In July, 2025, the Arayara International Institute of Education and Culture - Arayara Institute of Education for Sustainability filed a Public Civil Action (ACP) filed against Âmbar Sul Energia SA, the National Electric Energy Agency (ANEEL), and the Federal Government due to alleged irregularities in the operation of the Candiota III Thermoelectric Power Plant (UTE), located in Candiota, Rio Grande do Sul, and owned by Âmbar Sul Energia SA. The aim is to suspend the UTE's activities and impose specific obligations on the operator and the public entities responsible for monitoring and granting its operation. The plaintiff highlights that, among other irregularities in the plant's environmental licensing process, there is repeated noncompliance with environmental conditions; and the current Operating License (LO) does not establish specific time limits for atmospheric emissions. The UTE also allegedly has several unpaid infraction notices issued against it. Furthermore, the report argues that the plant operates by burning low-quality coal, which exacerbates greenhouse gas emissions and makes it one of the largest GHG emitters in the Brazilian electricity system, contributing to acid rain, degrading air quality, and worsening the climate crisis. It highlights the occurrence of extreme weather events in the country, particularly the 2024 floods in Rio Grande do Sul, which are likely to worsen, arguing that mitigating GHG emissions is urgently needed to mitigate the effects of climate change. It argues that ANEEL has failed to monitor and control irregularities at the project. It argues that the UTE's operations must be halted due to repeated failure to comply with environmental obligations and also to reduce GHG emissions. As a preliminary injunction, it requests: (i) suspension of the plant's LO until all environmental conditions already established by the environmental agency and compliance with legal GHG emission standards are fully met; (ii) imposing a non-action obligation on ANEEL and the Federal Government to refrain from issuing a commercial operating authorization for the project until it complies with the legal requirements; (iii) imposing a non-action obligation on Âmbar to refrain from operating the project without a valid environmental license and all necessary regulatory authorizations; (iv) determining the existence of the action in the registration of the property where the project operates. In the final instance, confirmation of the same requests submitted in urgent relief is requested.

On September 3rd 2025 the Federal Union filed a defense, arguing its lack of standing and the inadequacy of the initial petition. It argued that environmental oversight, energy regulation, and mining oversight are the responsibility of distinct federal agencies, not the Union directly. The defense also argued for the mandatory joinder of IBAMA (Brazilian Institute of Environment and Renewable Natural Resources), questioned the validity of the class action lawsuit due to lack of assembly authorization, and refuted the automatic reversal of the burden of proof and the granting of urgent relief against the Union. On the merits, it requested that the claims against it be dismissed.

On September 16th 2025 Âmbar Sul Energia SA filed its defense and raised preliminary issues, such as lack of procedural interest, lack of standing to sue, lack of standing to be sued, and the need to include IBAMA (Brazilian Institute of Environment and Renewable Natural Resources) as a defendant. On the merits, it argued that the alleged extensive history of infractions and misleading reports refers to the former operator and to projects that have already been discontinued, and that it does not violate environmental conditions, stating that the Candiota III Thermal Power Plant operates with a valid Operating License until 2026 and follows the regular environmental licensing procedure. It defended the role of thermal power plants in providing a stable supply to the national energy system and the central role of the Candiota III Thermal Power Plant in the state and national economy, and especially in the Municipality of Candiota and the Pampa Gaúcho region. It argued that the power plant has a continuous atmospheric emissions monitoring system (CEMS) and that there are technical studies proving that emissions and air quality between 2021 and 2024 are in compliance with regulatory standards and the operating license. It requested the dismissal of the case without prejudice or that the claims be dismissed as unfounded.

On September 29th 2025 ANEEL filed its defense and argued its lack of standing as a defendant, reiterating that the authorization for the power plant was issued by the Ministry of Mines and Energy and that the energy trading contracts, which would fall under its jurisdiction, ended in 2024. It maintained that environmental licensing and oversight are the exclusive responsibilities of environmental agencies, such as IBAMA, and that its role is limited to regulating the electricity sector and verifying whether the developer possesses valid environmental licenses, which would be the case for the Candiota III power plant. ANEEL also pointed to Arayara's lack of standing as a plaintiff due to the absence of the specific shareholders' meeting minutes authorizing the filing of the lawsuit, as legally required. It requested the dismissal of the case without prejudice or a judgment of total dismissal of the claims.

The Federal Union filed a response, arguing its lack of standing and the inadequacy of the initial petition. It argued that environmental oversight, energy regulation, and mining oversight are the responsibility of distinct federal agencies, not the Union directly. The defense also argued for the mandatory joinder of IBAMA (Brazilian Institute of Environment and Renewable Natural Resources), questioned the validity of the class action lawsuit due to lack of assembly authorization, and refuted the automatic reversal of the burden of proof and the granting of urgent relief against the Union. On the merits, it requested that the claims against it be dismissed.

As requested by the court, the plaintiff submitted an amendment to the initial complaint to include IBAMA as a defendant in the lawsuit, since the purpose of the lawsuit is to annul, suspend, or challenge administrative acts carried out by the agency.

In its defense, IBAMA argued that it monitors pollutant emissions from the Candiota III Thermal Power Plant and that, given the irregularities found, it thoroughly investigated the issues and adopted procedures to ensure appropriate sanctions. The agency attempted to demonstrate, through the history of fines issued against the company, the effective exercise of its environmental police power. It presented data showing that the sum of penalties in recent months exceeds R$1.3 million, demonstrating the effective adoption of sanctioning measures. It stated that the matter at issue is eminently technical in nature, involving the analysis of atmospheric emissions monitoring data with specific parameters; therefore, the administrative act is valid and in accordance with the technical routine of the competent authority. It argued that the suspension of the Operating License was impossible, since the judiciary does not re-evaluate the technical merit of the environmental agency's decision, but only executes legality in the strict sense. In the context of urgent relief, it requested the dismissal of the request to suspend the Operating License, given the legality of the licensing and the lack of proof of the severity of the damage. On the merits, it requested the dismissal of the claims against IBAMA because there was no omission on the part of the agency; on the contrary, it identified irregularities and is conducting the license renewal process regularly.

Arayara Institute vs. Âmbar Sul Energia S.A., ANEEL and Federal Union (UTE Candiota III)

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Arayara Institute vs. Âmbar Sul Energia S.A., ANEEL and Federal Union (UTE Candiota III) - reply

Filed

Brazil

Rio Grande do Sul

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