Framework Law of the Drinking Water and Sanitation Sector

This Law establishes the regulations applicable to drinking water and sanitation services throughout the national territory as a basic instrument in promoting quality of life in the population and strengthening sustainable development as a generational legacy. The provision of these services shall be governed under the principles of quality, equity, solidarity, continuity, generality, environmental respect, and citizen participation.

The objectives of this Law are:

• 1)

  To promote the expansion of coverage of drinking water and sanitation services;

• 2)

  To ensure water quality and potability, guaranteeing that its consumption is healthy for people;

• 3)

  To establish the framework for environmental management, both for the protection and preservation of water sources and for sanitation and management of effluent discharges;

• 4)

  To establish criteria for service valuation, tariff schemes, and mechanisms of compensation and social solidarity that guarantee access to the resource for family and community groups in conditions of social vulnerability;

• 5)

  To strengthen organization and governance in the management of drinking water and sanitation services through appropriate allocation of functions, competencies, and responsibilities, promoting citizen participation in the conduct of the process and in conflict resolution;

• 6)

  To establish the integration of responsibilities for environmental management and infrastructure operation of drinking water and sanitation services for service providers as the foundation to contribute to resource preservation, sustainability, and actual valuation of the service;

• 7)

  To establish conditions for regulation and technical control of those who construct or operate drinking water and sanitation systems;

• 8)

  To establish mechanisms for service provision in rural areas that operate efficiently and comply with the objectives set forth in this Law;

• 9)

  To promote citizen participation through Water Management Boards and other forms of community organization in service provision, execution of works, and expansion of drinking water and sanitation systems; and,

• 10)

  To promote efficient operation of drinking water systems, sanitation works, and efficient use by users.

The supply of water for human consumption has priority over any other use of this resource.

Municipalities shall have the right of preference over natural or legal persons, public or private, for the utilization of any body of surface or underground waters necessary for the supply of drinking water for human consumption, discouraging to the extent applicable the provisions of the Civil Code, the General Environmental Law, the Municipalities Law, the Health Code, and legislation on the subject matter.

Without prejudice to national registries, municipalities shall maintain a special registry in which must be registered national organizations, non-governmental international cooperation organizations that participate in activities related to water supply and sanitation programs.

For the purposes of this Law, the following terms shall be understood to mean:

• 1)

  DRINKING WATER: Water suitable for human consumption;

• 2)

  SERVICE: The system by which home delivery or immediate supply of water is made through pipes, as well as treatment of effluents and other pollutant discharges into water bodies;

• 3)

  SANITATION: Collection, treatment, and disposal of wastewater and its residues, including management of latrines and discharge of other substances that could contaminate aquifers or water courses;

• 4)

  REGULATION: The authority of the entity to apply criteria and regulations in relation to techniques and municipal ordinances applicable to the scope of drinking water and sanitation services, and the efficiency of management and water quality in service provision; environmental respect and financial sustainability, which stimulates and obligates service providers to improve services through progressive achievement of technical, economic, health, and environmental targets.

• 5)

  CONTROL: Monitoring and evaluation of service provider management in service improvement and achievement of technical, economic, health, and environmental targets through objectively measurable performance indicators and results;

• 6)

  CONTINUITY AND GENERALITY: Qualities of drinking water and sanitation services supplied in continuous and accessible form to all users;

• 7)

  EQUALITY, EQUITY, AND SOLIDARITY: Principles according to which users of services in equal conditions must be treated in the same manner;

• 8)

  TRANSPARENCY: Principle according to which service provision, investment plans, management results, and tariffs are explicit and public;

• 9)

  SERVICE PROVIDERS: Natural or legal persons authorized with the responsibility to provide drinking water and/or sanitation service;

• 10)

  ENVIRONMENTAL MANAGEMENT: Development of plans based on sectoral policies and strategies of the State to protect and preserve the environment; and,

• 11)

  COMPREHENSIVE MANAGEMENT: The inescapable and associated obligation of service providers to carry out environmental protection tasks in the sections and course of the watersheds from which they draw the resource and where they discharge it.

The National Council of Drinking Water and Sanitation (CONASA) is created, which shall be composed of:

• 1)

  The Secretary or Under-Secretary of State in the Office of Health, who shall preside;

• 2)

  The Secretary or Under-Secretary of State in the Offices of Governance and Justice;

• 3)

  The Secretary or Under-Secretary of State in the Offices of Natural Resources and Environment;

• 4)

  The Secretary or Under-Secretary of State in the Office of Finance;

• 5)

  The President of the Association of Municipalities of Honduras (AMHON);

• 6)

  A representative of Water Management Boards elected in a National Assembly of departmental representatives chosen in turn at an assembly convoked by the Governor of the department; and,

• 7)

  A representative of users who shall be elected in a national assembly of departmental representatives at the call of the Consumer Authority. The General Manager of the National Autonomous Service of Aqueducts and Sewers (SANAA) shall serve as Executive Secretary of CONASA, whose functions shall be established in the Regulation of this Law.

CONASA shall have the following powers:

• 1)

  To formulate and approve policies of the Drinking Water and Sanitation Sector;

• 2)

  To develop strategies and national plans for drinking water and sanitation;

• 3)

  To define sectoral objectives and targets related to drinking water and sanitation services;

• 4)

  To prepare the investment program for the sector at urban and rural levels, and coordinate with competent organizations, especially municipalities, the mechanisms and financial activities structured with drinking water and sanitation projects;

• 5)

  To serve as an organ of coordination and consultation of the activities of the various public or private institutions related to technology, training, service improvement, and conservation of water sources, as well as to channel their economic contributions;

• 6)

  To promote dialogue spaces with participation of society sectors;

• 7)

  To develop the methodology to establish economic valuation of water; and,

• 8)

  Such other functions as are established in this Law.

There is created an Institution called the "Regulatory Authority for Drinking Water and Sanitation Services", hereinafter known as the "Regulatory Authority", as a decentralized Institution attached to the Secretariat of State in the Office of Health, with functional, technical, and administrative independence, which shall have the functions of regulation and control of the provision of drinking water and sanitation services throughout the national territory.

The Regulatory Authority shall establish control mechanisms over the conditions of service provision, which shall be of general character and local application, and may have the assistance of regional, municipal instances, and citizen audits.

The Regulatory Authority shall be composed of three (3) members appointed by the President of the Republic at the proposal of the National Council of Drinking Water and Sanitation (CONASA), with a minimum of five (5) years of experience in the field and shall serve for five (5) years and may only be removed for justified cause. Those who perform activities in conflicts of interest incompatible with their functions may not be members of the Regulatory Authority, nor relatives of each other within the fourth degree of consanguinity or second degree of affinity, nor members of CONASA in the same degrees previously mentioned.

The Regulatory Authority, in fulfillment of its functions and considering the physical characteristics of the systems, institutional conditions, and financial capacity of municipalities, shall establish differentiated criteria for the application of regulatory norms through properly reasoned resolutions.

The Regulatory Authority shall have the following powers:

• 1)

  To comply with and ensure compliance with this Law, its Regulation, and environmental health and other regulations applicable in its field of competence;

• 2)

  To promote efficiency in the activities of drinking water and sanitation service provision and to investigate and sanction illegal or discriminatory conduct among participants;

• 3)

  To establish norms, efficiency criteria, indicators, and representative models to evaluate the technical, environmental, financial, and administrative management of service providers taking into account regional diversity and the characteristics of each area of the country;

• 4)

  To maintain a public registry of information presented by service providers and that which is generated about technical, economic, and operational aspects of service provision;

• 5)

  To elaborate the model format of service regulation that governs relations between service providers and users;

• 6)

  To safeguard user rights regarding service provision and collection when they have not been resolved by the respective instances. Every service provider shall have a user service office to hear complaints and provide information regarding services provided.

• 7)

  To reconcile and where appropriate arbitrate conflicts that arise between municipalities, between these and service providers and between these same, and between service providers and users, through procedures to be established in the Regulation of this Law or those that exist in laws;

• 8)

  To apply sanctions and interventions for non-compliance or violations of the norms of this Law and its regulatory provisions, under established legal procedures;

• 9)

  To take action before the administrative authorities of the Public Prosecutor's Office and Judicial Branch to guarantee compliance with this Law;

• 10)

  To prepare the Annual Operating Plan;

• 11)

  To prepare an annual report of its activities; and,

• 12)

  To prepare the Draft Budget to be approved by the National Congress.

Tariff regulation shall be the competence of the Regulatory Authority through the establishment of methodologies, procedures, and calculation formulas in accordance with the principles set forth in this Law.

The funds for the operation of the Regulatory Authority shall be allocated annually in the General Budget of Income and Expenses of the Republic.

It corresponds to the municipalities, in their capacity as holders of drinking water and sanitation services, to determine the form and conditions for the provision of such services in their respective jurisdiction, observing what is prescribed in this Law and other applicable regulations. The ownership referred to in this Article is permanent and non-transferable.

The Water Management Committees and community organizations shall have legal personality which shall be granted to them by the Secretariat of State in the Offices of Governance and Justice through the distinctive of the respective municipal corporation, which shall constitute its legality. The granting of municipal authorization for the total or partial operation of drinking water and sanitation services in their respective community shall require the minimum participation of fifty-one percent (51%) of the benefited community present by plebiscite supervised by the National Electoral Board (T.N.E.).

The Water Management Committees shall have legal personality which shall be granted by the Secretariat of State in the Offices of Governance and Justice through the distinctive of the respective municipal corporation, which shall constitute its legality. The granting of such legal personality and its publication in the Official Gazette La Gaceta shall be at no cost. The Regulation of this Law shall establish the organization and functions of the Water Committees.

The municipalities may associate with each other to provide services to communities located in one or more municipal terms, in accordance with what is established in the Law of Municipalities; likewise, the Water System Management Committees may associate.

The income derived from drinking water and sanitation services shall be invested in activities related to these services for their improvement, maintenance, watershed management or expansion of the systems. CHAPTER V CONDITIONS OF SERVICE PROVISION

The Central Government, the Municipalities, and the Water Management Committees shall promote the management of resources for the development of drinking water and sanitation services, establishing project development authorities, investment recovery criteria, capital allocation, which shall be determined based on socio-economic studies and taking into consideration the respective financial capacity. Likewise, in order to alleviate supply shortages and prevent price speculation, they shall promote the execution of alternative programs for water storage and delivery in aqueducts adopted with social justification, when service provision through pipelines is not possible. The conditions for service provision shall be formalized through contract.

Without renouncing the objectives of improvements in efficiency and quality, priority shall be given to the goals of maintaining and extending the coverage of drinking water and sanitation services in economically depressed areas applying criteria of equity.

In the event of a failure in the drinking water system or in the sanitation system, the service provider is obligated to immediately warn users, using effective means of communication, explaining the reasons and indicating the necessary preventive measures to avoid damage.

For the compliance with the quality standards required in drinking water and sanitation services, the Regulatory Entity shall require that service providers have viable investment plans that allow them to gradually execute the construction of sanitation facilities and the development of environmental protection projects in the areas of watersheds, sub-watersheds and micro-watersheds where aquifers or sources of surface or groundwater are located and where the discharge of effluents takes place. CHAPTER VI RIGHTS AND OBLIGATIONS OF USERS

Users of public drinking water and sanitation services shall enjoy, among others, the following rights:

• 1)

  To receive the services in the form and conditions established in the service provision contract granted by the service provider, which must contemplate at least: a) Conditions of service provision; and, b) Administrative procedures for filing complaints and other procedures.

• 2)

  To receive information about the provision of services, tariff regime and billing, plans for expansion and improvement of services and any other circumstance that is of their interest, in a sufficiently detailed manner to allow the exercise of their rights as a user;

• 3)

  To be assisted by the service provider in the inquiries and complaints they file, when the quality of water or services is below what is established, or when they incur in any irregular conduct or omission that affects or diminishes their rights; and,

• 4)

  To appeal, as the case may be, to the corresponding instances in the form and term established by the Regulation of this Law.

Users of drinking water and sanitation services shall be obligated to:

• 1)

  Pay the corresponding charge established for connection and for the provision of services;

• 2)

  Install at their own expense the internal household services of drinking water and sanitary sewerage complying with the established technical requirements;

• 3)

  Pay promptly for the provision of services in accordance with the tariff regime; and,

• 4)

  Comply with the other obligations established in the contract and in the respective regulation. CHAPTER VII RIGHTS AND OBLIGATIONS OF SERVICE PROVIDERS

It corresponds to the service providers of drinking water and sanitation services to establish collection mechanisms that ensure suitability to assure the activity of billing for services provided.

Service providers are empowered to deactivate unauthorized connections and to demand the indemnifications that correspond for any damage caused to the facilities, without prejudice to the other responsibilities that correspond.

The municipalities, as service holders, shall approve the service provision regulations and their tariff regime; they must also facilitate the activities of service providers, carrying out the necessary actions to support the service provision tasks and the execution of works and environmental management projects under their responsibility. Operators shall mandatorily manage promotional programs on health, environmental protection, and rational use of water.

Service providers shall assume the obligations established in the current regulations related especially to the efficient provision of services, their continuity and generality, sustainability, quality, emergency plans, equity and equality, relationship with users and complaint procedures. It also corresponds to them the obligation to provide information to the control bodies and compliance with aspects related to tariffs and works, goals and investment commitments as applicable.

Service providers shall consider water source preservation actions in watersheds, sub-watersheds, and micro-watersheds as one of their priority activities, in order to achieve the existence of the water resource, sustainable and incremental water. They shall be part of the watershed, sub-watershed, and micro-watershed councils, in order to participate in the management processes of these management units.

Service providers shall strictly observe the legal obligations imposed with respect to the assets delivered, constructed, and operated for the provision of services, especially in relation to their quality, maintenance, renewal, restitution, and obligations in relation to the community of users.

Service providers in the development of their management shall be subject to the provisions of this Law and to the criteria applied by the Regulatory Entity to reaffirm the efficient provision of the service, as well as transparency, the protection of the interests of users, and the patrimony of the State. CHAPTER VIII OF THE RATE REGIME

The rate regime shall be adjusted to the following principles:

• 1)

  It shall promote rational and efficient use of the services and the resources used for their provision;

• 2)

  It shall comply with sanitary, social, and environmental objectives directly linked to the provision of services;

• 3)

  It shall reflect the real costs of the services, including the costs of operation of the entire integrated management and profit margins for the operator, and in applicable cases, investment costs and economic savings of capital shall be incorporated. In systems containing more than five thousand (5,000) users, it shall also contain the costs of supervision, surveillance, and advisory services of the Regulatory Entity. The charge made for this concept shall be remitted by the service provider to the General Treasury of the Republic.

• 4)

  It shall seek homogeneity in the methodology of rate calculation in the different service provision areas and shall establish sectoral conferences that reflect the socio-economic realities of each stratum of the country;

• 5)

  It shall mandatorily observe the principles of economic efficiency and transparency, as defined in this Law;

• 6)

  It shall require providers to discriminate in invoices the various concepts under the overall rate; and,

• 7)

  It shall be based on the measurement of actual consumption as an equitable criterion, except by authorization of the Regulatory Entity when the limited time, technical conditions, and quality of service do not permit it.

Rates may be differentiated by consumption blocks or ranges in order to induce more rational use of water and with the purpose of introducing equity in billing in accordance with technical studies prepared for this purpose by the Regulatory Entity.

The rates applicable to water supply and sanitation services provided to users with low family incomes shall be established in a manner that allows partial recovery of costs and shall be configured as preferential rates, as long as the condition of social vulnerability of these families persists.

The rate regime for sanitation shall be established by the holder to be annexed to the general service rate. In the case of non-residential discharges, sanitation and environmental protection charges shall be determined in proportion to the user's consumption, without prejudice to the user's obligation to provide treatment to wastewater.

The rates applicable to water supply and wastewater services approved by the municipalities and by Water Boards in application of the regulations on this aspect applied by the Regulatory Entity shall be recorded in the respective service regulations and municipal uniform.

The Regulatory Entity shall establish the criteria of gradualism for the rationalization of the rate system.

The service provider shall be responsible and liable for the collection of services and the application of sanctions to the user for non-payment.

For purposes of judicial collection, duly certified account statements shall have the character of an executive title. CHAPTER IX OF EASEMENTS

The assets that constitute the infrastructure or others necessary for the effective provision of water supply and sanitation services to communities may not be subject to precautionary measures.

The lands necessary for the construction or expansion of works or installations for the provision of services are declared to be of public utility and subject to forced expropriation. Expropriation shall be subject to applicable legal provisions and shall proceed whenever the owners do not agree to the sale of the corresponding properties. CHAPTER X OF INFRACTIONS AND SANCTIONS

Infractions by service providers are:

• 1)

  Non-compliance with the conditions of wastewater treatment;

• 2)

  Non-compliance with quality standards of services;

• 3)

  Unjustified interruptions in the provision of service;

• 4)

  Non-compliance with the rate regime established in this regulatory framework;

• 5)

  Refusal to provide information to the Regulatory Entity or on the terms of this Law;

• 6)

  Obstruction or prevention of the practice of verifications ordered by the Regulatory Entity; and,

• 7)

  Non-compliance with the obligations imposed upon them by this Law, related laws, and complementary regulations.

The infractions set forth in this Law shall be sanctioned with fines of One Thousand (L. 1,000.00) to Fifty Thousand (L. 50,000.00) Lempiras that the Regulatory Entity shall impose in accordance with the respective Regulation taking into consideration the severity of the infraction, without prejudice to the deduction of the civil or criminal liability that corresponds. The amounts shall be remitted to the respective Municipal Treasury; in the case that a municipality is the violator, payment shall be remitted to the General Treasury of the Republic.

The following constitute infractions by users:

• 1)

  Clandestine connection to systems;

• 2)

  Breakage, damage, or manipulation of meters;

• 3)

  Water waste in unauthorized activities;

• 4)

  Discharge of industrial wastewater without prior treatment;

• 5)

  Discharge of waste, effluent, or objects not permitted in the sanitary sewage system;

• 6)

  Breakage of public roads without prior municipal permit, except in case of emergency; the violator shall repair the road to at least the state in which it was originally found; and,

• 7)

  Disposal of wastewater in violation of health standards and municipal regulations in places and at times not authorized by the service provider.

In order to impose a sanction, the violator shall be heard beforehand. The imposition of the fine does not exempt the violator from the obligation to perform the necessary repairs at his own cost or to restore the damages caused. CHAPTER XI FINAL PROVISIONS

The systems currently under the charge of the National Autonomous Service of Aqueducts and Sewers (SANAA) and the assets directly affected by its provision shall be transferred to the corresponding municipalities; their conditions for assuming operation shall be evaluated and ruled upon by the Regulatory Entity. For the purposes of the aforementioned, the transfer process must be completed within a period of five (5) years, counted from the date of the beginning of the validity of this Law. During this period, the National Autonomous Service of Aqueducts and Sewers (SANAA) shall serve as Technical Secretary to support CONASA, the Regulatory Entity, the municipalities, and Water Boards. Likewise, it shall conduct studies, promotion, and supervision of regional installations to ensure the achievement of the objectives of this Law.

The transfer of services shall comprise the corresponding works of water collection, treatment plants, distribution networks, pumping stations, and other works and assets necessary for the distribution of services. The transfers of assets and services of the National Autonomous Service of Aqueducts and Sewers (SANAA) to the municipalities shall be made by mutual agreement, and in case of disagreements, in accordance with the terms and conditions determined by the Regulatory Entity. The transfer of water supply and sanitation services shall be made by the National Autonomous Service of Aqueducts and Sewers (SANAA) to the municipalities free of debt, unless otherwise agreed.

The National Autonomous Service of Aqueducts and Sewers (SANAA) in its capacity as service provider shall continue operating the services, comparing and managing the corresponding tariffs while the transfer to the municipalities has not been made. In this case, the National Autonomous Service of Aqueducts and Sewers (SANAA) shall be subject to the provisions of this Law and to the regulation and control of the Regulatory Entity of Water Supply and Sanitation.

In those systems administered by Water Administration Boards and other neighborhood organizations, the ownership of such systems belongs to the respective communities, and the rights shall be exercised through the aforementioned organizations. Systems built with contributions from the private sector where the holder of the property right has not been determined shall be understood, absent contrary proof, to be property of the communities. In any case, the operation of the service shall be subject to the provisions of this Law and to municipal ordinances on the matter.

In order to guarantee the continuity of ongoing processes and projects and for those systems that have not been transferred to the municipalities, the National Autonomous Service of Aqueducts and Sewers (SANAA) is authorized to continue with the management of studies, bid processes, advisory services, and the execution of water supply and sanitation system construction projects. The National Autonomous Service of Aqueducts and Sewers (SANAA), among other functions, shall serve as a Technical Entity to support CONASA, the Regulatory Entity, the municipalities, and Water Boards. Likewise, it shall conduct studies, promotion, and supervision of regional installations to ensure the achievement of the objectives of this Law.

The National Autonomous Service of Aqueducts and Sewers (SANAA) is authorized to terminate, with payment of the respective benefits and indemnities, personnel whose positions are deemed necessary to eliminate under the application of this Law. All such positions shall be canceled permanently, and the National Autonomous Service of Aqueducts and Sewers (SANAA) may not use future hires based on them. Whoever violates this provision shall be personally liable to the client for one hundred percent (100%) of his salary as a fine for breach of the obligation.

For the purposes of this Law, the Executive Branch, through the Secretary of State in the Office of Finances, shall make transfers of necessary funds to the National Autonomous Service of Aqueducts and Sewers (SANAA) in accordance with its fully justified requirements.

The President of the Republic shall appoint the three (3) members of the Regulatory Entity within a maximum period of thirty (30) days from the effective date of this Law. For this sole occasion, the members of the Regulatory Entity shall hold their positions for three (3), four (4), and five (5) years, respectively, according to the order of appointment, so that the renewal of members shall be made subsequently in a staggered manner.

The Executive Branch shall approve the General Regulation of this Law within a period not to exceed ninety (90) days counted from its effective date, through the Secretary of State in the Office of Health.

In all matters not provided for in this Law, the provisions of the laws that regulate water and other provisions of current legislation shall apply.

This Law shall enter into force twenty (20) days after its publication in the Official Gazette La Gaceta. Done in the city of Tegucigalpa, municipality of the Central District, in the Session Hall of the National Congress, on the twentieth day of the month of August of two thousand three. PORFIRIO LOBO SOSA President JUAN ORLANDO HERNÁNDEZ ALVARADO Secretary ANGEL ALFONSO PAZ LÓPEZ Secretary To the Executive Branch. Therefore: Let it be executed. Tegucigalpa, M.D.C., September 29, 2003 RICARDO MADURO President of the Republic The Secretary of State in the Office of Health, by law MANUEL SANDOVAL LUPIAC