Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Southside Recycling filed a federal lawsuit on Monday against the City of Chicago for failing to issue the final permit for its shredder operation, following a recent unexpected delay.


The setback came when the overdue pending permit was put on hold again, by Chicago mayor Lori Lightfoot citing a May 7 request from the US Environmental Protection Agency asking the city to stop the permitting process.


The RMG lawsuit calls for more than $100mn in damages from the city due to the delay and requests the court to bar the city from interfering with Southside’s lawful use of its property.


Southside Recycling owned by Reserve Management Group (RMG), cites having met city requirements as well as a written contract from September 2019 when the city promised to collaborate with RMG in reaching a speedy and effective switch to the new site, while offering sufficient help with the administration and review for the license and permit applications.


RMG has built an environmentally friendly metal recycling facility in the US situated in the Southeast Side of Chicago, as evidenced by company’s chief executive officer, Steve Joseph, during a site tour on Monday with Davis Index.  


The recycler trusted the city’s assurance in the agreement when it erected the new $80mn facility on its 175-acre property on the Calumet River, following state approval received in June 2020. RMG also relied on promises covered in the deal with the city when it ended operations at the end of 2020 at the previous site. 


Since then, RMG noted in its lawsuit, the city has violated the September 2019 agreement more than once along with its rules and guidelines. The claim maintains that the city unlawfully failed to issue the final required permit for the facility to commence operations, despite recognizing for months, that the recycler has met all requirements. 


The final phase in the broad two-year zoning, rulemaking and state and municipal permitting process is a large recycling facility permit from the Chicago Department of Public Health (CDPH) that is already three months overdue, Joseph told Davis Index.


According to Joseph, RMG had accepted the business risks and the investment needed to design and build a facility that complies with all city, state, and federal standards when they announced the project nearly three years ago. He added that RMG had complied with all these norms to protect public health and the environment. 


Joseph continued that the one risk the company did not consider was the city casting aside its rules and agreement and suspending the permit review without legal justification despite the scrap yard meeting all its requirements. This left RMG with no option but to file a lawsuit to protect its business and stakeholders.


RMG’s filing with the court also suggests that the city delayed permit issuance due to certain community groups and environmental justice advocates, who have undertaken opposition, despite the facts or evidence.


The delay will likely impact other shredder operations, such as Sims Metal Management in Pilsen, regarding environmental controls on its shredder. Additionally, the delay Is harming other stakeholders, financially impacting small scrap metal businesses and individual recyclers, in the area who are receiving approximately 30pc less pay for recyclable material as compared to what would be paid out in a normal, competitive market. 

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