New Legal Framework for Basic Sanitation – National Guidelines (Part I)

The New Legal Framework, in turn, is established in the legal system with the main purposes of universalization until 2033 and qualification of the provision of services in this sector.

Law nº 14.026 / 2020 changed Law nº 11.445 / 2007 in many points, sanctioned thirteen years ago as a regulatory framework for the basic sanitation sector, from the junction of projects that were being processed in the Legislative Branch, with the expectation of an increase in legal security. between related parties and the attraction of new investments.

The New Legal Framework, in turn, is established in the legal system with the main purposes of universalization until 2033 and qualification of the provision of services in this sector. Thus, it aims to standardize rules, define standards for regulatory activity and increase competition, and the opening of bids is mandatory.

A priori essential to delimit the context of the normative changes to the legal definition of basic sanitation (art. 3, I, Law nº 11.445 / 2007), which covers the set of public services, infrastructures and operational installations for the supply of drinking water, since the capture up to building connections and their measuring instruments; sanitary sewage, including collection, transportation, treatment and final disposal; urban cleaning and solid waste management, covering the activities of collection, manual and mechanized sweeping, urban cleanliness and conservation, transport, transhipment, treatment and final destination; and drainage and management of urban river waters.

The provision of services related to this space of activities obeys guidelines based on fundamental principles (art. 2, Law nº 11.445 / 2007) divided into the following thematic axes:

(1) Universalization: access by the population, availability, regularity, continuity, concurrent provision of water supply and sanitation;

(2) Effective service provision: effectiveness of actions and results, efficiency, economic sustainability, R&D, security, quality, regularity, integration of infrastructure and services;

(3) Regionalized service provision: attention to local and regional peculiarities;

(4) Governance: transparency, social control, institutionalized decision-making processes, competitive selection of service providers;

(5) Protection: public health, conservation of natural resources, protection of the environment, security of life and property;

(6) Public policies: articulation with those for which basic sanitation is a determining factor, efficient management of water resources, stimulating the rationalization of consumption, promoting energy efficiency.

The provision of this public service depends on the signing of concession contracts, by means of a prior bidding process, with the possibility of signing program contracts, agreements, partnership terms or the like (art. 10, Law no. 11,445 / 2007). The concession contracts must contain, in addition to the essential clauses already provided for by law (art. 23, Law No. 8,987 / 1995), other specific ones regarding the goals of expansion, quality and efficiency in the provision of the service; risk-sharing between contracting parties; alternative recipes for the production of reused water; and calculation methodology for indemnities for reversible assets in the event of extinction of the contract (art. 10-A, Law 11,445 / 2007).

The validity of these contracts depends, among other legal requirements (art. 11, Law nº 11.445 / 2007), on the proof through study of the technical, economic and financial feasibility of the provision of services and the existence of goals and timetable for universal basic sanitation.

Legislation gave special importance to these goals, as they represent a mandatory clause, constitute a condition of validity and even in contracts signed prior to the New Legal Framework, alternatives must be sought to achieve the universalization goals (direct provision, complementary bidding or amendment of contracts already bidding).

The party contracted for the provision or concession of public basic sanitation services will need, including for the contracts in force, to prove the economic-financial capacity (own resources or debt contracting), in order to make it possible to achieve the goal of universalization by 2033 ( Article 10-B, Law No. 11,445 / 2007). In this sense, the legal text provides for regulation of the methodology inherent to this proof to occur within 90 days. To this end, the Ministry of Regional Development opened a public consultation on 7/29/2020 in order to collect contributions to elaborate the referred methodology, which will be succeeded by a public hearing to discuss the theme (Ordinance / MDR nº 2.069).

In addition, as for service providers, the New Legal Framework stipulated the obligation to maintain an accounting system that separately demonstrates costs and revenues for each municipality or region served (art. 18, Law No. 11,445 / 2007) and the possibility of sub-delegating the object of the contract up to the limit of 25% of its value, provided that there is a contractual provision or express authorization from the holder of the services, also depending on technical evidence and other legal requirements (art. 11-A, Law 11,445 / 2007).

By: Wilson Sales Belchior