MPF Recommendations on Land Lease Agreements for Energy Projects
The Brazilian Federal Prosecution Service (Ministério Público Federal – “MPF”) has issued three recommendations that significantly change the rules applicable to land lease agreements for wind and solar energy projects in Brazil. Recommendations No. 17/2023 and No. 22/2023, issued in April and May 2023, and more recently Recommendation No. 30/2025, issued in December 2025, address alleged abusive contractual practices, shortcomings in consultations with traditional communities, and non-compliance with legal rules governing land leasing by foreign or foreign-controlled companies. As a practical consequence, authorities such as the Brazilian Electricity Regulatory Agency (Agência Nacional de Energia Elétrica – “ANEEL”) and the National Institute for Colonization and Agrarian Reform (Instituto Nacional de Colonização e Reforma Agrária – “INCRA”) have been urged, through recommendations, to provide information, review authorizations and contracts, and amend their regulatory procedures.
One of the central pillars of these recommendations is the reinforcement of the mandatory Free, Prior and Informed Consultation (Consulta Livre, Prévia e Informada – “FPIC”) for projects that may affect traditional communities. Recommendation No. 17/2023 advises the environmental authority of the State of Paraíba to condition the granting of environmental licenses on the performance of FPIC in accordance with protocols defined by the communities themselves. In this regard, the recommendation reflects an understanding—increasingly present in the MPF’s practice—that FPIC should not be treated as a mere procedural formality or an ancillary step within environmental licensing, but rather as an autonomous process to be conducted even before administrative decisions that enable the project.
Another line of recommendations issued by the MPF concerns the content of land lease agreements involving traditional communities, quilombola communities, or agrarian reform settlers. Recommendation No. 22/2023, dated May 18, 2023, is specifically addressed to INCRA and introduces requirements applicable to companies intending to enter into such agreements with these communities, including: (i) the obligation to provide draft agreements at least 60 days in advance; (ii) the inclusion of transparency clauses regarding energy generation and revenues, periodic financial compensation, the supply of part of the generated energy at affordable prices for local use, as well as a minimum remuneration corresponding to 6% of the revenue obtained from the sale of electricity from each wind turbine or solar panel; and (iii) the inclusion of a five-year contractual review clause, with the option of unilateral termination by the community if the project’s economic return is lower than that of the agricultural activity previously carried out in the area.
In this context, it should be noted that there is a risk that land-lease agreements already executed with traditional communities, quilombola communities, or agrarian reform settlers without these safeguards may be deemed null and required to be renegotiated under the new criteria. In addition, the absence of adequate FPIC may give rise to challenges affecting environmental licensing and the operation of projects, increasing their legal and reputational risks.
Finally, the MPF’s recommendations draw renewed attention to the legal regime applicable to foreign-owned companies in renewable energy projects involving rural land. Under Law No. 5,709/1971 (as interpreted by Attorney General’s Opinion AGU LA-01/2010), Brazilian companies controlled by foreign capital are equated to foreign legal entities for purposes of acquiring or leasing rural land, and therefore require prior authorization from INCRA.
In this context, the MPF recommended that ANEEL identify all Special Purpose Vehicles (Sociedades de Propósito Específico – “SPVs”) under foreign control in the wind and solar sectors, notify such companies to present INCRA authorization and the relevant land registry records, and, in cases of non-compliance, adopt administrative measures, including the revocation of authorizations. The MPF also recommended the review of ANEEL Resolution No. 1,071/2023 to make the submission of land tenure documentation mandatory in new authorization requests.
INCRA was further recommended to conduct, within 60 days, a survey of SPVs with foreign capital operating in the sector and to verify the existence of the corresponding land authorizations. In the event of irregularities, the MPF advises the adoption of administrative and judicial measures to annul acquisition or lease agreements and to notify the competent authorities. These measures cover acquisition or lease agreements executed without authorization, as well as agreements that, regardless of their denomination, effectively characterize a rural lease relationship.
It is worth emphasizing that rural lease agreements are not, in any event, the appropriate instrument to govern the relationship between wind and solar energy companies and landholders, as they are designed for typically rural relationships (specifically agricultural, livestock, agro-industrial, extractive, or mixed activities) and are subject to a series of specific conditions established under the Land Statute (Law No. 4,504 of November 30, 1964) and its implementing decree (Decree No. 59,566 of November 14, 1966). These conditions bear no relation to the energy market nor to prevailing market practices. By generalizing the contracts currently used in the energy sector, the MPF appears to suggest that rural land possession can only be regulated through lease agreements, which is not the case.
Another aspect addressed by Recommendation No. 30/2025 concerns the presentation of draft agreements as references for rural lease contracts aimed at wind and solar power generation. These drafts include clauses such as the requirement of FPIC for impacted communities, a minimum monthly payment equivalent to four minimum wages per hectare used, and an annual premium of 2.5% of gross revenue. They also provide for compensation for indirect impacts, prohibit automatic renewal, and require five-year reviews, with the possibility of unilateral termination in specific situations. In addition to these conditions not having been properly contextualized by the MPF, it should again be emphasized that lease agreements are generally not applicable to the energy sector.
Taken together, the MPF’s recommendations direct public authorities to review regulations monitor contracts entered into by foreign-capital companies, and assess the legality of authorizations granted without proof of land tenure regularity. The indicated measures affect projects under development, in operation, or in the structuring phase, requiring verification of contractual and land tenure compliance in light of the applicable legal requirements. From a socio-environmental perspective, the recommendations reinforce the need for prior risk assessments involving traditional peoples and communities, as well as the integration of land tenure analysis, environmental licensing, and FPIC processes.
In light of the information to be submitted to the MPF and the fact that the companies involved will be notified to present their positions, our team remains available to provide legal assistance on this matter.
