City Denies Operating Permit For Controversial Metal Shredding Plant On Southeast Side, Citing 'Unacceptable Risk'

CHICAGO (CBS) -- City officials have denied an operating permit for Southside Recycling, a controversial scrap metal recycling facility on the Southeast Side, after deeming it poses an "unacceptable risk" to health and air quality in the surrounding community.

Reserve Management Group (RMG), the scrap yard's parent company, needed a final permit from the Chicago Department of Public Health (CDPH) to begin operating the $80 million facility near 116th Street and the Calumet River, which was completed at the end of last year.

But CDPH announced Friday that it had denied RMG's permit application, which Mayor Lori Lightfoot put on hold last May, after President Joe Biden's top environmental official told her in a letter that he has major reservations about the car shredding plant moving to the Southeast Side, raising civil rights concerns about the move from a predominantly white neighborhood to a mostly Latino community already overburdened with pollution.

In a statement, city officials said their review of RMG's permit application "found the potential adverse changes in air quality and quality of life that would be caused by operations, and health vulnerabilities in the surrounding communities - together with the company's track record in operating similar facilities within this campus - present an unacceptable risk."

"We are committed to protecting and enhancing the health, environment, and quality of life for all Chicagoans. In an already vulnerable community, the findings from the HIA combined with the inherent risks of recycling operations and concerns about the company's past and potential noncompliance are too significant to ignore," said CDPH Commissioner Dr. Allison Arwady.

"We're excited. We're elated. We're filled with joy," said Pastor Richard Martinez. "We have been praying for His divine intervention."

Prayers were answered Friday for Martinez, who is no stranger to protecting his community. He lives near the proposed site, and about two years ago, he sued the city – accusing Mayor Lightfoot of environmental racism.

"Bad corporate neighbor, bad corporate citizen, not a good track record, not a good history in Lincoln Park – and so now you want to come to the East Side and Southeast Side," Martinez said.

He added that it was "absolutely" refreshing to know that he and other community activists have been heard.

"Even though we weren't necessarily invited to the table, we still had a say," Martinez said.

Shortly after word came from City Hall, dozens celebrated the victory outside the Mayor's office.

"Enough is enough," Marcie Pedraza of the Southeast Environmental Task Force said at the rally. "We are tired of being dumped on."

"Shame on Lori Lightfoot for making us fight this hard," said Kim Wasserman of the Little Village Environmental Justice Organization.

Meanwhile, RMG officials blasted the decision to deny the company a final permit for the metal shredder, saying other experts had concluded the facility would be safe, and noting state officials had already issued a state air permit for the site.

"We have built the most environmentally conscious metal recycling facility in the country, but politicians and government officials have ignored the facts and instead were cowed by persistent false narratives and misinformation aimed at demonizing our business. What should have been an apolitical permitting process was hijacked by a small but vocal opposition that long ago made clear they would unconditionally oppose this facility, facts and science be damned. Politics, not environmental or public health protection, is the only reason that the city denied Southside Recycling's permit to operate," the company said in a statement.

RMG said it plans to pursue a lawsuit against the city, predicting it will cost taxpayers "hundreds of millions of dollars in damages."

"Aside from the litigation, this decision is a clear message to any businesses or industries that might be considering expansion or investment in Chicago: the city is not a reliable partner and is not open for business. Chicago has loudly stated that politics – not signed agreements, its own laws and regulations, nor actual protection of human health and the environment – is the ultimate consideration in all matters," the company said.

However, city officials said an eight-month Health Impact Assessment recommended by the U.S. Environmental Protection Agency found the Southeast Side already has among the highest rates of chronic conditions such as coronary heart disease and chronic obstructive pulmonary disease among Chicago adults, and rank among the most vulnerable populations in Chicago to air pollution, based on underlying health and social conditions.

The same study also found the Southside Recycling plant would only exacerbate existing negative impacts from past and current industrial operations on the local environment, health, and quality of life for Southeast Side residents.

The city also cited a lengthy history of pollution problems at RMG's old General Iron scrap yard in Lincoln Park, which RMG shut down at the end of 2020 as it prepared to relocate the operation to the Southeast Side, under the new name Southside Recycling.

General Iron had a history of violations with the Illinois Environmental Protection Agency and Chicago health inspectors for emitting toxic fluff and excessive air emissions. For years neighbors of General Iron's scrap yard in Lincoln Park had called the plant an environmental dumping ground.

After Lightfoot put the permit approval process on hold last year, RMG filed a $100 million federal lawsuit against the city, accusing Lightfoot of breaking an agreement to help the company move its operation from Lincoln Park to the Southeast Side.

A judge tossed the lawsuit, rejecting the claim that the city is violating the company's constitutional rights.

City officials said RMG will be allowed to operate other previously permitted businesses at the Southside Recycling site, but cannot operate its metal shredding facility.

The HIA summary report is available on the CDPH HIA website. City officials said it will be updated by the end of the month with all final data.