Did South Carolina’s disaster price-gouging law set a fixed percentage cap on price increases?

Official title

Regarding commodity prices following a state or federal disaster.

Requester

The Honorable Liston Barfield, House District No. 58.

Plain-English summary

A legislator asked whether South Carolina capped disaster-related price increases at a set percentage, how the Attorney General identified an unconscionable price, and when the restrictions ended. The office said the statute imposed a general prohibition on unconscionable prices during a covered emergency, disaster or abnormal market disruption; it did not impose a fixed percentage cap during and after a declaration.

The AG said it used the legislature’s definition of “unconscionable price” in the statute, without additional factors outside that definition. It also said the restrictions lasted only while the applicable declaration or notice remained in effect.

Currency note

This opinion was issued in 2014. 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 there a fixed percentage that automatically made a disaster price illegal? A: The opinion said the statute used an unconscionable-price standard rather than a fixed percentage cap.

Q: Did the AG use extra factors outside the statute’s definition? A: The office said it looked only to the legislature’s definition of “unconscionable price” in the anti-price-gouging statute.

Q: Did the restriction continue indefinitely after disaster conditions ended? A: The opinion said it remained in effect until the relevant declaration or notice expired or was terminated by the proper authority.

Background and statutory framework

The three questions concerned the reach of South Carolina’s anti-price-gouging statute. The office’s conclusion answers each: no percentage cap, the statutory unconscionable-price definition, and a duration tied to the official declaration or notice. The original PDF is linked below.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/september-5-2014/
• Original PDF: https://www.scag.gov/wp-content/uploads/2014/09/Barfield-L.-OS-9785-9-5-2014-00437404xD2C78.pdf

Original opinion text

cu 5S- - c\n

Alan Wilson
Attorney General

September 5, 2014
The Honorable Listen Barfield
House District No. 58
503-A Blatt Building
Columbia, SC 2921 1
Dear Representative Barfield:

We are in receipt of your opinion request concerning commodity prices following a state or federal disaster. not

.

.

Specifically, you ask:

(1) if it is accurate to say "South Carolina law does

. explicitly cap price increases at a certain percentage during and after disaster

declarations," but instead only imposes "a general prohibition on 'unconscionable prices' during times of disaster;" (2) if this Office, outside of the statutory definition of "unconscionable price" contained in Section 39-5- 145(A)(5)(a) of the Code, relies on "any additional factors" to determine if a price is unconscionable; and (3) whether this State's price gouging restrictions "cease to apply during lengthy periods of time in which conditions related to the disaster no longer exist?" Our responses follow. Law/Analvsis

As noted in your letter, it appears each of your questions relate to this State's anti-price gouging statute, which is found in Section 39-5-145 of the South Carolina Code. See S.C. Code

Ann. § 39-5-145(B)-(D) (2013 Supp.) (prohibiting a person, his agent, or employee from charging unconscionable prices for commodities, dwelling units, or self-storage units during a

state of emergency, disaster, or abnormal disruption in the market). In particular, we understand your questions as generally inquiring about the breadth and applicability of Section 39-5-145. 1.

South Carolina Law Prohibits Charging "Unconscionable Prices" during Emergencies, Disasters

and Abnormal Market

Disruptions

rather than

Imposing Price Caps during such times

In your first question you ask whether it would be accurate to summarize South Carolina law as regulating price gouging by imposing "a general prohibition on "unconscionable prices' during times

of disaster" rather than explicitly capping

prices during and

after disaster

declarations. We believe this is an accurate statement.
A variety of stale legislatures have passed laws addressing the issue of price gouging during times of disaster.

Emily Bae, Are Anti-Price Gouuinu Legislations Effective Against

RembertC. Dennis Bu.ld.ng • Post Oehce Box 11549

• Columb.a, SC 29211-1549 • Telephone 803-734-3970
Facsimile 803-253-«sn

The Honorable Liston Barfield
Page 2

Septembers, 2014

Sellers During Disasters?. 4 Entrep. Bus. L.J., 79, - (2009). According to legal commentators,

anti-price gouging statutes fall into one of three categories:

(1) percentage price caps, which

limit the percentage a commodity may be marked-up following a disaster or other event affecting a market; (2) unconscionability laws, which attack price gouging by barring the sale of goods at

unconscionable prices; and (3) no-increase laws, which bar any price increase beyond that required by the higher costs of post-disaster economic activity.

Geoffrey C. Rapp, Gouging:

Terrorist Attacks. Hurricanes, and the Legal and Economic Aspects of Post-Disaster Price

Regulation. 94 Ky. L.J. 535, 543 (2005); Michael Brewer, Planning Disaster: Price Gouging Statutes and the Shortages Thev Create. 72 Brook. L. Rev. 1 101, 11 13-14 (2007); Bae, 4 Entrep. Bus. L.J., at —.

As of 2009, unconscionability laws made up a majority of state anti-price

gouging legislation. See Bae, 4 Entrep. L.J. at ~ (explaining that as of 2009, 16 of the 30 states that have passed anti-price gouging statutes, passed unconscionability laws).

This includes

South Carolina's anti-price gouging statute.1
Specifically, South Carolina's anti-price gouging statute prohibits price gouging during or after a state of disaster, emergency or abnormal disruption in the market, not by capping prices, but by simply outlawing a person, his agent, or employee from selling or renting a

commodity, dwelling unit or self-storage unit at an unconscionable price in the area where a disaster, emergency, or abnormal market disruption occurs.

See S.C. Code Ann. § 39-5-

145(B)(l)(a-b) (Supp. 2013) (explaining that when the Governor has declared a state of

emergency it is unlawful to rent or sell a commodity, dwelling unit, or self-storage unit at an unconscionable price in the area where the emergency declaration has been issued); S.C. Code

Ann. § 39-5-145(C)(l)(a-b) (Supp. 2013) (stating that where the President has declared a state of disaster, it is

unlawful to rent or sell a commodity, dwelling unit, or self-storage unit at an

unconscionable price in the area where the disaster declaration has been issued); S.C. Code Ann.

§ 39-5- 145(D)( 1-2) (Supp. 2013) (providing that once the Attorney General has given notice of an abnormal disruption in the market, it is unlawful to rent or sell a commodity, dwelling unit, or self-storage unit at an unconscionable price in the area where the abnormal market disruption

occurs.). As mentioned in your letter, the statute defines an "unconscionable price" in Section 39-5-145(A)(5) of the Code as either: (i)

[A]n amount charged which . . . represents a gross disparity between the price of the commodity or rental or lease of a dwelling unit, including a

1 South Carolina's practice is consistent with a variety of other state legislatures, which have adopted a similar approach. Rg, Ala. Code §§ 8-31-1 to 8-31-6 (2014); Fla. Stat. Ann. § 501.160(2) (2014); Idaho Code Ann. § 48603(18) to (19)(a-c) (2014); Idaho Code Ann. § 48-603C (2014); Ind. Code Ann. §§ 4-6-9.1 to 4-6-9.7 (2014); Iowa Admin. Code 61-31.1 (714) (2014); 940 Code Mass. Regs. 3.18 (2014); Mass. Gen. Laws Ann. Ch. 93A, § 2 (2014); N.Y. Gen. Bus. Law § 396-r(I) (2014); N.C. Gen. Stat. § 75-38 (2014); 73 Penn. Stat. §§ 232.2 to 232.5 (2014); R.L Gen. Laws § 6-13-21 (as amended by 2014 R.I. Pub. Laws Ch. 14-528); Tenn. Code Ann. §§ 47-18-5101 to 47-18 5104 (2014); Tex. Bus. & Com. Code § 17.46(b)(27) (2014); 9 Vt. Stat. Ann. § 2461d (2014); Va. Code Ann. § 59.1-527 (2014); Wis. Stat. Ann. § 100.305 (2014).

The Honorable Liston Barfield
Page 3

September 5, 2014

motel or hotel unit, or other temporary lodging, or self-storage facility that

is the subject of the offer or transaction at the average price at which the commodity or dwelling unit, including a motel or hotel unit, or other temporary lodging, or self-storage facility was rented, leased, sold, or offered for rent or sale in the usual course of business during the thirty

days immediately before a declaration of a state of emergency, and the increase in the amount charged is not attributable to additional costs incurred in connection with the rental or sale of the commodity or rental or

lease of the dwelling unit, including a motel or hotel unit, or other temporary lodging, or self-storage facility, or local, regional, national, or

international market trends; or

(ii)

[Gjrossly exceeds the average price at which the same or similar
commodity, dwelling unit, including a hotel or motel unit, or other temporary lodging, or self-storage facility was readily obtainable in the trade area during the thirty days immediately before a declaration of a state of emergency, and the increase in the amount charged is not

attributable to additional costs incurred in connection with the rental or sale of the commodity or rental or lease of the dwelling unit, including a motel or hotel unit, or other temporary lodging, or self-storage facility, or

local, regional, national, or international market trends.

S.C. Code Ann. § 39-5-145(A)(5)(a)(i-ii) (2013 Supp.). In short, the Legislature defines an "unconscionable price" as one which is either grossly disparate or grossly excessive in comparison to the average price in the affected area in the 30 day timeframe preceding the declaration of the event giving rise to the conditions facilitating such a declaration. Id. Accordingly, we agree with your summary that South Carolina law regulates price-gouging

during disasters, emergencies and market disruptions not by imposing price caps, but by prohibiting a person, his agent, or employee from charging unconscionable prices for commodities, dwelling units and self-storage units. 2.

Determining Whether a Price is Unconscionable

In your next question you ask whether this Office, outside of the statutory definition of "unconscionable price" contained in Section 39-5-145(A)(5)(a)(i-ii) of the Code, relies on "any

additional factors" to determine if a price is unconscionable. We do not.2 2 However, we do note that Section 39-5- 145(A)(3) gives the Attorney General the power to give notice of an "abnormal disruption of the market" which is defined as "a change in the market for a commodity in a part of South Carolina, whether actual or imminently threatened, resulting from stress of whether, forces of nature, failure or shortage of electric power or other source of energy, strike, civil disorder, or other cause that constitutes the basis for an out-of-state declaration." See S.C. Code Ann. § 39-5- 145(A)(3) (2013 Supp.) (empowering the Attorney General

The Honorable Liston Barfield
Page 4
Septembers, 2014

As explained above, the Legislature, via Section 39-5-145, has banned charging unconscionable prices for commodities, dwelling units and self-storage units where a state of

disaster, state of emergency, or abnormal disruption in the market occurs. S.C. Code Ann. § 395-145(B)(l)(a-b); S.C. Code Ann. § 39-5-145(C)(l)(a-b); S.C. Code Ann. § 39-5-145(D)(l-2). Moreover, the Legislature, by expressly defining the phrase "unconscionable price" in Section 39-5-145(A)(5)(a)(i-ii), has already set the parameters for determining whether a price is

unconscionable.

See S.C. Code Ann. § 39-5-145(A)(5)(a)(i-ii) (defining an "unconscionable

price" as one that is either "a gross disparity" or "grossly exceeds" the average price in the affected area in the 30 days preceding the declaration of applicable emergency, disaster, or abnormal market condition).

Thus, the only factor to review for purposes of determining an

"unconscionable price" is whether the price at issue meets the statutory definition contained in

Section 39-5-145(A)(5)(a)(i-ii) of the Code.

Accordingly, this Office does not rely on "any

additional factors" to determine if a price is unconscionable.
3.

When Price Gouging Restrictions Apply

Finally, you ask if Section 39-5-1 45' s unconscionable price restrictions "apply during lengthy periods of time in which conditions related to the disaster no longer exist?" We believe this is squarely addressed in §§ 39-5-145(B)(2), 3 9-5- 145(C)(2) and 39-5-145(E) of the Code, each of which explain that the statutory restriction on unconscionable prices apply until the applicable declaration or notice either expires, or is terminated by the proper authority.

As detailed above, Section 39-5-145's unconscionable price restrictions apply in one or more of the following circumstances: where the Governor has declared a state of emergency;

where the President has declared a state of disaster; or where the Attorney General has given notice of an abnormal disruption in the market. See S.C. Code Ann. § 39-5-145(B)(l)(a-b) (explaining that when the Governor has declared a state of emergency it is unlawful to rent or sell a commodity, dwelling unit, or self-storage unit at an unconscionable price in the area where the emergency declaration has been issued); S.C. Code Ann. § 39-5-145(C)(l)(a-b) (stating that where the President has declared a state of disaster, it is unlawful to rent or sell a commodity, dwelling unit, or self-storage unit at an unconscionable price in the area where the disaster declaration has been issued); S.C. Code Ann. § 39-5-145(D)(l-2) (providing that once the Attorney General has given notice of an abnormal disruption in the market, it is unlawful to rent or sell a commodity, dwelling unit, or self-storage unit at an unconscionable price in the area

to give "[n]otice of an abnormal disruption of the market"); see ajso S.C. Code Ann. § 39-5- 145(A)(1) (2013 Supp.) (defining an abnormal disruption in the market). Therefore, while this Office does not rely on "any additional

factors" to determine if a price is unconscionable, it appears Section 39-5-145 does empower the Attorney General to determine whether an "abnormal disruption of the market" has occurred as defined in Section 3 9-5- 145(A)(1). As a result, this Office does have the authority to determine when Section 39-5-145's prohibitions apply. S.C. Code Ann. § 39-5-145(D)(l); S.C. Code Ann. 39-5-145(E) (2013 Supp.).

The Honorable Listen Barfield
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September 5, 2014

where the abnormal market disruption occurs.). With respect to instances when the Governor or

President declare a state of emergency or state of disaster, Section 39-5-145's unconscionable price restrictions, "remain in effect until the declaration expires or is terminated."

S.C. Code

Ann. § 39-5-145(B)(2); S.C. Code Ann. § 39-5- 145(C)(2). The same is true when the Attorney General has given notice of an abnormal disruption of the market, as Section 39-5-145(E) explains "the prohibitions in this section are in effect for fifteen days unless notice of an

abnormal disruption in the market is earlier retracted or renewed." 145(E).

S.C. Code Ann. § 39-5-

Thus, we believe the answer to your third question is that Section 39-5-145's

unconscionable price restrictions only apply when a state of emergency, state of disaster, or abnormal market disruption occurs, and such restrictions only remain in effect until the applicable declaration or notice expires or is terminated by the proper authority. Conclusion

In conclusion, it is the opinion of this Office that it would be accurate to summarize

South Carolina's anti-price gouging statute as regulating price gouging by imposing "a general prohibition on 'unconscionable prices' during times of disaster" rather than explicitly capping

prices during and after disaster declarations. Further, this Office looks only to the Legislature's definition of "unconscionable price" within the anti-price gouging statute when determining whether a price is unconscionable under the anti-price gouging statute. Finally, pursuant to the

terms of Section 39-5-145, unconscionable price restrictions only apply when a state of emergency, state of disaster, or abnormal market disruption occurs, and such restrictions only

remain in effect until the applicable declaration or notice expires or is terminated by the proper authority. Sincerely,

Brendan McDonald
Assistant Attorney General

REVIEWED AND APPROVED BY:

Robert D. Cook
Solicitor General