Commercial real estate alert: New Jersey PFAS flooring standards shake up cleanups and closures

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The New Jersey Department of Environmental Protection (NJDEP) kicked off the week by releasing the long-awaited and immediately effective Draft Soil Remediation Standards for four types of PFAS chemicals. The following questions and answers provide preliminary advice on the risks of impacting you and useful general information.

What does this mean for a New Jersey property undergoing remediation and/or an open ISRA case?

As of October 17, 2022, any New Jersey property that is undergoing a remediation and/or an open case under the Industrial Site Remediation Act (ISRA) and where sampling has discovered any of the regulated PFAS chemicals (i.e., PFOA, PFOS, PFNA, and GenX) above their applicable new standard shall be remedied in accordance with NJDEP technical regulations.

For each of these properties, we anticipate that the Licensed Site Remediation Professional (LSRP) will need to assess the likelihood that any of these four PFAS chemicals may be present in soil and/or soil leachate. This assessment may result in the determination that a new soil survey is now warranted, which could lead to a new soil remediation case. This is especially possible for any property with an ongoing PFAS groundwater case (NJDEP established underground waters sanitation standards for PFNA, PFOS and PFOA a few years ago, but not GenX).

How do I know if there might be PFAS on the property? Should I taste?

This can get tricky because there are many potential sources of PFAS. There are several reasons for this. First, these man-made chemicals are highly engineered to have several unique properties that make them highly attractive for use in many industries, manufacturing processes, and consumer products. This means that they have been used globally since the 1940s and 1950s. Second, PFAS chemicals do not break down naturally in the environment and are highly mobile, meaning they are found virtually everywhere. Even Antarctica. And especially New Jersey.

This means that it can be easy for an LSRP or a buyer, lender or insurer to find a reason to sample. If the property has a history of any of the potential sources or uses in the table below and if there is a potential pathway to soil and/or groundwater, PFAS sampling may be warranted. This list is not exhaustive, but it is a good starting point. Nor is it conclusive. A thorough analysis of the facts is required to assess the PFAS risk profile of each property.

Ultimately, if you have an ongoing remediation and/or are under ISRA review, your LSRP will need to review the facts through NJDEP’s site survey guidelines and regulations to assess whether sampling is necessary. Your environmental lawyer should be involved in every step of this analysis.

What about environmental due diligence? And my exit strategy in a few years?

Above all, potential buyers and their professionals should ensure that the scope of their Phase I Environmental Site Assessment and Preliminary Assessment (i.e. the New Jersey version of a Phase I) includes an assessment of the potential for groundwater and soil impacts for PFNA, PFOA, PFOS and GenX.

The decision whether or not to proceed with due diligence sampling is driven by multiple factors and should be carefully considered with the guidance of an environmental consultant and environmental attorney familiar with the nuances of each property’s unique PFAS risk profile. in the context of the transaction under consideration, the business case for the deal, and the exit strategy for the property.

Properties undergoing ongoing remediation and/or ISRA review will of course involve a thorough PFAS review, but also keep in mind issues that your lender, tenant, insurer and future buyer could ask, especially after federal regulations come into effect as soon as 2023. Due diligence for construction or redevelopment projects involving offsite disposal of soil or groundwater must also consider the costs of additional disposal and liability risks.

I believe this could affect my agreement, ownership, cleanup and/or ISRA record. What are the next steps?

In most cases, the best next step is a call with your LSRP or environmental consultant, as well as your environmental attorney to assess your options. Given the widespread historical and current uses of many PFAS chemicals, especially these four, it’s easy to be overly cautious.

The number one rule here is to deal with the real facts for the specific property – your professionals should look closely at the unique risk profile of the PFAS and think strategically about how to achieve your business goals. For example, just because there was a fire on the property does not mean that a fire-fighting foam containing PFAS was used. It’s entirely possible that the fire was put out with some good old-fashioned water. Another example is metal plating, which is generally considered high risk for PFAS use, but not all plating operations are the same and many do not use PFAS.

On the insurance front, with many insurers increasingly insisting on excluding PFAS from coverage, the market is changing and an insurance broker specializing in environmental policies can be a valuable member of the insurance industry. risk management team. Additionally, many existing policies do not have the PFAS exclusions and could help strengthen the overall risk mitigation package.

How can I be PFAS smart?

PFAS liability is a serious issue that is not unique to New Jersey and is not going away. In addition to the patchwork of regulations in many other states, the U.S. Environmental Protection Agency regularly pursues federal regulations that are slated to take effect as early as 2023. There are a lot of moving parts, with legal and technological developments day to day, and the market reacts and evolves in kind.

In this brave new world, being PFAS smart basically comes down to staying focused on facts and goals and creatively using the tools already available in the commercial real estate industry.

By the way, what is PFAS?

PFAS is short for “per- and polyfluoroalkyl substances” and is an umbrella term that refers to a class of thousands of synthetic chemicals that have several unique properties that make them particularly attractive for use in many industries and products. consumption. Think Teflon, Scotchguard and Goretex.

PFAS are found in the global environment and in the blood of nearly 99% of the US population. They’re nicknamed “Forever Chemicals” because they don’t break down naturally in the environment, making them very difficult and expensive to dispose of and dispose of.

PFAS have been used globally since the 1940s and 1950s and largely escaped environmental regulation until some toxicity studies were made public following litigation in the late 1990s and early 1990s. 2000s. There are no enforceable federal remediation standards for PFAS chemicals today, but the U.S. Environmental Protection Agency routinely pursues regulations that are expected to take effect as early as 2023.

What is GenX?

Previously considered safer than other PFAS, GenX was used as a substitute for PFOA after manufacturers voluntarily stopped production of PFOA and PFOS in the early to mid-2000s. However, subsequent toxicity assessments, including those carried out by the United States Environmental Protection Agency (see US EPA, Drinking Water Health Advisory for GenX Chemicals, June 2022), found that GenX may be more toxic than PFOA. Since GenX is used in many industries including medical, automotive, electronics, aerospace, energy, telecommunications, chemical processing and semiconductors, it is expected that is as ubiquitous in the environment as PFOA and other PFAS chemicals.

Why is it remarkable that GenX now has a remediation standard?

While the NJDEP established groundwater remediation standards for PFOA, PFOS, and PFNA a few years ago, this is the first time the NJDEP has regulated GenX. This means that, for the most part, no environmental audit, investigation or remediation would have researched, let alone addressed, the potential impacts of GenX. The new remediation standard makes GenX the ultimate x-factor in the world of commercial real estate.

PFAS Interim Soil Remediation Standards

A very special thank you to the invaluable contributions of Inga Caldwell and Erin Palmer for this piece.

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