Federal Environment Agency (IBAMA) v. Madelin Madeireira Linhares Ltda.

On December 20, 2018, Brazil’s Federal Environment Agency (“IBAMA”), filed a public civil action (environmental class-action) against Madelin Madeireira Linhares Ltda. seeking compensation for environmental and climate damages based on an infringement notice for illegal wood storage without an environmental license. This public civil action is part of a set of 9 lawsuits brought by IBAMA on the same grounds, but against different defendants, to question illegal wood deposits and climate damage. The plaintiff alleges that the storage of wood without proven origin is associated with illegal deforestation and predatory exploitation in the Amazon biome. Thus, it seeks reparation for environmental damages provoked by it, including (i) the damage caused to flora and fauna, (ii) soil erosion, (iii) contribution to global warming. As for the climate damage, it claims that the unlawful conduct not only removed carbon sinks from the forest, but also caused the release of carbon into the atmosphere. The plaintiff seeks redress through the determination of (i) an obligation to restore the vegetation in an area equivalent to that estimated by IBAMA, based on the volume of logs seized, amounting to 43,2727 hectares, ideally in an area of the same biome in Indigenous Land, Conservation Unit or Agrarian Reform Settlement Project and (ii) an obligation to pay the climate damage based on the Carbon Social Cost (CSC) in the amount of R$ 2,871,489.47. It claims, based on the polluter pays principle, that the climate damage represents an external social cost that is not internalized by the illegal deforestation, leaving it to society. It also argues that climate damage can be quantified on an individual scale by multiplying the estimated GHG emissions of the activity by the CSC. In this case, IBAMA uses the Amazon Fund methodology to estimate emissions based on the area of the Amazon biome considered deforested, summing up to 15,881.0809 tons of carbon. The plaintiff requests, as an injunction: (i) suspension of financing and tax incentives and access to credit lines by the offender, (ii) unavailability of assets in the estimated amount for the obligation of the vegetation restorage and the obligation to compensate the climate damage, and (iii) judicial restraint order of the illicit polluting activity. On the merits, it requests the defendant's conviction in the obligation to do - to recover an area equivalent to that deforested - and the obligation to pay - in the amount related to the social cost of carbon. The defendant filed an opposition claiming the incompetence of the court, the active illegitimacy of IBAMA and the occurrence of lis pendens. On the merits, it argued the existence of an ongoing administrative proceeding, the failure to prove the causal link, the disagreement regarding IBAMA's calculation methods for identifying the volume of seized wood and collective environmental damage (CSC). The Court ruled dismissing the action on the grounds of IBAMA's active illegitimacy. According to the decision, under the principle of predominance of interests in the distribution of environmental jurisdiction, there was no interest of the Union involved to give rise to IBAMA's action. Subsequently, IBAMA filed an appeal defending its active legitimacy in view of the express legal provision. In its counter-appeal, the appellant company insisted on the arguments for dismissal of the appeal. In November 2024, a ruling annulled the judgement and determined that IBAMA and the Federal Public Prosecutor's Office have standing to file a public civil action for environmental damage. As a result, the case was sent back to the original court for regular processing.