The return of “political appointments” is not the only relevant issue of the bill of law on Regulatory Agencies

Posted on: Jul 24, 2018

On July 11, a Special Commision of the Chamber of Deputies approved a bill of law establishing a new legal framework for Regulatory Agencies. Such bill had been approved by the Federal Senate in 2016; thus, its current version, as amended by the Chamber of Deputies, will be returned to the Senate for review.

“Political appointments”

As approved by the Federal Senate in 2016, the bill prevented the President from appointing, to an Agency’s Board of Directors, “a person who [had] acted, within the last 36 (thirty-six) months, in a political party’s decision-making structure, or in activities connected to the organization, structuring and execution of political campaigns.”

The original bill also made it unlawful for the President to appoint relatives, until the third degree, of Ministers of State, State and Municipal Secretaries, directors of political parties and holders of mandates in Federal, State and Municipal Legislative Powers.

Similar prohibitions, established in Federal Law nº 13.303/2016 (the “Statute of State-Owned Enterprises”), were applied to appointments made by the President to the management and corporate boards of state-owned enterprises.

The restrictions established in the bill approved by the Senate in 2016 and in the Statute of State-Owned Enterprises, however, were revoked by the bill approved by the Chamber of Deputies on July 11.

Less stringent technical requirements for Agency Directors and possibility of presidential interference in Agencies’ spending power

The bill regulates other equally relevant issues for the autonomy of Brazilian Agencies:

  • Less stringent technical requirements – the bill approved by the Chamber of Deputies reduces the technical requirements that had been set by the Senate for candidates to positions at Agency Boards. In the bill’s current version, some of such requirements are less stringent than those currently demanded from state-owned enterprises’ management and corporate board members;
  • Limitations to Agencies’ spending power – the bill does not prevent the President from, through a discretionary decision, limiting the amount of budgetary resources available to Agencies;
  • Possible unconstitutionality – pursuant to the Federal Constitution, bills of law regulating the “creation and modification of administrative bodies” can only be presented by the President. The bill recently approved by the Chamber of Deputies, however, was originally presented by a Senator in 2013. There are good arguments, therefore, to conclude that it is unconstitutional.

A bill of law similar to the project recently approved by the Chamber of Deputies had been introduced by the Presidency in 2004 (PL n⁰ 3.337/2004) — but it was withdrawn in 2013. The presentation of a new bill by the President establishing a proper regulatory framework for Agencies may be crucial to strengthen them in a lasting manner.