New Deal On Chevron Refinery Brings Millions To City Of Richmond, California – CleanTechnica

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“Don’t raise the bridge, lower the river,” is an expression that celebrates creative thinking. The city of Richmond, California, has had a fraught relationship with Chevron for  more than a century. On one hand, the Chevron oil refinery in Richmond has been providing jobs for local residents and tax revenue for the city for more than 100 years. On the other hand, the pollution from that refinery has had a negative impact on the quality of life in the city.

According to NBC News in San Francisco, just hours before a deadline to remove ballot initiatives from the list of items voters will consider in November, the Richmond City Council accepted a settlement with Chevron that will bring the city more than a half billion dollars over 10 years. Approved by the council on June 18, the ballot proposal would have asked voters to decide whether the city should impose a $1 per barrel tax on feedstock (oil or other raw material used in the industrial process) refined at Chevron’s Richmond refinery for 50 years.

The city’s finance director estimated the per barrel tax would would have added $60 to $90 million per year to the city’s coffers. Chevron offered to pay $300 million over 10 years, which was increased to $550 million if the city dropped the ballot measure. Just before the unanimous vote, Richmond Mayor Eduardo Martinez called it a historic moment and said the fight over Richmond’s environment isn’t over. “The community of Richmond has created a movement that will echo across the nation. What’s happened here has demonstrated to the community, to the nation, to the world, that when we as people pull together, we can create change. And that by standing up for environmental justice just as we have, other communities too can require that their polluters do the right thing, either by measure or by negotiation.”

Chevron & Richmond Strike A Deal

The city had already been sued by a local resident and a nonprofit over the language in the ballot proposal, over which Chevron also indicated it would sue. More than one council member referred to a similar ballot measure passed by the Southern California city of Carson taxing a local refinery in 2017, which is still being held up by the courts. Council member Doria Robinson, who grew up in Richmond’s Iron Triangle area, said Carson hasn’t seen “a dime” of that tax money. “If we were fighting around the kind of pollution that was going into our air, I would be in it to the bitter end because it’s about the point, but this has always been about money, (it’s) about paying their fair share. I think that a half a billion dollars for this community is something that this community needs.”

Brian Hubinger, senior manager of public and government affairs at Chevron, told the council the agreement found common ground. “This agreement will allow Chevron Richmond to continue to employ thousands of Bay Area residents and remain focused on providing the affordable, reliable and ever-cleaner energy this region demands every day, while also supplying the city with much needed additional funding to support our community’s needs,” he said.

Chevron will pay the city $50 million annually for the first five years and $60 million annually for the remaining five years of the deal. The money will go into Richmond’s general fund and Chevron has agreed not to take credit for how the city spends it. The agreement won’t affect any of the other taxes Chevron already pays the city, including property taxes, the city’s Measure U business license tax and a utility user tax. The city and Chevron struck a similar deal in 2010, for less money, that expires next year.

How The Deal With Chevron Got Done

In response to that agreement, Politico reports the local activists and city council who initiated the ballot initiative process had not set out to win a compromise. And yet they discovered a new source of leverage that can be used to win concessions from large corporations with little political bloodshed. In doing so, they may have inadvertently created a playbook for other local governments by proposing a 50-year tax that would have left Chevron’s business future to the whim of voters.

In the weeks since the settlement was ratified, other California communities have reached out to Richmond to learn more about how this deal got done. Representatives from Healthy Martinez, a watchdog group in a nearby Bay Area city that is home to the Martinez Refining Company, say they are exploring their own tax initiative. Organizers who helped launch Richmond’s measure say at least two other California cities with major refineries have contacted them for guidance.

Chevron officials minimize the Richmond deal as simply the latest “historical wrinkle” in a sequence of tax agreements with the city, and one that sets no new precedent. But the speed with which the company succumbed to political pressure has activists asking whether the approach of forcing environmentally damaging industries to defend their business practices before voters can be exported across the state, or even the country. “All of these refinery communities should be considering this kind of effort,” said Healthy Martinez member Heidi Taylor.

This Deal Is Not For Every Community

There will be challenges in exporting Richmond’s process to other jurisdictions, Politico says, It is not entirely unusual for cities to try to pull money from the big businesses within their jurisdiction. Ironically, California law is supposed to make it more difficult to enact a special tax by requiring voter approval, but that provision may have given Richmond a unique source of leverage over Chevron through the threat of an all-consuming ballot fight. According to David Hackett, the chair of the board of consulting firm Stillwater Associates, there is no guarantee that other communities have the same level of antagonism that Richmond has toward Chevron. Plus, a less profitable refinery might simply fold in the face of a $50 million yearly tax.

The success of the initiative in Richmond was a result of decades of organizing and research by a grassroots base that became formidable enough to scare Chevron. The Healthy Martinez coalition, which formed in response to a different high profile refinery disaster in 2022, is in its infancy compared to what has been built in Richmond. “The Richmond refinery is a unique asset and the Bay Area is a unique community and political environment,” said Ross Allen, a spokesperson for the company. “Chevron maintains continuous dialogue with the jurisdictions where we have assets. The agreement was fruit of that conversation and reflects our long-term discussion with city officials.”

The organizers of the Richmond campaign insist from the outset they had more in their sights than just taxing Chevron. Their initiative, they point out, would have been called Polluters Pay. “It was always our intention to set a precedent,” said Megan Zapata, a local environmental activist.

The Takeaway

Holding polluters responsible is hard work. Cities, states, and national governments are reluctant to say no to corporations that provide jobs and pay local taxes. Wealthy corporations have little trouble finding compliant government officials who are willing to treat them favorably in exchange for certain “considerations.” A million dollars spread around among politicians can lead to billions in profits so why not do it? One hand washes the other, so where’s the harm? Besides, we need fossil fuels to live a life of comfort and convenience. You can’t make an omelet without breaking a few eggs, right?

The obverse of that conventional thinking is that a person cannot dump their waste on their neighbor’s property without penalty, so why should corporations be allowed to dump their waste products into the atmosphere, into the soil, and into the rivers for free? For excellent insights into how business games the system to make it a “heads we win, tails you lose” situation, read John Grisham’s The Appeal. It is fiction, of course, but then again, is it really?

The city of Richmond may have discovered a new lever it can pull to protect its citizens from pollution, and that is good news. The world needs as many arrows in its quiver as it can get to fight fossil fuel pollution, but it is only applicable in specific  instances in which the offending industry is located within certain geographic confines. Nevertheless, it represents a small but important victory in the fight for climate justice.