Earlier this week, the NJ Senate and General Assembly passed the “Protecting Against Forever Chemicals Act” (the “PAFC Act”), following other state legislatures seeking to limit or eliminate the proliferation of forever chemicals in various products sold in the State of New Jersey. A copy of the FAFC Act can be found here https://www.njleg.state.nj.us/bill-search/2024/S1042/bill-text?f=S1500&n=1042_I1 The PAFC Act has been delivered to Governor Murphy who is expected to sign it in the next few days.
Commonly referred to as PFAS or PFOS (standing for perfluoroalkyl and polyfluoroalkyl substances) are man-made compounds that have multiple flouring atoms bonded to a chain of carbon atoms. The substances are often referred to as “forever chemicals” as the bonds between the carbon and fluorine atoms are extremely strong and very difficult to break.
Due to impacts of PFAS and PFOS on waste streams, water, soil and the air, various studies have shown, and the New Jersey legislative history indicates that these forever chemicals bio accumulate in human blood and do not leave our bodies resulting in PFAS having been detected in 98% of humans who have been tested for this substance.
The PAFC Act focuses on the following types of products:
– carpet
– cookware
– cosmetics
– fabric treatments; and
– food packaging
and bans for sale, and the making of an offer to sell and distribute any these products that contain PFAS/PFOS, 2 years from the effective date of the statute – meaning by 2028. The Act also restricts manufacturers and distributors from adding PFAS to consumer products other than in di minimis quantities. Yes, you read that correctly – the PAFC Act BANS the above products from being sold in New Jersey if they contain PFAS/PFOS!
Products are defined to include not only the item manufactured, assembled, packaged or otherwise prepared for sale to consumers, but also includes personal, residential as well as commercial and industrial uses and restricts the addition of PFAS into these products.
Consumer Products do NOT include drugs, dietary supplements, medical devices, cosmetics covered by the Federal Food, Drug and Cosmetics Act, medical equipment, products regulated under the Federal Insecticide, Fungicide and Rodenticide Act, and certain products made with fluoropolymers.
Where the Division of Consumer Affairs (DCA) finds a person has violated the PAFC Act, the PAFC Act provides DCA with broad enforcement powers including bringing a civil action, levying a civil penalty, bringing an action for a penalty, and directing the manufacturer to cease offering the product for sale. The PAFC Act allows for civil penalties of between $1,000 per day up to $25,000 per day depending on the violation.
The Department of Environmental Protection (DEP) is also directed to create and implement a source reduction program within one (1) year from the effective date of the PAFC Act focusing on air, water, soil and bio-solids and to begin research and information sharing on the above PFAS levels within NJ’s air, water, soil, and bio-solids and to report and publish such findings yearly beginning in year 2 from the effective date of the PAFC Act. These mandates have been funded from the General Fund to the tune of $4.5M.
Forever Thoughts: As the Federal government continues its significant regulatory scale back, in particular at the EPA on many environmental issues, including PFAS, various states like New Jersey have taken up the mantle and continue to pass ever stronger regulations focusing on PFAS in the air, water, soil and in consumer products. While some might say this is a “blue state” or a “red state” thing, in the PFAS arena both red and blue states remain very active and continue to focus efforts to limit PFAS’ and PFOS’ impact on their citizens by creating restrictions on adding PFAS to products like New Jersey’s PAFC Act, to seeking to force various manufacturers of PFAS to clean up and test for various levels of PFAS and PFOS impacts. Some commentators have even labeled forever chemicals and their trapping and eradication and removal from human blood as the “asbestos like” issue of the 2020s and beyond.
Duane Morris has an active Energy and Environmental Team to help organizations and individuals plan, respond to, and execute on your risk mitigation planning and initiatives. For more information, please contact Brad A. Molotsky, Alexander Judd, Sheila Rafferty-Wiggins, Jeff Hamera, Robert Montejo, or the attorney in the firm with whom you are regularly in contact.
New Jersey – Developing, Investing and Leasing Healthcare Facilities
Fresh off a panel of distinguished contributors at the MidAtlantic Real Estate Healthcare Conference in Edison, NJ earlier today featuring Andrew Antognoli, Blake Goodman, Randy Horning, Cory Atkins, Pasquale Avallone and Jonathan Marks, where they discussed and debated a wide range of topics focusing on healthcare related real estate issues.
As you may be aware, New Jersey ranks 8th in the US in terms of healthcare satisfaction, with over 113 hospitals and 72 acute care facilities in the State. Over 150,000 employees are employed in these facilities making them the largest private sector employee base in the State with over 15 Million patients being served a year.
Key Take Aways:
Development – limited new development due to interest rates and constructions costs despite there not being many if any new facilities for rent at the moment. Adaptive reuse of existing buildings continues to be the main game noting that some of the older B and C product in the marketplace will not be able to meet current design specifications of the users.
Construction Costs for Medical Office – continue to be at or near an all time high in NJ.
Key Design Issues – access, parking, visibility, redundant sources of power, sewage capacity and growing desire to have more sustainable spaces.
Acquisitions – muted at the moment due to interest rates and slow moving product historically.
Cap Rates – generally around 6-6.5% on single tenant, good credit buildings and 7-7.5% for multi tenant buildings.
Average Lease Size – approximately 3,000 SF but as more and more systems continue to consolidate, the larger systems want larger spaces for back office operations of around 10,000 SF.
Rents – depending on product type but mid to high $20s depending on what part of the state and how old the building is with approximately $3.00 in electric.
Leasing Velocity – our team of top shelf brokers felt that leasing velocity is picking up and relatively strong due to the lack of new space availability.
Tenant Improvement Dollars – owners prefer tenants to be investing in sophisticated equipment to create more “stickiness” but willing, with the right tenant, to provide T/I dollars of approximately $50 psf for a 7 year term.
Urgent Care – continued activity in this space with multiple engagements for 10 sites or more around the state.
Sustainability – more important to some owners than in the past. Electric Car chargers are being considered and requested by more and more tenants and owners but surprisingly solar was less of interest to the panelists, despite the ability to use state incentives and reduce power costs.
Section 179-D – with changes under the Inflation Reduction Act to allow non-profits to monetize and transfer the tax deduction or reduce the cost of their building out, many of the owners and brokers in the room thought this was worth exploring to see how the potential $5.25 PSF in tax deduction could be utilized by their clients.
A super turn out, packed house and folks engaging in networking and learning. Kudos to MARE for yet another excellent, well attended event. Duane Morris, LLP looks forward to our continued involvement with the group.
Duane Morris has a robust real estate group and healthcare group focused on regulatory, permitting, executive compensation and real estate related and incentive issues and programs. f you have any questions or follow ups, please do not hesitate to contact Brad A. Molotsky, Erin Duffy or the lawyer in the firm whom you normally deal with on other maters.