A Portland City Council committee on Thursday took its next step in deciding whether to transfer a city contract with Zenith Energy to a new, Miami-based investment company called I Squared Capital (ISQ). The transfer will allow the new company to take over operations of Zenith’s terminal, which sits between the Willamette River and Forest Park in Northwest Portland. ISQ has promised to continue Zenith’s transition to “renewable fuels,” and to retain Zenith’s staff to continue operations.
More than 100 people provided testimony to a Council committee about the franchise agreement transfer, with half scheduled to testify in person on Thursday. The ordinance passed out of committee in a 7-5 vote, moving it to the full council for further discussion.
Councilors Olivia Clark, Jamie Dunphy, Steve Novick, Elana Pirtle-Guiney, Dan Ryan, Loretta Smith, and Eric Zimmerman voted to send the ordinance to full Council. Councilors Candace Avalos, Mitch Green, Sameer Kanal, Tiffany Koyama Lane, and Angelita Morillo voted no. In the full Council, the ordinance will require nine yes votes to pass, as outlined in city code.
Proponents of the transfer are hoping the transfer moves through the City Council quickly, but opponents say information about the deal is scarce, and the city should add conditions to the transfer to protect Portlanders. Public records show an ISQ attorney believes there is a desire to manage opposition from the public.
A franchise agreement is a contract between the city and utility providers that allows the companies to access the city’s rights-of-way for infrastructure. That includes for construction of pipes for fossil fuels, communications equipment, or other utilities. Zenith operates under a franchise agreement that was initially held by Chevron beginning in 1991 and transferred to Zenith in 2018. The agreement was amended by Council in 2018 to allow Zenith to transport renewable fuels and other liquid fuels through the pipes.
Zenith took over a former asphalt terminal in 2014 and began its oil-by-rail and storage operations in 2017. Since then, the company has expanded its operations, most recently as part of its 2022 promise to local officials that it would transition to 100 percent renewable diesel by October 2027. In the process, Zenith was repeatedly fined by state for flouting legal requirements on multiple occasions, but largely evaded local accountability.
With that in mind, environmental advocates want the City Council to amend the transfer and require third-party enforcement over the terms of the agreement. Many advocates are slow to trust the new company after Zenith’s infractions, and slow to trust the city after it hardly held Zenith accountable for any of it.
Jerry Zhang, vice president of I Squared Capital, said he is aware the terminal carries a “nuanced history,” but sought to allay advocates’ fears in Thursday’s testimony.
“We’re here because we will be a different kind of owner,” Zhang said. “Long term, committed to Portland and Oregon’s clean energy goals and responsive to this community.”
Zhang and other ISQ representatives said the company is committed to transitioning to renewable energy.
But environmental and public safety advocates are asking the City Council to slow down until the public has full information to provide feedback on the transfer. Some are concerned the city appears to be intentionally delaying the information until the franchise is approved.
Public records obtained by the Mercury through a public records request show the parties are working to ensure the transfer goes through without a hitch. As the city and ISQ’s law firm, Miller Nash, went through the franchise transfer process earlier this year, the city requested information regarding any prior compliance violations, and about the company’s experience with terminals, including in the US, Europe, and the Philippines. The city clarified that while ISQ appeared to have experience in the US, none of those assets are technically bulk fuel terminals, like the one they want to acquire in Portland.
On February 5, Deputy City Attorney Nancy Thorington, who helped Miller Nash walk through the transfer process, wrote to ISQ’s attorney Hong Huynh. The two had spoken over the phone earlier that day, according to the records, and Thorington outlined why the city needed as much information as possible in its review.
Huynh replied, saying they believed the international scope was irrelevant to the Portland project.
“I understand and sincerely appreciate the desire to manage potential public opposition,” Huynh wrote. “To that end, it would seem to be most helpful that the City is clear with the public on what are the legal requirements on a franchise transfer request. Thus, issues that the City should manage should be ones that have legal, technical, and financial basis.”
It’s unclear why Huynh believed there was a desire to manage opposition, and there is no explicit record showing the city told Huynh that was a tactic. The city attorney’s office declined to comment on the records when asked by the Mercury.
But in the historical context of how Zenith moves with officials, the notion that the city might “manage potential public opposition” adds fuel for critics who have long felt the city and the company were not fully transparent about its processes.
Multiple people providing testimony referred to what they call “backroom deals,” beginning with Zenith as early as 2022. Huynh did not respond to the Mercury’s request for comment prior to publishing.
Zenith has also attempted to derail the public’s involvement in the sale. The company sued the city in late July, arguing that the city was unreasonably delaying the approval.
Skylar Cruz, a Portlander who lives near the operations, said councilors should take the issue seriously, and should be skeptical of the fuel company’s claims.
“What’s going on here is really a cash grab, without a real understanding of our safety,” Cruz said.
Cruz said the Council should not rush the transfer, but take its time to ensure the regular Portlanders’ voices are heard over cash-rich fossil fuel companies.
“I want to see us incorporate third-party support here to make sure we’re keeping this new company, I Squared, accountable.”
In the meeting, City Attorney Robert Taylor outlined why he believed the records that had been requested—which includes multiple requests by the Mercury—were exempt from disclosure. Taylor cited state public records law that allows documents provided by private entities like ISQ and its legal counsel to remain undisclosed, unless the public interest requires their disclosure.
“Based on the testimony today, I think it’s clear to me that the public interest is is in the disclosure of it, and we will follow that public interest,” Taylor said. “We will disclose that information.”
The city released 210-pages of public records Thursday afternoon. The documents may give the public deeper insight into the terms of franchise agreement.
