The city of Mebane has agreed to pay the city of Graham $9.3 million toward the cost to upgrade and expand Graham’s wastewater treatment plant, based on a motion that Mebane’s city council members voted unanimously to approve Monday night after emerging from a half-hour closed-session discussion with their attorneys.
Mebane filed a lawsuit against Graham in December 2025, disputing Graham’s claim that a 2017 agreement between the two cities had obligated Mebane to pay $18.1 million, or 21.43 percent of the $84.6 million cost to expand Graham’s wastewater treatment plant.
The motion that the council approved Monday night calls for Mebane to pay the $9,310,976 to Graham “at the same interest rate and at the same amortization as [the] city of Graham is paying on its loan from the state of North Carolina” and for payments to begin during the upcoming 2026-27 fiscal year that begins July 1.
“The payments are made with reservation of all rights,” according to the motion that the council approved, leaving open the possibility that Mebane may continue to pursue its litigation against Graham.
Background on the dispute
Mebane officials had initially offered to pay Graham $6.8 million toward the cost to upgrade Graham’s wastewater treatment plant – and, in December 2025, offered to increase Mebane’s share to $10.7 million, according to Mebane’s suit against Graham, which gave no details about how that figure was calculated.
Graham began planning several years ago to expand its WWTP to increase the treatment capacity from 3.5 million to five million gallons of wastewater per day, according to Mebane’s original lawsuit.
Mebane contends that nothing in the “Graham/Mebane Wastewater Treatment Plant Intergovernmental Agreement” that the two cities entered into in April 2017 had obligated Mebane to pay $18.1 toward the wastewater treatment plant (WWTP) upgrade and expansion.
In its suit, Mebane claims that the 2017 agreement obligated Mebane to pay Graham $2.7 million in yearly installments, over 20 years, to have 750,000 gallons of wastewater treated per day at Graham’s plant.
Mebane officials contend they were never asked about and never agreed to fund a portion of Graham’s WWTP upgrade and expansion and have struggled since October 2022 to get information about the project from Graham city officials.
The 2017 wastewater treatment agreement stipulated that it could only be terminated by a joint agreement of both cities.
In September 2025, however, Jennifer Talley, then-mayor of Graham, sent a letter to Mebane mayor Ed Hooks notifying him that “the city of Graham, by way of this letter, serves as official notice of its desire to terminate” the agreement, according to Mebane’s suit.
Hooks told his counterpart in Graham last fall that he had no interesting in terminating the agreement and asked for another meeting, which Talley rejected, according to the lawsuit that Mebane subsequently filed against Graham in December 2025.
Mebane filed suit, asking a superior court judge to determine its legal and financial obligations for any agreed-upon improvements to Graham’s WWTP, based on the 2017 agreement.
Graham files counterclaim against Mebane
In February 2026, Graham filed a response and counterclaim, asserting that the city’s staff had “kept Mebane apprised of the planning and construction of the upgrades needed [and] the upgrade has been knowingly and voluntarily accepted by Mebane.”
Mebane’s and Graham’s mayors and city managers had met on multiple occasions over the past several years to review the costs associated with the 2017 agreement, most recently in late 2025 to attempt to reach a consensus about Mebane’s share of the costs to upgrade and expand the WWTP, according to Graham’s counterclaim.
In its counterclaim, Graham asked a superior court judge to enter an order that would force Mebane to pay its $18.1 million “proportional share” of the wastewater treatment plant upgrade and expansion, as outlined within the 2017 agreement between the two cities.
Graham contended in its counterclaim that its existing WWTP couldn’t comply with “the more stringent limitations imposed by the Jordan Lake Rules,” i.e., statewide wastewater discharge regulations originally enacted in 2009 and subsequently amended in 2014 and 2020, as well as added demand created by ongoing development.
Mebane files motion to dismiss Graham’s counterclaim
Mebane has since filed a new motion, asking a superior court judge to dismiss Graham’s counterclaim for failing to join Alamance County as a party to its counterclaim.
The two cities and Alamance County government had signed an “intergovernmental agreement” on May 6, 2013 to create the N.C. Commerce Park and develop about 1,200 acres in the Hawfields community, which is between the two municipalities. The three governmental entities agreed to share equally in revenues generated from property taxes assessed on the industrial park; Mebane and Graham agreed to share revenues from the water and sewer service they would provide to the site.
The 2017 wastewater treatment agreement between Graham and Mebane called for all wastewater from the industrial park to be pumped to Graham’s WWTP at 1204 East Gilbreath Street through the Cherry Lane Pump Station. The agreement also stipulated that 78.57 percent of Graham’s wastewater treatment capacity would be allocated to Graham and 21.43 percent allocated to Mebane.
“The cost of agreed upon improvements or upgrades to the WWTP and the Cherry Lane Pump Station” was to be based on the same percentages of wastewater treatment capacity allocated to each city, the 2017 agreement between Mebane and Graham stated, based on a copy of the agreement that Mebane filed with its lawsuit in December.
“To the extent that [Graham’s] counterclaim for [a] Declaratory judgment seeks to relieve [Graham] from continuing to provide wastewater services to persons or entities already receiving such services or who are entitled to the provision of the same, [Mebane] further moves to dismiss said counterclaim [under N.C.’s Rules of Civil Procedure] for failure to join all parties with an interest which would be affected by such a declaration,” Mebane states in its motion to dismiss.
“From 2017 to present, and notwithstanding and with knowledge of any alleged non-payment by Mebane under the Capacity Agreement…[Graham] has continuously, intentionally, and voluntarily supplied wastewater capacity to Mebane, billed Mebane [and] accepted payment from Mebane, [and] signed off on further utilization of that capacity and operation,” Mebane contends in its motion to dismiss Graham’s counterclaim, adding that Graham “promised to accept” $10.7 million from Mebane to satisfy its obligation toward the cost for the WWTP upgrade.
Graham officials allegedly slow-walked approvals for Buc-ee’s project
Meanwhile, Mebane also alleged in its suit that Graham has slow-walked approvals for “Flow Tracing for Sewer Extension” (FTSE) applications for the Buc-ee’s travel plaza that is underway near I-85/40 and Trollingwood-Hawfields Road, which is within Mebane’s extraterritorial jurisdiction.
The Buc-ee’s travel plaza – which would become the company’s first in North Carolina – was originally targeted to open this year but has since been pushed to late 2027.
The FTSE approval process is a state-mandated certification ensuring that wastewater treatment facilities have sufficient capacity for any projects that connect new wastewater lines to an existing system, according to the state Department of Environmental Quality.
In recent months, both city councils have gone into closed sessions to confer with their attorneys on the lawsuit.
On February 9, Mebane’s council met at the end of their regular monthly meeting behind closed doors with city attorney Lawson Brown as well as Norris to discuss the matter and emerged about 25 minutes later and announced that the attorneys had been authorized to depose former Mebane city managers David Cheek and Chris Rollins, both of whom were in charge during the early portions of the contract with Graham.
Graham’s city council also met behind closed doors for about 15 minutes on February 10, 2026 to discuss the lawsuit.
The city of Graham is being represented by attorneys Jay H. Ferguson and Olivia Warren of the Thomas, Ferguson & Beskind law firm in Durham.
Mebane is being represented by R. Bryan Norris, Jr. of the Vernon Law Firm in Burlington.
