The Portland City Auditor determined Zenith Energy violated city lobbying code in its pursuit of a Land Use Compatibility Statement, or LUCS, in 2022.
In a determination letter sent March 26, the auditor’s office said Zenith failed to register as a lobbying entity and failed to file a report with the city of Portland for the third quarter of 2022. That is a violation of Portland City Code Sections 2.12.030 and 2.12.040.
As Street Roots reported in August 2023, city officials met repeatedly with Zenith, a Houston-based fossil fuel company with a history of violating safety and emissions requirements, to approve the LUCS. Zenith needed a LUCS from the city in order to acquire a state permit from DEQ to continue its operations at the Critical Energy Infrastructure Hub, or CEI Hub — a massive cluster of fuel-filled tanks nested between Forest Park and the Willamette River.
“It is more likely than not that Zenith Energy participated in the above communications in order to gain approval of their LUCS,” the auditor’s letter said.
The auditor’s office declined to issue civil penalties, instead issuing a warning and letter of education. The auditor’s office has reviewed calendars, texts, emails, file attachments, interviewed Zenith staff and related bureau staff since the initial complaint was filed Aug. 2, 2023.
Public records obtained by Street Roots revealed Zenith Energy and city staff, including Commissioners Dan Ryan and Carmen Rubio, quietly coordinated to approve a land use permit as the company sued the city in 2022.
“Zenith Energy has never been registered as a lobbying entity with the city of Portland, including during the third quarter of 2022,” the auditor’s letter said. “At the time of this determination, Zenith Energy remains unregistered as a lobbying entity with the City.”
The auditor’s letter referenced a string of text messages between Rebecca Esau, then-director of the Bureau of Development Services, and Grady Reamer, Zenith’s vice president of operations between Sept. 2, 2022 and Oct. 3, 2022.
The city approved the LUCS on Oct. 3, 2022.
“Additional texts … indicate Zenith was communicating with city officials for the purpose of having them take an action, in this case approving the referenced LUCS,” the auditor’s office said.
Nick Caleb, climate and energy attorney at climate advocacy nonprofit Breach Collective, provided Street Roots with the records showing city officials operated internally to ensure approval despite considerable public opposition. He said the lobbying violations are not unexpected, given Zenith’s history of skirting regulations.
“For those of us who have followed Zenith’s activities since they came to Portland, it’s not a surprise that they broke the law again,” Caleb said.
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, plus $55,000 in legal fees.
Zenith began transporting tar sands and crude oil through old asphalt infrastructure in 2014, before purchasing the terminal in 2017. The city passed a resolution prohibiting new fossil fuel storage facilities and the expansion of old infrastructure in 2015. Citing the resolution, the city rejected the 2021 land use permit application seeking to expand fossil fuel storage and transportation at the CEI Hub.
“I’m glad that the City Auditor is holding Zenith accountable for its part, and now we need state regulators to hold city officials accountable as well,” Caleb said.
“Commissioners Rubio and Ryan have public calendars that are accessible,” T.J. McHugh, Commissioner Ryan’s deputy chief of staff, said. “All meetings with Zenith were included.”
Reamer, did not respond to Street Roots request for comment at the time of publishing. This story will be updated.
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