Chevron to pay California’s Richmond City Council in the US $550m over ten years as part of a settlement.
The settlement has resulted in the withdrawal of a planned ballot initiative for a new tax on the oil company's refinery in Richmond, according to a statement from the city.
In June, the council passed a resolution to include the “Make Polluters Pay tax” on the 5 November 2024 ballot, which would allow the city to implement a business licence tax on oil refining at $1 per barrel of feedstock refined within Richmond.
The city had planned to seek voters' approval for a tax on Chevron’s refinery in the city, which processes approximately 250,000 barrels of crude oil per day, with the rationale that Chevron should contribute fairly to the community it has been a part of for more than a century.
In response, Chevron presented a tax settlement agreement, under which it would pay the city $300m, with the potential to increase to $550m if the council removed the business licence tax proposal.
The company also suggested paying the city millions of dollars for providing general services if the city consented to take the tax measure off the November ballot.
The city thus agreed to withdraw the proposal following the council's approval of the $550m settlement on 14 August.
"Chevron Richmond and the City of Richmond have reached an agreement that settles litigation and removes the refining business licence tax measure from the ballot," the company told Reuters.
"This agreement ensures Chevron Richmond can continue to provide Northern California with the affordable, reliable and ever-cleaner energy the region’s economy needs."
The settlement payment will be made in yearly instalments, beginning on 1 July 2025 and ending on 30 June 2035.
The settlement outlines that Chevron will pay the city’s Measure U business licence and utility users tax at current rates while property taxes paid to Contra Cota County, benefiting the state, county, city, school districts and other local governments, will not be affected.
The settlement also allows the city or its voters to impose new taxes on Chevron within the ten years the agreement covers.
However, Chevron is entitled to credit the payments it makes under the agreement against any new taxes. This provision is designed to ensure that Chevron receives the agreement's benefits. A similar provision was included in the 2010 settlement agreement, which is set to expire next year.
