Santo Antônio Energia S.A. vs. SEDAM (Administrative fine for illegal burning)

In March 2018, Santo Antônio Energia S.A. filed a Claim for the Annulment of an Administrative Act, with a request for injunction, against the State Agency for Environmental Development of Rondônia (SEDAM). The Santo Antônio Hydroelectric Plant (UHE Santo Antônio) operates a large hydroelectric plant located in the Amazon region. Construction activities required the removal of vegetation along the banks of the Madeira River, for which subcontractors were hired. During the vegetation clearance, the Environmental Commission of the Rondônia State Legislative Assembly received complaints that the subcontractors were setting fires in areas of the Santo Antônio and Jirau Hydroelectric Plants. SEDAM issued an infraction notice, alleging that the subcontractors burned 2,280 hectares of vegetation (1,750 hectares belonging to Santo Antônio S.A.) and imposed a fine of R$10,000,000.00. In its claim, the plaintiff asserts that the fires in question were criminal and that it took all necessary preventive measures. It seeks recognition of the statute of limitations or, alternatively, the annulment of the administrative act on the grounds of defects and the absence of elements necessary to establish administrative liability. As an injunction, the company requests the suspension of the enforceability of the fine and an order for SEDAM to refrain from taking any action that would require payment of the fine. On the merits, it requests the annulment of the infraction notice, or alternatively, an adjustment to the applied penalty or reduction of the fine amount. The state of Rondônia filed a defence contesting the arguments presented in the initial claim and requested that the claim be dismissed. The court issued a judgment partially upholding the initial claim to adjust the fine to R$5,000,000.00. Both the plaintiff and the state of Rondônia filed appeals. On September 22, 2023, the Court dismissed both appeals. The dissenting vote granted the state of Rondônia’s appeal to reinstate the original fine, considering that the amount imposed by SEDAM was reasonable, given that the fire affected 1,750 hectares of the company's land and lasted for 15 days. It argued that Federal Decree 6,514/2008 states that, when grading the penalty, the extent of the damage and its environmental impact must be taken into account. The dissent emphasized that one hectare of burned forest equates to hundreds of tonnes of CO₂ released into the atmosphere, contributing to Brazil's high GHG emissions. It highlighted the provisions of CNJ Resolution 433/2021 and the targets Brazil has committed to under the Paris Agreement. The opinion argued that, given the climate crisis and current regulatory standards, the environmental authority's discretion to set the amount of fines imposed cannot be restricted.