From OregonLive:
Unique Portland City Council meetings focus on Zenith, leave company’s future unclear

Updated: Jan. 21, 2025, 6:38 p.m.|Published: Jan. 21, 2025, 6:18 p.m.

The Portland City Council on Tuesday held a first-of-its-kind work and listening session on Zenith Energy, the controversial crude oil storage company that has promised to transition to renewable fuels.

The combined session featured presentations from city staff, Zenith officials and environmentalists who oppose Zenith. It was meant to educate council members about the company’s history and land-use policies but also nodded to heightened public interest in the company.

Yet it left much unclear about whether the council would have any say about Zenith’s future operations in Portland.

The session came a month after the Oregon’s Department of Environmental Quality asked Zenith to get a new city approval – known as a land-use compatibility statement – after discovering inconsistencies in the company’s air permit application.

The city has until Feb. 4 to make a decision on the land-use credential.

The Zenith session served as a test of authority for newly elected council members under Portland’s reshaped form of government as they grappled if they could and should intervene in Zenith’s trajectory in Portland.

Given the council’s progressive leanings and the fierce public criticism of Zenith’s violations and lack of transparency, some council members have indicated an interest in taking the reins of the Zenith permission process.

But city staff members have maintained that the decision on the land-use credential should be purely administrative – and told the council that permitting staff would make the call by the deadline, as a delay could open the city up to a lawsuit.

Portland processes about 150 land use compatibility statement applications a year, said David Kuhnhausen, city permitting and development interim director. A number of state agencies require the approvals, including the Oregon DMV for auto dismantling businesses, Oregon Department of Agriculture for hemp handling businesses and the Oregon Department of Education for child care facilities, he said.

Under the old form of government, the vast majority of those land-use approvals were issued as administrative decisions at the bureau level, Kuhnhausen said. In Zenith’s case, its credential was denied in 2021 based on an executive decision by then-Commissioner Dan Ryan who oversaw the former Portland Bureau of Development Services, which issued the documents. (The city reversed course a year later and approved Zenith’s land-use credential.)

Under the new form of government the mayor can allow the decisions to be handled by bureau staff or the council can take legislative action to create a new quasi-judicial process for the council to make land-use credential decisions, City Attorney Robert Taylor said.

Short of action from the mayor or the council, “as things presently stand, this is an administrative decision,” Taylor told council members.

Donnie Oliveira, interim deputy city administrator for community and economic development, told The Oregonian/OregonLive that city staff likely would approve Zenith’s application.

“Given existing policy and procedures and early review of the applicant’s newest request, yes the LUCS would be granted because it is an outright allowed use, assuming staff’s complete analysis confirms that,” he said via email. “And yes, it is council’s prerogative to take up a legislative action for new LUCS decision-making, so if they chose to take that path their conclusion may be different than the bureau subject matter experts.”

The session also underlined a desire by some residents for more participation in the public process for significant land-use decisions like Zenith’s.

“There’s a disconnect between what our city officials perceive as a robust public process and what citizens have been demanding for over six years, legitimate public engagement and legitimate enforcement power for the city to wield in its land-use decisions,” said John Giacoppe, a Mount Tabor neighborhood resident.

“This is not a land-use decision for a daycare,” Giacoppe said. “This is a land-use decision for a giant facility which can explode, and even if it’s a small possibility of an explosion, that is something which should be considered when we’re evaluating how public input is weighed and the opportunities we present to the public to be involved in this process.”

The listening session cemented some residents’ repudiation of Zenith as well as their deep skepticism over the city’s policy to transition to renewable fuels, also known as biofuels, to reach greenhouse gas emission-reduction mandates. Zenith is one of 11 companies operating a fossil and renewable fuel terminal at the Critical Energy Infrastructure hub on the Willamette River.

For two hours, 45 people urged the city to deny Zenith’s land-use compatibility statement, an approval the company needs to apply for a new state air permit.

“The issue before us is not whether there will be an accident or earthquake at the CEI hub, but when. The issue before us is what can we do today to prevent a catastrophe just five miles from where we sit, what we can do is limit the future harm,” Portland resident Peter Kokopeli told the council members. “What we can do is deny the Zenith LUCS and phase out the trans-shipment of dangerous liquid fuels through our beautiful city.”

“A massive transition to biofuels is not a climate solution,” he said.

An analysis of Zenith’s now-on-hold air quality permit application by The Oregonian/OregonLive showed the permit, if approved, could pave the way for Zenith’s expansion in Portland and was not likely to lead to substantial emission reductions.

Zenith’s chief commercial officer, Grady Reamer, reiterated that the company would wean itself off fossil fuels by 2027 and was the only local option to bring a steady supply of renewable fuels to Oregon and to Portland.

“Oregon has limited production of renewable fuels, such as renewable diesel. So renewable fuels must be imported to this market. Zenith is the only major rail facility in the market capable of handling the renewable fuels that meet Oregon’s demand,” Reamer said. “What is driving the demand for renewable fuels? Local and state climate-related programs.”

Several business groups also sent letters in support of Zenith, including Oregon Business & Industry, a statewide association representing businesses from a wide variety of industries.

“The most effective way to reduce carbon emissions in the near term is to expand the availability of low carbon, renewable fuels,” the group wrote. “Zenith’s terminal is crucial to complying with the City’s aggressive carbon reduction targets.”

In November, state regulators put Zenith’s air permit process on hold after an inspection uncovered inconsistencies in its application. In December, Oregon’s Department of Environmental Quality asked Zenith to secure a new land-use compatibility statement from the city before the state agency will consider issuing a new air permit.

Environmental activists, who want the city to deny the credential, hailed the session a success, praising the new council members for listening to community concerns about Zenith’s numerous violations and potential to increase the risk of spills in the case of an earthquake.

The violations have ranged from Zenith performing months of construction work without a permit at its terminal to the company failing to conduct a state-required preparedness drill for a crude oil spill to violating city code by lobbying city officials to get approval of the land use document.

“We’ve had more oversight and transparency over this issue in the last two hours than we had in the prior three years,” said Nick Caleb, an attorney with the Breach Collective, a climate-justice advocacy organization that tracks and opposes Zenith’s operations.

— Gosia Wozniacka covers environmental justice, climate change, the clean energy transition and other environmental issues. Reach her at gwozniacka@oregonian.com or 971-421-3154.

https://www.oregonlive.com/environment/2025/01/unique-portland-city-council-meetings-focus-on-zenith-leave-companys-future-unclear.html