Adopting the legal arguments made by Paul H. Schneider and Afiyfa H. Ellington, the Appellate Division of New Jersey Superior Court unanimously upheld DEP’s controversial “Waiver Rules,” which allow DEP to relax or waive strict compliance with its regulations.  The rules specify four circumstances in which DEP may consider a waiver: (1) when rules conflict, (2) where strict compliance would be unduly burdensome, (3) where the waiver would achieve a net environmental benefit, or (4) in a public emergency.  The rules specify circumstances in which DEP may not waive rules, including “[a] requirement of, or duty imposed by, a Federal or State statute or Federal regulation, unless that statute or regulation provides for such a waiver.”  Finally, the rules specify the criteria upon which DEP will evaluate waiver requests, define key terms used in the rules, and require public notice.

Rejecting an appeal brought by over two dozen self-styled “environmental” groups,  the Appellate Division held that DEP has the authority to adopt and implement the Waiver Rules.  The Court held that notwithstanding “the absence of an express legislative grant or prohibition”, State agencies have “inherent authority. . . to waive their regulatory requirements through regulations . . . which establish appropriate standards for the exercise of the agency’s waiver decision-making, while still honoring requirements imposed by statutes or federal law.”  Similarly, the Court disagreed with the appellants that DEP cannot adopt a “blanket” waiver rule that applies to virtually all programs administered by DEP.  The Court stated “appellants point to no authority that DEP cannot cut across intramural boundaries by adopting department-wide rules to deal with overlapping concerns or subjects.”  Finally, the Court also rejected claims that the rules lack adequate standards.

As an unexpected bonus to the business community, the Court agreed with the appellants that “guidance” documents and forms posted on DEP’s website after formal adoption of the waiver rule are unenforceable because they are de facto rules promulgated by DEP without following the notice and comment requirements of the Administrative Procedure Act.  Yet the Court rejected appellants’ claim that this deficiency is fatal to the DEP’s implementation of the waiver rule.  The Court emphasized “there are sufficient substantive standards in the waiver rules for applicants to submit, and the decision-maker to evaluate, waiver applications.”

DEP relies upon similar guidance documents in a wide variety of the programs it implements, often to the chagrin of developers and others in the regulated community because the guidance may impose requirements and restrictions not found in the text of the rules.  This decision provides a basis for the business community to challenge these guidance documents in other situations.

The GH&C attorneys represented the New Jersey Builders Association, with funding provided by the National Association of Home Builders.