“…In 1933, the government created the Water Service, and Decree-Law 23501 extinguished the golden clause, establishing that contractual reviews should respect the principle of cost of service in tariff determination (Schlesinger, 1954;Souza, 1936;Vieira, 2007). Furthermore, the 1934 Constitution, through article 119, established that the industrial use of mines, mineral deposits, and water sites would depend on federal authorization and that concessions would only be granted to Brazilian companies or those established in Brazil (Abreu, 1999;Ianni, 1971). Also in 1934, the Code of Waters implemented the criteria of historical cost for tariff fixation at a maximum 10% profit rate (CMBEU, 1954;Melo;Araújo, 1994).…”