Second Regular Session Sixty-sixth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 08-0389.01 Thomas Morris HOUSE BILL 08-1237 HOUSE SPONSORSHIP Judd, SENATE SPONSORSHIP (None), House Committees Senate Committees Business Affairs and Labor A BILL FOR AN ACT Concerning the regulation of qualified intermediaries. Bill Summary (Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.) Requires registration of persons and entities that facilitate like-kind exchanges pursuant to the federal tax code ("qualified intermediaries and qualified intermediary officers"). Specifies procedures for qualified intermediaries and qualified intermediary officers and prohibits certain practices. Gives the director of the division of registrations within the department of regulatory agencies rule-making and regulatory authority. Establishes registration standards. Requires record-keeping. Specifies complaint, investigation, and disciplinary procedures. Repeals the law in the year 2018, subject to sunset review. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Article 61 of title 12, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW PART to read: PART 10 QUALIFIED INTERMEDIARIES AND QUALIFIED INTERMEDIARY OFFICERS 12-61-1001. Legislative declaration. (1) The general assembly hereby: (a) Finds that, absent enactment of this part 10, Colorado has no requirements for the monitoring and registration of persons or entities that facilitate like-kind exchanges pursuant to 26 U.S.C. sec. 1031; and (b) Determines that qualified intermediaries and qualified intermediary officers should meet certain requirements and follow certain procedures. 12-61-1002. Definitions. As used in this part 10, unless the context otherwise requires: (1) "Controlling interest" means an interest that allows a person or entity to control an entity as provided by the director by rule promulgated pursuant to section 12-61-1003. (2) "Director" means the director of the division of registrations created in section 24-1-122 (2) (g), C.R.S. (3) "Financial institution" means a bank, savings and loan association, savings bank, or trust company doing business in this state whose accounts are insured by the full faith and credit of the United States of America, the federal deposit insurance corporation, the national credit union share insurance funds, or other similar or successor programs of federal insurance, and that is operating under state or federal charter. (4) "Like-kind exchange" means a section 1031 exchange that is tax-deferred and not tax-free. (5) "Person" means, in addition to the singular, persons, groups of persons, cooperative associations, limited liability companies, firms, partnerships, corporations, or other legal entities, and includes the agents and employees of any such person. (6) "Principal officer" means a president, vice president, secretary, or treasurer in the case of a corporation; each general partner in the case of a partnership; a manager or managing member in the case of a limited liability company; the owner in the case of a sole proprietorship; and each person who has a controlling interest in a registrant. (7) "Property" means real property located in Colorado and personal property that is located in Colorado at the time of a like-kind exchange. (8) "Publicly traded company" means a corporation whose securities are publicly traded on a stock exchange that is regulated by the federal securities and exchange commission. The term also includes all subsidiaries of such publicly traded company. (9) (a) "Qualified intermediary" means a person who holds a taxpayer's exchange funds and who: (I) For a fee, facilitates an exchange of like-kind property by entering into an agreement with a taxpayer by which the qualified intermediary acquires from the taxpayer the contractual rights to sell the taxpayer's relinquished property located in this state and transfer a replacement property to the taxpayer as a qualified intermediary, as that term is defined in 26 CFR 1.1031 (k)-1 (g) (4), or enters into an agreement with a taxpayer to take title to a property in this state as an exchange accommodation titleholder, as that term is defined in federal internal revenue service revenue procedure 2000-37, or enters into an agreement with a taxpayer to act as a qualified trustee or qualified escrow holder, as those terms are defined in 26 CFR 1.1031 (k)-1 (g) (3), except as otherwise provided in paragraph (b) of this subsection (9); (II) Maintains an office in this state for the purpose of soliciting business as a qualified intermediary; or (III) Holds himself, herself, or itself out as a qualified intermediary by advertising services or soliciting customers in printed publications, direct mail, television or radio advertisements, telephone calls, facsimile transmissions, or other electronic communications directed to the general public in this state such as e-mail or text messages. (b) "Qualified intermediary" does not include: (I) The taxpayer or disqualified person as that term is defined under 26 CFR 1.1031 (k)-1 (k) seeking to qualify for the nonrecognition provisions of 26 U.S.C. sec. 1031; (II) A financial institution that is merely acting as a depository for exchange funds or that is acting solely as a qualified escrow holder or qualified trustee, as those terms are defined in 26 CFR 1.1031 (k)-1 (g) (3), and is not otherwise facilitating exchanges; (III) A person who advertises for and teaches seminars or classes, or otherwise gives presentations to attorneys, accountants, real estate professionals, tax professionals, or other professionals, where the primary purpose is to teach the professionals about tax-deferred exchanges or train them to act as qualified intermediaries; (IV) A qualified intermediary, as that term is defined in 26 CFR 1.1031 (k)-1 (g) (4), whose sole business in this state as a qualified intermediary consists of holding exchange funds from the disposition of relinquished property located outside this state; or (V) An entity that is wholly owned by a registrant or is wholly owned by the owner of a registrant and is used by that registrant to facilitate exchanges or to take title to property in Colorado as an exchange accommodation titleholder, as that term is defined in federal internal revenue service revenue procedure 2000-37. (c) For purposes of this subsection (9), "fee" means compensation of any nature, direct or indirect, monetary or in-kind, that is received by a person or a related person as defined in 26 U.S.C. sec. 267 (b) or 26 U.S.C. sec. 707 (b) for any services relating to or incidental to the exchange of like-kind property under 26 U.S.C. sec. 1031. (10) "Qualified intermediary officer" means: (a) An attorney or certified public accountant admitted to practice in any state or territory of the United States; (b) A certified exchange specialist as certified by an organization that meets qualifications established by the director by rule promulgated pursuant to section 12-61-1003; or (c) An individual person who has been actively conducting the business of qualified intermediary full time for the three years immediately preceding designation by the registrant as a qualified intermediary officer or who otherwise meets qualifications established by the director by rule promulgated pursuant to section 12-61-1003. (11) "Registrant" means a person registered under this part 10 to conduct business as a qualified intermediary or qualified intermediary officer. (12) "Related company" means any cooperative association, limited liability company, firm, partnership, corporation, or other legal entity owned by a registrant to further the registrant's business as a qualified intermediary when at least eighty percent of the value of the outstanding stock, shares, or similar certificates of ownership in the related company are owned, directly or indirectly, by or for the registrant. (13) "Section 1031 exchange" means an exchange conducted pursuant to 26 U.S.C. sec. 1031 that allows investors to defer the tax on capital gains. (14) "Taxpayer exchange funds" means money a taxpayer entrusts to a qualified intermediary. 12-61-1003. Rules. By January 1, 2009, the director shall adopt rules in accordance with section 24-4-103, C.R.S., as the director deems necessary for the effective administration and enforcement of this part 10. 12-61-1004. Registration required. On or after July 1, 2009, a person shall not act as a qualified intermediary or qualified intermediary officer unless the person is registered by the director as a qualified intermediary or qualified intermediary officer or is a wholly owned subsidiary of a person that is so registered. If the qualified intermediary is not a natural person, a publicly traded corporation, or a subsidiary of a publicly traded corporation, each shareholder, member, or other owner who owns a controlling interest in the voting stock, shares, or other ownership interest of the qualified intermediary shall be registered. 12-61-1005. Application for registration. (1) A person desiring to be registered as a qualified intermediary or qualified intermediary officer shall file an application and pay a prescribed fee to the director pursuant to section 12-61-1014. The application shall set forth: (a) The name, date of birth, criminal history, and business address of the applicant and the applicant's principal officers; (b) A summary description of the business of the applicant; (c) A list of any similar licenses obtained and maintained in other states and information regarding revocation, suspension, or other disciplinary action imposed in regard to any such licenses; (d) The tax identification number of the applicant; (e) A current certificate of good standing for the applicant from the state in which the applicant is formed if the applicant is not a natural person; and (f) Such other information as the director may reasonably require. (2) (a) Except as otherwise provided in paragraph (b) of this subsection (2), contemporaneously with the application, each applicant and principal officer who will be conducting the business of the applicant in this state and who has the authority to deposit, transfer, or disburse exchange funds held by the applicant shall submit a set of fingerprints to the Colorado bureau of investigation for the purpose of conducting a state and national fingerprint-based criminal history record check utilizing records of the Colorado bureau of investigation and the federal bureau of investigation. The applicant shall pay the fee established by the Colorado bureau of investigation for conducting the fingerprint-based criminal history record check to the Colorado bureau of investigation. Upon completion of the criminal history record check, the Colorado bureau of investigation shall forward the results to the director. The director may acquire a name-based criminal history record check for an applicant who has twice submitted to a fingerprint-based criminal history record check and whose fingerprints are unclassifiable. (b) This subsection (2) shall not apply to an applicant or principal officer who is currently subject to and in compliance with a fingerprint-based criminal history record check requirement imposed by a provision of state law other than this part 10. 12-61-1006. Investigation and issuance. (1) The director shall investigate the information furnished by an applicant and may require the applicant to furnish additional information. (2) Unless the director determines that the applicant has committed an act that would be grounds for disciplinary action under section 12-61-1016, the director shall approve an application after the applicant has: (a) Submitted a complete application, including any additional information requested pursuant to subsection (1) of this section; (b) Complied with sections 12-61-1007 (1), 12-61-1009,and 12-61-1011; and (c) Otherwise complied with the requirements of this part 10. (3) A decision of the director adverse to the applicant may be reviewed in the district court. 12-61-1007. Registration requirements. (1) Every person desiring to be registered as a qualified intermediary or qualified intermediary officer shall: (a) Have and maintain a principal place of business in this state; or (b) Maintain a registered agent in this state who meets the requirements specified in section 7-90-701, C.R.S. (2) Every registrant shall notify the director in writing within ten business days after any change in the location of its principal place of business in this state or its designated registered agent in this state and shall promptly provide other information as may be required by the director. (3) A registrant may establish one or more branch offices in this state if the registrant provides written notice of such establishment to the director within thirty days after establishment of each branch office. A registrant whose principal place of business is located outside this state and who desires to establish a branch office within this state shall first register under this part 10. (4) Each qualified intermediary business shall be conducted under the direct management of a qualified intermediary officer. 12-61-1008. Registration - renewal. (1) Immediately upon the approval of an application and payment of the registration fee, the director shall register the applicant as a qualified intermediary or qualified intermediary officer. The registration shall be effective only upon the applicant's filing with the director evidence that bonds and insurance, or deposits or irrevocable letters of credit permitted in lieu thereof, as provided in sections 12-61-1009 and 12-61-1011, have been obtained. A qualified intermediary or qualified intermediary officer registration is nontransferable. The registration shall be renewed annually, each July 1, upon payment of the annual renewal fee and the finding of the director, from the information contained in an annual renewal application of the registrant or investigation or hearing, that the registrant: (a) Continues to meet the qualifications for registration; and (b) Has continued in force the bonds and insurance or the deposits permitted in lieu thereof as provided in sections 12-61-1009 and 12-61-1011. 12-61-1009. Financial assurance. A registrant shall at all times maintain a fidelity bond or bonds executed by an insurer authorized to do business in this state, or such other security as may be approved by the director, in the amount of one million dollars or such higher amount as the director may establish on a class or case-by-case basis pursuant to procedures required by article 4 of title 24, C.R.S. 12-61-1010. Action on financial assurance. The director or any person claiming to have sustained damage by reason of the failure of a registrant to comply with this part 10 may file a claim against the registrant to recover damages from the bonds or other security. 12-61-1011. Errors and omissions insurance. (1) A registrant at all times shall either: (a) Maintain a policy of errors and omissions insurance in an amount not less than two hundred fifty thousand dollars, or such higher amount established by the director, executed by an insurer authorized to do business in this state and approved by the director; or (b) Deposit an amount of cash or securities or provide irrevocable letters of credit in an amount not less than two hundred fifty thousand dollars, or such higher amount established by the director, under such terms and conditions as are acceptable to the director. 12-61-1012. Cancellation of financial assurance - withdrawal of deposits. The bonds, insurance, or other security required by this part 10 shall not be cancelled or withdrawn as to future accruing liability except upon thirty days' prior written notice to the director. The director shall suspend a registrant's registration upon the cancellation or withdrawal of any bond, insurance, or other security unless substitute security deemed adequate by the director has been deposited with the director on or before the date of cancellation. 12-61-1013. Modification of bonds or insurance. If the director determines that the financial assurance or insurance required by this part 10 are not commercially and reasonably available, the director shall modify the requirement for such financial assurance or insurance for a period of time to be determined by the director so as to adequately protect a taxpayer's exchange funds. 12-61-1014. Registration fees. A registrant shall submit registration fees to the director in amounts established pursuant to section 24-34-105, C.R.S. The director shall transmit all fees received to the state treasurer, who shall deposit them in the division of registrations cash fund created in section 24-34-105, C.R.S. 12-61-1015. Accounting rules. (1) Every registrant shall act as a custodian for all exchange funds, including money, property, other consideration, or instruments received by the registrant from or on behalf of the taxpayer, except funds received as the registrant's compensation. A registrant shall invest or deposit exchange funds for the benefit of the taxpayer in investments that meet a standard of care that an ordinarily prudent person would use when dealing with the property of another and shall satisfy investment goals of liquidity and preservation of principal as established by the director by rule. For purposes of this section, a prudent person standard of care shall be deemed to have been violated if: (a) A taxpayer's exchange funds are commingled by the registrant with the operating accounts of the registrant or with the exchange funds of another taxpayer; (b) Exchange funds are loaned or otherwise transferred to any person or entity affiliated with or related to the registrant; except that this paragraph (b) shall not apply to a transfer or loan made to a financial institution that is the parent of or related to the registrant; or (c) Exchange funds are invested in a manner that does not provide sufficient liquidity to meet the registrant's contractual obligations to the taxpayer and does not preserve the principal of the exchange funds. (2) Exchange funds are not subject to execution or attachment on any claim against a registrant. A registrant shall not knowingly keep or cause to be kept any money in a bank, credit union, or other financial institution under any name designating the money as belonging to a taxpayer unless the money equitably belongs to the taxpayer and was actually entrusted to the registrant by the taxpayer. (3) Taxpayer exchange funds in excess of such amount as the director determines by rule shall be invested or deposited in such manner as to require both the taxpayer's and the qualified intermediary's commercially reasonable means of authorization for withdrawal as determined by the director by rule promulgated pursuant to section 12-61-1003. 12-61-1016. Disciplinary actions. (1) The director may revoke, suspend, deny, or refuse to renew a registration, place a registrant on probation, or issue a cease-and-desist order or letter of admonition to a registrant or applicant in accordance with this section upon proof that the registrant or applicant has: (a) Made any material misrepresentations concerning a registrant's or applicant's transaction that are intended to mislead another; (b) Pursued a continued or flagrant course of misrepresentation or made false statements through advertising or otherwise; (c) Failed, within a reasonable time, to account for any money or property belonging to others that may be in the possession or under the control of the registrant or applicant; (d) Engaged in any conduct constituting fraudulent or dishonest dealing; (e) Been convicted of, or, in the case of an entity, one or more of its owners, officers, directors, or employees who has access to exchange funds has been convicted of, any crime involving fraud, misrepresentation, deceit, embezzlement, misappropriation of funds, robbery, or other theft of property; except that conviction of such crime by an officer, director, or employee shall not be cause for revocation or suspension if the employment or appointment of such officer, director, or employee has been terminated and no customers of the registrant or applicant were harmed or full restitution has been made to all harmed customers; (f) Wilfully failed to fulfill a registrant's or applicant's contractual duties to the taxpayer to deliver property or funds to the taxpayer unless such failure is due to circumstances beyond the control of the registrant or applicant; (g) Had a receiver or conservator appointed to take control of the assets of the registrant or applicant or the registrant entity has been dissolved or declared bankrupt; (h) Violated this article or aided or abetted or knowingly permitted any person to violate this article, a rule adopted under this article, or any lawful order of the director; (i) Committed an act that does not meet generally accepted standards of practice for qualified intermediaries or qualified intermediary officers or failed to perform an act necessary to meet generally accepted standards of practice for qualified intermediaries or qualified intermediary officers; (j) Failed to keep appropriate records or falsified or made incorrect entries of an essential nature on such records; (k) Falsified information in an application or attempted to obtain or obtained a registration by fraud, deception, or misrepresentation; (l) Failed to notify the director, in writing, of the entry of a final judgment by a court of competent jurisdiction in favor of any party and against the registrant or applicant relating to the registrant's or applicant's acts as a qualified intermediary or qualified intermediary officer or any settlement by the registrant or applicant in response to charges or allegations relating to the registrant's or applicant's acts as a qualified intermediary or qualified intermediary officer. The notice shall be given within ninety days after the entry of the judgment or settlement and, in the case of a judgment, shall contain the name of the court, the case number, and the names of all parties to the action. (m) Been disciplined in any way by a national certifying agency or by a regulatory agency of another jurisdiction; (n) Been convicted of or pled guilty or nolo contendere to a felony or any crime defined in title 18, C.R.S., that relates to the registrant's or applicant's employment as a qualified intermediary or qualified intermediary officer. A certified copy of the judgment of a court of competent jurisdiction of the conviction or plea shall be prima facie evidence of the conviction or plea. In considering the disciplinary action, the director shall be governed by section 24-5-101, C.R.S. (o) Advertised, represented, or held himself or herself out, in any manner, as being a registrant or registered in Colorado or acted as a qualified intermediary or qualified intermediary officer unless registered or exempt under this article; (p) Acted as a qualified intermediary or qualified intermediary officer during the time the person's registration was expired, suspended, or revoked; (q) Acted as a qualified intermediary or qualified intermediary officer without being registered; (r) Failed to notify the director of the suspension, probation, or revocation of the person's past or currently held license, certificate, or registration required to practice as a qualified intermediary or qualified intermediary officer in this or any other jurisdiction; or (s) Been disciplined in another state, territory, or country. This paragraph (s) shall apply only to discipline that is based upon an act or omission in such other state, territory, or country that is substantially the same as conduct specified in this subsection (1). (2) When the director suspends or revokes a registration, the director may appoint a different registrant as a receiver registrant or successor registrant for the purpose of winding up and completing existing exchanges, but that receiver or successor registrant shall not have authority to accept any new business as a qualified intermediary or qualified intermediary officer on behalf of the registrant whose registration has been suspended or revoked. (3) Except as otherwise provided in subsection (1) of this section, the director need not find that the actions that are grounds for discipline were willful but may consider whether such actions were willful when determining the nature of disciplinary sanctions to be imposed. (4) The director may commence a proceeding to discipline a registrant when the director has reasonable grounds to believe that the registrant has committed an act enumerated in this section. (5) Disciplinary proceedings shall be conducted in accordance with article 4 of title 24, C.R.S., and the hearing and opportunity for review shall be conducted pursuant to that article by the director or by an administrative law judge, at the director's discretion. The director has the authority to exercise all powers and duties conferred by this article during the disciplinary proceedings. (6) (a) The director may request the attorney general to seek an injunction, in any court of competent jurisdiction, to enjoin a person from committing an act prohibited by this article. When seeking an injunction under this paragraph (a), the attorney general shall not be required to allege or prove the inadequacy of any remedy at law or that substantial or irreparable damage is likely to result from a continued violation of this article. (b) (I) In accordance with article 4 of title 24, C.R.S., and this article, the director is authorized to investigate, hold hearings, and gather evidence in all matters related to the exercise and performance of the powers and duties of the director. (II) In order to aid the director in any hearing or investigation instituted pursuant to this section, the director or an administrative law judge appointed pursuant to paragraph (c) of this subsection (6) is authorized to administer oaths, take affirmations of witnesses, and issue subpoenas compelling the attendance of witnesses and the production of the originals or copies of all records, papers, books, documents, and materials of the registrant or another person containing information relevant to the hearing or investigation. (III) Upon failure of any witness or registrant to comply with a subpoena or process, the district court of the county in which the subpoenaed witness or registrant resides or conducts business, upon application by the director with notice to the subpoenaed witness or registrant, may issue to the witness or registrant an order requiring that witness or registrant to appear before the director; to produce the relevant papers, books, records, documentary evidence, or materials if so ordered; or to give evidence touching the matter under investigation or in question. If the witness or registrant fails to obey the order of the court, the witness or registrant may be held in contempt of court. (c) The director may appoint an administrative law judge pursuant to part 10 of article 30 of title 24, C.R.S., to conduct hearings, take evidence, make findings, and report such findings to the director. (7) If the director finds the charges proved and orders that discipline be imposed, the director may require, as a condition of registration, that the registrant take such courses of training or education as may be needed to correct any deficiency found as a condition for continuing or reinstating registration pursuant to this article. Upon the failure of the registrant to comply with any conditions imposed by the director pursuant to this subsection (7), unless due to conditions beyond the registrant's control, the director may order suspension of the registrant's registration until such time as the registrant complies with such conditions. (8) (a) The director, the director's staff, a person acting as a witness or consultant to the director, a witness testifying in a proceeding authorized under this article, and a person who lodges a complaint pursuant to this article shall be immune from liability in any civil action brought against him or her for acts occurring while acting in his or her capacity as director, staff, consultant, or witness, respectively, if such individual was acting in good faith within the scope of his or her respective capacity, made a reasonable effort to obtain the facts of the matter as to which he or she acted, and acted in the reasonable belief that the action taken by him or her was warranted by the facts. (b) A person participating in good faith in making a complaint or report or in an investigative or administrative proceeding pursuant to this section shall be immune from any civil or criminal liability that otherwise might result by reason of the participation. (9) A judicial proceeding to enforce an order of the director may be instituted in accordance with section 24-4-106, C.R.S. (10) A registrant shall report to the director any disciplinary action taken against a principal officer or the resignation of a principal officer in lieu of disciplinary action for conduct that violates this article. (11) (a) When a complaint or investigation discloses an instance of misconduct that, in the opinion of the director, does not warrant formal action by the director but should not be dismissed as being without merit, the director may issue a letter of admonition to the registrant or a principal officer by certified mail. (b) When the director sends a letter of admonition to a registrant or principal officer, the registrant or principal officer shall be advised that he or she has the right to request that formal disciplinary proceedings be initiated to adjudicate the propriety of the conduct upon which the letter of admonition is based. The registrant or principal officer shall make the request in writing within twenty days after receipt of the letter. (c) If the request for adjudication is timely made, the letter of admonition shall be deemed vacated and the matter shall be processed by means of formal disciplinary proceedings. (12) When a complaint or investigation discloses an instance of conduct that does not warrant formal action by the director and, in the opinion of the director, the complaint should be dismissed, but the director has noticed indications of possible errant conduct by the registrant that could lead to serious consequences if not corrected, the director may issue a confidential letter of concern to the registrant. (13) When a complaint or an investigation discloses an instance of misconduct that, in the opinion of the director, warrants formal action, the complaint shall not be resolved by a deferred settlement, action, judgment, or prosecution. (14) (a) If it appears to the director, based upon credible evidence as presented in a written complaint by any person, that a registrant is acting in a manner that causes or constitutes an imminent threat to the welfare of the public, or a person is acting or has acted without the required registration, the director may issue an order to cease and desist such activity. The order shall set forth the statutes and rules alleged to have been violated, the facts alleged to have constituted the violation, and the requirement that all unlawful acts or unregistered practices immediately cease. (b) Within ten calendar days after service of the order to cease and desist pursuant to paragraph (a) of this subsection (14), the respondent may request a hearing on the question of whether acts or practices in violation of this article have occurred. The hearing shall be conducted pursuant to sections 24-4-104 and 24-4-105, C.R.S. (15) (a) If it appears to the director, based upon credible evidence as presented in a written complaint by any person, that a person has violated any other portion of this article, in addition to any specific powers granted pursuant to this article, the director may issue to the person an order to show cause as to why the director should not issue a final order directing the person to cease and desist from the unlawful act or unregistered practice. (b) A person against whom an order to show cause has been issued pursuant to paragraph (a) of this subsection (15) shall be notified promptly by the director of the issuance of the order, along with a copy of the order, the factual and legal basis for the order, and the date set by the director for a hearing on the order. The notice may be served on the person against whom the order has been issued by personal service, by first-class, postage prepaid United States mail, or in another manner as may be practicable. (c) (I) The hearing on an order to show cause shall be held no sooner than ten calendar days and no later than forty-five calendar days after the date of transmission or service of the notification by the director as provided in paragraph (b) of this subsection (15). The hearing may be continued by agreement of all parties based upon the complexity of the matter, the number of parties to the matter, and the legal issues presented in the matter, but in no event shall the hearing be held later than sixty calendar days after the date of transmission or service of the notification. (II) If a person against whom an order to show cause has been issued pursuant to paragraph (a) of this subsection (15) does not appear at the hearing, the director may present evidence that notification was properly sent or served on the person pursuant to paragraph (b) of this subsection (15) and such other evidence related to the matter as the director deems appropriate. Such hearing shall be conducted pursuant to sections 24-4-104 and 24-4-105, C.R.S. The director shall issue the order within ten calendar days after the director's determination related to reasonable attempts to notify the respondent, and the order shall become final as to that person by operation of law. (III) If the director reasonably finds that the person against whom the order to show cause was issued is acting or has acted without the required registration, or has engaged or is about to engage in acts or practices constituting violations of this article, a final cease-and-desist order may be issued, directing the person to cease and desist from further unlawful acts or unregistered practices. (IV) The director shall provide notice, in the manner set forth in paragraph (b) of this subsection (15), of the final cease-and-desist order within ten calendar days after the hearing conducted pursuant to this paragraph (c) to each person against whom the final order has been issued. The final order issued pursuant to subparagraph (III) of this paragraph (c) shall be effective when issued and shall be a final order for purposes of judicial review. (16) If it appears to the director, based upon credible evidence presented to the director, that a person has engaged or is about to engage in an unregistered act or practice; an act or practice constituting a violation of this article, a rule promulgated pursuant to this article, or an order issued pursuant to this article; or an act or practice constituting grounds for administrative sanction pursuant to this article, the director may enter into a stipulation with the person. (17) If any person fails to comply with a final cease-and-desist order or a stipulation, the director may request the attorney general or the district attorney for the judicial district in which the alleged violation exists to bring, and if so requested such attorney shall bring, suit for a temporary restraining order and for injunctive relief to prevent any further or continued violation of the final order. (18) A person aggrieved by a final cease-and-desist order may seek judicial review of the director's determination or of the director's final order as provided in section 12-61-1006 (3). 12-61-1017. Costs. If the director undertakes an investigation and a registrant's registration is revoked, suspended, denied, or refused to be renewed or there is a final determination that a registrant has violated this part 10, a rule adopted pursuant to this part 10, or an order of the director pursuant to this part 10, the registrant shall bear the reasonable expenses of the investigation. 12-61-1018. Penalty. (1) A person who violates any provision of this part 10, as determined by the director, shall be subject to an administrative penalty of up to one thousand dollars per day for each day that the violation continues. (2) An action taken to impose or collect the penalty provided for in this section shall be considered a civil or administrative action. 12-61-1019. Repeal of part. This part 10 is repealed, effective July 1, 2018. Prior to such repeal, the registration of qualified intermediaries and qualified intermediary officers shall be reviewed as provided for in section 24-34-104, C.R.S. SECTION 2. 24-34-104 (49), Colorado Revised Statutes, is amended to read: 24-34-104. General assembly review of regulatory agencies and functions for termination, continuation, or reestablishment. (49) The following agencies, functions, or both, shall terminate on July 1, 2018: (a) The environmental management system permit program, created in article 6.6 of title 25, C.R.S.; (b) The registration of qualified intermediaries and qualified intermediary officers pursuant to part 10 of article 61 of title 12, C.R.S. SECTION 3. Effective date - applicability. This act shall take effect upon passage and shall apply to acts occurring on or after said date. SECTION 4. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.