A state regulatory board denied environmental advocates’ petition requesting the board hold a hearing regarding Zenith Energy on May 23. Ultimately, advocates wanted the board to direct the Department of Environmental Quality, or DEQ, to deny Zenith a crucial state air permit after a March 26 Portland City Auditor report found Zenith violated city lobbying code in pursuit of a prerequisite permit in 2022.
Community members gathered mid-morning at DEQ’s Portland office to provide testimony to the Environmental Quality Commission, or EQC, the governor-appointed board in charge of policy and rulemaking for DEQ. One by one, the commissioners said they heard petitioners’ concerns, but after a short presentation from DEQ later that afternoon, unanimously voted to deny the request.
“They are legitimizing what the city did with Zenith,” Nick Caleb, a climate and energy attorney at Breach Collective, told Street Roots. “The bureaucrats of DEQ had no appetite to pursue any of this, and the EQC as their oversight body just deferred to that.”
A coalition of advocates, including Northwest Environmental Defense Center, Columbia and Willamette Riverkeepers, Breach Collective and the Linnton Neighborhood Association petitioned the commission for a declaratory ruling in a letter sent April 8.
In that petition, advocates outlined concerns that the city of Portland engaged in a legally insufficient process before granting the Houston-based fossil fuel company a land use compatibility statement, or LUCS, on Oct. 3, 2022. The LUCS was a necessary step for Zenith to obtain an Air Contaminant Discharge Permit, or ACDP, to continue its oil-by-rail operations fuel storage tanks on the banks of the Willamette River. DEQ is currently assessing that application.
In a relatively uncommon move, the Columbia River Inter-Tribal Fish Commission, or CRITFC, joined a chorus of local community organizations and elected officials supporting the petition asking state regulators to scrutinize how Zenith obtained its LUCS despite significant public opposition. Sent the day before the meeting, the letter highlighted concerns about the dangers of Zenith’s oil-by-rail along treaty-reserved tribal fishing sites on both sides of the Columbia River.
“When treaty rights are impacted, we expect, at minimum, a transparent process,” the CRITFC letter said.
The Nez Perce, Umatilla, Warm Springs and Yakama tribes established the CRITFC in 1977 to coordinate policy and technical support protecting treaty fishing rights and tribal fisheries along the Columbia. Its member tribes each hold one vote, and the CRITFC only acts if all four tribes reach a consensus.
The city of Portland previously denied Zenith a LUCS in 2021. The city said the company’s operations were incompatible with the city’s 2035 comprehensive plan because they could negatively impact the environment and historically marginalized groups. The comprehensive plan dictates the city must implement its plan in a manner that “supports the cultural practices and fiscal health of tribal nations.”
The April 8 petition asked the commission to declare the city’s LUCS issuance “may not be legally sufficient” — language defined in Oregon administrative rules — and direct DEQ to use its authority to either deny Zenith’s ACDP application or remand the LUCS to the city for a transparent public process.
Public records revealed city officials engaged in consistent communications with Zenith officials throughout the summer of 2022 at the same time Zenith was suing the city over its previous 2021 LUCS denial, as first reported by Street Roots.
City officials reversed the city’s prior position after taking a tour of Zenith’s facilities, organized by its public relations firm Pac/West. On that tour, a host of city officials — including Bureau of Development Services current and former commissioners in charge, Carmen Rubio and Dan Ryan, respectively — appeared to buy into a plan selling Portlanders on Zenith’s promise to shift to renewable fuels within five years, according to public records.
The city issued a new LUCS Oct. 3, 2022. The Oregon Supreme Court decided not to hear Zenith’s appeal three days later, on Oct. 6, 2022, leaving in place an appellate court opinion upholding Portland’s right to deny the LUCS. With the LUCS in hand, Zenith applied to DEQ for a new ACDP on Nov. 18, 2022.
At the time, city officials maintained their communications were above board.
“It is standard practice to engage with stakeholders who have business before the city,” Jimmy Radosta, Rubio’s spokesperson, said in an Aug. 16, 2023, email to Street Roots.
Still, after a months-long investigation, the Portland City Auditor determined March 26 that Zenith violated city lobbying code in those interactions.
“It is more likely than not that Zenith Energy participated in the above communications in order to gain approval of their LUCS,” the auditor’s letter said.
In response to the auditor’s report, T.J. McHugh, Dan Ryan’s deputy chief of staff, distanced Ryan’s office from environmental advocate’s accusations of a “backroom deal” in a March 26 email to Street Roots.
“Commissioners Rubio and Ryan have public calendars that are accessible,” McHugh said. “All meetings with Zenith were included.”
Advocates argue Zenith may not be able to transition to renewable diesel within five years, and based on its history of violating DEQ regulations, some are skeptical as to whether or not the company intends to deliver on its promises this time around.
In its 2018 quest to add 32 new rail spots to its operations, Zenith promised DEQ the site would see no new oil throughput and no increase in emissions or pollutants. However, Zenith reports filed with DEQ show a steady increase each year, from 167 million gallons in 2019 to 419 million gallons in 2023 — mostly Bakken crude. Bakken crude oil has a low flash point, meaning it ignites at a lower temperature than other crude oils, making it more prone to unintentional ignition or explosion.
Zenith failed to pay its 2018 franchise fees on time and defied an order from state regulators in 2019 requiring it to practice a cleanup in the instance of a tar sands oil spill. DEQ fined Zenith nearly $25,000 for flagrant violations of its stormwater permit in 2021. The same year, Willamette and Columbia Riverkeepers threatened to sue Zenith for violating its stormwater construction permit. Zenith paid a $115,000 settlement to the Portland Audubon Society, plus $55,000 in legal fees.
In a staff report submitted to the commission on May 13, Leah Feldon, DEQ director, argued a declaratory ruling would be unnecessary because DEQ is not a local land use agency and should not engage in a separate review of LUCS decision. Any appeals should be taken up with the Land Use Board of Appeals, or LUBA, Feldon said.
Additionally, that letter said since the agency has not yet submitted a proposed approval or denial of Zenith’s ACDP, a more appropriate path forward would be for DEQ to make a decision and allow the public to appeal the decision through the standard process if they are aggrieved by the decision.
The May 23 DEQ presentation followed those arguments precisely. The commission agreed, and voted unanimously to decline a hearing.
Critics say despite evidence the local land use process was abnormal, officials have failed to hold Zenith accountable and instead pass responsibility to another regulatory body.
“We need accountability for these fossil fuel companies that continue to push for profit at any cost,” Kate Murphy, Columbia Riverkeeper community organizer, said in testimony. “We need decision-makers who are willing to stand up and do the right thing — decisions that actually translate to a real world reduction of harm.”
Advocates are expected to appeal.
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