Brazil: Quantification Of Environmental Damages

Last Updated: 9 November 2015
Article by Carbone Law Office

It is undisputed that evaluation of environmental damage is an extremely complex area. This is clearly reflected in the varied and often controversial material available on the matter, from studies of legal principles to courts precedents on actual pollution cases. Brazil is no exception to this rule.

Prior to the 1980's, Brazilian legislation on pollution was neither extensive nor severe. As far as marine pollution caused by ships was concerned, sanctions against polluters were limited to administrative fines imposed by the Naval authorities through local Port Captaincies. Public actions in the civil sphere were extremely rare. This was due to the lack of specific statutes and of an administrative structure to deal with the problem.

This picture has changed radically since then. The 1990's and early 2000's brought abundant and very aggressive rules (in the ambit of penal, civil and administrative law) in respect of pollution in general and also pollution caused specifically by vessels. At the same time, environmental bodies, as well as Prosecutor Offices in Federal and State spheres, greatly improved their operational structures. As a result, the value of administrative fines escalated and civil actions by Public Prosecutors became the norm.

As a consequence, the problem of quantification of environmental damages became acute. Against this background, the Environmental Body for the State of São Paulo, CETESB, came up with a formula for quantifying environmental damages. Given the good technical reputation of this body and also the leading role of São Paulo in the Brazilian economy (it was also home to the largest Brazilian port, Santos), this formula rapidly spread from its cradle in the administrative sphere and started being used in court cases.

However, as is often the case with mathematic al formulae, the CETESB formula failed to provide a fair assessment of all circumstances involved in pollution cases, both aggravating and mitigating. To make matters worse, its conceptual flaws also caused the resulting values to increase exponentially and absurdly; For example, even when starting from zero pollution (but with the input of other variables at low figures) the formula yields a result of a minimum of over US$ 31,000. If there is no pollution, how can there be any "damage" to compensate for ?

From the very beginning Brazilian lawyers acting for Owners and P&I Clubs have waged a fierce court battle against the application of CETESB's formula, trying to draw the Courts' attention to its flaws and inconsistencies. But the results during more than a decade were unquestionably negative. While compensation figures were in fact eventually reduced in a number of cases on account of defence arguments against the formula these were small claims and the reductions in compensation amounts were granted by the Courts intuitively, because the values initially found seemed excessive, but without any formal criticism of the formula itself. These reductions were seen instead as small corrections required by the particular circumstances of a few cases, leaving intact, or even confirming the validity of, CETESB's formula as a safe criterion for assessing the quantum of environmental damage.

However, this position now seems to have been drastically changed in what has become the most important precedent against CETESB's formula. In a case handled by our firm, involving an oil spill during fuel supply operations, the owners calculated the spill at 30 litres (compared with 273 litres by the Federal Prosecutor Office's assessments). A civil action for compensation for environmental damage ensued and was filed before the 1st Federal Court of Santos. A technical investigation by a court expert was held with a view to quantifying the damage to the environment. Application of the CETESB's formula resulted in the astronomical figure of US$ 912,640,962.56 !

This assessment was strongly opposed and the first instance Court requested a second survey by a different expert. The aim of this second investigation was to consider specifically the criticisms against the CETESB formula.
The results of the second survey were decisively positive. First, the expert recommended a reduction in quantum of the compensation to a symbolic amount - US$ 1.00. In reaching this conclusion the expert took into consideration the small amount of the spill and other factors such as (i) the Member's immediate and effective reaction fighting the oil spill and (ii) the hydrodynamic conditions of the Santos estuary which is capable of supporting small spills without significant alterations to its natural status. In figurative but particularly expressive language the court expert said:

"should it be possible to insert on a ruler 100 centimetres long, in an escalating manner, the maximum amount being the valuation previously proposed (around 1 billion U.S. dollars), it is correct to affirm that the amount to be compensated by the defendant in the particular episode should be far closer to the zero on the ruler than to the end of the scale".1

Additionally, the expert - himself a biologist from CETESB - admitted that even in the administrative sphere CETESB has now ceased to use the formula in question, as it is no longer considered an adequate instrument to evaluate damages arising from oil spills: "CETESB's technical body is firmly convinced that the limitations and technical inconsistencies" (says the report about the formula) "make it difficult to support it and consequently to continue using it"2 .

It is true that these are considerations set out not in a judgment, but, so far, only in a survey report which has yet to be examined by the First Instance Court. However, it will be very difficult for the second survey report not to exert enormous influence on the judge's mind when the time comes to render judgment in the case. And, more than this, it was decidedly good news to have a public mea culpa from CETESB, after all these years of unfair use of such a long-criticised formula. It is expected that the effects of this technical investigation will now slowly spread to other Courts in and out of Santos until the application of CETESB's formula is definitively banished from court practice. The negative experience of this formula will then allow room for other criteria of assessment of environmental damage that may be more just. Hopefully, this is what the future holds, sooner rather than later.

Footnotes

1.Report, court file, folio 454. This conclusion immediately brings to mind what happened in the well-known precedent of the "PATMOS" case which was dealt with by the Italian Courts. In a sense, it must be noted that the Brazilian case went even farther than the Italian one. In Italy, likewise, there were two technical reports and the experts stated that where it was not possible to precisely appraise the damages they would supply the Court with the information necessary to reach a just evaluation. Because of that there was a widespread criticism that the conclusions reached by the said specialists were vague. In Brazil, on the contrary, the expert not only recognised the existing difficulties, but was courageous enough to recommend a symbolic figure, as this was found adequate in the circumstances.
2. Report, court file, folio 454.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.