California Lawmakers Divided Over Polluters' Pay Plan to Combat Climate Crisis

Shiva Mishek loves to win. And the co-chair of the Richmond Progressive Alliance is not afraid of stiff competition.

Last summer, as chief of staff for Richmond Mayor Eduardo Martinez, she helped lead a campaign to convince voters to approve a ballot tax measure that would impose an oil-refining tax on Chevron, which processes hundreds of thousands of barrels of crude oil each day in Richmond.

The company threatened to sue, and the city only ditched the ballot measure after Chevron agreed to pay $550 million over a decade to compensate the community for the effects of pollution. Martinez called the settlement a historic victory.

Peering through an opening of a tree-lined fence on Castro Street earlier this month, Mishek, wearing a grey T-shirt and high-waisted jeans, said: “It’s very hard to turn down a deal like this,” even if the Richmond resident had wanted more from the company. “Half a billion dollars is pennies,” for big corporations, she said.

Chevron’s touch is all around Richmond. Oil tanks on hills loom over the community. Trains split the city. The company played a pivotal role in helping the city become an industrial powerhouse, stimulating the West Contra Costa County economy to the tune of approximately $1 billion each year, according to a report commissioned by the company. But advocates claim that having a refinery in town comes with significant health implications, like higher rates of asthma.

“What’s so insidious about environmental harm is it’s often invisible,” Mishek said.

A group of California Senate and Assembly lawmakers have now proposed a similar plan — the Polluters Pay Climate Superfund Act of 2025 — that would require companies to pay the state money retroactively for their oil production between 1990 and 2024, to address the damages they argue Californians are facing now and in the future as a result. Climate policy experts said that if the bill passes, it will become entangled in legal battles. The legislation already faces fierce opposition from Republican lawmakers and a slew of influential groups, including the California Chamber of Commerce, the State Building Construction Trades Council and the oil industry.

The Western States Petroleum Association, in an email, called it “a misguided proposal to retroactively punish companies for providing a legal product that was, and remains, critical to our state’s economy.”

Marie Choi, communications director at the Asian Pacific Environmental Network, which helped spearhead the ballot measure in Richmond, said state lawmakers should look to the campaign in that city — where organizers leveraged local support — as a guide as they pursue the controversial policy.

“There’s a reason that Chevron came to the table, settled and didn’t even want to see this go on the ballot because there was overwhelming support in the community,” she said. “For lawmakers in Sacramento who are inundated with oil lobbyists, it can be hard to remember that it is very much the reality of how people feel on the ground.”

‘Protecting all of California’

For bill author Sen. Caroline Menjivar, D-Panorama City, the policy is a personal matter.

January’s devastating Los Angeles fires destroyed thousands of homes and caused other damages that will cost north of $100 billion, according to early estimates. It was like climate change smacking her district across the face, she said.

“You pay for that, and I pay for that,” Menjivar said. “If we don’t do something to increase the revenues for these kinds of catastrophes, we’re going to be falling even more behind on being able to combat or be responsive or be preventative for the next kind of catastrophe.”

Maya Golden-Krasner has lived in a hotel since the Eaton Fire contaminated her family’s home with lead and ash. As deputy climate director at the Center for Biological Diversity, which sponsored the bill, she believes the act is essential for California because the Trump administration is actively defunding policies that protect people during climate disasters.

“We don’t know if we are going to have money from the federal government to deal with disasters in the future,” she said.

If passed, the bill requires the California Environmental Protection Agency to determine which California companies could be responsible for more than a billion metric tons of greenhouse gases released into the atmosphere over the last three decades. Regulators would then conduct a climate cost study to determine the amount each business would need to contribute to a new fund within the state treasury.

“They throw in tens of millions of dollars just for lobbying,” Menjivar said. “If they’re putting so much money into that, I know they can afford this.”

Similar laws have been passed in Vermont and New York that require fossil fuel companies to pay for the damages caused by human-caused climate change through funds to support adaptation projects.

Assemblymember Dawn Addis, D-San Luis Obispo, would like the fees collected to help harden homes in areas of the state prone to wildfires, prepare cities in her district for flooding and create living-wage green jobs.

“The majority of California’s population lives at the coast and needs to know that they’re gonna be able to keep their homes safe and that their children are gonna grow up in a world that is not experiencing such extreme weather events,” Addis said.

‘A misguided attempt’

The California proposal has emerged at a time when oil companies are set to close two refineries in the state and the Trump administration is attempting to revive oil drilling off the West Coast. At the same time, gas prices are high compared to their historical average at $4.76 a gallon, according to AAA, but still below the roughly five bucks Californians paid at the pump on average last year.

Chevron officials told KQED in an email that if the bill were to pass, it “would exacerbate a hostile business environment,” undermine the state’s energy production, increase energy costs and “threaten the reliability of fuel supplies.”

Senator Suzette Martinez Valladares, R-Santa Clarita, urged lawmakers at the bill’s introduction to reject the legislation, claiming it will hurt commuters in her district who travel hundreds of miles every week for work.

“To say that this bill will not raise gas prices is not only absurd, it’s downright irresponsible and the definition of gas lighting,” Valladares said.

A coalition of more than two dozen industry groups and associations opposes the bill and said it “would likely worsen California’s affordability crisis for the state’s consumers and businesses,” in a joint press release. Jon Kendrick, a lobbyist with the California Chamber of Commerce, called the bill a “job killer.”

“By retroactively punishing decades-old lawful emissions that largely occurred outside of the state, we disincentivize businesses from actually coming to California,” he said at the bill’s introduction.

The bill “does nothing for working people,” said Martin Rodriguez, who represents thousands of people with Ironworkers Local 433. “It’s a misguided attempt to punish an industry that our whole economy is based [on].”

‘Long legal battles’

Opponents also argue that companies have already paid a tax on these emissions through the state’s cap-and-trade program, money the state spends on climate projects. They want the state to focus on extending the program, which Gov. Gavin Newsom proposed doing in his updated budget proposal. The program has generated $33 billion through seasonal auctions that enable businesses to purchase allowances for emitting greenhouse gases.

“By holding polluters accountable, we’re sending billions of dollars back to communities and back to people’s wallets through credits on utility bills,” Newsom said in a press release dated May 7.

Then there is the question of the bill’s legality. Severin Borenstein, a UC Berkeley economics professor, questions whether California could compel companies to pay retroactively, especially since the state’s cap-and-trade program already taxes them.

“Legally, that would be problematic,” he said. “If we go down this route of going back 30 years and penalizing companies, that’s likely to lead to long legal battles and more bad publicity for the state.”

Borenstein believes a price on carbon emissions nationally “would be much more impactful” than California’s proposal, but it would face extreme pushback.

“It’s important to have a feel for what is going to move the ball forward politically and what might cause so much blowback that it could undermine the pursuit of a lower carbon future,” Borenstein said.

Back in Richmond, Shiva Mishek sipped Earl Grey tea in her beige orderly kitchen, pondering how the state can learn from Richmond’s half-billion-dollar settlement. She said she is still torn over it and worries about the city’s future. And those oil tanks on the hills are a constant reminder that.

It’s a win because she sees the city as overburdened by the refinery’s operations and has “a lot of climate adaptation needs that are urgent.”

“In Richmond, the lesson is that it’s important to stay clear-eyed on what the needs are and to keep our eye on the prize,” Mishek said.