Did a South Carolina county need a referendum before adopting a stormwater fee?

Plain-English summary

In August 2020, the South Carolina Attorney General concluded that a local stormwater utility fee did not require a public referendum before adoption. The service-fee statute then required an ordinance approved by a positive majority, public notice, a hearing, and public comment before final reading. The office believed failure to hold a referendum would not invalidate a stormwater fee.

The opinion also expected a court to accept Georgetown County's use of a parcel's impervious surface area to calculate its stormwater user fee as reasonable and equitable, because that area related to runoff and the need for stormwater service. It said the law did not require a separate account for each payer. If service-fee revenue reached five percent of a local government's total budget, the statute required a fund separate from the general fund.

Currency note

This opinion was issued in 2020. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Was a public vote required before imposing a stormwater fee?
A: The office said no. The statute required public notice, a hearing, and comment before final ordinance adoption, but no referendum.

Q: Could the county base charges on impervious surface area?
A: The office expected a court to find Georgetown County's method reasonable and equitable because impervious surface related to runoff and the need for the utility.

Q: Did the county have to track each payer's fees in a separate account?
A: No. The opinion found no such requirement. It identified a separate-fund requirement when service-fee revenue reached the statutory share of the local budget.

Background and statutory framework

The Stormwater Management Act authorized local governments to establish stormwater utilities and fund them through a reasonable and equitable fee system or tax assessment. The related regulations linked a user's charge to contribution to the need for the system and limited spending to utility purposes. The opinion read those provisions alongside the local service-fee statute's adoption and accounting rules.

Citations and references

The legal authorities discussed above appear in the official opinion. The analysis addressed the request as presented in 2020.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/august-24-2020/
• Original PDF: https://www.scag.gov/wp-content/uploads/2020/08/02367365.pdf

Original opinion text

h%

August 24, 2020

The Honorable William L."Lee" Hewitt, III
Member

South Carolina House of Representatives
District No. 108
P.O. Box 928

Murrells Inlet, SC 29576

Dear Representative Hewitt:

Attorney General Alan Wilson has referred your letter to the Opinions section. The request letter forwards one of your constituent's concerns about a county imposed stormwater management fee. The request letter separately asks the following: After reading the previous opinions that your Opinions Section has published on local governing bodies enacting local fees, 1 still have questions about S.C. Code
§ 6-1-300 and related Code § 6-1-330. These code sections appear to allow local governing bodies to impose local fees, which would include storm water fees.

Generally, I want to know what obligations do local governing bodies take on, once they impose storm water fees, to account for the use of the revenues they collect as storm water fees?

Specifically, if these fee revenues are spent under a local government's storm water management plan, is that sufficient? Must the local government show how revenues collected from an individual payor benefit that payor? If so, what information would have to be included in such a showing?

If the local governing body has the obligation to make such an accounting, do you also see any obligation in these South Carolina Code sections, or any other related Code sections, for the local governing body to hold any part of these revenues in reserve accounts and disperse them for emergency, hurricane, any other unexpected or force majeure related damages or repairs?

r^iiMBERT C. Dennis Building • Post Office Box 11549 • Columbia,SC29211-1549 • Telephone 803-734-3970 • Facsimile 803-253-6283

The Honorable William L. "Lee" Hewitt, III
Page 2
August 24, 2020

If, under SC Code § 6-1-330, the Georgetown County Council —or any other local governing body for that matter—failed to hold a public referendum on a proposed storm water fee prior to enacting it, is that failure fatal to the legitimacy of their storm water fee? Law/Analysis

In order to address the questions raised in the request letter, this Opinion will first discuss the Stormwater Management Act, S.C. Code §§ 48-14-10 et seq., and its related regulations before addressing the extent to which S.C Code § 6-1-330 impacts the imposition and collection

of stormwater management fees. The Act defines "Stormwater management" as: (a) quantitative control, a system of vegetative or structural measures, or both,

that control the increased volume and rate of stormwater runoff caused by manmade changes to the land; (b) qualitative control, a system of vegetative, structural, or other measures that reduce or eliminate pollutants that might otherwise be carried by stormwater runoff. S.C. Code Ann. § 48-14-20(11).

i

The South Carolina Supreme Court explained in State ex rel.

Condon v. City of Charleston. 334 S.C. 246, 247, 513 S.E.2d 97, 98 (1999), the Stormwater

Management Act "authorizes local governments to establish a 'Stormwater Utility,' and to fund it either through a fee or a tax assessment." "Stormwater utility" is defined as "an administrative organization that has been created for the purposes of planning, designing, constructing, and maintaining stormwater management, sediment control,

projects." S.C. Code Ann. § 48-14-20(14).

and flood control programs and

These stormwater utilities are permitted to "fund

such activities as watershed master planning, facility retrofitting, and facility maintenance." S.C.

Code Ann. § 48-1 4-1 20(C).2 Moreover, a local government that establishes a stormwater utility is responsible for "implementing all aspects of the utility including long range planning, plan

implementation, capital improvements, maintenance of stormwater facilities, determination of charges, billing, and hearing of appeals and petitions.

The local government also will have

See also S.C. Code Ann. Regs. 72-300 ("A. Stormwater runoff is a source of pollution of waters of the State, and may add to existing flooding problems. The implementation of a statewide stormwater management and sediment control program will help prevent additional water quantity and quality problems and may reduce existing

problems.").

2 See also S.C. Code Ann. Regs. 72-300 ("F. The activities which may be undertaken by a stormwater utility include not only assessment, collection, and funding activities, but also carrying out provisions of adopted stormwater management plans. These provisions may include contracting for such services as project construction, project maintenance, project inspection, and enforcement of installation and maintenance requirements imposed with respect to approved land disturbing activities.").

The Honorable William L. "Lee" Hewitt, III
Page 3
August 24, 2020

responsibility for providing staff support for utility implementation." S.C. Code Ann. Regs. 72310E.

A stormwater utility may be funded by either a "fee system or tax assessment that must be reasonable and equitable." S.C. Code Ann. § 48-1 4-1 20(C).

When a stormwater utility is

funded by a user charge, the South Carolina Code of Regulations additionally clarifies that "each user of the stormwater system pays to the extent to which the user contributes to the need for the stormwater system, and that the charges bear a substantial relationship to the cost of the service."

S.C. Code Ann. Regs. 72-31 OA.

The Code of Regulations limits the use of such charges "to

those purposes for which the utility has been established." S.C. Code Ann. Regs. 72-3 10G. The regulations provide a non-exhaustive list of such purposes which includes "planning; acquisition of interests in land including easements; design and construction of facilities; maintenance of the stormwater

system;

billing

and

administration;

and

water

quantity

and

water

quality

management, including monitoring, surveillance, private maintenance inspection, construction inspection, and other activities which are reasonably required." Id

As described in the request letter, S.C. Code Ann. § 6-1-330 generally permits local governing bodies to charge a service or user fee.

A local governing body, by ordinance approved bv a positive majority, is authorized to charge and collect a service or user fee. A local governing body

must provide public notice of any new service or user fee being considered and the governing body is required to hold a public hearing on any proposed new

service or user fee prior to final adoption of any new service or user fee. Public comment must be received by the governing body prior to the final reading of the ordinance to adopt a new service or user fee. A fee adopted or imposed by a local

governing body prior to December 31, 1996, remains in force and effect until repealed by the enacting local governing body, notwithstanding the provisions of

this section.

S.C. Code Ann. § 6-1 -330(A) (emphasis added).

The service-fee revenue is to be used "to

finance the provision of public services must be used to pay costs related to the provision of the

service or program for which the fee was paid." S.C. Code Ann. § 6-1 -330(B).3 Additionally, if the service-fee revenue amounts to five percent or more of the local government's total budget, it "must be kept in a separate and segregated fund from the general fund." Id, Finally, Section 6-1-

3 The South Carolina Supreme Court has recognized that the "surplus revenue" provision of the Revenue Bond Act, S.C. Code Ann. §§ 6-21-5 to -570, provides a limited exception to the general rule in section 6-1 -330(B) that revenue must be spent on expenses related to the service for which a service fee is paid. See Azar v. City of Columbia. 4 1 4 S.C. 307, 778 S.E.2d 3 1 5 (20 1 5).

The Honorable William L. "Lee" Hewitt, III
Page 4
August 24, 2020

330 also makes reference to the Stormwater Management Act where it directs that counties may not impose a fee on agricultural lands, forestlands, or undeveloped lands for stormwater,

sediment, or erosion control programs adopted under Chapter 14, Title 48 of the Code unless permitted thereunder. With this statutory frame work in mind, this opinion will next address the questions raised in the request letter.

I.

What obligations do local governing bodies take on, once they impose storm water

fees, to account for the use of the revenues they collect as storm water fees? Is there a requirement that the local government show how revenues collected from an individual payor benefit that payor?

This Office has previously opined that a local government may impose a stormwater fee "so long as such a fee complies with [s]ection 48-14-120(C)'s requirement that the fee be 'reasonable and equitable.'" Op. S.C. Att'v Gen.. 2014 WL 1398600 (February 28, 2014). The South Carolina Code of Regulations further clarifies that, where a stormwater utility is funded by a user charge system, "each user of the stormwater system pays to the extent to which the user

contributes to the need for the stormwater system, and that the charges bear a substantial relationship to the cost of the service." S.C. Code Ann. Regs. 72-31 OA. (emphasis added). These

considerations demonstrate that the benefit to a payor is that a stormwater utility offsets the increased need for stormwater runoff attributable to the payor. This Office understands that your constituent is concerned with the stormwater user fee imposed in Georgetown County. The Georgetown County stormwater user fee was adopted by Ordinance No. 2007-32 on June 12, 2007 and bases its rate structure on the impervious surface

area of a parcel of land.

Section 8-38. 1(a) of the ordinance explains the reasons for using

impervious surface area as the basis for its rate structure as follows: Impervious surface area on a given land parcel directly relates to the volume, rate and pollutant loading of stormwater runoff discharged from that land parcel to the

County's

structural

and

natural

drainage systems and

facilities.

Therefore,

impervious surface area shall be the primary parameter for establishing a rate structure to distribute the cost of services associated with the operation, repair,

improvement,

maintenance,

and

ongoing

regulatory

compliance

of public

drainage systems and facilities through a schedule of rates, fees, charges, and

penalties related to the operation of a Stormwater Management Utility and Stormwater Management Enterprise Fund.

It is this Office's opinion that a court would likely hold the use of impervious surface area as a basis for establishing a stormwater user fee complies with section 48-14-120(C)'s requirement that the fee be "reasonable and equitable," as well as regulation 72-3 1 OA. 's requirement that users pay based on their contribution to the need for a stormwater system.

The Honorable William L. "Lee" Hewitt, III
Page 5

August 24, 2020

While section 6-1-330 requires that service- fee revenue must be kept in a separate fund

from a local government's general fund when the service-fee revenue amounts to five percent or more of the local government's total budget, there is no statutory or regulatory requirement that stormwater fee revenue be kept in an account for each payor.

II.

If, under SC Code Section 6-1-330, the Georgetown County Council —or any other

local governing body for that matter—failed to hold a public referendum on a proposed storm water fee prior to enacting it, is that failure fatal to the legitimacy of their storm water fee?

It is this Office's opinion that a court would not hold a local government's stormwater utility ordinance or stormwater user lee is invalid because a public referendum was not held prior to its adoption. Section 6-1 -330(A) requires that a local governing body that seeks to impose a service or user fee must provide public notice, hold a public hearing, and receive public comment prior to final reading of the ordinance to adopt the fee. referendum.

The statute does not require a public

The Stormwater Management Act authorizes local governments to establish

stormwater utilities. See S.C. Code § 48- 14- 120(C).

This section allows local governments to

adopt a fee system specifically applicable to funding stormwater management activities, but it

too docs not require a public referendum prior to adoption.

Conclusion

As is discussed more fully above, the Stormwater Management Act, S.C. Code §§ 48 14-10 el seq., authorizes local governments to establish a stormwater utility and to fund it either through a fee system or tax assessment. See State ex rel. Condon v. Citv of Charleston. 334 S.C. 246, 247, 513 S.E.2d 97, 98 (1999).

This Office has previously opined that a local government

may impose a stormwater fee "so long as such a fee complies with [sjection 48- 1 4- 1 20(C)'s

requirement that the fee be 'reasonable and equitable.'" Op. S.C. Att'v Gen.. 2014 WL 1398600 (February 28. 2014).

Further, it is this Office's opinion that a court would not hold a local

government's stormwater utility ordinance or stormwater user fee is invalid because a public referendum was not held prior to its adoption. See S.C. Code §§ 6-l-330(A); 48-14-120(C). Sincerely,

&
Matthew Houek
Assistant Attorney General

The Honorable William L. "Lee" Hewitt, III
Page 6
August 24, 2020

REVIEWED AND APPROVED BY:

Robert D. Cook
Solicitor General