(1) A systems contractor, a professional engineer, or a manufacturer of on-site wastewater treatment systems that employ new technology may apply to the division for a determination of reliability of the system. The division may hold a public hearing to determine whether the particular design or type of system, based upon improvements or developments in the technology of sewage treatment, has established a record of performance reliability that would justify approval of applications for such systems by the health officer without mandatory review by the local board of health. If the division determines, based upon reasonable performance standards and criteria, that reliability has been established, the division shall so notify each local board of health, and applications for permits for the systems may thereafter be acted upon by the health officer, the health officer's designated representative, or the local board of health's designated representative, in the same manner as applications for systems described in section 25-10-106. The division shall not arbitrarily deny any person the right to a hearing on an application for a determination of reliability under this section.

(2) Except for designs or types of systems that have been approved by the division pursuant to subsection (1) of this section, the local public health agency may approve an application for a type of system not otherwise provided for in section 25-10-106, only if the system has been designed by a professional engineer and only if the application provides for the installation of a backup system, of a type previously approved by the division under subsection (1) of this section, in the event of failure of the primary system. A local public health agency shall not arbitrarily deny any person the right to consideration of an application for such a system and shall apply reasonable performance standards in determining whether to approve an application.