Legal Guidelines and Legal Challenges in the Sanitation Sector

With the enactment of the new Legal Framework for Sanitation (Law 14.026/2020), the sanitation sector in Brazil is going through a phase of intense investment and structural changes. This scenario brings with it various privatizations, concessions and renegotiations, as seen in the case of the State Water and Sewage Company of Rio de Janeiro (CEDAE) - now managed by the company Águas do Rio. In this context, it is crucial to look at two sensitive areas from a legal point of view: bidding crimes and environmental crimes.

1. Bidding crimes: Law 14.133/2021

The new Bidding and Administrative Contracts Law (Law 14.133/2021) establishes stricter rules and increases the penalties for illegal practices in bidding processes. The following points stand out:

• Fraudulent Direct Contracting: Direct contracting outside the hypotheses provided for by law, which proves to be fraudulent, is now punishable by imprisonment of 4 to 8 years. The prison sentence allows for a closed initial regime and prevents substitution by restriction of rights and the signing of an agreement not to prosecute (ANPP).

• Strict supervision: The law provides for increased supervision and control of bidding processes, with the aim of preventing fraud and guaranteeing transparency and legality in public contracts.

2. Environmental Crimes: Law 9.605/1998

The Environmental Crimes Law (Law 9.605/1998) regulates the criminal liability of companies and individuals for damage to the environment. In the sanitation sector, especially in solid waste and leachate management, compliance with this law is crucial to avoid severe sanctions. Important points include:

• Criminal Liability of Legal Entities: Companies can be held criminally liable for environmental damage, with penalties including partial or total suspension of activities, temporary interdiction of establishments and a ban on contracting with public authorities for up to ten years.

• Impact on the Economic-Financial Balance: Environmental sanctions can impact the targets stipulated in concession contracts and affect the financial viability of concession companies.

Examples of Harmful Practices and Environmental Penalties

Some practices in the sanitation sector that can be considered harmful to the environment include:

• Inadequate Solid Waste Management: Incorrect waste disposal that can cause soil and groundwater contamination.

• Inadequate Slurry Treatment: Failure to treat slurry, resulting in water pollution.

Applicable penalties include:

• Suspension of Activities: Partially or totally halting the company's operations until compliance is re-established.

• Temporary Prohibition: Temporary closure of facilities operating without proper authorization.

• Ban on Public Contracts: Restriction of the company's ability to participate in public contracts for up to ten years.

In view of the significant financial volume of investments in the sanitation sector, it is essential that companies adopt strict legal compliance practices to avoid criminal implications. This includes

• Preventive Consulting: Hiring specialized consultants to advise on compliance with bidding and environmental laws.

• Training: Training programs for employees on the new legal guidelines and sustainable practices.

• Monitoring and Auditing: Implementation of monitoring and auditing systems to ensure ongoing compliance with legal obligations.

Sustainable development and efficiency in the sanitation sector depend on strict compliance with legal guidelines, ensuring that companies can operate ethically and responsibly, contributing to the country's social and environmental development.

Reference:

Jota - Why should sanitation companies be concerned about criminal law? by Dante D'aquino