After the vote of the rapporteur, Cármen Lúcia, the minister said that new facts had emerged in the process and that, given the complexity of the trial, more time was needed for analysis; case lasts 13 years
Minister Flávio Dino, of the Federal Supreme Court, interrupted this Thursday (May 7, 2026) the trial on the redistribution of oil royalties between States and municipalities. Dino asked for a review shortly after the rapporteur, Cármen Lúcia, voted to make the rule unfeasible, favoring the producing federative entities. The case has been awaiting resolution from the STF for 13 years.
When requesting a review, Flávio Dino stated that new facts were mentioned in the process and that, given the complexity of the trial, he preferred to ask for more time to analyze the issue. The court judges the constitutionality of the which changed the criteria for dividing oil royalties between producing and non-producing states and municipalities.
Cármen Lúcia understood that it is not possible to distribute the amounts resulting from oil exploration equally among the federative entities. The minister highlighted that the impacts in the producing states, notably Rio de Janeiro, São Paulo and Espírito Santo, have a greater environmental burden than the others. “The greatest losses are concentrated in the exploration regions”, he pointed out.
On the merits, the minister highlighted the redistribution of values, disregarding the “compensation“of oil royalties for the entities most affected by the environmental impacts of exploration. Cármen considered that the Constitution established that, in the federative pact, there is a favor to States and municipalities that explore oil resources.
“Therefore, care must be taken to ensure that the system is capable of bringing enormous instability to federative relations. The National Petroleum Agency itself… has to wait for someone else to choose before making its own, to know which is best”he declared.
UNDERSTAND
Royalties are financial compensation paid by oil exploration companies to the Union, States and municipalities for the extraction of non-renewable natural resources, such as oil and natural gas.
The law approved by Congress expanded the share allocated to non-producing states and municipalities, but has been suspended since 2013 due to an injunction by Cármen Lúcia. The trial resumed after 13 years on Wednesday (May 6).
Any change in the distribution of resources would benefit federal entities that are not in the areas of direct extraction and would mainly harm Rio de Janeiro, São Paulo and Espírito Santo, which concentrate almost all of the country’s oil production. The 3 States claim that the change would cause billions in losses, mainly to Rio de Janeiro, responsible for 86% of the country’s oil production and 76% of natural gas production.
The CNM (National Confederation of Municipalities) and a group of 19 non-producing states work with the Court to recognize the constitutionality of the law, which can guarantee up to R$40 billion annually for these entities.
