The vote could take place just over a year after the Brumadinho (MG) disaster. Changes in legislation could pave the way for new tragedies. Read the questions and answers on the subject at the end of the page.
By the communications department of Socioenvironmental Institute (ISA)
Just over a year after the Brumadinho (MG) tragedy left 259 dead and 11 people (still) missing, a proposal that weakens the legal controls and restrictions that could prevent similar tragedies may be voted on in the Chamber of Deputies.
Since the end of last year, the president of the House, Rodrigo Maia (DEM-RJ), has been stating that he intends to put to a vote in the plenary, as early as February, Bill No. 3.729, which creates a General Law on Environmental Licensing. Last week, Congressman Rodrigo Agostinho (PSB-SP) confirmed the information. He was chosen by Maia, on the side of environmentalists, as an interlocutor on the matter.
The problem is that no one has yet had access to the latest version of the substitute bill by Congressman Kim Kataguiri (DEM-SP). Last year, Maia also promised to send the version of the bill that would be voted on to seven former Environment Ministers who went to Congress to discuss the matter. The congressman has not yet done so. On several occasions, faced with pressure from environmentalists and the international community, Maia has stated that he would not put proposals harmful to the environment to a vote. In the case of licensing, he said he would not allow the project to be considered without consensus.
Congress resumes its work next week, and for Maia's wishes to be fulfilled, the bill would need to be voted on by February 19th. The following week is Carnival.
One of the reasons cited for the Brumadinho disaster was the downgrading of the risk level of the Córrego do Feijão dam, owned by Vale, which collapsed on January 25, 2019. This measure was made possible by a change in state licensing legislation (Learn more about the topic in the chart and video below.).
Members of Parliament following the issue in the Chamber of Deputies say that, although the latest version of Kataguiri's substitute bill is unknown, the limited information available indicates that it is even worse for the environment than the one released last year.
The first three versions of the proposal drafted by Kataguiri were directly negotiated by environmentalists and representatives from various economic and social sectors. The fourth and final version, released in August, however, was discussed behind closed doors with rural landowners and the government, marking a rupture in this debate. According to more than one hundred civil society organizations, Kataguiri “made a 180-degree turn, broke previously established agreements, and presented, at the last minute, a substitute proposal that makes licensing the exception, rather than the rule.”read more).
Urgent environmental permit required!
In Brazil, there is no general law on environmental licensing. The legal requirements on the subject are scattered across different regulations, in addition to those contained in the National Environmental Policy (Law 6.938/1981), such as the resolutions of the National Environmental Council (Conama) 01/1986 and 237/1997, Complementary Law 140/2011, and rules present in other federal, state, and municipal laws and regulations.
An inadequate or unbalanced law can increase risks and impacts on society and harm economic ventures, which may be implemented without the guarantee that they comply with constitutional environmental protection standards. This creates an environment of legal uncertainty that can negatively impact the investment sector, reducing credit lines and offers.
Currently, the federal, state, and more than half of the municipal governments have legislation and administrative procedures focused on environmental licensing and impact assessment. Although there are no official statistics, it is estimated that tens of thousands of environmental licenses are issued annually in Brazil.
Therefore, a clear, balanced, and effective legal framework is expected that reconciles environmental and social protection, legal and regulatory certainty, and encouragement of private initiative. In other words: rationality and speed for responsible and sustainable development.
What do you need to know about Environmental Licensing?
What is it?
Environmental licensing is a preventive and supervisory instrument of the National Environmental Policy aimed at guaranteeing the fundamental rights to quality of life, health, and a balanced environment as stipulated in the Constitution. It is an administrative procedure by which an environmental agency – federal, state, or municipal – evaluates and authorizes, or not, the installation, expansion, and operation of activities or projects that use natural resources or that may pollute or degrade the environment. The process also defines when these steps should occur. The process encompasses everything from the installation of a gas station and the deforestation of an area with native vegetation, to the opening of roads, the establishment of a mine or factory, and the construction of large hydroelectric plants or industrial complexes.
Com funciona?
Today, it is possible to obtain a simplified license, in a single step, for projects with minor risks or impacts. Regarding larger projects and those with greater potential impacts, most procedures require the submission of an Environmental Impact Study and Environmental Impact Report (EIA-RIMA) and three licenses:
– Preliminary: when studies and projects are approved, declaring the viability of the undertaking;
– Installation: authorizes the start of construction;
– Operation: authorizes the operation of the activity or undertaking.
What is the importance of licensing?
The main objectives of environmental licensing are: to identify, prevent, control, reduce, and compensate for the negative impacts – social or environmental – of projects or economic activities, aiming to protect the environment and the quality of life of the population. Through it, the environmental agency establishes the conditions, restrictions, and measures that must be obeyed for the undertaking to occur in a minimally safe manner from a socio-environmental point of view. Furthermore, it promotes publicity, transparency, and social participation in the processes involving public decision-making regarding environmental assets (water, forests, climate, etc.). The process also includes public hearings, where it is possible to mitigate or resolve conflicts that may arise between companies, governments, and communities, including reducing the time and litigation required to resolve these conflicts. Licensing is also a guarantee for every citizen that the State is concerned about their safety and that they will not be a victim of a disaster that could have been avoided.
What can be considered an environmental impact?
Identifying and assessing an environmental impact requires following detailed processes that demonstrate whether there is a physical, chemical, or biological alteration of the environment caused by any human activity that directly or indirectly affects:
– the health, safety and well-being of the population;
– social or economic activities;
– the collection of animals and plants in a region;
– the conditions and quality of environmental resources (water, air, soil, food, etc.).
How can environmental licensing affect people's lives?
Poorly executed environmental licensing can have consequences as far-reaching and varied as the impacts of projects and activities that may or should be licensed. The quality and availability of natural resources can be compromised depending on the scale of an activity or undertaking and the impacts involved. The ecosystems that may be affected by economic activities and undertakings are responsible for fundamental services for the maintenance of society and the economy (availability and quality of water sources, erosion control, hydrological and climatic cycles, etc.).
Poor licensing of a gas station, for example, can result in the contamination of a body of water, including sources of drinking water. These risks increase in the case of large projects, such as refineries or fuel distributors. Hazardous activities that use toxic, contaminating, or explosive products require more rigorous environmental analyses of the production, transportation, and storage of waste. There are many details to be observed, and none of them is less important.
In recent decades, there have been numerous cases, in Brazil and around the world, of large-scale socio-environmental disasters caused by negligence, abuses in the environmental licensing process, or changes in legislation. The result is deaths, irreparable environmental damage or damage that can only be recovered after decades, entire communities displaced, and significant financial losses.
Some examples
The most recent and serious case was the collapse of the Vale mining company's tailings dam in Brumadinho (MG), on January 25, 2019. The disaster left 259 dead and 11 still missing. At the end of 2018, changes made by the Legislative Assembly of Minas Gerais to the state's environmental licensing legislation allowed for a reduction in the risk level of the tailings reservoir at the Córrego do Feijão mine, whose collapse caused the catastrophe. If the controls and parameters of the legislation become less rigorous, the risks of new socio-environmental disasters increase.
Another example is the "Valley of Death," a nickname for the Cubatão petrochemical complex in the state of São Paulo during the 1970s and 1980s, when industries released tons of toxic gases into the atmosphere, generating a poisonous fog that affected the health of the population, causing everything from respiratory illnesses to the birth of babies with deformities. The water and soil were also contaminated.
In 1984, a failure in Petrobras' underground pipelines spilled 700 liters of gasoline in the Vila Socó region, also in Cubatão, causing a fire that killed approximately 100 people.
How has the General Licensing Law been discussed?
The main bill (PL) under discussion in Congress on this subject is number 3.729/2004. So far, two reports have been approved by committees in the Chamber of Deputies: the Agriculture Committee in 2014, and the Environment Committee in 2015. In the Finance and Taxation Committee, the bill received 13 versions of reports, but it was never voted on due to a lack of agreement. In 2017, it began to be processed under an expedited procedure, which allows the bill to be voted on directly in plenary at any time, without needing to be reviewed by other committees.
In 2019, the Speaker of the House, Rodrigo Maia (DEM-SP), took up the issue as part of his agenda for reducing bureaucracy and stimulating the economy, especially advocating for fixed and shorter licensing periods. Despite stating that he would not put the matter to a vote without a consensus text, he tends to push for the proposal's processing to be expedited.
In June, Maia established a Working Group (WG) to propose a General Licensing Law project. Deputy Kim Kataguiri (DEM-SP) was chosen as coordinator and subsequently presented a first version of the proposal. Between June and July, a series of public hearings took place in the Chamber with representatives of civil society and social movements, the scientific community, the Public Prosecutor's Office, companies, agribusiness, and researchers. Meanwhile, Kataguiri presented two more versions of the base text of the law, incorporating consensuses obtained in the hearings. In August, however, he made a 180-degree turn by presenting a fourth substitute drafted behind closed doors, with only the participation of representatives from agribusiness, the business sector, and the government, abandoning consensuses and breaking agreements made with environmentalist parliamentarians and other sectors of society. The new proposal incorporated serious setbacks, making licensing the exception instead of the rule, compromising the protection of the environment and the population, the legal security of works and economic activities, and potentially increasing litigation and obstacles to investment.
After that, since the end of last year, Rodrigo Maia has stated several times that he intends to put the text to a vote in February 2020, which, if the last text published by the rapporteur is maintained, could mean the approval of an unbalanced and inadequate law.
What is the procedure that the proposal should go through?
The bill can be voted on in the Chamber's plenary session at any time. If approved, it goes to the Senate to be debated in committees and in plenary session. If the approved version is the same as the Chamber's, it goes to the President for approval. If it is amended, it returns to the Chamber's plenary session for consideration.
Whose interests are involved in the debate, and what are their interests?
The rural caucus, the lobby of organizations such as the National Confederation of Industry (CNI) and the Confederation of Agriculture and Livestock of Brazil (CNA), and companies in the infrastructure sector have been pushing for the weakening of controls and restrictions foreseen in the legislation. Government sectors, such as the Ministry of Infrastructure, have proposed setbacks in legislation, such as the adoption of a License by Adhesion and Commitment (LAC, self-declaration license) for certain infrastructure projects. The argument is that licensing creates bureaucracy, increases costs, delays, or even makes projects important for job and income generation and national growth unfeasible. Data has shown, however, that the cause of the paralysis and delay of works is not licensing, but:
– poorly done studies and projects;
– corruption;
– poor management;
– insufficient structure, human resources and financial resources in licensing bodies.
In the case of the federal licensing agency, the Brazilian Institute of the Environment (Ibama), data from 2018 indicates that, in the list of large infrastructure projects considered strategic by the government, there were no delays in granting licenses at that time.
Representatives from the agribusiness sector primarily advocate for exemptions from licensing requirements for agriculture, livestock farming, and forestry. The industry and construction lobby has been working, above all, to ensure reduced responsibilities and costs, for example, by decreasing the scope of impacts that must be considered and addressed in each project, in addition to securing as many exemptions as possible.
On the other hand, environmental organizations and other segments of civil society, the scientific community, the Public Defender's Office, the Brazilian Bar Association (OAB), and the Public Prosecutor's Office condemn the latest version of Kataguiri's proposal, despite acknowledging that current legislation needs improvement, the need to harmonize various state and sub-legal norms (decrees, resolutions, ordinances, etc.), and to establish a new legal framework that guarantees greater efficiency, rationality, and speed in the licensing process.
These sectors demand that the rights of the populations be respected and ecosystems protected. For these actors, the impacts of projects need to be assessed, mitigated, and adequately compensated to guarantee, as mandated by the Constitution, a balanced environment for all. The balance between environmental preservation and efficiency is key to ensuring both legal and financial security for economic development.
What are the licensing costs for businesses?
Numbers circulating online or appearing in the speeches of some politicians attributing nearly 30% of the cost of certain projects to licensing are not substantiated or scientifically proven. It is very difficult to make this calculation because the costs involved can vary considerably from case to case. For hydroelectric plants, a World Bank document makes a much more modest estimate: around 5%.
What are the main points of debate in Congress regarding the General Licensing Law?
1) Exemption from licenses for maintenance, expansion or improvements of infrastructure works.
The latest publicly available version of Kim Kataguiri's text paves the way for the waiver of licenses or the granting of self-declaration licenses (LAC, see below) for mining and infrastructure projects (highways, railways, waterways, ports, airports, hydroelectric plants, etc.), which may have high socio-environmental risks and impacts. These activities and projects would not be subject to the general law, but their licensing would be defined by subsequent regulations, a blank check for the government to establish exemptions or less rigorous procedures. This measure could increase the risk of environmental disasters, as well as potentially increasing illegal deforestation. Research shows that roads in the Amazon are the main driver of forest destruction: 95% of deforestation in the region is located within a 5,5 km radius of highways. The construction of the Trans-Amazonian Highway and the BR-163 (Cuiabá-Santarém) caused the destruction of millions of hectares of forests and the decimation of entire indigenous communities due to uncontrolled immigration, land grabbing, and the spread of diseases. Therefore, high-impact projects planned by the federal government, such as the BR-319 highway (Manaus-Porto Velho) and hydroelectric dams, could be included in the package of exemptions and flexibilization.
2) Exclusion of “indirect” socio-environmental impacts
In practice, the proposal excludes the assessment of impacts considered "indirect" from the licensing process. Deforestation resulting from the installation, expansion, and paving of roads, especially in the Amazon, would no longer be considered in impact assessments, and the necessary measures to prevent, mitigate, or compensate for it would not be adopted. In the region, the construction of hydroelectric dams causes uncontrolled immigration, which, in turn, overloads the education, health, sanitation, and public safety systems. If the proposal under discussion in the Chamber is approved as is, these impacts would continue to occur, but would not be assessed or addressed. The same would happen with damage to fishing and hunting, which can compromise food security and the living conditions of local, indigenous, and traditional communities. Similarly, air pollution and the increase in cases of respiratory diseases caused by thermoelectric plants, and the contamination of water and soil potentially caused by mining projects, could be excluded from the licensing process. All of these impacts would be disregarded in the licensing process and would all need to be borne solely by the Public Authorities, therefore by the whole of society, in the form of taxes, among other things.
4) Indigenous and traditional populations, protected areas, historical and cultural heritage, and health are threatened.
The proposal stipulates that only Indigenous Lands (ILs) with a published declaratory decree and titled Quilombola territories would be considered in the licensing process. All areas that are currently in earlier stages of their respective officialization processes – which are always lengthy and complex – would be disregarded for the purposes of identifying, evaluating, preventing, reducing, and compensating for impacts.
The discussion text also restricts the participation of authorities responsible for Conservation Units (CUs) in the licensing process to cases involving fully protected CUs and when they overlap with the area directly affected by the project or activity, excluding from the analysis all CUs present in the area of influence (of indirect impacts) and those of sustainable use.
If the bill is approved, 29% of the 743 existing Indigenous Territories in the country, according to data from the National Indian Foundation (Funai), would be excluded from the licensing process. The same would occur with 87% of the 1.755 processes for the official recognition of quilombos (settlements of escaped slaves) already opened at the National Institute for Colonization and Agrarian Reform (Incra). According to data from ISAFrom the outset, 185 federal and 358 state sustainable use protected areas, totaling 543, would be disregarded in the licensing process.
The proposal threatens the continuation of the recognition processes for these areas, as well as the legal and financial security of projects, since the impacts on territories pending recognition will occur anyway, without being properly addressed. Furthermore, it contradicts a Supreme Court decision that guarantees the primacy of the regularization of indigenous and quilombola territories over other interests. The result will be increased litigation and the imposition of obligations on developers not originally foreseen.
The substitute bill also weakens the protection of historical and cultural heritage, excluding assets found during the preparation of studies for the project. Furthermore, the proposal excludes the Ministry of Health from environmental licensing, whose participation, under current legislation, is limited to preventing malaria outbreaks and other health issues.
Furthermore, Kataguiri's proposal restricts, to the point of almost eliminating, the direct participation of indigenous and traditional populations affected by projects requiring licensing in the licensing process. The bill makes no specific reference to the participation of these communities in the licensing, which contradicts Convention 169 of the International Labour Organization (ILO). This standard was ratified by Brazil, incorporated into our legislation, and requires that these groups be consulted on all decisions and projects that affect them.
The proposed bill also states that the license can be granted even without input from the agencies responsible for protecting these territories and populations. Even if such opinions are prepared, they may be disregarded by the licensing body. The participation of these agencies in the licensing process aims to provide technical input on the impacts on the populations and assets they are meant to protect, while the participation of those populations aims to fulfill their basic right to be heard and to influence the implementation of economic projects that affect them.
5) Allowing states to weaken licensing controls and parameters. "Anti-environmental war between states"
Today in Brazil, there is a "fiscal war" between states and municipalities. They compete for investments and projects by reducing taxes and fees or granting subsidies. The licensing bill paves the way for the same thing to happen in the environmental area. In this case, the dispute would be between state governments that can offer licensing rules that are more advantageous to companies and less rigorous in protecting the environment and affected populations, including the possibility of waiving licenses or granting LACs (Environmental Licensing Authorizations). Currently, state and municipal inspection bodies follow minimum standards determined by federal laws. If the new proposal is approved, the same project could be licensed differently in different states. The consequence would be increased legal uncertainty and the number of lawsuits, as well as various types of risk to the population, since this war could produce weakened licensing, capable of authorizing projects with a high potential for damage.
6) License by Adhesion and Commitment (LAC)
Another controversial idea being debated in Congress is the LAC. With it, entrepreneurs could obtain a license automatically, through self-declaration, via the internet, provided they commit to a pre-established set of conditions and restrictions, without prior evaluation or control by environmental agencies, including without the need to validate the information presented by the license applicant. The latest version of the proposal published by the rapporteur foresees this type of license for all medium- and low-impact projects and activities, including mining.
There are Direct Actions of Unconstitutionality (ADIs) filed by the Attorney General's Office (PGR) in the Supreme Federal Court (STF) against the systems implemented in Bahia and Santa Catarina using this type of license. The Bahian experience proved unsuccessful. According to a report by the Association of Environmental and Water Resources Servants of Bahia (ASCRA), of the 1.596 licenses of this type registered between 2012 and 2015, only 152 licenses, or 9% of the total, were inspected, and 89% of them (135) presented pending issues and irregularities, and the businesses were notified or fined. The vast majority of licenses were for gas stations, an activity that uses hazardous waste.
7) Lack of locational and integrated criteria
Brazil possesses unique ecological characteristics across its diverse biomes. Kataguiri's proposal does not consider the environmental characteristics of the area where the project or activities will be implemented. Therefore, projects that could cause degradation and pollution may be implemented in environmentally sensitive locations. The official map of priority areas for conservation and protection of natural resources, for example, will not be considered. It will make no difference whether the project is located, for example, in the Amazon rainforest or in the metropolitan region of São Paulo.
8) Exemption from licensing for agriculture and livestock farming
One of the proposals under discussion is the exemption from licensing for agricultural, livestock, and forestry (tree monoculture) activities, regardless of the activity's potential for environmental degradation. This is the main demand of the rural lobby. If approved, it will eliminate the need for assessment and authorization of activities that may pollute and degrade the environment, with possible impacts on the availability and quality of water sources and the rate of deforestation, for example. The exemption from licensing for this type of activity was already declared unconstitutional by the Supreme Federal Court in 2001. The tactic used by the rapporteur of the proposal to implement the idea is to make mere registration in the Environmental (Rural) Registry be considered an environmental license.
9) Corrective Operating License (LOC): irregularity as a “good deal”
The proposal simplifies as much as possible the procedures for regularizing projects or activities in operation but without licensing. The text grants amnesty for sanctions for lack of a license, does not stipulate a deadline for the entrepreneur to regularize their situation, and establishes a simpler and less costly procedure than the regular one. It will be easier to implement a business illegally and then request regularization. This will act as an incentive for the implementation of unlicensed businesses throughout the country, that is, for the violation of the law itself.