statement of reply

Federal Environmental Agency (IBAMA) v. Seringal Indústria e Comércio de Madeiras EIRELI - statement of reply

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petition

Federal Environmental Agency (IBAMA) v. Seringal Indústria e Comércio de Madeiras EIRELI - petition

decision

Federal Environmental Agency (IBAMA) v. Seringal Indústria e Comércio de Madeiras EIRELI - decision

Filing Year For Action

On January 28, 2019, Brazil’s Federal Environment Agency (“IBAMA”), filed a public civil action (environmental class-action) against Seringal Indústria e Comércio de Madeiras 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 39.412 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$ 3,827,228.38. 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 14,464.204 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 a preliminary decision, the court rejected the injunction, understanding that there was no urgency in the provision or danger of delay.

The defendant filed a response alleging the ineptness of the complaint, arguing that the facts had not been proven, pointing them out as mere unreasonable presumptions. It also claimed that it’s illegitimacy to be a party to the action, since there was no proof of conduct, comissive or omissive, or causal connection that linked itself to the environmental damage. Finally, it requested the termination of the case without resolution of its merits or the judgment for dismissal of the action.

On August 15, 2023, there was a decision granting the plaintiffs' requests and ordering Seringal Industria e Comércio de Madeiras EIRELI (i) to recover the degraded area described of 39.412 hectares, (ii) in the alternative, if it is impossible to recover the area at issue, to pay compensation of R$423,363.70 and (iii) to pay compensation corresponding to the social cost of carbon (SCC) of R$3,827,228.38. On August 28, 2023, the defendant company filed an appeal alleging a lack of evidence since the causal link to the damage is presumed without mentioning the date of the deforestation, which was verified using remote systems without on-site inspection. 

Federal Environmental Agency (IBAMA) v. Seringal Indústria e Comércio de Madeiras EIRELI

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Federal Environmental Agency (IBAMA) v. Seringal Indústria e Comércio de Madeiras EIRELI - statement of reply

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Risk

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Renewable energy

Economic sector

Adaptation/resilience

Finance