(a) Subsequent to signing a contingent franchise, license, or service agreement with a local agency, a privatizer shall apply to the commission for a determination that the proposed privatization project is not a public utility within the meaning of Section 216 and is therefore exempt from commission regulation. When a privatizer files an application with the commission, the privatizer shall include the information the commission requires to make a determination in accordance with subdivisions (b), (c), (d), and (e).

(b) (1) Not later than 60 calendar days after the privatizer submits its application to the commission, the commission shall determine in writing whether the application is complete and shall immediately transmit the determination to the privatizer.

(2) If the application is determined not to be complete, the commission shall specify in writing those parts of the application which are incomplete and shall indicate the manner in which it can be made complete, including a list and thorough description of the specific information needed to complete the application. The applicant shall submit materials to the commission in response to the list and description. Upon resubmittal of the application, a new 60-calendar-day period shall begin, during which the commission shall determine the completeness of the application.

(3) If the application is deemed complete, the commission may determine not later than 90 calendar days after the application is deemed complete that the privatization project is not a public utility within the meaning of Section 216 and is therefore exempt from commission regulation, if the commission finds that the application clearly complies with the criteria in subdivisions (d) and (e). If the commission does not make this finding, then it shall proceed under the schedule established in subdivision (c).

(4) If the commission fails to make a written determination as to the completeness of the application within 60 calendar days after receipt of the original or resubmitted application, the application shall be deemed complete for purposes of this section.

(c) Within 180 calendar days after the application is deemed complete, the commission shall determine whether the privatization project is a public utility within the meaning of Section 216 using the criteria in subdivisions (d) and (e). The commission may hold a hearing on the matter if the commission finds it to be necessary. No franchise, license, or service agreement between a privatizer and a local agency shall be entered into until the commission has either exempted the project or the 180-calendar-day period has expired, whichever comes first. Nothing in this section precludes a privatizer and the commission from mutually agreeing to a further extension of any time limit provided in this section.

(d) The commission may determine that a privatization project is not a public utility within the meaning of Section 216, and is therefore exempt from commission regulation if it finds that the franchise, license, or service agreement both demonstrates that the local agency retains sufficient jurisdiction to protect the public interest and adequately addresses all aspects of the provision of service which would otherwise be subject to commission regulation. In making its determination, the commission shall determine whether the local agency has complied with § 54253 of the Government Code. The decision of the commission shall be final and conclusive in the absence of any subsequent changes.

(e) In making a determination pursuant to subdivision (c), the commission shall review the franchise, license, or service agreement to ensure that the agreement grants the local agency, at a minimum, all of the following:

(1) Exclusive authority to establish all rates and rate changes charged to the public.

(2) Approval over any proposal of the privatizer to provide new, additional, or alternative service to any other public or private entity or to change the service fee paid to the privatizer by the local agency.

(3) Approval over the original design and construction of the project, including any changes in design, alterations, or additions to the project.

(4) Approval over any changes in ownership of the party or parties subject to the franchise, license, or service agreement.

(5) Authority to impose fines and penalties for noncompliance with any provision of the executed franchise, license, or service agreement, or for failure to provide the service within the time period agreed to in the franchise, license, or service agreement.

(6) Authority to ensure that the facility is adequately maintained.

(7) Adequate opportunity to monitor compliance with the agreement and to ensure the project will be operated to meet any applicable federal or state water quality standards or other applicable laws.

(8) Adequate opportunity to amend the agreement in the event of unforeseen circumstances or contingencies, such as flood, earthquake, fire, or other natural disasters or federal tax law changes.

(f) The commission may adopt whatever procedures it deems necessary to carry out the provisions of subdivisions (a), (b), (c), (d), and (e). The commission shall adopt regulations for reviewing any proposed changes to a contingent franchise, license, or service agreement to determine if the proposed changes could render the project a public utility within the meaning of Section 216. The commission shall charge each privatizer submitting an application pursuant to this section a fee which will be sufficient to defray the costs incurred in processing the application and rendering a decision upon it.

(g) As used in this section, “privatization project” means any waste water or sewerage project that is owned and operated by a privatizer pursuant to a franchise, license, or service agreement with a local agency, or any agency of that local agency, pursuant to which services are supplied for the benefit of the local agency, its residents, or both, or any agency of the state. “Project” includes, but is not limited to, financing, designing, constructing, repairing, replacing, maintaining, and operating collector systems, pumping stations, treatment plants, and lateral interceptors, and outfall sewers. “Local agency” means any city, county, city and county, special district, or county service area. “Privatizer” means any corporation, partnership, or natural person, excluding municipal corporations, which owns and operates a wastewater or sewerage project pursuant to a franchise, license, or service agreement with a local agency. “Privatization project,” as used in this section, includes the Santa Ana Watershed Project Authority’s Arlington Basin Groundwater Desalter Project, which will treat groundwater contaminated by wastewater.

(Amended by Stats. 1992, Ch. 669, Sec. 3. Effective January 1, 1993.)