A lawsuit environmental advocates filed against the city of Portland after it issued a land use credential to Zenith Energy will be heard in a specialized administrative court, after a state appeals court returned the case. Environmental advocates say the court’s decision is a win because the case will be heard by a board of attorneys with a better understanding of the complex legal framework around state land use law.
The Oregon Court of Appeals on November 13 reversed a Land Use Board of Appeals (LUBA) order issued June 5, in a legal claim brought against the city over its permitting approval process for Zenith. LUBA previously ruled that it should not hear the case. It said the lawsuit should instead move to Multnomah County Circuit Court because the city’s approval of a land use credential for Zenith Energy was an administrative decision, not a land use decision.
The city will be required to provide a record of events and meeting notes related to Zenith. LUBA could ultimately decide that the city needs to start over, with a more public process, to determine whether to approve a land use credential to Zenith called a Land Use Compatibility Statement (LUCS). Zenith needs that credential to operate legally in the city, and to maintain a state air permit.
Zenith operates a petroleum and renewable liquid fuels facility in Northwest Portland’s industrial area. Environmental advocates have been concerned for years that the location and the explosive products stored there—and transported by rail across the city—endanger Portlanders, wildlife on the Willamette River and Forest Park, and violate treaties with local tribes. Zenith has also flouted state and local policy in the past by failing to pay franchise fees on time and expanding the amount of fuels it transports despite promising it would not do so. The Oregon Department of Environmental Quality (DEQ) fined Zenith in 2021 for flagrant violations of its air permit, and in 2024 for illegal construction at its site.
A group of petitioners, including the Northwest Environmental Defense Center (NEDC), Willamette Riverkeeper, 350PDX, and 18 Portland residents, sued the city in February after it approved Zenith’s LUCS. Environmental attorneys want LUBA to force the city to reopen the land use process with more transparency, saying the law requires it.
Mary Stites, staff attorney at NEDC, said the appeals court’s decision is a procedural win for the plaintiffs. Environmental advocates believe LUBA, the specialized court, should hear the case, rather than the Multnomah County Circuit Court the city argued for, which is not as specialized in local land use laws.
Stites said she felt confident about their arguments in any court, but it makes more sense for LUBA to interpret how a host of complicated mechanisms fit together.
“It's also very important for us to reinforce that there should be guidelines that need to be complied with, and LUBA is the best court to do that for the entire state,” Stites said.
NEDC argues that the city engaged in a flawed process when it approved a new LUCS in February because it failed to appropriately include the public when making its decision. Portland first approved the LUCS in 2022 with additional conditions for Zenith, requiring the company to phase out all crude oil by October 3, 2027, restrict new infrastructure to only renewable fuels and blended jet fuel, and dismantle 30 storage tanks at its facility.
In November 2024, the DEQ found Zenith had violated those conditions by illegally constructing and using pipelines without proper approval. The DEQ required the Houston-based fossil fuel company to obtain a new LUCS, which the city approved on February 3.
The city argued that LUBA should not have jurisdiction in this case, saying it should fall under exemptions in Oregon law allowing the Zenith approval to fall into administrative court rather than land use court. The city relied on an interpretation that fossil fuel terminals are allowed outright under state law in heavy industrial zones, including where Zenith operates. The city argued, and LUBA agreed, that Zenith’s proposed use was allowed outright under the city’s land use regulations, according to court documents.
Secondly, the city argued that the conditions it set out for Zenith in its approval did not convert the LUCS into a non-discretionary land use decision, meaning the Circuit Court should instead hear the case.
That would have put the legal arguments in a more generalized legal setting, despite the complex nature of land use laws, according to Stites.
The appeals court disagreed with LUBA’s findings, saying in court documents released November 13 that “LUBA’s order is unlawful in substance” and remanding the case back for further action. The court said even with the conditions the city and Zenith agreed on for the LUCS approval, the case should not be exempted from the land use court. In other words, LUBA is the appropriate venue.
“Petitioners met their burden to establish LUBA’s jurisdiction by showing that the city made a land use decision by imposing the conditions of approval in the 2025 LUCS,” the order said.
The appeals court also said the city’s attached conditions are enforceable by the city based on Zenith’s use of the property. In August, a city attorney turned heads when she argued in a court hearing that the city’s rules were not enforceable, going against the city’s longstanding assertions that they are.
Zenith needs the LUCS from the city in order to maintain an air permit from the Oregon Department of Environmental Quality (DEQ). The DEQ approved the permit on October 9 amid significant pushback from environmental advocates, and despite the ongoing litigation.
DEQ spokesperson Michael Loch said DEQ does not comment on ongoing litigation, including cases it is not involved in, and DEQ could not speculate on potential outcomes.
“However, DEQ’s air quality permits are contingent on a valid LUCS,” Loch said. “If the LUCS is overturned or revoked at any point, we will evaluate how that may impact the status of Zenith’s ACDP.”
Stites said in the end, environmental advocates want the city to stand up to the fossil fuel industry, and NEDC’s lawsuit does not challenge the city’s role in imposing and enforcing conditions to stop handling fossil fuels.
“We want the city to be able to use its authority to regulate those industries to comply with the city's ambitious Comprehensive Plan,” Stites said. “But when they do that, they need to follow the specific procedure that guides these kinds of discretionary reviews.”
The court’s decision came the same day the Portland City Council heard updates from City Attorney Robert Taylor on the city’s investigation into Zenith's potential violations of its franchise agreement. The city hired an independent law firm Cable Huston in September to assist in an ongoing investigation of the company. The City Council passed a resolution in March requiring that Mayor Keith Wilson open the investigation.
Environmental advocates remain concerned that the city has not been fully transparent in its dealings with Zenith. They’re pressuring the city to disclose what work and what documents Cable Huston has access to, ensure it has full access to documents dating back to 2017, and allow the law firm to broaden its scope to investigate a pattern of conduct between Zenith and city officials.
“Portlanders will not accept a delayed, constrained, or opaque process,” Diana Meisenhelter, an XRPDX activist, said. “We need a definitive, transparent investigation that doesn’t intentionally avoid incidents and activities that would lead to revocation of Zenith’s franchise agreement — an outcome which aligns with the City’s climate resolutions and its duty to protect public safety.”