City of Portland hires independent law firm for Zenith investigation
The city’s internal investigation of its contract with the fossil fuel company faced bias claims and missed multiple deadlines. City councilors pressured the mayor to hire outside help.
Credit: Illustration by Etta O'Donnell-King/Street Roots
The city of Portland hired independent law firm Cable Huston to assist its investigation into whether the Houston-based fossil fuel transport and storage company Zenith Energy violated city laws when it constructed and used new pipes at its facility along the Willamette River.
That’s according to an email City Administrator Michael Jordan sent to Mayor Keith Wilson and city councilors Sept. 3, summarizing the latest from Eric Engstrom, Bureau of Planning and Sustainability director. Engstrom was tapped in April to manage the city’s ongoing internal investigation.
State regulators have already fined Zenith for transporting fossil fuels through pipes it built and used without permission over a three-year period. In December, the Oregon Department of Environmental Quality fined Zenith $372,600 for that infraction. Currently at issue in the city’s investigation is whether the expansion and use of the pipes violated city law as well — specifically an agreement Zenith is required to uphold in order to use the city’s right-of-way for its infrastructure. Zenith offloads liquid fuel and stores it in tanks at the Critical Energy Infrastructure Hub in Northwest Portland, alongside multiple other liquid fuels companies.
Zenith illegally modified and used infrastructure to transport both fossil fuels and renewable diesel on at least 34 occasions between 2021 and 2024, according to DEQ. That ran afoul of state regulations, as well as city law barring the expansion of fossil fuel infrastructure. Under city law, Zenith is only allowed to transport renewable fuels through any new pipes it installs and is expected to phase out all fossil fuels by October 2027.
With assistance from local law firm Cable Huston, Jordan said he’s hopeful the investigation will be completed by the end of 2025.
Launching the investigation was the first major policy City Council passed out of committee this year, in an 11-1 vote on March 19 in favor of a resolution demanding Mayor Keith Wilson investigate Zenith’s potential violations of its franchise agreement.
The city’s contract with Cable Huston comes after city councilors Mitch Green (D4) and Angelita Morillo (D3) raised concerns with Wilson earlier this summer, saying the internal investigation could be perceived as a conflict of interest, according to Morillo and Green, who sponsored the resolution.
Zenith’s continued presence in the city is hotly debated among advocates and city councilors who say a liquid fuels depot on the shores of the Willamette River, just five miles from City Hall and 1,300 feet from Forest Park, has no place here. Amid these tensions, some city councilors worried the city staffers put in charge of the investigation were the same ones who approved Zenith’s permits in the first place.
City Council passed the resolution March 19, citing concerns about city staff’s inconsistent or omitted responses to questions councilors asked during an official work session in January about Zenith and in private emails going back to 2022. City staff, including Engstrom and Portland Permitting and Development Interim Director David Kuhnhausen, gave a staff presentation on Zenith Jan. 21, during which Zenith and local environmental advocates also presented.
Both Engstrom and Kuhnhausen are leading members of the city investigation’s management team responsible for providing documents to Cable Huston.
The resolution calls for investigation into whether city staff knew about Zenith’s illegal construction prior to approving Zenith’s Land Use Compatibility Statement, or LUCS, in 2022 and whether Zenith intentionally misled the city to continue expanding fossil fuel infrastructure. It requires the city to disclose all prior communications between the city and Zenith. The city has released some communications, but multiple city councilors told Street Roots they fear Cable Huston may not receive all of the relevant documents if the staff potentially involved in the communications are also responsible for submitting them.
Deputy City Administrator Donnie Oliveira, who oversees the Community and Economic Development Service Area, which includes PP&D, also presented at the work session. Oliveira was the director of the Bureau of Planning and Sustainability when Zenith negotiated the conditions of its permits in 2022 — including the franchise agreement, amended in 2023, that is now under review.
Under the new contract, Cable Huston is charged with researching and reviewing documentation collected from PP&D and Zenith. The city said it will review applicable laws and materials provided by Zenith and the city, provide recommendations to focus the city’s inquiry and recommendations for further review by city staff or outside experts.
It will also review and recommend adjustments to help the city in its compliance review, review the city’s draft report and make note of instances in which it agrees or diverges from the city report, according to Carrie Belding, city communications manager.
Belding said the city anticipates Cable Huston will work with the city’s Franchise Utility, PP&D, Fire Marshal and Bureau of Environmental Services teams, as well as the City Attorney’s Office.
“Cable Huston can recommend consultation with any other subject matter experts it deems appropriate, including City staff or outside experts,” Belding said.
Multiple city councilors and advocates told Street Roots they questioned whether the law firm will have access to all relevant documents. While the hiring of Cable Huston provides a measure of independence to the investigation, some worry it doesn’t go far enough. The city retained the law firm to provide independent peer review services for the city’s audit regarding Zenith’s compliance with its franchise agreement — not to take over the investigation altogether. The investigation aims to determine whether certain city staffers knew about Zenith’s illegal construction.
Belding referred Street Roots to the city website which has relevant documents related to the Zenith issue. (In the interest of transparency, Street Roots published public records it obtained that are not included in the city’s release at streetroots.org.)
“The city will provide Cable Huston any other documents requested to assist Cable Huston perform its work,” Belding said.
City Councilor Jamie Dunphy (D1) is one city councilor concerned the final report could fail to include all the necessary information.
“I don’t think that the final report will be as satisfying to the people who are really relying on this to come back a certain way,” Dunphy said.
Dunphy said in his experience, consultant and Blue Ribbon commission reports often come back “mealy-mouthed” and indirect, but City Council often accepts the reports and moves on with little scrutiny.
“If that comes back like that and doesn’t get into the meat of it and isn’t compelling additional information and isn’t telling the whole story, we’ll make them go back and do it again,” Dunphy said. “This is not a City Council that’s simply going to accept whatever is handed to us.”
Two steps forward
The city requires franchise agreements for various public and private entities’ long-term use of the city’s streets. Zenith is one of six companies with an agreement for pipelines, including Chevron and Kinder Morgan, while major utilities NW Natural and Portland General Electric, wireless carriers AT&T and T-Mobile and cable television provider Comcast also carry franchise agreements with the city.
Street Roots has reported on a host of unusual administrative processes regarding Zenith’s various permits since as early as 2022. City staff, including current City Councilor Dan Ryan, former Commissioner Carmen Rubio, their staff and bureau staff parlayed with Zenith in July 2022 on a Zenith-sponsored tour of its facilities. The city auditor later determined Zenith broke the city lobbying code with its consistent dialogue to convince city officials to approve its permitting.
The city ultimately approved the LUCS Zenith applied for just two months later, in October 2022, under the condition that it not expand fossil fuel infrastructure. But how that would be enforced remains an open question. While the LUCS is a different approval than a franchise agreement — which expires in 2037 — the franchise agreement requires Zenith to comply with city, state and federal laws, including the conditions outlined in its LUCS prohibiting fossil fuel transport in the new pipes.
Since taking over the former asphalt facility in 2014, Zenith has consistently expanded its infrastructure and increased production, seeking to become the preeminent “renewable fuels hub” for the West Coast.
The City Council resolution cited Street Roots reporting saying public officials’ often cozy relationship with Zenith undermined public confidence by facilitating its operations without sufficient public involvement.
“WHEREAS, the process for Zenith’s 2022 LUCS substantially undermined public confidence in the City’s administrative apparatus by creating the appearance of impropriety,” the resolution stated.
But many of the same city staff who have been responsible for approving Zenith’s permits for years were also tasked with the initial investigation.The city did not respond to Street Roots’ question clarifying if they were also tasked with choosing which documents were sent to Cable Huston, but the resolution is clear that all prior communications must be released.
“The Director of Portland Permitting & Development, the Director of the Bureau of Planning & Sustainability, the Deputy City Administrator for Community & Economic Development, and the City Attorney is demanded to disclose all prior communications between the City and Zenith and its representatives on the public record and redact only information allowed by law,” the resolution says.
The investigation management team also included city land use attorney Lauren King, who previously claimed attorney-client privilege to protect the city’s communications about Zenith. King claimed those communications should be shielded from the public eye because they amounted to “political strategy,” as reported by Street Roots Jan. 10. King also represents the city in a lawsuit environmental organizations brought before the Land Use Board of Appeals, arguing the city’s “flawed process” approving Zenith’s latest land use permit in 2024 skirted state land use laws.
Another member of the city’s investigation team, Andrew Speer, the city’s franchise compliance manager, worked with Oliveira and Zenith leadership to craft amendments to Zenith’s franchise agreement — which the city is now investigating for potential infractions — in July 2023.
City zoning code bans all new fossil fuel infrastructure. Zenith’s amended agreement was intended to ensure it would not expand its infrastructure to remain in line with city laws.
“BPS has completed its review of Zenith’s request and will approve the request subject to Zenith’s compliance with the conditions set forth in this letter,” said a July 31, 2023 letter written by Speer and signed by Oliveira. “The intent of these conditions is to assure the City that the new pipelines are used solely to transport biodiesel or other renewable fuels.”
Deadlines
Since the City Council passed theresolution launching the investigation, the city has missed its own deadlines on multiple occasions.
Aisling Coghlan, Mayor Keith Wilson’s chief of staff, sent a memo to City Council outlining the investigation timeline, scope of work and management structure April 21, after Oliveira requested a timeline proposal from bureau staff March 25.
“City staff will conduct the investigation and provide the City Administrator with a report of findings and any recommendations,” Coghlan’s memo said. “In general, the investigation will focus on Zenith’s compliance with local, state, and federal laws related to construction and expansion of their facilities at the Critical Energy Infrastructure (CEI) Hub.”
The email also included a letter the Bureau of Planning and Sustainability sent to Zenith’s representatives on April 7.
The memo said Zenith would have 30 days to respond to the letter, and staff would begin investigating immediately, providing an initial staff report by mid-July.
But that report never came.
While the City Council’s March 19 resolution did not require an initial report, it did require an update by roughly July 17.
“The City Administrator shall deliver to City Council a report that documents the progress of the Mayor’s investigation no later than 120 days from the effective date of this resolution,” the resolution said.
That report also never came.
PP&D has not had trouble meeting deadlines for Zenith-related issues in the past. When the DEQ fined Zenith and requested a new LUCS from the city by Feb. 4, PP&D worked through the weekend to approve the land use credential by Zenith’s Feb. 4 deadline, according to public records obtained by Street Roots. While the city was not required to meet Zenith’s deadline with DEQ, it approved the LUCS on Feb. 3 amid significant pushback from local advocacy groups.
Zenith has operated under a franchise agreement between the city and Chevron dating back to 1991, which the city extended for 20 years in 2017 and transferred to Zenith in 2018. Its franchise documents outline specific requirements, including “compliance with laws,” if Zenith wants to continue its operations.
The mayor has the authority to revoke an agreement if any entity is found in violation of those terms.
Investigating the investigators
During the vote on the resolution in March, Dunphy brought a late amendment seeking to remove a requirement that the mayor hire an independent investigator, citing the city’s ongoing budget woes. The city faced a $93 million budget deficit, and at the time Dunphy said the city already had employees who could investigate, making the extra cost ill-advised. Now, Dunphy says he is glad the city decided to hire a third party.
“I felt a sense of urgency, both around money and time, to get this done right and done quickly and get something thoroughly on the books,” Dunphy told Street Roots Sept. 4. “And I had every confidence that the city attorney and city staff could do that. I think I was wrong.”
Dunphy said as a matter of principle, he prefers to support city staff over contractors. But if the new approach leads to a timely and thorough investigation, he believes it’s the right move — particularly if it can engender public trust lost under years of Portland’s old form of city government.
“The previous City Council did not have the intestinal fortitude to push back against corporations like this,” Dunphy said. “They were absolutely — I won’t say captured — but I will say that they were sympathetic to the voices of folks who own large parts of property, employ a lot of people and make a lot of money in the city.”
Street Roots is an award-winning weekly publication focusing on economic, environmental and social justice issues. The newspaper is sold in Portland, Oregon, by people experiencing homelessness and/or extreme poverty as means of earning an income with dignity. Street Roots newspaper operates independently of Street Roots advocacy and is a part of the Street Roots organization. Learn more about Street Roots. Support your community newspaper by making a one-time or recurring gift today.
