AN ACT to impose a limited moratorium on initiating certain surface water transfers from the cape fear river basin, to direct the north carolina collaboratory to study the cape fear river basin, and to make certain revisions to the environmental management commission's authority to require reductions to existing surface water transfers from any river basin in the state.

The General Assembly of North Carolina enacts:

part i. cape fear water resources

LEGISLATIVE PURPOSE AND FINDINGS

SECTION 1.(a)  Title. ‒ This Part shall be known as the Cape Fear Water Resources Modernization and Regionalization Act of 2026.

SECTION 1.(b)  Legislative Findings. – The General Assembly finds that the State's laws regulating surface water transfers, originally enacted more than 30 years ago, should be comprehensively reviewed and evaluated for updates in light of the State's and, in particular, the Cape Fear River Basin's tremendous economic and population growth and the impacts of drought and natural disasters on riverine and water reservoir systems over that period. The General Assembly finds that the approval of new or modified transfers that substantially diminish the overall hydrologic flow, current and future water storage capacity, and water quality of the Cape Fear River Basin should be temporarily paused while this review and evaluation is ongoing.

SECTION 1.(c)  Legislative Purpose. – The purpose of this Part is to ensure the sustainable use and protection of the Cape Fear River Basin's water resources by temporarily pausing new surface water transfers from the upper reaches of the Cape Fear River Basin while a comprehensive review is conducted.

MORATORIUM ON NEW OR INCREASED INTERBASIN TRANSFERS FROM THE UPPER REACHES OF THE CAPE FEAR RIVER BASIN

SECTION 2.(a)  Definitions. – The definitions set forth in G.S. 143‑215.22G apply to this section.

SECTION 2.(b)  Moratorium on New or Increased Interbasin Transfers. – There is hereby established a moratorium on the initiation of new surface water transfers or increases in existing surface water transfers from any source in the Cape Fear River Basin located upstream of Cape Fear Lock and Dam #2 in Bladen County. The Environmental Management Commission shall not issue a certificate authorizing a new surface water transfer or an increase in an existing surface water transfer from any source in the Cape Fear River Basin located upstream of Cape Fear Lock and Dam #2.

SECTION 2.(c)  Exceptions. – The moratorium established by subsection (b) of this section shall not prohibit the following surface water transfers from the Cape Fear River Basin:

(1)        Any existing transfers authorized by the Environmental Management Commission or else lawfully initiated prior to the effective date of this act. No person who maintains an existing transfer under this subdivision shall increase the amount of surface water transferred to another river basin.

(2)        Any emergency transfer of surface water authorized by the Secretary of Environmental Quality under G.S. 143‑215.22L(q) or G.S. 143‑355.3.

SECTION 2.(d)  Moratorium Duration. – This section is effective when it becomes law and expires June 1, 2030.

CAPE FEAR RIVER BASIN STUDY

SECTION 3.(a)  Study. – The North Carolina Collaboratory at the University of North Carolina at Chapel Hill (Collaboratory) shall study the Cape Fear River Basin to determine its reliable yield of water supply and make recommendations for any legislative changes necessary to ensure the sustainability of existing and future in‑basin water uses. The Collaboratory shall include all of the following in its study:

(1)        A catalog of the existing water uses and users of the Cape Fear River Basin.

(2)        An assessment of the reliable yield of water supply of the Cape Fear River Basin, including an assessment for each of its subbasins and major tributaries. This assessment shall include a scientific evaluation of the quantity of water that can be dependably withdrawn or transferred under current and projected future hydrologic conditions without causing unacceptable environmental or economic impacts to in‑basin uses.

(3)        An analysis of the adequacy of the environmental impact study requirements for interbasin transfers from sources in the Cape Fear River Basin located upstream of Cape Fear Lock and Dam #2.

(4)        An assessment of the economic equity of interbasin transfers for affected communities within the Cape Fear River Basin.

(5)        An examination of any anticipated water quality and ecological impacts from approved and proposed interbasin transfers from the Cape Fear River Basin.

SECTION 3.(b)  Consultation. – In collecting and analyzing data relevant to determining reliable yield of water supply from the Cape Fear River Basin, the Collaboratory shall consult with the United States Army Corps of Engineers, the Department of Environmental Quality, the Environmental Management Commission, the State Water Infrastructure Authority, the North Carolina League of Municipalities, and other relevant public and private entities responsible for impoundments and water supply infrastructure in the Cape Fear River Basin.

SECTION 3.(c)  Report. – The Collaboratory shall report its findings, together with any proposed legislation, to the General Assembly no later than July 1, 2029.

SECTION 3.(d)  Appropriation. – There is appropriated from the General Fund to the Board of Governors of The University of North Carolina the sum of one million five hundred thousand dollars ($1,500,000) in nonrecurring funds for the 2026‑2027 fiscal year to be allocated to the North Carolina Collaboratory to fund the study of the Cape Fear River Basin described in subsection (a) of this section. These funds shall not revert to the General Fund at the end of the 2026‑2027 fiscal year but shall remain available until the end of the 2028‑2029 fiscal year.

SECTION 3.(e)  Effective Date. – This section becomes effective July 1, 2026.

part II. emc authority to require reductions to existing interbasin transfers

SECTION 4.  G.S. 143‑215.13(d) reads as rewritten:

(d)      The Commission may conduct a public hearing pursuant to the provisions of this subsection in any area of the State, whether or not a capacity use area has been declared, when it has reason to believe that the withdrawal of water from or the discharge of water pollutants to the waters in such area is having an unreasonably adverse effect upon such waters. If the Commission determines that withdrawals of water from or discharge of water pollutants to the waters within such area has resulted or probably will result in a generalized condition of water depletion or water pollution within the area to the extent that the availability or fitness for use of such water has been impaired for existing or proposed uses and that injury to the public health, safety or welfare will result if increased or additional withdrawals or discharges occur, the Commission may issue a rule:

(1)        Prohibiting any person withdrawing waters in excess of 100,000 gallons per day from increasing the amount of the withdrawal above such limit as may be established in the rule.

(2)        Prohibiting any person from constructing, installing or operating any new well or withdrawal facilities having a capacity in excess of a rate established in the rule; but such prohibition shall not extend to any new well or facility having a capacity of less than 10,000 gallons per day.

(3)        Prohibiting any person discharging water pollutants to the waters from increasing the rate of discharge in excess of the rate established in the rule.

(4)        Prohibiting any person from constructing, installing or operating any facility that will or may result in the discharge of water pollutants to the waters in excess of the rate established in the rule.

(5)        Prohibiting any agency or political subdivision of the State from issuing any permit or similar document for the construction, installation, or operation of any new or existing facilities for withdrawing water from or discharging water pollutants to the waters in such area in excess of the rates established in the rule.

(6)        Requiring any person who maintains an existing surface water transfer from one river basin to another to reduce the amount of transfer to such rates established in the rule.

The determination of the Commission shall be based upon the record of the public hearing and other information considered by the Commission in the rulemaking proceeding. The rule shall describe the geographical area of the State affected thereby with particularity and shall provide that the prohibitions set forth therein shall continue pending a determination by the Commission that the generalized condition of water depletion or water pollution within the area has ceased.

….

SECTION 5.(a)  G.S. 143‑215.22L(n) reads as rewritten:

(n)      Final Determination: Certificate Conditions and Limitations. – The Commission may grant the certificate in whole or in part, or deny the certificate. The Commission may impose any conditions or limitations on a certificate that the Commission finds necessary to achieve the purposes of this Part including a limit on the period for which the certificate is valid. The conditions and limitations shall include any mitigation measures proposed by the applicant to minimize any detrimental effects within the source and receiving river basins. In addition, the certificate shall require all of the following conditions and limitations:

(1)        A water conservation plan that specifies the water conservation measures that will be implemented by the applicant in the receiving river basin to ensure the efficient use of the transferred water. Except in circumstances of technical or economic infeasibility or adverse environmental impact, the water conservation plan shall provide for the mandatory implementation of water conservation measures by the applicant that equal or exceed the most stringent water conservation plan implemented by a public water system that withdraws water from the source river basin.

(2)        A drought management plan that specifies how the transfer shall be managed to protect the source river basin during drought conditions or other emergencies that occur within the source river basin. Except in circumstances of technical or economic infeasibility or adverse environmental impact, this drought management plan shall include mandatory reductions in the permitted amount of the transfer based on the severity and duration of a drought occurring within the source river basin and shall provide for the mandatory implementation of a drought management plan by the applicant that equals or exceeds the most stringent water conservation plan implemented by a public water system that withdraws water from the source river basin.

(3)        The maximum amount of water that may be transferred, calculated as a daily average of a calendar month, and methods or devices required to be installed and operated that measure the amount of water that is transferred.

(4)        A provision that the Commission may amend a certificate to reduce the maximum amount of water authorized to be transferred whenever it appears that an alternative source of water is available to the certificate holder from within the receiving river basin, including, but not limited to, the purchase of water from another water supplier within the receiving basin or to the transfer of water from another sub‑basin within the receiving major river basin.

(5)        A provision that the Commission shall amend the certificate to reduce the maximum amount of water authorized to be transferred if the Commission finds that the applicant's current projected water needs are significantly less than the applicant's projected water needs at the time the certificate was granted.

(5a)      A provision that the Commission shall amend the certificate to reduce the maximum amount of water authorized to be transferred if the Commission finds that a reduction is necessary to avoid detrimental effects on the source river basin, including present and future effects on public, industrial, economic, recreational, and agricultural water supply needs, wastewater assimilation, water quality, fish and wildlife habitat, electric power generation, navigation, and recreation.

(6)        A requirement that the certificate holder report the quantity of water transferred during each calendar quarter. The report required by this subdivision shall be submitted to the Commission no later than 30 days after the end of the quarter.

(7)        Except as provided in this subdivision, a provision that the applicant will not resell the water that would be transferred pursuant to the certificate to another public water system. This limitation shall not apply in the case of a proposed resale or transfer among public water systems within the receiving river basin as part of an interlocal agreement or other regional water supply arrangement, provided that each participant in the interlocal agreement or regional water supply arrangement is a co‑applicant for the certificate and will be subject to all the terms, conditions, and limitations made applicable to any lead or primary applicant.

SECTION 5.(b)  No later than 60 days after the effective date of this act, any person issued a certificate for an interbasin transfer by the Environmental Management Commission on or before the effective date of this section shall submit a request to the Commission to modify the certificate to incorporate the provision required by G.S. 143‑215.22L(n)(5a), as enacted by subsection (a) of this section.

part iii. severability clause and effective date

SECTION 6.  Severability. – If any provision of this act or its application is held invalid, the invalidity does not affect other provisions or applications of this act that can be given effect without the invalid provisions or application and, to this end, the provisions of this act are severable.

SECTION 7.  Effective Date. – Except as otherwise provided, this act is effective when it becomes law.