Limits of judicial intervention in the conversion of environmental fines: STJ assigns Repetitive Theme No. 1447

The Superior Court will decide whether the Judiciary may order the substitution of an environmental fine by alternative measures, or whether this prerogative belongs exclusively to the environmental agency

On May 26, 2026, the First Section of the Superior Court of Justice (“STJ”) assigned to the repetitive appeals regime (Arts. 1,036 to 1,041 of the Code of Civil Procedure) the controversy regarding the conversion of environmental fines into service obligations, registering it as Repetitive Theme No. 1447. The delimited question is “[t]o define whether the substitution of a fine imposed for the commission of an environmental administrative infraction by alternative measures falls within the exclusive scope of the environmental agency’s discretion, with the Judiciary being limited to exercising only a legality review of such administrative act.”

The conversion of environmental fines into service obligations may be carried out in the (i) direct modality, with the implementation by the sanctioned party of services of preservation, improvement, and recovery of environmental quality, or (ii) indirect modality, with adherence to a project previously selected by the federal body that issued the fine.

The Precedent Management Commission of the Court selected as representative of the controversy REsp 2,225,938/DF, REsp 2,225,936/AC, and REsp 2,226,575/RR, all under the rapporteurship of Justice Paulo Sérgio Domingues[1].

In the affected lawsuits, IBAMA appeals panel decisions of the Federal Regional Court of the 1st Region (“TRF-1”) that ordered the judicial conversion of environmental fines based on criteria such as proportionality and the financial vulnerability of the sanctioned party. IBAMA alleges violation of Art. 72, § 4, of Federal Law No. 9,605/98[2] and Arts. 141 to 148 of Federal Decree No. 6,514/2008[3], arguing that conversion is an administrative faculty, and not a subjective right of the sanctioned party.

On the other hand, there are precedents from the TRF-4 and from the STJ itself signaling that the conversion of fines falls within administrative discretion, and that the request must be made through the administrative channel, under penalty of preclusion.

Opinion of the Federal Public Prosecutor's Office on the matter

In Opinion No. 550/2026, submitted on July 28, 2026, the Federal Public Prosecutor’s Office (“MPF”) opined in favor of granting IBAMA’s appeal, on the grounds that the discussion does not concern the non-excludability of legality and proportionality review, but rather whether the Judiciary may substitute the administrative sanction based on factual issues such as financial vulnerability or low harmfulness. The MPF argued that the recent case law of the STJ’s Second Panel (AgInt in REsp 2,243,094/MG; AgInt in REsp 1,948,085/PE) is emphatic in holding that the substitution falls within the scope of discretion, and the Judiciary may not interfere with the administrative merits.

Although the federal prosecutorial body acknowledged the disproportionality of the fine in the specific case, it concluded that the trial court judgment (which reduced the fine) acted within the limits of legality review; whereas the TRF-1 panel decision (which ordered the conversion of the fine into service obligations) exceeded those limits. In conclusion, the MPF proposed the establishment of the thesis with the following wording: “[t]he definition of the penalty to be imposed for the commission of an environmental administrative infraction falls within the scope of the environmental agency’s discretion, with the Judiciary being limited to exercising only a review of its legality and proportionality.”

Briefs of the Federal Public Defender's Office

In briefs submitted on August 3, 2026, the Federal Public Defender's Office ("DPU") proposed a thesis that recognizes the judicial reviewability of the denial of conversion, while preserving the technical competence of the environmental agency.

DPU argues that the competence under Art. 72, § 4, of Federal Law No. 9,605/98 is discretionary as to the means, but bound as to the purpose of environmental recovery. Thus, when the fine serves the legal purpose less effectively than service obligations, it understands that there is a deviation from the sanctioning purpose, and emphasizes that the backlog of unpaid fines exceeds BRL 20 billion (with effective collection below 5%), whereas conversion produces an obligation to act with measurable results. The DPU invoked STJ precedents on the breadth of review of acts that restrict rights (AREsp 1,806,617/DF), the requirement of contemporaneous reasoning (AREsp 1,108,757/PI), and review not limited to formal aspects in sanctioning matters (MS 13,083/DF).

DPU proposed the following thesis: "(a) It is not for the Judiciary to substitute the environmental agency in defining and executing the recovery project; (b) it is for the Judiciary to review the legality of the denial of conversion, including as to the reasoning (specific, technical, and contemporaneous); (c) upon finding an omission, generic reasoning, or arbitrariness, the Judiciary may order the conversion, referring to the environmental agency the definition of the project; and (d) where socioeconomic vulnerability is demonstrated, there is a reinforced duty of technical reasoning for the denial."

Immediate effects and practical impacts

With the assignment, it was ordered the stay of all lawsuits on the matter in which a special appeal or an interlocutory appeal in a special appeal has been filed, including those pending before the STJ. The STJ's decision will have binding effect (Art. 927, III, CPC) and will impact pending judicial actions seeking the conversion of environmental fines.

Possible scenarios

Depending on the thesis to be established, the outcome of the judgment will redefine the limits of the Judiciary's action vis-à-vis administrative decisions on conversion of environmental fines into service obligations, with direct repercussions on the conduct of environmental agencies during the exercise of their administrative police power and on the procedural strategy of sanctioned parties:

Pursuant to Art. 1,037, § 4, of the CPC, the suspension of the lawsuits shall remain in effect for a maximum period of one year, after which the appeals shall resume processing if the repetitive theme has not been adjudicated. Considering that the assignment was formalized on May 26, 2026, the judgment should occur, in theory, by May 2027.

Entities with environmental activity, business associations, and civil society organizations with an interest in the definition of the thesis may request admission as amicus curiae as long as the judgment has not commenced, pursuant to Art. 138 of the CPC.

[1]According to available records, there are currently approximately 42 cases pending before the STJ addressing this issue, in addition to 6 panel decisions and more than 350 single-justice decisions on the matter.

[2]Art. 72. Administrative infractions shall be punished with the following sanctions, subject to the provisions of Art. 6: (…) § 4. A simple fine may be converted into services of preservation, improvement, and recovery of environmental quality.

[3]Art. 141. Conversion of a fine for the repair of damages arising from the infractions themselves shall not be permitted. Art. 142. The sanctioned party may request the conversion of a fine as provided in this Section until the time of its submission of final arguments, in the form established in Art. 122. Art. 142-A. The sanctioned party, when requesting the conversion of a fine, shall choose between: [omitted]. Art. 143. The cost value of the services of preservation, conservation, improvement, and recovery of environmental quality shall be equal to or greater than the value of the converted fine. [Omitted]. Art. 144-A. The request for fine conversion in the modality provided for in item I of the heading of Art. 142-A shall be accompanied by the project, in accordance with the guidelines established by the federal body that issued the fine. [Omitted]. Art. 145. The adjudicating authority shall, in a single decision, rule on the infraction notice and the request for fine conversion at the time of ruling on the infraction notice. [Omitted]. Art. 146. In the event of a decision favorable to the request, the parties shall execute a commitment agreement, which shall establish the terms of the sanctioned party's obligation to the object of the fine conversion for the duration of the execution of the approved project or its share in the project chosen by the federal body that issued the fine. [Omitted]. Art. 147. Summaries of the commitment agreements executed shall be published in the Official Gazette. Art. 148. The federal body that issued the fine shall define the guidelines and criteria for the projects referred to in this Section and the form of monitoring and oversight of the execution of services rendered as a result of the fines to be converted.