Our partner Antonio Rubilar and senior associate of the Public Law and Regulated Markets Group, Gonzalo Bravo, spoke exclusively with LexLatin to discuss the main changes and implications of the new Framework Law on Sectoral Authorizations in Chile.
Until recently, Chile’s strategic projects had to pass a litmus test: emerge unscathed from the maze of permitting. However, this scenario changed on September 29, with the publication in the Official Gazette of Law 21,770, or the Framework Law on Sectoral Authorizations (LMAS), which seeks to modernize the State and reduce waiting times for the execution of investment initiatives by between 30% and 70%. What changes with this law?
“The LMAS is a response to an urgent economic problem that Chile has been experiencing for almost a decade. This regulation is an attempt to respond to a long period of stagnant growth and productivity, a direct consequence of excessive bureaucracy and permitting, that is, a regulatory system perceived as slow, excessive, and discretionary, which has been identified as a key obstacle to investment in Chile,” explains Antonio Rubilar, partner at Albagli Zaliasnik.
The objective of the new regulatory framework, popularly known as the Permitting Law, is to enable investment projects to move forward with greater certainty and efficiency by reducing regulatory standards. In fact, it modifies more than 300 permits managed by a large number of public entities and regulated by different regulatory bodies.
According to the expert, the role of the LMAS is to organize the maze of existing regulations and permits. “This law does not eliminate permits, but rather standardizes, coordinates, and streamlines their processing,” he explains.
Gonzalo Bravo, senior associate of the Public Law and Regulated Markets Group at the Chilean law firm, points out that the main issues the law aims to resolve are the sequential processing of permits; the lack of binding deadlines and systematic non-compliance with existing deadlines; and the enormous administrative discretion of the public entities responsible for processing permit applications.
“The LMAS introduces a series of new features which, although not directly applicable on their own, incorporate tools that could be a real solution,” he explains.
For Bravo, the most important new features of Law 21,770 are:
- Parallel processing, which generally prohibits the requirement for prior permits, allowing simultaneous progress.
- Alternative enabling techniques (AETs) which, in the case of low-risk activities, replace ex-ante permits with a notice or sworn statement with ex-post oversight. “ATEs are the most efficient tool for low-risk projects and represent a paradigm shift for Chile,” says Bravo.
- Administrative silence, which triggers consequences—positive or negative, depending on the permit—if the authority fails to meet the legal deadline.
- The SUPER platform, a mandatory digital one-stop shop for the submission, processing, and tracking of all applications.
- Classification and deadlines, as it requires the 380 permits to be classified into types, each with a maximum resolution period ranging from 25 to 120 days.
Why can the Framework Law on Sectoral Authorizations promote investment in Chile?
As Law 21,770 sets cross-cutting standards, introduces standard procedures, establishes common principles for services—including interoperability, defined deadlines, and the duty to provide reasons—and establishes a governance architecture designed to coordinate historically autonomous agencies, the outlook is encouraging: analysts believe that strategic projects for economic development will begin to move forward and new investment opportunities will come to the country.
In this sense, while the permitting law serves as a response to a structural problem, it also aims to restore confidence in the state’s ability to manage authorizations with predictability and technical rigor.
In the best-case scenario, the most valuable asset created by the LMAS is predictability. By setting mandatory maximum deadlines and centralizing processing on the SUPER platform, the law makes it possible for the first time to quantify the timeline for non-environmental permits. In other words, the next time any project owner who does not require an environmental assessment needs to know how long it will take to obtain a permit, they will be able to find out easily, as the SUPER platform will provide the approximate deadlines for obtaining each permit. Now, with the LMAS and the SUPER platform, the permit schedule is no longer an uncertain variable and becomes a measurable milestone. This will allow for more aggressive development schedules and reduce the risk premiums associated with uncertainty about deadlines, which is key for any developer or project owner,” says Antonio Rubilar.
For Gonzalo Bravo, the institutional framework of the new regulatory framework is a real change that benefits investors and anyone who wants to develop a project.
Many problems in the processing of permits are due precisely to the lack of collaboration or coordination that currently exists between different public agencies. The creation of the Office of Sectoral Authorizations and Investment (OASI) and the Unified Sectoral Permit Information System (SUPER) are real solutions to these problems of lack of coordination and cooperation. On the one hand, the OASI will allow permits to be classified and will be able to coordinate, monitor, propose, and advise, while the SUPER platform will allow for greater transparency, as investors and civil society will be able to see in real time which service is missing a deadline, why, and for how long. Consequently, it is to be expected that the OASI will use this objective data to propose reforms based on evidence, rather than anecdotes or reports with no practical consequences. The transparency of SUPER is, in itself, the most powerful governance tool in the law,” says the senior associate of the Public Law and Regulated Markets Group.
Seven key concepts to consider before investing or trading under the new regime, according to Albagli Zaliasnik experts:
- Alternative enabling techniques promote radical acceleration for low-risk projects and replace permits with sworn statements, allowing operations to begin immediately. “This is a great benefit for small and medium-sized projects that do not require entry into the environmental assessment system. However, the success of this tool will depend largely on the state’s actual capacity to finance and carry out subsequent oversight,” they agree.
- The new institutional framework of the SUPER platform provides predictability for projects. “In addition, a public agency specializing in advising and monitoring on permit issues is being created,” they emphasize.
- Projects that are classified as strategic investment initiatives will be processed quickly. “This will drastically reduce regulatory risk and, therefore, allow projects to access lower capital costs,” they anticipate.
- The possibility of conducting parallel procedures is a huge advantage, but it will require an initial investment in regulatory due diligence and much more robust detailed engineering before any procedures can begin. “This tool will allow the owner of any project to prepare and submit a package of applications to the SUPER platform simultaneously, ensuring that the engineering and legal information is completely consistent from day one,” they add.
- The risks involved in implementing the LMAS are low, but they do exist. “The law depends on multiple regulations that are still pending; the success of the THAs will depend on the exercise of supervisory powers,” they warn.
- The application of positive silence is a solution to state inefficiency, but it is extremely risky. “An authorization obtained by silence is a weak authorization and will be an easy target for annulment litigation, creating a new form of legal uncertainty,” they note.
- Projects that require environmental assessment will benefit the least. “Large capital-intensive sectors, such as mining, energy, and infrastructure, remain in a situation of uncertainty. Although they will benefit from the LMAS in the post-RCA phase, the gain is marginal compared to their central problem: the delay and complexity of the SEIA and PAS, which were left out of this reform,” they explain.
Changes at the board level: what should companies consider in light of the new regulatory framework?
“The LMAS represents a huge cultural shift for companies. The problem will be identifying which internal company processes will be affected by the LMAS and future regulations. Identifying the benefits in terms of processes and the potential risks will be key at the board level and for companies in general,” replies Antonio Rubilar.
On this point, Gonzalo Bravo adds that the LMAS imposes the obligation to establish a model for supervising regulatory due diligence and compliance.
“With THAs, the company operates on the basis of a sworn statement. The compliance risk is transferred 100% to the company. A false, erroneous, or omitted statement can have serious consequences, such as closure or fines, and can even trigger the criminal liability of the legal entity,” he notes.
In turn, the board of directors must require a real-time monitoring dashboard for all permits on the SUPER platform.
“The new critical obligation is to monitor the clock to know exactly when deadlines are met and the company is in a position to invoke administrative silence, a decision that will have strategic legal implications, the outcome of which—favorable or unfavorable—will depend precisely on the internal capacity to supervise regulatory due diligence and compliance,” Rubilar explains.
The Chilean case: why the Framework Law on Sectoral Authorizations marks a regional turning point
The law came into force at a key political moment, in the midst of an unprecedented pre-election cycle. More than ever, the country is seeking to balance signs of regulatory stability with the urgency of unblocking strategic projects in energy, mining, green hydrogen, infrastructure, and logistics.
“While ‘red tape’ is a general problem in Latin America, what is remarkable and imitable in Chile’s case is not so much the technical model of the law or the solutions established therein, but rather the political consensus that made it possible, converging on a pro-growth agenda,” analyzes the partner at Albagli Zaliasnik.
However, the model is not so easy to replicate in other countries in the region. “Any imitation of the LMAS carries a risk: the Chilean law deliberately excluded reform of the complex Environmental Impact Assessment System (SEIA), which the mining industry itself identifies as the main obstacle, and also ignored the fact that the main problem in the development of projects is their constant judicialization. Therefore, any country that imitates this model without addressing its own parallel environmental reform and the judicialization of projects will only be solving half—and certainly the least complex—part of the problem,” warns Rubilar.
