A Cook County judge says Chicago's city public health commissioner had the power to act beyond the limits of her power spelled out in the law to block a permit that would have allowed a new Southwest Side metal recycling center to open, even after prior approvals from other city reviewers had led the company to invest more than $80 million in the project, before the project was suddenly nixed by the public health commissioner.
Business groups and the company behind the project have warned the ruling will harm Chicago's economy and taxpayers.
On Aug. 16, Cook County Associate Judge Allen P. Walker ruled in favor of the city in the ongoing legal battle with the developers of the proposed Southside Recycling facility.
Chicago Mayor Brandon Johnson
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In the ruling, Judge Walker agreed with the city that the Chicago Department of Public Health has broad powers under city ordinances to intervene on a case-by-base basis into any development proposal it believes requires its review, even after the project has satisfied all of the city's other permitting rules and requirements.
Further, Walker said the ALJ had improperly used a "narrow interpretation" of city ordinances in reviewing the case, and should have deferred to City Hall's interpretation of its own rules and ordinances to decide the question over the scope of the authority granted to the commission of the CDPH to block development permits.
"The legislative grants of power to the Commissioner under the Chicago Environmental Protection and Control Ordinance, including the authority to request 'any other information' from permit applicants and enforce public health regulations imply the authority to address issues and make informed judgments as they arise during the permit application process," Walker wrote in his order.
"... Public officials, like the Commissioner of CDPH, have the discretion to act beyond explicitly listed statutory powers when such actions are in line with their regulatory responsibilities," the judge declared.
The ruling drew a sharp response from the developers of the proposed scrap yard, who warned the decision will empower city officials to use politics to decide whether developers can proceed with projects that otherwise satisfy all rules spelled out by law.
"The ruling effectively gives city officials carte blanche to inject politics, without any guardrails, into what is supposed to be an apolitical permitting process," a Southside Recycling spokesperson said in a statement following the ruling. "And it renders the city an unreliable business partner, regardless of the risk to taxpayers."
The company said it is likely to appeal the ruling, adding they "will continue to pursue all avenues to operate our best-in-class recycling facility."
Southside Recycling's statement echoes concerns stated by business groups, who had filed a brief in court in support of Southside Recycling and urging Walker to uphold the ALJ's decision.
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.'"
In response to the ruling, Southside Recycling also noted it intends to move forward with a separate lawsuit against the city, demanding the city's taxpayers shell out more than $100 million for denying its permit, allegedly in violation of the city's own rules and procedures.
That lawsuit has been on hold, as the company is continuing to pursue a court order forcing the city to grant the permit it needs to open the plant.
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 Arwady, 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.
While current Mayor Brandon Johnson has replaced Arwady, the city has continued to defend her actions, asserting it has the authority to use "public health" to terminate development projects that otherwise meet all other city rules.
In the first stop in the appeal process, the case proceeded into the city's Department of Administrative Hearings, where ALJ Mitchell Ex agreed 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.
Walker's decision overturned ALJ Ex's ruling. The case can be appealed to Illinois First District Appellate Court in Chicago and potentially to the Illinois Supreme Court.
Southside Recycling has been represented by attorneys Jeffrey A. Rossman, Terrence J. Sheahan and Gia F. Colunga, of the firm of Smith, Gambrell & Russell, of Chicago, formerly Freeborn & Peters.
Editor's note: This article has been revised from its initial version to clarify the identity of the law firm with whom the attorneys representing Southside Recycling are associated.