The social network bought a 22-acre parcel off of Constitution Drive, which was formerly the home of a chemical operation, according to the newspaper.
That means that the soil there is contaminated with chemicals called polychlorinated biphenyls.
Facebook has asked the state for permission to clean up the soil before it builds five buildings up to four stories high as well as a five-story parking garage to house its employees, the newspaper reported.
Facebook has 2,400 employees on site in Menlo Park, which used to house the Sun Microsystems campus, the newspaper reported.
A Facebook spokesman refused to comment on the company's sagging stocks, but reaffirmed the firm's goal of having up to 9,600 employees in just a few years' time.