General Iron’s owner sues city over permit holdup, seeks more than $100 million

The owner of a controversial metal-shredding operation proposing to open on the Southeast Side is suing the city in federal court for more than $100 million, claiming Mayor Lori Lightfoot’s administration broke a contract as it holds up a permit due to pollution concerns.

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Southside Recycling, formerly known as General Iron in Lincoln Park, wants a judge to order the city to issue a final permit that will allow the opening of a new facility at East 116th Street and the Calumet River. This month, Lightfoot said she would hold off on issuing the permit until an environmental assessment can be completed. That decision was made after a request from President Joe Biden’s Environmental Protection Agency administrator.

“The City’s failure to issue the permit to Southside Recycling has caused significant and potentially permanent damage to Southside Recycling’s business,” the company’s complaint said.

In September 2019, the Lightfoot Administration signed a two-page agreement with General Iron and Reserve Management Group, which was at the time proposing to buy the shredding operation and move it to the Southeast Side, where it has existing operations. That agreement laid out plans for the Lincoln Park facility to close, which it did at the end of 2020. RMG began building its new operation, which the lawsuit says cost $80 million. The company says it kept its part of the deal during the permit process and the city must abide by its own guidelines.

Community opponents of the new shredding facility have said that the move is a case of environmental racism because it moves a polluting business from a white, wealthy neighborhood to a Latino-majority community on the South Side.

“Neither the law nor the Agreement permits the City to abandon its obligations and instead cater to this false narrative,” RMG said in its complaint.

Tyler Pasciak LaRiviere / Sun-Times file

The company’s complaint makes a number of arguments that RMG has repeated for more than year as it addressed objections to the move to the Southeast Side and assured pollution controls were in place. But it also accuses the city of violating its constitutional rights as a landowner. By not issuing a final permit to operate on its own land, the lawsuit claims, the city “has effectively taken the value of RMG’s property without just compensation.”

“This illegal taking is particularly pronounced because the City lured RMG into permanently ceasing operations at the North Side facility and constructing a new facility on the Southeast Side,” the complaint said.

The city’s role in relocating General Iron to the Southeast Side is at the core of a federal civil rights investigation being conducted by the Department of Housing and Urban Development. That agency also had asked Lightfoot to withhold issuing a permit until its probe was completed.

In a response, the city said it “has engaged in a thoughtful, data-driven and robust process that took into consideration the application, supplemental materials, expert reports and studies, as well as input from residents who will be most directly impacted by RMG’s proposed new use. Given the recent directive from U.S. Environmental Protection Agency, we must work with them to conduct a further analysis of potential adverse environmental impacts. Because this matter is now being litigated, we will have no further comment.”

In a letter to Lightfoot earlier this month, EPA Administrator Michael Regan said the Southeast Side already faces too many environmental and health hazards and asked the mayor to hold off on issuing the permit. Almost 250 operations in the area are monitored for air pollution, he said, noting that more than 75 of them have been investigated for air pollution violations since 2014.

Community opposition has been strong and some residents activists even staged a month-long hunger strike.

In its complaint, RMG accused the city of bowing to political pressure rather than following its own rules and regulations.

Contributing: Jon Seidel

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