Benicia Takes First Steps Toward Future Without Valero Refinery

Updated 11:55 a.m. Wednesday

Benicia city leaders are taking initial steps to prepare for the likely closure of the Valero refinery, a month after the oil giant announced plans to cease operations at its sprawling Solano County facility within a year.

The City Council on Tuesday unanimously approved the mayor’s proposal to create four economic and community-focused task forces to “understand potential economic impacts, develop strategies to mitigate those impacts and plan for the future.”

The groups are intended to ready the small North Bay city for the potentially seismic fallout if Valero makes good on its intent to cease operations at the refinery by April 2026.

Valero is Benicia’s largest employer and accounts for almost 20% of its tax base.

“I think we are taking some serious steps trying to address as many of the known and unknown facts that we have,” said Mayor Steve Young, who tapped specific council members to head each of the groups, and said no one attending the meeting voiced any opposition to the plan. “We’re basically trying to utilize the respective strengths of the council members, all of whom have significant things that they can bring to the table.”

That includes a group to address economic recovery options for the city as it braces for a massive budget shortfall, and another to collaborate with nonprofits, schools and local sports leagues that have long relied on Valero’s donations, and now face losing their primary funding source.

“We’re in a situation where we’re going to have $10 [million] to $12 million less than last year,” Young said. “The hit on the community is going to be severe. My main job is to ease that transition as much as we can.”

A third group would map out next steps for the city’s port and the many businesses in its industrial park that for decades have supplied equipment and services to Valero, while a fourth would tackle plans to redevelop the 930 acres of land the company owns.

Oakland-based Signature Development Group recently announced it was in talks with Valero to redevelop the land on the eastern side of the city into housing and commercial property.

Doing so, however, would require a costly remediation effort — one Valero is legally required to undertake— that would likely take a decade to complete before any development takes place. During that time, the city would receive no revenue, Young said.

Valero has taken the land off the market, which implies that it’s given Signature the exclusive right to negotiate for it, he said.

“So [Signature’s] got a year to sort of do their due diligence, look at redeveloping options and then at the end of that year presumably buy the site and then move forward with who knows what kind of development options,” Young said.

He noted, however, “there are so many unknowns that probably things will pivot a month from now, three months from now. Six months from now, we might be doing something different.”

Councilmember Terry Scott, whom Young asked to help lead the redevelopment group, said his priority is to focus on the 400 acres of the Valero property that haven’t been used for manufacturing and processing operations. That land wouldn’t require the same degree of remediation, and could potentially be turned into housing and other uses within several years.

As for the refinery property, he said, the city would need to court industries that could operate on land that will remain fairly contaminated, even after the remediation process.

“There’s gonna be some pretty bad brown spots there,” said Scott, who is hoping to attract less-polluting industries to replace the refinery. “This will not be growing gardens, and having front lawns and having kids running across it.”

Valero’s announcement in mid-April to “idle, restructure or cease” operations at the refinery that it’s operated since 2000, caught Young and other city officials completely off guard. The company cited California’s tough “regulatory and enforcement environment” as the main driver behind its move to consider closing the sixth-largest refinery in the state, which makes up about 9% of the state’s total crude oil capacity.

The news dropped less than two weeks after the City Council unanimously approved modest rules to increase their oversight of the refinery, and some six months since regional and state air regulators fined the company a record $82 million for secretly exceeding toxic emissions standards for more than 15 years.

Although that money is reserved for future public health initiatives, Young said he is pressing regulators to consider “a lenient and liberal” interpretation of what they mean by public health, so that Benicia leaders may use those funds “to offset some of the losses that the city’s going to see.”

Young also hopes he can help broker a deal with Valero and state officials to convince the company to continue operating the refinery for at least a few more years. He additionally intends to make the case that closing the facility next year could pose a serious national security threat, as it’s currently the sole provider of roughly 50 million gallons of jet fuel to nearby Travis Air Force Base, which it delivers via a direct pipeline.

“The threat of no jet fuel for Travis potentially puts the future of the whole base at risk,” he said. “If we could get three years instead of one year, that certainly eases the transition period for the city and gives us a little bit of breathing room to try to stabilize the financial hit that we’re going to see, and at the same time, plan for the eventual closure.”

Young said members of the City Council and community leaders have so far been generally supportive of the proposal to form task forces as part of the city’s abrupt effort to begin processing and planning for an uncertain future. People, he said, are glad to see that the city is at least trying to create a blueprint.

“Even though a lot of it is out of our hands, we are addressing it to the best of our ability so far,” he said.

Scott called Valero’s announcement last month “a warning shot” that he hopes will galvanize the community into action.

“We cannot let weeks or months go by without really looking at the future and saying, what are the things that we can do?” he said.