On 15/03/2012, the Governor of the State of Rio de Janeiro filed at the Supreme Court (STF) a Direct Action for Declaration of Unconstitutionality (ADIN) under no. 4917 against provisions setting forth new distribution rules of oil royalties contained in Law no. 12.734 of 2012.

As per the Brazilian Government ´s understanding, the recently approved law violates the constitution, “especially due to the fact that the payment of royalties and special participations are inserted in the original federative pact of the Constitution of 1988, being a trade-off to the ICMS differentiated regime levied on the oil (paid at destination and not at the origin), as well as involves, as determined by art. 20, § 1º, a compensation for the environmental burdens and those relative to demand for public services generated by the exploration of this natural resource. There is also a less comprehensive thesis, relative to absolute lack of legitimacy of application of the new regime to the concessions entered into prior to enactment of the Federal Law no. 12.734 of 2012”.

The action contains a provisional remedy request to suspend the effects relative to the new distribution of royalties until judgment of the merits by reason of the urgency of the matter, emphasizing that massive revenues to be applied in the continuance of essential public services of the state and  Municipalities located in the State of Rio de Janeiro would no longer be available with the immediate application of the new regulations. 

Upon analyzing the claim, the reporting Justice of the case decided to grant the provisional remedy sought, suspending the effects of articles of Law no. 12.734 of 2012 that alter  the distribution of royalties, the decision of which  is subject to  approval of the Federal  Supreme Court sitting en banc.  

The  Senate ´s  Council Office presented an appeal to the Supreme Court against the reporting justice ´s decision, having the monocratic nature of the decision been questioned.