The New Jersey Appellate Division recently held that the state was not permitted to repeal administrative regulations without going through the formal rule making processes of the Administrative Procedures Act (APA), even if the subject regulations are tied to a regional cooperative effort in which the state is no longer participating. In the case, captioned In re Regional Greenhouse Gas Initiative, docket number A-4878-11T4, environmental organizations brought suit to challenge the New Jersey Department of Environmental Protection’s (NJDEP) repeal of regulations adopted in order to facilitate New Jersey’s membership in the Regional Greenhouse Gas Initiative (RGGI), arguing that the procedures outlined in the APA applied but were ignored by the NJDEP.

In 2005, New Jersey signed on to a memorandum of understanding (MOU) with six other states recognizing the growing concerns of climate change and the serious risks it poses to human health and the natural environment, thereby creating the RGGI. The seven Mid-Atlantic states then agreed to implement a carbon dioxide (CO2) trading program designed to prevent the increase of CO2 emissions in the region and to create an organization which would provide the states with technical assistance in meeting their emissions-capping goals. The RGGI now counts nine East Coast states among its membership: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.

Under the MOU, the emissions-limitations goals of RGGI were to be achieved through a system of compliance periods, offsets, allocations, and credits. In New Jersey, the program was implemented through the Global Warming Response Act and the Global Warming Solutions Fund Act (the “Solutions Act”), both enacted in 2007. The Solutions Act provided the NJDEP with authority to promulgate regulations creating the necessary administrative framework to allow New Jersey to participate in the RGGI CO2-limitation program. Those regulations, finalized in 2008, capped CO2 emissions at a set amount and established allowances that were auctioned off to CO2 generators, mainly power plants.

Despite several years of successful auctions and allowances trading between member states, Governor Chris Christie announced that New Jersey would be withdrawing from the RGGI in 2011. The administration also posted a notice to the NJDEP’s website stating that New Jersey CO2 generators would no longer be obligated to comply with the requirements of the regulations promulgated alongside New Jersey’s entry into the RGGI.

Two environmental groups, Environment New Jersey and the National Resource Defense Council, appealed the agency’s action, arguing that the NJDEP violated the APA when it repealed the regulations without going through the formal rule making process set out in the APA. In response, the NJDEP argued that formal rule making under the APA was not required because the only purpose of the regulations was to implement New Jersey’s participation in the RGGI.

The New Jersey Superior Court Appellate Division held that the regulations were worded “quite broadly” and could be read to have effect notwithstanding New Jersey’s affiliation with RGGI. Therefore, if the NJDEP wished to repeal or otherwise alter the regulations, formal action pursuant to the procedures outlined in the APA was necessary. Accordingly, the Appellate Division remanded the matter to the NJDEP to take action under the APA to address the regulations. The Court also stayed enforcement of the regulations to allow the NJDEP time to comply with the decision.

While the largely procedural ruling does not require that New Jersey rejoin the RGGI, it has been seen by some as an opportunity to address concerns over climate change through legislation and rule making.

The attorneys at Lieberman Blecher & Sinkevich P.C., who regularly assist clients with concerns relating to compliance with state environmental regulations, will be closely following the developments in New Jersey’s approach to climate change.