The president of the STJ (Superior Court of Justice), Minister Maria Thereza de Assis Moura, overturned a decision by the Justice of Brasília that had changed the calculation for the payment of millionaire oil royalties to 6 municipalities in Rio de Janeiro.
The change had been defined in a July 19 ruling by the substitute judge Frederico Botelho de Barros Viana, of the 21st Federal Civil Court of Brasília.
Three municipalities started to be considered as Main Production Zone, which ensures a greater share in royalties: São Gonçalo, Magé and Guapimirim. Before, they were Secondary Production Zone. On the other hand, Niterói, Rio de Janeiro and Maricá started to receive less resources from royalties. Here’s the intact of the decision (55 KB).
Niterói appealed the decision, also upheld at the 2nd Instance, in the TRF-1 (Federal Regional Court of the 1st Region). At the STJ, however, he managed to overturn the change in the calculation.
In his decision, Assis Moura said that the lower court decision imposed on Niterói “relevant financial loss, capable of jeopardizing the entire budget planning of the public entity”. read the intact of the decision (150 KB), signed on Tuesday night (13.Sep.2022).
The minister cited estimates from the municipality, that the distribution of amounts to São Gonçalo, Magé and Guapimirim would represent a loss of R$ 1 billion, an amount that would be almost 1/4 of Niterói’s annual budget.
“That is to say, the plaintiff demonstrates, specifically, that the contested decision causes serious damage to public order and economy, insofar as it suddenly interferes with the organization of its public policies, compromising the execution of essential services to the population”wrote the magistrate.
She also understood that the suspension of the decision and the distribution of royalties does not impact the execution of public policies of the 3 previously benefited municipalities, because until then they had no way to count on this extra revenue.
Change
The decision of the 1st Instance, now suspended, allowed them to earn more, starting in August:
- Are Gonçalo – R$4.2 million in July, R$49 million in August (+1,066%);
- Mage – R$18 million in July, R$42 million in August (+133%);
- Guapimirim – BRL 15.9 million in July, BRL 31 million in August (+95%).
And they started to receive less:
- Niterói – BRL 101 million in July, BRL 52 million in August (-49%);
- River in January – R$35 million in July, R$26 million in August (-26%);
- Sissy boy – 240 million in July, R$ 213 million in August (-11%).
The 3 cities that became the Main Production Zone also received royalties related to the quarterly special participation. São Gonçalo received BRL 219 million, Magé, BRL 186 million, and Guapimirim, BRL 121 million in August, Power 360.
THE “ISLAND SHADOW”
The case was tried in Brasília because São Gonçalo, Magé and Guapimirim filed a lawsuit against the IBGE (Brazilian Institute of Geography and Statistics), responsible for defining the municipalities that are part of the Main Production Zone, and the ANP (National Agency for Petroleum, Natural Gas and Biofuels), which pays royalties based on criteria defined by the IBGE.
To calculate how much goes to each municipality, IBGE draws parallel imaginary lines from the limit of coastal municipalities. The proportion that lines occupy in productive oil wells is the same proportion that cities can receive in royalties. It is a way of defining whether or not a municipality is a Main Production Zone.
Another criterion is based on the number of industrial or support facilities involving the production and distribution of oil that are active in a given territory. According to the IBGE, São Gonçalo, Magé and Guapimirim do not fit the definition of Main Production Zone, according to the 2 criteria.
Among the arguments of the lawsuit is that the IBGE would have changed its criteria in 2020 when there are protrusions on the Brazilian coast, and applied the new calculation when distributing royalties referring to São Sebastião, Ilhabela and Caraguatatuba, on the coast of São Paulo. The same measure, the suit says, would not have been used in Rio.
It so happens that this was not a new IBGE criterion, but a specific change in the calculation in cases involving islands that make “shadow” in other municipalities, blocking the lines drawn by the IBGE.
The substitute judge Frederico Botelho de Barros Viana, however, accepted the argument that the method should also be used in Rio, as if some municipalities that are not islands should be considered as such in terms of the lines defined by the IBGE.
“By the projections applied today, the municipalities of Rio de Janeiro and Niterói, especially, shadow the author municipalities, preventing the tracing of geodesic lines from the geographic limits of the authors. […], the geodesic projections are drawn as if Rio de Janeiro and Niterói were islands, and it is uncontroversial that the 2 municipalities form a barrier and prevent the projection of the authors’ lines [São Gonçalo, Magé e Guapimirim]“said the judge.
The magistrate is substitute. He took over the 21st Civil Federal Court during the Judiciary duty and made the decision on the merits 1 day after taking the post.
Both the IBGE and the ANP sent opinions against the decision. They said that the concept of “shadow of islands” is punctual and should not have been applied, except in cases that actually involve islands.
“It is unfeasible to consider the hypothesis that the municipalities of Niterói/RJ and Rio de Janeiro/RJ perform ‘island shadows’ over the requesting municipalities, as they are not municipalities with an island headquarters. [uma ilha]”, said the IBGE.
According to the Power 360, Rio, Niterói and Maricá, who started to receive less with the new division, only learned about the case when they were notified of the decision. That is, they were not heard in the course of the action.
After that, they managed to reverse the decision in the 1st Instance of Rio. They lost, however, in 2nd Instance. The president of the TRF-2 (Federal Regional Court of the 2nd Region), Azulay Messodoverturned the preliminary injunction (provisional decision) favorable to the 3 municipalities, maintaining the effects of the July 19th sentence, given by the substitute judge.
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