The Portland City Auditor’s Office is investigating Zenith Energy for potential violations of the city lobbying code, according to Louise Hansen, an elections officer in the auditor’s office.
Confirmation of the investigation comes just three weeks after Street Roots reported Zenith Energy and its PR firm, Pac/West Communications, spent months courting Portland city officials, their staff and bureau staff to approve a land use permit in 2022. Communications between the fossil fuel giant, its PR firm and the city after the city rejected its initial application in 2021 included a July 2022 Pac/West-organized private tour of Zenith’s facilities, which Portland commissioners Dan Ryan and Carmen Rubio attended, along with several other city staffers.
Grady Reamer, Zenith vice president of operations, also invited Ryan to talk about the project during a Working Waterfront Coalition boat tour they both attended Aug. 26. Ryan's Bureau of Development Services approved the permit less than six weeks after the boat tour.
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 Critical Energy Infrastructure Hub, or CEI Hub, a massive cluster of fuel-filled tanks nested between Forest Park and the Willamette River.
Hansen told Street Roots the office opened an investigation into Zenith Energy and any potential violations of Portland city code chapter 2.12 in response to a complaint it received.
The code requires lobbying entities for private companies attempting to influence city officials to report lobbying efforts to the public. The purpose is to preserve the integrity of the city’s decision-making process according to language in the city code.
City code says the definition of lobbying includes time spent preparing emails and letters and preparing oral communications with a city official. The code requires a lobbying entity that has spent at least $1,000 or a cumulative eight hours during a calendar quarter to register with the city auditor’s office within three working days of meeting the lobbying activity threshold.
The complaint, obtained by Street Roots, said public records showed significant lobbying activities, including site visits, emails, zoom meetings, phone calls and text messages. Nick Caleb, a climate energy attorney at Breach Collective, filed the complaint with the auditor’s office Aug. 2.
“It seems highly unlikely that Zenith or Pac/West representatives could have spent less than eight hours or $1000 on lobbying in quarter 3 (July - September),” the complaint said. “The development of a new draft Land Use Compatibility Statement (sent to city officials as a draft and not a formal submission on August 23, 2022) would take significant time on its own.”
The Land Use Compatibility Statement, or LUCS permit, is a necessary step for Zenith to acquire an air contaminant discharge permit from the Oregon Department of Environmental Quality, or DEQ, allowing the Houston-based fossil fuel company to continue operations along the Willamette River in NW Portland’s CEI Hub. The city of Portland granted the LUCS permit on Oct. 3, 2022.
A coalition of environmental advocates recently signed on to a 20-page letter asking DEQ to deny the permit Aug. 21, saying DEQ has the legal authority to deny the ACDP permit if it concludes the city’s LUCS determination was not legally sufficient.
“For the reasons that follow, DEQ should utilize its existing legal authority to deny Zenith’s pending ACDP permit application,” the letter stated. “First, the City’s LUCS process was not legally sufficient… Second, Zenith’s activities — both its oil and “renewable fuels” transport and storage operations — pose a serious danger to public health, safety, and the environment.”
Local youth climate activists walked out of school Sept. 15 to demand local leaders act on legislation to protect the environment. Among their primary demands, activists want Gov. Tina Kotek to declare a statewide climate emergency and also called on DEQ to deny Zenith the air quality permit.
DEQ spokesperson Harry Esteve declined to comment on the city auditor’s investigation but acknowledged Leah Feldon, DEQ director, received the letter.
“DEQ is currently evaluating the details of the letter and will respond once we have fully analyzed the details,” Esteve said.
City code offers some lobbying exemptions, including news media who may directly or indirectly influence a city official in the ordinary course of business, lobbying entities that comply with state public meetings and public records law and registered nonprofit organizations.
2022 city lobbying reports show neither Zenith nor Pac/West reported any lobbying activity during that period, despite consistent communication with officials focused on permit approval.
Zenith promised to transition to “renewable fuels” within five years as part of its deal with the city. Environmental advocates say the promise of renewable fuels is a way for fossil fuel companies to continue operating while appearing to address climate change.
“It has become very fashionable in the fossil fuel industry to just use the word renewable when describing the operations that they plan on doing in the future,” Caleb said. “In a lot of ways, this will depart from how maybe ordinary people understand what renewable energy is — like solar panels and wind turbines. This is not renewable in that sense.”
Meeting notes from a July 29, 2022, tour of Zenith’s facilities show how Zenith and Pac/West sold city officials on a plan to transition Portland into a primary provider of renewable fuels on the West Coast. Portland is poised to become the first stop for renewable fuels imported from Singapore, then exported to facilities in British Columbia, Washington and California, according to the notes.
The tour, which took place while Zenith was actively suing the city, included city commissioners Carmen Rubio and Dan Ryan, their chief of staff Jillian Schoene and senior policy advisor Karen Guillén-Chapman, BPS chief planner Patricia Diefenderfer and city building official Terry Whitehill, according to records.
Zenith’s public relations firm, Pac/West, organized the tour. Paul Phillips, Pac/West president and Chris West, vice president of operations, participated alongside Zenith Portland terminal manager JT Hendrix and Zenith’s Reamer.
Reamer and West did not respond to Street Roots’ request for comment.
Less than 10 weeks after the tour, city officials reversed the city’s prior position, approved the LUCS permit and worked alongside Zenith to sell Portlanders on the promise to shift to renewable fuels.
Including other energy companies at the CEI Hub, many storage tanks are 100 years old, and none were built within the last 30 years, contributing to the risk posed by seismic activity. Zenith’s facility has stored petroleum products since 1947, and as part of its new agreement with the city to obtain the LUCS permit, it is expected to remove 30 old tanks.
With the LUCS permit in hand, Zenith applied for a lower-tiered DEQ permit Nov. 18, 2022. DEQ is currently analyzing their request and working on a draft permit. The request includes a reduction in the VOC plant site emission limit from 179 to 39 tons per year and a requirement that the facility cease the handling and storage of crude oil (whether by rail, marine or otherwise) after Oct. 3, 2027. A 35-day public comment period will follow before the permit is issued, according to DEQ spokesperson Harry Esteve.
The lobbying investigation raises the stakes for critics who accuse the city of approving the multinational oil company’s operations behind closed doors. Despite Zenith’s promises to phase out fossil fuels within five years, many critics argue the transition may not be possible in that timeframe, and the city lost bargaining power by caving to plans without including the public in the process.
Zenith’s history of operating outside legal requirements since taking over a former asphalt terminal in 2017 furthers environmentalists’ doubt the company played by the rules.
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.
The city auditor’s office rarely issues fines for lobbying violations. After an investigation in April, the office found insufficient evidence of lobbying violations against the controversial gunshot detection tech company Shotspotter. On three separate occasions, the auditor’s office found the Portland Business Alliance — now Portland Metro Chamber — violated lobbying rules but penalized it just $450 in 2021. Recently, the highest civil penalty from the auditor’s office was in 2016, when it fined Uber $2,000 for lobbying activity by an unregistered lobbyist and multiple undisclosed lobbying communications and activities.
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