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Legislation adding regulations for private wastewater systems is headed to Gov. Bill Lee’s desk, despite multiple lawmakers’ failed attempts to exempt their counties from the bill.

Sen. Mark Pody, a Lebanon Republican, brought the bill after faulty decentralized wastewater systems in Wilson County allowed pools of polluted wastewater to form near residential homes.

Decentralized systems are often installed in rural areas that lack existing sewer infrastructure. This includes drip dispersal systems, which filter sewage and then disperse it over large “drip fields” to further filter the wastewater through the soil. These systems are most common in Middle Tennessee and in East Tennessee counties around Knoxville.

But the Tennessee Department of Environment and Conservation found in 2024 that more than half of these systems did not comply with their permits. Drip systems often overloaded soil with wastewater and led wastewater to run off into nearby land and waterways, according to the department’s report. 

Utility organizations have been responsible for approving system plans, overseeing and signing off on construction, and operating the systems or hiring outside operators, Pody said Monday.

“They have failed,” he said. “This is going to put teeth in this … we’re going to make sure these systems are going to be operated properly.”

Senators proposed more than 20 amendments to the bill, mostly attempting to carve their counties out of the legislation, citing requests from local water authorities or local government officials concerned about long-term liability.

Nashville Democratic Sen. Heidi Campbell said she had never seen that many amendments on a bill on the Senate floor. She asked Pody to make the legislation a “trial run” for his district, which has had repeated issues with decentralized wastewater systems. 

Pody was adamant that the legislation apply across the state, “because water doesn’t stay in an individual county. It goes across county lines.”

All but one of the amendments were either withdrawn or tabled. Only Hamilton County is exempt, due to “unique topographical and geological situations … which require additional study,” Sen. Bo Watson said. The county may opt into the legislation next session.

The legislation ultimately passed 21-12 in the Senate, and 69-22 in the House.

New rules for private subdivision wastewater systems

The bill requires TDEC to create a new set of rules for these wastewater systems by July 31, 2027. Those rules must include long-term performance standards, proper site locations and soil characteristics and redundancy requirements. TDEC must approve engineering plans and specifications for these systems, and permits expire after 12 months unless construction begins. The department can renew those permits up to five times.

Pody clarified that these rules do not apply to individual homeowners, only developers building wastewater systems for multiple homes or subdivisions.

Any wastewater treatment system proposed by a developer must meet or exceed TDEC’s minimum treatment standards or the local utility company’s standards, whichever is more strict.

Once at least half of the units in a development receive a certificate of use and occupancy, local governments must require developers to secure a two-year bond for the full replacement cost of the system in case of failure. Private wastewater systems will also need a 50% bond on the cost of the system for years three through 10.

Sen. Jeff Yarbro, a Nashville Democrat, said counties are concerned that they will have to foot the bill for failed systems once the utility’s responsibility ends after that 10-year period. 

“If one of these goes bad, the county wouldn’t be required to do anything with it, but they would still have to have it within their county borders,” Yarbro said. “The county is the one who is ultimately, in the long run of this infrastructure, inescapably going to have financial responsibility.”

The bill also bars the systems from operating until construction is complete. Pody said this will prevent houses from being hooked up to unfinished systems that may never be completed. 

The legislation also requires developers to submit their treatment system plan to the local utility, which has up to two years to decide to accept or reject ownership and operating responsibility for the system. If the local utility rejects the system, the developer can contract with another utility, so long as the utility is fully compliant with state and federal standards and has no outstanding fines.

“If they don’t want it, they sign a piece of paper, (and) they are completely off the hook,” Pody said. “There’s no liability to the utility systems.”

Sen. Richard Briggs, a Knoxville Republican, supported the bill.

Briggs said utilities may be wary because of their experience in the 1980s and 1990s, when they were mandated to take over largely unregulated, poor quality private wastewater systems when the property was annexed into the cities. The utilities then had to run sewer lines out to these more rural areas, at the expense of their ratepayers. 

Under Pody’s bill, he said, “as long as that utility never accepts responsibility, the rate payers in that utility service area would not be required to pay for one of these that goes bad.”

“In that case, it would be the subdivision (that would) have to have a special assessment on them to get their system working again,” Briggs said.

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