Actions that question the law that expands transfers to non-producing states and municipalities will be judged this Wednesday
After 13 years of waiting, the Federal Supreme Court will judge, this Wednesday (May 6, 2026), the merit of the actions that question the redistribution of royalties from oil exploration between Brazilian states and municipalities.
The Court analyzes the law that decentralizes the receipt of amounts, benefiting federal entities that are not in the areas of direct extraction, currently concentrated in Rio de Janeiro, Espírito Santo and São Paulo.
In practice, to compensate for the redistribution, there would be losses for the Union and for the three States where there is currently greater oil production. As reported by the Poder360states and municipalities hope to raise R$40 billion annually if the Court recognizes the constitutionality of the Law of 2012.
In total, 6 actions will be judged: 5 under the report of Minister Cármen Lúcia and one under the responsibility of Minister Luiz Fux. Most of the actions have been awaiting judgment on the merits since 2013, shortly after the device was approved by Congress and had sections suspended by injunction.
Federative Impasse
The issue is delicate for governors and mayors, who have sought out the Court’s ministers to present their perspectives, whether on the side of producers or other federative entities. Currently, the expectation is that, even if the case is brought to the plenary, there will not be a consensus among the judges on how to deal with the modulation of financial effects.
There is an assessment that the process will not be completed this year, as the result could drastically impact the electoral agenda and public accounts. Furthermore, there are fears that the court’s incomplete quorum — which currently has 10 ministers, after Jorge Messias’ rejection — will make it difficult to resolve the merits in the event of a tie.
Values
The 3 states with the highest oil production do not accept the change in the transfer of values. Part of the discussion involves the concept of royalties: whether they are compensation for the environmental and economic impact of production or for the use of oil property.
A (Federation of Industries of the State of Rio de Janeiro) estimates that the State would lose up to R$8 billion with the change, and the cities in Rio de Janeiro benefiting from the payments, R$13 billion. Rio de Janeiro produces 88% of the country’s oil and 77% of its gas.
The State of São Paulo has the 2nd largest estimated loss: R$2.3 billion annually. Espírito Santo estimates the annual loss at R$500 million.
