by Daniel Almeida Stein and Amanda Salgado e Carvalho

Two new decrees were recently issued to regulate the Sanitation Legal Framework: Decree No. 11,466 and Decree No. 11,467, both of April 5, 2023. Only the latter covers solid waste, dealing with the regionalized provision of public basic sanitation services, technical and financial support and the allocation of public funds in the sector.

We highlight two points of Decree No. 11,467/2023 that amend and regulate the new framework and seem to us essential to the provision of public solid waste services: 1. More flexibility in contracting municipal solid waste (MSW) services; and 2. Uncertainty about the regional nature of service provision by voluntary intermunicipal public consortia.

Regarding the first point, under the new framework the delegation of public solid waste services is restricted to concession contracts following a prior tender. This would therefore be the only alternative for municipalities if direct provision of the services were not feasible. In addition to affecting the common instrument of program contracts, this measure aimed to eradicate irregular forms of service provision.

Contrary to the legal guideline, the decree began to allow “third parties” to be contracted for “certain activities”, under the Public Procurement and Administrative Contracts Law or the State-Owned Companies Law (article 2, §1). From the legal text, whose wording is abstract and full of gaps, it appears that on this point the decree seems to contradict the very spirit of the law that amended the legal framework.

Moreover, it creates legal uncertainty for at least two main reasons: (1) it alters the legal premise restricting the contracting of activities; and (2) it fails to define exactly which “certain” basic sanitation services and activities may be contracted to third parties by the holder, and in which cases such a provision would be authorized.

In this regard, the challenges faced by municipalities in adapting to the new framework’s requirements of direct provision or provision through concession are undeniable. However, it would have sufficed for the decree merely to set a temporary transition period to this new legal regime, during which third parties could be contracted.

The second point concerns public consortia, or intermunicipal consortia, which were not included in the list of regional provision options in article 3, item VI of the law that established the new Basic Sanitation Legal Framework.

The new Decree No. 11,467/2023 regulated regionalized provision, merely indicating indirectly that intermunicipal consortia are associated management structures to be considered by the states and the Federal Government when establishing metropolitan regions and regional units, respectively, so that the municipalities involved form part of the same regionalized provision structure, without prejudice to the inclusion of new municipalities.

At the same time, the decree provides that, until the Federal Government issues the resolutions of the Interministerial Committee on Basic Sanitation (Cisb), responsible for establishing the reference blocks, cooperation agreements and intermunicipal consortia will be considered regionalized provision structures, provided that the State has not approved any of the laws relating to regional arrangements.

As a result, the decree seems to create legal uncertainty, since, while recognizing the role of voluntary consortium arrangements in regionalized provision, it makes this recognition conditional on a possible legislative omission in establishing regional arrangements.

However, despite the possible disregard of the regionalized provision nature of voluntary consortia, the decree seeks to push municipalities to join intermunicipal arrangements by prohibiting the inclusion of municipalities in public basic sanitation service concessions in tender processes that have already been approved, under the rule in §18 of article 6. It remains to await practical experience to see how much this rule contributes to encouraging voluntary regionalized provision.

Article originally published on the Consultor Jurídico portal (in Portuguese), on 05.06.2023