Zenith Energy

​DEQ does not have the authority or jurisdiction ​to make land use decisions. The City of Portland is the local land use authority for determining if the Zenith facility and operations are in line with local land use requirements. DEQ's process for reviewing these statements is to ensure any land use compatibility statement, or LUCS, the agency receives is consistent with that facility's application to confirm both DEQ and the land use agency are getting the same information.

DEQ asked Zenith for a new LUCS from the City of Portland in January 2021 because the activities Zenith proposed in its air quality permit renewal application did not match the existing LUCS.

When the City denied Zenith's LUCS, DEQ also denied Zenith's permit application. Zenith appealed the City's land use decision to the Land Use Board of Appeals. While the decision was under appeal, Zenith proposed a new LUCS and the City approved it. Zenith submitted a new air quality permit application to DEQ with the approved LUCS.

DEQ requested that Zenith provides a LUCS from the City of Portland that includes operations on adjacent properties in December 2024. The City approved Zenith’s LUCS application on Feb. 3, 2025. DEQ reviewed the LUCS to ensure it is complete and determined it is sufficient to continue with processing Zenith's air quality permit application.

Any reversal or appeal of the LUCS would have to come from the City or go through the Land Use Board of Appeals the same way Zenith appealed the City's 2021 denial.

Questions specific to the City's LUCS process, approval, decision making and auditor report can be sent to: ppd@portlandoregon.gov​

​​​The 2025 LUCS​ updates where Zenith's activities may be located and includes conditions set in the 2022 LUCS.

These conditions require Zenith to cease all transloading of crude oil by 2027, lower the plant site emission limit for volatile organic compounds by nearly 80%, cease operation of the asphalt refinery and remove 30 storage tanks. It also prohibits new construction of facilities and infrastructure for handling fossil fuels, except for piping and related components for handling jet fuel and sustainable aviation fuel jet fuel blend.  New storage tank construction is only allowed for renewable fuels and non-fuel products. Zenith must formally request that DEQ terminates its Title V permit once the Air Contaminant Discharge Permit is in full effect.

Learn more about these conditions from the City of Portland Permitting and Development. Read the full LUCS on the City of Portland's public records website. Questions specific to the City's LUCS process, approval, decision making and auditor report can be sent to: ppd@portlandoregon.gov​

Because Zenith was operating in compliance with its existing Title V permit. Per Oregon law, while Zenith has a complete, timely application in, it may operate consistent with its existing permit until DEQ makes a permitting decision.

​DEQ is aware that the City's LUCS decision has been appealed to the Land Use Board of Appeals. OAR 340-018-0050(2)(a)(G) states: “If a local government land use compatibility determination or underlying land use decision is appealed subsequent to the Department's receipt of the LUCS, the Department shall continue to process the action unless ordered otherwise by LUBA or a court of law stays or invalidates a local action."

DEQ was required to follow this rule and continuing the permitting process because the LUCS is still considered valid. An appeal does not automatically stop DEQ's permitting process unless ordered to by a legal authority.

Additionally, DEQ air quality permits are contingent on a valid LUCS. If the LUCS is overturned or revoked at any point, DEQ will evaluate how that land use decision will impact the air quality permit.

​Any investigation the City may conduct is completely separate from DEQ's permitting process. Under state regulations, DEQ must continue to process the permit application because DEQ received a complete application from Zenith and an approved LUCS from the City. DEQ air quality permits are contingent on a valid LUCS. If the LUCS is overturned or revoked at any point, DEQ will evaluate how that land use decision will impact the air quality permit.​​​

The City’s CEI Hub policy project is completely separate from DEQ’s permitting process. Under Oregon Administrative Rules - OAR 340-018-0050 - DEQ was required continue processing Zenith’s air quality permit application since we had a complete application and an approved LUCS from the City. DEQ air quality permits are contingent on a valid LUCS. If the LUCS status changes at any point, DEQ will evaluate how that land use decision will impact the air quality permit. The City of Portland’s CEI Hub policy project team is in touch with DEQ’s Fuel Tank Seismic Stability team to ensure that potential future local zoning requirements are compatible with the state’s seismic stability regulations.​​

Below is a summary of key changes between the fall 2024 and spring 2025 public notice periods. You can see the full list of changes in the permit review report.

• Updated Land Use Compatibility Statement: References the February 2025 and October 2022 land use compatibility statements issued by the City of Portland.
  

• New fuel handling activities: Requirements for handling jet fuel, sustainable aviation fuel, or SAF, and SAF jet fuel blends, as allowed under the updated LUCS issued by the City of Portland.

• New connection: Installation of new piping components to connect the McCall Dock to the Kinder Morgan pipeline, as approved in Notice of Approval application number 63533. This is an approved update to the facility rather than a change to permit conditions.

• Revised permit condition: A permit condition about product handling (formerly Condition 3.5) was moved to Condition 11.3 and revised to include jet fuel and sustainable aviation fuel blend as allowable products that the referenced new infrastructure may be used to handle.

• ​This condition prohibits Zenith from using new infrastructure for handling products other than renewable fuels (as defined in Portland City Code 33.910.030), jet fuel, sustainable aviation fuel jet fuel blend and non-fuel products.
  

• Emissions calculation updates: DEQ corrected a vapor growth factor used in emissions equations and removed a redundant factor related to crude oil loading. These changes improve calculation accuracy but do not affect the facility's emission limits.
  

• Recordkeeping and reporting: Zenith must track and report all product types handled in new infrastructure as part of its annual reporting.

• Technical corrections and administrative updates: DEQ fixed regulatory citations, clarified language and updated references throughout the permit for clarity and consistency.​

The permit includes the following conditions, which are part of the City of Portland's land use compatibility statement.

• Cessation of handling and storage of crude oil after Oct. 3, 2027

• Prohibition of shipping or receiving crude oil from Railcar Rack 1A

• ​Utilize new infrastructure only for loading and unloading renewable fuels, jet fuel, sustainable aviation fuel, sustainable aviation fuel jet fuel blends and non-fuel products​.
  

• Reduces the facility's emission limit of volatile organic compounds to 39 tons per year, meeting the LUCS requirement of less than 40 tons per year.​
  

While DEQ included these LUCS conditions in the permit, it is important to note that DEQ enforces the conditions of its permits instead of conditions of a LUCS. DEQ does not have authority to enforce a local land use agency’s conditions for a land use approval, which is the City of Portland.​

The air quality permit accounts for emissions from the facility's equipment and on-site operations including product transloading, but not from trains, trucks or marine vessels traveling to and from the facility. Under state regulations, marine vessels and trains are considered mobile sources. Those emissions are considered secondary emissions, which state regulations do not factor into a stationary air quality permit such as the Standard Air Contaminant Discharge Permit that Zenith applied for. Any further regulation of these emissions would require action from the legislature.​​

DEQ, like all other states, relies on self-reporting from permitted facilities and is charged with reviewing all reports and notifications those facilities submit to evaluate compliance. The monitoring and reporting requirements in the draft permit are representative of most requirements for all air, water and land permits issued by DEQ and EPA. DEQ staff also performs on-site inspections to ensure that Zenith is complying with all applicable permit requirements. Periodic source testing (which tests air emissions at the source) is performed by an independent third-party company, and DEQ staff can witness this testing on site.​​

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The May 2025 settlement maintains all violations alleged in DEQ's December 2024 enforcement order. These include:

• Zenith's failure to obtain DEQ approval for its connection to the McCall dock.
• 34 unauthorized loading events at the McCall dock.

DEQ resolves many enforcement cases through settlement, which allows the agency to uphold accountability while avoiding a prolonged legal process. The penalty amount was revised based on information provided during settlement discussions and DEQ's review of the penalty calculation. It does not reflect a change in DEQ's assessment of the violations.

As part of the settlement:

• The 34 unauthorized loading events were reclassified from Class I to Class II violations. DEQ made this change after reviewing how the Class I rule – OAR 340-012-0054(1)(e) – is written and how it has been applied in past cases.

• The penalty accounts for 27 unauthorized loading events that happened before Zenith submitted the required Notice of Approval application to DEQ. Seven additional unauthorized loading events occurred after the application was submitted but before DEQ approved it. These seven events were not included in the final penalty amount but are still considered violations by DEQ.

Details about the settlement and penalty adjustment are available in the Mutual Agreement and Final Order and Amended Exhibit 2.​

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