Ministério Público Federal vs. União Federal (FUNCAP and environmental fines)

On February 28, 2025, the Federal Public Prosecutor's Office (MPF) filed a public civil action (ACP) against the Federal Union, arguing that the federal entity is failing to allocate a portion of the revenue from fines for environmental infractions and crimes to the National Fund for Public Calamities, Protection and Civil Defense (FUNCAP), in violation of Law No. 12,340/2010. It was argued that this omission compromises the socio-environmental recovery of the areas affected by the collapses of the Fundão and Córrego do Feijão dams, as well as the implementation of public policies for disaster prevention and mitigation. Plaintiffs requested: (i) the granting of urgent relief to order the Union to remedy the omission in allocating resources to FUNCAP; (ii) the condemnation of the Union to the obligation to promote the regular allocation of a portion of the environmental fines to the aforementioned fund; (iii) the allocation of these resources to the recovery of affected soils, to support family farming and to the adoption of measures aimed at reducing the physical and social vulnerabilities of the affected communities.

The Union filed a response, alleging preliminarily that the initial petition was defective due to the lack of indication of the value of the case. On the merits, it argued that the allocation of environmental fines to FUNCAP is not an automatic legal obligation, stating that the definition of these resources depends on budgetary legislation and administrative and legislative discretion, for which reason it requested that the claims be dismissed.

On May 12, 2026, Judge Marcelo Aguiar Machado of the Minas Gerais Federal Court dismissed the MPF’s claims. It determined that the allocation of resources to FUNCAP falls within the budgetary discretion of the Executive and Legislative branches, and there is no basis for the Judiciary to impose the desired allocation.

On June 30, 2026, the MPF filed an appeal, arguing that the ruling confused discretion regarding the amount of resources with the legal duty to ensure the functioning of FUNCAP. It argued that the Federal Government has an obligation to allocate a reasonable portion of environmental fines to the fund in future budget laws and to regulate its operation. Furthermore, it expressly framed the controversy within the context of climate change, arguing that strengthening FUNCAP is essential to finance policies for prevention, adaptation, risk management, and response to extreme events, the frequency and intensity of which are being exacerbated by climate change. Plaintiff highlighted that, according to the terms defined by the Supreme Federal Court in PSB et al. v. Brazil (ADPF 708/DF), the international commitments to which Brazil is a signatory and which provide for the protection of an ecologically balanced environment are of paramount importance to the realization of human rights, which is why they are characterized as supralegal norms. Plaintiff further emphasized the understanding of the Supreme Court, recognizing the unconstitutional omission of the Federal Government in failing to allocate resources in the Budget Laws (LOAs) for the composition of the Climate Fund and the Amazon Fund. Plaintiff stressed that with regard to FUNCAP, the unconstitutional omission is even more serious than that relating to ADPF 708/DF because, while in relation to FUNCAP there was omission by both the Executive and Legislative branches, in the cases of the Climate Fund and the Amazon Fund, the Legislative branch exercised its powers to ensure the effectiveness of the environmental funds, with omission only on the part of the Executive branch. Finally, the MPF requested the complete reversal of the judgment and the granting of urgent appellate relief, ordering the Federal Government to adopt the necessary measures to ensure that future budget laws guarantee a reasonable portion of the financial resources derived from environmental fines for the composition of FUNCAP (Fund for the Control of Environmental Risks), in order to make the operation of FUNCAP fully viable for the implementation of public policies for risk management and disaster response, including in the context of the collapses of the Fundão and Córrego do Feijão dams. The MPF also requested that the Federal Government be compelled to implement the regulations stipulated in Law 12.340/2010, reducing its discretion in the management and transfer of financial resources that should comprise FUNCAP.