Brazilian Government regulates requirement of prior regulatory impact analysis for normative acts issued by the federal public administration

On July 1, 2020, Decree No. 10,411 (“Decree”) was published, regulating the requirement of prior regulatory impact analysis (“RIA”) as set out in the Economic Freedom Act (Law No. 13,874/2019) and the Regulatory Agencies Act (Law No. 13,848/2019).
The Decree defines RIA as a “procedure of evaluation, based on the definition of a regulatory problem, prior to the edition of normative acts (…), which will contain information and data on their likely effects, to verify the reasonableness of the impact and to support the decision-making”.

This initiative is in compliance with the recommendations of the Organization for Economic Cooperation and Development (OECD), which determines the carrying out of an analysis at the beginning of the process of the creation of new normative acts, in order to identify the objectives, the needs and the different alternatives for determining which is the most efficient.

According to the Decree, the result of the RIA must be published in a report containing the following information:

• description of possible alternatives for addressing the identified regulatory problem, taking into consideration normative and non-normative solutions;
• exposure of the possible impacts of identified alternatives and regulatory costs;
• considerations regarding the submissions received in possible processes of social and interested parties’ participation;
• mapping of international experience regarding the measures adopted to solve the identified regulatory problem;
•  identification and definition of the effects and risks arising from the issuance, amendment or repealing of the normative act;
• comparison of the alternatives considered for the resolution of the identified regulatory problem, supported by a reasoned analysis with the specific methodology chosen for the case and for the achievement of the desired objectives; and
• description of the strategy to implement the suggested alternative, forms of monitoring and evaluation to be adopted and, when appropriate, evaluation of the need to amend or repeal existing regulations.

The RIA requirement does not apply to proposals for the edition of a decree or to normative acts to be submitted to the National Congress. Nor does it apply to acts of an administrative nature (the effects of which are restricted to the internal scope of the administrative body), acts intended to regulate specific situations, acts related to budgetary and financial execution, exchange and monetary policy, national security, as well as acts intended to consolidate norms without changing the merits. In the case of Federal tax and customs administration, the RIA applies only to normative acts which establish or modify an accessory obligation. The Decree also provides for other scenarios in which the RIA may be exempted, such as in cases of urgency or low regulatory impact, for example.

The related Decree also establishes the requirement of a regulatory result analysis (“RRA”), which aims to verify the effects resulting from the edition of normative acts. Moreover, the Decree establishes criteria for the choice of regulatory acts to be analyzed as well as the need to prepare and release a work schedule for the reviews to be performed by the federal administration bodies.

The requirement of carrying out a prior RIA enters into force on April 15, 2021 for the Ministry of Economy, regulatory agencies and the National Institute of Metrology, Quality and Technology (INMETRO), and on October 14, 2021 for the other federal administration bodies.

Demarest’s Tax, Infrastructure and Public and Regulatory Law practices are available for any clarifications on this and other related matters.