NEW HANOVER COUNTY — Two local governments are joining a state financing program to promote energy and resiliency improvements for commercial buildings, as introduced by a local senator last year before becoming law. But added into Senate Bill 802 before its final vote was a separate component allowing light industries to release millions of gallons of wastewater in streams and wetlands.
READ MORE: Sen. Lee wins clean energy award for sponsoring C-PACE program
The New Hanover County Commission and Wilmington City Council unanimously passed resolutions of intent this week to join the Commercial Property Assessed Clean Energy Program (C-PACE) program; this did not include voting on support for the wastewater provision of S.B. 302.
Sen. Michael Lee (R-New Hanover) was the lead sponsor of the bill to create North Carolina’s C-PACE program. He received a 2024 North Carolina Clean Energy Champion Award in November from Conservatives for Clean Energy and Chambers for Innovation and Clean Energy for his initiative.
The Senate voted in favor of the original C-PACE bill on June 18. Rep. Dean Arp (R-Union) introduced an amendment — titled “Modernize Wastewater Permitting to Support Environmentally Sound Economic Development” — in the bill a week later on June 26, the same day the House voted to pass it. The Senate approved the amended the bill the next day.
PCD reached out to Arp to ask about his wastewater amendment, if any stakeholders requested the provision or helped draft it, and if it would impact his company Arp Engineering Inc.’s projects or clients; a response was not received by press.
Former Gov. Roy Cooper signed the C-PACE bill into law in July but criticized the wastewater regulation. It requires the Department of Environmental Quality to develop draft rules allowing households and light-industrial businesses to release up to two million gallons per day of treated wastewater into “low flow” or “zero flow” surface waters, including wetlands, perennial streams, and unnamed tributaries.
“It is unfortunate that the General Assembly has paired C-PACE with a provision directing the Department of Environmental Quality to request that the Environmental Protection Agency allow the discharge of household wastewater into wetlands,” Cooper wrote in a July statement. “My administration will express opposition to this provision to the EPA.”
Commissioner Rob Zapple expressed concerns about S.B. 802’s wastewater provision to Cape Fear Public Utility Authority officials last week. He told Port City Daily he wanted to ensure voting in favor of the C-PACE resolution would not include support of its unrelated accessory component.
“To my knowledge this has not been approved by DEQ nor has EPA approved draft rules according to the requirements,” CFPUA attorney Nicolette Fulton wrote in an email to Zapple Thursday.
Fulton added exceptions in the bill could exclude New Hanover County’s waters from being impacted. S.B. 802’s wastewater provision notes discharges are not permitted in classified shellfish waters, tidal waters, and water supply waters. However, “low-risk” discharges are allowed in unnamed tributaries of shellfish waters, streams, and wetlands. Commercial and residential wastewater collected included in CFPUA’s sewer system undergoes significant treatment prior to discharge.
“This strikes me as something that was not thought through,” Zapple told Port City Daily. “It allows household and light industry wastewater into low-flow and no-flow areas in a community. Without further definition, what that means is great potential for a lot of problems.”
Again, the city and county’s resolutions were not associated with support of the wastewater provision tacked on in S.B. 302, but only to authorize local government participation in C-PACE. The program will provide local building owners access to long-term financing for commercial property improvements including clean energy, efficiency, and resiliency upgrades.
“There are many benefits of the C-PACE program,” New Hanover County sustainability manager Madelyn Wampler said at Monday’s commissioners meeting. “For property owners, C-PACE benefits include an increase in cash flow, utility bill savings, enhanced building resilience, and potential increase in property value.”
C-PACE financing was introduced in California in 2009 and is now available in over 36 states. The program provides funds for eligible projects — including energy efficiency, flood mitigation, and renewable energy measures — through repayments tied to property values. State-approved private lenders provide fixed-rate financing over a typical period of 25 to 30 years. Interest rates are negotiated between property owners and lenders, but are generally lower than traditional loans.
North Carolina’s program requires local governments to pass a resolution authorizing the financing tool in their jurisdictions. Municipalities are charged with carrying out property tax assessments to determine repayment.
Wampler said C-PACE would benefit the county by promoting clean energy and economic development with minimal burden on local governments. C-PACE is administered by the Economic Development Partnership of North Carolina but financing comes entirely from approved private lenders.
EDPNC is a nonprofit public-private partnership focused on promoting North Carolina’s economic development and attracting businesses to the state. It operates under contract with the Department of Commerce and received nearly $49 million in state funding last year.
The nonprofit is governed by an 18-member board of business leaders, including Spence Broadhurst, First National Bank eastern NC president and former Wilmington mayor. First National Bank is a participant in C-PACE programs.
Port City Daily reached out to Senator Lee to ask if he had a response to criticisms about the bill’s wastewater provision but he did not respond by press.
The Southern Environmental Law Center and four other North Carolina nonprofits — including Cape Fear River Watch — cited the C-PACE law in an August petition to the EPA requesting the federal government take over North Carolina’s water permit regulation.
The petition contends S.B. 802 violates the Clean Water Act because it would restrict DEQ from regulating a broad range of pollutants treated wastewater can contain:
“Under any rule developed pursuant to [S.B. 802] DEQ would be constrained from including effluent limits on pollutants like arsenic, mercury, lead, polychlorinated biphenyls, pesticides, herbicides, radioactive substances, 1,4-dioxane, PFAS, etc. — even if the permit applicant discharged those pollutants at levels that have a reasonable potential to cause or contribute to violations of the state’s water quality standards.”
“We never like to see an environmentally detrimental provision put into a completely unrelated good environmental bill in a late night session,” Southern Environmental Law Center senior attorney Brooks Rainey Pearson told Port City Daily. “That is bad policy making that is going to result in polluted, small creeks and streams throughout the state, including ones that flow into drinking water sources.”
The environmental groups’ petition argued S.B. 802 is part of a broader pattern of lawmakers and appointed officials systematically obstructing the Department of Environmental Quality’s ability to regulate toxic compounds. Examples include a broad range of recent laws and Chief Administrative Law Judge Donald van der Vaart’s September ruling to block DEQ’s enforcement of 1,4-dioxane regulations.
North Carolina has the third highest concentrations of PFAS and 1,4-dioxane in the country but remains without discharge limits for the toxins. The DEQ has sought to implement PFAS and 1,4-dioxane limits in recent years but their proposals have been stymied by separate regulatory bodies, the Environmental Management Commission and Rules Review Commission.
Local officials including Rep. Ted Davis (R-New Hanover), Rep. Deb Butler (D-New Hanover), Rep. Frank Iler (R-Brunswick), and Rep. Charles Miller (R-Brunswick) have repeatedly introduced bills to set industrial PFAS limits but none have passed. Davis and Butler both recently told PCD they would introduce similar legislation in the 2025 session.
WECT anchor Jon Evans asked Lee if he would support legislation to limit industrial PFAS and 1,4-dioxane discharges at an October candidate forum, hosted by the news outlet with Port City Daily and WHQR. Lee said he supported the DEQ’s regulatory authority but did not advocate enacting discharge limits through legislation.
“I don’t think we want legislators establishing scientific regulations and guidelines,” Lee said. “DEQ should be doing that. They’ve got the authority and power to do that and that’s the process they’re going through.”
However, S.B. 802 specifies discharge limits for eight compounds unless the discharger and DEQ agree to more stringent standards or the permit applicant carries out complex modeling on dissolved oxygen levels.
“[S.B. 802] prescribes how the rule must be written by the Environmental Management Commission,” Pearson said. “Substituting the legislature’s preferences for the expertise of agency scientists.”
SELC’s petition cites numerous laws setting scientific parameters for environmental regulation. Last year, the EPA notified the state that a provision included in the 2023 Appropriations Act is inconsistent with the Clean Water Act. The 2023 law requires DEQ to approve highly treated wastewater plant discharges to low or zero-flow waterbodies. It mandates discharge limits for nine specific pollutants and excludes remaining compounds.
Rep. Pricey Harrison (D-Guilford) supports C-PACE but voted against S.B. 802 due to the wastewater provision. She described the cumulative impact of bills eroding water quality as “death by a thousand cuts.”
“I’m very troubled by the lack of transparency,” she said. “If this were a provision with its own merit we should have voted on it separately.”
[Update: This article has been updated to further clarify the county and city resolutions expressing intent to join the C-PACE program did not include the wastewater regulation component of S.B. 802.]
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