On December 19, 2018, Brazil’s Federal Environment Agency (“IBAMA”), filed a public civil action (environmental class-action) against Souza Brilhante EIRELI 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 14.90763 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$1,447,650.20. 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 5,471.0892 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.

In its response, the defendant preliminarily alleged passive illegitimacy due to lack of evidence relating the defendant to the deforestation and the ineptitude of the initial petition. He also claimed the absence of liability for lack of evidence that the defendant was to blame for the damage, in addition to not having any interference over the area where the alleged deforestation was carried out.

Subsequently, a judgment was delivered upholding the claims. The defendant's arguments were refuted and it was affirmed that the infraction notice was coated with the requirements of validity and delineates the environmental damage. The allegation of passive illegitimacy was also refuted, stating that, in the environmental field, civil liability of a purely objective nature prevails. Thus, the defendant was condemned (i) to make an obligation to recover the area, and to prepare and comply with a reforestation project for the deforested area, under penalty of a fine, and (ii) to pay compensation for property damage, in case of impossibility of recovering the degraded area, in an amount to be defined in the settlement phase, by arbitration.

In view of the sentence, IBAMA filed a motion for clarification requesting that the defendant be ordered to pay the amount of R$ 1,447,650.20 related to the social cost of carbon, on which the sentence did not rule.

Subsequently, an integrative judgment was issued in which the court remedied the omission of the previous decision by including in the conviction the obligation to pay for the social cost of carbon.

Federal Environment Agency (IBAMA) v. Souza Brilhante EIRELI

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Federal Environment Agency (IBAMA) v. Souza Brilhante EIRELI - decision

Filed

Brazil

Amapá

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Federal Environment Agency (IBAMA) v. Souza Brilhante EIRELI - decision

Policy instrument

Risk

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Renewable energy

Economic sector

Finance