Chicago City Hall
CHICAGO — Chicago's city public health commissioner can use criteria and reasons not spelled out in the law to block building permits for the development of a new Southwest Side metal recycling facility and other kinds of projects the commissioner believes are harmful to public health, a state appeals panel has ruled.
On Nov. 6, a three-justice panel of the Illinois First District Appellate Court sided with the city of Chicago in a decision that could potentially spell the end of a $100 million project and which business groups have warned will generate lasting harm to Chicago's business reputation and to the city's economy and taxpayers.
In the ruling, the three justices said a Cook County judge was right to conclude the Chicago Department of Public Health has broad powers under city ordinances to intervene on a case-by-case basis into development proposals, and use criteria to block the projects that aren't written out in any city ordinance or regulation, even after the project has satisfied all of the city's permitting rules and requirements.
They further said judges should defer to the CDPH's own interpretation of its powers when determining if the CDPH exceeded its powers under the law.
The decision was authored by Justice Aurelia Pucinski, joined by Justices Michael Hyman and Timothy Evans.
Following the ruling, developers of the recycling facility said they disagreed with the ruling, and intended to appeal the case to the Illinois Supreme Court, as well as to move forward with their $100 million lawsuit against the city of Chicago.
The case centered on the city's abrupt and allegedly politically-motivated rejection of a plan by the company known as General III LLC, which does business as Southside Recycling, to construct a 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.
Court filings showed the city instead supported an alternative plan to build a more modern and less polluting recycling plant on the South Deering site. Citing assurances and support from city officials, the company said it invested more than $80 million to develop and build the project.
However, in early 2022, the city suddenly reversed its position on the project, rejecting the company's request for the needed operating permit to open the plant.
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 under former Democratic President Joe Biden.
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.
The company appealed that decision. In the first stop in that process at the city's Department of Administrative Hearings, a Chicago Administrative Law Judge 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.
However, the city appealed that decision to the Cook County Circuit Court, where Associate Judge Allen P. Walker said the city health commissioner is authorized under the law to use whatever criteria she wishes to deny projects, as the city ordinances give her "the authority to request 'any other information' from permit applicants and enforce public health regulations ... to address issues and make informed judgments as they arise during the permit application process."
"... 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," Judge Walker wrote in his August 2024 order.
The company again appealed, and more than two years later, the First District court held hearings in October and rendered its decision just weeks later, also siding with the city.
Pucinski and her colleagues agreed that Walker was correct to determine the health commissioner can use the HIA to justify a permit denial, even if it the law doesn't specifically allow it.
They said city ordinances specifically gave the commissioner "power to 'encourage and conduct studies, investigations and research' that 'the Commissioner may deem advisable and necessary.'"
"... We conclude that use of the HIA fell within the scope of the CDPH’s authority. We recognize that none of the relevant ordinances in the Code specifically uses the term 'health impact assessment' and that term does not appear in the Rules promulgated by CDPH," Pucinski wrote.
"Yet, we find (as did the circuit court) that the HIA falls within the broad scope of the CDPH’s enumerated powers and overall mission, as described in the Code. That is, we think the use of an HIA falls within the scope of acts the Commissioner may find 'reasonably necessary' to effectuate the powers given under the relevant ordinances."
They further said neither outside influence from federal officials nor assurances and promises from city officials in persuading the company to shut down at one site and build in another matter in deciding whether courts should force the city to issue permits over the objections of the health commissioner.
And, they said, the city's decisions to award all other building permits and lead the company to spend $80 million also do not mean the public health commissioner acted illegally.
"Although General III emphasizes that it obtained permits from the Zoning Board and other agencies related to the facility, we do not find this supports General III’s right to have the permit granted by CDPH," Pucinski wrote. "This is because the CDPH is uniquely tasked with matters of public health, including the power to issue permits for recycling facilities and to make related rules.
"The determinations of other agencies did not bind the determinations of the CDPH as to whether a permit should be granted to allow a large recycling facility."
"... We recognize that General III spent large sums of money, apparently in expectation that it would be permitted to operate the planned large recycling facility. Yet, we decline to accept that the mere expenditure of sums before a permit is granted somehow creates a property right, at least without any positive assurances that the permit would be granted," Pucinski and her colleagues added.
In response, Southside Recycling pledged to not abandon its court fight, maintaining its position that the commissioner invented new rules in the middle of the game to deny the permit and keep them from opening their new recycling plant.
In addition to the litigation pending against the CDPH to force the issuance of its operating permit, the company has also filed a lawsuit demanding the city pay at least $100 million for allegedly misleading the company into abandoning its former site and investing in the new one.
In a statement, the company said: "We respectfully disagree with the Appellate Court’s decision. The opinion fails to give appropriate deference to the administrative law judge, who vacated the City’s permit denial after carefully considering the evidence and testimony presented during a nine-day hearing in 2023.
"The record clearly established that the facility met the City’s stringent requirements for a permit. Instead, the City invented new undisclosed subjective standards to deny the permit, which the ALJ found was improper. The City also ignored the conclusions of its own independent experts, who found there would be no adverse public health impact from the facility.
"Our environmentally friendly state-of-the-art facility meets all applicable City, state, and federal environmental and public health standards. We also demonstrated that it can operate safely while providing significant metal recycling benefits to the community.
"We remain fully committed to obtaining the operating permit, serving the recycling needs of the City, and supporting our Chicago-based employees and local suppliers. We will continue to pursue all legal options, including seeking review by the Illinois Supreme Court. We will also continue to pursue our separate pending lawsuit for substantial damages."
As part of the court proceedings, the company and business groups, including the Illinois Chamber of Commerce, warned an ultimate decision in favor of the city would harm Chicago’s economy and leave industry and other businesses to think more carefully about investing big money on projects in the city.
