New Jersey's Department of Environmental Protection (DEP’s) long-anticipated “Waiver of Department Rules”, the so-called “waiver rule”, has finally been adopted.  The waiver rule allows DEP to relax strict compliance with its regulations.  The rule proposal was the subject of much criticism and debate.  Environmental groups vilified the proposal claiming waivers will eviscerate environmental regulatory programs and the Legislature attempted to derail the rule.   Possibly in an effort to appease critics, DEP has deferred implementation of the rule until August 1, 2012.  Landowners and developers subject to DEP requirements should begin to familiarize themselves with the rule now to assess its potential applicability.

The waiver rule recognizes that DEP “cannot anticipate every circumstance or personal hardship that may exist” when it adopts regulations and that “one size does not fit all.”  The rule attempts to permit flexibility in the regulatory process to better balance the protection of resources with economic opportunity, consistent with DEP’s Transformation Plan and Governor Christies “Common Sense” Executive Order.

The rule identifies four situations where a waiver may be issued.

• Conflicting rules:  The “Catch-22” scenario where DEP’s rules conflict internally, or conflict with other state or federal agency rules, making compliance impossible or impracticable.
• Undue burden:  Strict rule compliance would create “actual, exceptional hardship or excessive cost” compared to some alternative that would achieve similar results.
• Net environmental benefit:  Waiver of a rule would result in a quantitative or qualitative benefit to a natural resource, or have some other related environmental good, that would substantially outweigh any detriment to the resource or environmental good. 
• Public emergency:  Waiver would ensure protection of public health, safety, and welfare and the environment in the event of a declared public emergency.

Even if one of these situations exist, there are limits to DEP’s waiver authority which should be carefully considered.  Examples include:

• The waiver would be inconsistent with federal or state statute, or state participation in multi-state programs.
•  Rules containing numeric or narrative standards protective of human health.
•  Regulations regarding designation of species and species’ habitat.
• Public participation and notice requirements.
• Statutory obligations where no DEP rules exist, for example, re-forestation plan requirements. 
   

DEP will consider various factors in deciding whether to grant a waiver.  These criteria include:

• Adequate public notice of the waiver request.
• The factual circumstances supporting the request and whether sufficient information and data is provided to DEP to support the need for the waiver.
• Whether a self-created hardship exists.
• Whether a net environmental benefit exists, including the impact on remediation and redevelopment of contaminated sites and expansion of existing development.
• Whether a proposed activity is consistent with DEP’s core mission of protection of natural resources, public health, safety and welfare.

As with any new program, there is sure to be a learning curve among applicants and DEP Staff, and practical issues will need to be considered and addressed.  Applicants must provide notice of waiver requests consistent with the rules from which the waiver is sought and DEP will also publish notice of waiver applications and decisions.  But the rule does not clearly define whether waiver requests must be noticed as part of an initial development application, or whether notice can be provided upon discovering the need for a waiver during the review of an earlier application.  Likewise, the rule does not specifically address whether waivers will be possible through DEP’s alternative dispute resolution program.  There is no specific provision for appeal of a waiver decision.  Practitioners will need to address whether DEP’s decision on a waiver application constitutes a final agency action for purposes of appeal.  DEP’s rule proposal provided that waivers will be prospective only, and not applicable to prior unauthorized activities.  Yet, the proposal also provided that waivers may be issued to resolve contested cases.  Where disputes exist in the enforcement context regarding the validity of prior activities, waivers may come into play.

The waiver rule is not a magic wand.  Applicants will need to satisfy the criteria for variance from strict application of DEP’s regulations.  Moreover, concern exists that DEP will apply the rule narrowly particularly in the early stages of the rule’s applicability to appease critics.  Commissioner Martin has stated that he will personally review waiver decisions and is mindful of the obligation to use waiver authority consistent with federal and state law.  But even with these concerns and limitations, the waiver rule should be a valuable tool to address DEP’s complex regulatory programs in a creative and flexible manner to facilitate well planned development.