Carson Mayor Lula Davis-Holmes celebrates alongside City Council members and staff during the signing of the city’s $370 million settlement agreement with refinery operator Tesoro, a Marathon Petroleum subsidiary. The agreement led Carson to withdraw its proposed refinery tax measure from the November ballot. (Photo via Facebook).

Carson, CA —The Carson City Council unanimously moved Monday to withdraw a proposed oil refinery tax from the November ballot after reaching a settlement in principle with a Marathon Petroleum subsidiary that city officials said could provide Carson with approximately $370 million.

The agreement stems from litigation between the city and Tesoro Refining and Marketing, a Marathon subsidiary.

Following a closed-session discussion during an Aug. 10 special meeting, the city attorney announced that the council had approved the terms and conditions of a proposed settlement in concept, subject to completion of a signed settlement and annual payment agreement.

Under terms described publicly at the meeting, the agreement would include $120 million to settle litigation between the parties and an additional $250 million paid to Carson over 15 years.

The development prompted city officials to recommend withdrawing a proposed per-barrel refinery tax that the council had provisionally placed on the Nov. 3 ballot.

Council members subsequently approved Resolution No. 26-097, rescinding and withdrawing Resolution No. 26-086 and related resolutions calling an election on the proposed oil refinery tax.

The action was made conditional on execution of a final settlement agreement satisfactory to all parties. The council approved the resolution unanimously.

Before the council acted, two speakers urged officials to reconsider the refinery tax.

Jimmy Holland, who identified himself as representing 2,000 members of Boilermakers Local 92, argued that refinery operators could pass the cost of a $1-per-barrel tax on to consumers.

“I believe that any tax imposed on local refineries will ultimately be passed on to consumers,” Holland said. “Increased operating costs do not simply disappear. They are often reflected in higher prices for the people who live and work in our community.”

Holland also pointed to the refinery industry’s long presence in Carson, arguing that refineries have provided jobs, supported families and contributed to the local economy for decades.

He urged the council not to place the measure before voters.

Another speaker, Stephen Klinnard, questioned whether the proposal could lead to additional litigation and argued that costs could ultimately fall on consumers outside Carson who would have no opportunity to vote on the measure.

Klinnard, who said he works in Carson but does not live in the city, also warned about potential economic consequences if the Marathon refinery were to close, citing jobs at the refinery and businesses that depend on its operations.

The settlement announcement represented a significant change in direction from the proposed refinery tax. City officials emphasized, however, that the withdrawal was not unconditional.

The resolution would take effect only after a final settlement agreement was fully executed. The city attorney told council members that officials hoped to finish the agreement quickly and send the completed document to Tesoro’s attorneys immediately following the meeting.

Officials instead scheduled another special meeting for 4 p.m. Tuesday, Aug. 11, to consider the agreement.

City staff also discussed the need to meet election deadlines for transmitting the rescission of the refinery tax measure to the Los Angeles County registrar’s office.

City officials said the resolution could be electronically transmitted to the office before the applicable deadline.

The council ultimately adjourned the meeting with plans to reconvene for the separate special meeting Tuesday afternoon.

At the follow-up special meeting Tuesday, Aug. 11, the council moved the tentative agreement across the finish line. The city attorney presented a partially executed tax payment and settlement agreement and confirmed that the Los Angeles County elections office had formally rescinded the Carson Oil Refinery Tax for City Services, Public Safety and Environmental Cleanup measure. The proposal will not appear on the Nov. 3, 2026, ballot.

The written agreement provides Carson with $120 million to resolve the tax dispute litigation and $250 million in annual business payments over 15 years. The annual payments will be $16,666,666.67, beginning in January 2027.

City officials said approximately $70 million of the litigation settlement consists of tax-deficiency payments Tesoro previously made and that Carson has held separately pending resolution of the lawsuit. Those funds, along with the interest earned while they were held, will be released to the city. The remaining approximately $50 million is expected within 45 days.

Tesoro will also continue paying the city’s Measure C oil-industry business license tax without receiving a credit against the settlement payments. The city attorney said the annual business payment and Measure C revenue together are expected to provide Carson with approximately $20 million to $25 million per year. Councilmember Jawane Hilton said the continuing Measure C payments could push the total value of the agreement above the $370 million stated in the settlement.

The agreement also calls for Tesoro’s attorneys to seek dismissal of the tax litigation after the case is returned to the trial court. The matter will be dismissed with prejudice, and the company agreed not to pursue litigation costs or attorneys’ fees from Carson.

City Manager David Roberts highlighted another provision requiring the city and Marathon to return to the table in the 14th year of the agreement to renegotiate its terms in good faith.

Mayor Pro Tem Cedric Hicks moved to approve the agreement and authorize Mayor Lula Davis-Holmes to execute it on the city’s behalf. The motion passed unanimously, with Councilmembers Arleen Rojas, Jim Dear and Jawane Hilton, Hicks and Davis-Holmes voting yes.

Council members characterized the agreement as an opportunity to address long-standing city needs. Hicks said the new revenue would help Carson confront deferred maintenance and other work that accumulated after the 2008 economic downturn. Rojas said the outcome demonstrated what could be accomplished when the council, community and major stakeholders worked together.

Davis-Holmes credited the council’s earlier 4-1 vote to place the refinery tax on the ballot with giving the city leverage in the negotiations. She pointed to an estimated $159 million in infrastructure needs and said the settlement would help Carson advance projects residents have been waiting to see completed.

Following the vote, Davis-Holmes and City Clerk Dr. Khaleah Bradshaw were expected to sign the agreement and return the fully executed document to Tesoro’s representatives, completing the settlement process.