Chevron Transfers $550m to Settle Tax Disputes

Chevron and Richmond Settle Major Lawsuit: $550 Million Agreement Reached

In a significant development, Chevron, the City Attorney, and a Richmond City Council ad hoc committee have reached a proposed settlement that will bring an end to the ongoing lawsuit and prevent future legal disputes.

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This agreement, if approved, will reshape the financial relationship between Chevron and the City of Richmond.

Settlement Overview

• Original Offer: Chevron initially proposed a $300 million settlement or $30 million annually.
• Final Agreement: After negotiations, Chevron agreed to pay $550 million over 10 years. This includes $50 million for the first five years and $60 million for the following five years.

Chevron’s Perspective

Caitlin Powell, Chevron Richmond’s spokesperson, voiced the company’s concerns about the proposed refining tax, highlighting the potential risks it poses to both Richmond and its residents.

“We are committed to minimizing the negative impact of the ballot measure on the region’s economy and our capacity to provide affordable, reliable, and increasingly clean energy,” Powell stated.

Background on the Refining Tax

• Council Resolution: On June 18, the Richmond City Council unanimously approved placing an oil refining business license tax, known as the “Make Polluters Pay tax,” on the November ballot.
• Tax Details: This measure, if passed, would impose a $1 per barrel tax on oil refining within Richmond for 50 years, potentially generating $60 million to $90 million annually.
• Support and Opposition: The tax is supported by groups like the Asian Pacific Environmental Network and the Service Employees International Union 1021 but faces legal challenges from Chevron.

Legal Challenges and Court Rulings

City Attorney Dave Aleshire revealed that the Coalition for Richmond’s Future and Daniela Dickey filed a lawsuit against the city, challenging the ballot language approved by the council for the November 2024 election.

“The Contra Costa Superior Court has issued a tentative ruling mandating changes to the ballot question, though the parties have yet to fully present their arguments,” Aleshire noted.

Chevron has indicated that it believes the ballot measure is legally flawed and is prepared to sue if the tax is approved by voters. Aleshire acknowledged that while the city disputes Chevron’s legal claims, it recognizes that prolonged and costly litigation is likely. He cited the City of Carson’s similar refining tax from 2017, which has been tied up in legal battles, preventing the city from accessing any of the tax revenue.

Details of the Proposed Settlement

• Allocation of Funds: The $550 million will be added to the city’s general fund. Chevron will not seek public recognition for any expenditures.
• Tax Provisions: Richmond retains the right to impose new taxes on Chevron during the 10-year agreement term, but Chevron will receive credit for payments against any new taxes.
• Business Taxes: Chevron will continue paying the city’s Measure U business license tax and utility users tax at current rates.

Next Steps for the City Council

• Ballot Removal Deadline: The Richmond City Council must decide by August 14, 2024, whether to remove the refining tax measure from the ballot.
• Special Meeting: A special council meeting is scheduled for August 15 to finalize the decision.

Councilmember Soheila Bana’s Statement

District 4 Councilmember Soheila Bana stressed the importance of the council discussing Chevron’s proposed settlement collectively. She emphasized the need for securing the best possible outcome for the Richmond community.

“There has been some mistrust with Chevron, but I reached out to the mayor and requested that the proposal be discussed collectively by the City Council, representing Richmond’s residents,” Bana said. “If we are to reject the offer, we must have a strong, well-founded reason. I commend the mayor and Vice Mayor Jiménez for their effective negotiation, which has led to an agreement that truly benefits Richmond’s citizens.”

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