PSB et al. v. Brazil (on Climate Fund)

Summary:

On June 5, 2020, four political parties filed a Direct Action of Unconstitutionality for Omission, before the Federal Supreme Court to challenge the Federal Union's alleged failure to adopt administrative measures concerning the Climate Fund. The National Climate Change Fund (Fundo Clima), created by Law 12.114/2009, is an instrument of the National Policy on Climate Change (PNMC, Law 12.187/2009) and aims to ensure that resources support projects or studies and finances activities aimed at mitigating and adapting to climate change and its effects.

The plaintiffs allege that although there is a legal obligation for the Ministry of the Environment to prepare an annual plan for the Climate Fund, it has been inoperative since 2019. The petitioners rely on the obligation of the Union, the States, the Federal District and the Municipalities to “protect the environment and fight pollution in any of its forms” and “to preserve forests, fauna and flora” per the Federal Constitution, as well as the precautionary principle. The plaintiffs also allege a violation of Article 225 of the Federal Constitution, regarding the State's duties to: preserve and restore ecological processes; promote the ecological management of ecosystems; define territorial spaces and its components to be specially protected; and protect fauna and flora. The petition also seeks an injunction to require that the Federal Union: (i) undertake the necessary administrative measures to reactivate the operation of the Climate Fund, with the due availability of resources related to the Climate Fund (including the non-refundable and refundable modalities); (ii) prepare and present the appropriate annual plans for the application of the Fund's resources; and (iii) refrain from making new contingencies of resources from the Climate Fund.

The preliminary ruling by the Supreme Federal Court: (i) adopted an urgency procedure for the action; (ii) summoned the governmental actors involved; (iii) admitted the action as an Argument for Failure to Comply with a Fundamental Precept (ADPF, another constitutional procedure aimed at enforcing the principles and values in the Constitution); and (iv) scheduled a public hearing on September 21 and 22, 2020, creating a deadline for interested parties to express their interest in participating, until August 10, 2020.

Subsequently, Minister Luís Roberto Barroso issued an order determining that the participation of all interested parties that met the criteria of i) representativeness, (ii) technical specialization and expertise of the exhibitor would be admitted; and (iii) guaranteeing plurality in the composition of the audience and different points of view to be defended. On February 2, 2021, the Court ordered the Federal Government and the Economic and Social Development Bank (BNDS) to be summoned to submit information on the resources allocated to the Climate Fund and on the total amount spent on projects and financing linked to the Climate Fund.

On May 3, 2021, the Supreme Court denied the preliminary injunction requested by the Brazilian Socialist Party, on the grounds that the request for suspension of funding for the Lixo Zero project by the Union was based on generic irregularities that did not allow confirmation of the concrete veracity of the situation.

On June 30, 2022, the Supreme Court rejected the government’s arguments and ruled that the executive branch cannot ignore the mandate of the legislative branch. Instead, the executive branch has a constitutional duty to execute and allocate the funds of the Climate Fund to mitigate climate change, based on both the separation of powers and the constitutional right to a healthy environment. The court further found that the judiciary, in turn, must act to avoid the regression of environmental protection. The Supreme Court clarified that environmental law treaties constitute a particular type of human rights treaty, which enjoy “supranational” status. This “supralegality” of human rights treaties means that they are above “regular” laws in the legal hierarchy. Accordingly, any Brazilian law or decree that contradicts the Paris Agreement, including the nationally determined contribution, may be invalidated. Any action or omission contrary to this protection is a direct violation of the Constitution and human rights. The constitutional duty to allocate the funds effectively means that there is a duty to mitigate climate change considering the international commitments under the climate change framework.

At Issue: Four political parties filed a Direct Action of Unconstitutional Omission to the Federal Supreme Court to compel the Ministry of the Environment to resume the activities of the Climate Fund.