thus constitutional insofar as the authorities provided therein serve the exercise of these competences and they are restricted to individual cases in which a claim for repayment appears possible on the basis of concrete facts.
2. The German Supreme Audit Institution's investigations with Länder and local authorities pursuant to § 6a sentence 4 ZuInvG also concern the Länder's basic competences and therefore require authorisation under the Basic Law.
According to Article 114.2 sentence 1 GG, the German Supreme Audit Institution is authorised to audit accounts and to examine the management of the budget and the conduct of business as to economy and correctness. However, taking account of the Länder's budgetary autonomy, Article 114.2 sentence 2 GG only justifies the German Supreme Audit Institution's authority to carry out investigations in the Länder and local authorities in the event of the granting of financial aid to the extent to which the Federation has been granted administrative powers. The Federation's exercise of supervision pursuant to Article 84.3 GG therefore in the first instance grants the German Supreme Audit Institution the authority to carry out investigations in the highest Land authorities for the purposes of determining breaches of the law on the part of the Land authorities. To that end it may, where there are concrete indications for a violation, have files sent by these authorities. The German Supreme Audit Institution is only constitutionally permitted to conduct investigations directly on the premises of subordinate Land authorities and local authorities if either the highest Land authority has consented thereto or has been replaced by the Bundesrat or if the investigations serve the purpose of establishing a liability claim within the meaning of Article 104a.5 sentence 1 half-sentence 2 GG which appears possible on the basis of concrete facts.
Insofar as § 6a sentence 4 ZuInvG authorises the German Supreme Audit Institution to conduct investigations even though no such preconditions are met, the legal provision is unconstitutional because the Federation lacks competence therefor.
3. The provision set out in § 6a sentence 3 ZuInvG is, by contrast, compatible with the Basic Law. The task it assigns the German Supreme Audit Institution, namely of examining the appropriate use of financial aid in cooperation with the respective Land audit institution, does not affect the area of competence of the Länder. The regulation merely requires the German Supreme Audit Institution to cooperate and to employ its resources judiciously.