DEPARTMENT OF PUBLIC HEALTH AND ENVIRONMENT

Solid and Hazardous Waste Commission
Division of Environmental Health and Sustainability
6 CCR 1007-2

Statement of Basis and Purpose
 and Specific Statutory Authority for

Updating of 6 CCR 1007-2, Part 4 (Regulations Pertaining to the Waste Tire Processor and End User Reimbursement Program), and adjustments to Section 1 (Rules for Reimbursements from the Processors and End Users Fund) to 6 CCR 1007-2, Part 4.

Basis and Purpose
	
I.	Statutory Authority

These amendments to 6 CCR 1007-2, Part 4, Section 1 (Rules for Reimbursements from the Processors and End Users Fund) are made pursuant to the authority granted to the Solid and Hazardous Waste Commission in Section 25-17-207(1)(a), C.R.S.
		
II.	House Bill 12-1034

House Bill (HB) 12-1034 amended Section 25-17-202 of the Colorado Revised Statutes (C.R.S.) by revising the definition of end user.  HB 12-1034 also modified the Processor and End User Fund requirements of Section 25-15-202.5 (1) of the C.R.S. by requiring a processor of waste tires to end use the tire-derived product or process waste tires into tire-derived product for an end use and move the tire-derived product off-site.  Also under the Processor and End User Fund section, Section 25-17-202.9 (1.5) was amended to require the Department to identify other markets in Colorado that are able to eliminate illegal tire dumping and to recycle or reuse waste tire in newer technologies. The Division of Environmental Health and Sustainability (“Division”) within the Colorado Department of Public Health and Environment (‘Department”) administers this waste tire reimbursement fund. 

HB 10-1018 extensively modified many sections of the C.R.S., including Sections 25-17-	202 and 204 and added Sections 25-17-202.6, 205, 206, and 207.  

III.	Purpose of updated regulations:

The purpose of these updated regulations is to modify who is eligible for reimbursements from the Fund per House Bill 12-1034 amended section 25-17-202.5, C.R.S.. Specifically, it redefines the term “End user” and when a processor is eligible to receive a reimbursement from the Fund. Because of the risk of processed waste tires being stored without incentive to be moved to an end user, the Commission believes it necessary to adopt regulations concerning administration of the Fund.   

IV.	Discussion of Regulatory Proposal

This Section 1 is the result of a stakeholder process involving Division staff, Hazardous Materials and Waste Management Division staff, waste tire processors, tire monofills and waste tire end users. Important issues identified by stakeholders are presented later in this Statement of Basis and Purpose.

Changes to Section 1:

A.	Defines who is eligible for reimbursements from the Fund;

B.	Updates application procedures for parties seeking reimbursements from the Fund;

C.	Clarifies the process to appeal a potential calculation error or denial of funds for a submitted application; and

D.	Updates the process for review of applications for Fund reimbursements.

V.	Issues Identified During the Stakeholder Process

	A. When are processors eligible for reimbursements from the Fund?

One issue faced during the stakeholder process concerns when processors are eligible for reimbursements from the Fund.  Amended Section 25-17-202.5, C.R.S.  define when reimbursements to processors are appropriate: 

The Department shall not reimburse a processor for processing waste tires unless the processor has end used the tire-derived product or the tire-derived product has been sold for an end use and moved off-site.

Section 25-17-202.5, C.R.S. This statement prohibits paying processors for processing of waste tires without moving the tire-derived product to an end user market. Under the previous statute, a processor could speculatively accumulate tire-derived product. This would incentivize processors to stockpile tire-derived product, in violation of the Regulations Pertaining to Solid Waste Sites and Facilities (6 CCR 1007-2, Part 1). This new language ends this practice and ensures that processed waste tires are being made into a tire-derived product that can be sold to an end user market before being eligible for a reimbursement.  
	
B. New definition of an “End user”.

Another issue faced during the stakeholder process was the updated definition of an “End user”:

”End user” means a person who uses a tire-derived product for a commercial or industrial purpose.

Section 25-17-202 (c), C.R.S.  The change further clarifies that the end user cannot be reimbursed for residential use, such as purchasing a tire-derived product for personal use. The end user must use the tire-derived product as part of their business, such as an installer of recycled tire landscape mulch. 

C. Reimbursement for processing of waste tires at an illegal waste tire site if being paid for by the Waste Tire Cleanup Fund.

Another issue concerned reimbursing for processing waste tires located at an illegal waste tire site that received funds from the Waste Tire Cleanup Fund.  The Commission determined such processing should not receive the processor reimbursement because the processor is already receiving state money from the Cleanup Fund to process and remove the waste tires.  Conversely, if a person receives money from the Cleanup Fund to remove waste tires from an illegal site and subsequently processes those waste tires offsite, they would be eligible for the processor reimbursement because the Cleanup Fund would be funding only the removal of those waste tires, not the subsequent processing.

D. Requiring new form for reimbursements for tire bales for processors and end users.

Another issue concerned appropriate support documents for receiving reimbursement for the processing into, or end use of, tire bales. Tire bales present a special case because they often are not allowed by local jurisdictions.  In the past a letter was required from the local government stating tire bales were allowed for beneficial use, if the applicant did not have a permit to support the use of the tire bale. The Division would receive many variations of letters that were not consistent from applicants or per local governments. The Division will create a letter to be signed by both the applicant and local government that will have language acceptable to the Department for the reimbursement of the processing or end use of tire bales. 

E. Eligibility of whole waste tires for a processor or end use reimbursement.

Another issue concerned whether beneficial use of a whole, non-processed waste tire should receive the end use reimbursement. The Commission determined whole waste tires should not be reimbursed because the waste tire still physically exists and is not processed prior to use. The exception is the use of whole waste tires for pyrolysis, since the waste tire physically changes to no longer being a waste tire into several waste tire individual components – typically gas, oil and char products. Plus using whole waste tires is more efficient than shredding the waste tire first prior to this use. Any other end use of a whole waste tire will not be eligible for a reimbursement because these tires have the potential to re-enter the waste tire stream. 

The commission feels for energy recovery or supplemental fuel is appropriate for an end use reimbursement. Due to the beneficial use requirements by the Department, these tires do not fit the definition of a “processed” tire. We encourage the end use of these whole waste tires for purposes of energy recover or supplemental fuel because we feel it is one of the best final uses for whole waste tires and it eliminates these tires reentering the waste stream. 

F. End Users registering with the Department.

Another issue is when are end users required to register with the Department, specifically the Solid Waste Division. With the change of the definition of an “End User”, it was determined that an end user of tire-derived product for a commercial or industrial use must register with the Solid Waste Division. 

G. Processing of applications.

This section was rewritten to clarify the process the Division has conducted over the past year in the processing of applications:

1.	Completeness- Review the applicant to ensure all appropriate information is included.
2.	Compliance- Conduct a check to ensure the applicant is in compliance with all applicable laws and regulations.
3.	Eligibility- Based on completeness of application and compliance status; determine if applicant is eligible for reimbursement.
4.	Reimbursement amount- Calculation of reimbursement amount based on approved tons and funding available. 

H. Appeals process 

This section was added to clarify how the Department conducts an appeals process when:

1.	A calculation error may have occurred; or
2.	An application has potentially been wrongly denied.

Before this information was referenced throughout the regulations, but now is consolidated in one new section so applicants understand what information is required before the Department will determine if an error has occurred. The appeals process is separated for these due to the type of support documents required for the Department to decide if an error occurred during the review process. A processor or end user who does not agree with the final decision by the Department can appeal per section 24-4-106, C.R.S.

I.  Casings and buffings 

Another issue concerned whether the production of casings (part of the tire that is used to produce a recapped tire) or buffings (tire material removed from a waste tire to be recapped) should be eligible to receive processor reimbursements from the Fund. In the past it was determined that creating these materials was not a process eligible for the processor reimbursement.   

Based on information from the stakeholders, paying reimbursements for this process would not help with the reduction of waste tires in the state because this process ultimately leads to the manufacturing of a “new,” that is, recapped, tire, and merely delays the problem of managing the waste tire rather than solving the problem.  

J. Allowable tire-derived products in local jurisdictions.

Another concerned verification that a tire-derived product is not restricted under local ordinances.  Each county or municipality may restrict certain tire-derived products in their jurisdiction based on several reasons (zoning, possible contamination issues, etc.). Tire bales are typically the biggest issue, but other tire-derived products also may be restricted. The Commission decided to require the applicant to determine if there is a restriction in the county or municipality. Additional language will be added to the application in which the applicant must certify the tire-derived product is not restricted from use. For tire bales, a Tire Bales Processor/End User Approval Form will be required by the processor or end user and signed by an authorized local official prior to being eligible for reimbursement. 

K.  Recapped tires counting towards tons for processors and/or end users.
Another issue faced during the stakeholder process was the definition of “tire” is counter-intuitive because it states recapped tires – objects that look and are used as tires – are not tires. § 25-17-202 (F)(I), C.R.S.  This definition, which undermines common sense, affects the Fund because in a regime where recapped tires are not tires, the processing of recapped tires is not eligible for reimbursement from the Fund.  This fact burdens processor and end users who understandably manage recapped tires the same as they manage non-recapped tires.  This illogical definition also undermines the state’s Section 10 authority over recapped tires because recapped tires do not become waste tires after their useful life span and therefore Section 10 and it waste tire hauling manifests and waste tire facility regulations appear not to apply to them. After discussion with our stakeholders, we will continue to allow recapped tires to be part of the tons counted towards reimbursements. 
L. Changing the reimbursement formula.
Another issue discussed was the current formula for determining reimbursements (2:1 ratio end users vs. processors). Some stakeholders discussed changing this formula so processors would benefit more because they felt that due to the new requirements for end users to register this would hinder processors ability to sell their tire-derived product, reducing their reimbursement. Others stated because the Department requires proof that processors either use the tire-derived product or the tire-derived product was sold and moved offsite that the reason for the 2:1 ratio is no longer needed. The Commission disagrees with this reasoning and feels the current formula should continue. The formula was created and unanimously approved by the Waste Tire Advisory Committee. It was developed to give more incentive to end use markets and changing it would lessen that incentive. 
M. Certified scales used for weight slips provided as proof to the Department.
Another issue was the type of scale that should be used to provide weight slips or other proof to the Department along with the applications. The Department of Agriculture currently regulates scales in the state for the commercial sale of products to the public per the Colorado Measurements Standards Act.  A reference to the statute was included in the regulations to ensure that any scale used by the processors or end users meets these standards.  
N. Clarification of a processor and an end user for feedstock.
Another issue was clarification on the use of feedstock by a processor to manufacture a product. Some questioned whether a processor could also receive end user reimbursement if he both make a feedstock and manufactured a tire-derived product. The intent of the regulations is that a processor cannot claim a reimbursement unless they either sell and move offsite or use themselves the tire-derived product. Any processing that occurs prior to making the tire-derived product with a feedstock the processor produced is not technically processing and is not eligible for a processor or end use reimbursement. 
O. Description of end use eligibility.
Another issue was clarification of when the use of a tire-derived product makes an applicant eligible for the end user reimbursement. The intent of the statute is for those who use tire-derived product for a commercial or industrial purpose to receive a reimbursement. In most cases, installers of tire-derived product in its final form meet this definition because many tire-derived products are indistinguishable from shredded or baled tires until installed. Tire-derived product installed by installers would include landscape mulch, playground surfacing, civil engineering projects, and other established end uses. The commission feels simply making these tire-derived products does not meet the definition of an end use – only installing them meets the definition and only installing them sufficiently addresses the waste tire problem in Colorado.  The Department will not reimburse for speculative accumulation of tire-derived product and will not reimburse persons who process in multiple stages seeking to be eligible for an end use reimbursement.
In contrast, the Department will reimburse, with limited scope, the use of tire-derived product for the manufacturing of a new tire-derived product only in limited circumstances where the new product is a product that needs no installation to be recognized as that product.   Examples of this would be ground mats, furniture and other products that are continuously used without further processing or manufacturing.  The Commission is concerned that an end user could accumulate a commercially unreasonable quantity of waste tire end products without the incentive to move those products to market. To help protect against this practice, the Department may request additional documentation demonstrating that waste tire end products are indeed being sold. If the Department determines that unreasonable accumulation is occurring, the Department may deny further reimbursements until sufficient supporting documentation has been provided demonstrating that the waste tire end products are being sold.  
P. Donated tire-derived product or the selling of tire-derived product at below market price.
Another issue was whether a processor who donates tire-derived product to an end user has met the “sold and moved offsite” requirement of 6 CCR 1007-2, Part 4, Section 1.2 (17). The commission feels that because the putative tire-derived product was not sold, it does not meet the definition of tire-derived product. The commission also believes the Department should ensure that tire-derived product be sold at reasonable market value to avoid manipulation of the program. 

Stakeholder Involvement in the Process 
	
	Executive Order D 2011-005, “Establishing a Policy to Enhance the Relationship between State and Local Government” (EO5) requires state rulemaking agencies to consult with and engage local governments prior to the promulgation of any rules containing mandates.  The EO5 - Internal Communication Form was completed and explained the reason for the rulemaking and how the rulemaking would affect local governments.  

I.	Department reasoning supporting the need to issue regulation amendments
HB 12-1034 requires the Solid and Hazardous Waste Commission to revise the Section 1 regulations for determining when a processor or end user is eligible for a reimbursement. The Division also wanted to update some the other regulations based on experienced gained in the past year on managing the Fund.  

II.	Potential impacts to local governments
The HB 12-1034 amendments to 25-17-202.5 and these amendments to the Regulations Pertaining to the Waste Tire Processor and End User Reimbursement Program, 6 CCR 1007-2, Part 4 will impact local governments. The potential impact would be local government signing the Tire Bale Processor/End User Approval Form for applicants applying for tire bale use in their local jurisdictions. Some applicants may inquire about the jurisdiction of other tire-derived products to ensure they don’t conflict against the local ordinances. 

III.	Extent of Agency consultation with representatives of local governments affected
The Department’s Hazardous Materials and Waste Management Division, Solid Waste and Materials Management Program completed an EO-5 that was submitted to the Office of State Planning and Budgeting (OSPB) for local government notification, through OSPB’s online notification system. 

Regulatory Alternatives

	No other regulatory alternatives were evaluated.

Cost/Benefit Analysis

A cost-benefit analysis will be performed if requested by the Colorado Department of Regulatory Services.  

Regulatory Analysis

A regulatory analysis for this rulemaking will be prepared and made available to the public in accordance with § 24-4-103(4.5), C.R.S.