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BB0E802387F1BE658725891700589DB4 Hearing Summary




PUBLIC
BILL SUMMARY For REVIEW OF NEW RULES

JOINT COMMITTEE COMMITTEE ON LEGAL SERVICES
Date Dec 13, 2022      
Location Old State Library



Review of new rules - Committee Discussion Only
09:09:01 AM  
Megan McCall, Office
of Legislative Legal Services, introduced the Office and the Office's rule
review process then reviewed her recommendations for rule 39-30-105.1 concerning
Enterprise Zone Business Facility Employee Credits to not be extended
09:10:00 AM  
Ms. McCall stated
that the statute the rule is promulgated under is section 39-30-105.1 CRS
and that the rule's definition of "business facility" conflicts
with the statutory definition
09:12:22 AM  
Ms. McCall explained
that in her legal interpretation the definition the Department of Revenue
uses in their rule differs from the statutory definition because their
rule exempts "temporary structures" from the definition,
which results in the rule being more narrow and limited than the statute
requires
09:14:19 AM  
Representative Snyder
asked for more clarification on what is being contested and by whom
09:14:30 AM  
Ms. McCall explained
that the Department of Revenue is contesting the Office's recommendation
to not extend the rule by asking the committee to extend the rule
09:14:52 AM  
Representative Weissman,
chair, expressed his thoughts on the two definitions and that the statutory
definition does not require permanency of a business facility as the rule
definition does
09:16:56 AM  
Ms. McCall responded
clarifying that the way the terms are defined in the statute is broad and
that some of the structures listed could be temporary, such as warehouses
09:18:12 AM  
Senator Lee asked
if tents or canvas structures set up by businesses qualify under the definition
for the tax credit
09:18:46 AM  
Ms. McCall explained
that if the tent falls within the definition of facility in one of the
enumerated categories then it's possible it could qualify for the tax credit
but that it would need to also comport with all other requirements and
components of the statute
09:19:26 AM  
Senator Lee asked
for clarity on the purpose of the tax credit and if it was created to incentivize
businesses to set up more permanent types of facilities in a community
that won't be removed
09:20:02 AM  
Ms. McCall explained
the tax credit is an enterprise zone tax credit and that the legislative
intent for the enterprise zone tax credits is as Senator Lee described
and that the tax credit is particularly for employees
09:21:57 AM  
Esther van Mourik,
Department of Revenue, provided comments on the Department's rule making
authority, describing it as broad. She explained that the reason it is
broad is because a statute simply cannot cover all possible situations
that will apply to it. Ms. van Mourik explained that in order to promulgate
the rule, the Department needs to be able to apply it to any situation
that comes up and fill in any gaps when a statute is silent for smooth
administration
09:25:29 AM  
Anne Mangiardi, senior
assistant attorney general representing the Department of Revenue, discussed
the Department's interpretation of the language of the statute and that
the definition needs to be read in the context of the whole statute, which
would not allow for "building" to be read as something temporary
09:28:23 AM  
Ms. Mangiardi expressed
the opinion of the Department that the statute is a silent statute on permanence
or non-permanence and that it is the role of the Department to fill in
the gaps when a statute is silent
09:29:47 AM  
Ms. Mangiardi discussed
the legislative intent behind the enterprise zone tax credits set out in
the legislative declaration in section 39-30-102 CRS and how a temporary
job doesn't carry out those intents as well as a more permanent job does
09:33:14 AM  
Representative Pico
explained what he has seen in his own experience with businesses building
temporary facilities before building a permanent one while they're getting
started in a new community
09:34:16 AM  
Ms. Mangiardi responded
by saying that the legislative intent of the statute seems to exclude those
situations from the credit but that if a business started up in a tent
then moved to a permanent facility they would start receiving the tax credit
then
09:35:09 AM  
Representative Pico
explained that in his experience the tax credit is an incentive for a business
to get started
09:35:44 AM  
Representative Weissman,
chair, asked that, in the absence of the rule, what would happen when a
tax-payer tried to claim the credit
09:36:53 AM  
Ms. van Mourik explained
that the tax-payer can reach out to a representative to get information
on the tax credit or call their call center
09:37:57 AM  
Representative Weissman,
chair, brought up a similar court case in the past regarding Title 39 that
relates and asked if there are other Colorado cases that may be helpful
in interpretation
09:39:49 AM  
Ms. Mangiardi discussed
"chevron deference" and explained that the rules that have gone
through the formal rule making process get deference
09:40:38 AM  
Representative Weissman,
chair, asked if the committee should find more judicial deference for the
rules in the tax space
09:41:36 AM  
Ms. Mangiardi explained
that for cases that have gone to the supreme court level the court seemed
to see agency rule-making as valuable in the complex tax arena
09:42:33 AM  
Senator Gardner,
vice chair, expressed that he agrees with the Office's recommendation and
that the Department has engaged in a policy argument rather than a discussion
on if the rule should be extended based on what the general assembly authorized
in statute
09:44:36 AM  
Ms. McCall noted
that the case law discussed is specific to judicial review and that case
law does not require the committee to give deference
09:45:38 AM  
Ms. van Mourik explained
that a broad interpretation would decrease revenue and not be in line with
the original fiscal note
09:46:37 AM  
Representative Carver
brought up the example of a warehouse and her concern that the proposed
rule by the Department would be too narrow because she believes warehouses
can be prefab and could be impermanent
09:49:01 AM  
Ms. van Mourik explained
that there is a lot of nuance in the language they use when writing a rule
and that the way the rule is written accounts for impermanent structures
to be included in the definition if they are used in association with more
permanent structures
09:51:16 AM  
Representative Carver
expressed concern of the use of the phrase "more permanent" as
it is not clear and that the rule seems to differ from the statute
09:53:14 AM  
Representative Weissman,
chair, brought up modular housing and how sometimes factory built structures
can be permanent and asked how evolving technology like the creation of
modular housing would be handled under the rule
09:54:27 AM  
Ms. van Mourik explained
that since technology changes and building codes change that's exactly
the reason why the Department needs rule making authority so that they
don't have to ask the general assembly for permission to interpret new
situations on a weekly basis
09:56:08 AM  
Senator Lee asked
which sorts of temporary facilities would not qualify for the credit under
the rule and asked if a specific facility
under section 39-30-104 CRS would or wouldn't
09:57:34 AM  
Ms. van Mourik explained
that section 39-30-104 CRS concerns a different credit than the one the
Department promulgated a rule for that is being discussed today
09:58:09 AM  
Senator Lee asked
again what sort of temporary facility would not qualify under the actual
rule
09:58:29 AM  
Ms. van Mourik explained
that, given the definition in the rule, something like a tent not used
in association with permanent structures would not qualify for the credit
09:59:48 AM  
Representative Bacon
asked more about the legislative intent previously discussed and asked
if the temporary nature of a structure is linked to the temporary nature
of a business and if that is why the distinction is important
10:01:43 AM  
Ms. van Mourik explained
that enterprise zone credits are unique because they are administered by
the Department but in conjunction with the Office of Economic Development
and that the Office of Economic Development questioned whether a temporary
structure would meet the qualification of the credit, which is why the
rule was written the way it was
10:04:06 AM  
Ms. Mangiardi explained
that the reason why the Department believes the statute would require a
structure at all, based on their interpretation of the legislative intent,
is because the general assembly wanted to give a credit to businesses that
had a permanent presence in a community rather than temporary
10:05:47 AM  
Ms. McCall discussed
the legislative history of the statute and that the section broadened the
scope to allow "any" business facility to qualify, not just new
business facilities, and that the tax credit is specific to employees including
seasonal employees, not just permanent employees, and that the credit also
covers businesses that operate for less than a full year
10:08:39 AM  
Representative Weissman,
chair, expressed his belief that the rule should be extended based on the
committee discussion and the Department's
reasoning
10:11:05 AM  
Committee recessed
for discussion
10:28:10 AM  
The committee returned
from recess


10:28:23 AM
 Motion I move to extend Rule 39-30-105.1 (1) of the rules of the Executive Director of the Department of Revenue
Moved Snyder
Seconded Lee
Bacon Yes
Buckner Yes
Carver No
Cooke No
Lee Yes
Pico No
Rodriguez Yes
Snyder Yes
Gardner No
Weissman Yes
YES: 6   NO: 4   EXC: 0   ABS:  0   FINAL ACTION:  PASS
10:30:24 AM  
Sarah Lozano, Office
of Legislative Legal Services, introduced Regulation Number 19 Part A II.B.13
a (iii) concerning the control of lead hazards and the Office's recommendation
to not extend the rule as it conflicts
with statute
10:33:44 AM  
Michael Ogletree,
Department of Public Health and Environment, introduced the role of the
Department in limiting the risk of lead exposure for children and recommended
aligning the relevant state statute with federal law
10:35:48 AM  
Laura Manyak, Department
of Public Health and Environment, introduced herself and indicated she
was present for any technical questions
10:36:17 AM  
Representative Bacon
echoed the concern of lead exposure for children and clarified that the
committee is not addressing lead dangers but instead whether the rule conflicts
with statute
10:37:06 AM  
Representative Weissman
discussed the importance of the Department and legislation to address the
conflict between the rule and statute


10:38:28 AM
 Motion I move to extend Regulation Number 19 Part A II.B.13.a.(iii) of the rules of the Air Quality Control Commission
Moved Snyder
Seconded Lee
Bacon No
Buckner No
Carver No
Cooke No
Lee No
Pico No
Rodriguez No
Snyder No
Gardner No
Weissman No
YES: 0   NO: 10   EXC: 0   ABS:  0   FINAL ACTION:  FAIL
10:40:29 AM  
Brita Darling, Office
of Legislative Legal Services, introduced rule 5.A. concerning the Colorado
Student Loan Equity Act and the Office's recommendation to not extend the
rule as the rule's requirements for a private education lender differ from
statute
10:44:18 AM  
Ms. Darling explained
that statute does not allow the administrator authority to grant private
education lenders an exemption from reporting requirements
10:47:01 AM  
Senator Gardner,
vice chair, requested a 17c prior to the motion


10:47:35 AM
 Motion I move to extend Rule 5.A. of the rules of the Administrator for the Uniform Consumer Credit Code and Commission on Consumer Credit
Moved Snyder
Seconded Lee
Bacon No
Buckner No
Carver No
Cooke No
Lee No
Pico No
Rodriguez No
Snyder No
Gardner Excused
Weissman No
YES: 0   NO: 9   EXC: 1   ABS:  0   FINAL ACTION:  FAIL






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