|Basking in the Afterglow of the Chevron Settlement
May 16, 2010
Whether it’s declaring victory or simply congratulating the combatants after the cease fire, kind words continue to flow from individuals, Council members, political organizations, Chevron and the media. Below is an op-ed piece from Jeff Ritterman and Chip Johnson’s column from the Chronicle.
After patting ourselves on the back, however, we still have a lot of work to do. Chevron’s continuing assault on property tax assessments through endless appeals could erode much of what Richmond recently gained.
The Chevron Richmond refinery is still the third highest point source polluter in the Bay Area at 1.2 million pounds annually (behind the Tesoro and Valero refineries, based on 2006 data) and the largest source of greenhouse gas emissions. Richmond still suffers from extraordinarily high rates of asthma. The project to modernize the Richmond refinery to further reduce emissions is on hold due to a successful legal challenge of the EIR. The ball is now in Chevron’s court as to whether to proceed. If Chevron chooses not to proceed with the entire project, the Richmond refinery may surpass emissions of Tesoro and Valero, which are being upgraded.
On the plus side, Chevron has stepped up its charitable giving significantly. Recent examples include:
Chevron is still “Big Oil,” one of the “seven sisters,” now reduced to four by mergers, including BP, which brought you the destruction of the Gulf of Mexico. Obama has pledged to spike Big Oil’s cozy relationship with the U.S. government, but that would be the first time in the last 150 years. See http://truecostofchevron.com/ for the “True Cost of Chevron.”
Even if our domestic relationships are smoothed over, Chevron has a history of international abuses to live down, including the latest legal maneuver over the Ecuador litigation.
For now, however, let’s remain optimistic and proceed to try and check off our next dispute with the local manifestation of the fount of human energy.
Richmond makes right move in deal with Chevron
San Francisco Chronicle, Friday, May 14, 2010
Just like the song says: You got to know when to hold 'em, know when to fold 'em.
On Tuesday, Richmond city officials folded - and it was the smart play.
Facing a projected $10 million budget shortfall, declining revenue and a bleak five-year financial forecast, city officials signed an agreement with Chevron, which operates the Richmond refinery, to provide $114 million to city coffers over the next 15 years.
It's the first time the two sides have agreed on anything for quite some time.
In recent years, the oil giant based in San Ramon and Richmond city officials have been at odds over a wide array of tax rates and the methodology used to determine them.
The new deal provides Richmond with a secure revenue stream at a time when virtually all municipalities are struggling to make ends meet in an economy defined by uncertainty.
The deal is structured to provide greater payments in the first five years.
Beginning on July 1, Richmond will receive $13 million in each of the next two years and $33 million over the next three, said Richmond Councilman Tom Butt, who negotiated for the city alongside Vice Mayor Jeff Ritterman. They are widely considered to be Chevron's toughest critics on the Richmond City Council.
"It was business poker, and we were in a situation where we could cut a deal and have a lot more money that we could have counted on for a long time," Butt said. "We decided to pocket our winnings and go home. I think that's sound public policy and a good business decision," he said.
As part of the agreement, the city dropped its court appeal on ballot Measure T - a voter-approved manufacturer's fee that had promised larger returns from Chevron, as much as $30 million annually, but at a much higher risk.
As tempting as the upside may sound, betting the farm on the river card is not what elected officials charged with fiduciary responsibility are supposed to do.
Taking the money to restore and retain basic municipal services was definitely the right move.
Joshua Genser, a Richmond attorney, landowner and vocal critic of the city's dealings with the Richmond plant, was pleased with the outcome.
"I think it's a fabulous deal for the city," Genser said. "The city receives a ton of revenue, saves money in legal fees and enjoys financial certainty - which is undervalued." While some of the poor public relations Chevron suffers from is of their own making, Genser conceded, a lot of the accusations hurled at the company by environmental groups, and encouraged by the city, have been unfair.
Although the deal does not mend all fences between the city and Chevron, Richmond's largest employer, land owner, taxpayer and donor in a city of 100,000 residents, the agreement can provide a foundation for more goodwill and good relations between them.
As gestures of cooperation, both sides agreed to stand down from plans to launch rival November ballot measures over the city's utility-user tax rate. City officials sought an end to a special calculation applied to the refinery's utility tax rate; Chevron vowed to respond with a countermeasure crafted to lower rates for all customers.
Richmond City Manager Bill Lindsay said Chevron recognized it was in its own best interests to provide capital to help the city capture more business opportunities.
"They are tired of being the only target," he said. "They want us to diversify our economy so they're not the only game in town." Lindsay said the funds will be used to halt about 30 planned layoffs and used to fill vacant and "frozen" positions in the Richmond Police Department.
Mayor Gayle McLaughlin, a Green Party member, says activist pressure led to the agreement, though I can't say that I agree with that assessment. Chevron posted $4.55 billion in profits in its first quarter, and it simply purchased a whole lot of peace of mind for very little money.
For about $7.5 million a year, a virtually painless corporate expenditure, Big Oil has put an end to the tax dispute with its host city for the next 15 years and opened an honest dialogue with a local government entity inextricably linked to its business dealings in Richmond.
There is still the matter of a $1 billion refinery upgrade and a new environmental impact report that will be required, but a brand new revenue deal with the city of Richmond certainly doesn't lessen its chances.
Chip Johnson's column appears in the Chronicle on Tuesday and Friday. E-mail him at firstname.lastname@example.org.
Readers' Forum: Richmond, Chevron deal proves common ground is holy ground
By Jeff Ritterman
THE CITY of Richmond and Chevron Corp. surprised a lot of people, including me, by signing a $114 million, 15-year revenue agreement. I believe this agreement is historic. I doubt that any municipality anywhere has ever made such a settlement with a corporation this size.