STF Halts Royalties Ruling After Cármen Lúcia Votes to Strike Down 2012 Law

Overview

• The case, which reached votes Thursday, was paused when Minister Flávio Dino asked for a review that can last up to 90 days and no new date was set.
• Relator Cármen Lúcia voted to deem Law 12.734/2012 unconstitutional, arguing royalties—fees oil firms pay to offset extraction impacts—are compensatory and cannot be reshaped by ordinary law.
• Because the trial stopped after the first vote, the 2013 injunction that blocked the law stays in force and the Court has not decided whether any future ruling would apply retroactively.
• If the suspended law took effect, the Union’s share of royalties would drop from about 30% to 20% and producers’ combined share would fall from 61% to 26% while the fund for non‑producers would rise from 8.75% to 54%.
• Stakeholders warn of heavy budget risks, with Rio de Janeiro producing roughly 86%–88% of Brazil’s oil and estimating losses of up to R$21 billion a year under the 2012 model, while ANP figures cited by the AGU indicate retroactive shifts could force the Union to return about R$57 billion.