The city of Mebane is suing the city of Graham for allegedly obligating Mebane – without its consent or involvement – to pay more than $18 million (21.4 percent) toward the $84.6 million cost to upgrade and expand Graham’s wastewater treatment plant.
The two municipalities entered into an agreement in April 2017 requiring Mebane to pay $2.7 million in annual installments over 20 years in order to have 750,000 gallons of wastewater per day treated at Graham’s plant for a period of 99 years, according to a copy of the wastewater agreement that is included with the lawsuit that the city of Mebane filed Tuesday in Alamance County superior court.
At the time, the 750,000 gallons of wastewater per day from Mebane that Graham agreed to treat at its Wastewater Treatment Plant (WWTP) represented approximately 21.4 percent of the facility’s capacity of 3.5 million gallons per day, according to the lawsuit. The 2017 agreement stipulates that it may be terminated only by the joint agreement of both municipalities.
Graham owns the WWTP along East Gilbreath Street, and its operating costs are funded as a separate department within the city’s annual budget, according to the 2017 agreement.
This intergovernmental agreement also called for the two cities to share a proportional cost of any future “agreed upon improvements or upgrades” and “necessary improvements or repairs.”
Meanwhile, in September 2018, the city of Graham hired an engineering firm – Hazen and Sawyer, which is headquartered in New York City and has five offices in North Carolina – to begin what Graham city officials had termed a “Process Optimization Study.”
The study was originally intended to analyze the ability of Graham’s WWTP to meet the state’s Jordan Lake Rules, according to background that Graham city manager Megan Garner cited in a letter to Mebane city manager Richard White, III, on July 1, 2025. The Jordan Lake Rules were passed by the General Assembly in 2009 and were intended to reduce pollution from wastewater and other types of runoff from areas upstream from the Jordan Lake watershed.
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Hazen and Sawyer in a March 2020 presentation to Graham’s city council outlined its recommendations for upgrading the WWTP, which included expanding the facility’s capacity from 3.5 million gallons per day to five million gallons per day, according to Garner’s letter to White.
Graham’s city manager asserted in her letter to Mebane’s city manager that Mebane’s share of the cost for the WWTP upgrade would be $18.1 million (21.43 percent of the total cost), while Graham’s share would be $66.5 million (78.57 percent), based on the expanded future wastewater treatment capacity of five million gallons per day.
In its suit, Mebane repeatedly insists that the city shouldn’t be on the hook to pay $18.1 million toward the $84.6 million WWTP upgrade it was never informed of – and which it has allegedly struggled for years to get information about from Graham.
“Having had no prior involvement or participation in the discussion, development, or planning of any improvements to the WWTP and Cherry Lane Pump Station, Mebane promptly requested more information from Graham concerning the purported monetary obligation, the state loan, and the WWTP Project,” the complaint states. “Graham withheld and failed to disclose to Mebane all necessary information concerning the WWTP Project for a period of several years.”
Mebane initially requested a meeting in November 2022, after receiving an invoice from Graham seeking $355,693 as payment for Mebane’s share of the $1.7 million in closing costs for an $84.6 million loan that Graham had obtained through the state Department of Environmental Quality to fund the expansion and upgrade of the WWTP and Cherry Lane Pump Station, the suit asserts. The pump station serves the commerce park along Cherry Lane – currently home to United Parcel Service and distribution facilities for Walmart, Lidl, and Amazon, among others – that was created in 2013 as part of an agreement between Graham, Mebane, and Alamance County government.
Seven meetings yield no resolution on Mebane’s share of cost for WWTP upgrade and expansion
“Mebane also requested a meeting with Graham so that it could learn more about the WWTP Project and understand Graham’s legal bases for the invoice and any other attendant financial obligations it asserted Mebane owed.”
After the first invoice went unpaid, Graham again invoiced Mebane in May 2023 for a reduced share of $248,968 in loan closing costs, Garner noted in her letter to White on July 1, 2025. Neither invoice has been “honored,” Garner wrote.
The two cities’ staffs, including their managers, assistant managers, and other municipal representatives ultimately met seven times between November 22, 2022 and September 4, 2025 to discuss the WWTP project.
At the first meeting in November 2022, Mebane asked Graham to provide all of the information concerning the WWTP project and the loan and “also asserted that Graham was not in compliance with the [2017 wastewater] capacity agreement insofar as Graham had failed to provide any information to Mebane,” the suit alleges. “In short, it was and remains Mebane’s express position that the WWTP Project and state loan could not have been, were not, and are not ‘agreed upon improvements or upgrades’ [as stipulated in the 2017 agreement] for which Mebane would be partially responsible.”
‘Current elected officials do not value the relationship with Mebane’
The two municipalities also attempted, unsuccessfully, during that series of meetings to reach an agreement about what amount that Mebane was legally obligated and/or willing to pay toward the $84.6 million cost to upgrade and expand Graham’s WWTP, according to the suit.
During these same discussions, “Mebane made clear, however, that it was open to a higher number if justified by [a separate analysis that Mebane had commissioned from an engineering firm], provided that Graham supplied the additional information necessary to perform the analysis,” the suit alleges. “Graham management – with acquiescence of its engineers – agreed to recommend to its city council that Graham accept $10.7 [million] from Mebane.”
During another meeting on December 2, 2025, “Mebane’s city manager conveyed to his Graham counterpart that he was willing to recommend the Mebane city council approve a [$10.7 million] payment from Mebane to Graham as previously proposed by Graham city management in June 2024,” the complaint states, adding that, to date, Mebane has received no response to this proposal.
The lawsuit gives no details about how the two city managers arrived at the $10.7 million figure – a departure from an earlier offer for Mebane to pay $6.8 million toward the WWTP upgrade – but describes that amount as the “total allocated cost for which Mebane is maximally responsible under the capacity agreement.”
Mebane had offered to pay $6.8 million toward the WWTP upgrade and expansion, which was to be paid during the upcoming 2026-27 fiscal year, based on a letter that Mebane claims it sent to Graham on July 22, 2025.
In her July 1 letter to White, Garner requested that Mebane pay $18.1 million toward the WWTP project “while simultaneously seeking clarity as to what number Mebane was presently willing to pay – [ignoring] both Mebane’s prior offer of [$6.8 million] and Graham’s earlier representation that it would be amenable to a $10.7 [million] payment,” the complaint states.
Graham mayor moves to unilaterally terminate 2017 agreement – then apparently backtracks
“Management staff” for Mebane and Graham most recently met on September 4, 2025. “When Mebane inquired as to Grahams position on the amount it would be requesting of Mebane towards the improvement of the WWTP, Graham replied, ‘the current elected officials do not value the relationship with Mebane the way that prior elected officials did,’” Mebane alleges in its suit.
After Mebane officials emailed their counterparts in Graham on September 9, 2025 to request another meeting, then-Graham mayor Jennifer Talley, who lost her bid for reelection to a third term as mayor in the November general election, responded with a letter to Mebane mayor Ed Hooks on September 15, informing him of Graham’s desire to terminate the 2017 wastewater agreement.
The lawsuit notes that, in a subsequent letter to Hooks, Talley appeared to backtrack on her September 4 statement that “the city of Graham, by way of this letter, serves as official notice of its desire to terminate” the 2017 agreement.
Hooks apparently reiterated the city’s position on the matter in a letter to Talley, which isn’t included in the court file but is referenced in a subsequent letter that Talley sent Hooks on October 23.
“After careful consideration by our city council, I must respectfully decline the proposed meeting at this time,” Talley states in her subsequent email to Hooks. She goes on to recall that “not less than five” meetings between the two municipalities hadn’t “yielded a pathway to a reasonable resolution, nor was there sufficient progress made to justify further meetings.
“We continue to contend that the most appropriate and constructive path forward is for the city of Mebane to honor the existing agreement – specifically, by paying its agreed-upon share of 21.43% of the costs associated with the wastewater treatment plant upgrade and operational expenses,” Talley’s second letter to her Mebane counterpart states. “This obligation has been stated clearly in the agreement, and we believe it is both fair and necessary to ensure the continued reliability of our shared infrastructure.”
Mebane is seeking a declaratory judgment to determine Mebane’s legal and financial obligations, as outlined within the 2017 agreement with Graham – or what portion of the agreed-upon improvement or upgrades that Mebane is required to pay toward the WWTP project.
“Mebane never agreed to the WWTP Project as unilaterally conceived of and pursued by Graham, as it was never advised of, provided notice of, or consulted in connection with [the project and Graham’s loan application],” Mebane insists under its first claim for a declaratory judgment. “The overall capacity upgrades and other similar discretionary improvements…are neither ‘agreed upon improvements or upgrades’ nor ‘necessary improvements or repairs for which Mebane is liable.”
Mebane is also asking a superior court judge to compel the city of Graham to fulfill its legal obligation to approve any application for “Flow Tracing for Sewer Extension” (FTSE), 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.
Mebane claims that Graham officials have withheld approval for several FTSEs that has delayed the start of construction on several major commercial projects – most notably the Buc-ee’s travel plaza and Koury shopping center planned along Trollingwood-Hawfields Road – due to the ongoing dispute over Mebane’s share of the cost for the wastewater treatment plant upgrade and expansion (see related story this edition).: https://alamancenews.com/mebane-says-grahams-slow-action-on-buc-ees-koury-sewer-approvals-has-delayed-construction/
After returning from a closed session near the end of the city council’s latest meeting Tuesday night, newly-installed mayor Chelsea Dickey made a motion authorizing Graham staff to “take appropriate action to resolve the ongoing dispute with the city of Mebane regarding wastewater capacity and related requirements and agreements and employ the services of Ward and Coleman [the city’s staff attorneys] and/or outside counsel if necessary.” The motion passed 4-0.
Graham mayor pro tem Ricky Hall didn’t participate in the meeting due to a recent surgery but was present earlier in the evening, during a celebration of service for outgoing and incoming council members and for his reelection as mayor pro-tem.
Mebane mayor pro tem Tim Bradley had introduced a nearly identical motion, after returning from a closed session near the end of Monday night’s council meeting, “authorizing staff to take appropriate action to resolve the ongoing dispute” but with an additional provision for initiating “a civil action filing.” Bradley’s motion passed 5-0.
Mebane is being represented for its suit by R. Bryan Norris, Jr. of the Vernon Law Firm in Burlington.
