Mirroring the reform of the Brazilian State, the decentralization of administrative and political competences in the environmental arena has been a dynamic process. Many local governments and agencies already hold responsibility for environmental issues. However, it does not mean stronger administrative competency, institutional sustainability or wider democratic participation. Two cases of environmental policy are described here: the industrial licensing carried out by Brazilian municipalities and the State of Mato Grosso's forest management. The decentralization of environmental licensing to the municipal level still seems to be fragile process in small municipalities, since it is likely to be induced by the State rather than by the local community. Regarding the forest policy, the case of Mato Grosso's emblematic: it shows that cooperation and, at times, coordination of the federal government is of great importance in order to assure the independence of environmental public policies from state governments that are biased in favor of agro-industries, as well to guarantee their legitimacy, weakened by the institutional and financial fragility of the local environmental institutions.