On October 8, 2014, the New Jersey Department of Environmental Protection (“NJDEP”) approved an application by Exelis Inc. (“Exelis”) under the “Waiver Rule” for a waiver from the requirements of the NJDEP Recycling Rules (“Recycling Rules”).
On October 8, 2014, the New Jersey Department of Environmental Protection (“NJDEP”) approved an application by Exelis Inc. (“Exelis”) under the “Waiver Rule” for a waiver from the requirements of the NJDEP Recycling Rules (“Recycling Rules”). The Waiver Rule allows NJDEP to waive strict compliance with a regulation where: (1) a regulatory conflict exists, (2) strict compliance would be unduly burdensome, (3) a net environmental benefit would be realized by the waiver, or (4) in the case of a public emergency. N.J.A.C. 7:1B-2.1(a). NJDEP’s approval of Exelis’ application is significant because it is the first approved application out of the over 50 applications that NJDEP has received since the Waiver Rule was first adopted on August 1, 2012.
Exelis Inc. (“Exelis”) is a U.S. Department of Defense (“DOD”) Research and Development contractor that stores classified information on removable hard drives that Exelis destroys on-site at the end of a project in accordance with DOD regulations. The Recycling Rules, contained at 7:26A-1.1, et seq., classify hard drives as Class D consumer electronics that may only be destroyed at an approved Class D recycling center. On May 30, 2013, Exelis submitted a Waiver Rule application to the NJDEP to be waived from the definition of a “Class D recycling center” on the basis that the Recycling Rules conflict with several federal regulations, including the DOD Cyber Security Rules and that strict compliance with the Recycling Rules would be unduly burdensome on Exelis and its future business.
The NJDEP did not agree with Exelis that the waiver was warranted because the Recycling Rules conflict with the DOD Cyber Security Rules, but it did agree with Exelis that complying with the Recycling Rules would be unduly burdensome on Exelis. NJDEP evaluated Exelis in comparison to other New Jersey DOD contractors and Class D recycling centers and found that compliance with the Recycling Rules would be unduly burdensome because the Recycling Rules did not account for Exelis’ unique security needs and would result in Exelis becoming the only New Jersey DOD Contractor subject to the Class D requirements. Therefore, compliance would pose security risks and vulnerabilities to Exelis and could place Exelis at a disadvantage in complying with DOD rules and obtaining new DOD contracts.
NJDEP’s approval of Exelis’ waiver application is significant because the regulated community has been eagerly awaiting NJDEP’s first approval under the Waiver Rule. This approval demonstrates that NJDEP is willing to consider and embrace a more flexible approach to its regulations. However, Exelis’ circumstances are unique, since Exelis’ need for a waiver results from its obligation as a DOD contractor to comply with national security and DOD requirements. Therefore, while the Exelis approval provides valuable insight on how NJDEP may review and consider future Waiver Rule applications, it remains to be seen whether NJDEP will ultimately agree to approve a waiver of a regulatory requirements in a more traditional business operation or redevelopment scenario.