The Richmond, California, City Council voted unanimously Wednesday to approve a $550 million settlement with Chevron in exchange for pulling a November ballot measure that could have imposed an oil refining tax on the company. 

Per the agreement, Chevron will pay $50 million a year for the next five years, then $60 million a year for the following five. The company initially offered $300 million, but raised the sum after a week of negotiations.

Richmond, a suburb of San Francisco with a population of 114,000, has a poverty rate that is double that of the rest of the state of California, according to the World Population Review. The population is 75 percent non-white, Neilsberg Research reports.

Richmond Mayor Eduardo Martinez called the settlement a “historic moment” in the push for environmental justice following a “difficult” set of negotiations.

“By standing up for environmental justice, as we have, other communities, too, can require that their polluters do the right thing,” he said.

The settlement money will help fund much-needed infrastructure improvements, city councilors said, and comes just as money from a previous settlement was drying up. Chevron in 2010 agreed to pay the city about $115 million over 15 years, with those payments set to expire in 2025. 

In exchange for that sum, the council dropped a plan that some advocates said could have done more to hold Chevron accountable for environmental harms associated with its refining activities. 

In June, the council unanimously agreed to place a measure on the ballot that would ask voters to approve a $1 tax per barrel of oil refined in the city for the next 50 years. The so-called Polluters Pay Ballot Measure was set to appear before Richmond voters on the November 5 ballot. 

The ballot measure, which council members expected Richmond residents to approve, had the potential to raise even more revenue. The city’s Finance Director estimated that the tax could have generated $60 to $90 million a year, according to council documents. 

However, council members said they feared litigation from Chevron could have prevented the measure from paying dividends. A similar tax passed in Carson in 2017 has yet to bear fruit because of ongoing litigation and is costing that city around $1 million annually in legal fees, council member Doria Robinson said.

In June, a Chevron employee and a recently-formed non-profit organization, called the Coalition for Richmond’s Future, sued the council over the wording that would have framed the tax on the November ballot. Chevron also expressed intent to litigate, according to council documents.

Given the potential for legal challenges, city officials said accepting much-needed funds was a prudent choice. “To have half a billion dollars in front of us and then to say ‘no’ when there is so much need is just not something I can do,” Robinson said.

Some community leaders expressed disappointment that the ballot measure was pulled. 

“Our campaign did not approach the city with this concept just so that Chevron would cut a deal that is pennies to them,” Kerry Guerin, an attorney with Communities for a Better Environment, said at the council meeting.

But others said the lucrative settlement is evidence of environmental advocates’ sway over Chevron.

“Chevron would rather pay than see us win at the ballot box,” said Megan Zapanta, an organizer with the Asian Pacific Environmental Network, at the council meeting. 

Chevron called the agreement a win-win for the city and the company. “This agreement will allow Chevron to continue to employ thousands of Bay Area residents and remain focused on providing the affordable, reliable, and ever-cleaner energy that this region demands everyday,” said Brian Hubinger, the public and government affairs manager for Chevron Richmond, “while also supplying the city with much needed additional funding to support our community’s needs.”

Community activists also urged city officials to use the new funds to support environmental justice causes.

“Our measure isn’t going to the ballot, but this makes it all the more important that when the refinery leaves, working families aren’t left with the cleanup cost,” said Connie Cho, a policy advisor for APEN. “Richmond deserves clean air, water, and for our families to grow up without fear of the next refinery disaster.”

NABJ Black News & Views contributed to this report.