A controversial oil-by-rail terminal in Portland’s industrial Northwest area received another blow Wednesday, when a state agency said it’s turning down the renewal of its air quality permit application.

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The Oregon Department of Environmental Quality’s proposed denial for Zenith Energy’s air quality permit renewal followed the city of Portland’s refusal to endorse such an action.

The city’s Bureau of Development Services said it was denying its certification for a land use compatibility statement, which the DEQ required as part of its own approval process for the air permit.

The city bureau said Zenith Energy is not aligned with Portland’s comprehensive plan and goals to reduce the city’s dependence on fossil fuels. Zenith said it plans to challenge the city’s bureau decision.

Texas-based Zenith acquired the facility, formerly an asphalt business, in 2017, and used the facility to transfer crude oil from freight-train tankers onto shipping vessels, which then transport the crude to refineries and other destinations. Since the acquisition, Zenith has been using the air-quality permit that DEQ had issued to the asphalt business.

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Zenith has said it is transitioning its operations to focus on renewable fuel alternatives, like plant-based biodiesel. But that has not blunted criticism from elected officials and climate activists and conservation groups. One of the biggest concerns raised by opponents is the terminal’s role in moving crude oil from the interior of North America to refineries and on to consumers that burn gasoline and diesel. Burning fossil fuels contributes to climate change, which is resulting in more frequent and intense droughts, more widespread wildfires and extreme weather.

Rep. Maxine Dexter, D-Portland, was among those to praise the action of city and state regulators.

“The City of Portland and DEQ have demonstrated the state’s commitment to the health of our community, addressing the climate crisis and helping our state transition definitively away from fossil fuel dependence,” she said in a statement.

Under state law, a local government’s determination that a type of land use is not compatible with its comprehensive plan makes it difficult for state agencies to approve or renew permits like the one Zenith had pending before DEQ.

Zenith now has 60 days until its previously-issued air-quality permit is no longer operative. But the company has an opportunity to request an administrative hearing. If it does, the denial will be put on hold.

Zenith was not immediately available to comment on the DEQ decision.

Columbia Riverkeeper Staff Attorney Erin Saylor said DEQ has an obligation to ensure facilities it permits to operate are doing so in ways that are compatible with local land use and policies.

“The City was very clear last week that Zenith’s crude-by-rail operation runs afoul of numerous land use goals and policies,” she said. “Zenith’s air permit application has been pending for close to a decade. It’s high time the agency takes action to close the book on this dangerous facility.”

On Tuesday, DEQ disclosed that it had fined Zenith nearly $24,000 for construction without a permit regulating the runoff of sediment into the Willamette River.

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Portland denies Zenith Energy’s essential certification

A city bureau has rejected a certificate that an oil-by-rail operation had been seeking. The bureau concluded that Zenith Energy's facility was not compatible with land-use designations for the Northwest Portland site.