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Mark A. McGinnis, Esq. & R. Jeffrey Heilman, Esq. Water is and always has been an issue of critical importance in Arizona. Living in Arizona’s desert climate means that all economic activity, from agricultural and industrial enterprises to residential development, is entirely dependent on the state’s limited water supplies. Even today, Arizonans engaged in buying or selling real estate confront significant water issues, both legal and technical. This paper examines several of the issues that commonly arise in the context of real estate transactions. Although these issues most often arise with respect to transactions involving commercial or industrial property, some of the most perplexing problems can arise in the normal course of residential sales. The potential ramifications of unrecognized water issues are easy to appreciate. For example, a “prime commercial…

Gary E. Marchant. Uncertain risks present unique challenges to the law. Unlike science, which can always defer judgment until more data are generated and uncertainties are reduced, law must often come to final decisions on uncertain risks that are indeterminate and contested. A relatively new area of uncertain health and environmental risks, which often arise in the context of property transactions, is vapor intrusion. Although the potential for vapor intrusion has always been present on contaminated lands, it is only due to recent legal and policy changes that vapor intrusion evaluation has now become a part of almost every investigation of a potentially contaminated site, and many real estate transactions. This article describes this emerging problem, and the challenges and liability risks it presents for environmental transactions and remediation. Part…

Laura Malone. The following Article is based on comments given by Laura Malone at “Saving the Deal: Avoiding and Minimizing Environmental Liability in Corporate and Real Estate Transactions,” a continuing legal education seminar. The information contained below is a summary of information available through the Arizona Department of Environmental Quality (“ADEQ”) at http://www.azdeq.gov/ and from various ADEQ documents. Those of you in the environmental field back in 1970 may remember the passage of the National Environmental Policy Act (“NEPA”). Subsequent to NEPA, and later that same year, then President Richard Nixon signed an Executive Order creating the United States Environmental Protection Agency (“EPA”). Both NEPA and EPA were predicated on public concerns that, as a nation, we were not focusing on the environment or even had an understanding of how…

Kenneth A. Hodson & Charles H. Oldham. This article discusses potential liability under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”) and certain defenses thereto including the Bona Fide Prospective Purchaser (“BFPP”) defense. Under certain circumstances, the assertion of the BFPP defense may enable the purchaser (and the lessee) of real estate to avoid liability under CERCLA. As discussed more fully below, in general, a potential purchaser of real estate should be aware that, under CERCLA, the new purchaser of the property may be liable for, among other things, the cost of cleaning up any “hazardous substances” that may have been released at the property. Full Article

Jim Derouin. “Environmental Law” is, on the one hand, a phenomenon—an active, sometimes frenetic, area of the law for the last forty years. On the other hand, it is an ages-long reaction of civilization to, variously, preserve, protect, use and/or harness natural resources while, at the same time, protecting society from health risks (e.g., typhus) and providing safe public services (e.g., waste disposal and water supply). It is easy for society today to get carried away with arguments over hot topics such as “global warming,” “environmentalism” and/or the never-ending debate between private property rights and the “public right” to be protected from heath threats (whether from air or water sources). It is useful, however, from time to time to put those debates aside and concentrate on context. That is the…

Michelle De Blasi. The high cost of remediating contaminated sites and the joint and several liability scheme under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) (42 U.S.C. § 9607), as amended, have led the United States Environmental Protection Agency (“EPA”) and CERCLA Potentially Responsible Parties (“PRPs”) to pursue every available resource to cover cleanup costs. Litigation seeking reimbursement for remediation expenses from corporate parents, corporate successors, officers, directors, and shareholders has shown that plaintiffs will attempt to cast CERCLA’s liability over every possible party with resources, and any such party can be caught under the right circumstances. United States v. Bestfoods established the standard by which the liability of corporate entities and their subsidiaries is determined. In Bestfoods, the Court held that parent corporations can be directly liable…

Hayleigh S. Crawford. In 2012, public pension systems responsible for providing retirement benefits for hundreds of thousands of state employees were underfunded by an estimated one trillion dollars. The recent recession’s enormous toll on investment earnings, combined with many states’ failures to make the required contributions to their retirement funds, has left state legislatures, employees, and taxpayers with a looming debt and few palatable options. Arizona is no exception to the nationwide public pension problem. Within ten years, Arizona’s pension funds have gone from “healthy” to seriously underfunded. As a result, Arizona taxpayers are paying more than ever for public employee retirement benefits: in 2010, Arizona taxpayers were paying paid at least $1.39 billion annually to fund the state pension systems, more money than the estimated cost for higher education,…

Robert D. Anderson, Norm James, Dawn Meidinger & Greg Adams. Standard practice for conducting due diligence as part of real estate transactions has long included an assessment of the potential for a site to have “recognized environmental conditions,” i.e., hazardous substances or petroleum products released to the environment. In addition to this evaluation, sound due diligence practices should include an evaluation of the potential for federal regulatory requirements to significantly affect value. This paper will look at four general areas: the Clean Water Act (“CWA”), the Endangered Species Act (“ESA”), the National Environmental Policy Act (“NEPA”) and the National Historic Preservation Act (“NHPA”). Section 404 of the CWA generally requires that a permit be obtained from the U.S. Army Corps of Engineers to discharge dredge or fill material into “navigable…

Bert Acken. Secured creditors can be exempted from liability for contamination from properties for which they hold security interests under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), the Underground Storage Tank (“UST”) program under the Resource Conservation and Recovery Act (“RCRA”) and Arizona’s CERCLA-counterpart, the Water Quality Assurance Revolving Fund (“WQARF”). However, these protections are far from absolute and will be lost if applicable requirements are not followed while a loan is active, or after a lender acquires ownership or possession. Additionally, even if a lender follows the steps necessary to protect itself from cleanup liability, additional efforts should be undertaken before a loan is originated to protect a security interest to the fullest extent possible. Full Article

FIFTY: Shades of Grey—Uncertainty About Extrinsic Evidence and Parol Evidence After All These UCC Years David G. Epstein | 45 Ariz. St. L.J. 945 (2013) POSTED: Notice and the Right to Exclude Richard M. Hynes | 45 Ariz. St. L.J. 949 (2013) ORPHANED POLLUTION Rhett B. Larson | 45 Ariz. St. L.J. 949 (2013) TAX CREDIT SCHOLARSHIP PROGRAMS AND THE CHANGING ECOLOGY OF PUBLIC EDUCATION Hillel Y. Levin | 45 Ariz. St. L.J. 949 (2013) UNORIGINAL SIN: The Problem of Judicial Plagiarism Douglas R. Richmond | 45 Ariz. St. L.J. 949 (2013) BEHAVIORAL LEGAL ETHICS Jennifer K. Robbennolt & Jean R. Sternlight | 45 Ariz. St. L.J. 949 (2013) THE SOLICITOR GENERAL UNBOUND: Amicus Curiae Activism and Deference in the Supreme Court Michael E. Solimine | 45 Ariz. St. L.J. 949 (2013) BEGGING THE (FIRST AMENDMENT) QUESTION: The Constitutionality of Arizona’s Prohibition of Begging…