Is Your Phase I Report Missing the Most Legally Toxic Risk?
Article
Let’s say you’re buying a warehouse. Or maybe it’s a tired strip mall, or a stretch of cracked pavement with “redevelopment opportunity” scribbled across the listing.
November 2025
Let’s say you’re buying a warehouse. Or maybe it’s a tired strip mall, or a stretch of cracked pavement with “redevelopment opportunity” scribbled across the listing. You do the right thing. You order a Phase I Environmental Site Assessment. Someone shows up with a clipboard, pokes around, checks a few records, pulls some data.
The report comes back: nothing recognized. No issues found. You move forward.
But twenty years ago, that site caught fire. Or it hosted a fleet of vehicles. Or a fire department ran foam training drills out back. Not a problem at the time. No one wrote it down. No one reported it.
But now? It’s a problem.
That foam probably contained PFAS. Per- and polyfluoroalkyl substances. Manufactured to resist heat, grease, water, and friction. They do their job very well. They also don’t go away. Once they hit the ground, they stick around. Through rain, snow, leases, ownership transfers, zoning changes, and redevelopment dreams.
In April 2024, the EPA formally listed PFOS and PFOA—two of the most common PFAS compounds—as hazardous substances under CERCLA. That changed the legal game. Once PFAS is discovered, cleanup obligations kick in. It is now a federal liability trigger. And it does not care who spilled it or when.
In September 2025, the EPA followed up with final enforcement guidance. That guidance confirmed the agency’s intent to pursue PFAS contamination through existing CERCLA enforcement powers. It confirmed that responsible parties include not just manufacturers and military facilities but landowners. That includes current owners, recent buyers, even those who acquired the site after the contamination occurred.
Right now, in Q4 of 2025, thousands of commercial properties carry this risk. But most Phase I reports won’t say a word about it.
Why? Because PFAS is not yet required in standard Phase I scopes. It does not appear in the federal or state environmental databases consultants typically search. It does not show up unless someone looks for it. Most environmental professionals rely on a set of sources designed around regulated tanks, spills, and reported violations. PFAS hides in the gaps.
The contamination may not have been reported. The foam may have been used once. The wastewater discharge may have been buried in a lease agreement from 1989. None of that makes it harmless. It just makes it easy to miss.
And if you miss it, the liability can still land on you.
PFAS moves. It travels with water. It seeps into groundwater. It vaporizes under the right conditions. It does not stay where it started. That means your risk is not limited to your parcel. You can buy a clean-looking property and inherit exposure from next door.
Fire stations, airfields, plating shops, dry cleaners, trucking depots, military suppliers, fabric mills, industrial laundries. These are not abstract examples. These are the past lives of many properties still circulating in today’s commercial real estate market.
The problem is not just the presence of PFAS. It is the absence of inquiry.
Most stakeholders assume someone else is watching the line. Buyers think the consultant caught everything. Brokers think the report cleared the path. Lenders assume the absence of flags means green light. Insurance underwriters price the risk but say nothing. And consultants follow the scope.
That’s how contamination moves quietly through the market.
Some groups are getting smarter. Buyers are modifying their scopes. They are adding PFAS screens to Phase I instructions. They are asking for more than the default database pull. They are layering historical land use reviews with regional groundwater studies. They are not looking for perfect certainty. They are looking for signal.
Sellers are commissioning their own environmental reviews before going to market. They want to understand their risk before a buyer uses it as a negotiation weapon. They want to disclose strategically, not reactively.
Lenders, especially in PFAS-heavy states, are tightening expectations. Some now require explicit mention of PFAS in environmental reports. Others are pushing borrowers to confirm whether a site carries known risk factors.
Insurance carriers are miles ahead. Many have already excluded PFAS from environmental coverage. Others charge premiums that reflect the uncertainty. If you are assuming your policy covers a future PFAS discovery, you are probably wrong.
So what do you do?
You treat PFAS like you would any other regulated contaminant. You build it into the process. You stop assuming the Phase I is complete without it.
If you are a buyer, ask your consultant: is PFAS included in this scope? If not, why not? What land use indicators trigger further investigation? What records or overlays do you use to identify PFAS potential?
If you are a seller, get your site screened before a buyer does. Identify the weak spots. Build the disclosure around real information. Avoid the surprise.
If you are a consultant, stop waiting for permission. If the site carries a PFAS profile and the scope excludes it, say so in bold print. Offer the screen. Do the work. The industry will not evolve without you.
If you are a broker, stop telling clients that the Phase I cleared the deal if it ignored PFAS. The report cannot clear what it does not examine.
We are no longer waiting on regulation. We are living in it. CERCLA covers PFAS. EPA enforcement is active. Legal action is increasing. The question is whether your due diligence reflects that reality or still operates like it is 2015.
This is not about panic. It is about precision.
The difference between a good Phase I and a useful one is whether it shows you what is really there.
A report that skips PFAS in 2025 is not clean. It is incomplete.
And incomplete reports do not protect you. They expose you.
Ask better questions. Read past the checklist. Stop flying blind.
Because the dirt remembers. Whether your consultant does or not.
References:
- EPA Designates PFOA and PFOS as Hazardous Substances Under Superfund Law (April 2024) – https://www.epa.gov/newsreleases/epa-designates-pfoa-and-pfos-hazardous-substances-under-superfund-law
- EPA Final Enforcement Guidance for PFAS under CERCLA (September 2025) – https://www.epa.gov/enforcement/pfas-enforcement
- Beveridge & Diamond LLP PFAS Enforcement Analysis – https://www.bdlaw.com/news/epa-finalizes-pfas-enforcement-discretion-policy-under-cercla
- ASTM E1527-21 Phase I ESA Standard – https://www.astm.org/e1527-21.html
- EPA Approval of ASTM E1527-21 as AAI-Compliant – https://www.epa.gov/brownfields/final-rule-standards-and-practices-all-appropriate-inquiries
- EPA PFAS Resources and Drinking Water Health Advisories – https://www.epa.gov/pfas
- https://www.epa.gov/sdwa/and-polyfluoroalkyl-substances-pfas
- EWG National PFAS Contamination Map – https://www.ewg.org/interactive-maps/pfas_contamination/
