As another initiative to reduce bureaucracy in the Brazilian business environment, the Economic Freedom Act (Federal Law No. 13,874/19) received new regulations from the Committee for the Management of the National Network for the Simplification of Registration and Legalization of Companies and Business (CGSIM), this time related to urban licenses.

CGSIM Resolution No. 64, of December 11, 2020, exempts buildings and facilities classified as low risk from urban licensing, in addition to establishing automatic exemption from licensing for buildings considered to be moderate risk, by simply sending the documents indicated in the resolution itself. High risk buildings and installations remain subject to the traditional licensing rules in force.

For the risk classification, buildings and facilities are rated into levels of complexity and size according to various criteria, requirements, and constraints.

The states, Federal District, and municipalities are subject to the rules and provisions of CGSIM Resolution No. 64 as long as they do not have their own legislation, expressly created on the basis of the Economic Freedom Act, which regulates and delimits, in an exhaustive manner, the economic activities considered low risk and the exercise of which is independent of any urban licensing. Once such laws are promulgated, CGSIM Resolution No. 64 will have suppletory application.

Although federal entities have laws on risk classification and licensing waivers for low-risk activities, if such rules have not been promulgated based on the principles and definitions of the Economic Freedom Act, the rules of the resolution should prevail. CGSIM Resolution No. 64 is already receiving criticism related to its constitutionality, under the argument that it encroaches on the competence of the municipality in the ordering and control of land use and creates obligations for the drafting of its own legislation, disregarding the autonomy of the municipalities and the Federal District in legislating on their territory.

Another important point is that the licensing waiver process will be carried out in a declaratory manner by the interested parties, by sending documents via digital means, integrated and accessible simultaneously by all the competent licensing bodies. Once correct and complete submission has been made, the waiver of urban licensing is automatic.

The integrated submission to the licensing bodies must be done through individuals or legal entities, public or private, qualified by the CGSIM, called Digital Integration Proxies (PDI), forming the Market of Digital Urban Integration Proxies of National Integration (Murin). In general, IDPs are responsible for managing submissions, and may even act as representatives of the interested party before licensing bodies. While it is argued that Murin will facilitate citizen access and ensure free competition in the provision of such services, there are views that direct submission by the interested party should also be permitted.

There will certainly be further debates and criticism of CGSIM Resolution 64, which is why it is essential to monitor developments after its publication.

CGSIM Resolution No. 64 will take effect on (i) March 1, 2021, for municipalities with a population of over 5 million inhabitants, for the Federal District and for the municipalities and states affiliated to the National Network for the Simplification of Registration and Legalization of Companies and Business (Redesim), provided that they have registered for access to Murin; (ii) June 1, 2021, for the other municipalities and states affiliated with Redesim; and (iii) September 1, 2021, for the other federal entities.