The City of Carson has reached a landmark $370 million settlement with Tesoro/Marathon Petroleum, securing significant immediate and long-term funding for the community while strengthening the City’s financial position without imposing a new tax on Carson residents.
Under the settlement, Carson will receive $120 million upfront and an additional $250 million over 15 years. Approximately $70 million in tax deficiency payments already held by the City, including interest earned on those funds, will be released to the City, with approximately $50 million in additional funds expected within 45 days. Beginning in January 2027, the City will receive approximately $16.67 million annually over 15 years.
Tesoro/Marathon will also continue paying Carson’s existing Measure C Oil Industry Business License Tax under the agreed calculation and apportionment methodology, without receiving a credit against the settlement payments.
City leaders announced the agreement Thursday, describing it as a significant financial achievement that provides Carson with both immediate resources and long-term revenue certainty.
“This agreement represents a major investment in Carson’s future and an important outcome for our residents,” said Mayor Lula Davis-Holmes. “We have worked to protect the interests of our community, strengthen our financial position and make sure Carson receives the resources it deserves. This $370 million settlement allows us to move forward from a position of strength without placing an additional tax burden on our residents.”
Following approval of the settlement, the City withdrew the proposed oil refinery tax measure from the November 3, 2026, ballot. The Los Angeles County Elections Coordination Unit has confirmed the measure has been rescinded and will not appear before voters. The agreement also underscores the City’s broader commitment to fiscal responsibility and taxpayer protection.
The $370 million Tesoro/Marathon agreement provides another significant piece of Carson’s long-term financial picture.
“This is what responsible government looks like, protecting our taxpayers while making sure major corporations doing business in our community meet their obligations,” said Davis-Holmes. “We are creating greater financial stability today while preserving the public’s voice in decisions that could affect taxpayers tomorrow.”
The settlement follows years of legal and financial disputes involving Carson, Marathon Petroleum and its predecessor, Tesoro.
Carson voters approved Measure C in 2017, establishing the City’s Oil Industry Business License Tax. Marathon acquired Tesoro in 2018, and the Carson refinery subsequently became part of Marathon Petroleum’s Los Angeles Refinery. The City and the refinery operator have had a broader relationship involving taxes, infrastructure, road conditions, pipeline franchise issues and community mitigation.
The more recent litigation centered on Tesoro’s challenge involving Carson’s Oil Industry Business License Tax and the procedure the company was required to follow in seeking a tax refund.
On August 10, 2026, the California Supreme Court ruled in Tesoro’s favor on a procedural issue, finding that California’s Government Claims Act preempts Carson’s additional local administrative review requirement for this type of tax-refund claim. The ruling reversed lower-court decisions that had previously favored Carson on that procedural question.
The Supreme Court ruling did not determine that Carson improperly assessed the tax, establish the amount of any refund or resolve the underlying merits of Tesoro’s tax dispute. As part of the settlement, Tesoro/Marathon agreed to seek dismissal of the tax litigation and will not seek recovery of its attorney fees or litigation costs from the City.
City officials said the structure of the agreement provides both near-term resources and a predictable long-term revenue stream that can support responsible financial planning and future community priorities.
“After years of litigation, we now have an agreement that delivers real financial benefits for Carson,” said Davis-Holmes. “These resources belong to our community, and we are committed to managing them responsibly and transparently.”
The City will consider the use of settlement proceeds through its established public budgeting and decision-making processes. During Council discussion of the agreement, infrastructure and deferred maintenance were among the significant community needs identified for future consideration.
This landmark agreement serves as a powerful model of local collaboration between Carson and Marathon, delivering the full revenue the City is entitled to, all without increasing taxes on local residents.
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