By: Ranieri Lima Resende
I. Truckers’ Movement: Lighting the Powder Fuse
What had begun as a backlash against the increase in the price of diesel became a national movement of truckers, blocking Brazilian roads through a diffuse, collective protest based on a broad agenda. According to the Finance Minister, Brazilian losses to date have been about $4 billion. These losses do not take into account how the blockade has negatively affected the social environment by creating private limitations on individuals’ freedom of movement, suspensions of medical appointments (e.g.: surgeries), risks of unavailability of medicines, and an inadequate distribution of supplies for companies and the general population.
In spite of the strict standards of liability in the Brazilian legal order, no entity or leader was considered responsible for these huge damages until now, mainly because of the diffuse nature of the movement. A symptom of the system’s failure to attribute responsibility can be seen in the low dissuasive effect of the decision adopted by Supreme Court Justice, Alexandre de Moraes, who authorized the use of federal and state police forces to unblock the roads and imposed significant monetary penalties for disobedient blockers and transportation companies.
In comparison, the recent truckers’ strike in Argentina had one important difference — the highly centralized organization in which a few labor union entities make up the national decision-making forum. This kind of structure facilitates the identification of responsible actors and, in consequence, the applicability of adequate legal measures by Argentinian public authorities.
In Brazil, after eleven days of a traumatic blockade, which was hardly recognizable as a classic type of strike, the negotiated solution involved government acceptance of several demands from the truckers, including a decrease in the price of diesel through public subsidies, adjustments of road tolls, and the establishment of minimal pricing policy for freight transportation, authorized by the Medida ProvisóriaNo. 832 (May 30, 2018). Acting in accordance with the Presidential act that delegated to the ANTT the power to establish the price table, the Agency, under pressure from an ongoing movement, published Resolution No. 5.820/2018 on the very same day without any wider discussion with representatives of other implicated economic sectors.
As could be reasonably expected, the minimum price policy encountered severe resistance from the National Confederation of Industry, which argued that the final consumer prices of some products would significantly increase in a cascade effect. In addition, the Minister of Agriculture said that the new freight transportation parameters would make the primary sector unsustainable. Then, on June 7th, the Agency released a second price table with different values and methodological corrections as Resolution No. 5.821/2018. At the same time, the Minister of Transport promised that public hearings would soon be called to allow an open debate on the subject among economic actors and civil society.
In a firm reaction, the representatives of the truckers’ movement clearly rejected the latest changes and threatened a new national blockade. A few hours later, the Minister announced that the most recent regulation would be cancelled. Demonstrating its very vulnerable position, the ANTT, in response, suspended the effects of June 7th Resolution No. 5.821/2018 and restored the original parameters inserted in its first Resolution of May 30th through a very questionable legal maneuver.
In just ten days, Brazilians were ruled by three different regulatory patterns applicable to freight transportation throughout the country, revealing the poor quality of regulatory activity combined with the relevant level of Presidential and Ministerial interference in the Agency’s powers. To better understand certain aspects of this situation, it is useful to briefly analyze the scenario from the perspective of the institutional design of Brazilian agencies.
II. Some Institutional Detours
Generally, the current model for regulatory agencies in Brazil was broadly implemented between 1996 and 2005 when more than 10 federal agencies were created in a number of fields (e.g.: energy, telecommunications, oil, health, water, and transportation). In spite of so many different specializations, the agencies had some essential characteristics in common, including their technical and regulatory nature, institutional autonomy, and the directive bodies proposed by the President and approved by the Senate for individual mandates.
Notwithstanding their well-elaborated abstract design, the practices of the regulatory agencies have taken dangerous shortcuts. One institutional detour can be identified in the action of the not-so-invisible hand of political parties on the agencies’ boards. According to a research study by the Getúlio Vargas Foundation published in 2016, which focused on 6 federal and 12 state agencies, about 27% of the all directors were affiliated with a party, only 58% had professional experience and connection to the specialized area of the respective agency, and 6% were from the private sector. Moreover, one-fifth of all directors did not complete their regular term and, out of these, 50% abruptly ended their term because of the election of new administrations (President and Governors).
Still based on the same academic work, another pervasive strategy for sabotaging the agencies’ autonomy appears in having the Executive or Legislative branch neglecting to nominate or approve candidates for the board, thereby risking the paralysisof the regulatory system. As some agencies adopt regulations by absolute majority, which requires more than 50% of the board to vote to be valid, political agents simply refuse to appoint or confirm new directors in order to perpetuate a vacancy and empty the board.
Not by chance, a notorious example of this situation occurred in the National Agency of Terrestrial Transport, which would have been in an artificially induced “coma” for about 4 years (2012-2015) because of an insufficient quorum for deliberation. To avoid this institutional deep-freeze, the precarious solution adopted was the provisional nomination of agency public servants as transitional directors by the Minister of Transport under Presidential authorization, but without parliamentary approval.
This makes apparent three structural effects likely caused by such unorthodox institutional practices:
1) the contamination of the regulatory activity from immediate political interests to the detriment of adequate mid- and long-term planning due to the direct interference of the President or the Minister;
2) the insulation of the agency from the reality of the market because of the low level of participation of directors from the private sector;
3) the weakening of the agency’s independence and legitimacy based on the long duration of interim director appointments without senatorial referenda.
This scenario clearly leads to the capture of the agency’s board and the regulatory function itself by the Executive Chief, the Minister, or some special-interest groups, which may apply policies not in the public interest.
III. De Facto Quasi-Regulatory Agency
Obviously, it is hard to believe that the behavior of the Agency alone caused the truckers’ movement that occurred in Brazil between May 21 and 31, 2018, but perhaps different institutional designs and practices could have generated adequate measures to avoid this chaotic climax or, at least, have managed the post-conflict reverberations with greater stability. As the contradictory sequence of price table regulations demonstrates, the decisions of the Agency have been perpetuating the conflict and seriously expanding it to other economic sectors. In this sense, the ANTT started talking about the on-going discussions focused on the possible third regulatory standard within the short interregnum of 15 days.
Another aspect deserves attention: in almost all public statements on the subject, the Minister of Transport appears mainly responsible for the regulatory policies and the ANTT Board remains completely unnoticeable as if the Agency Directors were just ordinary public servants connected to a Ministry’s regular department. In some way, this perspective might reflect the institutional reputation that has been absorbed by the private sector and the general public.
Within the literature on EU administrative law, there is an interesting category named the Quasi-Regulatory Agency. This type of agency does not produce autonomous regulations but only makes recommendations for the deliberative performance of another decision-maker (e.g.: European Medicine Agency and European Maritime Safety Agency). Despite the ANTT’s legal capability for regulation, the episodeanalyzed in this brief opinion lead to wonder if based on the substantive dynamic, some formal Brazilian regulatory agencies should have openly assumed a quasi-regulatory status.
Even when the law expressly delegates the power to regulate to the agency, as the Medida Provisória No. 832 did in its reference to the ANTT, political confirmation of the regulatory content by another authority may provide a compensatory measure for implicit institutional deficiencies, which might reveal a de facto quasi-regulatory agency.
IV. Judiciary: An Unfair Competitor
From the Brazilian agencies’ perspective, not only does the President and the Minister perform a relevant influential force in regulatory activity, but the Brazilian Judiciary does too. Through a type of inter-institutional competition, the Brazilian Judiciary has eclipsed the autonomy of the agencies on several occasions based on the general attraction of its universal competence for judging any legal question, including those in specialized fields.
Due to the strong belief in judicial supremacy, the Brazilian Judiciary regularly assumes a distinctive position in comparison with the Executive and Legislative branches. This political peculiarity has become a diffuse legal problem, given that each of current 773 federal judges’ offices seems potentially capable of suspending or derogating agency regulations in individual and collective cases, producing immediate effects that might have state, regional, or national implications. In this sense, the existence of 53 cases against the table pricing policy in the span of 15 days did not cause strangeness in legal practitioners even when interim measures had already been authorized by different federal judges.
In some way, the Brazilian Supreme Court itself contributes to this highly unstable scenario for regulatory agencies as the leading case may show.
In response to the prohibition of flavored tobacco products introduced by a Resolution of the National Health Regulatory Agency (ANVISA), a provisional measure was adopted by Supreme Court Justice Rosa Weber to suspend the national enforcement of the regulation in 2013. After this precarious situation lasted 5 years, the merits of the case were judged by the Plenary in 2018, when a tied vote at the Court restored the regulation’s legal strength. Through an institutional strategy applied against the authority of the Agency, the Supreme Court expressly encouraged the tobacco companies to file various lawsuits for avoiding the legal application of the ANVISA Resolution. According to the news, about 90% of all tobacco companies in Brazil are selling flavored products under the protection of scattered decisions adopted by federal judges in a clear confrontation with the valid Agency regulation.
Looking again at the ANTT pricing table regulation, a similar narrative is apparently under construction: a freight transportation association sought a constitutional remedy against the Presidential delegation and the Agency Resolution before the Supreme Court. Subsequently, Justice Rapporteur Luiz Fux suspended all cases involving the subject as well as the respective interim measures. At the same time, Justice Fux ordered a not-so-public hearing for a restricted audience composed of the Minister of Transport, the ANTT Director, the Federal General Attorney, the Federal General Prosecutor, the Applicant, and one representative of the National Confederation of Agriculture.
Based on the scheduling of this private meeting in the Supreme Court for June 20, 2018, the Agency interrupted the expected publication of the third pricing table resolution and deeply buried the promised public hearing, which was replaced by a mere remote consultant open to contributions from the general public as a kind of recognition of its institutional inability to mediate the conflict in its own specialized area. In a definitive assumption of the Agency’s functions, Justice Fux also called a judicial public hearing for representatives of public and private sectors involved (August 27) in order to relegate to the Court the decision on the minimal pricing policy for freight transport.
Through a strong judicial interference on December 6, 2018,Justice Fux suspended all administrative penalties imposed by the Agency based on the Federal Law and the ANTT Regulation on price table in order to provoke more reactions and instability. Just six days later, the same Judge revoked his own decision to restore the Agency’s power and capability to impose penalties based on the price table’s regulation.
Notwithstanding the Judiciary’s bona fides, these circumstances reveal a subtle judicial strategy of not only short-circuiting the Agency’s regulatory functions, but also affecting its institutional reputation. After all these interventions, a sincere question must be asked: What autonomous powers were left to the ANTT? Substantively speaking, maybe none.
The sky for Brazilian agencies seems not so blue as initially planned, especially for the National Agency of Terrestrial Transport during and after the truckers’ crisis of 2018. On one side, there are heavy clouds full of Presidential and Ministerial direct interference; on the other, a hungry Judiciary striving to take on its institutional powers; and in the middle, a Board of Directors that performs a very shy, unstable role.
This is definitely not an auspicious perspective for recognizing the Agency’s autonomy and independence in its true sense, but we might infer that the current scenario in Brazil reflects the sum of historical options adopted in politics for at least a decade. Maybe it is time to rethink the de factoquasi-regulatory performance of some Brazilian agencies as well as their institutional in-efficiency. Ignoring it may facilitate the occurrence of another nightmarish situation, especially for the new Administration inaugurated on January 1, 2019.
A tragedy occurred on January 25, 2019, in Brumadinho city, Minas Gerais state (Brazilian southeast), when a huge dam of mining residues broke and caused death and massive environmental damage. It is estimated that about 350 people died by the waste mud. Not so far from it, another avoidable similar occurrence had taken about three years before in a mining dam located in Mariana city, which was considered the worst environmental disaster in the country. Institutional attributions of Brazilian agencies might be identified in connection to both situations.
According to federal legislation, the competence for mining dams’ inspections remain with the entity which has authorized the respective activity. In both cases of Mariana and Brumadinho, there was the autonomous National Department of Mineral Production (DNPM), recently converted into the National Mining Agency (ANM). Subsidiarily, the National Water Agency (ANA) had the capacity to organize and manage the National System of Information on Dams Safety (SNISB) and was responsible to promote the connection among all inspection entities.
In this sense, it is interesting to read the press notes produced by these Agencies on the facts. On the one hand, ANA says that the inspections on mining dams are not under its functions without any word on its competence for connecting all inspectors; on the other hand, ANM registers that the Agency received a company’s positive technical report on the Brumadinho’s dam in December 2018, but does not expressly recognize the responsibility for direct inspection by the Agency itself.
In spite of all possible concomitant causes for those irreparable damages, Brazilian agencies’ institutional attributions seriously seem to have become an urgent matter not only for the private sector and investors, but also to the population’s protection and safety.
Ranieri Lima Resende is PhD. in Law Candidate at the Federal University of Rio de Janeiro (UFRJ, Brazil), Excellence Fellow of the Rio de Janeiro Research Foundation (FAPERJ, Brazil), and Visiting Doctoral Researcher for the academic year 2017-2018 at the New York University School of Law (NYU, U.S.). During his MSc. in Law studies at the Federal University of Minas Gerais (UFMG, Brazil), Ranieri was admitted as Visiting Research Fellow at the Max Planck Institute for Comparative Public Law and International Law (MPIL, Germany). He has published in many law journals, conference proceedings and collective books in Brazil and abroad, especially in the areas of International Protection of Human Rights, International Responsibility, Democracy, Constitutionalism, Fundamental Rights and Transitional Justice. Some of his works were quoted by the Brazilian Supreme Court in important precedents (e.g.: Asbestos case) and also included in the Oxford Bibliographies (topic: Countermeasures in International Law).