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Manuela Demarche

Trench Rossi Watanabe, São Paulo

manuela.demarche@trenchrossi.com

 

Luiza Ramos

Trench Rossi Watanabe, São Paulo

luiza.ramos@trenchrossi.com

Access to sanitation is still a major problem in several regions of Brazil. Currently, 35 million inhabitants do not have access to treated water and more than 100 million live in households which are not connected to the sewage system. This shocking state of affairs contributes to public health crises and generates vast social inequality. The lack of adequate sanitation has had an even more direct impact on public health following the outbreak of the Covid-19 pandemic.

Brazil’s New Sanitation Law is therefore extremely important in aiming to improve sanitation across country, as well as encouraging increased investment in the sector, and improving water supply and sewage service coverage. It is important to highlight that in Brazil, basic sanitation encompasses the supply of drinking water, sanitary sewage, as well as the proper handling and disposal of waste and the management of rainwater.

In this regard, despite being a subject of common interest among states, local government authorities and the Union, the constitutional definition of the federation’s entities which hold basic public sanitation services has become a challenge for a legal framework drafted through Federal Law. The New Sanitation Law is defines the holders of public basic sanitation services (Services Holders), as:

• Municipalities and the federal district, in the case of services of local interest, which means when infrastructures and operational facilities serve a single local government authority; or

• The states, together with the municipalities, when there is sharing of operational facilities in metropolitan regions, urban conurbations and micro-regions, instituted by a complementary state law for common interest, in order to guarantee centralisation and quality of regulation.

Nevertheless, the matter of ownership of basic sanitation services has the potential to generate considerable controversy between states and certain local government authorities, considering that there is common interest in the subject. In other words, an overlapping of rules may arise, leading to potential resistance of local government representatives who are not interested in definitions for sharing ownership of basic sanitation services. This, of course, depends on political factors and the specific situation.

This challenge is also present in the scope of environmental licensing water and sewage treatment-related activities. Local government authorities have the independence to legislate on the subject, when dealing with activities that cause local impact. It is therefore necessary to create standard rules to create stability to contracts for the provision of these public services.

In parallel, the formulation of the ‘reference standards’ to be followed on a formal voluntary basis by the regulatory authorities held by the Service Holders is within the remit of the National Water and Basic Sanitation Agency (ANA). This body has the authority under a special regime, with administrative and financial autonomy, linked to the Ministry of the Environment.

The reference standards aim to: stimulate cooperation between federal entities with a focus on universal standardisation and low tariffs; promote the regionalisation of service provision; and establish criteria which limit the duplication of administrative or managerial costs to be paid by the end user.

Furthermore, the ANA has the responsibility to guide service providers, local regulatory agencies and service providers. The body also takes on responsibility for preparing technical studies, guides and manuals, as well as promoting human resource training. In this context, it is interesting to observe how the ANA’s regulations will be made compatible with the resolutions of the National Environment Council (CONAMA) which regulate quality standards and the discharge of effluent and also the water courses where the effluent ends up.

The main guidelines of the New Sanitation Law involve:

• Restructuring the ANA, assigning responsibility for implementation and regulation of reference standards for the public sanitation services, as well as supervision of compliance with those standards.

• Achieving universal access by December 2033, ensuring that 99 per cent of Brazil’s population has access to drinking water and 90 per cent to sewage services; depending on the circumstances, the term may be extended to 2040.

• Stimulating the competitiveness and efficiency in the provision of basic sanitation services, indicating that such services provided by third parties must be formalised by entering into a concession contract and prior bidding, prohibiting new programme contracts.[1]

• Possibility of programme contract renewal or formalising de facto situations for a 30-year period, provided companies commit to the new quality and universal standardisation.

• Possibility of forming blocks of local government authorities to provide services to third parties, allowing less viable locations to combine, enabling private investments.

• Environmental licensing, necessary for undertakings related to water and sewage treatment, usually issued by local government authorities (local impacts), and changes to the National Solid Waste Policy, extending deadlines for closing landfills. All ANA quality parameters must be compatible with Ministry of the Environment rules.

It is also important to mention the allocation of federal resources and financing with the Union’s resources, which was widely debated during the approval of the New Sanitation Law. It was decided that the contribution of the Union’s resources will depend on compliance with the reference standards issued by the ANA. Therefore, in practice, the ANA now has the role of a national regulatory agency, albeit indirectly, as local agencies and holders of sanitation services will have to copy and follow reference standards. In other words, the new law will allow for greater competition, removing control in the provision of such services away from public authorities.

Regarding environmental aspects involving water supply and sewage treatment, it is important to highlight that Complementary Law No 140/2011 provides for cooperation between the Union, states and local government authorities in administrating environmental licensing.

Based on this rule, it was decided that the local government authorities are responsible for licensing undertakings that cause or may cause an environmental impact at the local level. States have residual licensing responsibility, covering what is out of the Union’s and local government authorities’ scope.

In this sense, small sanitation works, in principle, will be licensed at the most local level. Larger works, such as the implementation of waste water treatment plants, which must necessarily dispose of the treated effluent, will probably end up being the states’ responsibility and, eventually even the Union, depending on the significance of the water course into which the treated water is released.

Furthermore, the environmental licensing of sanitation projects will have priority over other processes being undertaken by the same environmental agency. Also, despite the new Sanitation Framework’s focus on water and sewage services, this law also updates regulations relating to urban cleaning and solid waste management services.

The New Sanitation Law also establishes changes to the National Policy on Solid Waste (Federal Law No 12,305/2010), in particular regarding the deadline for closing landfill sites. According to this new law, environmentally appropriate final disposal of waste (‘tailings’) must be implemented by 31 December 2020. In the case of local government authorities, deadlines depend on when they have developed an inter-municipal solid waste plan or a municipal solid waste management plan and have collection mechanisms that guarantee economic and financial sustainability. The following deadlines were therefore identified:

• 2 August 2021, for capitals of states and local government authorities which are part of the Metropolitan Region (RM) or the Integrated Region of Development (Ride) of capitals.

• 2 August 2022, for local government authorities with populations greater than 100,000 in the 2010 census, as well as local government authorities whose urban area of ??the municipal headquarters is located less than 20 kilometres of the border of a neighbouring country.

• 2 August 2023, for local government authorities with populations of between 50,000 and 100,000 in the 2010 census.

• 2 August 2024, for local government authorities with populations of less than 50,000 in the 2010 census.

Regarding the universal standardisation waste management goals, there is already an environmental licensing trend towards environmental authorities imposing conditions to fulfil the National Policy on Solid Waste through implementing a take-back system. The idea is to incorporate procedures by which it is possible to collect different types of waste, products and packaging post-consumption, for reuse, recycling or environmentally appropriate final disposal. Such mutual actions will contribute to the closure of dumps and the reduction of waste to landfill, therefore increasing the useful life of the waste.

Another innovation established by the New Sanitation Law is that in cases where disposing waste in landfill is economically unfeasible, other solutions that observe technical and operational standards established by the relevant body might be adopted, in order to avoid damage or risks to public health and safety while minimising the environmental impact.

It is also worth noting that the New Sanitation Law in Brazil provides that fees from the provision of urban cleaning and solid waste management services will take into account the appropriate destination of the collected waste and the income level of the population in the local area, either individually or in total. Sanitation service providers will therefore have the right to charge users, as soon as the necessary infrastructure is made available for the collection of water and sewage in a given location. For this reason, the approval of the New Sanitation Law is seen as a factor which increases the attractiveness of infrastructure projects in Brazil, as it has improved the quality of regulation in the sector and provided greater legal security.

There are nevertheless, still a number of significant challenges in the implementation of Brazil’s new Sanitation Framework. This is mainly because the ANA is still defining the necessary standards and unfortunately does not yet have a robust structure to meet all the imposed obligations.

According to the ANA’s timetable, priority topics, expected to be discussed by the end of 2022 include: (1) quality and efficiency standards; (2) fees and fares; (3) standardisation of contractual instruments; (4) universal standardisation goals; (5) regulatory accounting; (6) reduction and control of leaks; (7) investment indemnities; (8) governance of regulatory bodies; (9) reuse of effluent; (10) expiration parameters; (11) system replacement goals; (12) evaluation systems; and (13) minimum content for universal provision and for economic and financial sustainability.

In view of the above, it will be essential to monitor the development of the ANA’s reference standards, as well as improve its structural organisation, so that basic sanitations can be implemented effectively.

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