On October 16, the Brazilian Congress voted to override the presidential veto of several articles of Law 14.273/2021 (Railway Law). Below we highlight the main changes resulting from the veto override.
Authorization applications for new railroads
As a result of the veto override, interested parties must also present technical, economic and environmental feasibility studies for a new railroad to the National Transportation Agency (ANTT) when applying for authorization to operate it.
The new provision seems to give ANTT greater control over the appropriateness of new authorization requests, based on these studies. Nevertheless, according to §6 of article 25, if all requirements are met, the authorization will be given except if there is incompatibility with the rail transportation national policy or there are relevant technical or operational reasons, duly justified by ANTT.
Cargo transportation operations
As a result of the veto override, refusal to transport cargo on railroads granted under both public and private systems (i.e., concession and authorization regimes, respectively) will only be justified if any of these conditions exist:
- Track saturation,
- Non-compliance with contractual conditions, or
- Unavailability of rolling stock or ancillary services suitable for transporting the cargo
With the enactment of the new rule, ANTT will have a more active role in overseeing railroads granted under the authorization regime, reducing private operators' discretion to decide whether to transport cargo. This is a measure to prevent abusive and anti-competitive behavior.
However, private railroad rates will remain unregulated, freely negotiated between operators and customers.
As a result of the veto override, public railway concessionaires now have a right of first refusal to obtain railway authorizations required within the boundaries of their concessions influence areas. Once the boundaries are set by ANTT, railway concessionaires will be granted up to 15 days to express their interest in exercising this option.
In the original bill, the right of first refusal did not apply to any authorizations required before the Railroad Law came into force. However, this provision's veto has not been overridden. Thus, ANTT will have to deal with whether the veto override affects authorizations that had already been applied for but have not yet been granted.
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This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.