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Last week, the Richmond City Council scrapped a November ballot measure that would have imposed a new oil-refining tax on the nearby Chevron refinery. Instead, the council voted unanimously to approve a $550 million settlement with the company.
KQED’s Dan Brekke explains why city leaders chose to strike a deal instead of taking the issue to the ballot box.
Episode Transcript
This is a computer-generated transcript. While our team has reviewed it, there may be errors.
Ericka Cruz Guevarra: I’m Ericka Cruz Guevarra and welcome to the bay. Local news to keep you rooted. The city of Richmond has ditched a Chevron refinery tax that it planned to let voters weigh on this November.
Ericka Cruz Guevarra: Instead, Chevron will pay the city more than half $1 billion over the next ten years as part of an agreement to prove it wants to be a good neighbor. And city officials say they want Chevron to pay up not just for past harms, but to help build a future that relies less on the oil refinery.
Councilmember Doria Robinson: We are all ready to wait. We’re already doing too little. We need to start to work through just transition now, not in ten years. We need to make those investments now.
Ericka Cruz Guevarra: Today, Richmond’s long standing battle to get Chevron to pay up. And what’s in this deal?
Dan Brekke: There’s a natural conflict between industry and residential areas. It’s been played out in many places.
Ericka Cruz Guevarra: Dan Brekke is a reporter and editor for KQED.
Dan Brekke: Refineries produce lots of things that people shouldn’t be breathing. They put lots of things in the water that people shouldn’t be drinking. And Chevron does all of that stuff. The city has become more and more conscious and more and more aggressive about trying to get Chevron to respond to community concerns.
Dan Brekke: And, you know, Richmond, like many cities and especially many cities with large minority populations. People are in the lower income brackets. They have a chronic financial problem.
Dan Brekke: And so they’ve turned to Chevron, which is the largest employer in town, is a. Fabulously wealthy company. I mean, they made more than $21 billion in profit last year. That’s not revenue. That’s profit.
Ericka Cruz Guevarra: And Chevron is already the largest taxpayer in the city of Richmond by far.
Dan Brekke: They account for about one sixth of the city’s total revenue every year. So they entered into an agreement about ten years ago for Chevron to start making payments, you know, to try to pay for some of the things the city has to pay for it. So this agreement from ten years ago was running out.
Dan Brekke: It was a ten year settlement. And mindful of that, the city council and community activists, especially a group called Communities for a Better Environment, started to think about, well, how do we go forward?
Ericka Cruz Guevarra: So one idea was a November ballot measure. What would it have done?
Dan Brekke: The idea they came up with was to pass a new tax. And it was a very ambitious tax. But, you know, in broad strokes, what it would do is for the next 50 years, it would bring in something like 60 to $90 million a year. If you multiply 50 by 60 million or 90 million, you get into the 3 billion to $4.5 billion range over the next half century.
Dan Brekke: That’s something that the city of Richmond sorely needs. And it would also allow it to to do things in terms of health programs, what they call just transition programs to start job training for people in the city who might be reliant on the refinery work in some way. And and the city was very committed to this.
Ericka Cruz Guevarra: So it was on track for the November ballot, as you said. What happened to it?
Dan Brekke: The city council went ahead in June and put this on the November ballot and immediately got sued by what appears to be a front group for Chevron. One of the attacks on the measure in the lawsuit was the ballot question.
Dan Brekke: The Chevron Allied Group said that the way it was written, the only logical answer to the question as it was posed would be to vote yes. Right. And that’s a level of bias. They argue that’s not allowed under state law. The city had the option of moving ahead with this.
Dan Brekke: But, you know, what the judge found was that the ballot question was indeed in permissibly biased. And so the judge, even though he only issued a tentative ruling on this, was signaling to all the parties this wording is not what you’re going to see on the ballot.
Ericka Cruz Guevarra: So a superior court judge’s preliminary ruling sort of signaled to the city of Richmond that maybe there might be more legal fights ahead for this ballot measure.
Dan Brekke: Yeah, that’s absolutely right. So the city council was getting caution from the city attorney that there was going to be litigation ahead. Chevron had already said, look, you know, we’ll sue to stop this. And the city attorney was very concerned about what that might mean for the city going forward.
Dan Brekke: And what he pointed to was the city of Carson down near Los Angeles that passed a tax on its resident refinery in 2017, but hasn’t been able to spend a dime from the revenue because they’ve been tied up in court the whole time. So what the city attorney’s warning was essentially was, look, we could pass this and maybe we’re going to go and win the vote in November, but it may be years before we see money from this.
Dan Brekke: And so behind the scenes, an ad hoc committee of city council members negotiated behind closed doors with Chevron, and they came up with what they’re calling a settlement, settling this difference between them about how to go forward on this revenue question.
Ericka Cruz Guevarra: Coming up. Richmond And Chevron’s agreement and how it’s different from what would have been on the ballot. Stay with us.
Ericka Cruz Guevarra: So basically, the city of Richmond was afraid of having to spend millions and millions of dollars fighting this in court. So they set this ballot measure aside and instead struck a deal with Chevron. What was in this deal exactly, And how is it different from this failed ballot measure?
Dan Brekke: The main thing is the money, as we said, about the ballot measure. The estimate was it would bring in 60 to $90 million a year for 50 years. Now, the agreement that was on the table before the city council was a ten year agreement. Chevron would immediately start paying the city $50 million a year, no strings attached.
Dan Brekke: And after the first five years, $60 Million a year. And so it would come to a total of 550 million after a decade. Now, that’s money over and above what the city would expect through its normal taxes. Right? It has a payroll tax that Chevron pays their property taxes that Chevron pays, and the city gets money from that. Now, so that was a key part of it.
Dan Brekke: This money is over and above everything that we’re already paying. The other thing is, if you decide you want to try to tax us again like you did with this measure, you can do that. The city is not ceding the right to to come back and try to do that again during this ten year agreement.
Ericka Cruz Guevarra: And how were city leaders at this meeting like rationalizing this deal? Why did they say this was better than the ballot measure that would have been on the ballot in November?
Dan Brekke: Well, it was surprising to me for a city council that has a reputation of being somewhat fractious. They all seem to be like we’re doing the right thing here. I think it’s pretty simple. It’s a bird in the hand versus something that might be great, but also might be nothing going forward. So let’s go for what’s what we know we can get now because it’s substantial enough that it’s going to allow us to make a start on some of our priorities.
Councilmember Doria Robinson: This has always been about money, about paying their fair share.
Dan Brekke: Council member Doria Robinson: is a member of the Richmond Progressive Alliance, which is one of the factions on the Richmond City Council. And as its name suggests, I mean, they are pretty forward in terms of thinking about green issues and corporate responsibility and social justice, environmental justice.
Councilmember Doria Robinson: We are absolutely committed to ensuring that these funds are used both to meet both immediate needs and to invest in just transition away from extractive, polluting fossil fuel economy.
Dan Brekke: She talked about looking over, you know, toward the refinery as a child, seeing the smoke rising from it and thinking this is just something that I’ve always lived with and it’s about time we take care of things.
Councilmember Doria Robinson: I live on these blocks. I see people in and in my grandparents church and in the schools, my neighbors. And they all when I talk to them, they’re like, Take the deal. Take the deal. We need it.
Councilmember Doria Robinson: I am accountable to the people of Richmond, to the people who actually suck in these fumes every every day, every day, including myself. I live here and I feel like we need to put this money to work now.
Ericka Cruz Guevarra: Where is Chevron in all of this? How are they feeling about this deal?
Dan Brekke: I think where Chevron is coming from, Chevron would like peace in the city of Richmond, Right? They don’t want people on their back. They don’t want people trying to pass taxes. Chevron is going. Look, I mean, this is a gesture from us that we’re serious about your concerns and we want to work with you. And that’s literally what the Chevron representative at the meeting, Bryan Hubinger, said.
Bryan Hubinger: This agreement will allow Chevron Richmond to continue to employ thousands of Bay Area residents and remain focused on providing affordable, reliable and ever cleaner energy that this region demands every day, while also supplying the city with much needed additional funding to support our communities needs.
Ericka Cruz Guevarra: What about the folks who I mean, organized to put the ballot measure forward in November? How are they responding to this deal that the city then cut with Chevron?
Dan Brekke: There was a coalition that was campaigning for this make polluters pay. And a lot of the people who spoke at the meeting identify themselves as part of that coalition. And they had two things to say. One was, look, what’s happening today is because we organized. And then the other thread was, it’s really disappointing we’re not going forward because this is the right thing to do.
Kerry Guerin: When our community members dreamt up this vision. It focused on a public campaign that empowered residents.
Dan Brekke: Kerry Guerin is an attorney for Communities for a Better Environment, the Richmond office. They have and was instrumental in writing the tax measure and coming up with the ballot language. By all accounts, and expressed really serious disappointment that for now this issue is going to end with this settlement with Chevron.
Kerry Guerin: Our campaign did not approach the city with this concept just so that Chevron would cut a deal that is pennies to them. I did not write this ballot measure and tax ordinance so that the city could settle.
Ericka Cruz Guevarra: Just so I understand, is the difference that with the ballot measure, Chevron would have been basically under this agreement for a much longer period than this deal that they just cut with the city. Are they getting less money this way? Like what? What really is at the heart You think of the disappointment, I guess, from from organizers.
Dan Brekke: I mean, I think there are two things that you just brought up that are really important. One is that this is a ten year agreement versus a tax that would have been in effect for 50 years. The amount of money is also really important. So they’ll get an average of $55 million a year over the next decade as opposed to 60 to $90 million a year.
Dan Brekke: Now, that larger figure, there is a caveat there that assumes that the Chevron’s Richmond refinery is going to continue operating for the next half century the way it has been. Right. And we don’t know that that’s true. There is going to be a transition. I won’t live to see it, but one can’t assume that things are going to continue the same way.
Dan Brekke: The other thing that I think is more subtle is that people are really thinking about trying to find ways of getting the company to operate and fundamentally different ways by exacting a price from them. And I don’t think that the, you know, the tax measure in for those people is really the most important thing.
Dan Brekke: I mean, I think regulatory and legal action is the most important thing. And trying to get Chevron and many other refineries to behave better, to be more responsible about their environmental impact. And and those kinds of things could be much more important in the long run.
Ericka Cruz Guevarra: You know, you talked in the beginning about how love it or hate it. Chevron is the largest employer, the largest taxpayer in the city of Richmond. I mean, if if Chevron was gone from Richmond tomorrow, I mean, it seems like the city would be in a tough position.
Ericka Cruz Guevarra: Like it feels like the city is just constantly walking this fine line between. Holding Chevron accountable, but also not pulling the rug out from underneath it entirely.
Dan Brekke: Yeah, it is a conundrum for them and the city is thinking about that. City officials are thinking about, okay, how do we create the conditions for the time when Chevron is no longer here? I mean, people can conceive of that idea. It’s kind of difficult given, you know, what we see in our world every day.
Dan Brekke: Right. I mean, you and I happen to have taken public transit, and today most people got to work by driving. And the world is not shifting away from that at light speed. And so companies like Chevron are going to do what they do for a while. But in the long run, cities like Richmond are going to have to devise strategies for how to go forward.
Dan Brekke: What what other things are there? What other things could that property be used for? For instance, because you’re right, if there’s a point where Chevron is processing zero barrels of crude petroleum a day at that facility, then the revenue stops.
Dan Brekke: You know, Richmond is a city of about 115,000 people, and it’s a city that needs services. It’s a population that has been neglected in many ways. There’s been a real lack of investment in Richmond over the years. And, you know, the city is going to need to find a way forward.
Ericka Cruz Guevarra: Thank you so much, Dan.
Dan Brekke: You’re welcome.
Ericka Cruz Guevarra: That was Dan Brekke, a reporter and editor for KQED. This 40 minute conversation with Dan was cut down and edited by senior editor Alan Montecillo. I produced this episode, scored it and added on the tape. Music courtesy of Audio Network.
Ericka Cruz Guevarra: The Bay is a production of listener supported KQED in San Francisco. If you liked this episode, consider sharing it with a friend. I am Ericka Cruz Guevarra. Thanks so much for listening. Talk to you next time.