
Article 1 
Regulation (EC) No 1974/2006 is amended as follows:

((1)) the following Article 16a is inserted:
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Article 16a 
For the purpose of Article 26 of Regulation (EC) No 1698/2005, where investments are made in the production of thermal energy and/or electricity from renewable sources on agricultural holdings, renewable energy production facilities shall be eligible for support only if their production capacity is no more than equivalent to the combined average annual energy consumption of thermal energy and electricity on the agricultural holding, including the farm household.
Where investments are made in the production of biofuels within the meaning of Directive 2009/28/EC of the European Parliament and of the Council on agricultural holdings, renewable energy production facilities shall be eligible for support only if their production capacity is no more than equivalent to the annual average transport fuel consumption on the agricultural holding.';
((2)) in Article 27(12), the second subparagraph is replaced by the following:
'Such adjustments may also take the form of an extension of the duration of the commitment. The extension may not go beyond the end of the period to which the 2013 payment claim refers.';
((3)) the following Article 32a is inserted:
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Article 32a 
For the purpose of Article 47 of Regulation (EC) No 1698/2005, Member States may allow forest-environmental commitments to be extended until the end of the period to which the 2013 payment claim refers.';
((4)) in Article 37, the following paragraph is added:
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5. For the purposes of Article 62(4) of Regulation (EC) No 1698/2005, decisions on the selection of projects by the decision-making body of local action groups shall be taken by a vote in which the economic and social partners as well as other representatives of the civil society, as provided for in Article 62(1)(b) of that Regulation, shall make up at least 50 % of the votes. As regards the decision-making process with regard to project selection, appropriate rules to guarantee transparency and to avoid situations of conflicts of interest shall be respected.';
((5)) in Article 38, paragraph 2 is replaced by the following:
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2. Member States may, upon request, pay an advance to local action groups. The amount of the advance shall not exceed 20 % of the public aid related to the costs referred to in Article 63(c) of Regulation (EC) No 1698/2005, and its payment shall be subject to the establishment of a bank guarantee or an equivalent guarantee corresponding to 110 % of the amount of the advance. The guarantee shall be released upon closure of the local development strategy at the latest.Article 24(6) of Commission Regulation (EU) No 65/2011 shall not apply for the payment referred to in the first subparagraph.';
((6)) in Article 44(3), the following subparagraph is added:
'A reduction in the area of the holding of up to 10 % of the area under commitment shall be considered as a minor change for the purpose of the first subparagraph.';
((7)) in Article 46, the following paragraph is added:
'A revision clause shall be provided from 2012 onwards for commitments undertaken for a period of between 5 and 7 years, pursuant to Articles 39, 40 and 47 of Regulation (EC) No 1698/2005, which extend beyond the end of the current programming period, to allow for their adjustment to the legal framework of the following programming period. However, Member States may decide to introduce such a revision clause already in 2011. The second paragraph shall apply also with respect to this paragraph.';
((8)) Article 52 is replaced by the following:
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Article 52 

1. As regards financial engineering actions referred to in Article 51 of this Regulation, the expenditure declared to the Commission in accordance with Article 26(3)(a) of Regulation (EC) No 1290/2005 shall be the total expenditure paid in establishing or contributing to such funds.However, when paying the balance and closing the rural development programme in accordance with Article 28 of Regulation (EC) No 1290/2005, the eligible expenditure shall be the total of:
(a) any payment for investment in enterprises out of each of the funds concerned, or any guarantees provided including amounts committed as guarantees by guarantee funds;
(b) eligible management costs.The co-financing rate to be applied shall correspond to the co-financing rate of the measure to which the fund contributes. If the fund contributes to several measures with different co-financing rates, these rates shall apply at the ratio of the respective eligible expenditure.The difference between the EAFRD contribution actually paid pursuant to the first subparagraph and the eligible expenditure under points (a) or (b) of the second subparagraph shall be cleared in the context of the annual accounts of the last year of implementation of the programme. These accounts shall include the detailed financial information needed.
2. Where EAFRD co-finances operations comprising guarantee funds for repayable investments pursuant to Article 50 of this Regulation, an appropriate ex ante assessment of expected losses shall be carried out, taking into account current market practices for similar operations for the type of investments and market concerned. The assessment of the expected losses may be reviewed, if justified by subsequent market conditions. The resources committed to honour guarantees shall reflect such an assessment.
3. Resources returned to the operation during the programming period from investments undertaken by funds or left over after a guarantee has been honoured shall be reused by the fund according to the funding agreement referred to in Article 51(6) of this Regulation or cleared in the context of the annual accounts. After the final date of eligibility of the rural development programme, resources returned to the operation from investments undertaken by funds or left over after all guarantees have been honoured shall be used by the Member States concerned for the benefit of individual undertakings.Interest generated by payments from rural development programmes to funds shall be used according to the first subparagraph.';
((9)) in Article 53(1), the first subparagraph is replaced by the following:
'Where appropriate, Member States may fix the level of support provided for in Articles 27, 31, 37 to 41 and 43 to 49 of Regulation (EC) No 1698/2005 on the basis of standard costs and standard assumptions of income foregone.';
((10)) in Article 54(1), the introductory phrase of the first subparagraph is replaced by the following:
'Contributions in kind from a public or private beneficiary, namely the provision of goods or services for which no cash payment supported by invoices or documents of equivalent probative value is made, may be eligible expenditure provided that the following conditions are fulfilled:';
((11)) Article 55(2) is replaced by the following:
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2. In the case of agricultural investments, the purchase of agricultural production rights, payment entitlements, animals, annual plants and their planting shall not be eligible for investment support.Simple replacement investments shall not be eligible expenditure.However, in cases of restoration of agricultural production potential damaged by natural disasters pursuant to Article 20(b)(vi) of Regulation (EC) No 1698/2005, expenditure for the purchase of animals and replacement investments may be eligible expenditure.';
((12)) Article 56 is replaced by the following:
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Article 56 

1. By way of derogation from Article 24(6) of Regulation (EU) No 65/2011, Member States may, upon request, pay an advance to the beneficiaries of investment support. As regards public beneficiaries, such an advance may be paid to municipalities and associations thereof, to regional authorities and to public law bodies.
2. The amount of the advances shall not exceed 50 % of the public aid related to the investment, and its payment shall be subject to the establishment of a bank guarantee or an equivalent guarantee corresponding to 110 % of the amount of the advance.A facility provided as a guarantee by a public authority shall be considered equivalent to the guarantee referred to in the first subparagraph, provided that the authority undertakes to pay the amount covered by that guarantee should entitlement to the advance paid not be established.
3. The guarantee may be released when the competent paying agency establishes that the amount of actual expenditure corresponding to the public aid related to the investment exceeds the amount of the advance.'.
Article 2 
This Regulation shall enter into force on the third day following its publication in the Official Journal of the European Union.
Article 1(12), as concerns the first subparagraph of Article 56(2) of Regulation (EC) No 1974/2006, shall apply from 1 January 2011.
This Regulation shall be binding in its entirety and directly applicable in all Member States.Done at Brussels, 14 July 2011.
For the Commission
The President
José Manuel BARROSO