5 Colo. Code Regs. § 1002-61.64
The provisions of section 25-8-202(1)(d) and (i) and (2); and sections 25-8-501 to -504, C.R.S. provide the specific statutory authority for this amendment to the Colorado Discharge Permit System Regulations. The Commission has also adopted, in compliance with section 24-4-103(4), C.R.S., the following Statement of Basis and Purpose.
BASIS AND PURPOSE
The provisions in Commission Regulation No. 61, 5 CCR 1002-61, subsection 61.13 apply to financial assurance requirements for housed commercial swine feeding operations (HCSFOs). In this rulemaking hearing, the Commission also adopted a new regulation, Regulation No. 66, which specifies the criteria for certain financial assurance instruments that HCSFOs can use to provide financial assurance. Therefore, HCSFOs are subject to the financial assurance provisions of both Regulation No. 66 and subsection 61.13 of Regulation No. 61.
The proposal considered by the Commission during this rulemaking hearing is the adoption of revisions to subsection 61.13(4)(h) of Regulation No. 61. The proposal is the result of a stakeholder process that was initiated in November 2008 for the purpose of establishing a guidance document for the financial test and guarantee financial assurance mechanism for HCSFOs, in accordance with subsection 61.13 of Regulation No. 61. A proposed guidance document was brought before the Commission at an informational hearing in November 2009. In response to statements from the Division and HCSFO producers at the hearing, the Commission agreed that, in lieu of continuing the hearing on the guidance document, a rulemaking hearing would be set to consider putting into regulation the criteria for all financial assurance instruments. As a result, the Division met with stakeholders to develop the proposal for today's rulemaking.
As discussed above in the "Applicability" section, the Commission also adopted in today's rulemaking hearing a new regulation, Regulation No. 66, which specifies the criteria for certain financial assurance instruments that HCSFOs can use to provide financial assurance. Because these criteria do not exist in the current subsection 61.13 of Regulation No. 61, the Commission adopted revisions to this subsection that accomplish the following outcomes:
* Removes language rendered obsolete by the placement of financial assurance instrument criteria in Regulation No. 66.
* Adds language that makes reference to the provisions of Regulation No. 66.
* For consistency, revises "financial assurance mechanism" to be "financial assurance instrument."
* Adds language and restructures existing language for the purposes of providing clarity, segregating discrete provisions, and making needed connections to other provisions in subsection 61.13(4)(h).
* Adds a new subsection that addresses the release of an approved financial assurance instrument.
* Adds a new subsection that establishes submittal requirements for a permitee's annual update and review of financial assurance instruments.
* Renumbers the subsections as a result of adding three new subsections.
Subsection 61.13(4)(h)(iii): This subsection was revised to clarify that the monetary value of financial assurance instruments can also be required to be the amount resulting from the interim financial assurance provisions of section 61.13 -(C). In addition, the phrase, "and shall use wording approved by the Division", was removed because financial assurance instrument criteria is now specified for six specific instruments in the new Regulation No. 66. For the purpose of having the phrase still apply to an alternative financial assurance instrument approved by the Division, the phrase was placed in new subsection 61.13(4)(h)(x)(B)(V).
New subsection 61.13(4)(h)(iv): This new subsection was added to refer to the financial assurance instrument criteria in subsection 61.13 and to the six instruments in Regulation No. 66.
Subsection 61.13(4)(h)(v): This is subsection 61.13 in the current regulation. The language was revised to add the word "instruments" after "financial assurance", and to refer to the financial instrument requirements of subsections 61.13(4)(h)(iii)-(iv).
Subsection 61.13(4)(h)(vi): This is subsection 61.13 in the current regulation. The language was revised to provide clarity, to add the word "instruments" after "financial assurance", and to refer to the financial instrument requirements of subsections 61.13(4)(h)(iii)-(iv).
Subsection 61.13(4)(h)(vii): This is subsection 61.13 in the current regulation. The language was revised to refer to "approved" financial assurance instruments, and to segregate discrete provisions into new subsections (B) and (C). In addition, subsection (B) was revised to provide clarity and to refer to the financial instrument requirements of subsections 61.13(4)(h)(iii)-(iv).
The existing regulation requires that permittees annually review and update their financial assurance instruments in a specified manner. However, the regulation does not provide for a permittee to verify to the Division that it conducted the review and update. Therefore, the Commission adopted a new subsection (A) that requires a permittee to annually submit to the Division a report documenting the permittee's update and review of financial assurance instruments.
Subsection 61.13(4)(h)(viii): This is subsection 61.13 in the current regulation. The language was revised to segregate discrete provisions into new subsections (A) and (B). In addition, subsection (A) was revised to provide clarity and to refer to the financial instrument requirements of subsections 61.13(4)(h)(iii)-(iv).
Subsection 61.13(4)(h)(ix): This is subsection 61.13 in the current regulation. The language was revised to add the word "instruments" after "financial assurance", and to delete all language after the first sentence. Most of the deleted language pertained to requirements for financial assurance instruments and is now obsolete because of the addition of Regulation No. 66. The deleted language pertaining to the specific financial assurance instruments that a permittee must use was moved to new subsection 61.13(4)(h)(x).
New subsection 61.13(4)(h)(x): This new subsection received the language from the current subsection 61.13 pertaining to the specific financial assurance instruments that must be used by a permittee. Also, because of the new Regulation No. 66, the existing criteria pertaining to all financial assurance instruments was moved to subsections 61.13 -(V), where they now pertain only to an alternative instrument approved by the Division. With regard to subsection (IV), the Commission is aware that the process of acquiring a financial assurance instrument, such as a letter of credit or bond, is rigorous and time-consuming. Therefore, the number of days of written notice that must be given prior to an issuing institution cancelling an instrument was revised from 60 days to 90 days in order to allow more time for a permittee to acquire a substitute instrument.
Subsection 61.13(4)(h)(xi): This is subsection 61.13 in the current regulation. The language was revised to provide clarity and to segregate discrete provisions into new subsections (A), (B), and (C). In addition, subsection (A) was revised to add the word "instrument" after "financial assurance", and subsection (B) was revised to have language that refers to requirements of subsection 61.13(4)(h)(xi).
New subsection 61.13(4)(h)(xii): The Commission adopted this new subsection to establish provisions that address the release of an approved financial assurance instrument prior to closure activities being initiated. The adopted language includes a provision requiring that an instrument be released when the relevant conditions of Regulation No. 66 for the instrument have been met.
Subsection 61.13(4)(h)(xiii): This is subsection 61.13 in the current regulation. Language was added to this subsection to clarify that this subsection pertains to the release of financial assurance requirements when closure actions are complete or "partially complete." This differentiates the purpose of this subsection from that of subsection 61.13 . In addition, the provision in existing subsection (A) was deleted. This provision, which addressed the prior written notice requirement for cancelling a financial assurance instrument, is now included for the six instruments in Regulation No. 66, and, for other instruments approved by the Division, is now required under subsection 61.13(4)(h)(x)(B)(IV).
The language in existing subsection (B) was deleted because it exists earlier in the subsection. As a result, existing subsections (I)-(IV) were revised to be new subsections (A)-(D).
The Commission adopted a new subsection (E) that requires the release of financial assurance when a reimbursement provision(s) in Regulation No. 66 has been satisfied, as applicable to the permittee's approved financial assurance instrument(s).
Subsection 61.13(4)(h)(xiv): This is subsection 61.13 in the current regulation. Subsection (B) was revised to change the word "may" to "will", prior to the phrase "direct the expenditure of forfeited funds..."
PARTIES TO THE RULEMAKING HEARING
5 CCR 1002-61.64