On August 10, 2018, Normative Instruction IBAMA No. 18/2018 was published, which has extended the deadline for all legal entities to express their interest in the conversion of environmental fines to within 240 days, calculated from the date of publication of IBAMA Normative Instruction No. 06/2018 (February 16, 2018). That is, an interested party has until October 15, 2018, to file the “Expression of Interest Form for Conversion of Environmental Fines” (“Formulário de Manifestação de Interesse pela Conversão de Multas Ambientais”), in which the legal entity must indicate the option of either the direct or indirect conversion method, independent of the project's submission, through a document addressed to the competent authority for the judgment of the notice of infraction or hierarchical appeal (“recurso hierárquico”).
Regulation of the necessary proceedings for the enforcement of fine conversions in services of preservation, improvement and recovery of the quality of the environment is established through IBAMA Normative Instruction No. 6/2018 ("IN IBAMA 6/2018").
It is important to note that the conversion of environmental fines is discretionary, based on the rules established by Federal Decree No. 9,179/2017, which amended the Federal Decree No. 6,514/2008, as well as by IBAMA Normative Instruction No. 6/2018, and the legal entity may request the conversion of fines until the presentation of its closing statements to the competent authority for the judgment of the notice of infraction.
However, for those notices of infraction that were in pre-trial and trial phases in the administrative instance prior to the publication of IN IBAMA 6/2018, and whose fines are not yet constituted as a public credit, the following transition rules shall be applied:
- If a notice of infraction is imposed on the legal entity up to the date of publication of IN IBAMA 6/2018, the company can request the conversion of fines pursuant to the provisions set forth in Federal Decree No. 6,514/2008, or adapt the previous request even if the closing statement phase has passed;
- If the request is formalised and accepted by IBAMA, the notice of infraction judgment will be suspended, without prejudice to the pre-trial stage procedure until (i) the conclusion of the selection process of the project by means of the First Public Call for Projects for indirect conversion carried out by IBAMA headquarters, in the case that the company has chosen the indirect method, and (ii) the conclusion of the IBAMA National Program for Conversion of Fines (“PNCMI – Plano Nacional de Conversão de Multas do IBAMA”) and the State Program for the Conversion of Environmental Fines (“PECMI – Programa Estadual de Conversão de Multas Ambientais”). In the case of item (i), following the conclusion of the selection process, the indirect method rites will be resumed. In the case of item (ii), upon conclusion of the PNCMI and PECMI, the legal entity that has opted for direct conversion must submit the respective project within 30 days.
The legal entity, at the time of requesting conversion of a fine , may opt for (i) the direct execution of conversion of environmental fines, in which the company will assume the implementation of, by its own means, the preservation, improvement and recovery services for the quality of the environment, whenever applicable in the state in which the damage was caused, in accordance with the guidelines, standards and priorities established in the PNCMI and in the PECMI or (ii) the indirect execution of conversion of environmental fines, upon the adhesion to a project previously selected by IBAMA, though the Public Call.
Conversion requests are not recognized if (i) submitted after the deadline and (ii) without the option for one of the conversion methods or (iii) unaccompanied by the project when the legal entity has opted for the conversion environmental fines through direct execution.
It is worth mentioning that conversion requests shall be denied when (i) the infraction results in human death; (ii) the legal entity is enrolled in the Official Employers' Register as having submitted employees to conditions analogous to slavery; (iii) there is evidence of child labor verified at the time of the imposition of the notice of infraction; (iv) the offense is committed through the use of cruel methods for slaughter or capture of animals; (v) the infraction is committed by a public agent in the exercise of its position or function; (vi) the measure taken is insufficient for compliance in order to discourage the committing of environmental infractions; (vi) the environmental service proposed by the legal entity in the direct conversion is incompatible with the PNCMI or the PECMI or (vii) when the legal entity fails to meet, within a predefined period, the conditions of the determination of the judging authority to proceed with complements or adjustments to the submitted project, including with the purpose of adjusting it to the consolidated amount of the fine to be converted.
Likewise, the conversion of fines is not applicable in cases (i) to repair damages resulting from the infraction itself; (ii) when the amount resulting from the discounts provided for in items I and II of paragraph 2 of Article 143 of Federal Decree 6,514/2008 is lower than the legal minimum amount of the fine imposed hypothetically for the violated provision; (iii) of a daily fine, when the situation that caused the issuance of the notice of infraction has not ceased by the final deadline of closing statements; (iv) when the legal entity who chooses to convert environmental fines for indirect execution does not pay the deposit into the guarantee account or (v) where the legal entity gives cause for non-execution of the project subject to the conversion of fines.
In the case of the direct conversion method, when the conversion request is granted, the 35% discount on the amount of the consolidated fine will be applied. If the judging authority sets a value different from that attributed to the value of the project, the legal entity will have 30 days for complements and adjustments with the purpose of adjusting it to the consolidated amount of the fine to be converted.
On the other hand, for indirect conversion, the adhesion of legal entities will only be admitted with fines (i) of a minimum consolidated unit value equal to or greater than BRL 500,000.00 or (ii) whose sum of the consolidated amounts is equal to or greater than BRL 500,000.00, when the integration of fines of more than one legal entity in the same quota can be considered up to the minimum value required for its implementation, established in the Public Call instrument that selected the project for indirect conversion.
In the case of adhesion of legal entities, each party must observe the waiting period until payment of the amount necessary for the implementation of the quota is made, through the adhesion of other legal entities, in a period established by IBAMA. In the event that payment is not made, the legal entity may opt for (i) full payment of the fine, ceasing the effects of conversion; (ii) adherence to another project selected in the Public Call, if any, or (iii) direct conversion. In the latter case, IBAMA will review the discount granted to suit the 35% discount established for direct conversion.
It is worth mentioning that if the conversion request is approved in the indirect method the discount of 60% will be applied to the amount of the consolidated fine and the Commitment Term Agreement will be signed. Lastly, it is also worth pointing out that "Public Call No. 01/2018 - Support for the water recovery of the São Francisco River basin and adaptation to climate change in the Parnaíba River basin" is available on the IBAMA website for interested parties who desire the conversion of the fine by indirect method.