49-295. Environmental liens

A. In addition to other rights or remedies available to this state, and in order to protect the state's interest in recovering monies expended by the state for remedial action, all remedial action costs for which a person is liable to the state for the remedial actions conducted at that facility by the state under this article constitute a lien in favor of the state against only the property that is a facility subject to or affected by that remedial action and in which the person who is liable has an ownership interest.

B. The director may request the attorney general to file an action in the superior court in the county in which the property is located for an order establishing an environmental lien. The application for an environmental lien may be filed and recorded pursuant to subsection H of this section. The application for an environmental lien shall include the following information:

1. The name of the record owner of the real property on which the environmental lien is requested, the name of the person purportedly liable, if different, and the person's ownership interest.

2. The legal description of the real property where the environmental lien attaches.

3. The amount and an itemization of remedial action costs that have been incurred by this state as of the time the application is filed.

4. A statement of the evidence demonstrating that the person is liable for remedial action costs incurred by the state under this article.

C. On the filing of an application for an environmental lien, the court shall set a hearing date at least thirty but not more than forty-five days from the date the application is filed with the court. The hearing may be rescheduled if all parties agree to a different date. Service of the application and notice of the hearing date on the purportedly liable person and the record owner of the subject real property, if different, shall be in the manner prescribed in the Arizona rules of civil procedure.

D. On a showing by the state of probable cause that the person is liable for remedial action costs incurred by the state under this article and the amount of the remedial action costs and that the person has an ownership interest in the real property that is the subject of the application for an environmental lien, the court may issue an order establishing an environmental lien in favor of the state.

E. The order establishing an environmental lien shall be filed and recorded as provided in subsection H of this section. If the state records the application for an environmental lien as provided in subsection H of this section, the environmental lien shall be deemed to attach as of the date of recording of the application for the environmental lien, once the order establishing the environmental lien is filed and recorded. If the state does not record the application for the environmental lien, the environmental lien attaches only on the recording of the order establishing the lien as provided in subsection H of this section.

F. If after establishment of an environmental lien the state incurs additional remedial action costs for which the person is liable under this article, the state may seek to amend the existing lien to include in the amount of the lien the additional remedial action costs incurred. The state shall file a statement itemizing the costs incurred with the court, with service as prescribed in subsection C of this section. On a showing by the state of probable cause with respect to the amount of those additional remedial action costs, the court may increase the amount of the environmental lien by the amount of those additional remedial action costs.

G. Any person that has been determined liable for remedial action costs in a probable cause hearing for purposes of establishing a lien and that owns an interest in real property that is the subject of an environmental lien established under this section shall notify the state in writing at least sixty days before alienating the interest. If the state believes that it will incur future remedial action costs at the facility, the state may within thirty days of receipt of the notification request a probable cause hearing pursuant to subsection C of this section. The court shall schedule the requested hearing before expiration of the sixty day period beginning on the date the state received notice that the person intends to alienate its interest, unless the parties agree to a continuance. Unless the person giving notice to the state withdraws that notice before the scheduled date of the hearing, the court shall conduct a hearing to estimate the state's future remedial action costs and may issue an order amending the lien to include total future remedial action costs that the state appears reasonably likely to incur. Any order increasing the amount of an existing lien pursuant to this subsection may be filed and recorded as provided in subsection H of this section. Any person having an ownership interest in the property that may be adversely affected by the order increasing the environmental lien may challenge the increased lien amount by filing a motion to quash pursuant to subsection I of this section. If the state fails to request a probable cause hearing with respect to estimated future remedial action costs within thirty days of receipt of the notification, any person subsequently purchasing an interest in real property that is subject to an environmental lien takes that interest subject only to existing, unsatisfied liens, and that person is liable to the state for future remedial action costs only to the extent it is liable for those costs because it is a responsible party under section 49-283 or because it is otherwise liable under other federal, state or common law.

H. Any application, order, lien, release or other document required to be recorded under this section shall be recorded in the office of the county recorder of the county where the real property is located. A filing fee or other charge is not required for filing any document pursuant to this section. The filing or mailing of any document pursuant to this section is the responsibility of the director or the director's designee. A copy of an environmental lien shall also be sent by certified mail to any other person including an owner, purchaser, holder of a mortgage or security interest or judgment lien creditor whose interest was perfected and recorded before an application for an environmental lien was recorded.

I. If a court issues an order establishing an environmental lien, any person having an interest in the real property that may be adversely affected by establishment of the lien may file a motion to quash the lien. The court retains jurisdiction to resolve any issue of fact or law raised by the motion to quash. If the motion to quash raises issues of fact, the person challenging the lien and the state are entitled to conduct expedited discovery on application to the court and are entitled to a priority for trial.

J. At any time after the lien is recorded any person having an ownership interest in real property subject to an environmental lien may move the court to substitute other security for the lien. The court shall retain jurisdiction to determine the sufficiency of the substituted security. On approval of the substituted security, the environmental lien shall be released.

K. Notwithstanding any other provision of this section, an environmental lien does not apply to real property that is used primarily for or that is under construction for use in single or multi-family housing at the time the environmental lien is recorded.

L. The director shall release an environmental lien if the lien or a claim or judgement for the remedial action costs is satisfied. If the lien or a claim or judgement for the remedial action costs has been partially but not wholly satisfied, the director on request of any person having an ownership interest in the property shall reduce the amount of the lien by the amount satisfied. The director may release an environmental lien if the director determines that the lien is not in the best interest of the state.

M. If the court refuses to issue an order establishing an environmental lien, any person having an interest in the property against which an environmental lien was sought is not entitled to attorney fees or damages against the state if the court determines that there was reasonable cause for the application.

N. Any determination of any issue by the court in a hearing held pursuant to this section shall not be considered binding in any future judicial or administrative proceeding except that any issue litigated in a motion to quash filed pursuant to this section shall not be litigated again in any subsequent motion to quash filed pursuant to this section that is filed by the same party.

O. An environmental lien is subject to any other lien that is perfected and recorded before the attachment date of the environmental lien as determined pursuant to subsection E of this section.

P. On entry of a final judgment in favor of the state for remedial action costs, an environmental lien may be foreclosed in the manner provided for foreclosure of mortgages pursuant to title 33, chapter 6, article 2. The state may combine an action to recover remedial action costs with an action to foreclose an environmental lien established under this section.

Q. This section does not preclude the state from initiating other actions under this title or under federal law.