Case Name: Instituto Arayara vs. Âmbar Uruguaiana Energia S.A. e outros (Candiota III Thermal Power Plant)

Summary

This is a Public Civil Action (ACP) filed by the Arayara International Institute of Education and Culture - Arayara Institute of Education for Sustainability against Âmbar Sul Energia SA, the National Electric Energy Agency (ANEEL), and the Federal Government due to alleged irregularities in the operation of the Candiota III Thermoelectric Power Plant (UTE), located in Candiota, Rio Grande do Sul, and owned by Âmbar Sul Energia SA. The objective is to suspend the UTE's activities and impose specific obligations on the operator and the public entities responsible for overseeing and granting the operating license. The plaintiff highlights that, among other irregularities in the plant's environmental licensing process, there is repeated non-compliance with environmental conditions; and the current Operating License (LO) does not establish specific time limits for atmospheric emissions. The UTE also allegedly has several outstanding infraction notices issued against it that remain unpaid. Furthermore, it argues that the plant operates by burning low-quality coal, which aggravates greenhouse gas emissions and makes it one of the largest emitters of GHGs in the Brazilian electrical system, contributing to acid rain, air quality degradation, and the worsening of the climate crisis. It recalls the occurrence of extreme weather events in the country, especially the 2024 floods in Rio Grande do Sul, which tend to worsen, arguing that mitigating GHG emissions is urgent to lessen the effects of climate change. It argues that ANEEL (Brazilian Electricity Regulatory Agency) has been negligent in monitoring and controlling the irregularities of the project. It asserts that it is necessary to halt the activities of the power plant due to repeated non-compliance with environmental obligations and also to reduce GHG emissions. In a preliminary injunction, it requests: (i) the suspension of the plant's operating license until full compliance with all environmental conditions already established by the environmental agency and compliance with legal GHG emission standards; (ii) the imposition of an obligation not to act on ANEEL and the Federal Government so that they do not issue a commercial operating permit for the undertaking until the legal requirements are met; (iii) the imposition of an obligation not to act on Âmbar so that it does not operate the undertaking without a valid environmental license as well as all necessary regulatory authorizations; (iv) the determination to record the existence of the action in the property registration where the undertaking operates. In the final stage, confirmation of the same requests presented in the urgent relief is requested.

In its defense, Âmbar Energia SA raised preliminary issues, such as lack of procedural interest, lack of standing to sue, lack of standing to be sued, and the need to include IBAMA (Brazilian Institute of Environment and Renewable Natural Resources) as a defendant. On the merits, it argued that the alleged extensive history of infractions and misleading reports refers to the former operator and to projects that have already been discontinued, and that it does not violate environmental conditions, stating that the Candiota III Thermal Power Plant operates with a valid Operating License until 2026 and follows the regular environmental licensing procedure. It defended the role of thermal power plants in providing a stable supply to the national energy system and the central role of the Candiota III Thermal Power Plant in the state and national economy, and especially in the Municipality of Candiota and the Pampa Gaúcho region. It argued that the power plant has a continuous atmospheric emissions monitoring system (CEMS) and that there are technical studies proving that emissions and air quality between 2021 and 2024 are in compliance with regulatory standards and the operating license. It requested the dismissal of the case without prejudice or that the claims be dismissed as unfounded.

In its defense, ANEEL argued its lack of standing as a defendant, reiterating that the authorization for the power plant was issued by the Ministry of Mines and Energy and that the energy trading contracts, which would fall under its jurisdiction, ended in 2024. It maintained that environmental licensing and oversight are the exclusive responsibilities of environmental agencies, such as IBAMA, and that its role is limited to regulating the electricity sector and verifying whether the developer possesses valid environmental licenses, which would be the case for the Candiota III power plant. ANEEL also pointed to Arayara's lack of standing as a plaintiff due to the absence of the specific shareholders' meeting minutes authorizing the filing of the lawsuit, as legally required. It requested the dismissal of the case without prejudice or a judgment of total dismissal of the claims.

The Federal Union filed a response, arguing its lack of standing and the inadequacy of the initial petition. It argued that environmental oversight, energy regulation, and mining oversight are the responsibility of distinct federal agencies, not the Union directly. The defense also argued for the mandatory joinder of IBAMA (Brazilian Institute of Environment and Renewable Natural Resources), questioned the validity of the class action lawsuit due to lack of assembly authorization, and refuted the automatic reversal of the burden of proof and the granting of urgent relief against the Union. On the merits, it requested that the claims against it be dismissed.

As requested by the court, the plaintiff submitted an amendment to the initial complaint to include IBAMA as a defendant in the lawsuit, since the purpose of the lawsuit is to annul, suspend, or challenge administrative acts carried out by the agency.

In its defense, IBAMA argued that it monitors pollutant emissions from the Candiota III Thermal Power Plant and that, given the irregularities found, it thoroughly investigated the issues and adopted procedures to ensure appropriate sanctions. The agency attempted to demonstrate, through the history of fines issued against the company, the effective exercise of its environmental police power. It presented data showing that the sum of penalties in recent months exceeds R$1.3 million, demonstrating the effective adoption of sanctioning measures. It stated that the matter at issue is eminently technical in nature, involving the analysis of atmospheric emissions monitoring data with specific parameters; therefore, the administrative act is valid and in accordance with the technical routine of the competent authority. It argued that the suspension of the Operating License was impossible, since the judiciary does not re-evaluate the technical merit of the environmental agency's decision, but only executes legality in the strict sense. In the context of urgent relief, it requested the dismissal of the request to suspend the Operating License, given the legality of the licensing and the lack of proof of the severity of the damage. On the merits, it requested the dismissal of the claims against IBAMA because there was no omission on the part of the agency; on the contrary, it identified irregularities and is conducting the license renewal process regularly.

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Main norms mobilized

• Article 170 of the Federal Constitution (CRFB/88)
• Article 225 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)
• Paris Agreement (Federal Decree 9.073/2017)

Case timeline

Case documents