TRENTON - Home to a densely packed population and heavy industry, New Jersey has been a longtime leader in adopting strong regulatory standards to protect residents against pollution of their soil, air, and water.

That's why environmental advocates sounded alarms when they learned that a bill scheduled for a vote in the Assembly last week would ban state agencies from adopting rules stricter than federal ones without coming to the Legislature for approval.

Among the critics was Assemblyman John McKeon (D., Essex), who said he talked with Assemblyman John Burzichelli (D., Gloucester), the sponsor, about concerns that the proposal was too overreaching.

Ultimately, it was pulled from the agenda so legislators could make revisions.

The episode is emblematic of a new push in New Jersey to change the regulatory process, and of the fears some have that state leaders are going too far.

Aspects of the federal-standards bill, and a number of other recent environmental developments in Trenton, are rooted in policies outlined a year ago in Gov. Christie's executive orders and reports from his transition team and Red Tape Review Group.

Those moves are being cheered by the business community, whose suggestions on easing the regulatory structure are getting a serious hearing from the administration and legislators.

Phil Kirschner, president of the New Jersey Business and Industry Association, attributes the eagerness to relax the state's regulatory burden to Christie's leadership and the poor economy.

"There are obviously many things that one must do to make sure that they're compliant and that the public's health, safety, and welfare are accounted for," Kirschner said, but businesses "don't like to do regulations for regulations' sake, where . . . the cost-benefit is skewed."

The new approach is being worked out at a time when the DEP's staff has shrunk by nearly 20 percent over the last eight years and many retirements have drained institutional knowledge, according to the agency.

Christie's second executive order outlines "commonsense principles" for state regulation that "will give this state the opportunity to energize and encourage a competitive economy to benefit businesses and ordinary citizens." Among other things, the document called for the adoption of waivers from conflicting or unduly burdensome rules.

Noting that executive order, the DEP this month said it was proposing a rule allowing the agency to waive strict compliance with its regulations for businesses and people in limited circumstances. The department could make exceptions when its rules conflict with those from another agency; when they are found to be unduly burdensome; in the event of a public emergency; and when the environment would be enhanced by a project enabled by a waiver.

"This is an important tool that will benefit the environment and the state's economy," DEP Commissioner Bob Martin said in a statement. ". . . This offers a practical flexibility in allowing us to deal with issues."

That has already drawn concern from environmental advocates.

In a piece last week for njspotlight.com, former DEP official Michael Catania said there were serious legal questions surrounding whether the agency could decide who needed to comply with its rules. He wrote that if the agency believed some rules were too burdensome, it would be more honest to identify those and propose specific revisions.

"Why would future permit DEP applicants not ask for waivers?" wrote Catania, a former deputy commissioner of the agency. "They have nothing to lose, and potentially everything to gain, by pleading their case to be exempted, especially since they can be sure their competitors will be doing exactly that."

The increasingly flexible approach to enforcement already can be seen in how the state treats those accused of violating environmental regulations.

Pollution fines levied by the DEP, which help support its budget, have dropped to their lowest level in five years for the 2010 fiscal year, according to revenue documents made public this month. Air-pollution fines, the largest source of fine revenue for the department, fell to their lowest in seven years during that period.

While it is too early to definitively attribute that to the Christie administration, the figures - projected in the budget to decrease further for 2011 and 2012 - are in line with the administration's statements to loosen the state's policy on fines.

The governor promised on the campaign trail that during his term, agencies would no longer rely on fines and fees to fund their budgets.

And in his second executive order, Christie said agencies were to discuss regulatory violations with the noncompliant person or business to try to resolve the matter without enforcement proceedings. He said penalties should be waived for first-time offenders, or for violations associated with isolated paperwork or procedural issues.

The Democratic-controlled Legislature has also played a part in furthering aspects of the Republican governor's regulatory agenda.

Among the directives in Executive Order 2 was that state agencies must not exceed requirements of federal law, with limited exceptions.

Burzichelli's bill on federal standards strengthens that, and goes a step further by requiring legislative approval.

"I have better faith in a body of 120 representatives making decisions on what's best for New Jersey than a bureaucrat sitting in an office," Burzichelli, who chairs the Assembly's regulatory panel, said last week.

He added: "In this case we would say [to government-agency employees], 'If you come across something that you think is significant, that is for the betterment of the health and welfare of New Jersey, make your case.' "

The bill would not apply to regulations of the state labor department, and would allow exceptions when an agency and the governor agree that there is an imminent danger to public health.

Critics say it would politicize the regulatory process, and 67 organizations called on the Legislature last week to kill the measure.

"This bill is a fundamental attack on the entire regulatory and public protection role of the state of New Jersey," said Rick Engler, director of the New Jersey Work Environment Council.

Senate Majority Leader Barbara Buono (D., Middlesex) also has reservations.

"It does politicize very technical decisions," she said. ". . . The Legislature doesn't have the knowledge to know whether or not we should exceed federal regulations."

Buono and Burzichelli were the two Democratic legislators who participated in the Red Tape Review Group, created by another executive order last year to make recommendations - ultimately endorsed by Christie and business groups - on easing the state's regulatory burden.

One bill signed by Christie this month - and originating in last year's Red Tape report - requires the secretary of state or some other official chosen by the governor to develop a system to accelerate the permitting process. That designee would become the point person for large, complicated projects with a significant potential employment.

A second Red Tape proposal that became law this month allows an agency to make substantial changes upon adoption of a rule by issuing a public notice and holding a 60-day comment period, without starting the intense rule-making process over again with a new notice of proposal. A third bill, which gained final legislative approval in February, extends the expiration date of state agency rules from five to seven years and allows agencies to readopt them without public comment if they are making only technical changes.

The last two bills reduce public input into regulatory decision-making and create a more secretive process, said Buono, who left the Red Tape panel over concerns that it was moving in an antienvironmental direction.

"Public input into rule-making should never be sacrificed," she said.

Voicing concerns relayed by other environmental advocates, state Sierra Club director Jeff Tittel said extending the readoption of rules would delay needed changes based on the latest scientific data and changes to the state's landscape, while allowing changes to rules upon adopting them could allow interference by business lobbyists.

Still, those bills won the approval of all but a handful of state lawmakers.

"Our regulatory process stinks and needs to be overhauled. . . . I think we should do much more," said Senate President Stephen Sweeney (D., Gloucester). "I think we've regulated the state almost out of business."