Brazil Enacts the Legal Framework for Urban Public Transportation

On June 14, 2026, Federal Law No. 15,432, dated June 13, 2026, was published in Brazil’s Official Gazette, establishing the Legal Framework for Urban Public Transportation (the “Legal Framework”), as well as amending Federal Law No. 10,257/2001 (the “City Statute”), Federal Laws No. 10,336/2001 and No. 10,636/2002 (both related to the Fuel CIDE tax), and Federal Law No. 12,587/2012, which established the National Urban Mobility Policy.

The Legal Framework sets forth national guidelines for the planning, regulation, financing and operation of urban and metropolitan public transportation services. Its enactment comes at a time of growing attention to the sector. Recently, the National Urban Mobility Study (“ENMU”), conducted by BNDES in partnership with the Ministry of Cities, identified 187 medium- and high-capacity public transportation projects across Brazil’s 21 largest metropolitan regions, representing estimated investments of approximately BRL 430 billion. By addressing structural aspects such as financing, fare structure, contractual economic and financial arrangements and governance, the new Legal Framework may play a significant role in enabling the implementation of these projects.
Set out below are the main aspects of the new legislation, taking into account the vetoes applied to the bill approved by Congress.

1. Remuneration Structure: Public Fare vs. Operator Contractual Revenue

The distinction between the public fare paid by passengers and the remuneration due to service providers is not new. Federal Law No. 12,587/2012 had already established that the public fare paid directly by users is distinct from the service remuneration fare, which may include alternative revenues, direct budgetary subsidies, financial compensation, and ancillary revenues.

The new Legal Framework, however, revokes these provisions and introduces the concept of “operator contractual revenue,” defined as the contractual payment mechanism intended to cover the efficient costs of providing the service and ensure a fair and adequate return on invested capital and assumed risks. Such remuneration may derive from fares, subsidies and other revenue sources established in the contract and linked to performance, quality and service availability standards.

The distinction between passenger fares and operator remuneration is elevated to a fundamental principle of the service and becomes a mandatory contractual provision. The granting authority remains responsible for establishing public fare levels.

2. Funding Sources: Fuel CIDE, Federal Support and Stabilization Funds

The Legal Framework expands and organizes funding mechanisms for the sector on two fronts.

From an infrastructure perspective, the law identifies specific funding sources, including land value capture mechanisms, contributions related to the impacts of new developments, budgetary allocations, tax incentives, structured transactions involving public or private funds, capital markets instruments and other legally authorized resources.

Certain provisions had been approved by Congress, but were vetoed and excluded from the enacted version of the law, including development bank financing, carbon credit revenues, environmental compensation mechanisms and sustainability-related funds.

From an operational perspective, economic and financial sustainability may be supported through fare revenues, ancillary revenues, contributions and fees, intra- and intersectoral cross-subsidies, and other funding sources established by the granting authority.

The law also authorizes the use of Fuel CIDE revenues to finance fare subsidies and transportation infrastructure programs. A vetoed provision would have required at least 60% of CIDE revenues collected in urban areas to be allocated to urban transportation.

Federal participation in service funding is permitted through specific legislation, including support for institutional development, operational programs and compensation for costs arising from fare benefits established by federal law.

The Legal Framework also allows granting authorities to establish stabilization funds aimed at ensuring fare affordability and improving service quality through the allocation of surplus revenues generated by transportation operations.

3. Ancillary Revenues

The law expressly recognizes ancillary revenues that may be explored by operators, including advertising, naming rights, real estate development, commercial activities in stations and adjacent areas, parking fees, use of public land for garages and other revenue streams established by contracts or applicable legislation.

Transit-Oriented Development

The Legal Framework classifies not only stations, terminals, and boarding facilities as areas of public interest, but also adjacent areas intended for ancillary activities and urban renewal projects developed under transit-oriented development strategies, provided they are contemplated in the applicable master plan.

Contracts may provide for expropriation or inclusion of such areas as reversible assets. Where expropriation is carried out for urban development projects, revenues derived from the resulting real estate developments may form part of the operator’s remuneration.

4. Regional Integration as a Planning and Structuring Tool

The Legal Framework creates the concept of a regional public transportation unit, defined as an association of municipalities, states, or the Federal Government for the integrated and multimodal provision of public transportation services as a common public interest function.

Service authority may be exercised jointly through public consortia or cooperation agreements. Similar to the model adopted in Brazil’s sanitation sector, this mechanism may facilitate intergovernmental concessions and expand financing arrangements for transportation projects.

5. Relevant Presidential Vetoes

Several provisions approved by Congress were vetoed during the enactment process.

Among the most relevant were: (i) the provision that would have granted private operators reimbursement rights for investments made in reversible assets; (ii) rules requiring the identification of specific funding sources and prior budget allocation for fare discounts and gratuities; (iii) toll exemptions for vehicles used in urban public transportation services; and (iv) mechanisms involving differentiated tax treatment based on pollutant emissions and payments linked to service availability.

6. Fare Benefits

The Federal Government, the Federal District, states, and municipalities may establish programs to subsidize public transportation operations and support fare benefits, service improvements and other operational adjustments.

However, the provisions that conditioned fare discounts and gratuities on the identification of specific funding sources and prior budget allocation were vetoed.

7. Procurement, Tender Procedures and Transparency

The Legal Framework reinforces public bidding as the standard mechanism for delegating transportation services to private operators and prohibits the use of precarious contractual arrangements such as program agreements, cooperation agreements, partnership agreements or authorizations for that purpose.

As an exception, supplementary on-demand transportation services may be contracted, provided they remain ancillary and comply with local regulations.

The law also establishes transparency obligations requiring the periodic disclosure of information relating to costs, revenues, subsidies, fare benefits and performance indicators. The service authority must designate a regulatory and supervisory body—preferably an independent regulatory entity—to oversee transportation services.

Effective Date

The law will enter into force one year after its official publication, i.e., June 14, 2027.

For additional information regarding this matter, please contact our Infrastructure & Public Law partners, Bruno Werneck and Juliana Deguirmendjian.

*This content was produced with the participation of law clerk Giovanna Medeiros.