Top 6 Environmental Concerns to Watch in 2022

21 Mar Top 6 Environmental Concerns to Watch in 2022

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In this month’s article, ESA offers a list of the Top 6 environmental concerns that will impact how you approach redevelopment in 2022 and beyond.

1. Environmental Sustainability & Governance

In 2018, New Jersey’s State Investment Council (SIC) adopted its Environmental Social and Governance (ESG) policy. In accordance with this policy, any funds connected to state investments, including the New Jersey Pension Fund, must integrate ESG factors into their practices. ESG has remained in the background at the real estate level for many years, but ESA believes it will take more of a front row seat in 2022.

Why does ESG matter to property investors, developers, and brokers? It matters because ESG policy spans a wide range of considerations such as carbon emissions, water and energy efficiencies, work-force diversity, share-holder rights, executive compensation, and accounting practices, to name a few. As investors continue to see the financial benefit for fund beneficiaries, we believe asset managers and real estate investment groups will pay more attention to how they can optimize ESG factors for their funds and be more selective of assets. It may mean development corporations use more energy efficient materials and pay closer attention to their corporate social impact, and it may also necessitate a greener environmental remediation strategy in the future. 

2. Environmental Justice

New Jersey property owners and developers must now comply with New Jersey’s Environmental Justice Law enacted in September 2020.

Assuming your project involves one of the eight types of facilities covered by the law, you must, at a minimum, prepare an Environmental Justice Impact Statement (EJIS) with the aid of a qualified attorney. Identify and retain an attorney who is well-versed in the environmental justice law and is well-known and well-respected in the township in which the property is located. It will also be helpful to become familiar with and visible within prominent community-centered non-profit circles relating to environmental justice causes.

This article explains the basics of the law and provides guidance on how to successfully navigate a potentially complex process to avoid disruption of your project.

3. Stormwater Management & PACT

As the climate changes, so do the regulations associated with stormwater management in New Jersey. Oversight of redevelopment within proximity of flood plains and waters is managed by the New Jersey Department of Environmental Protection (NJDEP), and there are some important revisions to regulations that developers should keep on their radar. Among these are more stringent restrictions to development in flood hazard areas — including the expansion of the riparian zones that restrict development near regulated waters — and “zero net fill” rules that will require developers to remove a greater quantity of fill from their site to offset flood storage. The stormwater management rules aren’t the only updates made during the pandemic; the NJDEP is also working on ways to make our state’s natural and built environment more resilient to climate change by introducing the Protecting Against Climate Threats (PACT) reform. PACT will include ways to modernize land use and air pollution rules that will affect construction and development in New Jersey, potentially impacting costs and development timeframes.

4. Wetlands Development

Due to significant improvements to over-water shipping infrastructure, the demand for warehousing in New Jersey is at an all-time high. Most of New Jersey’s available warehouse space has either been developed already or is prohibitively expensive. This has caused developers to get creative in how and where they can construct new warehousing space. One potentially untapped — although highly restrictive — development sector is wetland areas, especially in southern and western New Jersey. The percentage of identified wetlands on properties in those areas of the state may pose logistical and planning concerns for developers. Therefore, they should plan to perform wetlands due diligence early in the process and concurrent with their Phase I or Preliminary Assessments. The result is minimized costs and lower risk in the acquisition and development planning process.

For more on wetlands development, see this article.

5. Revised NJDEP Soil Remediation Standards

Last year, NJDEP implemented significant revisions to their Soil Remediation Standards through an amendment to New Jersey Administrative Code (N.J.A.C) 7:26D. Parts of the revised code incorporate either an increase or decrease in the remediation standards for certain compounds. This has implications for both active and closed NJDEP Site Remediation Program cases and, therefore, for developers managing these sites. In brief:

• For properties relying on an older No Further Action letter or Remedial Action Outcome and where a new Preliminary Assessment is required, an order of magnitude analysis may require further investigation of a previously closed Area of Concern (AOC) based on the recent changes in remediation standard. 
• For properties currently undergoing active remediation and in which a Remedial Action Workplan was not submitted prior to March 17, 2021, sample results must be reevaluated in comparison to the newly adopted remediation standards. This reevaluation may require that certain AOCs be further investigated, thus increasing project costs.
• For properties currently undergoing active remediation, the increase in remediation standards for certain compounds may cause certain AOCs that were previously considered contaminated to now be closed and not warranting further investigation, thereby reducing project costs.   

6. PFAS

By now, most everyone has heard of the contaminants of emerging concern collectively known as PFAS. PFAS compounds are man-made chemicals that have been used in a variety of industries around the globe, including in the United States, since the 1940s. Perfluorooctanoic acid (PFOA, i.e., Teflon) and PFOS have been the most extensively produced and studied of these chemicals. Both are highly persistent in the environment and in the human body — meaning they don’t break down and they can accumulate over time. There is evidence that exposure to PFAS can lead to numerous adverse human health effects.

Since ESA published its first article on PFAS back in 2018, the NJDEP continues to aggressively tackle this issue and has implemented several interim ground water quality standards for PFAS contaminants in advance of additional studies and more permanent regulations. The issue of PFAS will present increasingly significant challenges to the developer community as NJDEP continues to fine tune their regulatory standards for this class of contaminants.

In ESA’s opinion, these are the Top 6 environmental topics that will influence the way you approach redevelopment in 2022 and beyond. Are there other areas of concern that you believe will be of particular concern to the development community in 2022? If so, or if you have questions about these or any other pressing environmental issues that are keeping you up at night, let us know.