Chevron, City Of Richmond Agree On $550 Million Settlement Over Refinery

Oil and gas company Chevron and the city of Richmond in Contra Costa County agreed to a settlement on Wednesday, with Richmond agreeing to drop a ballot measure that would have added a huge refinery tax on the company, in exchange for Chevron agreeing to pay the city $550 million over the next ten years.

For years, the relationship between Chevron and Richmond has grown more strained. The city found that oil refining in Richmond, dominated by Chevron, was the single largest polluter in the city, as well as the cause of growing health problems in the city. At the same time, Chevron continued to be the largest employer in the city, as well as the city’s biggest source of tax income. In 2023, Chevron paid $45.9 million in taxes to the city, accounting for 15% of the entire city’s budget. The Richmond refinery is also crucial for state gasoline production, refining 250,000 barrels of oil a day.

Early in the 2020’s, city lawmakers began looking at taxing oil refineries in the city, both to help bump up quality of life in Richmond, as well as solve city budget issues. Richmond currently faces a $34 million budget gap for the 2024-2025 fiscal year, with a refinery tax potentially raising Chevron’s taxes in the city close to $100 million a year. In May, the refinery tax proposal was approved by the Richmond City Council, making it a city-wide proposition and placing it on the November ballot.

“What we are proposing is not going to break things or just to make them leave,” said Richmond Vice Mayor Claudia Jimenez earlier this year. “What we are proposing is to make sure that we continue to advocate for such a big business with billions of dollars to pay their fair share to Richmond.”

However, Chevron fired back in a statement, saying that “We support policies that encourage business investment and seek to create a better quality of life for Richmond residents. That said, we believe the proposed refining tax is the wrong approach to do that. The tax is a hasty proposal, brought forward by one-sided interests and said it would hinder the company’s ability to improve its facility to better provide clean energy.”

Throughout the summer, Chevron continued to fight against the ballot measure in Richmond. Even after the company announced that they would be moving their headquarters to Texas, Chevron fought the measure as it would only increase costs in a state that has the highest refining costs in the country. But, in recent weeks, the popularity of the ballot measure has only climbed, leading to Chevron to look for a way out to keep the tax off the table. On Wednesday, the company and Richmond finally reached an agreement.

In a statement, Richmond said that Chevron is to pay the city $550 million between July 1, 2025 to June 30, 2035 in annual installments. In exchange, the ballot measure will now officially be off the November ballot.

A $550 million settlement

“Chevron Richmond and the City of Richmond have reached an agreement that settles litigation and removes the Refining Business License Tax measure from the ballot,” added Chevron in a statement on Wednesday. “This agreement ensures Chevron Richmond can continue to provide Northern California with the affordable, reliable and ever-cleaner energy the region’s economy needs.”

While the company and city both agreed to the deal, environmental groups rallied against the settlement on Wednesday and Thursday, saying that neither were being held accountable through the agreement.

“I don’t know that there’s an amount of money that’s enough money. Because we’re talking about generations of harm, of death, of sickness, of pollution,” said Asian Pacific Environmental Network organizing Director Megan Zapanta. “We were talking to hundreds of voters a day and they were excited to vote in November. They were excited to hold big polluters accountable. The long-term investments in a just transition away from fossil fuel refining that our community has been demanding all along.”

Despite some still opposing the agreement, most in Richmond on Thursday said the deal was fair.

“Richmond got the additional money they needed, funds are going to health and environmental programs most likely, and Chevron saves money by just giving these payments over 10 years instead of a longer term, more expensive tax. Plus, jobs stay in Richmond. Everyone wins,” said environmental lawyer Brian Boone to the Globe on Thursday. “If the city and Chevron are ok with it, and voters still get what they wanted through the settlement, then this was an easy fix for everyone.

“A ballot measure passing is really easy to fight against and challenge legally. There are similar refinery taxes that passed that way a decade ago that haven’t been paid out yet because of all the legal challenges. This was a smart move for everyone involved.”

The city confirmed that the ballot measure is now completely off the ballot on Thursday.