Appellate Division Tells NJDEP it Must Amend/Repeal RGGI Rules, Gives Legislature an Opening

Brian Block
Thursday, March 27, 2014

I. Background

            On March 25, 2014, the Appellate Division of the Superior Court of New Jersey released its decision in In re Regional Greenhouse Gas Initiative (RGGI),[1] instructing the Christie Administration to properly repeal or amend the state’s existing Regional Greenhouse Gas Initiative (RGGI) rules under the formal procedure provided by the New Jersey Administrative Procedure Act (APA).[2] As the Nation’s first multi-state carbon dioxide cap-and-trade program, RGGI was formally implemented in 2009 by ten states in the Northeastern and Mid-Atlantic, including New Jersey.[3]The state promulgated rules in accordance with the initiative, collectively entitled the “CO2 Budget Trading Program” (Trading Program).[4] In 2011, however, Governor Chris Christie announced that New Jersey would be withdrawing from RGGI effective January 1, 2012, claiming that the RGGI was a failure.[5] Subsequently, the New Jersey Department of Environmental Protection (DEP) “posted a notice on its website,” generally stating that, due to the withdrawal, “[DEP] would no longer implement the Trading Program regulations . . . .”[6] Notably, the DEP did not use formal rulemaking under the APA to repeal or amend the existing rules, instead relying on its web notice to render the rule inoperative.[7]

            Both Environment New Jersey and the Natural Resources Defense Council (together appellants) challenged the DEP’s use of the web notice, contending that the Trading Program could “be implemented independently of RGGI and, consequently, c[ould not] be abrogated except through the formal rulemaking procedures” provided by the APA.[8] In opposition, the DEP contended that the Trading Program became “inoperative” upon the state’s withdrawal.[9]

II. Formal Amendment or Repeal Required

            Acknowledging that the Trading Program was undoubtedly promulgated to enable New Jersey’s participation in RGGI, the Appellate Division found, nevertheless, that the Trading Program provisions’ language is “worded quite broadly and can be read to require action by the Department absent participation in a regional greenhouse program.”[10] In essence, as worded, the Trading Program can function as a stand-alone cap-and-trade scheme. The panel, therefore, concluded that although the web posting by the DEP was useful to the regulated community, under the APA, the DEP still had to “(1) repeal the Trading Program regulations or (2) amend them to provide that they are applicable only when New Jersey is a participant in a regional or other established greenhouse gas program.”[11]Hence, the DEP’s original course of action was procedurally improper.[12] As such, the Appellate Division remanded to the DEP to take one of the two aforementioned actions, and in the meantime, stayed enforcement of the Trading Program regulations.[13]

III. Impact of the Holding

            The panel’s opinion is notable for what it is not: a directive directly affecting New Jersey’s membership in RGGI.[14] In fact, the appellants did not even challenge the legality of the State’s withdrawal.[15] Unquestionably, however, In re RGGI’s rebuke of DEP’s action is a short-term victory for environmental groups, but the opinion’s long-term significance may only be that of a negligible contribution to state administrative law jurisprudence.[16] Nevertheless, the true silver lining to the holding for environmental groups is that the State Legislature now has a foot in the door, in that under the New Jersey Constitution, it can overturn by simple majority vote, the DEP’s future repeal of the Trading Program—otherwise known as a legislative veto.[17] Such an action is not too farfetched considering that the Legislature's past attempts to have New Jersey rejoin RGGI were vetoed by the Governor, and that it is once again moving on a bill that would do the same.[18] Going forward for now, on or before May 25, 2014, the DEP must begin the formal APA process to amend or repeal the Trading Program.[19]



* May 2014 J.D. candidate at Rutgers School of Law – Camden, and the Managing Blog Editor for the Rutgers Journal of Law & Public Policy. He may be contacted by email at bmb134@scarletmail.rutgers.edu.

[1] No. A–4878–11T4, 2014 WL 1228509 (N.J. Super. Ct. App. Div. Mar. 25, 2014) [hereinafter In re RGGI], available at http://www.judiciary.state.nj.us/opinions/a4878-11.pdf.

[2] N.J. STAT. ANN. §§ 52:14B-1 to -15.

[3] Press Release, Reg’l Greenhouse Gas Initiative, RGGI States Announce Preliminary Release of Auction Application Materials (July 11, 2008), available at http://www.rggi.org/docs/20080711news_release.pdfsee generally REGIONAL GREENHOUSE GAS INITIATIVE, www.rggi.org (last visited Mar. 27, 2014).

[4] See CO2 Budget Trading Program, N.J. ADMIN. CODE §§ 7:27C-1.1 to -10.11 (West, Westlaw current through March 17, 2014); see also 40 N.J. Reg. 6541(b) (Nov. 17, 2008).

[5] In re RGGI, 2014 WL 1228509, at *5; see also Mireya Navarro, Christie Pulls New Jersey From 10-State Climate Initiative, N.Y. TIMES, May 27, 2011, at A20 (“‘RGGI does nothing more than tax electricity, tax our citizens, tax our businesses, with no discernible or measurable impact upon our environment,’ Mr. Christie said.”).

[6] In re RGGI, 2014 WL 1228509, at *1.

[7] Id. 

[8] Id.

[9] Id. 

[10] Id. at *5.

[11] Id. at *6.

[12] Scott Fallon, Appeals Panel: Christie Administration Improperly Pulled N.J. Out of Program to Cut Greenhouse Gas Emissions, THE RECORD (Mar. 25, 2014, 5:33 PM), http://www.northjersey.com/news/appeals-panel-christie-administration-im....

[13] In re RGGI, 2014 WL 1228509, at *6.

[14] See Fallon, supra note 12 (“[T]he ruling does not reinstate New Jersey into The Regional Greenhouse Gas Initiative.”)

[15] In re RGGI, 2014 WL 1228509, at *5.

[16] See Tom Johnson, Appellate Panel Faults State DEP for Abolishing Rules on Greenhouse Gases, NJSPOTLIGHT (March 26, 2014), http://www.njspotlight.com/stories/14/03/25/three-judge-appellate-panel-faults-state-dep-for-abolishing-rules-on-greenhouse-gases/.

[17] Id. (implicitly citing N.J. CONST. art. V, § 4, ¶ 6); see also Matter of Adoption of Regulations Governing State Health Plan, N.J.A.C. 8:100, et seq., 637 A.2d 1246, 1248 (N.J. 1994) (“Under [N.J. CONST. art. V, § 4, ¶ 6], if the Legislature finds that an existing or proposed rule or regulation is not consistent with the legislative intent, it may invalidate that rule or regulation or prevent it from taking effect.” (internal quotations omitted)).

[18] Tom Johnson, Bill Would Require NJ to Rejoin Program to Curb Greenhouse Gases, NJSPOTLIGHT (Mar. 24, 2014), http://www.njspotlight.com/stories/14/03/23/bill-would-require-new-jerse....

[19] See In re RGGI, 2014 WL 1228509, at *6 (citing N.J. STAT. ANN. § 52:14B-4).