By Leonardo Munhoz, Researcher at the Observatório de Bioeconomia da Fundação Getulio Vargas, São Paulo

As Brazil moves to modernize its environmental licensing system, a key debate emerges: how can the country balance efficient agricultural development with robust environmental safeguards? Bill No. 2,159/2021, recently approved by the Federal Senate, proposes a sweeping reform that redefines which rural activities require environmental licenses. This blog post unpacks what’s at stake in the ongoing legislative process, examining how the bill affects agricultural producers, rural compliance with the Forest Code, and Brazil’s position in global environmental governance.[1] Could this reform be a bold step toward legal harmonization—or does it risk weakening critical environmental protections?

Rural Environmental Licensing in Brazil: Legal Modernization or Environmental Risk?

In June 2025, the Brazilian Senate approved Bill No. 2,159/2021, marking a significant shift in how environmental licensing is conducted in the country. Unlike the current regulation, based on CONAMA Resolution No. 237/1997, the bill proposes a unified national framework for environmental licensing, aiming to harmonize procedures and deadlines across Brazilian states. While environmental licensing has existed in Brazil for decades, this bill introduces, for the first time, a national law that comprehensively governs such processes.

A primary motivation for the legislation is to resolve the current fragmentation in licensing rules among the states, particularly in the agricultural sector. Today, whether an agricultural activity needs environmental licensing varies widely depending on the state. This discrepancy arises from the combined application of Resolution No. 237/1997 and Complementary Law No. 140/2011, which delegates certain licensing powers to state governments. Consequently, the same activity—such as forestry or intensive livestock farming—may be subject to licensing in one state and exempt in another, depending on differing local interpretations and thresholds.

This fragmentation leads to legal uncertainty, inefficiencies, and competitive imbalances among producers in different states. For example, a cattle farmer in São Paulo might benefit from a streamlined process or even be exempt from licensing altogether, while their counterpart in Minas Gerais must undergo a full licensing procedure. Such discrepancies not only impact business planning and investment but also fuel legal disputes and administrative challenges for both state agencies and farmers.

The new bill introduces a federal standard distinguishing agricultural activities into two categories: those exempt from licensing, such as extensive and semi-intensive farming, and those requiring licensing, especially intensive livestock operations. Importantly, it introduces the instrument of “Licença por Adesão e Compromisso” (LAC), a simplified licensing process that some states, like São Paulo and Santa Catarina, already apply for low-impact activities. However, the proposed federal framework would allow LAC for medium-impact intensive livestock activities, which is a departure from current norms and may face constitutional scrutiny.

This change in scope has ignited debate. On one hand, it offers flexibility and a faster route to legal compliance for producers operating within sustainable thresholds. On the other, critics argue it opens the door to weakening oversight over potentially impactful operations, especially if there are gaps in the evaluation of what constitutes ‘medium impact’. Defining the thresholds and risk assessment metrics becomes critical, and stakeholders demand transparency in how these categories will be enforced.

The bill does not ignore existing environmental protections. All rural properties, whether or not their activities require a license, must comply with Brazil’s Forest Code (Law No. 12,651/2012). This includes obligations such as registering in the Rural Environmental Registry (CAR), maintaining Areas of Permanent Preservation (APP), and ensuring the integrity of Legal Reserve (RL) zones.[2] Properties that fail to meet these obligations must enroll in the Environmental Regularization Program (PRA), under penalty of noncompliance with national conservation laws.

This connection between environmental licensing and land-use regulation is unique to Brazil. The Forest Code imposes land-use restrictions that function similarly to environmental servitudes, limiting a landowner’s use of portions of their property without financial compensation. This model of preservation places Brazil among the strictest globally in terms of environmental obligations tied directly to private land use.

Despite the exemption of certain activities from licensing, environmental obligations such as authorization for legal deforestation remain. This means that any land-use change involving the removal of native vegetation, even on properties exempt from licensing, still requires official approval. Therefore, the bill reinforces rather than weakens the environmental regulatory structure in Brazilian agriculture.

A point of legal ambiguity, however, arises in the production of biological products—known as bioinputs. Brazil’s Bioinputs Law (Law No. 15,070/2024) allows for the on-farm production of biofertilizers and biopesticides, requiring only adherence to good practices and a producer registry. Yet the bill currently does not exempt such production from environmental licensing, even if done on a small scale. This could lead to regulatory overlaps, especially since the new bioinputs law and the licensing bill lack clear integration. Addressing this legal uncertainty will require further infra-legal regulation and coordination between federal laws.

It is worth noting that on-farm production of bioinputs has grown significantly in Brazil in recent years, driven by the need for sustainable alternatives to chemical inputs and the increasing demand from export markets for residue-free commodities. As the sector grows, clarity in the regulatory framework becomes not just a matter of compliance, but a determinant for innovation, market access, and investment.

Comparative Law

International comparisons reveal that Brazil’s proposed model stands out for its rigor. In the United States, environmental licensing of agricultural activities is minimal. The National Environmental Policy Act (NEPA) applies only to federally funded or approved projects, leaving private farming largely unregulated. Only concentrated animal operations (CAFOs) that discharge pollutants into water bodies are subject to regulation under the Clean Water Act. Moreover, the U.S. lacks an equivalent to Brazil’s Forest Code, meaning rural property owners face fewer legal environmental obligations regarding land preservation.

In South Africa, environmental licensing is governed by the National Environmental Management Act (NEMA), which mandates prior authorization for potentially impactful activities. Though licensing is limited to activities like land clearing beyond 300 square meters or conversions above 100 hectares, there is no requirement equivalent to Brazil’s APP and RL obligations. Notably, the South African licensing system is single-phased, unlike Brazil’s traditional three-step model.

In Australia, the Environment Protection and Biodiversity Conservation Act (EPBC Act) triggers licensing only when activities impact nationally significant environmental assets—such as endangered species or indigenous lands. States may impose stricter regulations, often focusing on vegetation clearing. Again, there is no nationwide requirement similar to Brazil’s Forest Code.

Therefore, in terms of regulatory reach and environmental oversight, Brazil’s framework—particularly the integration of licensing with land-use obligations under the Forest Code—is among the most comprehensive globally. While other countries regulate environmental impacts, none impose such extensive obligations on rural landholders independent of licensing status.

Constitutional issues?

Despite this rigor, the legal sustainability of using LAC for medium-impact livestock activities remains contentious. According to current jurisprudence from the Brazilian Supreme Court (STF), such as in the case of Direct Action of Unconstitutionality (ADI) No. 6618, simplified licensing procedures like LAC may only apply to low-impact activities. Any deviation from this, such as licensing medium-impact operations under LAC, may be deemed unconstitutional unless the court adopts a more flexible interpretation. In the ADI 6618 case, the STF explicitly ruled that simplified licensing mechanisms should apply only to activities with low degradation potential, aligning with CONAMA’s existing framework.

The risk is not merely theoretical. In states like Rio Grande do Sul, legislation that expanded LAC to medium-impact activities was struck down on these grounds. Without a revision in national jurisprudence or the underlying resolutions, the use of LAC as proposed by Bill No. 2,159 for medium-impact livestock could be judicially challenged.

Nonetheless, the bill’s alignment with the Forest Code provides a strong legal backbone. By maintaining strict obligations for environmental preservation, including the restoration of degraded areas, and requiring licensing for intensive livestock, the proposal arguably strengthens Brazil’s environmental governance. It also ensures legal certainty and coherence across states, fostering a more predictable business environment for farmers and investors alike.

Importantly, the bill does not eliminate environmental licensing. Instead, it adapts its form and scope, ensuring that activities with higher environmental risk—such as animal farming and soil contamination—remain under scrutiny. This approach balances environmental protection with the operational realities of modern agriculture.

In conclusion, the environmental licensing framework proposed by Bill No. 2,159 does not constitute an environmental regression. Instead, it represents a pragmatic evolution, seeking to integrate rigorous environmental obligations with a more efficient licensing process. While legal ambiguities remain—particularly regarding LAC for medium-impact operations and licensing for on-farm bioinputs—these can be addressed through careful regulation and continued judicial oversight.

Conclusion

For Brazil, a country with one of the world’s most diverse ecosystems and a global agricultural powerhouse, the challenge is not only to produce sustainably but also to regulate intelligently. The success of this bill will ultimately depend on the enforcement of the Forest Code, the clarity of its regulatory frameworks, and the judicial system’s ability to reconcile legal innovation with constitutional principles of environmental protection.

Only with full implementation and institutional alignment will Brazil be able to show the world that agricultural productivity and environmental stewardship are not mutually exclusive but can, in fact, reinforce each other in a sustainable development trajectory.

Credit: Photo by Adrian Infernus on Unsplash

[1] This article was based on MUNHOZ, L. G. S.. Licenciamento ambiental no Agro – PL 2.159/2021. São Paulo: FGVagro, 2025 (Relatório).

[2] According to the Forest Code (Federal Law 12,651/2012)[8], new areas of forests can be converted into agriculture only through (i) an authorization by the Environmental State Agency and (ii) if the farmer is already protecting its Permanent Preservation Areas (APP) (e.g., riparian forests) and its Legal Reserve (RL) (percentage of native vegetation up to 20%, 35% or 80% depending on the biome in which the farm is located), see New environmental restrictions and their impact on international trade on this blog.