For commercial real estate owners and business professionals, the landscape of environmental liability continues to shift. The recent decision by the U.S. Court of Appeals for the D.C. Circuit in Chamber of Commerce of the United States of America v. EPA has unequivocally affirmed the U.S. Environmental Protection Agency’s authority to designate PFOA and PFOS, constituents of the PFAS group of “forever chemicals,” as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (the Superfund law).

This ruling, issued on August 18, 2026, by a unanimous three judge panel, is not merely a legal footnote; it reshapes risk assessment and transactional strategy for these synthetic chemicals that have been widely used since the 1940s and are highly persistent in the body and in real estate.

A practical takeaway is that this immediately changes how Phase I Environmental Site Assessments are ordered.

A Deeper Dive: Why the Court Affirmed EPA’s Authority

Industry groups challenged the EPA’s 2024 rule designating the two forever chemicals as hazardous substances, arguing, among other things, that the agency misinterpreted the statutory standard for hazardous substances and failed to assess costs adequately. However, the D.C. Circuit rejected the challenge, siding squarely with the EPA. The court upheld the EPA’s interpretation that “may present substantial danger” under CERCLA Section 102(a) signifies a possibility of harm, not a certainty, thereby affirming the scientific basis for the designation.

The court also found EPA’s cost benefit analysis and adherence to administrative procedure to be legally defensible. In essence, the court recognized EPA’s prerogative to designate substances posing potentially significant environmental and health risks under the existing legal framework, even if the financial implications are substantial.

And the costs of this public policy shift will be substantial, as we blogged in PFOA and PFOS Now Hazardous Substances Under Superfund Law, where we pointed out, “this is a true bete noire where a peer reviewed 2020 study cited approvingly by the EPA describes 99.7% of Americans having detectable PFAS in their blood!” That is, PFAS is so widespread that, locking the barn door after the cow has bolted, solutions will be hard to find.

The CERCLA Net Widens: Understanding Strict and Retroactive Liability

The D.C. Circuit’s decision activates CERCLA’s powerful liability scheme for PFOA and PFOS. This means CERCLA Liability is strict, retroactive, and joint and several. Current and past property owners, operators, generators, and even transporters can be held liable for cleanup costs, regardless of fault or whether their actions were legal at the time. This broad net can ensnare parties with even tangential connections to properties where PFOA or PFOS are found, creating significant Superfund implications far beyond traditional polluters.

Redefining Due Diligence in Commercial Real Estate Transactions

The ruling mandates a profound shift in environmental due diligence. Standard Phase I Environmental Site Assessments, which historically excluded emerging contaminants like PFAS, are no longer sufficient to provide comprehensive risk assessment or potential CERCLA liability protections.

Moving forward, commercial property risk assessments must explicitly expand the ASTM E-1527-21 scope of Phase I ESAs to include PFAS considerations. Where warranted, Phase II subsurface investigations will become critical to confirm the presence and extent of PFAS contamination, providing a baseline for potential liabilities. This will inevitably increase the complexity and cost of preacquisition due diligence.

Navigating Transactional Agreements and Proactive Risk Allocation

The newfound CERCLA implications elevate the importance of robust property transaction indemnities and contractual risk allocation. Buyers and sellers must meticulously negotiate representations, warranties, and indemnification provisions to address potential PFAS liabilities explicitly. Indemnities should anticipate future regulatory changes and potential claims, going beyond current regulations. Sellers may be hesitant to permit preacquisition sampling due to the risk of triggering reporting requirements, demanding creative solutions for deal structuring.

EPA’s Enforcement Discretion: A Limited Shield Against Liability

While the EPA has issued an EPA Enforcement Discretion Policy, aiming to focus its efforts on “major PRPs” (manufacturers, industrial users) and exercise restraint with “passive receivers” (e.g., municipalities, farmers), this offers only partial comfort. This policy does not eliminate statutory liability under CERCLA, nor does it preclude private parties from pursuing cost recovery or contribution claims against any potentially responsible party. Businesses must understand this discretion is a shield against government action, not a blanket immunity from all environmental law liability.

The Inescapable Cost of PFAS Management and Remediation

The designation of PFOA and PFOS as hazardous substances will inevitably lead to an increase in site remediation obligations. The EPA’s low maximum contaminant levels for PFAS in drinking water will drive expensive and technically challenging cleanups. Properties with historic industrial uses, firefighting foam application, or waste disposal activities are particularly vulnerable. Even sites previously deemed “clean” or “no further action” may face reevaluation and new cleanup requirements, adding significant, often unforeseen, costs.

Practical Takeaway for Commercial Real Estate Professionals

The D.C. Circuit’s decision creates an era of heightened PFAS scrutiny under CERCLA. For commercial real estate owners and business professionals, proactive engagement is paramount. The innocent landowner defense and other defenses under CERCLA remain available, but the decision increases the importance of demonstrating that PFAS contamination could not reasonably have been discovered; something that has not been included within the scope of ASTM E-1527-21 Phase I Environmental Site Assessments. Consultants have in the past evaluated PFAS as a “non-scope consideration,” but now it needs to be added to the scope of each assessment.

We have already modified our bespoke AI agent, which we use to conduct and to review a Phase I environmental site assessment, to now take PFAS into consideration.

Additionally, it is now necessary to integrate PFAS specific evaluations into environmental due diligence processes, negotiate robust indemnities that look beyond the immediate transaction, and understand the full scope of potential CERCLA liabilities. Ignoring these evolving risks is no longer an option; prudent management demands strategic foresight and a thorough understanding of this expanding legal and financial exposure.

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Join us this Tuesday for the next in our webinar series at the Intersection of Business, Science, and Law, “Exposomics – The New Environmental Challenge And Opportunity You Have Not Heard About,” on Tues, October 13 15 at 9 am. The webinar is complimentary, but you must register here.