The company wants to move its scrapyard from Lincoln Park to the city's Southeast Side.
The EPA sent a letter to the city of Chicago, telling the city that it should stop the permitting process over environmental concerns.
Groups fighting General Iron's move to the Southeast Side are claiming victory.
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"The people in this community were finally heard, and we need to work so this never ever happens again, that no other company gets this close to approval," said Olga Bautista with the Southeast Environmental Task Force.
"I'm still reeling from the surprise. It's good news, and it's also at the same time bittersweet," said Breana Bertacchi, environmental activist.
Beratcchi and Oscar Sánchez live near the proposed site at 116th and Avenue O. They're among the community members who have spent months trying to stop the recycling plant's move. They even participated in a 30-day hunger strike earlier this year.
They're concerned about the potential for dangerous pollutants being released into the air.
"We don't believe they're going to be a good neighbor to our community," said Sanchez.
Sánchez said he grew up going to school just down the street from the proposed site and welcomes a halt.
"It is so surreal to me. I don't know how to find the words because we worked so hard for this, we put our life on the line for this," said Sanchez.
General Iron's new owners released a statement, saying in part:
"The advanced pollution control system at Southside Recycling is creating a new industry standard that will serve as a national model for capturing and controlling emissions from large recycling facilities."
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Lightfoot said in a statement that she has directed the Chicago Department of Public Health to start an environmental study, also at the EPA's request.
"The City shares the U.S. EPA's commitment to environmental justice and public health, and we look forward to partnering with them to conduct a fair, thorough and timely health impact analysis to inform our future decision-making," Lightfoot said.
A new cumulative impact ordinance will also be drafted, requiring an assessment of the additional environmental impact of a potential industrial business' operations on the surrounding community, Lightfoot said.
Southside Recycling said in part that the "U.S. EPA knows this is in stark contrast to other metal shredders, including the only other one in Chicago that continues to operate in Pilsen but has none of the air pollution controls and enclosures that Southside Recycling has. Delaying Southside Recycling's permit will only exacerbate the environmental justice burden in Pilsen. And, after carefully reviewing the charges of environmental racism, a federal judge concluded there was no evidence to support the baseless allegations."
The following is a response from Southeast Environmental Task Force, Southeast Side Coalition to Ban Petcoke, People for Community Recovery, NRDC (Natural Resources Defense Council), Southeast Youth Alliance, United Neighbors of the 10th Ward, Bridges/Puentes, Southeast Side Educators for Environmental Justice, George Washington High School Student Voice Committee, Alliance of the SouthEast:
"Chicago is filled with communities that are vibrant and full of life, but have suffered from the city's environmentally racist policies that turn neighborhoods into sacrifice zones. The City must reform policies that have left Southeast Side residents to fend for ourselves as dangerous pollution and industrial facilities continue to be directed towards our homes, schools and parks.
"It's past time that the city began addressing the cumulative impacts of pollution on communities of color that are overburdened and include the community in the process of making these zoning policies that have great impacts on our lives.
"Our struggle for environmental justice is a fight against racism and its impacts on our health and communities. As the U.S. EPA has recognized, it's no longer an option to continue to wait for the segregation and health disparities to deepen, the Lightfoot administration must act now, not just to protect the health of people on the Southeast side, but to protect all Chicagoans.
"Our health shouldn't be sacrificed so that industry can make a profit. Our community should receive the same opportunities, resources, and protections that every other community receives across Chicago."