Effective over a year ago, on Aug. 1, 2012, the New Jersey Department of Environmental Protection (NJDEP) adopted a regulation providing the authority to waive strict compliance with certain of its rules and regulations. Under the “Waiver Rule,” N.J.A.C. 7:1B, an applicant may request a waiver of the NJDEP’s rules on a case-by-case basis under limited, proscribed circumstances.

There are, however, prohibitions on the NJDEP’s authority to grant waivers, including the following:

any state or federal laws, including federally delegated programs or federally enforced programs pursuant to a state implementation plan;

rules that are part of a collaborative program involving multiple states or jurisdictions where the waiver is inconsistent with New Jersey’s participation in the program;

rules concerning air emissions trading programs;

rules establishing numeric or narrative standards of human health;

rules designating endangered species or habitats;

rules regarding remediation funding sources or NJDEP fees;

rules providing for certain licensing requirements;

rules providing for public participation or public notices; and

any provisions of the Waiver Rule itself.

Below is a discussion of the Waiver Rule process, the types of waiver requests that were received in the first year of the program, and the NJDEP’s decisions in processing these requests. These decisions were the subject of litigation challenging the validity of the rule and the NJDEP guidance posted in its website.

Four Bases To Request a Waiver

In order to request a waiver, the applicant must establish that at least one of the following bases exists to justify the waiver:

(1) compliance with the rule would be unduly burdensome, which requires the applicant to demonstrate actual, exceptional hardship or excessive cost;

(2) there exists an alternative with a net environmental benefit, which requires the applicant to demonstrate that the benefit to the environmental good outweighs the detriment protected by the rule sought to be waived;

(3) there are conflicting rules such that compliance with both rules would be impossible or impracticable; or

(4) there is a federal or state declared public emergency, which requires the applicant to show that the emergency impacted the applicant’s ability to strictly comply with the rule. N.J.A.C. 7:1B-2.1(a).

As set forth in the regulations, the NJDEP evaluates waiver requests based on a specific set of criteria. N.J.A.C. 7:1B-2.2(a). In particular, the NJDEP confirms that the applicant provided sufficient public notice of the waiver request and information to support said request, a detailed statement describing the circumstances justifying the need for a waiver, a statement specifying if the applicant caused or contributed to the circumstances resulting in the waiver request, and a statement explaining how the waiver is consistent with the NJDEP’s core missions. In addition, if the request is based on the net environmental benefit basis, then the applicant must include an explanation of how the waiver will impact the remediation and/or redevelopment of a contaminated site or expansion of existing development. If the request is based on the public emergency basis, then the applicant must include a statement explaining how the waiver is a reasonable and effective response to the public emergency.

Status of the Waiver Rule Challenge

In the Courts

Opponents of the Waiver Rule continue to challenge its validity in the courts. Many environmental groups are concerned that the Waiver Rule will render the core mission of the NJDEP moot by weakening environmental protection and providing too much latitude to the regulated community to secure waivers of environmental protection rules. In In re Adoption of N.J.A.C. 7:1B et seq., a coalition of a few dozen organizations challenged the Waiver Rule, arguing that it is vague and open to abuse because of the lack of process transparency and standards to guide the NJDEP’s implementation. The Appellate Division upheld the validity of the Waiver Rule, reasoning that the authority of the NJDEP to promulgate rules implies the ability to waive those rules under certain circumstances. However, the court invalidated the requirement that an applicant use the guidance documents posted on the NJDEP website in its application submittal. The Appellate Division disagreed with the challengers’ concerns regarding the NJDEP’s failure to follow the Administrative Procedures Act process by providing guidance, noting that the guidance documents are unnecessary because the Waiver Rule itself contains adequate standards and safeguards for the NJDEP’s discretion and application.

The challengers’ petition for certification to appeal the Appellate Division’s decision is currently pending before the New Jersey Supreme Court. A legislative bill to block the Waiver Rule is also being considered in the New Jersey Senate. For now, the Waiver Rule continues in full force.

Waiver Applications Submitted to Date

Despite initial fears that the Waiver Rule would open up the floodgates for routine or customary waiver requests, the NJDEP has received only 33 waiver applications in the past year. (The waiver applications and their review status are posted on the NJDEP’s Data Miner website.) Moreover, the NJDEP has yet to approve any waiver requests. The department has denied five applications, rejected 13 applications for procedural deficiencies, and accepted 15 applications for review. Of the five applications that were denied, three involved land use projects and coastal zone development, one involved the decommissioning of a well, and one related to alternative remedies for an active site remediation. With respect to the 15 applications that the NJDEP accepted for review, 12 involve land use programs, particularly with respect to development in coastal zones (i.e., installation of docks and waterfront structures) or flood hazard areas, one involves solid waste facility rules, and two assert conflicts with the Flood Hazard Area Control Act rules regarding active site remediations.

Nearly one year after the adoption of the Waiver Rule, the emerging trend demonstrates that concerns about weakening environmental protection and creating loopholes for powerful industrial polluters are not as prolific as originally feared. None of the applications to date have been granted, bolstering the NJDEP’s position that the Waiver Rule is narrow in scope and curtailing fears about abuse of discretion. The majority of the applications under review request waivers relating to land use and residential development, not contaminated commercial sites where environmental protection is particularly sensitive. Furthermore, the two applications pending review and involving properties undergoing active site remediations request waivers under the Flood Hazard Area Control Act rules, not rules relating to the Site Remediation Reform Act, the Industrial Site Recovery Act or the New Jersey Spill Act. The application that was denied focused on the conflict of capping to control stormwater runoff on a contaminated site, with the floodplain regulations prohibiting the filling of floodplains, which would render the ability to complete a remediation impossible.

The future impact, and validity, of the Waiver Rule remain to be seen as the public awaits the New Jersey Supreme Court’s decision on certification and more applications are submitted and reviewed by the NJDEP. There is no timeframe within which the NJDEP must review or approve the applications. The delay in approving any applications may be intentional, pending the outcome of the litigation and the fate of the legislative bill. Most of the waiver applications have invoked the unduly burdensome basis, and, to a lesser extent, the net environmental benefit or conflicting rules bases, to justify a waiver. With the exception of one application concerning the decommissioning of a well supplying public drinking water, which the NJDEP denied, none of the applications have requested a waiver based on the public emergency basis. This is surprising in the wake of Hurricane Sandy, as the application needs to be submitted shortly after the emergency. The NJDEP has, however, issued a “relaxation” of the coastal area requirements in order to allow rebuilding to the same footprint as before the storm without extensive NJDEP review.

Perhaps the full impact of the Waiver Rule remains to be seen, but the lackluster initial year has been far from the expectations of both the regulated community and the challengers. Businesses had hoped that the Waiver Rule would cut red tape and allow business to expand in our challenging economy.•

Next Week…

Constitutional Law