DEPARTMENT OF PUBLIC HEALTH AND ENVIRONMENT

Solid and Hazardous Waste Commission
Hazardous Materials and Waste Management Division
6 CCR 1007-2

Statement of Basis and Purpose
 and Specific Statutory Authority for

Amendment of Section 10.12.5 (Rebate Amount) 

(Adopted by the Solid and Hazardous Waste Commission on November 17, 2015)

Basis and Purpose
	
I.	Statutory Authority – House Bill 14-1352

Section 30-20-1405, C.R.S. requires the Commission to annually set the amount of the per-ton monthly rebate paid to end users of waste tires.	

II.	Purpose of new regulation:

This new regulation sets the per-ton rebate amount at $80.  

Discussion of Regulatory Proposal

The proposed section 10.12.5 requires the Department of Public Health and Environment (the Department) to payout a per-ton rate of $80 for approved applications submitted by End Users, Retailers, and certain Processors of tire-derived products and waste tires. If the amount of rebates exceeds the amount available in the Fund, the Department will pay the rebate at a reduced per-ton basis that will not cause a deficit in the Fund. 

Description of Local Government Involvement in the Stakeholder Process 
	
	Executive Order D 2011-005 (EO-5), “Establishing a Policy to Enhance the Relationship between State and Local Government” requires state rulemaking agencies to consult with and engage local governments prior to the promulgation of any rules containing mandates.  The Department completed an EO-5 Internal Communication Form – Conception Phase that was transmitted to local governments.  The new regulation will only impact local governments who apply for a rebate from the Fund for the end use of tire-derived products or waste tires. 

Issues Encountered During Stakeholder Process: 

The per-ton rate of $80 was vetted during a two month stakeholder process. The Department provided a forecasting spreadsheet that contained the following information:

1.	Forecasting on a per ton basis tire-derived products and/or waste tires to be end used, sold, or processed in calendar year 2016. This information was collected from End Users, Retailers, and Processors who participated in the Fund in calendar year 2014. 
2.	Projected funds available in calendar year 2016 based on remaining funds from calendar year 2015 and historical waste tire fees collected during fiscal year 2015. 
3.	Projected rebate payouts based on forecasted tons and a per-ton rate of $80.
4.	Projected monthly fund balances based on projected revenues and rebate payouts. 
5.	Projected Fund spending authority throughout calendar year 2016.
6.	Historical data breakdown of end used tons approved by the Fund over the last three calendar years.  

During the stakeholder process it was discovered the spending authority set by the Joint Budget Committee (JBC) was lower than the 65% that is allocated to the Fund per HB 14-1352. The JBC will be adjusting the spending authority in calendar year 2016 to reflect the increased per-ton rate.

The Department and stakeholders want the rebate amount set at the highest per-ton amount that will not exceed the forecasted Fund balance or the spending authority. The tons end used, sold, and/or processed in calendar year 2015 came in lower than projected, causing the Fund to have a larger than expected balance. Based on the projected fund balance and adjusted spending authority, the Fund can support a per-ton rate of $80. The stakeholders understand that if the forecast of tons end used, sold, or processed exceeds projections or if the Fund balance or waste tire fees collected are lower than expected, the per-ton rate of $80 may be reduced or may be unavailable.

Regulatory Alternatives

	The Department and the stakeholders discussed setting the per ton rate lower than $80 based on the previous spending authority set by the JBC. Because the spending authority is being adjusted and there is sufficient funding forecasted for calendar year 2016, the per-ton rate will be set at $80. Other alternatives were not considered because section 30-20-1405(5) mandates that rebates be generated from the Fund until the scheduled sunset date of January 1, 2018.  

Cost/Benefit Analysis

A cost-benefit analysis will be performed if requested by the Colorado Department of Regulatory Services. The Department and stakeholders evaluated fiscal impacts during the legislative stakeholder process and determined, based on the forecasting spreadsheet, the Fund could support a per-ton rate of $80.