Public Civil Action

In June 2012, a Public Civil Action was filed by the Government Attorney's Office, requiring the company to cease traffic on federal highways in order not to damage public assets, the environment, and the economic order due to alleged excess weight. The restated amount on December 31, 2016, was BRL 1,604,607,348.02. Fibria filed an appeal against the injunction that prevented it from traveling on federal highways with alleged excess weight, in which it was successful, and presented defense regarding other issues pleaded in the action. The process is under investigation and the likelihood of loss is considered possible.

Administrative Tax Proceedings

In the first quarter of 2016, Fibria reported four relevant cases in its financial statements. All had favorable decisions (according to the explanatory notes published for the first quarter of 2016). It should be noted that in all proceedings, the discussion involved taxation of Income Tax and Social Security Contribution (IRPJ/CSLL) on Profit earned abroad, as follows:

• Infraction notice - IRPJ/CSLL - Fibria Trading International - Fine: BRL 101.5 MM; 

• Infraction notice - IRPJ/CSLL - Fibria Overseas Holding - No fine involved; 

• Infraction notice - IRPJ/CSLL - Newark - Fine: BRL 55 MM.  

In addition to these cases, Fibria obtained a final favorable decision in the case involving an isolated fine, assessed because the company had received an unfavorable decision on claims for compensation involving PIS/COFINS credits. The amount under discussion in this case amounted to BRL 56.8 million.

Environmental Lawsuits

The company has eight environmental proceedings based on similar legal facts and causes and that are considered relevant when taken together. Such proceedings are related to performance obligations, and, therefore, there are no defined values involved. The common object among the proceedings is licensing of plantations in the state of Espírito Santo and in the municipalities of São Luiz do Paraitinga, Taubaté, and Guaratinguetá, in the state of São Paulo. Licensing would depend on the development of an environmental impact study (EIS/EIA). These proceedings are not a result of illegal practices and are common among companies that develop forestry in Brazil.

Fibria is involved in ten environmental suits and procedures, which can be considered relevant when taken together. Of this total, seven are Civil Public Actions that question the licensing of eucalyptus forests in the states of São Paulo and Espírito Santo. There is also a Terms for Adjustment of Conduct (TAC) signed with the Public Ministry of the State of Bahia on 12/5/2011, through the Regional Environmental Prosecutor of the municipality of Teixeira de Freitas, as a result of partnership contracts entered into with owners of lands with environmental irregularities. The obligations undertaken by the company in this Terms for Adjustment of Conduct (TAC) totals BRL 12.5 million and all obligations assumed are being fulfilled.

The Infraction Notice filed in 2014, in the amount of BRL 1.5 million, by the environmental agency of Mato Grosso do Sul, which discussed the alleged discharge of effluents in the Paraná River exceeding the parameters established in legislation, was terminated and the amount of the fine reduced to BRL 56,000. There is an Infraction Notice, originated in 2015, in the amount of BRL 500,000, filed by the municipal environmental agency of Caravelas, (Bahia), questioning the operation of the Eucalyptus Wood Storage Terminal without proper authorization from the competent environmental agency. No significant new infraction notices were received in 2016.

Agreements

All agreements entered into by the company are included in the company's monitoring systems and are being fulfilled within schedule. No new TACs were signed in 2016.

MONETARY VALUE OF ENVIRONMENTAL FINES EN-29

MONETARY VALUE OF FINES (IN BRL THOUSANDS)¹

1 Only fines per process exceeding BRL 98 million were considered.
2 More information about pending cases per decision are available in the explanatory notes for 2016