* President vetoes watered-down reforestation rules
* Forest code meant to give certainty for investment
* Environmentalists see it as too lenient on deforestation
By Anthony Boadle
BRASILIA, Oct 18 (Reuters) - Brazil enacted a controversial law on Thursday meant to protect forests and force farmers to replant trees on scattered swathes of illegally cleared land totaling an area roughly the size of Italy.
The law, signed by President Dilma Rousseff, overhauls the “forest code,” a set of laws unchanged for decades that dictates the minimum percentage and type of woodland that farmers, timber companies and others must leave intact on their properties.
The new code, following years of tense negotiations with Brazil’s powerful farm lobby, is considered necessary to help establish clearer rules for the ranchers, soy growers and other producers who pushed into the Amazon rainforest and other sensitive climes in recent decades, enabling Brazil to become one of the world’s biggest exporters of food.
The farm lobby, with influential legislators from parties across the political spectrum, pushed for a new law to end uncertainty over rules for land use. Doubts about existing law, they argued, have held back investment in a sector that is crucial to the world’s sixth-biggest economy.
But the lobby, which fought to keep the law lenient, now says it could challenge the final version in court after Rousseff late Wednesday vetoed a handful of congressional changes.
Environmentalists have opposed the bill because it reduces the total forest area many farmers are required to keep intact. Many critics also believe the law does too little to punish those who have conducted illegal clearing in the past.
The new law carries over from previous legislation a requirement to maintain forest cover on 80 percent of rural properties in the Amazon, 3 5 percent in the central savanna region and 20 percent in other areas of the country.
The key change is that farmers can now include river margins and steep hillsides when accounting for the total area of woodlands they are preserving.
But such land, crucial to preserve watersheds and prevent erosion of woodland, was already mandatory, so the new law effectively reduces the total amount of land growers have to preserve compared with the old statute.
Farmers who have cleared land in excess of the new limits will have to replant them. Brazil’s environment ministry said that could result in the reforestation of a total land area of about 30 million hectares (74 million acres), about the size of Italy.
It remains unclear, however, whether the government will be able to successfully enforce the reforestation requirement or any of the other new provisions.
Back in April, Congress passed a weaker version of the requirements, leading Rousseff to veto key provisions. Congress then rolled back her changes, leading to months of wrangling over a final version.
On Wednesday, just as a deadline to pass the law was approaching, Rousseff vetoed nine clauses reintroduced by the farm lobby, including one that would have allowed planting of fruit trees in place of native forest.
“There should be no amnesty or encouragement of illegal deforestation,” Environment Minister Izabella Teixeira said on Wednesday night.
But Homero Pereira, leader of the agricultural caucus in the lower chamber of Congress, accused Rousseff of ignoring the will of legislators.
“We only expected surgical vetoes,” he said, not wholesale changes. He said the farm lobby would go to court to challenge the new law as unconstitutional.
Brazil is a global commodity powerhouse and a major producer of soy, corn, sugar, coffee, oranges, cotton and beef. Illegal land clearance has enabled cattle ranchers and producers of soy, the top export crop, to expand into the Amazon basin.
The rate of deforestation has slowed in recent years because of tougher law enforcement and the use of satellite imagery to track areas with the most troubling rates of clearcutting.
But environmentalists fear that trend could reverse as Rousseff dismantles longstanding environmental policies in a push to further develop the economy, which began to slow last year after nearly a decade of steady growth.
The new forest code was published on Thursday along with a decree that will require landowners to take part in a rural environmental registry. The registry is a venue through which landowners, in order to remain eligible for state credit and other forms of government support, must report on their compliance with the code. (Additional reporting by Jeferson Ribeiro; Editing by Paulo Prada and Eric Walsh)