Brazil’s National Strategy for Regulatory Improvement: A Step Toward Regulatory Quality, but Also Toward Greater Control?

By Dr. Márcio Alcântara, Brasília, September 18, 2024

Brazil and the United States recently reached an agreement to strengthen good regulatory practices in Brazil. The Ministry of Development, Industry, Trade and Services (MDIC) and the Office of the Attorney General of Brazil (AGU) signed a memorandum of understanding with the U.S. Office of Information and Regulatory Affairs (OIRA), within the Office of Management and Budget, and the U.S. Department of Commerce, under the Commercial Dialogue between Brazil and the United States in Washington. [1][2]

The agreement is consistent with the National Strategy for Regulatory Improvement, known as Estratégia Regula Melhor (“Better Regulation Strategy”), launched by the federal government in August 2024 to promote continuous improvement in regulation. The partnership is expected to result in clearer and more effective rules, benefiting companies and citizens, with AGU’s participation adding legal backing to the process.

In recent weeks, however, federal regulatory agencies have faced strong public criticism from government officials. The Minister of Mines and Energy, Alexandre Silveira, publicly raised the possibility of intervention in ANEEL, the Brazilian Electricity Regulatory Agency. [3] The decree establishing the Regula Melhor Strategy also assigns a broad role to the steering committee responsible for coordinating, monitoring, and evaluating its implementation. Depending on how that role is exercised, it could increase Executive Branch influence over agencies’ regulatory agendas. [4]

The strategy is part of PRO-REG, the Program for Strengthening Institutional Capacity for Regulatory Management, currently governed by a decree from October 2023. [5] Under the current framework, the program’s steering committee is responsible for coordinating actions across several areas of government, not only within regulatory agencies.

Guidelines of the Regula Melhor Strategy

The Regula Melhor Strategy, established by Decree 12,150 of August 20, 2024, aims to disseminate good regulatory practices with a focus on citizens, promote continuous improvement of the regulatory process, improve the business environment, and safeguard society’s interests. With guidelines and objectives set for a ten-year period, the strategy seeks to create a safer, more predictable and more reliable regulatory environment.

The guidelines of the Regula Melhor Strategy include:

• Open government;
• Evidence-based regulatory action;
• Allocative efficiency and effectiveness;
• Use of plain language;
• Accountability;
• Justice and social welfare;
• Promotion of competition;
• Innovation.

These guidelines aim to foster collaboration between government and society, ensure that regulations are based on reliable data, allocate resources efficiently and make regulations accessible and clear. They also seek to hold the parties involved accountable, consider the effects on social welfare, promote market competition and support an environment favorable to innovation.

Objectives of the Regula Melhor Strategy

The Regula Melhor Strategy sets out seven specific objectives:

1. Communicate, raise awareness, and promote engagement among the various actors involved in regulatory activity to support the consistent, broad, and effective adoption of good practices.
2. Encourage the creation, sharing and use of knowledge.
3. Encourage cooperation among regulators at all levels of government and with other relevant actors in the regulatory process at the local, national, and international levels.
4. Develop the institutional capacities needed for regulatory activities.
5. Promote periodic review of the existing stock of regulations, simplify regulation, and adopt measures to reduce red tape and regulatory costs while encouraging innovation.
6. Expand transparency and effective, inclusive and continuous public participation.
7. Coordinate with the bodies and entities of the federal public administration, with a view to promoting regulatory coherence and competition in markets and supporting evidence-based decisions.

For each objective, the strategy sets out a series of high-level actions and deliverables, such as creating a Regulatory Intelligence Center, conducting awareness-raising activities for key actors, harmonizing rules for public participation, and reviewing and consolidating the existing stock of regulations.

Indicators and Targets

The Regula Melhor Strategy also establishes indicators and targets for each objective, allowing progress in implementing the proposed actions to be monitored and evaluated. Examples of indicators include the degree of alignment in regulatory instruments and timelines at the federal level, perception surveys on the effectiveness of public participation and the transparency of information about the regulatory process, and an increase in the number of regulators rated as “improved” in different areas.

Final Remarks

The National Strategy for Regulatory Improvement is an important step toward higher regulatory quality in Brazil, with the potential to promote a safer, more predictable, and more reliable regulatory environment for the benefit of society and the country’s development.

At the same time, the strategy could also become a channel for greater Executive Branch influence over regulatory agencies. By setting government-wide guidelines and objectives and assigning an Executive Branch committee responsibility for monitoring implementation, the Regula Melhor Strategy could, depending on how it is applied, affect agency autonomy and influence regulatory priorities.

It is therefore essential that the implementation of the Regula Melhor Strategy be closely followed by civil society and oversight bodies, to ensure that improving regulatory quality does not compromise the independence and technical capacity of regulatory agencies.

The agreement between Brazil and the United States on good regulatory practices could bring benefits, including clearer and more effective rules. However, recent public criticism of regulatory agencies by government officials and the stronger role of the Executive Branch in monitoring the strategy raise questions about how agency autonomy will be preserved in practice.

The National Strategy for Regulatory Improvement is therefore a relevant initiative for the development of regulation in Brazil, but its implementation should be transparent and attentive to the balance between regulatory improvement and the preservation of regulatory agencies’ autonomy.

References

1. WIZIACK, Julio. Brasil e EUA fecham acordo para agências reguladoras [Brazil and U.S. reach agreement on regulatory agencies]. Folha de S. Paulo, São Paulo, Sept. 17, 2024. Painel S.A. column. Available at: https://www1.folha.uol.com.br/colunas/painelsa/2024/09/brasil-e-eua-fecham-acordo-para-agencias-reguladoras.shtml. Accessed on: Sept. 18, 2024.
2. AGÊNCIA GOV. AGU e MDIC celebram acordo com agência americana para aprimorar práticas regulatórias em ambiente de negócios no Brasil [AGU and MDIC sign agreement with U.S. agency to improve regulatory practices in Brazil’s business environment]. Sept. 2024. Available at: https://agenciagov.ebc.com.br/noticias/202409/agu-e-mdic-celebram-acordo-com-agencia-americana-para-aprimorar-praticas-regulatorias-em-ambiente-de-negocios-no-brasil.
3. EXAME. Ministro de Minas e Energia critica inércia da Aneel e cogita intervenção [Minister of Mines and Energy criticizes ANEEL’s inaction and considers intervention]. Aug. 20, 2024. Available at: https://exame.com/brasil/ministro-de-minas-e-energia-critica-inercia-da-aneel-e-cogita-intervencao/.
4. BRAZIL. Decreto nº 12.150, de 20 de agosto de 2024 [Decree 12,150 of August 20, 2024, establishing the National Strategy for Regulatory Improvement]. Available at: https://www.planalto.gov.br/ccivil_03/_ato2023-2026/2024/decreto/D12150.htm.
5. BRAZIL. Decreto nº 11.738, de 18 de outubro de 2023 [Decree 11,738 of October 18, 2023, on the Program for Strengthening Institutional Capacity for Regulatory Management, PRO-REG]. Available at: https://www.planalto.gov.br/ccivil_03/_ato2023-2026/2023/decreto/D11738.htm.

The opinions and analyses expressed in this article are personal and do not represent the positions, decisions or institutional views of the Brazilian Electricity Regulatory Agency (ANEEL).