The city of Portland denied Zenith Energy’s Land Use Compatibility Statement (LUCS) Friday, labeling the oil transport facility’s operations in conflict with the city's climate goals. The denial could force the Zenith facility to shut down completely.

Environmental advocates and local leaders are celebrating the decision while the future of the Zenith facility is in limbo.

The battle over the LUCS decision started because Zenith needs to renew its air permit with the Oregon Department of Environmental Quality (DEQ), which is required for the facility to operate legally. Because Zenith had previously increased the scale of its operations without notifying Portland officials, the DEQ required Zenith to first get a city-approved LUCS—a form determining whether a facility’s operations are consistent with local government’s land use regulations—before the DEQ would renew the facility’s air permit.

The DEQ’s decision to require a LUCS prior to granting the air permit was widely interpreted by environmental lawyers, advocates, and other local leaders to mean that if the LUCS was denied, the air permit renewal would also automatically be denied.

That is not the case, according to DEQ spokesperson Harry Esteve.

“These laws are relatively complex and we have to make sure we’re following them properly,” said Esteve.

The DEQ’s legal advisors will review the language in the LUCS denial to determine how the city’s decision will impact the air permit process. Esteve said the process may take a couple days. The DEQ did not immediately respond to questions about whether the department has ever granted a facility’s air permit without an approved LUCS.

“The decision goes well beyond the confines of one Council office or bureau—we all stand united in affirmation of the City of Portland’s commitment to pursuing a clean energy future, addressing climate change, and reducing our dependence on fossil fuels,” said Commissioner Dan Ryan, who oversees the bureau responsible for the LUCS decision, in a press release. “It is time to stop kicking our declarations down the road of intention—and start acting with the urgency needed at this critical time in history.”

Since being tasked with the decision in early 2021, city officials maintained they were limited in their ability to deny the LUCS because of Portland’s previous, more relaxed policies around fossil fuel infrastructure. The air permit application for the Zenith facility was submitted before the city banned the expansion of all new fossil fuel infrastructure in 2016, meaning that the city was required to evaluate Zenith’s request under the previous, more lenient rules. Environmental advocates argued that the city had more agency to deny the LUCS because it was a document based on city values, not strict readings of city policies.

In its denial of the LUCS, the city cited Portland’s 2035 Comprehensive Plan—a climate action plan that aims to lower the city’s carbon emissions by 80 percent by 2035 that was adopted in 2018—as a reason to deny the LUCS. The denial points to 16 goals and policies in the Comprehensive Plan that are incompatible with Zenith’s operations, including developing a climate resilient city, limiting negative air quality impacts, and promoting seismic and energy retrofits to improve public safety. A recent report from the city and Multnomah County found that the industrial hub where the Zenith facility is located in Northwest Portland could cause one of the largest oil spills in the world during a major earthquake, like the expected Cascadia earthquake.

“We are very disappointed in the City’s decision, which is particularly puzzling as 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,” said W. Grady Reamer, the Vice President of Western US Operations for Zenith Energy, in a press release. Zenith has sought to increase the amount of biofuel transported through its Northwest Portland facility.

A Zenith spokesperson claimed that the facility's ability to transport biofuel will be "invaluable" in helping the city achieve the climate goals set in the 2035 Comprehensive plan.

State Representative Khanh Pham, one of the 21 state legislators who called for the city to deny the LUCS last week, celebrated the city’s decision on Twitter, saying it’s proof that community organizing works.

“Credit to the hard work of advocates and community who would not give up on PDX’s commitment to climate justice,” Pham wrote.

Dineen O’Rourke, a campaign manager with 350PDX, also applauded communities that have rallied against Zenith.

“For over three years, thousands of community members have been fighting Zenith Energy’s crude oil facility everywhere from the streets, the river and train tracks, to the courtrooms and City Hall,” O’Rourke said in a press release. “This announcement is yet another example of how when people come together, we can stop the fossil fuel industry from continuing to destroy our climate, our communities, and our shared future. Grassroots organizing works.”

City commissioners Jo Ann Hardesty and Carmen Rubio also celebrated the decision while calling for more “bold decisions on climate.”

Rubio, who oversees the Bureau of Planning and Sustainability, said she plans to create city ordinances in the coming months that permanently halt the expansion of fossil fuel storage capacity at the Critical Energy Infrastructure Hub in Northwest Portland where the Zenith facility is located, as well as forward the city’s commitment to replacing fossil fuels with biodiesel and renewable diesel.

Rubio also called on county, state, and federal leaders to pass climate-centered legislation.

“Portlanders want climate action rooted in racial justice and economic opportunity so that we do not reproduce the systemic barriers that have accompanied our dependence on fossil fuels,” Rubio said in a press release. “Shifting away from fossil fuels means meaningfully centering more frontline voices and perspectives—specifically those from Black, Indigenous, Latinx, Asian, Pacific Islander and other communities of color, low-income Portlanders and immigrants—who experience climate change first and disproportionately.”