## Facts

- Crown/Vista proposed a new power-generation facility and sought an air pollution control permit from the New Jersey Department of Environmental Protection (NJDEP).
- Crown/Vista submitted its permit application on February 28, 1992.
- NJDEP deemed the application “complete” on October 21, 1992 under then-existing New Jersey regulations.
- Under pre-1990 Clean Air Act (CAA) implementation rules for the relevant nonattainment area, a “major source” of volatile organic compounds (VOCs) was set at 50 tons per year; the 1990 CAA amendments lowered that threshold to 25 tons per year for certain areas.
- NJDEP determined the facility would emit approximately 49 tons per year of VOCs—below 50 tons but above 25 tons.
- During the transition to revised State Implementation Plan requirements, the Environmental Protection Agency (EPA) issued guidance indicating that permit applications submitted before November 15, 1992 could be processed under pre-1990 rules if the state had not yet implemented revised requirements.
- New Jersey adopted implementing rules effective in 1993 that included a grandfather provision for applications submitted before November 15, 1992 and deemed complete under the prior regime.
- Citizen objectors appealed the permit issuance, arguing NJDEP was required to apply the 25-tons-per-year threshold and that grandfathering undermined the 1990 amendments’ objectives.

## Issues

1. Whether NJDEP violated the 1990 CAA amendments by applying the pre-1990 50-tons-per-year VOC threshold to an application submitted and deemed complete before the federal transition deadline.
2. Whether NJDEP lawfully “grandfathered” pre-November 15, 1992 applications consistent with EPA transition guidance and state implementing rules.
3. Whether NJDEP’s permitting decision was arbitrary, capricious, or unreasonable under New Jersey administrative law review standards.

## Decision

- The Appellate Division affirmed NJDEP’s issuance of the air pollution control permit.
- The court held NJDEP properly processed the application under pre-1990 standards because the application was submitted and deemed complete before November 15, 1992 and fit within lawful grandfathering provisions.
- The court concluded NJDEP’s reliance on EPA transition guidance and New Jersey’s implementing regulations was consistent with federal law.
- The court rejected the claim that the agency action was arbitrary, capricious, or unreasonable.

## Legal Principles

- Transitional grandfathering of permit applications filed (and treated as complete) before the applicable federal deadline may be permissible under the CAA when consistent with EPA’s reasonable transition guidance and state implementing regulations.
- Courts generally defer to environmental agencies’ reasonable implementation of federal statutory schemes through state permitting programs, particularly when aligned with EPA interpretations.
- Under deferential administrative review, an agency permitting decision will be upheld unless shown to be arbitrary, capricious, unreasonable, or contrary to law; courts do not reweigh policy objections where the agency followed a lawful transition framework.

## Conclusion

The court upheld NJDEP’s decision to issue the permit under pre-1990 VOC major-source thresholds, ruling that grandfathering a timely, complete application was consistent with EPA-endorsed transition treatment and was not arbitrary or unlawful.


In re Crown/Vista Energy Project, 279 N.J. Super. 74, 652 A.2d 212 (N.J. Super. Ct. App. Div. 1995)