Mayor Keith Wilson on Wednesday used his power to break a tie City Council vote for the second time on his watch, this time to facilitate a massive fossil fuel deal.
Wilson joined six councilors in voting to transfer a contract the city has with Houston-based fossil fuel company Zenith Energy to a Miami-based international investment company called I Squared Capital, or ISQ Holdings. The franchise transfer is a precondition that will ultimately allow ISQ to take over Zenith’s oil-by-rail and storage operations in Northwest Portland, once their business deal goes through. ISQ manages $50 billion in assets worldwide, according to its website, but specifics of the deal with Zenith have not been made public. ISQ needs the franchise agreement—a contract that utility companies must enter into with the city to access the city’s rights of way—before it can begin operating the facility.
Wilson voted yes alongside the Council’s more moderate bloc—Councilors Olivia Clark, Steve Novick, Elana Pirtle-Guiney, Dan Ryan, Loretta Smith, and Eric Zimmerman. Candace Avalos, Jamie Dunphy, Mitch Green, Sameer Kanal, Tiffany Koyama Lane, and Angelita Morillo voted no.
Wednesday’s Council meeting brought a bevy of procedural maneuvers after Councilor Smith was absent during the first vote on September 16. Today’s vote was the second time councilors voted on the issue after it failed in a 5-6 vote with one absence on its first attempt.
ISQ insists it takes safety seriously, and has repeatedly promised to be a better neighbor than Zenith. But as one Portlander spoke on the dangers of an explosion, landslide, or fire at the Critical Energy Infrastructure (CEI) Hub during public testimony on September 2, the Mercury observed three ISQ representatives laughing quietly with one another in the chamber seats.
The public remains concerned about the dangers at the CEI Hub, which sits along the Willamette River adjacent to Forest Park in Northwest Portland’s industrial area. Environmental advocates have been asking for confidence that the new company won’t be allowed to flout state and local laws the same way Zenith has since it bought a former asphalt terminal and expanded its fossil fuel infrastructure a decade ago.
It’s unclear when exactly ISQ will take over for Zenith. The company has promised to keep current Zenith staff employed to oversee the facility’s day-to-day operations.
District 4 Councilor Mitch Green, whose district includes the CEI Hub, introduced an amendment September 1 alongside District 3 Councilor Angelita Morillo that would add conditions to the franchise transfer. The amendment ultimately failed, but if it had passed it would have added a mechanism allowing a third party—for instance, the public—to sue if ISQ violated city laws. Environmental advocates have consistently raised concerns that the franchise would be transferred from Zenith to ISQ with no significant changes to how the rules are enforced. They say the city’s failure to hold Zenith accountable for violating the law gives them pause—and they want assurances.
Public trust around the issue is low. The vast majority of public testimony opposed an unconditional transfer, and there appears to be broad support for community-led enforcement opportunities, particularly after the city hired an independent law firm to investigate Zenith’s alleged violations of its franchise agreement earlier this year. That report cleared Zenith of wrongdoing, but advocates rejected those findings, saying the investigation was guided by city administrative staff to engineer the outcome. Still, Zenith sued the city in US district court in July, saying the city had unnecessarily delayed the transfer when councilors followed city rules allowing public testimony.
Portlander Edward Barnhart said in written testimony that the City Council should apply rigorous scrutiny to the deal.
“I urge the City Council to stand up against Zenith Energy’s bullying of our local democracy and ensure a full public process regarding the franchise transfer to I Squared Capital,” Barnhart wrote. “The community has zero confidence in this agreement or the Mayor’s willingness to enforce it, especially given Zenith’s history of breaking the law, which is why it must be strengthened with provisions for third-party enforcement.”
The process to transfer the franchise agreement has been contentious, and some councilors have been accused of maneuvering behind closed doors for years. Councilor Zimmerman, who voted to approve the transfer, cast further doubt that the decisions were made sincerely and transparently.
“No less than three members who are going to vote no today on this have asked me to make sure I vote yes,” Zimmerman said. “I think that’s transparent and interesting.”
Zimmerman did not respond to the Mercury’s request for further information at the time of publishing. This story will be updated.
Zenith’s list of infractions runs deep. The company illegally constructed and used new piping that allowed for the transport of fossil fuels and renewable fuels on at least 34 occasions between 2021 and 2024 without notifying the city or the Oregon Department of Environmental Quality (DEQ) of the changes. At the time, DEQ initially paused a permitting process and fined Zenith over $370,000 for the infractions, but negotiated with the company on appeal.
That violation led to the investigation into whether Zenith broke its franchise agreement with the city, an agreement the mayor and six councilors voted to transfer Wednesday.
On Thursday, September 24, the Council will hear a major Bureau of Planning and Sustainability (BPS) policy package meant to address three interrelated issues at the CEI Hub. A major piece of the project is a drawdown timeline, requiring the 11 companies that operate there to reduce fuel storage capacity by 20 percent by 2036. Public records have revealed that Zenith, and now likely ISQ intend to turn the area into the preeminent renewable fuels hub for the entire West Coast.
