On June 18, 2020, Normative Ruling No. 7 of the Chico Mendes Institute for Biodiversity Conservation ("ICMBio") was published, which regulates the administrative procedures for the execution of Environmental Compensation Commitment Terms ("TCCA") related to the expected compensation for the licensing of projects with significant environmental impact (Article 36 of the SNUC Law - Federal Law No. 9,985/2000).
Normative Ruling No. 7 regulates the two ways to fulfill the environmental compensation: execution of the deposit in a private fund created by an official financial institution selected by ICMBio of an amount determined by the licensing agency in the Environmental Compensation Fund ("FCA"), and direct execution in which the entrepreneur directly implements the compensatory measures.
Although they are disciplined in different ways, the general procedures are common to both modalities. Necessary, in both cases, is the opening of an administrative case records of environmental compensation, as well as the monetary update of the amount and the entrepreneur's communication to choose between the two modalities. After the submission of the necessary documents by the entrepreneur, ICMBio will send the TCCA to execution.
With regard to the method of execution to deposit in the FCA, the entrepreneur must submit, together with his statement regarding the TCCA, his disbursement schedule, which must indicate the number of installments and the distribution of the amount over time, up to no more than five years.
In case of the direct execution modality, the ICMBio General Coordination will prepare an Environmental Compensation Work Plan ("PTCA") that will describe the activities to be implemented, as well as its execution schedule, which should have a maximum term of 60 months.
In summary, we understand that the normative ruling facilitates and makes the procedure for complying with environmental compensations for projects with significant environmental impact more transparent, establishing clear and predefined rules to be followed by entrepreneurs and ICMBio.
Originally published by Mayer Brown, July 2020
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