CHICAGO — A top city public health official defended her department’s decision to block a metal scrapping company from relocating to the Southeast Side, arguing that the move would have had detrimental effects for residents of a neighborhood that has long grappled with significant industrial pollution.
Megan Cunningham, the city’s deputy public health commissioner, submitted to a grueling, eight hours of testimony and cross examination before an administrative law judge Wednesday, as lawyers for the scrap shredding company grilled her on the merits of the city’s decision to deny the permit.
The denial dates back to February 2022, when the Chicago Department of Public Health rejected a permit for the rebranded General Iron scrap shredder’s assets and employees to relocate from Lincoln Park to 11600 S. Burley Ave. in East Side — a major victory for local environmental justice advocates who had initiated a hunger strike to protest the move.
But the shredder’s parent company, Reserve Management Group, immediately filed suit in multiple courts and appealed the decision, arguing that the denial violated the company’s constitutional rights and breached an earlier contract that it had signed with the city. The company spent tens of millions of dollars building the site along Calumet River, thinking it would get the necessary permits to operate as Southside Recycling.
At Wednesday’s appeal hearing, held in a small, windowless room normally reserved for parking ticket disputes, Cunningham stood by the decision to deny the permit, testifying that a federal EPA investigation into an earlier approval of the project by the state EPA prompted the department to look more closely at its own environmental review.
“With the support of the U.S. EPA, we identified that a [health impact assessment] was a valuable and important step for us to take in this particular permit decision,” Cunningham said. “We weren’t just evaluating this permit in a vacuum, but the effects on top of what is already going on in the neighborhood.”
After the EPA announced it disagreed with the state’s approval, the city paused review of the permit to conduct the impact assessment, Cunningham said.
The impact assessment, which she led, found the Southeast Side was already overburdened, determined the metal shredder would negatively impact quality of life, and raised concerns about the company’s compliance history. The analysis made no recommendation about the health department’s pending permit decision.
“I think we understood that this is a risky business, that this presents real potential environmental and health concerns, and requires a real degree of attention and scrutiny,” Cunningham said. “The permit is only as strong as the company’s willingness to abide by it.”
Lawyers for Reserve Management Group have argued that the city should not have incorporated the health impact assessment in its review.
The decision to deny the permit also came two days after the federal Department of Housing and Urban Development told the city in a letter on Feb. 16, 2022, that it had opened an investigation into whether federal civil rights laws were violated by attempting to relocate an industrial polluter to a majority Black and Latino neighborhood from its former home in whiter and wealthier Lincoln Park.
HUD officials concluded six months later the city discriminated against Black and Latino residents by moving polluters into their neighborhoods..
A lawyer for the scrap shredder, Jeff Rossman, took issue with the timeline of the denial Wednesday, hinting that the city rejected the permit because it got wind that the HUD investigation could jeopardize more than $700 million in annual federal funding.
“Some of the funds could be at risk depending on the result of the HUD investigation,” Rossman said. “I want to ask what impact that finding had on the decision to deny the permit two days later.”
Cunningham said it was city Public Health Commissioner Dr. Allison Arwady’s decision to deny the permit, and that she did not believe the HUD investigation played a role in it.
Rossman also pushed Cunningham on whether the city solicited the federal EPA’s involvement in the permitting process. A letter from the city law department to an EPA employee in February of 2021 asked whether “the U.S. EPA will suggest that the Chicago Department of Public Health suspend the final operating permit process,” Rossman said.
The letter asking for information came months before the EPA formally told the city it disagreed with the state EPA’s approval, prompting the suspension in the review and the initiation of the health impact assessment.
Cunningham explained that the U.S. EPA said it had altered its view on the state’s approval of the project after the change in federal administrations.
“When the city came to understand that the U.S. EPA was looking differently at the permit decision that the Illinois EPA had made, that gave us pause,” Cunningham said. “And we knew we needed to take another look, a harder look, at this stage of the city’s review.”
In nearly five hours of cross-examination, lawyers for the scrap shredder hammered Cunningham with questions about each of the health assessment’s findings, particularly about its standards for traffic and air pollution. The assessment said the facility would have negative impacts on both, even though neither would have a large enough increase to affect residents — the closest of whom live 2,000 feet from the site.
“There is no healthy level of exposure to pollution in the air,” Cunningham said.
Rossman also questioned whether the city would use the same stringent standards for its review of a permit request from Sims Metal Management in Pilsen — the only other scrap recycling facility in the city. Cunningham said the two requests weren’t analogous because Sims wanted to renew its permit, rather than build a new facility.
In his final line of questioning, Rossman noted that the facility complied with all state and federal requirements. Cunningham agreed that it did, but said the city still had the authority to deny the permit, looking at the development holistically.
“These were assessments of factors that were taken collectively to draw a conclusion,” Cunningham said. “There wasn’t a single threshold number.”
The appeal hearing is set to continue Friday, with two additional city officials scheduled to testify.
Lawyers for Reserve Management Group formally requested Wednesday that Dr. Arwady be subpoenaed, which city attorney Brad Wilson strongly rebuffed.
Judge Mitchell Ex, who is presiding over the hearings, said he would take the question under consideration and decide on Friday whether Dr. Arwady could be called to the stand.
The unusual appeal has two more hearings scheduled after Friday on Jan. 27 and 30.
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