Science & Environment

Land-use board says Portland can deny Zenith oil-by-rail terminal, but more evidence needed

By Cassandra Profita (OPB)
Feb. 4, 2022 2:08 a.m.

Opponents of the controversial project celebrate a state ruling confirming the city’s authority to deny key approval

The Oregon Land Use Board of Appeals says the city of Portland has the authority to deny a key approval for a controversial oil-by-rail terminal, but the city needs to provide more evidence to back up its denial last year.

In a decision announced Thursday, the land-use board said the city does have the power to deny Zenith Energy the approval it needs to continue operating in Portland’s Northwest industrial area. But city officials must do more to support their arguments that the project’s planned expansion conflicts with existing land-use goals.

Trains containing petroleum crude oil on a rail line outside of Zenith Terminals, sandwiched between the Willamette River and Forest Park in Portland's northwest industrial district.

Trains containing petroleum crude oil 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

In August, the Portland Bureau of Development Services refused to issue a land use compatibility statement to the Texas-based company, quashing a proposed expansion of its Portland facility and putting its continued operation in jeopardy.

As a result of the city’s denial, the Oregon Department of Environmental Quality refused to issue the company the air quality permit it needs to continue operating the oil-by-rail terminal where it receives crude oil and renewable fuels from trains, stores it in tanks and sends it through pipes to outgoing ships.

The company proposed adding to its capacity so it could receive more renewable biofuels, but city officials said the project as a whole is not aligned with their 2035 comprehensive plan and their goals to reduce the city’s dependence on fossil fuels.

Zenith appealed the city’s denial to LUBA, saying in a statement that the company was disappointed in the city’s decision, given that its plan to transition to renewable energy is aligned with the city’s comprehensive plan.

“We know our plan to transition to a fully renewable energy facility is very much in line with the values and goals reflected in the City of Portland’s 2035 Comprehensive Plan,” W. Grady Reamer, a vice president of Zenith Energy said in August.

In a statement Thursday, Zenith Energy vice president Andrea Simpson said the company is pleased with the land-use board’s ruling to remand the city’s decision. But Simpson also said the board is making it more difficult for businesses to operate in Portland by allowing the city a chance to revise and strengthen its denial.


“Oregon can be a leader in renewable fuels by using terminal infrastructure already in place but not with rulings like these,” she said. “Continued operation of, and handling of renewable fuels at our existing facilities in Portland would facilitate major reductions in carbon emissions.”

In its decision, LUBA agreed with the company that the city had not sufficiently supported its argument that the Zenith project conflicts with Portland’s 2035 comprehensive plan. But the board indicated the city can strengthen its argument with a closer review of what the plan does and does not allow with respect to fossil fuel facilities.

Environmental groups that have opposed the terminal’s ongoing expansion celebrated the decision. Several groups had intervened in the land-use appeal to side with the city.

Nick Caleb, an environmental attorney and advocate involved in the case, said the state affirmed the city’s authority to shut down the Zenith operation.

“This decision is a significant victory for Portlanders,” he said. “The city has the authority to deny the land-use compatibility statement. They have the power to do what they did and need to make more findings in support of their conclusion.”

He said the environmental groups that intervened in the land-use case want to help the city so that the Zenith facility does not get the land-use approval it needs.

The debate over whether the city and state should approve the permits Zenith needs to keep operating stretches back several years. The company took over an old asphalt facility in 2017 that already had the key environmental permits the company needed to receive crude oil from trains and ship it down the Willamette River.

So it launched its oil shipping operation without a long permitting process and was able to upgrade the facility to expand its capacity to transport oil without a permitting fight.

As of last year, the company had 84 above-ground oil tanks that could hold more than 1.5 million barrels of oil, and had increased its transportation of oil nearly 17-fold over the previous three years.

But the company was still operating on the old air quality permit issued to the former asphalt plant that operated at the site. For Zenith to continue operating, DEQ needs to renew that permit.

To get that DEQ permit, the company needed a land-use compatibility statement from the city certifying that the company’s plans are consistent with local land-use goals. When that compatibility statement was denied, DEQ also denied the air quality permit Zenith needs to continue operating.

The company is still operating on its existing permit while legal challenges are pending.