A New Jersey appellate court is set to determine the fate of a controversial measure by the state's environmental regulator to waive land use regulations and other requirements on a case-by-case basis, a move that has won praise from business groups for cutting red tape but also raised concerns over its potential to undo years of environmental protection.

The closely watched litigation is a rare example of the state's environmental community fighting, and business groups throwing their weight behind, a regulation from the state Department of Environmental Protection.

The 28 environmental and labor groups challenging the so-called waiver rule in the state's Appellate Division offer a starkly different vision of the rule's potential impact than the DEP and business interests, which contend that waivers will be selectively granted to applicants based on specific criteria and give the regulator much-needed flexibility to consider compliance alternatives that don't harm the environment or public health. 

“It's so open ended and so vague that you can justify almost anything,” New Jersey Sierra Club Director Jeff Tittel said. “If we were to lose, especially when it comes to land use, almost anything goes.”

The DEP lacked the legislative authority to create a blanket waiver covering thousands of regulatory provisions under 91 different statutes, failed to spell out standards that would control agency discretion, and omitted critical details on the waiver process in the rulemaking, the Sierra Club and other groups argue. They filed their challenge to the regulation shortly after it was adopted in March. 

In its defense, the DEP has said it has the statutory power to issue the rule and that the regulation has been properly crafted and implemented.  

Various groups, including the New Jersey Builders Association and the American Petroleum Institute, have also rallied around the rule as amicus participants in the case.

The waivers will help resolve conflicting rules and prevent one-size-fits-all regulations from hampering environmentally beneficial projects, according Dennis Toft, a co-chair of the environmental group at Wolff & Samson PA who is representing amici including the API and New Jersey Chamber of Commerce.  

“From industry's perspective, it makes sense, because when you're trying to do the right thing and the rules are preventing you from doing it, or when you're trying to comply with conflicting rules, there was no mechanism out there to make it possible for the DEP to get to the result that you want for the environment in the long run,” Toft said. 

While the waivers could be a useful tool in some cases, the regulation might not even have a broad impact if it remains in effect, according to David Restaino, a partner with Fox Rothschild LLP whose practice includes environmental litigation.

“I think we're talking about a small universe of potential qualifying parties,” Restaino said.

Businesses or other parties that want a waiver would have to demonstrate at least one of four criteria — that a public emergency exists, that conflicting rules that are adversely impacting the project or activity, that a net environmental benefit would be achieved or that the regulations impose an undue hardship, the DEP has said.

Tittel worried that environmental concerns could be sacrificed if the DEP opted to waive rules that, say, conflicted with the rules of another agency such as the state Department of Transportation and argued the concept of a “net environmental benefit” was meaningless.  

“It's a determination by a commissioner who could be under political pressure,” he said. 

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

“In my experience dealing with the DEP over the years, they do apply these kinds of rules in a very narrow way,” said Marilynn R.

Greenberg, a partner in the environmental and energy groups of Riker Danzig Scherer Hyland & Perretti LLP. “I don't think they're going to apply this rule to undermine an entire statutory scheme.”  

The waiver rule went into effect Aug. 1 and the DEP has since received

22 applications, according to records on the agency's website. Of those, 12 are under review, two have been denied and eight were rejected as incomplete.  

Two main factors likely have suppressed the number of applications so far, according to Andrew B. Robins, of counsel in the real estate practice at Sills Cummis & Gross PC. One is hesitancy over the newness of the program and how the DEP will administer it, but the other is the legal challenge to the rule, which has left potential applicants wondering if it's worth going through the waiver process when court-directed changes could be on the horizon, he said.

“The court action succeeded in creating uncertainty and reducing the number of people who sought to take advantage of the rule, which is the environmentalists' goal ultimately,” Robins said. 

Oral arguments in the case took place Jan. 14 and there is no timetable for the court issuing its decision. The panel's eventual ruling might not be limited to a straightforward affirmation or rejection of the rule. For example, the court could uphold the DEP's authority to adopt such a rule, but side with green groups on their concerns over its implementation. 

For better or worse, the waiver rule represents a significant departure from past DEP practices, many watching the case said.

While a number of DEP rules already had waiver components, most of its programs did not, according to Restaino. 

“I know from my perspective, having been inside government and now for a number of years being outside government, there are times you wished you had the flexibility to craft something that will be positive but you feel like your hands are tied. I think this would alleviate that in some circumstances and be a win-win,” said Restaino, a former deputy attorney general. 

Tittel called the waiver rule “the Super Bowl of regulations.”  

“Once you can waive for virtually any reason, there's no standards left, there's no bottom,” Tittel said.

Source: Law360