DEQ fines Zenith Energy, requests new land use statement from the City of Portland
Zenith has a storied history of flouting local regulations. The latest DEQ findings represent a significant setback for the Houston oil-by-rail company.
Zenith Energy's fossil fuel storage and transport facility located along the Willamette River faces criticism for potential environmental dangers, particularly in the event of an earthquake. Credit: Photo by Jeremiah Hayden
Houston-based fossil fuel company Zenith Energy experienced a significant setback in its efforts to continue its oil transport and storage operations at the Critical Energy Infrastructure, or CEI, Hub.
"Earth to Oregon" is a recurring column by Jeremiah Hayden covering developments in environmental policy and litigation in Oregon.
The Oregon Department of Environmental Quality, or DEQ, issued a $372,600 civil penalty to Zenith Dec. 6, and requested Zenith provide DEQ with a new city of Portland-approved Land Use Compatibility Statement, or LUCS, within 60 days. Zenith will need the LUCS to demonstrate the local land use permit aligns with DEQ’s air contaminant requirements.
The DEQ Office of Compliance and Enforcement sent a letter Dec. 6 saying it issued the civil penalty due to Zenith modifying and operating its fuel products transloading facility at the CEI Hub without notifying DEQ of the changes. Those changes are out of compliance with Zenith’s current LUCS, which covers Zenith-owned properties but not the adjacent properties owned by Chevron and McCall Oil.
Zenith installed new piping on its own property and at least 250 meters of new piping and other components on adjacent property operated by McCall Oil. It used the new infrastructure from April. 8, 2021 to June 6, 2024. DEQ said Zenith was aware it was required to obtain DEQ approval for changes at the facility, yet failed to obtain the approval before construction despite DEQ’s requests for information and a March 5 warning letter, according to the Dec. 6 letter.
“DEQ issued this penalty because operating outside the scope of a Title V Operating Permit is a serious violation,” the letter said. “The permitting process is the mechanism by which DEQ ensures that air contamination sources meet all applicable standards and are operating in accordance with good air pollution control practices to minimize air emissions.”
The penalty follows DEQ’s Nov. 14 announcement that it paused Zenith’s Air Contaminant Discharge Permit, or ACDP, process “to gather more information from Zenith about its operations to confirm Zenith’s application and draft permit are complete.” DEQ also canceled multiple public hearings previously scheduled for December.
Advocates have long held Zenith’s word as unreliable. Nick Caleb, Breach Collective climate and energy attorney, said DEQ’s latest regulatory action — prompted by community member questions in a public information meeting — begs for more answers from the city.
“Why did city staff authorize expansions of fossil fuel infrastructure?” Caleb said. “Why didn’t city staff notify DEQ about these new operations? Why did the city shut the public out of processes where community advocates could have provided crucial oversight and evidence to rebut Zenith’s claims?”
Christine Svetkovich, DEQ’s northwest region administrator, said community participation and questions during the public process led DEQ to conduct an unannounced inspection of the property Nov. 13 to gather more information.
“Their questions and feedback led DEQ to pursue additional information from Zenith Energy,” Svetkovich said Nov. 14.
“Ensuring compliance with all environmental regulations and land use laws is critical to protecting public health and the environment and maintaining trust in the regulatory process,” Svetkovich said Dec. 6. “DEQ remains committed to holding all permitted facilities accountable to these standards.”
DEQ reiterated that Zenith’s ACDP process continues to be on hold while Zenith responds to DEQ’s LUCS request but said Zenith may continue to operate under its current Title V permit during that time. Zenith is applying for the lower-tier ACDP due to its promise to the city that it will transition to what it calls “renewable diesel” within five years after DEQ approves its ACDP, something advocates say may not be possible. Advocates also argue that the dangers of “renewable diesel” may be similar to that of traditional fossil fuels, a broader issue that Multnomah County is working to address.
Mitch Green, City Council-elect, said the incoming City Council should provide a public process for Zenith’s LUCS. Green and 26 other City Council candidates sent a letter to Leah Feldon, DEQ director, asking her to delay a decision on Zenith’s ACDP as the prior City Council failed to engage the public.
“What matters most is the chance for the public to have a process around this,” Green said. “This is a big enough issue, it’s worthwhile. With a new City Council with a deliberative charge, it would be an abdication of duty to not have a public process.”
Donnie Oliviera, director of the Bureau of Planning and Sustainability when the previous LUCS was issued in 2022, did not respond to Street Roots’ request for comment asking how the city can ensure future processes will align with standard practices, or if illegal construction changes and use of that infrastructure would typically be grounds for denying the LUCS. During an investigation by the Portland city auditor’s office, Oliviera said the communications involved in approving Zenith’s LUCS “went beyond what they considered the standard process,” which the auditor ultimately determined violated city lobbying code.
Background
The $372,600 civil penalty is not the first time the state agency has fined Zenith for its deceptive practices, as Zenith transports oil by rail through Portland neighborhoods to be exported elsewhere.
Advocates have long voiced concern about Zenith’s history of operating outside legal requirements since taking over the former asphalt terminal in 2017. When Zenith applied for a permit to add 32 new rail spots at its facility in 2018, Zenith promised DEQ no new oil throughput and no increase in emissions or pollutants. However, Zenith reports filed with DEQ show a steady increase in throughput every year since 2019.
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 air 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 (now called Bird Alliance of Oregon), plus $55,000 in legal fees.
In 2022, as Zenith was actively suing the city, bureau staff and Portland City Commissioners Dan Ryan and Carmen Rubio quietly coordinated with the Houston-based company to approve its current LUCS, as first reported by Street Roots Aug. 23, 2023. After reviewing calendars, texts, emails, and file attachments and interviewing Zenith staff and related bureau staff, the Portland City Auditor determined March 26 that Zenith violated the city lobbying code in pursuit of the LUCS issued Oct. 3, 2022, but declined to issue a penalty.
Zenith has until Dec. 26 to appeal the penalty.
Zenith did not respond to Street Roots’ request for comment at the time of publishing.
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