Partner Marilynn Greenberg quoted in “NJ Enviro Waivers Get Green Light Despite Judicial Rebuke”

Partner Marilynn Greenberg quoted in “NJ Enviro Waivers Get Green Light Despite Judicial Rebuke”
Law 360

NJ Enviro Waivers Get Green Light Despite Judicial Rebuke

By Martin Bricketto

Law360, New York (March 21, 2013, 9:10 PM ET) -- A New Jersey appeals court found Thursday that the state Department of Environmental Protection improperly issued guidance documents for companies applying for exceptions from land use, site remediation and other regulations, but that won't stop the regulator from continuing to mull applications
under its controversial waiver program, attorneys said.

Holding that adequate standards remain in place for the so-called waiver rule, the 54-page opinion from the state's Appellate Division represents a significant win for those that fall under the department's regulatory umbrella, according to Dennis Toft, a co-chair of the environmental group at Wolff & Samson PA. And it's a victory for Gov. Chris Christie, whose 2010 executive order to combat red tape eventually spawned the DEP initiative.

“It clearly upheld the power of the DEP and other administrative agencies to adopt an omnibus rule allowing for waivers in appropriate situations,” said Toft, who represented amici in the case, including the American Petroleum Institute and New Jersey Chamber of Commerce.

A coalition of 28 environmental and labor groups challenged the rule shortly after its March 2012 adoption, claiming the DEP had exceeded its authority and failed to spell out standards to control agency discretion. Noting that agency regulations carry a presumption of validity in such disputes, a three-judge appeals panel rejected those concerns.

“This promulgation constituted a valid exercise of DEP's implied authority incidental to the extensive and expressly broad powers vested in the agency by the Legislature,” the published opinion said.

Among other restrictions, the rule doesn't allow waiver applicants to challenge anything set by federal or state law, standards protecting public health, or rules shielding endangered plants and animals.

A waiver applicant would have to demonstrate at least one of four criteria: that a public emergency calls for a waiver, that conflicting rules are adversely impacting the project or activity, that a net environmental benefit would be achieved, or that the regulations
impose an undue hardship.

“In those circumstances where a rule exists and the literal enforcement of the rule doesn't make sense and the regulated community realizes that, you now have an option that you didn't have before,” said Robert W. Bucknam Jr., who chairs the land use group at Archer &
Greiner PC.

In the appeal, opponents contended that most of the waiver criteria are too vague. But the court found that the rules contained enough regulatory standards to guide the DEP's review of applications.

And while the panel agreed that the department had violated notice and comment requirements under the state Administrative Procedure Act when it posted guidance documents on its website that should have undergone formal rulemaking, that wasn't enough to scrap the program for now.

“On this score, we reiterate our view that there are sufficient substantive standards in the waiver rules for applicants to submit, and the decision maker to evaluate, waiver applications,” the opinion said.

“Even without the guidance documents and FAQs listed on DEP's website, the waiver rules provide adequate standards and safeguards to inform the public and guide the agency as to how decisions will be made under the new rules,” it continued.

The court's opinion means the waiver program can move forward without the guidance, according to Andrew B. Robins, of counsel in the real estate practice at Sills Cummis & Gross PC.

“Unless the Supreme Court took up the case, [the opinion] would provide a level of confidence that the waiver rule is out there,” Robins said. “It was very clear that the DEP has very sufficient
authority to issue that rule, even without the guidance.”

On the guidance question, the court may have provided greater clarity about what should be subject to formal rulemaking, but the opinion may also limit the flexibility of agencies to spell out their regulatory positions, according to Robins.

“How that's going to be handled is a real issue in New Jersey,” Robins said. “I would hope that the Legislature takes up a reform of the APA.”

The court found that the online postings fell under the rulemaking requirement because they did more than help implement the waiver rule. They instead established “rules of the game,” according to the panel.

“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,” the opinion said. “As such, they form integral, substantive components of the waiver rules, subject to rulemaking in accordance with the APA.”

But the decision made sense to David Restaino, a Fox Rothschild LLP partner whose practice includes environmental litigation.

“I see it as the court's method of telling the DEP that you've got the authority, but you've got to be a little bit more careful about how you execute it. And if you do something that is going to smell like a rule, then you're going to have to make it a rule,” Restaino said.

DEP spokesman Lawrence Hajna stressed that the court's finding on the guidance documents was technical and doesn't disturb its ability to implement the waiver rule. He was unsure whether the DEP would consider further rulemaking based on the decision.

“We set the criteria to be very stringent,” Hajna said Thursday. “This process was designed to help people, but also, we weren't going to bend our environmental protections.”

The court may have found that the rule had enough meat on its bones to stand, but that doesn't mean a flood of waiver applications will follow, according to Marilynn R. Greenberg, a partner in the environmental and energy groups of Riker Danzig Scherer Hyland & Perretti LLP.

The “tightly bound” regulation makes those exemptions available in limited circumstances, and that's not going to change because of Thursday's ruling, she said.

“Not only is it not for everybody, it's hardly for anybody,” Greenberg said.

So far, the DEP hasn't granted any waiver applications, according to state records. Fourteen applications have been accepted for review, while two have been denied. A handful of other applications have been rejected as incomplete.

But the small number of applications so far hasn't allayed the concerns of waiver rule opponents, who don't appear to be backing down because of Thursday's ruling.

In statement, New Jersey Sierra Club Director Jeff Tittel called the waiver rule the “worst environmental rule ever proposed.” Its implementation would unwind environmental protections and lead to more pollution and flooding, he argued.

“We maybe disappointed by today’s ruling, but we will continue to fight on this rule, whether it is in the Supreme Court, through the Legislature, or each individually waiver when granted,” he said. “We are going to keep fighting because this is too important for the environment and the future of New Jersey — especially after Superstorm Sandy. This is just the end of Round 1.”

The cases are In re: Adoption of N.J.A.C. 7:1B et seq., case Nos.A-003514-11-T02 and A-004098-11-T02, in the Superior Court of NewJersey, Appellate Division.

--Editing by Kat Laskowski.