Environmental Regulation: Changing Direction without Losing Focus

Environmental Regulation: Changing Direction without Losing Focus
New Jersey Law Journal

State government leaders are showing signs that they are willing to relinquish a bit of New Jersey's role as a leader in environmental regulation, if it means improving the environment for Garden State business.

Legislation is moving forward in Trenton that would ease some of the administrative burden on industry, and Gov. Christine Todd Whitman has distinguished herself from her predecessors in her open call for reform of the way New Jersey has implemented environmental laws and regulations.

But even though change appears imminent, it is doubtful that New Jersey will abandon its traditional deep support of clean air and water and waste-disposal laws. Most notable in this regard is the Whitman administration's resolve to develop an "Environmental Master Plan."

By doing so, Whitman will be focusing renewed attention on one of the original emphases of environmental law: to protect land, wildlife and New Jersey's unique and valuable natural areas.

Industry critics have long argued that the New Jersey Department of Environmental Protection and Energy has abandoned its proper mandate in its drive to hold business to ever-more rigid and technical requirements. For example, business has claimed that, ironically, the permit-approval process has become so complex that it frequently delays manufacturers from getting pollution-control equipment into service.

A recent study by the Chemistry Industry Council of New Jersey demonstrates that the state lost 6,000 jobs between 1991 and 1992 in the chemical processing sector, traditionally the state's strongest industry. See "The Chemical Process Industry in New Jersey: Economic Impact Study," Chemistry Industry Council/New Jersey, Jan. 7, 1994.

Although it is difficult to trace all of the causes of this exodus, the council concludes that the cost of meeting New Jersey's environmental requirements is an important factor in driving business away. Nancy Lawson, a spokeswoman for the council, says, "Basically, manufacturers have found New Jersey a hostile place to do business, and that environmental protection needs to be balanced with rebuilding the economy."

For the first time in many years, industry finds itself with a supporter of its ideas on regulatory reform in the chief executive's office. "We are in a battle for jobs with Pennsylvania, the Carolinas and the Sun Bett every single day," said Whitman in her inaugural address. "One of the main reasons we've been losing that battle is state government. We must cut through the needless overregulation that drives businesses out of New Jersey and discourages new firms from locating here."

Gradual Escalation

Environmental regulation in New Jersey escalated gradually over the years as a logical result of the state's special ecology and economy. Home to both great recreational retreats and major industrial corridors, New Jersey sees a wide variety of pollution problems first-hand: ocean dumping, landfill pollution, oil spills and medical waste, many of them threats to the state's beloved beaches. The only other state to rival New Jersey in the breadth of its environmental law is California, which shares our status as both a coastal recreational and industrial center.

During Republican Gov. Thomas Kean's administration in the early 1980s, the state's economy was strong and polls indicated repeatedly that the environment was the primary concern of New Jersey's citizens. Under his successor, Democratic Gov. James Florio, who as a congressman had been one of the original sponsors of the national Superfund toxic waste cleanup law in 1980 (Public Law 96-510 (passed Dec. 11, 1980)), the trend for increasing environmental regulation continued. The staff of the then-Department of Environmental Protection was increased and the agency (now often called the DEPE) took on the additional responsibility of regulating public utilities.

Symbolic of the back-to-basics approach her administration is expected to embrace, Whitman plans to return the agency to its original name and mission (by jettisoning from the DEPE and then re-creating on its own the Board of Public Utilities).

She speaks of environmental programs in reference to their effect on the economy, which has superseded the environment as New Jersey's primary public concern. "We can protect the environment without taking years to process a permit," she promised in her inaugural speech.

In this atmosphere ripe for reform, state lawmakers are moving forward on ideas that would attempt to rein in New Jersey's environmental regulators. (See accompanying chart.)

By far the most important piece of legislation is S.231, sponsored by Sen, John Scott, R-Bergen, which seeks to justify, if not actually end, the practice followed for many years in a variety of environmental programs in New Jersey of adopting regulatory standards above and beyond the standards set by federal law.

Approved by the Senate on March 15, the bill would require that any agency that adopts standards higher than federal standards would have to certify the public policy reasons for doing so, and would have to detail the costs and benefits of such an action.

The legislation also would require a similar analysis, over a period of years, of every rule and regulation already in place which exceeds federal standards. Current regulations that are more stringent than their federal counterparts would be set to expire after five years, and state agencies would be required to re-adopt the rules in conformance with the new mandate to bring New Jersey in line with the federal standards.

According to Nancy Lawson of the Chemical Industry Council, this process would affect the entire regulatory structure in New Jersey. With some exaggeration, she adds that, typically, the federal government adopts a regulation, and New Jersey goes 10 steps beyond that. The Assembly's regulatory oversight committee now is considering its version of the measure, A. 1577.

Tackling Bureaucratic Delay

Other measures under consideration in the Legislature would address industry's long-standing complaints about bureaucratic delay. The so-called "permit-at-risk" measure (Assembly Committee Substitute A-899 (for A-441 and A-1116)) would allow a company to install pollution-prevention equipment without waiting for the lengthy state permit-approval process.

Manufacturers would be able to install equipment at their own risk; if a permit is not eventually approved by New Jersey environmental officials, companies would have to remove the equipment at their own expense. This proposal was approved by the Assembly on March 15 and is being considered by the Senate Natural Resources, Trade and Economic Development Committee.

Another bill, S-232/A-1521, would give a business a 30-to 60-day grace period to correct minor violations of environmental laws before it receives a fine. This legislation is in committee in both the Senate and Assembly.

Bills also have been introduced that would revisit the Pollution Prevention Act (A-903 and S-308), passed by the legislature only a few years ago, but implemented by the DEPE in a way that business says has been overly burdensome. For example, industry wants to get pollution prevention credit for so-called "out-of-process" recycling, which takes place when a company sends material to another company to be recycled because it lacks the facilities to recycle on site.

On most issues, ultimate responsibility for change rests with the Whitman administration. For example, it is still too early to gauge the effect of New Jersey's March 2 takeover of responsibility for the federal wetlands program (under Section 404 of the Clean Water Act.)

Some have argued that the DEPE is taking an overly tough view on regulating areas that previously were viewed as "exempt" by the federal government. Much depends upon how the administration carries out the program, as New Jersey is only the second state (after Michigan) to assume wetlands regulation responsibility.

The Whitman administration has presented some innovative ideas on how to reform New Jersey's much criticized regulatory regime. DEPE Commissioner Robert Shinn Jr. has discussed the idea of privatizing air and water pollution permitting, in order to eliminate thousands of hours of review by state personnel. Environmental consultants would be certified by the state and would become freelance deputies, explains Douglas Stuart, chief of the DEPE's Bureau of Environmental Evaluation, Cleanup and Responsibility Assessment, at a recent New Jersey Environmental Regulations conference.

They may be given the authority to sign off on various remediation projects and even to issue "no further action" letters when clean-up is complete. This proposal, however, may face some opposition due in part to the potential for conflicts of interest inherent in the state's reliance on engineers employed by regulated entities.

Another challenging environmental goal that the Whitman administration has discussed is the idea of making New Jersey self-sufficient in disposal of solid and hazardous waste, instead of having it export its waste. Self-sufficiency would require developing additional landfill space and resource recovery facilities, increased recycling and pollution reduction. In light of last month's U.S. Supreme Court decision invalidating waste flow rules, however, such a goal likely now will be more difficult to achieve. C&A Carbone, Inc. v. Clarkstown, 62 U.S.L.W. 4315, 1994 W.L. 183594 (May 16, 1994).

One creative approach to opening up additional landfill space is proposed by bill A-318, which passed the Assembly in April. This bill provides grants for local landfill mining demonstration projects to excavate recyclable materials.

Studies of these pilot projects will help determine if this is a cost-effective, workable solution to the waste problem. One can foresee numerous problems resulting from the reopening of closed waste facilities. Other steps on the Whitman administration's regulatory reform list may be easier to take, such as freezing New Jersey's water discharge permit fees, which are higher than those in other states.

Environmental Master Plan

Commissioner Shinn has discussed another idea that, at first glance, seems to run counter to his department's overall trend to reduce regulation. The DEPE is in the process of developing an Environmental Master Plan, which would involve cataloging the entire state based on data derived from surface water, ground water, plant and animal habitat and state preservation acreage.

It is an idea that, in the long run, may help reduce regulatory burdens; presumably, once the data is gathered and computerized, an applicant for a permit could quickly ascertain environmental conditions that exist in the vicinity of his or her proposed project, and the permit application could be tailored to address appropriate concerns.

The master plan concept also affirms that the original purpose of environmental regulation will remain strong. It signals that the Whitman administration will be unlikely to leave behind New Jersey's heritage of environmental protection even as it attempts to transform the state into, in the governor's words, "the engine of economic growth that leads this nation into the 21st century."

Additional Bills Aimed at Easing the Regulatory Burden

on Business and Industry in New Jersey

(Presently in Committee)

A-317 Provides for recovery of cleanup costs and damages incurred by innocent purchasers of property because of a hazardous substance discharge.
A-440 & S-556 Prohibits State agencies from excessively increasing the cost of permit or application fees.
A-1031 & S-829 Requires DEPE to approve certain construction work plans & NJDEPE, permits within 30 days of issuance of final Discharge Allocation Certificate.
A-1188 Provides investment tax credit for cost of certain equipment used for control and abatement of air and water pollution.
A-1631 & S-761 Provides State assistance and tax credits for cleanup of abandoned former urban industrial sites and operation of business on site -- "Urban Environmental Enterprise Zones."
A-1665 Establishes Office of Permit Coordinator in the Dept. of State; provides for concurrent review of certain development and permit applications by certain state and local government entities.
S-233 Provides mechanism for expedited review of certain projects.
S-234 Exempts certain small businesses from certain environmental laws and regulations.
S-235 Creates office of New Projects Permitting in the Dept. of Commerce, Energy & Economic Development to issue environmental permits for certain projects.