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The U.S. Environmental Protection Agency (EPA) has reaffirmed its 2024 decision to designate two PFAS chemicals—perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS)—as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). In a September 2025 court filing, EPA committed to defending the designations against ongoing challenges in the D.C. Circuit Court of Appeals. The designations, effective since July 2025, remain enforceable and impose strict liability for reporting releases and cleanup costs. For property owners, developers, and lenders, EPA’s decision underscores the need to evaluate and manage PFAS-related risks in transactions, redevelopment projects, and ongoing site management. The designations carry immediate consequences for the real estate market. Three key issues stand out:
- Broad CERCLA Liability and Transactional Risks
Under CERCLA’s strict, retroactive, and joint-and-several liability framework, property owners and operators may face significant responsibility for PFAS contamination involving PFOA and PFOS—even if they did not cause, or only partially contributed to, a release. Unless a statutory defense such as the bona fide prospective purchaser applies, owners may still be on the hook for costly investigations and cleanups, with exposure to government enforcement actions as well as private cost recovery or contribution suits. Real estate transactions involving PFAS-impacted properties now demand careful negotiation of purchase agreements, indemnities, and escrow arrangements to allocate liability—especially given the widespread presence of these chemicals in the environment.
- EPA Enforcement Discretion and Ongoing Exposure
EPA’s 2024 PFAS Enforcement Discretion and Settlement Policy directs agency enforcement toward significant sources of PFAS contamination—such as manufacturers and industrial users—while generally extending leniency to “passive receivers” like municipalities, water utilities, and farmers. However, the policy does not shield landowners from private cost recovery actions under CERCLA, nor does it provide absolute protection absent congressional action to create statutory exemptions. For developers, buyers, and lenders, the takeaway is clear: EPA’s approach may limit—but not eliminate—exposure, making contractual protections and, where available, environmental insurance essential tools for managing PFAS liability.
- Enhanced Due Diligence and Transactional Planning
Real estate transactions now require robust PFAS-focused due diligence, including updated Phase I and Phase II environmental site assessments that specifically evaluate PFOA and PFOS. Importantly, “clean” reports issued before 2024—when PFAS were often excluded from standard assessments—may offer little protection if PFAS are later detected, leaving parties exposed to CERCLA liability. Buyers, lenders, and investors should engage qualified environmental consultants and legal counsel to assess risks, determine whether PFAS sampling is advisable, and mitigate potential liability through tools such as escrow reserves, indemnities, or environmental insurance. Key considerations include distinguishing site-specific contamination from background levels and understanding evolving lender requirements for PFAS-related assessments.
Although pending litigation in the D.C. Circuit could narrow or overturn the EPA’s rule, parties should not rely on that outcome. For now, PFOA and PFOS remain firmly embedded in CERCLA’s liability framework. Property owners and developers should update diligence protocols, review leases and transactional documents for PFAS provisions, and monitor both litigation outcomes and EPA guidance as the regulatory landscape continues to evolve.
