House Bill 694 / SL 2025-77
House Bill 694 directs the Environmental Finance Center at UNC-Chapel Hill’s School of Government to study water and wastewater regionalization across North Carolina. The study is intended to examine the benefits, costs, and financial, statutory, and regulatory barriers to regionalizing public water and wastewater systems, with recommendations on policy changes that could improve financial stability and identify systems that would benefit from regionalization. The bill requires consultation with state and local water and government entities and a report to legislative committees by April 1, 2026.
The bill also makes targeted changes to water transfer and nutrient management law. It eliminates certain subbasin designations in the Haw River, Deep River, and Contentnea Creek areas for purposes of the interbasin transfer process, which reduces regulatory requirements for water withdrawals or transfers initiated or modified after the effective date. In addition, it revises the applicability of a 2020 Farm Act provision governing TMDL transport factor calculations for nutrient offset credits in the Neuse River Basin, limiting the current rule to wastewater permit applications for smaller local governments and allowing DEQ to develop new transport zones and delivery factors through modeling and rulemaking.
Overall, the bill appears to reflect a policy preference for greater flexibility in water system planning, regional infrastructure solutions, and streamlined transfer rules in fast-growing basins. The legislative findings emphasize distressed systems, economic development pressures, drought resilience, and the need to reduce duplicative infrastructure and unnecessary regulatory barriers. The bill was enacted as Session Law 2025-77 and approved by the Governor, indicating broad enough support to become law.
The main points of contention suggested by the text are the environmental and regulatory implications of removing subbasin designations and changing interbasin transfer requirements, as well as the revised nutrient transport factor rules in the Neuse Basin. Those changes may be viewed as beneficial for municipal planning, affordability, and water supply reliability, but they also alter longstanding water management constraints and could raise concerns among environmental stakeholders, downstream interests, or communities worried about cumulative impacts on river basins. The study component suggests the General Assembly still saw unresolved questions about the best structure for water and wastewater regionalization.
HB694 amends North Carolina water resources law by removing certain subbasin designations from the interbasin transfer framework, thereby eliminating the need for an interbasin transfer certificate for water transfers between those subbasins within the same major river basin, effective for withdrawals or transfers initiated or modified on or after enactment. It also narrows and then phases out a 2020 Farm Act rule on TMDL transport factor calculations for nutrient offset credits in the Neuse River Basin, while authorizing DEQ and the Environmental Management Commission to develop and adopt new transport zones and delivery factors by rule after modeling and validation. Separately, it creates a legislative study of water and wastewater regionalization that may influence future oversight, financing, and regulatory changes affecting public water and wastewater systems, local governments, utilities, and ratepayers.
The overall sentiment reflected in the bill is supportive of regionalization, infrastructure flexibility, and reduced regulatory friction for water supply planning. The findings frame distressed systems, growth pressures, and economic development needs as reasons to encourage more coordinated water and wastewater solutions. Because the bill was ratified and signed into law, the available voting history indicates sufficient legislative support, and there is no recorded committee transcript showing organized opposition in the provided materials.
The most notable areas of potential contention are the water-management provisions that loosen interbasin transfer constraints and revise nutrient offset treatment in the Neuse Basin. Supporters are likely to emphasize drought resilience, affordability, and the ability of municipalities and utilities to plan regional infrastructure more efficiently, while opponents may worry about environmental impacts, basin-by-basin water availability, and the precedent of reducing regulatory safeguards. The study mandate itself is less controversial, but it signals that lawmakers recognized unresolved policy questions about the costs, benefits, and obstacles to regionalizing water and wastewater systems.