Did the South Carolina AG approve a water district’s use of an exclusive contractor list for a developer’s water-line work?

Plain-English summary

Three legislators asked whether Anderson County public service water districts may require developers to use contractors selected through bids limited to approved contractor lists. Their request described higher costs and situations where a developer who is also a licensed utility contractor could not get onto a district's list. The opinion repeats those concerns as the requesters' account; it does not make findings about the districts' practices.

The AG quoted two district powers in S.C. Code § 33-36-1360. Subsection (A)(16) concerns authorizing construction, operation, and maintenance of projects by other persons. Subsection (A)(17) concerns obtaining regulatory permits and operating projects in accordance with them. The AG assumed the enclosed qualifications were broadly representative of those used by the districts. It then made another express assumption: if those requirements are called for by or related to compliance with regulatory permits, licenses, certificates, or approvals, § 33-36-1360(A)(17) "may well require" districts to confirm the qualifications.

That is the opinion's conclusion. It does not decide whether a district may bar a developer's chosen contractor, restrict bids to an approved list, or refuse a developer who is also a contractor. It does not find that any listed qualification actually is required by a permit.

What this means for you

If you are a developer or utility contractor

The opinion does not establish a right to choose your contractor or establish that a district can deny your choice. Its limited analysis concerns confirmation of qualifications under an assumed link to regulatory requirements. The requester's reported cost and access concerns were not resolved.

If you serve on a public service district board

The AG did not approve the district's list or its bid procedure. It treated the enclosed list as an assumed example for analysis. If qualifications are called for by or related to the district's regulatory approvals, the AG says subsection (A)(17) may well require the district to confirm them. The opinion does not decide whether any actual list meets that condition.

Common questions

Can a water district make a developer use only an approved-list contractor?
The AG does not answer that question directly. The opinion says only that, on the stated assumption about regulatory requirements, § 33-36-1360(A)(17) may well require confirmation of contractor qualifications.

Which qualifications did the AG approve?
It approved none. It assumed the enclosed list was broadly representative. The list included a contractor's license, authority to do business, insurance and bond information, subcontractors, suppliers, references, and recent project history. The opinion did not decide whether any item was required by a permit or approval.

Can a developer who holds a utility contractor license do the work on their own property?
The request described a developer who could not meet every list requirement. The AG did not decide whether the district may deny that developer the work.

What role does § 33-36-1360(A)(16) play?
The opinion quotes that subsection's authority to authorize project construction, operation, and maintenance by other persons. Its conditional concluding sentence relies on subsection (A)(17), concerning regulatory permits and approvals. It does not combine them into an express approval of an exclusive list.

Did the AG resolve the reported cost dispute?
No. It said the office cannot find facts in an opinion and assumed the requester's factual account for analysis.

Background and statutory framework

S.C. Code § 33-36-1310 allows a qualifying nonprofit water or water and sewer corporation to become a public service district. S.C. Code § 33-36-1360 lists district powers. The AG focused on subsection (A)(17), which concerns obtaining permits, licenses, certificates, or approvals and constructing, maintaining, and operating projects in accordance with them.

The office said it could not investigate the actual district practices. Its conclusion is conditional: "Assuming arguendo that these requirements are called for by or related to compliance with permits, licenses, certificates, or approvals ... S.C. Code § 33-36-1360(A)(17) may well require such districts to confirm these qualifications." The opinion stops there.

Citations and references

• S.C. Code § 33-36-1310: formation of a public service district by a qualifying nonprofit corporation.
• S.C. Code § 33-36-1360(A)(16): authority to authorize project construction, operation, and maintenance by other persons.
• S.C. Code § 33-36-1360(A)(17): permits, licenses, certificates, approvals, and compliance with them.
• Op. S.C. Att'y Gen., 2006 WL 1207271 (April 4, 2006): cited for the office's inability to adjudicate or investigate factual questions.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/opinion-addressing-whether-a-public-service-district-can-impose-contractor-qualifications-under-s-c-code-section-33-36-1360-et-seq/
• Original PDF: https://www.scag.gov/media/mp2fles2/cashr-chapmand-gilreathl-os-11042-final-opinion-7-3-2025.pdf

Original opinion text

ALAN WILSON
ATTORNEY GENERAL

July 03, 2025

The Honorable Richard Cash
Member, South Carolina Senate
P.O. Box 8002
Anderson, SC 29622

The Honorable Don Chapman
Member, South Carolina House of Representatives

The Honorable Lee Gilreath
Member, South Carolina House of Representatives

Dear Senator Cash and Representatives Chapman and Gilreath:

Attorney General Alan Wilson has referred your letter to the Opinions section. Your letter requests an opinion addressing the following:

> We are writing today to seek an opinion about public service water districts organized under the provisions of S.C. Code § 33-36-1310.
>
> It has been brought to our attention that a number of the public service water districts in Anderson County prohibit a developer from using a licensed water utility contractor of their choice to perform work. Instead, when a developer needs a new line run, many of the water districts have a policy of contracting directly with a utility contractor using a bid process that is limited to those contractors who are on the water districts' approved list. Then, the developer is responsible for paying whichever utility contractor is selected by the water district.
>
> The complaint we have received about limiting a developer's contracting ability is that the cost of the work is much higher when the water district puts the work out for bid to contractors on its approved list. Also, there are times when a developer is also a licensed water utility contractor but cannot meet all the requirements to get on an approved list and therefore cannot do the work on his own property. Enclosed is an example of what a contractor must do to try to get on the approved list.
>
> We understand the high priority that public service water districts must place on maintaining a safe and reliable system. However, we seek an opinion of whether it is legal for a public service water district to prohibit a developer from contracting with a licensed water utility contractor to perform work and instead mandating that the district contract with a licensed utility contractor using a bid process limited to contractors that are on the water districts' "approved list."

Law/Analysis

Your letter states that several service water districts were formed under the provisions of S.C. Code § 33-36-1310 which authorizes a nonprofit corporation incorporated for the purposes of providing water or water and sewer services to become a public service district. S.C. Code § 33-36-1360 within the same article lists the rights and powers of such a district. These rights and powers include the power to:

> (16) authorize the construction, operation, maintenance of any project by any person, firm, or corporation, including political subdivisions and agencies of any state of the United States;
>
> (17) apply to the appropriate agencies of the State, the United States or any state, and to any other proper agency for and obtain from them permits, licenses, certificates, or approvals as may be necessary; and construct, maintain, and operate the project in accordance with such license, permits, certificates, or approvals;

Id. This Office cannot find facts in an opinion, but will assume the facts presented for purposes of analysis. See Op. S.C. Att'y Gen., 2006 WL 1207271 (April 4, 2006) ("Because this Office does not have the authority of a court or other fact-finding body, we are not able to adjudicate or investigate factual questions."). In order to provide guidance, this opinion will assume the enclosed contractor qualifications are broadly representative of the qualifications the water districts have imposed for inclusion on the approved contractor lists. Those qualifications include: a South Carolina Contractor's License, qualification statement of company, evidence of authority to do business in the State of South Carolina, proof that Contractor can provide limits of liability insurance coverage, proof that Contractor can provide a 100% performance bond, proof that Contractor can provide a 100% payment bond, list of primary subcontractors, and a list of primary material suppliers. Additionally, the form asks for a list of references and a list of water distribution projects completed within the last five years. Assuming arguendo that these requirements are called for by or related to compliance with permits, licenses, certificates, or approvals from agencies of the State, the United States or any state, or other proper agency, S.C. Code § 33-36-1360(A)(17) may well require such districts to confirm these qualifications.

Sincerely,

Matthew Houck
Assistant Attorney General

REVIEWED AND APPROVED BY:

Robert D. Cook
Solicitor General