A California city reached a settlement with Chevron on Thursday that will see the company pay hundreds of millions of dollars in exchange for dropping an effort to impose a tax on the firm, according to Reuters.

Chevron agreed to pay Richmond, California, $550 million over 10 years, while the city will abort a ballot initiative that could have allowed the city to impose new taxes on the company’s refinery, according to Reuters. The settlement follows Chevron’s decision earlier in August to move its headquarters out of California, a move motivated in part by the state’s aggressive regulatory and policy approach toward traditional energy producers.

“Chevron Richmond and the City of Richmond have reached an agreement that settles litigation and removes the Refining Business License Tax measure from the ballot,” Chevron said in a statement shared with the Daily Caller News Foundation. “This agreement ensures Chevron Richmond can continue to provide Northern California with the affordable, reliable and ever-cleaner energy the region’s economy needs.” (RELATED: What Has California’s War On Fossil Fuels Actually Accomplished?)

The company will make the payments in monthly installments starting in July 2025 and ending in June 2035, according to Reuters. The refinery that Richmond, which is located in the San Francisco Bay area, could have opted to tax opened in 1902 and processes approximately 250,000 barrels of crude oil on a daily basis.

The original proposal for the city’s “Refining Business License Tax” would have taxed the company at a rate of $1 per barrel for crude oil and other refinery inputs, a Chevron spokesperson told the DCNF. If the voters of Richmond approved the measure, it would have likely imposed heavy costs on the refinery, potentially disadvantaged consumers and could have kickstarted lengthy legal battles that probably would not be in the interests of either the firm or the city, the spokesperson added.

Some estimates projected that the tax would have generated somewhere between $60 million and $90 million of revenue annually if enacted, according to local nonprofit news outlet Richmondside.

Andy Walz, president of Chevron Americas products, recently told reporters that the Richmond refinery tax proposal was an example of the “headwinds” the firm faced in California in the lead-up to its decision to move its headquarters to Texas.

The office of Richmond City Attorney Dave Aleshire declined to comment.

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