Oregon regulators will soon decide the fate of Zenith Energy’s controversial fuel terminal in Portland.
The Houston-based company needs to get an air quality permit to continue storing and moving fuels between railcars, ships and pipelines at its Northwest Portland facility along the Willamette River. The Oregon Department of Environmental Quality is holding public hearings in November and December ahead of making a final decision.
For years, environmental groups have criticized Zenith for violating local policies. In March, the Portland Auditor’s Office concluded Zenith broke city lobbying rules in 2022 after it “engaged in several meetings” with city officials to get a land-use permit, something it needed before getting an air quality permit with the state. Despite that finding, the city didn’t rescind the land-use permit.
In a public comment, Zenith executives said they disagreed with the auditor’s conclusion, and that they would “fully adhere to any regulations governing communications with the City.”
Related: Zenith Energy terminal nearing state approval to continue operating in Portland
As part of its deal with Portland leaders, Zenith promised to phase out crude oil at the terminal and transition to renewable fuels, like biodiesel and ethanol. It would also be allowed to handle jet fuel and conventional diesel.
“We look forward to working with state and local officials to complete this clean fuel transition and advance Oregon’s carbon reduction goals,” Grady Reamer, Zenith’s chief commercial officer, said in a statement to OPB.
Even with the switch, Zenith could potentially double the amount of fuel moving through its facility under its new air-quality permit, according to reporting by The Oregonian/OregonLive. That’s because renewable fuels have lower emissions, so the company could handle more fuel within its emissions cap. Zenith executives say consumer demand will ultimately determine how much fuel runs through its terminal.
An increase in fuel would mean more ships and railcars carrying these flammable chemicals through the Portland area.
“People have seen news around things that can happen — like East Palestine, Ohio, and all over this country — where lower safety standards combined with dangerous transported fuels has led to horrible industrial accidents,” said Nick Caleb, an attorney with the climate nonprofit Breach Collective, which has — like other environmental groups — been critical of Zenith’s Portland plans.
Some people who live near the terminal say they’re concerned about Zenith’s seismic risks. It’s part of an industrial hub in Northwest Portland that handles 90% of Oregon’s fuel supply. The area is expected to release massive plumes of toxic chemicals in the event of a 9.0 Cascadia earthquake, which could happen in the next few decades.
DEQ officials have tried to calm local concerns about air pollution and potential spills by holding multiple informational meetings, with long sessions dedicated to answering attendees' questions, ahead of this winter’s public hearings.
Related: Portland approves Zenith Energy’s renewable fuels plan
In the agency’s latest meeting on Monday, DEQ air quality permit writer David Graiver said Zenith’s terminal could emit some toxic air pollutants, including some classified as volatile organic compounds.
“And yes, there are these pollutants, but there are various types of control strategies or devices used to reduce the quantity of emissions,” Graiver said.
Those strategies include using devices that notify workers about potential leaks in tanks or pipes. Zenith will also use floating roofs in its liquid storage tanks. These roofs help reduce liquid fuels' contact with the air, thereby limiting how much pollution they release.
FILE - Undated photo of trains transport fuel on a rail line outside of Zenith Terminals, sandwiched between the Willamette River and Forest Park in Portland's northwest industrial district.
Tony Schick / OPB
Zenith’s patchy track record with local regulations
Zenith purchased its 42-acre plot, where there had previously been an asphalt refinery, in 2014. Zenith then operated under a different emissions permit that came with the property.
In early 2021, the state denied Zenith’s application for a new air-quality permit because operations at the property had changed significantly, from manufacturing asphalt to storing and distributing fuels. State officials said Zenith first needed to get a land-use permit from Portland that reflected the change.
That summer, DEQ fined Zenith nearly $24,000 for “flagrantly” disregarding environmental regulations by doing construction work without a stormwater permit. Zenith had tried to get the work permitted the previous year, but DEQ officials told the company it first needed to get a city land-use permit. Zenith went ahead with grading land anyway.
Two nonprofits, Willamette Riverkeeper and Columbia Riverkeeper, sued Zenith over the work. DEQ staff subsequently investigated the site and discovered Zenith hadn’t used any erosion controls for at least eight months, so its land-grading work could have released sediment into the Willamette River and threatened fish and other aquatic life.
Related: Zenith Energy to phase out crude oil at Portland terminal
Weeks later, Portland officials denied Zenith’s land-use permit application, saying it didn’t comply with several components of the city’s 2035 Comprehensive Plan. They specifically pointed to city policies aimed at reducing emissions and pollution, preventing environmental disparities affecting marginalized communities, and reducing natural disasters and seismic risks.
Zenith appealed Portland’s denial to the Oregon Land Use Board of Appeals, then to the Oregon Supreme Court.
But during the appeals process, Portland leaders suddenly changed course and gave Zenith the land-use permit it needed. It was during this time that Zenith staff were holding meetings with city leaders and not reporting those lobbying hours, according to the auditor’s report.
“We understand there have been some past disagreements and miscommunication about our Portland Terminal,” Zenith COO Reamer said, adding that the company’s relationship with local officials and regulators is “as strong as they’ve ever been.”
State continues to consider Zenith’s permit
Despite Zenith’s history, Oregon DEQ officials say they can’t deny an air-quality permit based on “how much they trust a person or facility.”
“DEQ must use its authority to regulate facilities according to state law and hold them accountable to their permits,” reads the agency’s website.
Related: Portland denies Zenith Energy’s essential certification
As part of that accountability, DEQ staff will periodically inspect Zenith’s terminal. The company will need to hire an independent company to regularly test its air emissions and report those findings to the state.
DEQ’s first public hearing for Zenith’s air-quality permit application is scheduled for Nov. 19 at the Buckley Center Auditorium at the University of Portland, and it includes a virtual option. The second hearing, scheduled for Dec. 4, will be entirely virtual.