Legal

Key Considerations for U.S./Mexico Cross-Border Business Transactions

Including the often-overlooked due diligence

by Daniel Arana

Conducting cross-border transactions and taking advantage of the resources in Mexico can present fruitful opportunities for U.S. businesses. There are some key considerations for U.S. businesses looking to explore working with companies in Mexico.

The first critical piece in setting up a successful crossborder transaction is having effective communication with one’s counterparts in Mexico. Being able to effectively communicate at the transaction level is key to understanding everyone’s expectations in the transaction. The laws in Mexico and the way business is conducted are different from in the U.S. When a U.S. business engages an attorney or other specialized professional, it’s important to take the time to ensure that the professional is well versed in the subtleties of cross-border trade with Mexico. It is very helpful if the professional is also a fluent Spanish speaker, as this will go a long way in streamlining the transaction with counterparts in Mexico. Translators can be used effectively, but there is always something lost in translation.

The second key consideration is due diligence. This is often a step that companies miss. It is critical to gather certain information in order to make informed business decisions. In the context of the produce industry, for example, many U.S. distributors do not search for registered security interests or liens against a grower before entering into a transaction or lending money to growers in Mexico. Because the grower is an entity or individual in Mexico, there are nuances regarding where to search for security interests. Due diligence may reveal the Mexican grower has multiple outstanding security interests registered against it, which may be a key consideration when deciding whether move forward with a transaction.

The next vital consideration is to make sure that a crossborder transaction is structured properly. This is where good counsel on both the U.S. and Mexico sides is crucial to making sure the transaction is structured in a way that is both economically beneficial and legally sound. For example, it is usually not beneficial for a U.S. entity to conduct business directly in Mexico because of the registration and legal reporting requirements in Mexico. When possible, a U.S. entity will want the transaction to occur and be governed by the laws of the U.S. so that the company can take advantage of remedies under U.S. law and have access to the U.S. court system. Structuring a transaction properly is also critical from a tax perspective. The tax laws related to foreign individuals with business interests and assets in the U.S. are very different from those for U.S. citizens, and there are many pitfalls that can have impactful tax consequences if a transaction is not structured properly.

The fourth consideration is tied very closely to structure and that is to make sure to take advantage of U.S. laws whenever possible. There are laws specific to certain industries that can benefit a U.S. client conducting cross-border trade with Mexico. For example, the IMMEX program has great tax and duty advantages for manufacturing in Mexico, but there are very specific requirements that need to be followed in order to qualify for those benefits. There are treaties, trade programs and many bodies of law that need to be followed and that create a competitive advantage for U.S. businesses if the transaction is documented and structured properly.

The final consideration is being aware of changes in the law in both countries. Changes in the law may require changes in structure to a transaction. Recently, there have been significant changes in the IMMEX program due to a reform of the laws in Mexico. Even the common practice of having independent contractors working in Mexico has changed due to a change in the laws in Mexico. If businesses and their counselors are not up to date on these changes, they risk losing the advantages the business has enjoyed from cross-border trade.

Daniel Arana is an attorney with Fennemore working in the firm’s business and finance law group. His practice focuses on agribusiness, international trade and tax law, international transactions, and mergers and acquisitions. The son of attorneys and fluent in Spanish, Daniel takes great pride in becoming an integral member of his clients’ teams, knowing their businesses, families and culture, and guiding them to success. fennemorelaw.com

SUPPORT HELPSNACKZ

Through HelpSnackz’s monthly subscription program, a monthly donation ensures that each homeless child will have food available to them every school day of the year. The impact and emotional support that every HelpSnackz Subscription provides is truly priceless.

HELP can stop the cycle of homelessness in one generation. helpingthehomelessnow.org

Tyler Butler is head of Corporate Responsibility for Aventiv Technologies, where she leads programs that positively impact society. She is also founder and principal of 11Eleven Consulting and is often cited as a subjectmatter expert by Forbes, SHRM, Entrepreneur, U.S. News and World Report and more. 11elevenconsulting.com

Donate First, Trash Second – Muscular Moving Men & Storage to the Rescue

Sustainability solutions are focused on donation and recycling

by Tyler Butler

The dreaded process of moving. Not only can this be a stressful experience, but it also has a tendency of taking a toll on our environment. In truth, moving is a proven cause of unnecessary waste. According to the website Move Buddha, humans produce nearly 16.4 billion pounds of waste annually as a result of moving. And with Americans projected to move 20% more next year than in previous years, planet Earth can count on an excessive amount of unnecessary waste in the near future.

As a trusted Arizona-based moving and storage provider, Muscular Moving Men & Storage has a long reputation for moving, packing, storage and more. The company recognized the unique opportunity it had to serve as a steward of sustainability. So, in November of 2020, it expanded its services to meet this need through its M3 Junk Removal division of M3 Commercial Moving & Logistics. Its goal is simple: to guarantee donation of certain items back to charities.

“Our team at M3 Junk Removal is on a mission to guarantee the donation of certain assets to charitable partners in our community for those in significant need,” says Jim Stevens, vice president of M3 Commercial Moving & Logistics. “We have already made a positive impact, but we’ve just scratched the surface. We look forward to exceeding our community impact goals moving forward and I’m proud of the team’s relentless determination to do so.”

Ever since M3 Junk Removal’s “donate first, trash second” model launched in November 2020, the company has been focused on creating a solution. Thus far, the program has kept more than 300,000 pounds of waste out of landfills. What’s more, the company saw the chance to save these assets and, instead, began donating items to benefit local charities. When M3 leaders started looking for items they could donate, they realized just how much was available that was previously being thrown away. Excited by this opportunity to build a more sustainable business model, they began prioritizing this part of their service.

“We are picking up amazing furniture that still has life left in them every day. Coming up with an infrastructure that revolves around saving assets has been a very difficult but rewarding process,” says Ethan Delahunty, director of M3 Junk Removal. “We are taking truckloads of items every single month to local organizations. With these massive quantities comes a need for efficient processes.” 3M has been mindful to keep its process simple yet efficient. When they pick up items from a site, 3M’s movers evaluate if they are suitable for donation. Those that are usable are then donated rather than being discarded to a landfill. By providing local charities with quality items, the company has been able to foster great relationships with the community and with important causes — while aiding our environment. Since the launch of the junk division, M3 has donated about 250,000 pounds of furniture and household goods to UMOM, Project C.U.R.E., New Life Center, Hope’s Closet, Furnishing Dignity, Goodwill and St. Vincent de Paul.

To expand on this mission, M3 leaders decided to explore other ways to help the local community and started to hold charity events with local organizations. In the months of February, March and April, the company hosted a food drive with The Society of St. Vincent de Paul. This drive helped St. Vincent De Paul continue to feed vulnerable families in need. During the food drive, M3 Junk Removal coordinated dropoffs and pickups of complimentary donation boxes to local businesses. With the help of more than 20 local businesses around the Valley, M3 Junk Removal was able to donate a truckload of food to the organization.

Most recently, M3 began working with Homeless Engagement Lift Partnership (HELP) in a backpack drive to support Arizona children experiencing homelessness. Working in conjunction with HelpSnackz, a program that improves students’ lives by aiding children in our community who go to bed hungry every night, M3 has expanded its giving efforts to support our local youth. For many of these kids, the only meals they receive are through their school’s breakfast or lunch programs. Through the execution of two HelpSnackz events, M3 team members were able to pack 18,000 snack bags, providing a helping hand to our local youth in need. Through this program and many more, Muscular Moving Men & Storage and M3 Junk Removal are making a positive impact, one issue and one cause at a time.

M3 Junk Removal m3junkremoval.com Muscular Moving Men & Storage muscularmovingmen.com

John Waters is the principal of Waters Business Consulting Group, LLC in Scottsdale, Arizona, which helps business owners and management grow their business. watersbusiness consulting.com

Performance Management Techniques for Managing Remote Workers

Ensure employees are performing at optimal levels

by John Waters

Remote workers are here to stay, so business leaders need to know how to get the most out of their team. Statistics show that 4.7 million people in the United States work remotely at least half the time. With these numbers — which are still growing — it is important leaders understand different techniques so they can get the best performance from their employees. Scheduling meetings with team members, giving feedback on a consistent basis, requesting status updates and trusting the employees are all vital ways to be sure employees are performing at optimal levels.

Schedule meetings. When employees are in the office, it’s a simple matter to stop by and check in periodically throughout the day and see what people are working on. This isn’t the case when most of the staff is working remotely. Checking in regularly, via video calls or regular phone calls, keeps both management and the employees updated on progress and expectations. When managing remote workers, checking in regularly, at least once a week, helps build rapport and makes it easier to give feedback. These weekly check-ins need to be on the same day and time every week, and it’s important to have a set agenda where each team member reports specific updates and KPI’s (Key Performance Indicators) or metrics (previously established) to provide objective data on their weekly performance pertaining to their roles and expected outcomes and results.

Annual reviews aren’t enough to understand the performance of team members since it is nearly impossible to recall a year’s worth of information in one meeting. Having regular one-on-one and group meetings, at least once every two weeks, allows managers to keep up to date on performance aspects, including where people are excelling and where they may need help.

Give consistent feedback. It’s important to be clear about giving feedback with remote workers. Doing so ensures employees aren’t overanalyzing the communication being given to them. This is especially true when giving feedback to remote employees, who don’t have the benefit of recognizing body language. Communication should be clear and concise.

The goal should be for communication to flow freely, but it’s also important to emphasize clarity in the feedback. Being clear with what is working and what isn’t allows employees to see where they can improve and where they are excelling. When there is negative feedback to give an employee, it’s best to discuss it one-on-one with the employee and never in a group meeting.

Request status updates. Requiring regular status updates, once a week, means leaders and their remote teams have information they can refer to on a regular basis. When remote workers keep a weekly log of the work they have done during that period, management and employees are able to keep track of what is getting done and how efficient they are. It’s not necessary to read the logs every day, but having them allows management to look back on it when it comes time for one-on-one meetings. For managers, these logs help keep accountability and helps them not overlook any accomplishments where praise needs to be given.

Trusting the employees. “If you don’t trust your employees, they shouldn’t be working for you in the first place.” This is a basic tenet. Trust is built over time, and just as employers need trust in their employees, the reciprocal is also true: They need to be able to trust their employer. A manager may notice a team member missing a meeting or a deadline, but a better strategy than assuming they aren’t doing their work is to give them a call. They may be overwhelmed or might have a personal matter they are dealing with. This is hard to know if leaders aren’t in the office and around them daily. It’s important to remember that communication is key when keeping the trust between management and employees and vice versa.

Performance management can be tricky when it involves remote workers. There aren’t the daily interactions that a normal office management team has. By following these few simple techniques, leaders can keep track of performance and keep themselves and their teams accountable in their positions.

Are We ‘Hear’ for Each Other?

Businesses build on relationships

by Don Henninger

You can observe a lot just by watching.

That’s one of the sayings made famous by Yogi Berra, a Hall of Fame baseball catcher perhaps best known for his off-thewall quotes. While some of his “Yogi-isms” are hilarious, many of them have a deeper meaning if you take a minute to think about it.

Here’s a twist on “watching” that might have a useful purpose.

You can hear alot just by listening.

Listening does not come easy these days. Actually, it has become an endangered skill — to the detriment of just about everything we do.

It’s not hard to understand why. There’s a never-ending explosion of information — a lot of it is on social media, which tends to be negative, opinionated and often short on facts. It can overwhelm our ability to hear anything truly useful, divide not unite us and, even worse, warp reality.

That point hit home in a New York Times article in November by Jonathan Holloway, president of Rutgers University.

He wrote: “If we Americans listened to one another, perhaps we would recognize how absurd our discourse has become. It is our own fault that political discussions today are hotheaded arguments over whether the hooligans storming the halls of the Capitol were taking a tour or fomenting an insurrection.”

You don’t have to be storming the halls of the Capitol — or our own city halls — to see the negative effects of our unwillingness to listen to each other. It’s also bad for business and erodes leadership at all levels.

It’s not easy to cut through the sheer volume of noise and distractions in today’s world.

Consider: • We consume three times as much information daily as we did just a few decades ago. • Two-thirds of us can’t ignore our electronic devices.

We check them within the hour, if not the minute, after getting an email, text or alert. • Most of us check our work emails outside of work hours, including weekends and vacations. Actually, who doesn’t? • More than half of us feel jealous, depressed, sad or annoyed after checking updates on our social media accounts. • Eighty-one percent of us admit we interrupt conversations, mealtime or playtime with family or friends to check our social media, text messages or email. • Three out of five of us spend more free time on our computer than we do with our significant others. • Three-quarters of us believe our use of electronic devices has contributed to stress in our lives.

These stats were from a stress management survey that asked 1,000 people about how the flood of information has impacted their lives and how it affects their attention spans and relationships with each other.

In business, we all know that success is based on developing good relationships. That’s true in all aspects of life, which is why it is amazing that in these, the most challenging of times, we are turning a deaf ear to the one core value that matters the most: listening to each other.

If you embrace the concept that listening is a skill and, like any skill, it takes awareness and practice to sustain and grow it, then consider these seven signs, courtesy of the Center for Creative Leadership, that suggest you might need to pay more attention to developing your listening abilities: • You find it difficult to concentrate on what someone is saying, especially when the person is complaining or rambling on. • You’re always thinking about what you are going to say next, not really hearing what the other person is saying. • You shut down when someone questions your ideas. • You shut down when confronted with someone’s negative attitude. • You’re ready to provide advice and solutions before the person has finished explaining the problem. • You tell people why they shouldn’t feel the way they do. • You do more of the talking.

Yogi also said this: “We made too many wrong mistakes.” Don’t let poor listening be one of yours.

3 STEPS TOWARD GOOD LISTENING

• Don’t talk when others are speaking. • Let others know you’re listening through expressions and verbal replies. • Be able to repeat what you just heard.

Don Henninger, executive director of Scottsdale Coalition of Today & Tomorrow (SCOTT), spent more than 30 years in the newspaper business in the Valley with The Arizona Republic and Phoenix Gazette, where he served in numerous roles, including managing editor, and at the Phoenix Business Journal, where he was publisher for 14 years. SCOTT is a nonprofit group of business and civic leaders who work to educate and advocate for issues important to the city’s economic health and quality of life. scottnow.com

James Voyles is Of Counsel in the Regulatory and Government practice at Lewis Roca, where he focuses on diverse matters in the environment, energy and natural resources space. Previously, he served as senior counsel at the U.S. Department of the Interior, where he focused on federal land management, responsible natural resources development, recreation and grazing access, conservation, environmental quality and infrastructure deployment.

Lewis Roca carefully and deliberately assembled the interdisciplinary team that makes up its Renewable Energy Endof-Life Planning Group to ensure it can handle every issue that may arise in this unique time in the renewable industry’s lifecycle. lewisroca.com

Time to Shine a Light on Renewable Energy End-of-Life Planning

Critical thinking will be needed to deal with a staggering volume of waste

by James Voyles

To address the unique end-of-life challenges and opportunities presented to renewable energy developers and operators, Lewis Roca created a first-of-its-kind Renewable Energy End-of-Life Planning Group. This team draws on our many years of experience in the energy and utilities sector and includes attorneys from throughout the firm’s practice areas to assist clients with matters that include the assignment of decommissioning responsibilities in construction, power purchase and real property agreements; compliance with or the development of state and local regulations related to renewables decommissioning; protecting intellectual property related to emerging renewables recycling technologies and structuring innovative collaborations to realize such opportunities; and, yes, litigation when things go wrong.

To understand the pressing need for a practice that offers such unique services, it is helpful to briefly examine the history of renewable energy and to understand where the country and the state stand in relationship to the industry’s lifecycle.

For the past 20 years, Arizona has been at the forefront of renewable energy deployment in the United States. Arizona Public Service installed the first utility-scale solar facility in the state in 1997. This early solar farm was a 95-kilowatt singleaxis tracking photovoltaic (PV) facility that operated near Flagstaff, which is now beyond obsolete by today’s standards. Since 1997, Arizona has deployed solar generation facilities at an incredible pace.

As of Q2 2021, the Solar Energy Industry Association says the state has installed 6,111.7 megawatts of capacity, produces enough solar electricity to power almost 1 million homes and ranks fifth in the U.S. in installed capacity. Solar accounts for approximately 8% of the state’s electricity use.

Utility-scale wind installations lagged a decade behind the state’s solar counterparts but arrived on the scene with a bang. In 2009, the Salt River Project began constructing the 128-megawatt Dry Lake Wind Project in Navajo County, which can power anywhere between 51,000 and 115,000 homes (depending on operating capacity). The Dry Lake Project is still the largest wind energy facility in Arizona. As of 2020, the state had installed 618-megawatts of wind generation capacity.

The impressive rise of renewable energy generation in Arizona can be attributed to a variety of factors that include world-class sun resources, public demand, available acreage, a business-friendly climate, favorable tax treatment and a Renewable Portfolio Standard. Based on these factors, Arizonans can expect continued renewable deployment for years to come.

This basic history of renewable deployment in Arizona shows a relentless drive toward installed generation capacity, power components manufactured in the state, and a mature market that attracts capital investment dollars from across the country. Until very recently, the conversation around the renewable industry in Arizona was nearly silent regarding what to do with solar and wind facilities that have reached the end of their useful or economical lives.

The need for a long-term solution for solar panels and

turbine blades that have reached the end of their useful life is perhaps the most pressing question facing the renewables industry. Significant public, industry and government attention is currently being paid to decommissioning fossil-fueled power plants based on the national trend toward renewable energy production, but these decommissioning issues are not unique to traditional power plants. Just like a coal, gas or nuclear plant, renewable projects must be decommissioned or repowered with new, more efficient equipment after the installed technologies reach the end of their useful life.

The average expected life of a solar panel is between 20 and 30 years, with the average Tier 1 panel manufacturer’s warranty lasting 25 years. According to the Nation Renewable Energy Laboratory, most panels still produce power after 25 years but at a reduced capacity. On the wind side, the average turbine blades are rated to last 20 to 25 years. However, history shows us that wind turbine blades are generally replaced, or repowered, every 10 years to capitalize on increases in blade size and efficiency.

Whether it be at the end of 10 years or 30, renewable energy technologies are decommissioned and/or repowered, just like traditional energy generation facilities. According to data aggregated by the European Environment Agency, by the year 2030, the world will produce 3,000,000,000 pounds of PV solar panel waste per year, 9,500,000,000 pounds of wind energy waste per year, and 450,000,000 pounds of energy storage and mobility waste per year. This is a staggering volume of new waste being created on an annual basis. At this time, the predominant solution for handling renewable waste is some form of specialized storage, or burying renewable waste in designated landfills.

Solar and wind energy facilities provide numerous benefits to the environment, and the reason this amount of waste matters, other than the sheer volume, is that renewable technologies contain materials that are toxic, do not decompose or are not recyclable. For example, typical solar panels contain toxic substances and heavy metals such as cadmium telluride, copper indium selenide, silicon tetrachloride, cadmium gallium (di)selenide, copper indium gallium (di)selenide, hexafluoroethane, lead and polyvinyl fluoride. Wind turbines and blades contain materials such as Bisphenol A, resin, BPAs and fiberglass that do not decompose or recycle readily — if at all.

On the positive side, solar panels and wind turbines contain substantial quantities of critical and rare earth minerals that, if recovered, represent a potential revenue stream and make renewable power renewable in more ways than one.

Numerous developers, utilities, research groups and universities are seeking to solve these issues through material science, land use, recycling solutions and more. State legislative bodies are also beginning to impose decommissioning requirements for existing renewable facilities and bonding requirements to ensure the decommissioning of future facilities. While certain entities are making headway, solutions are still maturing.

This is a unique time in the renewable energy industry’s lifecycle as the industry begins to grapple with such issues as whether a company needs to protect new turbine recycling technologies, establish a joint venture for disposing solar panels, lobby a state or federal government for efficient decommissioning and bonding rules, or needs to acquire land for disposal.

The issue of what to do with solar panels, wind turbines and other associated equipment and facilities at the end of their useful life will continue to require critical thinking and robust problem solving from numerous disciplines that include engineers, land use professionals, material scientists — and even lawyers.