Judge overrules city denial of Southeast Side metal-shredder’s permit to operate

The owner of a Southeast Side car-shredding operation should have received a city permit to operate last year, an administrative judge ruled Thursday.

Administrative Judge Mitchell Ex made his ruling through a written order, reversing a decision by the city, after hearing appeals over the last year from lawyers for the business, Southside Recycling, formerly known as General Iron.

"According to the evidence presented during the hearing," Ex wrote, "Southside Recycling had met the [city’s] rules and requirements for an operating permit."

Mayor Brandon Johnson said he "stands firmly behind" the decision to block the controversial business from opening and vowed to "immediately appeal the administrative judge’s ruling."

The judge’s decision does not automatically give Southside Recycling a permit.

In early 2022, Mayor Lori Lightfoot’s administration denied the permit for the operation. The business owner argued that the mayor was bowing to political pressure after residents and activists protested the plan.

"The hearing exposed the city’s failure to follow its own rules and ordinances," Southside Recycling officials said in a statement, promising to "persist in our effort to operate."

Opponents of the metal-shredding operation argued that the addition of another polluting business on the Southeast Side was too much for an area already overburdened with poor air quality where residents suffered from a number of health conditions. One community organizer vowed to keep fighting and called the judge’s ruling "shortsighted."

Reserve Management Group acquired General Iron in 2019 after announcing plans to move the scrap metal operation from its longtime home in Lincoln Park to a rebuilt facility at East 116th Street along the Calumet River. Reserve Management waited until it had an agreement with the city and a timeline for shutting down the North Side operation at the end of 2020 and opening the new shredding facility in early 2021.

After Lightfoot paused the permit process in May 2021, Reserve Management sued the city. The company has taken its case to federal, state and local courts. A state lawsuit that seeks millions in damages for delaying the opening is pending.

"We will continue pursuing all of our rights and remedies," the company said in its statement, "to fully develop the facts supporting our claim for hundreds of millions of dollars in damages."

In the city administrative appeal, lawyers for the business argued that the company had followed rules that should have allowed it to receive the city permit. Ex agreed and said in his order that Lightfoot had halted the permit process and added steps, including a health assessment of the Southeast Side, without seeking City Council approval.

In administrative hearings that ran through January, city lawyers defended the decision, stating that Lightfoot’s Public Health Commissioner, Dr. Allison Arwady, had acted within her authority to block the business from opening. Ex’s ruling overturns that denial, though next steps for the company to obtain a permit are not clear.

In a statement, Southeast Environmental Task Force Executive Director Olga Bautista criticized the judge’s ruling.

"We’re going to keep fighting this shortsighted decision to put profits over people," Bautista said.

The relocation of General Iron from white, wealthy Lincoln Park to a Southeast Side community of color spurred a federal civil rights investigation that determined Chicago’s planning, zoning and land-use policies were discriminatory.

As she was leaving office last month, Lightfoot signed an agreement with the U.S. Department of Housing and Urban Development vowing to reform city policies and practices.

HUD officials had raised concerns about the permit denial being overturned. They insisted that Lightfoot enter into an agreement, a move that was also necessary to assure the city continued to receive tens of millions of dollars in federal funding every year.

Johnson’s administration will be responsible for following through on the terms of the HUD agreement, which include a comprehensive environmental review across the city.

Brett Chase’s reporting on the environment and public health is made possible by a grant from The Chicago Community Trust.