A legal retrospective
 
A new decree regulating Brazilian ports may restart much-needed growth in the industry, argues José Virgílio Lopes Enei, a partner at Machado, Meyer, Sendacz e Opice Advogados.
 
During 2008, there were very intense discussions about the port industry in Brazil, maybe with a strength not seen since the enactment of the Ports Modernisation Law in 1993. Those discussions, we might add, came as a result of the significant increase in demand for port services, caused by the growth in export activities. Such growth made the huge gaps in Brazil’s logistics very clear, revealing low-quality and high-cost port services, as well as long waiting lines and irrefutable repressed demand.
 
Despite the legal prerogatives, public ports and their authorities were not able to expand capacity consistently with the increasing demand, which is mainly due to the low efficiency and agility of the government in managing corporate activities. This inefficiency was aggravated by the lack of planning and of clear expansion policies of national port infrastructure.
 
It is not by chance we are seeing the proliferation of private port terminals, especially mixed-use ones. Under the Ports Modernisation Law, mixed-use private terminals were supported by the government and considered a priority as the main option for fast expansion of the port services offer. The only requirement was the compliance with own cargo requirements, which, pursuant to the rules of the water-based transport regulator, ANTAQ, and the Federal General Attorney’s Office, did not require specific volume or minimum percentage in relation to third parties’ cargo or to the total capacity of the terminal’s activities.
 
However, the public terminal lessees were concerned about the new private terminals and filed an action (named Argüição de Descumprimento de Preceito Fundamental da Constituição Federal (ADPF)) to contest ANTAQ’s and the private terminals’ compliance with certain fundamental commands of the federal constitution. According to the public terminal lessees, the constitution says that port services are public services and, therefore, all new terminals destined to render services to third parties (moving mainly third parties’ cargo) should abide by the public law regime, with a previous bidding procedure and the consequent execution of a concession instrument.
 
In spite of the fragility of certain legal arguments supporting the ADPF, which refute the reality in Brazil, the judicial claim has forced public authorities to more closely focus on national port policies. In this regard, it must be said that the government had already been flexible regarding new changes to the port industry’s legal framework, as evidenced by the creation of the Ports and Hydroways National Dredging Programme, which admitted long-term contracts to be executed with private parties and to measure performance based on actual results.
 
As a result of this closer focus, the government enacted Decree No. 6,620/08, aiming at regulating the Ports Modernisation Law and subsequent related legislation. In parallel, the government prepares the Ports Strategic National Plan and the General Granting Plan (Plano Geral de Outorgas (PGO)). It should be noted that ANTAQ has already drafted the PGO and has already submitted it to the Presidency’s Special Ports Secretariat (Secretaria Especial de Portos da Presidência da República) for approval in April 2008. The purpose of these plans is to identify and give priority to the actions necessary to expand and improve the national port capacity.
 
The decree has in fact proposed policies and guidelines for the development of the Brazilian port industry, identifying clearer actions and priorities. Together with the Ports Strategic National Plan and the General Granting Plan, the decree may dissuade the public Port Authorities from inertia and compel them to gradually reduce the current ports gap.
 
Naturally, the decree does not offer a solution for the limitations inherent to government, including its lower efficiency in managing corporate activities. However, it took certain mitigating measures, which include giving priority in leasing public terminals to private companies, as well as enabling private companies to undertake feasibility studies in order to propose new projects and so to require its granting or leasing. The decree has also regulated the leasing of non-operational facilities, an innovation which may be very useful for revitalising degraded port areas in urban centres.
 
In relation to private ports, the decree maintained the authorisation regime and the exemption of bidding procedures, but conditioned the granting of new authorisations to the suitability of the projects to the policies and guidelines of the port industry.
 
The authorisation regime was maintained and became formalised by means of an adhesion contract. Two different authorisations were established: one for the terminal construction and another for its operation, the second one to be granted as an extension of the first one, after the fulfilment of all legal and regulatory requirements. In this aspect the decree stopped the use of authorisation terms adopted by the regulator ANTAQ, which treated authorisations as precarious and non-stable acts. Therefore, the adhesion contract might certainly contribute to resolve those questionings regarding the stability of authorisations.
 
Notwithstanding, the authorisation for the exploitation of mixed-use private terminals was even more restricted and made more difficult to obtain, due to the restrictions regarding moving third parties’ cargo, that is, third-party cargo may only be handled as a subsidiary and occasional activity. Additionally, third-party cargos must be of the same nature and have the same moving and storage characteristics of the company’s own cargo that justified the infrastructure associated with it.
 
Whether such limitation to new private terminals was appropriate or not, only time will tell, and naturally it depends on the capacity of the public ports to expand and supply the current repressed demand. Anyhow, the decree did not intend to affect those terminals already authorised, limiting its effects to the new acts and authorisations.
 
Also, although the decree did not recognise the merits of the ADPF, its new policies and rules converged with the results sought by the lawsuit. New mixed-use private terminals will only be authorised in restricted cases: when not inconsistent with the expansion plans of public ports and provided that the offer of services to third parties is a subsidiary and occasional activity. In addition, the government shall undertake to make new bidding procedures for concessions or new leases of public port terminals. In this regard, it is possible ADPF will lose its grounds and become moot, as it is not the appropriate judicial remedy to discuss only individualised or past facts.
 
The final question is to know how ANTAQ will construe the new decree, as the agency is responsible for adjusting its regulation and new authorisations to the decree’s terms. We want to believe that, once the divergences and questions mentioned above are settled, there will be a firm environment for restarting the port industry’s growth.
 
(Latin Lawyer 12.06.2009)
 
(Notícia na Íntegra)