Appeals Court Upholds Rule Allowing NJDEP to Waive Compliance with Its Own Regulations

by McCarter & English, LLP

On March 21, the Appellate Division of the New Jersey Superior Court issued an opinion rejecting a challenge by environmental groups to new rules of the New Jersey Department of Environmental Protection (DEP) that authorize the agency to waive the substantive requirements of its regulations in certain limited circumstances.  In re N.J.A.C. 7:1B-1.1 et seq., No. A-3514-11 and A-4098-11(consol.), slip op. (N.J. App. Div. Mar. 21, 2013).  However, while sustaining the Waiver Rule, the court invalidated certain DEP guidance documents and forms as improperly establishing substantive requirements that could be imposed only through notice and comment rulemaking. 

The Waiver Rule, established following a 2010 Executive Order issued by Governor Christie,  provides that DEP may waive compliance in limited circumstances in which (i) regulations conflict, (ii) a regulation is unduly burdensome in a specific application, (iii) a net environmental benefit would be realized or (iv) a public emergency has been declared,  provided the waiver will not be inconsistent with the DEP's core mission to protect human health and the environment.  The rule identifies thirteen categories of regulations that cannot be waived, including numeric or narrative standards protective of human health, the designation of endangered species, certain regulations pertaining to the funding of environmental cleanups, requirements imposed by a federal or state statute and regulations where a waiver would not be consistent with a federally delegated environmental program.  The Waiver Rule became effective August 1, 2012.

Environmental groups argued the Waiver Rule was invalid without express legislative authorization.  However, the court held the authority to waive rules is implicit in a legislative grant of broad rulemaking power.  The court also rejected the argument that the Waiver Rule did not contain adequate standards to govern when a waiver would be granted.  The court noted that the standards incorporated in the rule -- such as whether compliance costs greatly outweigh any resulting environmental benefit -- were criteria already routinely applied by the DEP in specific regulatory programs and were well understood by interested parties.  As to the vagueness of the standards, the court observed that these concepts, by their nature, defy precise definition.

However, the court invalidated several "guidance documents" and the standardized submission form developed by the DEP and posted on its website.  Because these guidances and forms had the effect of defining the nature and scope of the evidence that all parties must present in support of a waiver request, the court found they have a substantive impact on the regulated community and the public in general and could be adopted only through notice and comment rulemaking.   This aspect of the court's decision may be among its most significant because other DEP forms and guidances arguably impose requirements not expressly found in adopted rules.   In light of this, the DEP may seek review of this ruling by the New Jersey Supreme Court. 

The actual significance of the process established by the Waiver Rule has yet to be demonstrated.  Of the eighteen waiver requests submitted to the DEP (as posted on its website) in the seven months since the program has been in effect, not one has been granted.  Two requests have been denied, and the rest have either been rejected as incomplete or are still pending.  Although the Waiver Rule has the potential to ameliorate unduly harsh effects that may be associated with a strict regulatory regime, its usefulness in advancing this goal ultimately depends on the DEP's willingness to grant prompt waivers in appropriate circumstances.  This remains to be seen.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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