Publications

Category: Environmental

Decree 65,486/21, published on January 22, regulates the environmental clearing procedure for activities causing significant environmental impact in the State of São Paulo, as provided for in article 36 of Federal Law No. 9,985/00. The instrument, among other measures, raises environmental compensation to the degree of mandatory conditioning in environmental licensing of ventures, works or activities with significant impact, in procedures under the jurisdiction of the state entity.

The standard established as a duty of the Environmental Company of the State of São Paulo (Cetesb), in the procedures for issuance of an installation license (LI), the establishment of an amount for environmental clearance, based on the degree of environmental impact identified in the EIA/Rima. The agency will also point out the conservation units (UCs) affected by the activity or venture.

For the issuance of a Prior License (LP), the decree imposes as a condition mandatory execution of an Environmental Clearance Commitment Agreement (TCCA), an extrajudicially enforceable instrument the fulfillment of which will constitute a condition for obtaining and validating the LI of the activity, work, or venture.

The requirements established by the Law on the National System of Conservation Units (SNUC), as a minimum limit of 0.5% of the total costs foreseen for the implementation of a work or venture in the transfer of funds intended for environmental clearance, must be observed. To grant the license sought, it is also necessary to obtain authorization from the body responsible for managing the conservation unit directly affected by the work or venture.

The São Paulo decree also reinforced the action of the Environmental Clearance Chamber (CCA), the body in charge of the analysis, proposal, regulation, and application of funds aimed at environmental clearance, detailing its competencies and drawing the limits on its operation.

Decree No. 64,132/19 had already established the CCA as part of the structure of the Bureau of Infrastructure and Environment of the State of São Paulo, but prescribing the analysis of and proposal for application of funds from environmental clearance as its only competencies.

An important way to instrumentalize environmental compensation measures, the CCA is a joint body composed of members from the public sector and civil society, under the coordination of the Deputy Secretary for Infrastructure and the Environment. In addition to the duty already mentioned to analyze and propose the application of the funds from environmental clearance, Decree No. 65,486/21 invested the CCA with the duties of:

• Indicating the UCs benefited by the funds for this purpose;

• Stipulating the percentage of funds for clearance that will fall to each UC, either by authorizing the transfer of funds from the entrepreneur to the UCs benefited, or by making their application compatible;

• Preparing standard instruments for Environmental Clearance Discharge Agreements and Environmental Clearance Commitment Agreements, in addition to advertising the execution and fulfillment thereof;

• Reviewing proposals for application of environmental clearance funds arising from the managing bodies of the UCs;

• Establishing the actions to be carried out with the funds from environmental clearance in the UCs established by the State.

In addition to giving greater effectiveness to the CCA, the standard revokes Decrees No. 60,070/14, 60,919/14, 62,451/17, and 62,672/17.

Category: Tax

Following in the steps of what was inaugurated in the federal sphere, the State of São Paulo published, in October, Law No. 17,293/20, which, among other measures, instituted tax settlement at the state level, allowing consensual resolution of disputes related to debts registered as outstanding debt.

To regulate tax settlements, the State Attorney General's Office issued Resolution PGE-27/20 and Ordinance SUBG CTF-20/20, in force since the end of last year. The purpose of both rules was to establish objective and transparent criteria for entering into settlement, as well as for ranking the credits of taxpayer-debtors in order to ascertain their situation and calculate possible discounts for each specific case.

In general terms, and without prejudice to the peculiarities of each case, settlements in São Paulo and federal settlements have four fundamental differences:

1. While the federal arrangement provides for three modalities (asset-debt settlement, litigation settlement, and small-claims settlement), the state arrangement provides that only debts registered as outstanding debt can be subject to settlement.

2. State settlements allow the granting of discounts (although less significant) also for debts classified as A and B (debts with maximum recovery capacity), while the federal arrangement only admits settlements for outstanding debt referring to debts classified as irrecoverable or difficult to recover (C and D). It also adopts as criteria for granting discounts not only the degree of recoverability of the debt according to the criteria it specifies, but also the chances of success of the litigation.

3. State settlements allow the use of amounts deposited in court to reduce the amount of the debt to be settled.

4. The state legislation defines, even if it does not use this expression, a contumacious debtor, in relation to whom settlement shall not be admitted (Article 47, IV, of the Law “Settlements are prohibited that: (...) involve a debtor of the Tax on the Circulation of Goods and Services of Intermunicipal and Interstate Transport and Communication - ICMS that, in the last five (5) years, present a default of fifty percent (50%) or more of its obligations due"). Federal settlements, on the other hand, provide that settlement with contumacious debtors shall not be admitted, but does not define them. Until such time as there is such a definition, it is believed that this specific restriction does not apply in the federal sphere.

With the due peculiarities, discount on the amount of fines and interest, installment payment of debts, deferment of payment, or moratorium is allowed, in addition to the possibility of settlement on issues linked to guarantees. The use of court-issued registered warrants (precatórios) as a means of offsetting debts owed, on the other hand, is not allowed.

The classification of tax debts to be settled is done according to the following criteria, expressly provided for by law: guarantee, payment history, age of the debt, economic capacity, tax risk, and collection costs. On the basis of the analysis of these criteria, the tax debts to be settled will be divided into the following categories (rating): "A" (maximum recoverability), "B" (average), "C" (difficult), and "D" (irrecoverable).

That is, tax debts will be classified according to their recoverability, but will be eligible for settlement in any of the existing categories. The benefit to be granted is inversely proportional to the rating: the higher the rating, the lower the benefit.

Ratings will be differentiated by the tax to be settled, unlike in the federal sphere, where the rating is uniform. An example is the ICMS (Tax on Circulation of Goods and Services) taxpayers, which will have more specific criteria for classifying tax debts when compared to ITCMD (Causa Mortis and Estate Tax). The objective is to increase the collection of funds considered irrecoverable.

Paragraph 3 of article 54 of Law No. 17,293/20[1] establishes that all information classifying a debt as recoverable shall be confidential and may only be disclosed to debtors or their representative.

However, Resolution PGE-27/20 provides that taxpayer will only know their classification grade and, consequently, their rating when submitting the individual proposal for settlement or adhesion to a public notice. In other words, the resolution ended up creating a restriction of constitutionality and dubious legality, inasmuch as São Paulo law, in line with the Federal Constitution,[2] allows taxpayers access to information related to the recoverability of their debt without any time limitation.

According to the debt classification, the following discounts will be offered:

• 20% on interest and fines for debts classified within rating A, up to the limit of 10% of the total discounted value of the same debt on the date it is granted.

• 20% on interest and fines for debts classified within rating B, up to the limit of 15% of the total discounted value of the same debt on the date it is granted;

• 40% on interest and fines for debts classified within rating C, up to the limit of 20% of the total discounted value of the same debt on the date it is granted.

• 40% on interest and fines for debts classified within rating D, up to the limit of 30% of the total discounted value of the same debt on the date it is granted.

• For settlements with Microenterprises (ME), Small Businesses (EPP), or Individual Microentrepreneurs (MEI), the limits will be 30% for debts classified in ratings A and B, or 50% for debts classified in ratings C and D.

The law provides that settlement may take place by adhesion to the PGE proposal or by individual proposal by the taxpayer. Settlement by adhesion to the public notices will be allowed only for taxpayers that have debts registered at outstanding debt in the maximum amount of R$ 10 million. Above this amount, only settlements pursuant to an individual proposal will be allowed.

In individual settlements, it is up to taxpayers to propose to the PGE which debts they intend to settle and under what conditions. The forms for an individual proposal for settlement transaction requests have already been made available on the PGE-SP website, such that taxpayers that comply with the general requirements set out in Law No. 17,293/20, regulated by Resolution PGE-27/20 and SUBG CTF-20/20, may settlement with the São Paulo tax authorities and bring their situation into good standing.

A settlement by adhesion will be proposed by the PGE to close disputes that deal with the same legal controversy and will be subject to the acceptance of taxpayers that meet the conditions and requirements to be reported in a public notice. It is intended exclusively for taxpayers who have debts registered in an amount not exceeding R$ 10 million and will be made exclusively by adhesion to be formalized electronically. There is no open call for this type of settlement yet.

[1] Article 54 - The State Attorney General shall regulate:

(...)

V - the linkage of the provisions dealt with in article 46 to the degree of recoverability of the debts subject to the settlement, which will take into account the guarantees of the debts assessed, existing judicial deposits, the possibility of success for the Treasury in the claim, the age of the debt, the debtor's solvency capacity and payment history, and the costs of judicial collection;

(...)

Paragraph 3  - Information on the recoverability of the debt referred to in subsection V of this article shall be considered confidential and may be disclosed exclusively to debtors or their representative.

[2] Article 5, subsection XXXIII, of the Federal Constitution of 1988: "all have the right to receive from public bodies information of their private interest, or of collective or general interest, which shall be provided within the time period provided for by law, under penalty of liability, except that for which secrecy is essential to the safety of society and the State"

Category: Litigation

 In order to make its arbitration rules more efficient, flexible, and transparent, the International Court of Arbitration of the International Chamber of Commerce (ICC) has revised to its arbitration rules, which entered into force on January 1, 2021 (the "Arbitration Rules").

The ICC has been acting as an arbitral institution since 1923 and today it is considered to be the chamber with the largest international projection in the world.[1] Its rules are updated periodically, and the last modifications had been made in 2017. The new Arbitration Rules contain minor changes that have been proposed in order to adapt them to new trends in arbitration and to make the procedures more efficient and flexible.[2]

The revised rules will apply to all disputes submitted to the ICC as of January 1 of this year, unless the arbitration agreement that gives rise to the dispute expressly provides otherwise.

Inclusion of additional parties

With the inclusion of item "5", Article 7 of the Arbitration Rules now expressly provides for the possibility of submitting a request for inclusion of additional parties, even after the arbitral tribunal has been constituted. In such a case, the inclusion of new parties is subject to the new party(ies) acceptance of the arbitral tribunal and to the terms of reference already agreed upon between the original parties. The provision also establishes that it will be incumbent on the arbitral tribunal to decide on its jurisdiction over the additional party or parties and whether to include such new party or parties.

The 2017 version of the Rules (in item "1" of the same Article 7) prohibited the inclusion of additional parties after the appointment of an arbitrator, unless there was the consent of all parties. As a result, it was practically impossible to include additional parties after the arbitrator(s) had been appointed, even though, in many cases, the participation of additional party(ies) could make the process more efficient.

Consolidation of arbitral proceedings

Items "b" and "c" of Article 10 of the Arbitration Rules, which previously provided that the Court could consolidate two or more arbitrations governed by the Arbitration Rules and arising from the same arbitration agreement, have undergone minor adjustments and now provide for the possibility of consolidating arbitrations arising from separate contracts.

Disclosure of third-party funding

In view of the increasingly frequent use of third-party funding in international arbitration and the debates surrounding the duty to disclose the existence of such funding agreements, the ICC added item “7” to Article 11 of the Arbitration Rules, which establishes the obligation to disclose third parties with whom the party(ies) have entered into funding agreements.

The disclosure of the existence of a third party with an economic interest in the case is fundamental for the arbitrators to be able to evaluate potential conflicts of interest.

Appointment of the arbitral tribunal by the Court

With the inclusion of item "9" in Article 12, the Arbitration Rules now grant the Court express powers to appoint all members of the arbitral tribunal in exceptional situations, namely, whenever it is necessary “to avoid a significant risk of unequal treatment and unfairness”, without prejudice to any agreement entered into between the parties regarding the appointment of the arbitral tribunal.

This will most likely help to avoid possible challenges to arbitrators and requests for annulment of awards on the grounds of unequal treatment of the parties during the constitution of the arbitral tribunal.

Party representation

Among the measures adopted to mitigate the risks of conflicts of interest, Article 17 was also amended and the Arbitration Rules now provide that (i) the parties must report any change in their representation immediately (item "1"); and (ii) the arbitral tribunal may take any measures it deems necessary to avoid conflicts of interest arising from changes in the parties' representation and to preserve their independence and impartiality, and may even order the exclusion of new representatives retained by the parties after the constitution of the arbitral tribunal (item "2").

Virtual hearings

Item “1” of Article 26 of the Arbitration Rules, which previously only established that the arbitral tribunal had to notify the parties within a reasonable period of time of the scheduling of hearings, now expressly provides that both the parties and the arbitral tribunal may request hearings to be scheduled and that the arbitral tribunal may determine whether a designated hearing will be held in person or remotely, via videoconference, telephone, or such other means of communication as they deem appropriate.

Emergency arbitrator provisions

The new Arbitration Rules excluded a previously existing rule that the emergency arbitrator provisions (Appendix V of the Arbitration Rules) would not apply whenever the parties had agreed to some other pre-arbitral procedure for the granting of conservatory, interim or similar measures (former item "6", "c" of Article 29 of the 2017 Rules), thereby expanding the range of situations in which parties may resort to emergency arbitration.

Law applicable to disputes related to the Court's administration of arbitrations

Article 43 was included in the Arbitration Rules, which provides that any disputes related to the administration of arbitration proceedings by the Court under the Arbitration Rules shall be submitted to the Paris Judicial Tribunal and governed by French law.

Other relevant changes

In addition to the changes detailed above, the following changes to the Arbitration Rules are worth noting:

Arbitrations arising from treaties:

• No arbitrator shall be of the same nationality as any of the parties to arbitrations arising from treaties (Article 13(6)); and

• The emergency arbitrator provisions shall not apply to arbitrations arising from treaties (Article 29 (6)(c)).

• Article 36 of the Arbitration Rules has been amended to provide that, in addition to being able to request the correction of any errors in arbitral awards, the parties may request the issuance of an additional award on any claims that the arbitral tribunal failed to address in its original award.

• Article 5 has been included in Appendix II of the Arbitration Rules to provide that parties may request that the Court disclose the reasons behind its decisions on (i) the existence of the arbitration agreement (pursuant to Article 6, item "4”, of the Arbitration Rules); (ii) consolidation of proceedings (pursuant to Article 10); (iii) the appointment of the president of the arbitral tribunal or all arbitrators (pursuant to Article 12, items "8" and "9"); (iv) challenges against arbitrators (pursuant to Article 14); and (v) the replacement of an arbitrator at the Court's own initiative (pursuant to Article 15, item "2"). Although the new general rule is that of transparency, pursuant to item "2" of Article 5, in “exceptional circumstances”, the Court may choose not to communicate the reasons for the decisions above.

• Article 2 of Appendix VI to the Arbitration Rules has been amended to broaden the scope of cases that are governed by the expedited procedure provisions. Now, arbitrations involving amounts of up to US$ 3 million will, as a rule, be governed by the expedited procedure provisions set out in Appendix VI, which were implemented with the intention of expediting the settlement of such disputes. Until now, the limit had been US$2 million.

Access the new ICC arbitration rules here. The comparative version of the 2017 and 2021 rules is available here.

[1]According to the ICC International Arbitration Statistics report released in July of 2020 (for the year 2019), the Court recorded 869 new cases in 2019 involving parties from 147 countries and independent territories. In December of 2019, the Court recorded its 25,000^th case.

A summary of the 2020 statistics is available at: https://iccwbo.org/media-wall/news-speeches/icc-releases-2019-dispute-resolution-statistics/ [Accessed on February 1, 2021]

[2] As announced by the ICC itself in its note disclosing the new arbitration rules: https://iccwbo.org/media-wall/news-speeches/icc-unveils-revised-rules-of-arbitration/ [Accessed on February 1, 2021]

Category: Tecnology

Laura Aliende da Matta and Matheus Perez Matsuno

The week of the International Day for Personal Data Protection (January 28) brought news in the area of data protection in Brazil, with the publication of the Regulatory Agenda for the biennium 2021-2022,[1] through Ordinance No. 11/2021 of the National Data Protection Authority (ANPD). The agenda is a planning instrument that brings together the regulatory actions defined as priorities for the ANPD in the next two years, either as objects of study or regulation.

 This measure is of great importance to the business sector, as it provides the possibility of structuring adaptation strategies that go hand in hand with the regulatory advances of the Authority itself, allowing a scenario of greater predictability.

The agenda provides for semi-yearly reports on the monitoring of regulatory initiatives produced by the General Coordination of Standardization, without prejudice to the adjustment of initiatives and goals as necessary. At first, however, the Agenda listed ten priority topics in the area of data protection and reported the forecast for the start of regulatory activity related to them. The topics will be developed by the ANPD in three phases:

• Phase 1: initiatives starting within up to one year (by the 2nd half of 2021);

• Phase 2: initiatives starting within up to one year and six months (by the first half of 2022); and

• Phase 3: initiatives starting within up to two years (by the 2nd half of 2022).

The initiative for transparency is to be commended, but the lack of a definition as to how some of the issues will be tackled until they are regulated is still worrying. It would be recommendable for the ANPD to at least disclose the goals for business continuity with a greater degree of legal certainty. An example of a topic to be addressed is that of the bases for the international transfer of personal data (in detail below), for which it is not yet possible to provide a strict and literal interpretation, which leaves them susceptible to relevant differences of opinion. In addition, for a large part of the market, doing business without some degree of international data transfer is practically impossible today and, for the time being, there are no scalable legal solutions that can be adopted by processing agents.

In any case, the balance of Ordinance No. 11/2021 is positive, since it brings in relevant elements for the planning of adjustment actions, as well as for monitoring and collection of regulatory initiatives that will be adopted by the ANPD. Please check out all the topics on the agenda below:

Internal Regulations of the General Data Protection Law (LGPD) and the ANPD’s Strategic Planning

These first two topics are prerequisites for the ANPD to begin operations, as well as for the definition of actions, objectives, and deadlines. The documents are of great value for civil society to follow the development of the ANPD, through rendering of accounts and comparisons with the calendar determined. The ANPD’s Strategic Planning for 2021-2023 has three strategic objectives:

1. Promote strengthening of the culture of personal data protection;
2. Establish an effective regulatory environment for the protection of personal data; and
3. Improve the conditions for fulfillment of legal duties.

Protection of personal data and privacy for small and medium-sized enterprises, startups, and individuals who process personal data for economic purposes

This subject is in accordance with the regulatory competence established in article 55-J, subsection XVIII, of the LGPD. It is of special importance, as the burden of adjustment generated by the LGPD may mean a significant competitive constraint for these companies. In addition to dispensing with certain obligations in some contexts, such as appointing a data protection officer, it would be interesting if the regulations brought in elements of simplification from compliance with other obligations to facilitate adaptation to the law.

The rights of the holders of personal data

The fourth topic is scheduled to take place in Phase 3. The LGPD expressly defines some of the rights of data holders, but there are still many points of uncertainty, for example, in articles 9, 18, 20, and 23 of the law. For example, article 9 of the LGPD provides that data holders are entitled to information "made available in a clear, adequate, and conspicuous manner" concerning the processing of their data, but do not establish objective criteria for compliance with this requirement. With the regulation planned, it is expected that companies will be able to rely on objective protocols for the disclosure of information, which may greatly reduce costs related to implementation. In addition, article 18, which deals with the holder's requisition rights vis-à-vis the controller, is expected to have clearer guidelines on procedures such as anonymization, blocking, or elimination of unnecessary data, among other situations.

The establishment of rules for the application of article 52 et seq. of the LGPD

The fifth topic is planned for Phase 1. Article 52 et seq. of the LGPD discuss the administrative penalties applicable to controllers and operators. It is expected that the circumstances and conditions for the application of the penalties provided for will be better defined. In compliance with the foundation of economic and technological development and innovation stated in the law, it is necessary to provide information that enables controllers to understand the criteria for the application of administrative sanctions and adapt accordingly.

Reporting of incidents and specification of notice period

The sixth topic (also for Phase 1) is regulation of the items for incident reporting. Article 48 of the LGPD holds the data controller responsible for reporting to the ANPD and the holder the occurrence of safety incidents that may cause relevant risk or damage to the holders. However, there is no express provision of some essential elements for such reporting, such as specification of the notice period and format, which shall be described in a resolution of the ANPD.

Personal Data Protection Impact Report

Article 38 of the law, supplemented by article 55-J, subsection XIII, and §3, provides to the ANPD the option to require a Personal Data Protection Impact Report from data controllers. Despite the provisions of article 5, subsection XVII, there is still no standardized model for the report, as was provided by the European authorities, for example, when the General Data Protection Regulation (GDPR) was approved.

Personal Data Protection Officer

The eigth topic is planned for Phase 2. The personal data protection officer , also known as Data Protection Officer (DPO), shall be appointed by the controller to act as a means of communication between the processing agent, the holder, and the ANPD (article 5, subsection VIII, of the LGPD). Their appointment is mandatory for the controller, in accordance with article 48. However, paragraph 3 of the same article expressly states that the ANPD may establish supplementary rules on the definition, duties of the officer, and events in which their appointment is waived. Therefore, the ANPD will have the opportunity to assess the need to appoint an officer according to the nature and size of the entities or volume of data processing operations, as well as define the necessary duties of the professional allocated in each sector of activity.

International transfer of personal data

The agenda points to the need to regulate articles 33, 34, and 35 of the LGPD, an activity to be carried out in Phase 2. Article 33 provides for cases in which the international transfer of personal data is permitted, such as to countries or international bodies that provide an adequate level of data protection (article 33, subsection I, of the LGPD), while article 34 expresses which factors the ANPD will take into consideration in determining the level of personal data protection of these countries or bodies. The list of countries classified according to their degree of protection is not defined, however, as has been done by the European authorities. The ANPD is also expected to define guidelines for interpretation of what constitutes international transfer (which may include or exclude, for example, storage on international servers contracted for cloud service) and the content of standard contractual clauses (as per article 35 of the LGPD).

Legal scenarios for the processing of personal data

The tenth and last topic of the ANPD's Regulatory Agenda foresees for Phase 3 the publication of guidelines on the application of the legal bases and scenarios for data processing to the specific case. Legal bases such as legitimate interest and protection of credit are especially open to interpretation and lack clear guidelines that make it possible to satisfy the requirements of the law. The ANPD will publish a good practices guide with the guidelines for agents to proceed in a proper and lawful manner.

[1] BRASIL. National Data Protection Authority. Publishes the regulatory agenda for the biennium 2021-2022. Ordinance No. 11, January 27, 2021. Available at: http://www.in.gov.br/web/dou/-/portaria-n-11-de-27-de-janeiro-de-2021-301143313

Category: Environmental

Roberta Danelon Leonhardt, Carolina de Almeida Castelo Branco, Bruno Vinciprova Pileggi, Eduardo Perazza de Medeiros, Sergio Ferraz e Opice, and Isabella Guerrero.

State Law No. 23,795/21, published by the government of Minas Gerais (MG), entered into full force to establish important requirements in local legislation on dams, especially by making it mandatory for the state to provide assistance to those affected by dams before, during, and after the installation and maintenance of these structures, including the time of deactivation. The law institutes the State Policy on Persons Affected by Dams (PEAB), to be observed in all actions prior, concomitant with, and subsequent to planning, construction, installation, operation, expansion, maintenance, or even deactivation of dams, whenever their presence may present a risk (albeit potential) of damages to local communities.

According to the PEAB, all those who are harmed, even if only potentially (i.e. indirectly), by the impacts resulting from the dams will be considered affected, namely:

• loss of property or possession of property or reduction in its market value;

• loss of productive capacity of the land;

• loss of fishing area;

• total loss or partial reduction of sources of income;

• proven damage to local productive activities or that makes it impossible for commercial establishments to operate;

• impracticability of access or management activity to natural resources and fishing grounds;

• compulsory displacement;

• loss or restriction of access to resources necessary for reproduction of their way of life;

• breaking of ecosystems;

• loss or restriction of water supply or capture; and

• damage to quality of life and health.

Another very important point to be observed by entrepreneurs in the region is the creation of an Economic and Social Recovery Plan (PRDES), called a binding linked plan. Each and every dam installed in MG must be accompanied by a PRDES, for which the preparation, management, execution, and financing of resources for the actions planned will be under the responsibility of the dam's developer. The PRDES will obligatorily cover all the actions foreseen for remediation of the socioeconomic, cultural, or environmental damages caused by dams, as well as the estimated deadlines and costs and the mechanisms for broad social monitoring and follow-up. Such actions and mechanisms are necessary for full repair of socioeconomic impacts arising from the construction, installation, operation, expansion, maintenance, or deactivation of dams.

The law also provides for a series of rights to those affected by dams, such as access to information related to environmental licensing processes and feasibility studies for dams, participation in processes related to repair policies, technical advice funded by the developer, and prior and collective negotiation of forms and parameters for comprehensive repair of socio-economic impacts arising from the construction, installation, operation, expansion, maintenance, or deactivation of dams.

A concrete example, which embodies much of the rights of those affected by dams listed in the law, is the plan to create a representative committee, composed of technicians from the Public Administration and members of the affected community, whose duties include managing the actions provided for in the PEAB and participating in collective negotiations to redress socioeconomic impacts, promoting dialogue between those involved and the developer. In the same sense, as an attempt to ensure greater transparency to enterprises, the law provides that the PRDES shall be prepared in a simple and understandable manner and shall be subject to prior public consultation. Thus, its implementation and results will be monitored and evaluated by the representative committee.

Although the Brazilian PEAB has brought in definitions of the damage experienced by those affected by dams ensuring their right to redress, state law has also brought in open and undetermined concepts, which still need to be regulated by the Executive. An example of this is the pending definition of the scope of action of the independent technical advisor, as well as the rules for the operation and performance of the representative committee.

Finally, another point of attention for developers and entrepreneurs is the mandatory payment of a handling charge, provided for in the tax legislation of the state of Minas Gerais (State Law No. 6,763/75), to the State Bureau for Social Development, in order to fund the activities related to the analysis and monitoring of the PRDES under the PEAB.

In order to ward off new incidents and all the implications that emerge from their consequences, the various immediate and relevant requirements to be met by the state and local developers created by State Law No. 23,795/21 must be closely monitored by all those interested and involved in activities using dams in Minas Gerais, reinforcing preventive action and corporate social and environmental responsibility.

Category: Real estate

As another initiative to reduce bureaucracy in the Brazilian business environment, the Economic Freedom Act (Federal Law No. 13,874/19) received new regulations from the Committee for the Management of the National Network for the Simplification of Registration and Legalization of Companies and Business (CGSIM), this time related to urban licenses.

CGSIM Resolution No. 64, of December 11, 2020, exempts buildings and facilities classified as low risk from urban licensing, in addition to establishing automatic exemption from licensing for buildings considered to be moderate risk, by simply sending the documents indicated in the resolution itself. High risk buildings and installations remain subject to the traditional licensing rules in force.

For the risk classification, buildings and facilities are rated into levels of complexity and size according to various criteria, requirements, and constraints.

The states, Federal District, and municipalities are subject to the rules and provisions of CGSIM Resolution No. 64 as long as they do not have their own legislation, expressly created on the basis of the Economic Freedom Act, which regulates and delimits, in an exhaustive manner, the economic activities considered low risk and the exercise of which is independent of any urban licensing. Once such laws are promulgated, CGSIM Resolution No. 64 will have suppletory application.

Although federal entities have laws on risk classification and licensing waivers for low-risk activities, if such rules have not been promulgated based on the principles and definitions of the Economic Freedom Act, the rules of the resolution should prevail. CGSIM Resolution No. 64 is already receiving criticism related to its constitutionality, under the argument that it encroaches on the competence of the municipality in the ordering and control of land use and creates obligations for the drafting of its own legislation, disregarding the autonomy of the municipalities and the Federal District in legislating on their territory.

Another important point is that the licensing waiver process will be carried out in a declaratory manner by the interested parties, by sending documents via digital means, integrated and accessible simultaneously by all the competent licensing bodies. Once correct and complete submission has been made, the waiver of urban licensing is automatic.

The integrated submission to the licensing bodies must be done through individuals or legal entities, public or private, qualified by the CGSIM, called Digital Integration Proxies (PDI), forming the Market of Digital Urban Integration Proxies of National Integration (Murin). In general, IDPs are responsible for managing submissions, and may even act as representatives of the interested party before licensing bodies. While it is argued that Murin will facilitate citizen access and ensure free competition in the provision of such services, there are views that direct submission by the interested party should also be permitted.

There will certainly be further debates and criticism of CGSIM Resolution 64, which is why it is essential to monitor developments after its publication.

CGSIM Resolution No. 64 will take effect on (i) March 1, 2021, for municipalities with a population of over 5 million inhabitants, for the Federal District and for the municipalities and states affiliated to the National Network for the Simplification of Registration and Legalization of Companies and Business (Redesim), provided that they have registered for access to Murin; (ii) June 1, 2021, for the other municipalities and states affiliated with Redesim; and (iii) September 1, 2021, for the other federal entities.