The New Jersey Waiver Rule is Upheld by Court

On March 21, 2013, the New Jersey Appellate Division upheld the validity of the New Jersey Department of Environmental Protection’s (DEP) controversial “Waiver Rule.”  The Waiver Rule generally allows the DEP to waive regulatory requirements under certain conditions.  The Waiver Rule was proposed by the DEP in March 2011, and was finalized in March 2012 with an effective date of August 1, 2012.

The Waiver Rule contains several conditions that must be met before the DEP will waive a regulatory requirement.  First, the waiver request must fall within at least one of four bases for obtaining a waiver: (a) the applicant faces conflicting rules; (b) strict compliance would be unduly burdensome; (c) a waiver would yield a net environmental benefit; or (d) a public emergency warrants the waiver.  Second, the waiver cannot fall within any of thirteen categories of DEP rules that cannot be waived (e.g., federal requirements cannot be waived).  Finally, the DEP applies several additional specific criteria in reviewing waiver requests.  The court indicated that one of the most significant of these additional criteria was to ensure that waivers are consistent with the DEP’s core mission.

A number of environmental groups challenged the legality of the Waiver Rule, claiming that the Waiver Rule was invalid because it exceeded the DEP’s authority and failed to provide adequate standards governing the implementation of the Waiver Rule.

The Appellate Division upheld the Waiver Rule.  The court first noted that it was required to defer to the DEP’s interpretations of the various statutes for which it is responsible.  Next, the court held that under those environmental statutes, the DEP has inherent authority to waive the requirements of its own regulations, provided that it does so in limited and well defined situations. This authority exists where waivers do not violate a statutory requirement or federal law and comport with the agency’s core mission.  Additionally, the agency must issue properly adopted regulations and provide clear standards for how the agency will issue waivers.  The court determined that the Waiver Rule met these requirements.  An appeal to the New Jersey Supreme Court is expected.

The court did invalidate the Waiver Rule guidance documents issued by the DEP.  Before the Waiver Rule became effective in August 2012, the DEP established several  guidance documents ostensibly governing the implementation of the Waiver Rule.  These  guidance documents were available on the DEP’s Waiver Rule webpage.  The court held that the DEP’s Waiver Rule guidance documents were invalid because they were effectively agency rules that had not been issued in compliance with the rulemaking requirements of the Administrative Procedures Act.  Nevertheless, the Waiver Rule remains in effect because the court found that the rule itself was detailed enough to stand on its own without the guidance documents.