On July 30, the Senate approved Conversion Bill (PLV) No. 30/20. The text will now go for presidential approval. At issue is the conversion into law of Executive Order No. 945/20, published on April 4, with the main objective of mitigating the effects of the covid-19 pandemic in the port sector, especially the removal and compensation of individual workers belonging to risk groups or with symptoms of coronavirus contamination.

During the process of consideration of MP 945 by the Brazilian Congress, however, the congressmen introduced a series of amendments to the original text, turning the final version of PLV 30/20 into a real reform of the legal framework of the port sector, with changes mainly to Law No. 12,815/13 (New Ports Law) and Law No. 10,233/01 (Law creating Antaq).

The matters dealt with by PLV 30/2020 were varied: from the inclusion of port activities in the list of essential services contained in Law No. 7,783 (Labor Strike Law) to the provision of targeted measures to remedy the effects of the pandemic (mirroring the original provisions of MP 945), such as the possibility for leased terminals to hire workers freely (in contracts limited to 12 months) whenever there is unavailability of freelance workers in the Labor Management Body (OGMO) to meet labor requisitions (including during strikes, stoppages, etc.). Mitigation measures are in force for 120 days or as long as the effects of the pandemic continue.

Some of the changes implemented by PLV 30/2020, however, have a truly structural nature, responding to the historical demands of the sector in an effort to relax the arrangement for occupation of public ports areas, with a view to promoting greater competitiveness in organized ports. In this regard, the recent Operational Audit Report of the Federal Accounting Court (TCU), which sought to identify the limitations of organized ports in relation to Private Use Terminals (TUPs) in terms of commercial dynamism and operational efficiency, should be highlighted. The report describes the trend of migration of public port investments and cargo, mainly due to their structural rigidity, which often prevents more rational use of their areas.

In this sense, PLV 30/2020 basically implemented a two-pronged structural reform for the port sector: (i) segmentation of the legal arrangements for the concession of organized ports and the leasing of port facilities; and (ii) consecration of new contractual instruments for the occupation of port areas and facilities in organized ports.

As to the first set of amendments, it should be emphasized that, according to the previous wording of Law No. 12,815/13, the concession and lease arrangements in the sector basically coincided, although, in practice, they referred to substantially different economic operations.

With the maturing of the initiatives for the privatization of organized ports, with Codesa in the final phase of studies and Codesp in the advanced phase of hiring consulting firms, important measures were effected to delimit specific arrangements for the concession of ports and the leasing of terminals.

In a first analysis, it is noted that PLV 30/2020 withdrew the lease term from articles 4 and 5 of the New Ports Law, reserving this arrangement exclusively to concession contracts. Also included is article 5-A to clarify that contracts entered into between the concessionaire and third parties, including those for the operation of port facilities, shall be governed by the rules of private law. No legal relationship will be established between the third parties and the granting authority. Although the new provision is directly inspired by article 25, paragraph 1, of Law No. 8,987/95 (Concessions Law), the measure seems to come at a good time since, in the specific framework of the port sector, a similar rule was not supported by provisions of law, but only by regulatory decree (Decree No. 8,033/13, article 21), generating challenges and some legal uncertainty regarding the legal reserve for the treatment of the matter.

However, although the consolidation of the legal arrangement under private law for contracts entered into by future organized port concessionaires is an important measure for the imminent implementation of port concessions, points relevant for the mitigation of possible insecurities in the model seem to persist. The transitional arrangement between lease contracts, once subject to the legal arrangement of public law and which, with the concession of the organized port, are now subject to private law, is noteworthy. Currently the matter is subject to article 22 (head section and paragraphs) of Decree No. 8,033/13. However, given the relevance of the provision for the certainty and attractiveness of port concessions, it would have been equally helpful to incorporate it into Law No. 12,815/13.

As for port leases, PLV 30/2020 also introduces into the New Ports Law articles 5-B and 5-C, inaugurating an autonomous arrangement for such contracts, with simplified provisions and a new specific process for waiving bidding procedures. In accordance with the sole paragraph of the new article 5-B, the direct contracting of leases may occur upon meeting the following requirements: (i) proven existence of a single party interested in the operation of the port facility, established by performing a public call by the port authority aiming at identification of potential interested parties; and (ii) compliance of the lease with the PDZ (Development and Zoning Plan) of the port.

In relation to the second prong of structural innovations in the legal framework of the port sector, PLV 30/2020 also introduced a new article 5-D, responsible for disciplining, on a legal level, temporary use of port facilities. According to the provision, port authorities may agree to use of the port with the party interested in the handling of cargo with a non-consolidated market (for an non-extendable period of 48 months) for port areas and facilities located within the land area of the organized port. Bidding will be waived and a simplified selection process may be carried out (along the lines of what is done today for transition contracts) in the event that there are multiple interested operators.

Once again, the merits of the measure is the incorporation of the institute of temporary use into the text of law. The measure had been provided for by Normative Resolution No. 7 of Antaq (National Agency of Water Transportation), but the Federal Courts of Espírito Santo suspended its effectiveness because of alleged excess in the regulatory power of the agency.

PLV 30/2020 also amends article 27 of Law No. 10,233/01, including in it subsection XXIX to ensure Antaq the competence to regulate other forms of operation of port areas and facilities not provided for in specific legislation. The change seems to put an end to the one size fits all model in force in the port sector, under which, regardless of demand, the granting power only had lease agreements to allow occupation of port facilities. Such rigidity, as noted in the Operational Audit Report of the TCU, was imposed at the expense of the competitiveness of organized ports.

It is also clear that, in addition to determining the measures applicable exclusively in the context of the exception and public calamity that arose from the covid-19 pandemic, PLV 30/2020, on the eve of the inauguration of the new organized port concessions, implemented relevant changes and improvements in the legal framework of the port sector, with the potential to resolve old deadlocks and boost the operation of Brazil's public ports.