COASTAL OBSERVER

A lawsuit seeking repayment of $26 million in road user fees collected from Georgetown County property owners in violation of state law is under consideration by the state Supreme Court. The suit seeks 10 times the amount in damages.

In addition to the financial impact that could be felt around the state, the suit has raised questions about the separation of powers between the legislature and the judiciary.

“It’s an important case,” Chief Justice John Kittredge said at the conclusion of oral arguments earlier this year. “We appreciate the ripple effect and collateral consequences of the decision.”

At issue is the ability of local governments to collect fees. Georgetown County began collecting a $15 annual road user fee in 2001. It has since increased to $50. The Supreme Court in 2021 struck down a similar fee in Greenville County saying it was actually an illegal tax because it provided no unique benefit to the people who paid it. Since the general public also benefited, the fee was really a tax.

“Local governments, for obvious reasons, want to avoid calling a tax a tax. I am hopeful that today’s decision will deter the politically expedient penchant for imposing taxes disguised as ‘service or user fees,’” Kittredge wrote in a concurring opinion in the Greenville case.

The opinion set off a wave of lawsuits around the state. Richard Butts, a Georgetown resident, filed suit in Circuit Court on behalf of himself and an unknown number of others who had paid the Georgetown County fee seeking to get their money back along with damages.

The following year, the legislature passed an amendment to the law on fees saying local government could collect them if they provide a benefit to the payer even if the general public also benefits. And the bill, Act 236, that was signed into law by Gov. Henry McMaster, made the amendment retroactive to Dec. 31, 1996.

Butts’ attorneys – from the Mount Pleasant firm McCullough, Kahn, Appel – asked the Circuit Court to declare that the section of the law making it retroactive was unconstitutional. 

In 2024, Judge Roger Young found that Act 236 violated the state Constitution by allowing the legislature to overturn the Supreme Court’s decision that the road user fee was illegal. 

Citing a series of decisions going back to 1974, Young said that provisions like the one in Act 236 “which seek to retroactively authorize conduct that has been deemed illegal by the Supreme Court, violate the separation of powers clause of the South Carolina Constitution.”

Georgetown County’s appeal to the high court was consolidated with an appeal from a similar lawsuit brought in  Orangeburg County.

Andrew Lindemann, a Columbia attorney who represented the counties before the Supreme Court, said that the lower court was wrong to conclude that Act 236 overturned the court’s decision from Greenville County, known as the Burns decision. That wasn’t the legislature’s intent.

“It may not have been their intent,” Kittredge said. “If we accept at face value what they’ve written, this scortched-earth language swallows Burns and reverses it. That’s not acceptable.”

“Perhaps I’m misreading it,” he added.

Act 236 should be interpreted by the court as applying “to cases that haven’t been brought, to cases that are pending and haven’t reached final judgment, such as we have in this particular case, but not to actually overrule any decision that has reached final judgment,” Lindemann said.

The counties also argued in court filings that the precedents that formed the basis for the lower court ruling need to be reviewed. They are inconsistent with U.S. Supreme Court decisions and those of the high courts in other states.

Justice John Cannon Few said he wasn’t sure the key issue is separation of powers.

“How is it that the county can get away with enacting a fee that they didn’t have the authority to enact at the time?” he asked Lindemann.

The fees were collected for years without challenge, Lindemann said. “What we’re dealing with here is are they due a refund and, of course, there are a number of issues as to how that could potentially even be collected.”

Justice Garrison Hill noted that the effect of Act 236 was to decide the suits in favor of Georgetown and Orangeburg counties. “Because of this amendment, you win, right?” he told Lindemann.

“Ah … yes,” Lindemann said.

If the Supreme Court decides Act 236 applies retroactively, it will decide all the pending cases in favor of the counties even though they are still in their preliminary stages, said Ross Appel, who represented Butts and the plaintiff from Orangeburg.

“The counties want this court to overturn decades of separation of powers precedent so they can keep millions of dollars in illegally collected fees,” he said. “That’s exactly why the retroactivity offends separation of powers.”

His client isn’t challenging the ability of the legislature to change the law, Appel said, he is challenging its ability to change the law while suits are still pending.

“We are only seeking protection,” he said.

Justice Letitia Verdin noted that a former chief justice argued that the precedents used to reach the lower court ruling  had the effect of creating a system under which the legislature could only apply laws retroactively if there was no Supreme Court decision involved. The court can’t infringe on the legislature’s powers, she said.

“I’m struggling with this whole separation of powers thing,” Few said.

“The legislature in this case is violating separation of powers in two ways. First, they’re purporting to seek to go back in time and obliterate Burns, as if Burns never happened,” Appel said. “Number two, and this is what makes these cases so egregious, they’re outcome-determinative.”

If Act 236 applies back to 1996, the suits are finished, he said.

“Fundamentally, what we’re dealing with here is whether and under what circumstances it’s legal to change the rules in the middle of the game,” Appel said. “My 4-year-old daughter understands that.”