Justification for Emergency Rule Filing under 1 CCR 205-1

Colorado Department of Revenue

Motor Vehicle Dealer Board

This justification for emergency rules applies to each regulation implementing the provisions of Senate Bill 08-151 (hereafter, the “Act”). The Act established a pre-licensing education program requirement for license applicants for specified motor-vehicle-related licenses issued by the Motor Vehicle Dealer Board. The following are the emergency regulations required to implement the Act: 12-6-115(7)(d); 12-6-115(7)(f)(I);12-6-115(7)(f)(II); 12-6-115(7)(f)(III); 12-6-115(7)(f)(IV); 12-6-115(7)(g); and, 12-6-115(7)(h).

The Act set the following effective date: “12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly that is allowed for submitting a referendum petition pursuant to article V, section 1(3) of the state constitution, (August 6, 2008, if adjournment sine die is on May 7, 2008); except that, if a referendum petition is filed against this act or an item, section, or part of this act within such period, then the act, item, section, or part, if approved by the people, shall take effect on the date of the official declaration of the vote thereon by proclamation of the governor.” The 2008 Session of the General Assembly adjourned on May 6, 2008. Therefore, the Act took effect on August 5, 2008.

The Act provided that its provisions had to apply to “applications for licensure submitted on or after thirty days after the effective date of this act.” Based on the effective date of the Act, the Act’s pre-licensing educational program had to be available for the specified license applicants to participate in no later than September 4, 2008. This September deadline proved impossible for the Board to meet under Permanent Rule-making Procedures and Timelines, necessitating an earlier Emergency Rule-making procedure with the adoption of an initial set of Emergency Rules for the reasons noted below:

  1. Until the Governor signed the Act on April 21, 2008, the Motor Vehicle Dealer Board had neither a basis in law nor the fiscal authority to open rule-making related to the Act.
  2. The Board’s first meeting subsequent to the Governor’s signature was May 8, 2008.
  3. Insofar as the Act required that rules effecting the Act had to be in effect no later than September 4, 2008, the Board had to have filed a Notice of Hearing, with proposed permanent rules attached, no later than May 31, 2008, due to the permanent rule-making process deadlines and timelines triggered by a filing date.
  4. In fact, the best case scenario for the Board would have been a Notice-of-Hearing filing for permanent rules no later than April 30, 2008. From such a filing, an August 5, 2008 effective date would have been possible. August 5, 2008 was a desirable effective date for permanent (or emergency) rules because the 30 days between August 5, 2008 and September 4, 2008 constituted a minimum reasonable time for an outside entity to apply for and to be approved to provide the pre-licensing education program by the September 4, 2008, operational deadline. However, the merely nine days between April 21, 2008 and April 30, 2008, for the Board to develop an entirely new, fully-integrated regulatory scheme would have been a rushed process unlikely to constitute good governance.
  5. Principles of good governance made even a May 31, 2008 filing date for the Notice of Hearing impossible. The Act effectively required the Board to undertake the selection, accreditation, oversight, and quality-control of pre-licensing education program providers who will be responsible to educate and certify license applicants in the large body of law and regulation under the jurisdiction of the Board. Establishing a regulatory scheme with such characteristics is a challenging and completely novel undertaking for the Motor Vehicle Dealer Board. Responsible governance required that the Board and the Auto Industry Division give considerable thought to the process and consult with staff experts, knowledgeable members of the regulated public, and potential educators who could deliver the educational program in order to draft regulations to put into a notice of hearing. Such deliberation and collaboration requires time in excess of merely a month.
  6. In order for the Board to propound a reasonable set of regulations to put into a notice, the Board chose to proceed under the combination of Permanent Rule Notice filing and Emergency Rule procedures utilizing the same set of regulations. The initial Emergency Rule procedures were necessary to ensure that Board could meet the September 4, 2008, statutory deadline to implement the provisions of the Act, while allowing outside providers time between the anticipated effective date of the Emergency Rules, August 5, 2008, and the operational deadline, September 4, 2008, to apply for and to be approved to provide the pre-licensing education program by September 4, 2008.

The initial set of Emergency Rules the Board adopted expired on October 10, 2008. The Board’s intention had been to have Permanent Rules in place by that date. However, the Office of the Attorney General and the Office of Legislative Legal Services separately determined that certain of the rules submitted originally required changes before they could meet with final approval. Such changes required the Board to continue rule-making through another Board hearing under the original notice for the permanent rules relating to SB 08-151.

At the conclusion of the continuing rule-making hearing on October 9, 2008, the Board followed the advice of the Attorney General and OLLS to make the required changes to the earlier submission of the Permanent Rules. Those Permanent Rules would not have been able to go into effect before November 30, 2008. Under the extant version of the Emergency Rules in effect then, the Legislature’s pre-licensing education program had already been functioning in the manner envisioned in Senate Bill 08-151.

However, because the extant version of the Emergency Rules in effect then was due to expire on October 10, 2008, the Board adopted a new set of Emergency Rules to become effective on October 10, 2008, in order to ensure that the pre-licensing education program under SB 08-151 could continue uninterrupted until the Permanent Rules were anticipated to go into effect. That set of Emergency Rules was identical to the set of Permanent Rules adopted by the Board through the continuing rule-making hearing of October 9, 2008.

Subsequent to the rule-making hearing of October 9, 2008, the Pre-licensing Education Program required by law continued in effect under the Emergency Rules adopted by the Board on October 9, 2008. However, the Office of the Attorney General found one additional substantive matter that the Board needed to address and revise. Therefore, the Board met in a continuing rule-making session on October 23, 2008, to consider the latest Attorney General recommendation. The Board accepted the AG’s recommended language change and adopted the latest version of the Emergency Rules to be equivalent to the set of Permanent Rules it also adopted. The Emergency Rules continued to be necessary to meet the requirements of SB 08-151 for the Pre-licensing Education Program to be in place from September 4, 2008, forward.