Instituto Arayara vs. ANP and others on auction of oil exploration blocks in Montes Submarinos

On November 17, 2023, the NGO Instituto Arayara de Educação e Cultura para a Sustentabilidade filed a public civil action (environmental class-action) against the National Agency for Petroleum, Natural Gas and Biofuels (ANP), Brazil’s Federal Environment Agencies (Brazilian Institute of the Environment and Renewable Natural Resources - IBAMA and Chico Mendes Institute for Biodiversity Conservation - ICMBio), and the Federal Government. This lawsuit is part of a set of 6 environmental class actions filed against the 4th Bid Cycle for oil exploration blocks. The aim is to challenge the auction of oil exploration blocks located in the Potiguar Basin. The plaintiff argued that the inclusion of this set of blocks is illegal because (i) the blocks overlap with seamount areas, which are extremely important geological formations for the region's ecosystem; (ii) there was a lack of a technical analysis of the feasibility of the offer or environmental assessment studies; (iii) the exploration areas are located less than 100km from the coast; and (iv) they imply investment to explore for oil and gas in a region of rich biodiversity and tourism, in a climate emergency scenario. The plaintiff argued that this scenario requires an energy transition towards clean energies and a reduction in GHG emissions, which is incompatible with the expansion of oil exploration. As a preliminary injunction, it requested that the offer in the 4th Permanent Offer Cycle of the blocks in the Potiguar Basin in Sector SPOT-AP2 be suspended until the technical analysis that demonstrates the socio-environmental viability is carried out, in particular with reasoned opinions from bodies such as ICMBio and IBAMA. On a definitive basis, they request that the contested blocks be excluded from the Bid Cycle. IBAMA, ICMBio and the Federal Government presented their defenses based on procedural arguments, such as plaintiff's illegitimacy, the absence of environmental damage resulting from the auction and the regularity of the procedure offering the area by the ANP. Finally, they emphasized the economic benefits of oil exploration for Brazilian society and that in the International Energy Agency's NetZero 2050 scenario, the energy matrix will still rely on oil and natural gas as primary energy and that the impacts of greenhouse gas emissions from the projects can be assessed in the environmental licensing phase under the financial burden of the entrepreneur. In May 2024, the ruling extinguished the case without resolution of the merits due to the supervening loss of the object of the action. This ruling was based on the fact that, on December 13, 2023, the public bidding session of the 4th OPC was held and, on that occasion, no bid was made for the blocks which are the subject of this lawsuit.