The Nickel Report

Demand for data center capacity is rewriting the rules of site selection. With interconnection queues stretching for years, power has become the scarcest input, and properties once discounted because of known or suspected contamination can offer infrastructure support that greenfield sites often cannot. This includes large tracts of industrially zoned land that already have transmission, substations, water, and transportation access. Additionally, federal, state, and local funding and tax benefits may be available to encourage development of these brownfield sites. For many developers, the question is no longer whether to consider a brownfield, but how to do it without inheriting its problems.

The federal government is encouraging this shift in perspective and practice. Executive Order 14318, Accelerating Federal Permitting of Data Center Infrastructure, directed the Environmental Protection Agency (EPA) to identify brownfield and Superfund sites that could support data center projects. Following issuance of its Guidance on the Redevelopment of Superfund and Brownfield Sites as AI Data Centers in January 2026, EPA has expanded its mapping tools to screen Superfund sites and large brownfields with potential for data center reuse. These projects are already happening. On its website, EPA highlights a data center built on two former textile and manufacturing brownfields in North Carolina, supported in part by EPA funds for brownfield activities. In California, a developer converted a former semiconductor manufacturing Superfund site into a data center after years of groundwater remediation.

But a contaminated site that looks attractive on a map is not necessarily ready to build on. Developers face two questions that must be answered together. The first is familiar: “Can we acquire this property without inheriting strict and potentially joint and several liability for historical contamination?” The second is just as important: “Can the existing contamination, remedy, and regulatory obligations coexist with the project we intend to build, on our schedule, and without jeopardizing liability protections?” A strong defense against liability on a site that cannot be developed on time is only half a solution, and so is a workable site plan that leaves the owner exposed. Both questions should shape diligence from the outset.

The sections below address each question in turn—how to secure and preserve liability protection, how to align the project with site conditions and the remedy, and how state and other federal environmental requirements fit into the picture.

1. Get the CERCLA Liability Protection Right Before Closing

CERCLA allows a buyer to acquire contaminated property and avoid owner or operator liability for existing contamination if it qualifies as a bona fide prospective purchaser (BFPP) or certain other defenses. Before acquisition, the buyer must conduct “all appropriate inquiries” (AAI) and have no disqualifying affiliation with a liable party. The protection is self-implementing in that EPA does not certify BFPP status, so the buyer must be able to prove every element if their invocation of statutory liability protections is ever challenged. In practice, the defense may be lost on technicalities that could have been avoided or fixed, including the following:

• Requirements and deadlines are unforgiving. AAI must be completed within one year before acquisition, and key components (environmental cleanup lien searches, government records review, site inspection, interviews, and the environmental professional’s declaration) must be no more than 180 days old at closing. The clock runs from the earliest component, not the report date, and updates cannot extend the one-year outer limit. On data center deals where closing may repeatedly be extended, this is a potential trap, and the expiration of a Phase I Environmental Site Assessment cannot be cured after closing.
• The draft Phase I report must be carefully reviewed. Common defects include nonconforming environmental professional declarations, owner or key site manager interviews that never happened, records written off as unavailable too quickly, and “controlled REC” conclusions without an actual regulatory closure behind them.

• Leases also trigger AAI. Many data center projects start with a ground lease. The 2018 BUILD Act extended BFPP protection to tenants, but at least one court of appeals affirmed a federal district court that held that a party that entered into a lease with a purchase option on a stale Phase I lost the defense. See Von Duprin LLC v. Moran Electric Service, 12 F.4th 751 (7th Cir. 2021). AAI was required when the tenant became an operator under the lease, and a timely Phase I at the time an option to purchase the property was exercised did not cure the gap.

• The correct party must own the diligence. In joint ventures and multi-entity campus structures, the entity taking title or the lease may not be the one that commissioned the Phase I. Relying on another party’s report requires confirming that it satisfies the AAI rule, preparing evidence that the user’s own “additional inquiries” were completed, and updating stale components within the regulatory deadlines. A reliance letter is also important for establishing contractual privity with the environmental professional that prepared the Phase I report.

2. BFPP Duties Do Not End at Closing

Many mistakenly assume that liability protections are secured when the Phase I report is executed, but those efforts can be wiped out by post-closing inaction. After closing, a BFPP must take reasonable steps regarding existing releases of hazardous substances (e.g., prevent migration or exacerbation), comply with land use restrictions, not impede institutional controls, cooperate with and provide access to response personnel, respond to information requests, and provide required notices. It must also show that no disposal of hazardous substances occurred after it acquired the property, a requirement EPA addressed in its 2019 update to the Common Elements Guidance.

Construction is often when these obligations are tested. Moving thousands of cubic yards of soil, trenching through impacted areas, removing pavement that functions as impervious barriers, or relocating parts of an existing remedy can all implicate continuing obligations. Notably, in PCS Nitrogen Inc. v. Ashley II of Charleston, 714 F.3d 161 (4th Cir. 2013), a redeveloper that had performed AAI lost the defense because it failed to fill or cap sumps when it demolished structures and failed to address a debris pile. The practical lesson is that BFPP strategy and construction strategy must be developed together. Reasonable steps planning belongs in the demolition and grading scopes of work and the construction contracts, not just in the closing file.

3. CERCLA Liability Is Only One Layer

A BFPP analysis only addresses a CERCLA protection. Several other regimes can drive cost and schedule on a data center site, and some fall entirely outside the BFPP protection, including:

• Petroleum releases. CERCLA’s “hazardous substance” definition generally excludes petroleum, so qualifying as a BFPP might not excuse the new owner from responsibility for reporting and addressing leaking tanks or fuel releases. Such issues are common at former industrial and utility sites, are generally governed by state petroleum release and tank programs, and could result in liability even if the release is unlikely to reach waters of the United States.
• Excavated soil and waste. Contaminated soil and debris generated during construction may be hazardous waste under the Resource Conservation and Recovery Act (RCRA) or state law. The developer or its contractor may become the generator, with characterization, manifesting, and disposal obligations and costs that need to be planned for and allocated. Additional issues may arise if soil and debris containing different contaminants are commingled or transported to different locations.

• Polychlorinated biphenyls (PCBs) releases. Former manufacturing and electrical sites may involve PCB-contaminated soil, equipment, or building materials. EPA has retained primacy over regulating PCB contamination under the Toxic Substances Control Act (TSCA), which means that PCBs are subject to cleanup and disposal requirements that differ from state waste disposal regulations.

• Dewatering and stormwater. Discharging groundwater from excavations, or stormwater from disturbed contaminated areas, is subject to National Pollutant Discharge Elimination System (NPDES) permit regulations under the Clean Water Act. The presence of certain contaminants can require obtaining individualized NPDES permits with specialized treatment obligations, which can become a critical path item for development.

• Vapor intrusion. Data centers are occupied buildings with large slab footprints. Where volatile organic compounds remain in soil or groundwater, vapor barriers or sub-slab depressurization systems may be required, and those controls become long-term obligations.

• Per- and polyfluoroalkyl substances (PFAS). Two PFAS (PFOA and PFOS) are now CERCLA hazardous substances, and, as previously reported, the DC Circuit upheld EPA’s designation in August 2026. Sites with known or suspected historical PFAS use, such as manufacturing, plating, or fire-training areas, warrant targeted diligence—starting with the environmental professional’s efforts in preparing the Phase I report. PFAS litigation filed by private parties and states, including under CERCLA, is proceeding regardless of EPA enforcement discretion priorities.

4. The State Program May Matter as Much as CERCLA

Most contaminated property transactions are resolved outside the federal Superfund program. State voluntary cleanup, brownfield, and corrective action programs often set the practical cleanup endpoint and can provide risk-based standards, liability protections, institutional control mechanisms, and “no further action” (NFA) or closure determinations that lenders expect. EPA’s guidance itself flags the importance of state NFA documentation for brownfields. Many states have voluntary cleanup programs that, on successful completion of the work, offer the incentive of a certificate or other documentation providing limited immunity from enforcement actions by the state (and from EPA under certain conditions).

However, these programs may involve tradeoffs that need to be carefully considered. State oversight can expand investigation and extend timelines, and state closure may not resolve federal Superfund liability, despite the CERCLA Section 128(b) enforcement bar. The presence of PCBs may complicate state oversight and require EPA involvement. A buyer that preserves BFPP status perfectly but learns after closing that the state will require years of additional investigation or remediation before excavation in the footprint has solved only part of the problem.

5. Design the Project and the Remedy Together

A legally compliant Phase I report assists in protecting against legacy liability, but it is not a development plan. It does not tell a developer the cost of building around contamination, or how to design or perform that work. It leaves open many more granular questions. Where will foundations, substations, utility corridors, stormwater facilities, and access roads go? Will excavation encounter impacted soil, or dewatering encounter contaminated groundwater? What needs to be done to prevent additional releases or migration of existing contamination to other properties? Does a planned building sit on a cap? Do monitoring wells or extraction systems cross the footprint? Will institutional controls accommodate future campus phases? A Phase II environmental site assessment can answer some of these questions, and potentially also set a baseline for future claims. As the site plan matures, the investigation should become development-specific.

At contaminated sites, developers often ask when the cleanup will be “finished.” That is usually the wrong question, as long-term monitoring and other requirements for some cleanups can span many years, if not decades. A remedy can be compatible with redevelopment long before cleanup levels are achieved, and EPA distinguishes physical completion of remedial construction from final attainment of cleanup goals. The better question is whether the intended use can coexist with the remedy. That may mean placing structures and utilities around a cap, preserving access to wells, building in vapor controls or, with agency approval, modifying the remedy to reflect the new use. EPA encourages qualified purchasers to perform cleanup work under agency oversight where that better coordinates remediation with redevelopment. EPA’s data center guidance even identifies treated groundwater from an existing remediation system as a potential source of cooling water. The key is sequencing—the remedy should account for the anticipated use early, and the project design should account for the remedy while the site plan is still flexible.

Conclusion

EPA’s policy direction makes brownfield and Superfund sites more visible to data center developers than ever. These projects can add layers of complexity. However, the projects most likely to succeed will treat a property’s environmental history not as a legal problem to solve after the site is chosen, but as one component of the development plan from the outset, with the liability strategy, the cleanup pathway, the transaction documents, and the construction schedule all pointing in the same direction. If you are evaluating a brownfield or Superfund site for a data center project, we would welcome the opportunity to help you assess the risks and build a strategy before key decisions are made.