Article originally published by Agência Infra

On July 12, Decrees 11,598/2023 and 11,599/2023 were edited, which revoked Decrees 11,466/2023 and 11,467, published in April. The purpose is to regulate legislation due to urgent issues, incorporated into the Sanitation Framework by Law 14,026/2020. Two aspects need to be highlighted.

The first is that the regulatory process is not over. The Basic Sanitation Framework (Law 11,445/2007), as taught by the best technique, was regulated by only one act: the
Decree 7,217/2010 – the regulation process consumed forty months of debates and negotiations, generating a consensual text of high technical quality.

However, due to the changes promoted by Law 14.026/2020, Decree 7.217/2010 is outdated and needs to be replaced – so a new decree must be prepared throughout this and next year, verifiable publication in 2025. However, there were issues that did not could therefore wait for the issuing of the decrees mentioned at the beginning.

On the other hand, through debates and studies, the ANA (National Water and Basic Sanitation Agency) is developing eleven reference norms, which will govern fundamental aspects of basic sanitation. Therefore, the coming years will be filled with much debate and, furthermore, the decrees of July 12th do not end, they are only part of the process at the beginning.

The second aspect is that the published decrees did little to change the previous ones. Decree 11,598/2023 practically reproduces Decree 11,466/2023, and Decree 11,599/2023 does the same in relation to Decree 11,467/2023. This text analyzes these small but relevant changes, which can be summarized in four themes: (i) proof of economic and financial capacity; (ii) provisional contracts; (iii) regionalized direct provision; and (iv) isolated exercise of ownership by Municipality that is part of a regionalized provision structure.

With regard to proving the economic and financial capacity of the provider to meet the universalization targets, the reopening of the deadline was maintained, whose objective is to repair the damage caused by the delay in the publication of Decree 10,710/2021, of May 31 of that year, more eight months after the deadline established by law.

Proof, as in the April decree, continues to cover the entire area of service provision, not just that disciplined by contract - thus, the effective economic and financial reality of the provider will be evaluated, which cannot be reduced to just a sample, a practice that distorted the results.

In this matter, the essence of the April decree was maintained, and the changes boil down to two: (i) the application to be submitted by the provider by December 31, 2023 may provide for other instruments, not just contracts (art. 10, caput , II, of Decree 11.598/2023) and also (ii) that proof is not a requirement, but – as provided by law –, a condition for the effectiveness of the instruments of delegation of the provision of services or their amendments.

In summary: the contracts and other instruments are valid, and amendments can be entered into at any time, however, in some cases, the effects depend on the provider obtaining proof of the economic and financial capacity to meet targets.

The themes of provisional contracts (provided for in art. 11-B, § 8, of Law 11.445/2007), and regionalized direct provision (which is based on the Constitution, as interpreted by the Federal Supreme Court) received identical treatment: it was its regulation by federal decree is excluded.

This implies that each holder, or entity that exercises ownership (as, for example, metropolitan regions, urban agglomerations and micro-regions), will be free to regulate these forms of service provision and, furthermore, how, in these situations, the federal legislation, in particular the principle of universalization.

Decrees 11,466/2023 and 11,467/2023, which were revoked in July 2023, provided that the provisional contract and the regionalized direct provision should be formalized and meet other requirements, such as the incorporation of targets, and, based on the principle of universalization, also provided that they were conditioned to proof, by the service provider, of economic and financial capacity to meet the targets.

These texts were suppressed, that is, they do not appear in Decrees 11,598/2023 and 11,599/2023. However, it does not mean that holders or regionalized provision structures can freely use, and without observing any conditions, the institutes of the provisional contract or direct provision. The local discipline that may be adopted, although no longer linked to a federal model, must clarify how the provisions of federal legislation, especially regarding universalization, will be met in each of these cases.

It should be added that the direct provision was the subject of an opinion by the AGU (Attorney General of the Union), accompanied in its conclusions by an opinion of the Attorney General of the Republic, 

issued within the scope of the Direct Action of Unconstitutionality 7.335-PB – both manifestations are for the filing of the action. in accessing federal resources or, even, in receiving federal support in modeling public-private partnerships.

Finally, the new decrees provide that, if the municipality intends to exercise ownership in isolation, in addition to authorization from the governance structure to which it is integrated, it will also be necessary for state legislation to provide for the possibility of this authorization. In other words: the decrees of July 2023 understand that the decision of the state legislator, to implement regionalization, implies the necessary joint action of the municipalities, unless the same legislator has also foreseen the possibility of a municipality that is part of the regionalization to exercise isolated action.

Almost all state legislation on regionalization provides for the isolated exercise of ownership by municipality, as long as it is authorized by the inter-federative collegiate. Incidentally, isolated provision is common in regional arrangements, as is the case of the Metropolitan Region of Rio de Janeiro which, in terms of water and sewage, has six different providers. From the final table, the main consequence is that there was a pacification of the basic sanitation sector, removing the political turbulence that surrounded it in the first half of 2023. There is a consensus that investments are necessary and should be encouraged, whether public or private. they private. And that, from now on, the issues still deserve debate, not least because the debate is natural to democracy and scientific evolution. However, the debate is technical and constructive.

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