House committee substitute to the 1st edition makes the following changes.

Instead of amending GS 130A-335, now amends GS 143-215 to direct the Environmental Management Commission (was, Public Health Commission) to adopt rules establishing standards for discharge to surface waters and for spray irrigation of highly treated wastewater, now as defined in GS 130A-334, that is in compliance with all applicable regulatory requirements and that is designed and operated to meet the following standards: (1) with respect to biological oxygen demand, 10mg/L; (2) with respect to NH3, 10mg/L; (3) with respect to total nitrogen, 10mg/L, or a minimum of 60% reduction from the influent total Kjeldahl nitrogen; (4) with respect to total phosphorus, 5mg/L, unless discharged into nutrient sensitive waters; (5) with respect to fecal coliforms, 10 colonies/100mL; and (6) capture and removal of residual sludge and biogases. 

Makes organizational changes in Section 2. Adds that the $20 million appropriated from the General Fund to the Department of Environmental Quality (DEQ) for the pilot program that is not spent or encumbered by June 30, 2023, reverts to the General Fund. Amends the requirements of the Innovative Highly Treated Wastewater Pilot Program as follows. Specifies that the pilot program is to be within the Division of Water Infrastructure. Adds the requirement that DEQ review and qualify wastewater systems meeting the standards in new GS 143-215(f) either as a single unit or as a combination of treatment devices. Requires the manufacturer (was, vendor) of the wastewater system to file a performance bond or other surety with a minimum of five years to be executed in favor of the permittee in the amount sufficient to cover system replacement. Requires DEQ to identify local governments, sanitary districts, or public authorities considered distressed or that include residential or commercial developments or subdivisions that are unable to be served by existing wastewater systems (was, identify areas that feature either a failure rate of septic tank systems that is significantly higher than the State average or a wastewater system that is a distressed unit). Requires DEQ to work with the entities that it has identified, to select, permit, and install at least four highly treated wastewater systems (was, work with the units of local government with jurisdiction over the identified area to design, permit, and install four wastewater treatment systems using wastewater treatment technologies that produce highly treated wastewater to discharge or reuse). Changes the effective date of these provisions, including the appropriation, from July 1, 2021, to August 1, 2021.

Deletes the provision requiring the adoption of rules to streamline the approval process for wastewater treatment system technologies under Article 11 of the Chapter. Instead requires the Commission for Public Health to adopt rules to establish standards for highly treated wastewater systems under Article 11, defining highly treated wastewater systems to include individual and multisite systems that meet residential or high strength treatment standards. Sets out six components the rules must contain, including specified timing for approving applications, and requiring wastewater systems and dispersal products to demonstrate the specified structural integrity. Effective January 1, 2022. Requires quarterly reports from the Commission for Public Health and DEQ on implementation starting May 1, 2022. 

Amends GS 130A-39 by prohibiting a local board of health from adopting a rule concerning wastewater systems, as listed in Article 11 of GS Chapter 130A and defined in GS 130A-334, that is more stringent than rules adopted by the Commission for Public Health (was, a local board of health may adopt rules concerning wastewater collection, treatment and disposal systems which are not designed to discharge effluent to the land surface or surface waters only in accordance with the specified statute).

Makes conforming changes to GS 130A-335.