A new Ibama procedure sets out requirements, deadlines and risks for those seeking to replace a fine with an environmental project carried out on their own account.
Ibama (the Brazilian Institute of the Environment and Renewable Natural Resources, the federal environmental agency) has issued Ibama Ordinance No. 163 of 14 August 2026. The rule was published in the Official Gazette of the Union on 17 August and is already in force. As a result, PAAP No. 01 now applies, a procedure that standardises the conversion of environmental fines under the direct modality.
Under this modality, the party charged itself prepares and carries out an environmental project instead of paying the fine. The project must have a cost equal to or greater than the amount of the fine to be converted.
What has changed in the conversion of environmental fines
Decree No. 6,514 of 22 July 2008 already provided for the replacement of the fine with environmental services. Ibama Normative Instruction No. 21 of 2 June 2023 also regulated the matter. However, there was no uniform roadmap for the conversion of environmental fines carried out by the charged party itself.
The charged party must now submit the project exclusively through Ibama’s Project Preparation System, known as Sispro. It must then attach proof of submission to the conversion application. In addition, the project must be at executive level, with targets, stages, a timetable, indicators and a budget.
The ordinance further requires three quotations from different suppliers for each item of expenditure, unless a justification is accepted by Ibama. Likewise, the charged party must appoint a technical officer in good standing with the relevant professional council.
The assessment follows a points system. Each parameter is scored 0, 1 or 2, and the final score may reach a maximum of 100. In practice, Ibama rejects a project with a final score below 70. Some requirements are eliminatory in nature, such as the total cost being equal to or greater than the fine.
The discount on the fine varies according to when the application is made. It reaches 40% where the application is filed together with the defence. On the other hand, it falls to 35% if the application is filed by the time of the closing submissions.
Who is affected
The rule applies to any individual or legal entity charged by Ibama that applies for conversion of the fine into environmental services. It is therefore of interest to companies facing administrative sanctioning proceedings or holding federal environmental fines. Ibama may, for example, allow more than one charged party in the same project.
The services accepted are those listed in article 140 of Decree No. 6,514 of 22 July 2008. The list includes the recovery of degraded areas, the protection of fauna and flora, and environmental education. It also covers basic sanitation, climate change mitigation and the management of conservation units.
The ordinance, however, requires technical and financial capacity. All costs of preparation, execution and monitoring are borne by the charged party, with no reimbursement by Ibama.
Important: the application does not guarantee approval. Ibama reviews the project and may reject it. In that event, the charged party has a single opportunity to resubmit it, within 15 days.
Deadlines and exceptions in the conversion of environmental fines
As a rule, the charged party submits the project together with the conversion application. If the project is not ready, it may request additional time from the adjudicating authority, which will grant 60 days.
The project’s term ranges from 90 days to 10 years, depending on the technical characteristics of the proposal. Once the project is approved, Ibama notifies the charged party. From that point, the party has 10 days to sign the Commitment Agreement for the Conversion of an Environmental Fine (TCCM). If that deadline is missed, the ordinance treats the case as a withdrawal, and the sanctioning proceedings resume their regular course.
The rule also sets out express prohibitions. Among the ineligible situations, it lists:
- private rural property without an active registration in the Rural Environmental Registry (CAR);
- redress of damage arising from the infringement itself;
- compliance with environmental licensing obligations;
- areas with indications of child labour or of labour analogous to slavery.
In other words, conversion does not replace the duty to redress the damage. The ordinance maintains that obligation in all cases, whether or not the application is granted.
What to do now
First, the charged company must choose the timing of the application. The higher discount depends on the application being filed together with the defence. Accordingly, the legal and technical analysis must begin immediately after the infringement notice.
Next, the effects of the TCCM should be assessed. Signature suspends the enforceability of the fine, but entails a waiver of the administrative appeal concerning the conversion application. In addition, the agreement constitutes an extrajudicial enforceable instrument. In other words, default leads to collection of the fine in full, with statutory increases. It also allows judicial enforcement of the obligations.
Finally, it is worth planning execution through to completion. Conversion is only finalised when Ibama approves the physical and financial execution of the project. In the meantime, the charged party must submit monitoring reports and keep the original supporting documents for 10 years.
The conversion of environmental fines may reduce cash outlay and turn the penalty into a concrete environmental outcome. At the same time, the decision requires a prior calculation of costs, deadlines and waivers. To assess your case, contact the team at Moraes de Freitas Advogados.
Conversion of an Ibama fine may be a sound choice, but it requires careful analysis of costs, deadlines and waivers before any application is made. See the firm’s monitoring of changes in environmental and business legislation.