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South Chicago, East Side

Judge Overrules City’s Decision To Block Southside Recycling From Opening — But Mayor Johnson Vows To Appeal

A judge vacated the city's decision to deny an operating permit to Southside Recycling, which was set to take on troubled scrapper General Iron’s operations.

Activists march and carry a fake coffin March 4 through Logan Square to call on Mayor Lori Lightfoot to deny a permit that would allow Southside Recycling to open in East Side.
Colin Boyle/Block Club Chicago
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EAST SIDE — A recycling company’s controversial bid to move defunct North Side metal scrapper General Iron’s operations to the Southeast Side received new life after a judge overturned the city’s denial of the company’s operating permit.

Southside Recycling was blocked by public health Commissioner Dr. Allison Arwady in February 2022 from opening a facility at 11600 S. Burley Ave. in East Side. The facility was set to take on troubled scrapper General Iron’s assets and employees.

Parent company Reserve Management Group spent $80 million to build the East Side facility, company officials said. They appealed the permit denial in the city’s administrative hearings court in March 2022.

Southside Recycling met the rules and requirements to receive a permit, and the city must vacate Arwady’s decision to deny the permit, administrative law judge Mitchell Ex ruled Thursday.

Ex overturned the denial after he found:

  • The findings of the health impact assessment Arwady cited in her permit denial “were improperly applied,” and she did not have authority to use them as a basis of her decision.
  • Southside Recycling was responsive to the city’s requests for more information during the permit application process, despite the city’s claims to the contrary.
  • The health department’s position in the denial letter that other Reserve Management Group facilities on the company’s East Side campus posed a risk to the community was contradicted by the department’s lack of enforcement against those facilities.

“The ruling is a welcome victory after years of unforeseen obstacles and delays,” said Randall Samborn, spokesperson for Reserve Management Group.

The company will continue pursuing all available options to open Southside Recycling, including a pending lawsuit which was on hold as the administrative law case played out, Samborn said. The lawsuit brought by Southside Recycling seeks at least $100 million in damages because of the city’s denial.

Mayor Brandon Johnson strongly disagrees with the judge’s decision Thursday and his administration “will immediately appeal the administrative judge’s ruling,” he said in a statement.

Credit: Colin Boyle/Block Club Chicago
The sun sets over the planned location for Southside Recycling, 11600 S. Burley Ave. on Feb. 22, 2021. Four Reserve Management Group recycling facilities currently operate at the East Side site.

Earlier this year, city health workers, Reserve Management Group employees and consultants hired by the company testified for weeks before Ex about the scrapper’s plans and the permit denial.

Through dozens of hours of testimony, city officials defended Arwady’s decision to block Southside Recycling from opening. The plans would have harmed residents of a neighborhood that has long been overburdened with industry and pollution, they said.

Health officials had legal standing to pause the permit review, start a health impact assessment and ultimately deny the permit, city attorneys argued.

A federal investigation into the state’s approval of Southside Recycling pushed the city to look more closely at its own review, said Megan Cunningham, the city’s deputy public health commissioner and leader of the health impact assessment.

“This is what environmental justice looks like,” Michael Regan — the head of the U.S. Environmental Protection Agency who in 2021 urged the city to pause its permit review and complete a health impact assessment — said after the permit denial.

Arwady’s decision came after Southeast Side activists organized for years to “deny the permit,” including holding a month-long hunger strike in 2021.

Southside Recycling’s attorneys repeatedly disputed Arwady’s decision and questioned her authority to block the company’s operations.

City health leaders unjustly ignored the results of their own health analysis and the state’s prior approval to deny the permit under pressure from residents, Lightfoot and the federal government, company attorneys argued.

Company attorneys pushed to subpoena Arwady, but Ex determined there was no need for her to testify. Nothing in her denial letter indicated “undue influence from an outside source,” Ex said in January.

Prior permits allowed the facility to be built with the caveat it could not operate unless the final permit was granted. Southside Recycling moved forward anyways, spending tens of millions of dollars to build the facility based on city officials’ assurances of an operating permit, company officials testified.

City officials showed substantial support for the plans to open Southside Recycling for years prior to the final permit’s denial.

Former Mayor Rahm Emanuel’s administration got the ball rolling on General Iron’s exit from Lincoln Park, Lightfoot’s administration agreed to help the company move to the Southeast Side in 2019 and the Zoning Board of Appeals approved plans for the scrapper that same year.

The city’s support spurred Southeast Siders to file a civil rights complaint, which led federal officials to determine the city discriminated against Black and Brown residents by moving polluters into their neighborhoods.

Lori Lightfoot’s administration later settled with the federal government and agreed to reform its policies with an eye toward environmental justice in the final days of Lightfoot’s term.

The health department also quietly issued the first of two permits in 2020, breaking a promise to notify residents as permit reviews moved forward.

An April 2021 draft document presented in court by Southside Recycling’s attorneys apparently showed Arwady’s comments to be made upon the final permit’s approval, suggesting the city was ready to issue the permit just weeks before officials paused the review, according to the Sun-Times.

Company attorneys said Ald. Susan Sadlowski Garza (10th) shared that draft with the company, as well as other internal communications between city officials, the Sun-Times reported. Ex denied the company’s bid to enter the draft as evidence.

Reserve Management Group employees and consultants testified earlier this year their East Side facility would have featured significantly stronger pollution controls than the troubled Sims Metal Management facility in Pilsen.

Sims continues to operate as the company seeks the same permit for which Southside Recycling was rejected. Those situations are not the same, as Sims applied to extend an expired permit and not a new permit like Southside Recycling, Ex wrote in his decision.

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