Case Name: Ministério Público Federal vs. União, Estado do Pará e CAAP (International carbon credit contract in Pará and illegalities)

Summary

This is a Public Civil Action (ACP) filed by the Federal Public Prosecutor's Office (MPF) against the Union, the State of Pará, and the Companhia de Ativos Ambientais e Participações do Pará SA (CAAP) in defense of the interests of traditional peoples and communities, due to the signing of an international Emissions Reduction Purchase Agreement (ERPA). The ERPA agreement was signed in 2024 between the State of Pará, represented by the Companhia de Ativos Ambientais e Participações do Pará SA (CAAP), and the LEAF Coalition, composed of the governments of the United States, the United Kingdom, Norway, the Republic of Korea, and major global corporations, for the sale of carbon credits or emission reductions verified through the jurisdictional REDD+ system of Pará, which is still under construction. It is alleged that the contract contains illegalities and nullities in its conception, since it has provisions contrary to the provisions of the Brazilian Emissions Trading System Law - SBCE (Federal Law 15.042/2024); it was signed without free, prior, and informed consultation with the affected indigenous and traditional communities; and it interferes with the conduct of the process of building the REDD+ jurisdictional system in Pará, also to the detriment of these communities. In the context of provisional relief, the Federal Public Prosecutor's Office requested: (i) the immediate suspension of the effects of the Emissions Reduction Purchase Agreement; (ii) the temporary suspension of the eligibility of the State of Pará to access payments based on results from the REDD+ system until the REDD+ Jurisdictional System is approved and adapted to the SBCE Law; and (iii) that the Union refrain from authorizing the direct participation of the State of Pará before the international certification body ART-TREES, while the Jurisdictional System does not comply with the SBCE Law. As final requests, it is requested (i) confirmation of the urgent injunction; (ii) declaration of nullity of the ERPA contract; (iii) that the Union revoke CONAREDD+ Resolution 10/2022, removing the eligibility of the State of Pará to receive payment for REDD+ results until the system is adapted to the SBCE Law; (iv) that the Union refrain from granting a letter of authorization for the direct participation of Pará before an international certification body if its jurisdictional system does not comply with the SBCE Law; and (v) the condemnation of Pará to pay collective moral damages in the amount of R$200,000,000.00.

The request for urgent relief was denied by the court, on the grounds that the arguments presented by the plaintiff are generic and abstract and do not justify granting the preliminary injunction; furthermore, the interests of traditional peoples and communities would be protected by the provisions of the contract.

In its defense, CAAP argued for the legality of the contested contract. It stated that jurisdictional REDD+ credits are not considered civil proceeds, as they are generated from the environmental performance of state-level public policies and have no legal relationship with specific properties, a situation supported by provisions of Law 15.042/2024. It argued that the ERPA (Environmental Regularization Program) is a preliminary contract, defining commercial conditions and containing suspensive clauses, not a definitive contract for advance sale. It further argued that its implementation is conditional upon verification of the existence of the credits by an independent certifier and that the estimates of deforestation reduction included therein are based on official deforestation and degradation data from PRODES and DETER. According to current REDD+ legislation and Law 14.042/2024, the right of exclusion applies, preventing the double counting of carbon credits. This right grants individuals the power to express their desire to exclude their property from the jurisdictional REDD+ program by notifying CONAREDD+. Other current and potential carbon credit projects in Pará were also considered in the ERPA estimates. The sharing of benefits with interested traditional peoples and communities, as stipulated in the contract and in accordance with Law 15.042/2024, was discussed, and a Consultation Plan with Traditional Peoples and Communities, conducted by the Secretariat of Environment and Sustainability (SEMAS), is necessary for its implementation. It was argued that communities can express their support for private REDD+ projects or their opposition to benefit-sharing, having the right to opt out based on their expressed position. The defendant requested that the action be dismissed.

The State of Pará, in its response, ratified and adhered to the terms presented by CAAP in its defense. It added to its arguments that SEMAS structured a dialogued and transparent process with traditional peoples and communities, and that this process is integrated into the discussion of the benefit-sharing plan and the draft bill that institutionalizes the REDD+ Jurisdictional System in the state. It argued that, according to the Ministry of the Environment's guidelines, the benefit-sharing stage is the point at which consultation should be focused, as this is where decisions directly impact the territorial and cultural rights of communities. It argued that there is no basis for collective moral damages warranting compensation, as this would compromise the space for discretion and innovation in the conduct of subnational climate policies. It requested that the claims be dismissed.

The Union, in its defense, argued that it had not committed any irregularities. It pointed out that its role is to coordinate the National REDD+ Strategy (ENREDD+) and that the States eligible before the National REDD+ Commission (CONAREDD+) have autonomy to implement their jurisdictional REDD+ programs. Due to a statement from the Ministry of the Environment and Climate Change, which emphasized that the disagreement discussed in the action was technical and not legal, it requested conciliation to resolve the conflict. If conciliation is not possible, it requested that the claims be dismissed.

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Main norms mobilized

• Article 231 of the Federal Constitution (CRFB/88)
• Brazilian Greenhouse Gas Emissions Trading System Law - SBCE (Federal Law 15.042/2024)
• ILO Convention 169 (Federal Decrees 5.051/2004 and 10.088/2019)

Case timeline

Case documents