New sanitation framework: sanction and vetoes by the President of the Republic

On Wednesday (15), the President of Brazil sanctioned Legislative Bill No. 4,162/2019, which establishes the new “Sanitation Legal Framework”. In the resulting approved text, certain important provisions have been maintained, such as goals for universalization of basic sanitation, the review of services level regarding quality and performance, reassessment of program agreements, the deadline for the closing of open dumps and the establishment of competence of the National Water Agency (ANA) to provide guidelines on sectoral regulation.

However, the Brazilian President vetoed some provisions. The main points vetoed are the following:

Article 14, paragraphs 6 and 7: The Article deals with the amendment of the program agreement/concession agreement, resulting from operations to change control of state-owned sanitation companies. The veto fell on the paragraphs dealing with the rules of indemnity on investments and assets, in cases where the public entity expresses its denial to the amendment of the agreement.

Article 16, main section and sole paragraph: the clause regulated the renewal and formalization (in cases of absence of a solid instrument) of program agreements, by reviewing provisions under the new legislation, within a maximum period of 30 years. The veto of the entire Article eliminates the chances of maintaining program agreements. In addition, the Brazilian Presidency’s understanding is that this item would “excessively” prolong the current situation, “in order to postpone solutions to the environmental and public health impacts, caused by the misuse of basic sanitation and by inadequate management of the urban cleaning and solid waste management”.

Article 20: the Article had provided for specific rules regarding water supply and sewage service. According to the veto, this provision would break the equality between basic sanitation activities, negatively impacting competition between those interested in provision of the services, in addition to making the investments less attractive.