(1) The department has the authority to cancel, deny, or deny the reissuance of any driver's or minor driver's license upon determining that the licensee was not entitled to the issuance for any of the following reasons:

(a) Failure to give the required or correct information in an application, or commission of any fraud in making such application or in submitting any proof allowed under this section;

(b) Inability to operate a motor vehicle because of physical or mental incompetence;

(c) Permission of an unlawful or fraudulent use or conviction of misuse of license, titles, permits, or license plates;

(d) That such license would have been subject to denial under the provisions of section 42-2-104;

(e) Failure of the licensee to register in Colorado all vehicles owned by the licensee under the requirements of section 42-3-103;

(f) The person is not lawfully present in the United States;

(g) The person is not a resident of the state of Colorado;

(h)

(I) The person has an outstanding judgment or warrant referred to in section 42-4-1709 (7) issued against such person; except that, as used in this paragraph (h), "judgment or warrant" shall not include any judgment or warrant reported to the department in violation of section 42-4-110.5 (2)(c).

(II) Upon receipt of a judgment or warrant from a court clerk on or after September 1, 2000, the department shall send written notice to the person identified in the court order that such person is required to provide the department with proof that the judgment or warrant is no longer outstanding within thirty days after the date such notice is sent or such person's driver's license shall be canceled or any application for a new license shall be denied. Proof that the judgment or warrant is no longer outstanding shall be in the form of a certificate issued by the clerk of the court entering the judgment or issuing the warrant in a form approved by the executive director.

(III) If acceptable proof is not received by the department within thirty days after notice was sent, the department shall cancel the driver's license or deny any application for a license of the person against whom the judgment was entered or the warrant was issued.

(IV) The general assembly finds that the department currently has record of a large number of outstanding judgments and warrants and that it does not know whether such judgments and warrants are still outstanding. All outstanding judgments and warrants that are in the department's records as of August 31, 2000, shall be deemed void for purposes of this section effective September 1, 2005.

(i) Failure of the person to complete a level II alcohol and drug education and treatment program certified by the office of behavioral health in the department of human services pursuant to section 42-4-1301.3, as required by section 42-2-126 (4)(d)(II)(A) or 42-2-132 (2)(a)(II). The failure must be documented pursuant to section 42-2-144.

(2) The department has the authority to cancel any driver's or minor driver's license if, subsequent to the issuance of such license, the department has authentic information that a condition developed or an act was committed which places such licensee in one of the categories for which cancellation is authorized.

(2.5)

(a) Any person who has had a driver's or minor driver's license or driving privilege cancelled pursuant to paragraph (b) of subsection (1) of this section who is receiving or has received therapy treatment for physical or mental incompetence or an evaluation for such incompetence through a rehabilitation provider or licensed physician certified by the department to provide rehabilitative driving instruction may receive a limited license with such limitations as the department deems necessary after consultation with and upon the recommendation of the rehabilitation provider or licensed physician.

(b)

(I) Any person licensed pursuant to this subsection (2.5) shall be subject to the examination requirements set forth in section 42-2-111.(II) Rehabilitation providers and licensed physicians shall be subject to the provisions governing medical advice in section 42-2-112.(c) The department shall adopt rules as necessary to carry out this subsection (2.5).

(3) Upon such cancellation, the licensee must surrender the license so cancelled to the department, and thereafter such licensee shall be entitled to a hearing by the department if such license is returned and if such request is made within thirty days from the date of such cancellation; except that a denial or cancellation under paragraph (h) or (i) of subsection (1) of this section shall be deemed to be final agency action for judicial review purposes under section 24-4-104, C.R.S. Such hearing, if requested, shall be held no later than thirty days from the date of such cancellation. Notification of such cancellation shall be given as provided in section 42-2-119.

(4)

(a) Upon the holding of a hearing as provided in subsection (3) of this section or upon determination by the department, the license shall be returned if the licensee is able to prove that cancellation should not have been made. When the original cancellation is sustained by the department, such licensee may apply for and receive a new license whenever the licensee can show that the reason for the original cancellation no longer applies. The licensee may also appeal the decision of the department after the hearing to the district court as provided in section 42-2-135.

(b) A licensee who has proved that cancellation should not have been made shall not be required to give proof of financial responsibility pursuant to article 7 of this title.