BRASILIA, March 15 (Xinhua) -- Brazil's two biggest oil- producing states Friday went to the Supreme Court to fight a government bill aimed at better distributing the nation's oil wealth.
The two oil-rich states of Rio de Janeiro and Espirito Santo want the court to overturn a new law backed by President Dilma Rousseff that cuts the states' oil royalties from 26.2 percent to 20 percent, to earmark more of the resources for non-producing states that until now received a scant 1.76 percent of the profits.
The two states claim the law is unconstitutional on several grounds, including that it affects both existing and future contracts, and state budgets, thus violating constitutional clauses that protect already-signed contracts and that demand fiscal responsibility.
"The drastic and sudden change to the distribution of government royalties, especially as it will apply to existing contracts, would create a severe budgetary imbalance and prevent the fulfillment of innumerable constitutional obligations," court documents claim.
Rousseff had earlier vetoed the part of the bill that calls for the cut in royalties to be applied to existing oil concessions, not just future ones, but Brazil's Congress overrode her veto.
Rio's Gov. Sergio Cabral warned last week that until the Supreme Court rules on the matter, all state payments will be suspended, except for state workers' salaries. He said he trusted the court will rule in favor of producing states, but if it does not, "we will have to take very harsh measures."
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