Businesses will reconsider locating in Chicago if courts ultimately find City Hall acted legally when it allegedly bowed to political pressure and changed the rules in the middle of the game to use "public health" concerns to justify denying a permit that would have allowed a new Southwest Side metal recycling center to open, warned a collection of Illinois business advocacy groups in a new court filing.
That petition was accompanied by a copy of the so-called amicus brief, or friend of the court brief, the groups intend to file with the judge, in an attempt, they said, to draw his attention to the real world consequences of siding with the city in the case.
"This case speaks to whether a single City of Chicago administrative agency, after the approval of many other agencies and the investment of tens of millions of dollars in reliance on those agencies' approval, can, without proper authority, arbitrarily decide not to issue a permit," the advocates wrote. "... Acceptance of CDPH's arguments would approve a massive and unlegislated increase in city agency power, and would shake the confidence of businesses across the country in the feasibility of making capital investments in Chicago."
Chicago City Hall and the company, known legally as General III LLC, which does business as Southside Recycling, have faced off in court since 2022, as the company seeks to compel the city to allow it to open the facility it says the city had all but approved, but then abruptly opposed, allegedly due to pressure from activists and officals within the Biden administration.
For more than six years, Southside Recycling has sought to open the new metal recycling plant on 175 acres in Chicago's South Deering neighborhood.
The company had operated a recycling plant for decades on the city's North Side, until the city under former Mayor Lori Lightfoot pressed the company to close that plant over pollution concerns.
In court filings since, Southside Recycling said the city instead supported an alternative plan to build a better, more modern and less polluting facility on the South Deering site.
The company says it invested more than $80 million in the project, in reliance on the city's assurances and with the city's guidance. However, in early 2022, the city suddenly reversed itself, rejecting the company's request for a so-called Large Recycling Facility permit.
The city's former public health commissioner, Allison Arwayd, said that decision was based on the results of a so-called Health Impact Assessment (HIA), which relied heavily on principles of so-called "environmental justice," as it would allegedly cause "adverse changes in air quality and quality of life ... in the surrounding communities."
Southside Recycling, however, has contended in legal proceedings that Arwady acted outside the scope of the authority granted to her by city ordinances and the law. They argue the city's own ordinances and rules don't allow CDPH to use such "environmental justice" criteria when evaluating such permit requests.
The company further has argued the decision was political, as it was rendered to appease influential local anti-development activists with powerful allies not only in Chicago, but within the White House.
Southside Recycling has sued the city, demanding the city pay $100 million, if the facility ultimately never reopens. That case, however, has been on hold, as the company also directly appeals the permit denial.
At the city's Department of Administrative Hearings, Administrative Law Judge Mitchell Ex sided with the company, agreeing the city’s use of the HIA amounted to “an unauthorized permitting requirement or standard,” illegally made on the fly and never formally published for public knowledge.
The city, now under Mayor Brandon Johnson, chose to appeal ALJ Ex's decision and take the matter to Cook County Circuit court. In that appeal, the city argued CDPH should be able to review permitting decisions subjectively, on a "case-by-case basis." The city further argued its Department of Administrative Hearings can't use city ordinances to determine if the city followed its own rules when approving or denying a permit.
The case remains pending before Judge Walker.
In the meantime, the business advocacy groups said they wished to support development of the project, and more broadly to support the principle that city officials cannot be allowed to simply make up rules as they go when evaluating development permit requests, which is what they say happened in this case.
They, like Southside Recycling and ALJ Ex, noted the use of the HIA to evaluate the recycling center's permit request was never authorized by any city ordinance or properly enacted regulations, but was merely used by CDPH to justify its political decision.
They assert siding with the city in this case would grant agencies like CDPH new broad powers that would otherwise be considered unconstitutional to invent new rules in the middle of the process, even if based on nothing more than "political winds."
"If CDPH's position is approved, businesses will be unable to rely upon the published Municipal Code and interpreting rules when interacting with any administrative agency of the City, and will further be unable to reply on direct representations from that agency.
"This will make it difficult or impossible for businesses to make investments in Chicago, and at a minimum disincentivize investments, particularly in heavily regulated industries."
These kinds of industries can include essential, core elements of the national and regional economy, including manufacturing.
Upholding the city's position, they said, would lead to "absurd results," in which the city is free to deny permits for any reason or no reason, so long as they claim the denial is related to "public health," but can never be challenged on appeal.
"CDPH's argument ... creates an incredible burden on businesses because businesses seeking to operate in Chicago will be unable to reply on any ordinance or rule guidelines when preparing permit applications or when interacting with the City's administrative agencies," the business advocates wrote in their proposed brief. "They will be left to guess how an agency will use its discretion when reviewing permit applications - discretion that CDPH, for its part, seems to argue is limitless so long as it has any relation to 'public health.'"
Judge Walker has not yet ruled in the case.
The Illinois Chamber, Illinois Manufacturers Association and other business advocacy groups are represented in the matter by attorneys Matthew C. Wolfe and Dylan P. Tilbury, of the firm of Shook Hardy & Bacon, of Chicago.