Case Name: IBAMA vs. Alto Norte Indústria, Comércio e Exportação de Madeiras Ltda. (Timber deposit in Colniza and climate damage)

Summary

This is a Public Civil Action (ACP), with a request for urgent relief, filed by IBAMA against Alto Norte Indústria, Comércio e Exportação de Madeiras Ltda., seeking compensation for environmental and climate damages based on an infraction notice for the storage of timber without an environmental license. This ACP is part of a set of 9 actions filed by IBAMA with the same grounds, but against different defendants, to challenge illegal timber storage and climate damage. The plaintiff alleges that the storage of timber without proven origin is associated with illegal deforestation and predatory exploitation in the Amazon biome. Thus, it seeks compensation for resulting environmental damages, including (i) damage caused to flora and fauna, (ii) soil erosion, and (iii) contribution to global warming. Regarding climate damage, it claims that the illegal conduct not only removed carbon sinks from the forest but also caused the release of carbon into the atmosphere. The author seeks to have determined (i) an obligation to restore vegetation in an area equivalent to that estimated by IBAMA, based on the volume of seized logs, totaling 20.63 hectares, preferably in an area of the same biome within an Indigenous Land, Conservation Unit, or Agrarian Reform Settlement Project, and (ii) an obligation to pay for climate damage based on the Social Cost of Carbon (SCC) in the amount of R$ 2,003,342.17. Based on the polluter-pays principle, the author argues that the negative climate externality represents an external social cost that is not internalized by the illegal vegetation suppression activity, leaving it to society. The author maintains that climate damage can be identified on an individual scale by multiplying the estimated GHG emissions from the activity by the SCC. In this specific case, IBAMA uses the Amazon Fund methodology to estimate emissions based on the area of the Amazon biome considered deforested, totaling 7,571.21 tons of carbon. It expressly mentions environmental justice and argues that accountability for climate damage consists of legally affirming the correction of the distortion of environmental burdens and benefits. The plaintiff requests, as an urgent measure: (i) suspension of financing and tax incentives and access to credit lines by the offender, (ii) freezing of assets in the estimated value for the obligation to restore vegetation and the obligation to pay for climate damage, and (iii) judicial embargo of the illegal polluting activity. It also asserts the need for reversal of the burden of proof and, definitively, requests that the defendant be ordered to restore an area equivalent to the deforested area and to pay the amount corresponding to the social cost of carbon.

The court ruled that the preliminary injunction was partially granted, finding that there was evident danger in delay, especially considering the fragility of the ecologically balanced environment. Thus, it granted and decreed (i) the suspension of the right to participate in financing lines offered by official credit institutions, communicating this decision to the Central Bank of Brazil (BACEN); (ii) the restriction of access to tax incentives and benefits offered by the Public Authorities at all three levels of the Federation; (iii) the freezing of assets of Alto Norte Indústria, Comércio e Exportação de Madeiras Ltda., in the amount of R$ 2,224,949.63. It also provided, subsidiarily, for the possibility of other forms of asset seizure.

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Main norms mobilized

• Article 225 of the Federal Constitution (CRFB/88)
• Article 5th of the Federal Constitution (CRFB/88)
• National Environment Policy Act - PNMA (Federal Law 6.938/1981)
• National Policy on Climate Change Act - PNMC (Federal Law 12.187/2009)

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