5 Colo. Code Regs. § 1002-101.10
The provisions of Colorado Revised Statutes Section 25-8-608(1) provide the specific statutory authority for the Water Quality Civil Penalty Inflation Adjustment Regulation adopted by the Commission. The Commission has also adopted, in compliance with Colorado Revised Statutes Section 24-4-103(4), the following Statement of Basis and Purpose.
BASIS AND PURPOSE
Section 25-8-608(1), C.R.S., directs that "on or before December 31, 2021, the commission shall, by rule, annually adjust the amount of the maximum civil penalty based on the percentage change in the United States Department of Labor's Bureau of Labor Statistics Consumer Price Index for Denver-Aurora-Lakewood for All Items and All Urban Consumers, or its successor index."
This regulation implements this statutory direction and provides for the new annually adjusted maximum civil penalty identified in 25-8-608(1), C.R.S. The maximum penalty prior to adjustment that is identified in statute is fifty-four thousand eight hundred thirty-three dollars ($54,833). This prior maximum penalty is applicable from July 2, 2020, when it was added to 25-8-608(1), C.R.S., through January 1, 2022, when the new maximum penalty identified in this regulation goes into effect. . In accordance with the statutory direction to adjust the maximum penalty annually, the commission intends to revise this regulation annually to identify a new maximum penalty to become effective no later than January 1st of each subsequent year.
The Commission used the following method to calculate the percent change in the United States Department of Labor's Bureau of Labor Statistics Consumer Price Index for Denver-Aurora-Lakewood for all Items and all Urban Consumers (the Consumer Price Index) to be used for calculating the new maximum penalty.
The commission based the percentage change calculation on the change between the July 2020 Consumer Price Index and the July 2021 Consumer Price Index. Using the July Consumer Price Index values for this calculation aligns with the statutory direction to provide an annual adjustment to the maximum penalty because the previous maximum was established in statute effective in July 2020. This method also allows for the use of the most recent available data.
The commission expects that the same method will be used for future revisions to this regulation. Any changes to the method will be addressed in the applicable future Statement of Basis and Purpose.
The new maximum penalty is calculated by adjusting the previous maximum penalty by the percent change in the Consumer Price Index from July 2020 to July 2021.
The Previous Maximum Penalty is identified in 25-8-608(1), C.R.S., as $54,833.
The July 2020 Consumer Price Index is 275.589. The July 2021 Consumer Price Index is 285.267. This represents a 3.512% change.
The adjusted maximum penalty is therefore equal to $54,833 multiplied by (1 + ((285.267-275.589) / 275.589). This results in a 2022 adjusted maximum penalty of $56,759.
To meet the statutory direction to apply an annual adjustment, the Commission must revise this regulation annually to be effective by January 1 of each subsequent year. It is the Commission's intention to make these adjustments effective on January 1. To meet this timeline, the Commission intends to annually schedule a rulemaking no later than October of each year. The Division will provide to the Commission a proposed revision to this regulation identifying the proposed new adjusted maximum penalty which will include proposed language for the Statement of Basis and Purpose that identifies the method and the values for the Consumer Price Index used in the calculation.
PARTIES TO THE RULEMAKING HEARING
October 12, 2021
HEARING CHAIR:
5 CCR 1002-101.10