El Segundo Inc.: Furor Over Chevron’s Sweetheart Deal

The skirmish of words in El Segundo over its city manager’s proposal to raise local taxes on that city’s largest business, Chevron Oil, has suddenly become a full-fledged legal war, with the official making explosive accusations against both El Segundo’s government and Chevron. The story, which Donald Cohen has been following for Frying Pan News, began with Doug Willmore’s efforts to bring the giant refinery’s taxes in line with the taxes paid by other California oil companies. Willmore was subsequently fired on February 9 by El Segundo’s city council.

In response, the ousted city manager has filed a governmental claim against El Segundo, a forerunner to a lawsuit. In it, Willmore claims that:

• During his research into Chevron’s tax history, Willmore discovered a 1994 agreement in which Chevron’s natural gas UUT (utility users tax) alone “would be capped at $150,000 per year . . . in perpetuity.” (Original emphasis.)

• In 1994, Chevron was delinquent $9.5 million in its UUT – yet the city was content to accept a mere $200,000 in back payment.

• When Willmore approached El Segundo’s city attorney with his findings that the city’s agreements with Chevron were unlawful, the city attorney did not act on those findings. A couple of weeks later Willmore was told by Mayor Eric Busch that the city council would act to terminate his contract, though he gave no reason for doing so.

Willmore’s attorney, Bradley C. Gage, is claiming that El Segundo violated the state’s laws against whistleblower retaliation. He says the city has 45 days to respond to the claim, which seeks unspecified awards for “general and special damages.”

“It always amazes me what city governments think they can get away with,” Gage told Frying Pan News. “If I were [El Segundo’s leaders], I’d be asking, ‘Why did we do this dumb thing?’”

The company town portrait painted by Willmore’s claim – essentially, El Segundo’s city hall as a government attached to an oil refinery – may seem out of place in cosmopolitan Los Angeles County, but fits in with similar stories of cities such as Vernon or Lancaster being run as personal fiefdoms by families or individuals.

The story has quickly attracted media attention. When reached for comment, El Segundo Mayor Eric Busch sounded subdued; he was soon to attend a closed meeting of the city council, followed by an open meeting. He declined to discuss the specifics of Willmore’s sacking, saying that confidentiality laws severely restricted his ability to talk about them.

However, when asked if, as Willmore contends, the city manager was not given a reason for his dismissal, Busch replied that as an at-will employee, Willmore was not entitled to an explanation.

Busch said he had not yet read Willmore’s claim, though he was familiar with its contents, including the allegation that El Segundo made what Willmore characterized as a “sweetheart agreement” with Chevron in 1994 regarding its delinquent taxes and its future payments.

“I’m not going to second-guess a previous city council,” Busch said. “It’s the deal they cut with Chevron and I’m sure they thought it was best for the city.”

Busch said that June 1 has been set as a target date for El Segundo and Chevron to reach an agreement on what he described as a plan of action for the city’s future.

“We’re moving forward in a positive way to provide the best and highest level of service to our community,” he said. “The city is currently doing that with Chevron.”

But what, he was asked, are the specific details of that plan?

“I don’t know,” Busch said. “A subcommittee was set up with the mayor pro tem. There’ll be a report.”