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Lucas Martins and Paulo Henrique Nagelstein v. the President of the Republic, the Minister of Mines and Energy and the Federal Government (Reduction in the percentage of biodiesel blended with fossil diesel) - decision

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Lucas Martins and Paulo Henrique Nagelstein v. the President of the Republic, the Minister of Mines and Energy and the Federal Government (Reduction in the percentage of biodiesel blended with fossil diesel) - petition

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Lucas Martins and Paulo Henrique Nagelstein v. the President of the Republic, the Minister of Mines and Energy and the Federal Government (Reduction in the percentage of biodiesel blended with fossil diesel) - reply

Filing Year For Action

This is a Popular Action with a request for an injunction filed by two individuals against an act carried out by the President of the Republic, the President of the CNPE (National Energy Policy Council) - the occupation of the Minister of State for Mines and Energy - and the Federal Union. The action seeks the annulment of an act that determined the reduction of the mandatory blending of biodiesel in diesel oil to 10% during 2022 ("B10"), under the terms of CNPE Resolution 25/2021, approved by Order of the President of the Republic. 

The plaintiffs request that CNPE Resolution 16/2018 be observed, so that the mandatory blend of biodiesel in diesel is 13% ("B13") in January and February 2022 and 14% ("B14") from March 2022, in keeping with the gradual increase in the blend previously announced by the authorities. They point out that the addition of biodiesel to fossil diesel helps to reduce the harmful environmental impacts caused by the latter and reduces dependence on oil to make diesel. As a clean energy source, biodiesel production has become even more valued, especially considering the commitments made under the Paris Agreement (enacted by Federal Decree 9.073/2017) and the establishment of the National Biofuels Policy - RenovaBio (Federal Law 13.576/2017), which recognizes the strategic role of biofuels in the Brazilian energy matrix for energy security, market predictability and the mitigation of greenhouse gas (GHG) emissions. 

With this in mind, the CNPE, through resolutions, and the National Petroleum, Natural Gas and Biofuels Agency (ANP) published the percentage evolution of the biodiesel content to be obligatorily present in fossil diesel, with CNPE Resolution 16/2018 providing for a mandatory percentage of 13% in March 2021 14% in March 2022 and reaching 15% in March 2023. Nevertheless, in 2021, the President of the Republic and the President of CNPE established a temporary measure to reduce the mandatory percentage to 10% for the other auctions to be held in the year, with a view to reducing the price of diesel sold to end consumers. However, by means of CNPE Resolution 25/2021 and an order formalized in December 2021, the President of CNPE and the President of the Republic maintained the mandatory minimum percentage of 10% biodiesel in diesel for the whole of 2022, contrary to the previous CNPE resolution (16/2018). 

In light of these facts, the plaintiffs claim that this reduction during 2022 is harmful to the environment, administrative morality and public assets, as well as being unconstitutional and illegal. They claim that the act was not duly justified and that the Federal Government deliberately omitted the 8th Extraordinary Meeting of the CNPE, which resulted in the change in the contested percentage. The plaintiffs allege that the percentage reduction in the blend violates the legal order of environmental protection established at the constitutional, legal and international levels, including the Federal Constitution, the RenovaBio Law, the National Policy on Climate Change - PNMC (Federal Law 12.187/2009), the Paris Agreement and the nationally determined contributions (NDCs) and climate targets presented by Brazil. They maintain that there is damage to administrative morality to the extent that (i) the Public Administration goes against its own rules and manifestations,(ii) there is damage to the biodiesel production chain, and (iii) there is non-compliance with the objective and principle of promoting predictability established by RenovaBio. 

Finally, the plaintiffs claim that the contested act harms public assets by reducing the demand for biodiesel to be produced by the national industry. They request, as a preliminary injunction: (i) the suspension of the harmful act and, consequently, the determination of compliance with CNPE Resolution 16/2018; and (ii) in the alternative, as long as there is no publication of the conclusive technical note of the study group created to evaluate the mixture of biodiesel in diesel, the suspension of the harmful act and determination of compliance with CNPE Resolution 16/2018. 

On a final basis, they request: (i) the ratification of the injunction; (ii) the annulment of the harmful act; and (iii) the determination of compliance with CNPE Resolution 16/2018, complying with the "B13" percentage in January and February 2022, and "B14" from March 2022. 

The defendants preliminarily argued that the contested act was not harmful or illegal, since Federal Law 13.033/2014 gives the CNPE the power to reduce the percentage of biodiesel blended into diesel sold to final consumers to up to 6% at any time, and that the reduction was based on the public interest. They challenged the value of the case, as they claimed it was exorbitant and without technical basis. On the merits, they emphasized the possibility of reducing the percentage of the mixture due to the legislation in force and the technical-administrative discretion of the Public Administration, which acted based on the CNPE's notes, highlighting its importance as a body made up of various actors and sectors of society. They argued that the reduction in the percentage of biodiesel was justified from a technical point of view and in line with the public interest. They also argued that the evaluation, formulation and implementation of public policies are the typical responsibility of the Executive Branch, and that the Judiciary cannot
intervene. In addition, they emphasized that the agents making investments in the biodiesel sector are aware of the possibility of altering the indicative percentages established by the CNPE in order to protect the consumer. In the end, they argued, among other things: (i) for the initial petition to be rejected or for the case to be dismissed without a decision on the merits; (ii) for the challenge to the value of the cause to be upheld; (iii) for the request for urgent  relief to be rejected; and (iv) for the plaintiff's claims to be dismissed. 

In its decision on the preliminary injunction, the court did not accept the defendants' preliminary lack of cause of action. With regard to the challenge to the value of the case, it ruled that it should be decided only after the plaintiffs had made their case. It admitted the participation of the National Transportation Confederation (CNT) as amicus curiae. On the merits, it held that the contested act falls within the scope of the technical-administrative discretion of the Public Authority and that it was duly justified in the public interest. Federal Law 13.033/2014 determines that the mandatory minimum percentage is 6% and, as the reduction had been to 10%, it considered that there had been no violation of legality or damage to administrative morality. He also pointed out that the Ministry of the Environment, which sits on the CNPE, had not objected to the proposal to reduce the biodiesel content. He concluded that the Judiciary should not interfere with the Public Administration, under penalty of violating the separation of powers. He therefore dismissed the request for an injunction. 

A judgment was subsequently handed down dismissing the Popular Action. The court reiterated the grounds presented in the preliminary injunction and added that, after this initial rejection, no other evidence was presented that could alter the judgment on the facts alleged in the initial decision. The case was referred to the TRF-4 for analysis, but no judgment has yet been handed down. 

According to the court, the necessary remittance was not granted because the defendants acted in compliance with the technical-administrative discretion that the law granted them, according to their criteria of convenience and opportunity, based on the data and studies. The case was closed.

Lucas Martins and Paulo Henrique Nagelstein v. the President of the Republic, the Minister of Mines and Energy and the Federal Government (Reduction in the percentage of biodiesel blended with fossil diesel)

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Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

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Lucas Martins and Paulo Henrique Nagelstein v. the President of the Republic, the Minister of Mines and Energy and the Federal Government (Reduction in the percentage of biodiesel blended with fossil diesel) - decision

Target

Policy instrument

Risk

Impacted group

Just transition

Renewable energy

Fossil fuel

Greenhouse gas

Economic sector

Finance