Appellate Division Affirms NJDEP Discretionary Denial of Waiver Rule Application

The Appellate Division has affirmed a decision by the New Jersey Department of Environmental Protection (“NJDEP”) denying a waiver rule application and rejecting the appellant’s argument that it was entitled to a regulatory waiver. The recent decision in NJDEP Water Enforcement and Compliance v. Cheyenne Corp., Dkt. No. A-4547-15T4, affirmed NJDEP’s decision requiring a seasonal theme park to replace or upgrade an existing drinking water well that repeatedly exceeded bacteria limits, and affirmed NJDEP’s decision denying a waiver rule application regarding the well.

The waiver rule allows NJDEP to waive strict compliance with any of its rules in a manner consistent with protecting and enhancing New Jersey’s natural resources and protecting public health and the environment. NJDEP may grant waivers when rules conflict, compliance would cause an undue burden, the waiver would result in a net environmental benefit, or a public emergency has been declared. If one of those criteria is met, and the requested waiver does not involve any of the 13 categories of rules that cannot be waived, then NJDEP may waive strict compliance with a rule. In this case, the appellant argued that the cost of a new or upgraded well would be an undue burden, and therefore NJDEP’s denial of the waiver rule application was improper. The Appellate Division disagreed, finding that NJDEP did not act arbitrarily and capriciously in denying the permit waiver because the appellant had not established an undue burden.

At the time of the waiver rule’s controversial adoption in 2012, objectors raised concerns that NJDEP would freely grant waivers. In fact, stringent review of waiver applications has resulted in NJDEP approving only 3 waiver applications, while denying 10 applications, rejecting 20 applications as incomplete, and convincing applicants to withdraw 31 applications. The unpublished Cheyenne Corp. decision provides a first look at how the Appellate Division will address challenges to waiver rule denials. Without reference to the section of the waiver rule that disclaims the creation of a right to a waiver (N.J.A.C. 7:1B-1.1(d)), the decision states that it was within NJDEP’s discretion to deny a waiver request. However, the court’s application of an arbitrary and capricious standard to review the waiver denial suggests that NJDEP waiver rule application denials are not wholly discretionary, and that a stronger case would have required further analysis and potential reversal.

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