Prospective Purchaser Agreement

What Is a Prospective Purchaser Agreement?

Arizona is one of a growing number of states with statutes that address liability issues associated with buying, selling or developing real property contaminated by hazardous substances.

Because of the potential for liability of owning one of these properties, property owners and other stakeholders frequently need to determine if a property they are interested in is contaminated. When contamination is discovered, stakeholders may also want to know the extent of the ADEQ authority to take enforcement actions or to recover cleanup costs.

Pursuant to Arizona Revised Statute (ARS),1 ADEQ may enter into a Prospective Purchaser Agreement (PPA) that provides a written release and covenant not to sue for potential Water Quality Assurance Revolving Fund (WQARF) liability and for potential owner liability to the State under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for the existing contamination at the property, if certain statutory conditions are met.

PPA Application Form | Download >

Eligibility

In order to be eligible for a PPA, the following conditions must be met:

  • the property is within a WQARF registry site or ADEQ has sufficient information to determine the extent of the contamination,
  • the purchaser did not cause or contribute to the contamination and is not affiliated with any person who may be responsible for the contamination,
  • the purchaser's use or development of the property will not exacerbate the contamination or interfere with ongoing remedial actions,
  • the purchaser completes and submits an application to ADEQ before the sale of the property closes, and
  • the purchaser provides a substantial public benefit, which must be more than the mere continuation of a business on the property.

Substantial Public Benefit

Examples of substantial public benefit include:

  • substantial funding or other resources to perform or facilitate remedial measures at the property,
  • an agreement by the applicant to perform substantial remedial measures at the property,
  • productive reuse of a vacant or abandoned industrial or commercial property,
  • development of property by a governmental entity or nonprofit organization to address an important public purpose,
  • creation of conservation or recreation areas, and
  • other substantial public benefits that ADEQ considers sufficient.

The release and covenant not to sue are not effective until the public benefit and all other obligations under the PPA have been performed. ADEQ may also agree to seek a court-approved consent decree that will provide contribution protection from claims under § 107 of CERCLA. The decision to enter into a PPA is solely within ADEQ's discretion and is not an appealable agency action.