Can the North Carolina Clean Water Management Trust Fund pay for an environmental impact statement on a proposed regional wastewater treatment system, and can it fund construction of the regional system?
Plain-English summary
NC's Clean Water Management Trust Fund (CWMTF) is a dedicated grant program created in 1996 to fund water-quality protection and restoration. The Fund asked the AG two related questions about funding a proposed regional wastewater system.
Question 1: Can CWMTF pay for an Environmental Impact Statement?
Not by itself. The AG read the statute's nine authorized purposes carefully:
- Acquire land for riparian buffers.
- Acquire conservation easements or other interests for water protection.
- Coordinate with other public programs involving lands adjoining water bodies.
- Restore previously degraded lands.
- Repair failing waste treatment systems (with conditions).
- Repair and eliminate failing septics and illegal drainage; expand systems to eliminate those problems.
- Improve stormwater controls.
- Facilitate planning that targets reductions in surface water pollution.
- Fund operating expenses of the Board of Trustees and its staff.
EIS preparation does not fit (1)-(4), (5)-(7), or (9). The arguable home would be (8) (planning to reduce pollution), but the AG read "planning" in (8) more narrowly than EIS preparation. NC's Environmental Policy Act, G.S. § 113A-4(2), requires an EIS only after a project has been selected; it documents environmental effects of the chosen alternative. So EIS preparation does not serve a "planning" function in the predevelopment sense.
But the AG identified a workaround. EIS preparation can be funded as part of a larger grant for a project that does qualify, such as wastewater expansion to eliminate failing septic systems. The authority to fund EIS preparation in that context is implied as necessary to discharge the CWMTF Board's NCEPA reporting duties for projects it funds.
Question 2: Can CWMTF fund construction of a regional wastewater system?
Only under § 113-145.3(c)(5) or (c)(6), with their respective conditions:
- (c)(5) Repair of failing waste treatment systems: Requires (i) prior application to and denial by the Clean Water Revolving Loan and Grant Fund, (ii) the repair is a reasonable remedy for an existing problem, and (iii) the repair is not for the purpose of expanding the system to accommodate future growth.
- (c)(6) Failing septics and illegal connections: Funds repair/elimination of failing septic systems, elimination of illegal drainage connections, and expansion of waste treatment to eliminate those problems. Priority to economically distressed local governments.
The cardinal rule throughout: CWMTF cannot fund expansion to accommodate future growth. The Fund exists to solve existing water-quality problems, not to enable new development. A regional wastewater project that fixes existing failing septics or illegal connections is eligible. A regional wastewater project sized to handle 20 years of projected growth is not.
Practical effect. The applicant would need to design the project around existing problems, document the existing failing-septic or illegal-connection inventory, and submit a grant request narrowly framed around the existing-problem fix. EIS preparation costs can be bundled into that request, but cannot stand alone.
Currency note
This opinion was issued in 1998. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
CWMTF's authorizing statute has been amended several times since 1998, and the funding categories have been adjusted. NC's coastal and rural wastewater funding programs now interact with new federal funds (American Rescue Plan Act, IIJA water infrastructure dollars). Anyone working on a current CWMTF application should pull the current text of § 113-145.3 and any subsequent AG opinions and CWMTF policies.
Common questions
Q: What is an EIS?
A: An Environmental Impact Statement. Required under NC's Environmental Policy Act (NCEPA) and the federal NEPA for major state or federal actions significantly affecting the environment. The EIS analyzes environmental impacts, alternatives, mitigation measures, and irreversible effects. It is prepared after a project alternative has been selected.
Q: What is the "Clean Water Revolving Loan and Grant Fund" referenced in (c)(5)?
A: The Clean Water State Revolving Fund (CWSRF), a federally seeded fund administered by the NC Division of Water Infrastructure that makes low-interest loans (and some grants) for water and wastewater infrastructure. CWMTF wants applicants to try CWSRF first; only after CWSRF denial in the latest review cycle does (c)(5) apply.
Q: Why does the statute exclude future-growth expansion?
A: Policy. CWMTF was designed as a remediation fund, not a development-enabling fund. Allowing growth-driven expansion would subsidize new sprawl development, contrary to the Fund's water-quality mission.
Q: Can a project be partly for existing-problem repair and partly for growth?
A: The AG opinion does not address mixed projects directly. The implied answer: CWMTF can pay for the existing-problem-repair portion only; the growth portion needs other funding (CWSRF loan, local capital funds, developer fees).
Q: What does "economically distressed" mean for priority under (c)(6)?
A: NC has long used various economic-distress designations for local governments, including the Tier system from the Department of Commerce. CWMTF has used several of these to prioritize grant awards.
Q: Could CWMTF fund a regional wastewater system that just consolidates several small failing systems?
A: Yes, under (c)(5) or (c)(6), if the consolidation eliminates failing systems or illegal connections without adding growth capacity. Regionalization with new capacity sized for future growth crosses the line.
Background and statutory framework
CWMTF was created in 1996 as a permanent, dedicated funding stream for water-quality projects (currently a constitutional dedication funded by some specific revenue sources). The Fund's authorizing statute, G.S. § 113-145.3, lists the nine authorized grant purposes. The list is closed: CWMTF cannot fund a project that does not fit one of the nine.
The future-growth prohibition is a deliberate design choice. NC has separate programs to fund growth-driven infrastructure (CWSRF, federal infrastructure programs, local impact fees and rates). CWMTF was carved out specifically for the existing-problem fix.
NCEPA is NC's state-level analogue to the federal NEPA. It requires EIS preparation for state agency actions significantly affecting the environment. CWMTF-funded projects above certain thresholds trigger NCEPA review, which is why the AG's implied authority for EIS funding within a qualifying project is necessary: the Board could not discharge its NCEPA duties without it.
The opinion is a clean example of how the AG reads a closed-list statute. The Fund cannot stretch the categories. The drafting workaround (bundle EIS into a qualifying project) is built into NCEPA's project-based logic.
Citations
- N.C. Gen. Stat. § 113-145.3 (CWMTF grant program authority and purposes)
- N.C. Gen. Stat. § 113-145.3(c)(5) (repair of failing waste treatment systems)
- N.C. Gen. Stat. § 113-145.3(c)(6) (repair/elimination of failing septics and illegal connections)
- N.C. Gen. Stat. § 113-145.3(c)(8) (planning targeting reductions in surface water pollution)
- N.C. Gen. Stat. §§ 113A-1 through 113A-13 (NC Environmental Policy Act, NCEPA)
- N.C. Gen. Stat. § 113A-4(2) (state agency EIS requirement)
Source
- Landing page: https://ncdoj.gov/opinions/funding-of-eis-preparation-by-the-clean-water-management-trust-fund/
Original opinion text
Best-effort transcription based on the text NCDOJ publishes at the landing URL; the published page omits the salutation block. The linked landing page is authoritative.
- Is preparation of an Environmental Impact Statement on a proposed regional wastewater collection, treatment and disposal system and the alternatives for wastewater disposal available to such a system properly within the authorized purposes of CWMTF grant funds under N.C.G.S. § 113-145.3?
Response: The preparation of an Environmental Impact Statement is not, in itself, one of the authorized uses of CWMTF grant funds under N.C.G.S. § 113-145.3, but EIS preparation may be included in funding for a project that otherwise qualifies for grant funds under the statute.
The preparation of an EIS addresses the requirement of the North Carolina Environmental Policy Act, N.C.G.S. § 113A-1 through 113A-13, (N.C.E.P.A.). The N.C.E.P.A imposes the following duty on state agencies:
Every State agency shall include in every recommendation or report on any action involving expenditure of public moneys or use of public land for projects and programs significantly affecting the quality of the environment of this State, a detailed statement by the responsible official setting forth the following:
a. The environmental impact of the proposed action;
b. Any significant adverse environmental effects which cannot be avoided should the proposal be implemented;
c. Mitigation measures proposed to minimize the impact;
d. Alternatives to the proposed action;
e. The relationship between the short-term uses of the environment involved in the proposed action and the maintenance and enhancement of long-term productivity; and
f. Any irreversible and irretrievable environmental changes which would be involved in the proposed action should it be implemented.
N.C.G.S. § 113A-4(2). As the text of the statute indicates, an EIS is prepared after a project proposal has been developed as a means of assessing its potential environment effects. Thus, EIS preparation follows the initial planning process in which alternatives are considered and rejected and focuses on an assessment of the selected alternative.
Against this background, EIS preparation in itself does not appear to fit within any of the enumerated purposes of CWMTF grants as set out in N.C.G.S. § 113-145.3. Those purposes include the following:
(1) To acquire land for riparian buffers… .
(2) To acquire conservation easements or other interests in real property for the purpose of protecting and conserving surface waters and urban drinking water supplies.
(3) To coordinate with other public programs involved with lands adjoining water bodies to gain the most public benefit while protecting and improving water quality.
(4) To restore previously degraded lands to reestablish their ability to protect water quality.
(5) To repair failing waste treatment systems… .
(6) To repair and eliminate failing septic tank systems, to eliminate illegal drainage connections, and to expand waste treatment systems if the system is being expanded as a remedy to eliminate failing septic tank systems or illegal drainage connections… .
(7) To improve stormwater controls and management practices.
(8) To facilitate planning that targets reductions in surface water pollution.
(9) To fund operating expenses of the Board of Trustees and its staff.
Of those, EIS preparation clearly does not fall within the purposes set out in (1) through (7) or (9).
As to (c)(8), the language most strongly suggests that the legislative intent was to make grant funds available for land use planning aimed at reducing surface water pollution. It could also be read to authorize funds for planning related to other authorized grant purposes (e.g., land acquisition projects or projects designed to eliminate failing septic tank systems and illegal drainage connections). EIS preparation does not serve a planning function within the general understanding of that term, however, since the EIS is prepared only after a preferred alternative has been selected. For that reason, EIS preparation cannot be considered "planning" within the meaning of N.C.G.S. § 113-145.3(c)(8).
Although EIS preparation is not, standing alone, one of the authorized purposes for CWMTF grant funds, EIS preparation could be funded as part of a larger grant for a project that falls within one of the statutory categories. For example, EIS preparation, where necessary, could be funded as part of a broader grant for expansion of a waste treatment system in order to eliminate failing septic systems or illegal connections. In this context, the authority to fund EIS preparation would be implied under the statute as necessary to discharge the CWMTF Board's duties under the N.C.E.P.A. to report on the environmental impacts of projects funded by CWMTF grants.
- Is the construction of a regional wastewater system one of the authorized purposes of CWMTF grant funds?
Response: Construction of a regional wastewater system may be funded only if the construction meets the criteria set out in N.C.G.S. § 113-145.3(c)(5) or (6).
As cited above, N.C.G.S. § 113-145.3(c) authorizes funding for two categories of projects related to wastewater treatment systems. Under N.C.G.S. § 113-145.3(c)(5), the CWMTF can provide funds to repair failing waste treatment systems under the following conditions: (i) an application has first been submitted to the Clean Water Revolving Loan and Grant Fund and denied during the latest review cycle; (ii) the repair is a reasonable remedy for resolving an existing waste treatment problem; and (iii) the repair is not for the purpose of expanding the system to accommodate future growth. CWMTF grants may also be used, pursuant to N.C.G.S. § 113-145.3(c)(6), to repair and eliminate failing septic systems, to eliminate illegal drainage connections, and to expand waste treatment systems for purposes of eliminating those problems. Priority for such grants are to be given to economically distressed units of local government.
Based on the details of the grant application, the CWMTF Board may determine which category most appropriately includes the proposed regional wastewater system. In either case, the primary statutory limitation on such grants is that expansion must be for purposes of eliminating existing wastewater treatment and disposal problems. The statute clearly prohibits the use of CWMTF grants for expansion of a wastewater treatment system to accommodate future growth.
Thus, the CWMTF has authority to grant funds for expansion of existing wastewater collection, treatment, and disposal systems in the four-county area to the extent the expansion addresses existing waste treatment and disposal problems such as failing septic tank systems and illegal discharges. CWMTF grants cannot be used to address needs related to anticipated future growth in the region.
Thank you for your inquiry. Please advise if we can be of further assistance.
signed by:
Daniel C. Oakley
Senior Deputy Attorney General
Robin W. Smith
Assistant Attorney General