The federal government pulled back on PFAS rules in May 2026. The risk didn’t go away. It moved to the states, and that’s where the next scope question on your Phase I ESA gets answered.
On May 8, 2026, EPA withdrew a proposed rule that would have triggered new cleanup obligations for PFAS at thousands of industrial sites. Many in commercial real estate viewed it as good news. That’s only partially true.
The federal posture on PFAS is softer than it was a year ago. But the rules that actually drive what gets included in a Phase I Environmental Site Assessment (ESA) haven’t changed. And underneath the federal headlines, the state rules are getting tougher and more inconsistent. For lenders writing loans on industrial or older mixed-use property, and for owners with assets in more than one state, that’s the combination that matters.
Here’s what’s actually in effect right now, and how to think about it for your next deal.
The Federal Picture: Less Changed Than the Headlines Suggest
Two federal rules still drive PFAS risk on a real estate transaction. Neither of them moved in May.
The first is the 2024 designation of PFOA and PFOS as hazardous substances under CERCLA (the federal Superfund law). That rule took effect in July 2024. EPA reaffirmed it in September 2025. In plain terms, it means three things for property:
- If a release of these compounds happens on site, reporting obligations may apply, generally within 24 hours of discovery.
- Current owners can be on the hook for cleanup costs even if a prior owner caused the contamination.
- Phase I ESAs done under the ASTM E1527-21 standard increasingly include evaluation of PFOA and PFOS when the property history suggests they could be present. Other PFAS remains a non- scope item under ASTM by default, but lenders, regulators, and buyers commonly add it to the scope to support All Appropriate Inquiries, the legal standard buyers need to meet to qualify for protection from inherited contamination liability.
The second is the federal drinking water limit of 4 parts per trillion for both PFOA and PFOS. Still in effect. EPA has proposed rolling back limits on four other PFAS compounds, but that proposal is still in public comment until July 2026 and only touches the less common compounds.
What the May 2026 withdrawal actually changed is the likelihood of new federal cleanup orders at certain industrial sites already in EPA’s corrective action program. What it did not change is anything that touches your asset. Lender requirements, environmental insurance language, state programs, and the legal protections buyers rely on at closing all still work the same way they did in April.
The State Picture: Where Your Scope Actually Gets Set
States have been moving in the opposite direction of the federal rollback. In the first three months of 2026 alone, lawmakers across more than 20 states introduced at least 82 PFAS-related bills. Seven states already have enforceable drinking water limits on the books: Massachusetts, Michigan, New Hampshire, New Jersey, New York, Vermont, and Maine. Florida, Illinois, and Virginia have added their own more recently. New Jersey, Michigan, Minnesota, and New Hampshire are the most demanding on cleanup standards and what sellers have to disclose.
The numbers across states are far apart. The same chemical can trigger an investigation at vanishingly small concentrations in one state, and be completely unregulated in the state next door. For a portfolio with assets in multiple states, that means two warehouses with the exact same history can carry different environmental risk profiles based on which side of a state line they sit on. The scope of the Phase I ESA, and the cost of any follow-up work, will follow that geography.
A 4-Point Scope Check Before You Order the Phase I
Before EBI mobilizes a Phase I ESA on a deal where PFAS could be in play, we walk through four questions with the deal team. None of them require a chemistry degree, and all of them help set the scope of work, the cost, and the language that lands in the final report. You can run the same four against your own deals.
1. What is the history of this site?
The list of property uses most associated with PFAS is shorter than people think. Was the site ever used by a fire department for firefighting foam training? Was it an airport, military base, or hangar? A former metal-plating shop, textile or leather coating plant, paper mill, or computer chip factory? Some older telecom infrastructure with built-in fire suppression also makes the list. If the subject property or any neighbor hits one of these categories, PFAS should be in the scope of the Phase I.
2. What state is the property in?
Same property, different state, different rules. A building in New Jersey, Michigan, Massachusetts, or California sits inside a fully developed state PFAS program with its own cleanup standards and disclosure rules. A building in a state without enforceable limits is governed almost entirely by the federal floor. The scope of the Phase I should reflect that from the start, not get added on later when the report is already drafted.
3. What kind of deal is this?
An acquisition is different from a refinance, which is different from a redevelopment. Buyers using a Phase I to qualify for protection from inherited liability need a more thorough PFAS evaluation. Lenders refinancing may or may not, depending on their environmental policy. Redevelopment can put state cleanup standards in play sooner than people expect. Brownfields applicants now have to specifically evaluate PFOA and PFOS to qualify for federal grant money, which is a 2024 change that still surprises people. When a Phase I identifies PFAS as a concern, the typical next step is a Phase II ESA, which uses soil, groundwater, and sometimes soil vapor sampling to confirm or rule out contamination.
4. What does the lender or insurer want to see?
Most CRE lenders updated their environmental playbooks after the 2024 federal designation. Environmental insurance carriers have done the same, and many now exclude PFAS from coverage or only cover it if the Phase I uses specific language. Get those requirements on the table before the scope is finalized. Going back to widen the scope after the report is drafted costs time, money, and sometimes the loan timeline.
What This Means For Your Assets
If you’re underwriting a loan:
Tighten your environmental questionnaire for any property with industrial, manufacturing, airport, fire training, or firefighting foam history. Tie your reps and warranties to the specific state the property is in. Build in protection for the chance that state rules will keep changing after closing. The state floor underneath your collateral is not done moving.
If you’re managing a portfolio:
Environmental reserves built off the rules in place before 2024 are probably understated for properties in active state programs. A targeted look at assets in New Jersey, Michigan, Massachusetts, Minnesota, New Hampshire, and California, plus any property with a firefighting foam history anywhere, will tell you whether reserves, insurance terms, and exit strategies need to be repriced. Better to know now than to find out during a refinance or sale. A portfolio-level environmental due diligence review is often the fastest way to get clarity.
What's Coming Next
Federal PFAS policy will keep moving through 2026 and 2027. There are at least three live rulemakings worth tracking. None of them are likely to make the state landscape simpler. Most will widen it, because when the federal government steps back, states tend to step forward to fill the gap.
For CRE deals, that means scope questions driven by which state the property sits in are the new baseline. Build the question into your deal process upfront and you’ll spend less time fixing reports later.
Did EPA's May 2026 rollback eliminate PFAS risk on a Phase I ESA?
No. The withdrawal narrowed the chance of new federal cleanup orders at certain industrial facilities. It did not change the 2024 designation of PFOA and PFOS as hazardous substances, which is still in effect. Phase I ESAs are increasingly scoped to include PFOA and PFOS when the property history suggests these compounds could be present.
Which states have the strictest PFAS rules for commercial real estate?
When should PFAS be included in the scope of a Phase I ESA?
PFAS scope is usually warranted when the property or a neighbor has a history that includes firefighting foam use, fire training, airports, military bases, metal plating, textile or paper manufacturing, or computer chip production. It’s also warranted when the property sits in a state with an active PFAS program, regardless of historical use. EBI applies a 4-point scope check covering history, jurisdiction, deal type, and lender or insurer requirements.
What does the CERCLA designation of PFOA and PFOS mean for property owners?
EPA designated PFOA and PFOS as hazardous substances under CERCLA in April 2024, effective July 8, 2024. In practice, current owners may be financially responsible for cleaning up these compounds even if a prior owner caused the contamination, and releases on site may trigger reporting obligations. Buyers can still qualify for legal protection from inherited contamination liability, but doing so generally requires a Phase I ESA scoped to support All Appropriate Inquiries, which is increasingly being expanded to include PFOA and PFOS where the property history warrants it.
Run the scope check against your next deal
EBI Consulting provides Phase I ESAs and environmental due diligence to lenders, investors, owners, and developers in all 50 states. If you’ve got a transaction on the table where PFAS could be a factor, get in touch with our environmental team.