In 1997, the Arizona Legislature substantially amended the Water Quality Assurance Revolving Fund (WQARF) statutes. As a result of this legislation, three settlement options were made available for resolving WQARF and Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) liability to the State. These options are qualified business, financial hardship, and general settlements.

A 30-day public comment period is required for each of the three settlements. Notice of the settlement is published in a newspaper of general circulation in the county where the property is located. ADEQ may withdraw from any settlement after considering the public comments. If contribution protection is requested, the settlement must be approved by a federal court.

Qualified Business Settlement

The qualified business settlement (QBS) statute (Arizona Revised Statutes § 49-292.01) allows an eligible person or business entity to settle all potential liability to the State under WQARF and § 107 of Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for known hazardous substance contamination at the property. To be eligible, the applicant must be a living person or valid business entity and have identifiable gross income, as defined by § 61 of the Internal Revenue Code, greater than one dollar and less than two million dollars in each of the two years prior to the application and for the average of the two years preceding the year ADEQ or the U.S. EPA initiated an investigation into the applicant's share of liability. In determining the applicant's gross income, ADEQ may consider the gross income of all concerns in which the applicant has ownership, control, of management. Any transfer of money or assets by the applicant within two years preceding the application is void for the purpose of determining eligibility. An applicant whose liability arose out of criminal acts is not eligible for a QBS. The applicant shall pay 10 percent of its average annual gross income for the two years preceding the year the application was submitted, including the income from money or assets transferred within two years preceding the application. The settlement amount will be interest free if it is paid in full within five years. If the settlement amount is paid from five to ten years, then it shall bear interest at the rate of six percent per annum. The applicant shall also grant to ADEQ an easement on the property in a form provided by ADEQ.

If ADEQ determines that an applicant is not eligible for a QBS, ADEQ must notify the applicant in writing within 90 days of receipt of a complete application and other requested information. The denial of a QBS is appealable to the Office of Administrative Hearings pursuant to ARS § 49-298.

Qualified Business Settlement Application | Download >

Financial Hardship Settlement

ADEQ will consider any offer of settlement by a person or business entity who may be potentially liable to the State under WQARF or § 107(a) of Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The person must demonstrate a financial hardship with respect to payment of that person's liability. A person who is unable to pay the full amount of his or her share of liability may pay a reduced settlement amount based upon the person's ability to pay. A person whose liability arose out of criminal acts is not eligible for a financial hardship settlement.

To apply for a financial hardship settlement, a person must submit to ADEQ tax returns for the preceding five years and other financial information sufficient to establish that the applicant cannot pay the full amount of his or her liability. ADEQ has 90 days to determine whether the person qualifies for the financial hardship settlement. If ADEQ determines that the person does not qualify, ADEQ will notify the person in writing. The denial of a financial hardship settlement is appealable to the Office of Administrative Hearings pursuant to ARS § 49-298.

General Settlement

Pursuant to ADEQ's general settlement authority under ARS § 49-292, a person or business entity may make an offer to ADEQ to settle its potential WQARF and CERCLA liability to the State. ADEQ will consider the factors under § 49-282.06 and § 49-285 (E) and (F) in determining whether to settlement any person's liability. Under the general settlement provision, ADEQ has wide discretion to consider any offer of settlement.

For further information on how to apply for a qualified business, financial hardship or general settlement, please contact:

Remedial Projects Section
P: 602-771-4189
Toll Free: 800-234-5677 ext. 6027714189

Any settlements that are submitted to ADEQ, a copy is to be supplied to:

Waste Programs Division Director
1110 West Washington, 6th floor
Phoenix AZ 85007