- Companies and individuals committing environmental crimes will often be requested to pay fines, but critics say that the amounts imposed by authorities often do not reflect the extent of the damage done.
- Many environmental fines remain unpaid or are contested in the courts until the statute of limitations is reached.
- The current administration in Brazil has reversed a decree by the former Bolsonaro regime which pardoned more than 180,000 cases involving environmental fines.
Regulatory agencies use fines as a key mechanism for enforcing administrative law. Fines act as a deterrent, because they discourage individuals and organizations from ignoring regulations; they also serve as punishment, because they ensure there are consequences for non-compliance. In some cases, fines can function as a form of reparation when the proceeds are used to compensate communities or families for damages caused by irresponsible and illegal acts. Like any legal procedure, the accused party should have access to a process that provides an opportunity for defence. In some (most) instances, violators can enter into settlement agreements with regulatory agencies, agreeing to pay a monetary settlement and undertake corrective actions without admitting guilt, which expedites the resolution of cases and avoids publicity.
Unsurprisingly, there are criticisms regarding the consistency and fairness of fines. Some environmental economists argue that they do not reflect the true damage caused by the loss of environmental services. Environmental fines will motivate people to comply with the law only if they are collected. In 2017, IBAMA reported that about 8,000 fines totalling more than R$ 4 billion were levied annually between 2010 and 2016; however, payments have never exceeded four percent of the annual figure and the total amount in arrears surpassed R$ 23 billion in 2017. IBAMA has been more successful in forcing large corporations to pay their fines, but even Petrobras has about R$ 1.3 billion in outstanding fines.
In most cases, defendants choose to litigate their fines in court, which causes their real value to depreciate over time, while allowing the perpetrator to use the financial capital during the intervening period and creating the very real possibility of avoiding payment altogether. There are three rules that can make a violation expire. The first establishes that IBAMA has five years from the date of the violation to identify and notify the wrongdoer. A second rule states that the investigation and regulatory process cannot be inactive (unpursued by authorities) for more than three years, giving landholders a convenient benchmark for invoking the statute of limitations.
The third rule says that once the analysis is complete, the state has five years to collect the fine. If IBAMA misses any of these three cutoff points, there is nothing to be done and the fine expires.
There are many different types of environmental fines, but the most difficult to collect are probably linked to the Forest Code. The vast majority of landholders simply choose to ignore the law, confident that they will escape the vigilance of the authorities.
The sheer number of farms in violation of the Forest Code provides no small measure of safety, because it is politically inconceivable for any government to pursue an intensive collection effort. The impact on the rural economy would be massive, leading to economic dislocation at the local, regional and national level, and quite likely leading to a change in government. This obvious quandary has motivated the government to seek solutions.
The 2017, the government of Michel Temer offered discounts to landholders who agreed to invest in environmental recovery programmes using two modalities:
(1) Direct investment in a project organized by the offending party and a 35% reduction in the nominal value of the fine; or
(2) Indirect contributions to projects approved by government authorities which would lead to a 60% reduction.
The government emphasised the fairness and legality of the rule. It did not let the perpetrators off the hook, nor did it create a new revenue stream for government agencies; instead, the funds were to be invested in environmental projects with well-defined benefits managed by third parties. IBAMA analysts estimated that about R$ 4 billion in liabilities might be attractive to the conversion programmes over the short term. The most likely participants were large multinational companies that weighed the cost and benefits of compliance versus litigation. For example, Petrobras has 278 cases pending in the courts, with a total value of R$ 1.3 billion.
After assuming office in 2019, Jair Bolsonaro weakened IBAMA’s capacity to enforce regulatory oversight by reducing its budget and appointing managers who scaled back field operations to combat illegal logging, forest clearing and mining. IBAMA levied 20% fewer fines in 2020, as the government rolled back conservation efforts and Amazon deforestation skyrocketed.
The federal agency imposed 9,516 fines in 2020, compared with 11,914 in 2019, according to an analysis of public databases by the Climate Observatory. In 2019, the Bolsonaro administration moved to declare an amnesty for IBAMA fines that would have forgiven and cancelled debts, particularly those associated with illegal deforestation and wildcat mining; nevertheless, those manoeuvres were halted by a lawsuit filed by environmental organisations arguing that they would harm the public well-being.
The subsequent administration, in which Marina Silva heads the Environment Ministry, immediately began to undo the harm done by its predecessor.
Among its actions was a legal brief that reversed a regulatory decree that had granted amnesty for (or nullified) 185,000 administrative rulings that had levied R$ 29 billion in total fines for illegal land clearing and logging.
Banner image: Macaws of Peru. Image by Rhett A. Butler.