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The Recent Federal Decree Addressing Federal Competence for Environmental Licensing

The division of competencies in environmental matters has always been a subject of disputes and controversies, lasting for about 23 years since the promulgation of the Federal Constitution of 1988, only settled on December 8, 2011, with the publication of a specific Complementary Law ("LC"). The advent of this LC was a major milestone in Environmental Law, as until that date, rules were imposed by resolutions, which are infralegal norms, and therefore inadequate to regulate the actions of federal entities.

For the establishment of environmental licensing competencies, the LC adopted the same criterion as the Federal Constitution – that of the predominance of interest. By interest, it is understood the scope of the direct impact of a specific enterprise, as a defining criterion for administrative competence. Accordingly, it is established that licensing involving the interests of more than one state or in any way affecting the nation falls under federal licensing competence; licensing involving the interests of one state or specific regions of a state falls under the competence of that respective state, and finally, licensing of predominantly local interest falls under municipal competence.

Notwithstanding the general rule, a specific provision of the LC stipulates that the federal government is responsible for the administrative action promoting the environmental licensing of enterprises meeting typologies established by executive act. Thus, with the aim of specifying these typologies, Decree 8,437/2015 ("Decree") was published.

Among the activities listed in the Decree, notable examples include infrastructure projects such as the implementation and paving of federal highways, expansion of federal railway capacity, offshore and onshore activities, and certain scenarios of electric power generation and transmission systems.

As mentioned, for years, the issue of competency to license enterprises and activities has been the subject of questioning by competent public entities, such as the Public Prosecutor's Office. The main consequences of this situation are project delays, project unviability, and, especially, the judicialization of licensing procedures, a harmful and recurrent practice in Brazilian law.

The specifications introduced by the Decree have provided legal certainty not only to those working in the field of Environmental Law but also to environmental agencies in applying the law and, consequently, to society, as it stimulates the country's economic development. It is worth noting that difficulties in licensing deter investors, slow down the market, and can cause immeasurable losses to entrepreneurs who invest billions in their projects.

Thus, the Decree aims to contribute to restoring investors' confidence by offering greater legal certainty in environmental licensing, reducing disputes, delays, and, especially, judicial proceedings regarding licensing competency issues.

Alexandre Sion and Maria Carolina Dutra