CARSON, Calif. — The city of Carson has reached a $370 million settlement with Marathon Petroleum-Tesoro.

The company owns and operates the largest oil refinery on the West Coast, which sits between the city of Carson and the city of Wilmington.

In 2017, the city of Carson passed Measure C Oil Industry Business License Tax, for refinery businesses. In 2022, the city’s audit found the company owed $70 million from that tax. 

However, Marathon Petroleum and its subsidiary Tesoro did not see it that way and argued they were being overcharged. The company said the disputed business was not done on the Carson side of their operations and therefore should not be taxed on it. 

Since then, the $70 million has been frozen, and Carson and Marathon Petroleum and their subsidiary Tesoro have been battling it out in court. Carson Mayor Lula Davis-Holmes leveraged voters and proposed putting a new oil tax on the ballot this November as a solution. 

“[I said] You’re making $70 a barrel so just give me a dollar. You know, you don’t have to worry about any appropriations or anything. Tesoro said, no, we don’t want that to go to the ballot because had it gone to the ballot, we had already done a survey that said it would pass by 69%,” Davis-Holmes said.

With the Marathon Petroleum facility capable of producing 365,000 barrels of crude oil a day, she said the proposed tax would be much more expensive for the company. Negotiations began to reach a settlement, and the city agreed to rescind the new tax proposal. 

“So with our city needing what it needs infrastructure wise, built a wall that need to be built on our main thoroughfares, we had to make a business decision whether you fight another ten years and get nothing or you get money to help you do what you’re going to do,” Davis-Holmes said. 

She said there are already over $150 million in approved projects that just need the funding. 

“We have fiber optic networks going through. We have to renovate parks that are falling apart. We still have so many streets in the city that need to be resurfaced,” Davis-Holmes said. 

She added that they also have several projects ahead of the LA28 Olympics that they have to prepare for, as the city will be hosting several events and welcoming thousands of tourists. 

The city will receive $120 million upfront and another $250 million over the next 15 years. Marathon Petroleum will continue paying Measure C, the initial oil tax at the root of this issue, and the company is also paying the city’s litigation costs.

All in all, the city says the deal comes closer to $430 million. 

In a statement to Spectrum News, a representative for Marathon Petroleum said;

“Marathon is pleased to have come to an agreement with the City of Carson to resolve prior and current tax matters, providing stability and predictability to both the City and the company. Under the agreement, Marathon will pay the city approximately $16.7 million annually over the next 15 years, and a $120 million up-front payment, of which $70 million has been held by the city in escrow. Separately, the California Supreme Court ruled on Aug. 10 in Marathon’s favor with regard to a portion of the tax matters that had been subject to litigation.”

The city said the Supreme Court ruling was a separate issue and did not determine Carson improperly assessed the tax, but rather the procedure the company was required to follow in seeking a tax refund. 

The agreement also states that the two will come back to the table in 14 years to renegotiate their agreement.