Overview

On March 21, 2013, the Superior Court of New Jersey upheld regulations setting forth when the New Jersey Department of Environmental Protection (“NJDEP”) may waive compliance with state environmental regulations. The Court held that promulgation of the regulations, entitled “Waiver of Department Rules” (“Waiver Rules”) was within NJDEP’s authority and contained sufficient standards to allow NJDEP to properly administer the program. The Court did, however, strike down the rules’ associated guidance documents as violative of the Administrative Procedures Act (“APA”). The ruling is a victory for the Christie administration, which has pushed to relax compliance with conflicting and unduly burdensome regulations seen as an obstacle to New Jersey’s economic development. The plaintiffs, however, reportedly have vowed to appeal to the New Jersey Supreme Court.

History of the Waiver Rules

The Waiver Rules, N.J.A.C. 7:1B-1.1 to 2.4, were proposed on March 7, 2011 by NJDEP in response to Governor Christie’s Executive Order No. 2 mandating state agencies to adopt rules permitting the waiver of state regulations under appropriate circumstances. The rules, as adopted by NJDEP begin that analysis with the consideration of four threshold requirements:

  1. Conflicting rules;
  2. Strict compliance with the rule would be unduly burdensome;
  3. A net environmental benefit [would result from the waiver]; or
  4. A public emergency.

N.J.A.C. 7:1B-2.1(a). Waiver, however, is unavailable for 13 prohibited circumstances, such as: where a federal or state statute or federal regulation imposes a duty; for rules concerning rare, threatened and endangered species designations; state regulations implementing a federal program; rules concerning the air emissions trading programs; and rules providing for a numeric or narrative standard protective of human health. N.J.A.C. 7:1B-2.1(b).

If the requested waiver satisfies the threshold criteria and is not otherwise prohibited as reflected above, it is then evaluated by the Department based on waiver evaluation criteria. N.J.A.C. 7:1B-2.2. The waiver is then made public and documented. N.J.A.C. 7:1B-2.3 to 2.4. The Waiver Rules provide that each waiver is a one-time grant only, is not precedential, and is non-renewing. N.J.A.C. 7:1B-2.4(b).

The Superior Court Decision

After NJDEP’s Commissioner adopted the rules on March 6, 2012, 28 environmental and labor organizations appealed NJDEP’s promulgation, arguing that: (1) promulgation of uniform waiver rules for all department regulations exceed NJDEP’s authority; (2) the rules lack adequate standards; and (3) the waiver rule guidance documents constitute de facto rulemaking in violation of the APA. Last week, the Court held that promulgation of the Waiver Rules was within NJDEP’s authority and the rules contained adequate standards. The Court struck down the rules’ associated guidance documents as violative of the APA.

NJDEP has the Authority to Promulgate Waiver Rules

As to the issue of whether an agency has the power to waive its regulations and/or adopt a uniform waiver rule, the Court held that the NJDEP’s authority to waive its own regulations is implicit in the Legislature’s delegation of broad rulemaking power to the agency. The Court cited NJDEP’s broad rulemaking powers and authority to coordinate the activities of the Department as support for the proposition that NJDEP has the power to enact “department-wide rules to deal with overlapping concerns or subjects.”

The Waiver Rules Contain Adequate Standards

The Court held that the Waiver Rules provided adequate standards and disagreed with Appellants’ assertion that the terms “net environmental benefit,” “conflicts” and “unduly burdensome” were vague and ill-defined. The Court cited the need for regulations to only be “sufficiently definite to inform those subject to them as to what is required” while being “flexible enough to accommodate the day-to-day changes in the area regulated.” The Court held that “with respect to all three of the challenged criteria or bases, the waiver rules incorporate regulatory standards that are routinely used by NJDEP to administer its various environmental programs… and are thus presumed to be understood by the regulated community.”

NJDEP Guidance Documents Violate the Administrative Procedures Act

However, the Court agreed with Appellants that NJDEP’s Waiver Rule guidance documents went beyond merely facilitating administrative implementation of the rules as claimed by NJDEP and contained new substantive requirements, such as developing internal processes and procedures to ensure consistency in waiver decision-making, creating a priority system for consideration of waiver requests, expanding transparency in noticing the receipt of applications for waivers and developing standardized submission forms. The Court noted,

these postings do more than implement the waiver rule; they establish rules of the game. By elaborating upon and clarifying the very standards by which applicants will be held and the outcomes of their applications determined, these newly posted measures will have a substantial impact on the regulated community as well as the public in general. As such, they form integral, substantive components of the waiver rules, subject to rulemaking in accordance with the APA.

As such, the Court invalidated the guidance documents but left intact the Waiver Rules themselves. Interestingly, the Court’s ruling calls into question the validity of the Department’s use of guidance generally to address the technical requirements of the site remediation program.

Conclusion

We will continue to monitor this case if, as we expect, it is appealed to the Supreme Court of New Jersey. If you have any questions or would like additional details about this ruling and its potential impact, you may contact members of Buchanan Ingersoll & Rooney’s Environmental Practice Group.