October 02, 2018

The Shape of the Water (Law): The Evolving Regulation of Surface Water in South Carolina

Michael Traynham

Ecologically and economically, there are few natural resources as critical as water. In South Carolina alone, annual consumptive use of surface water can exceed 300 billion gallons for purposes as diverse as drinking water supplies, mining, agricultural irrigation, and industrial process use. See 2016 Reported Water Use—South Carolina, https://www.dhec.sc.gov/environment/water-quality/groundwater-use-reporting. As with many states, South Carolina’s population continues to increase and new industries move into the state with new demands for water on a seemingly daily basis. This increased demand has led to concerns about how our water resources are allocated and regulated. Surface water withdrawals in particular have come under heightened public scrutiny, stemming from a new law passed by the South Carolina state legislature in 2010 and the subsequent arrival within the state of several large-scale agricultural withdrawers. The most recent volley in the ongoing debate resulted in not one but two separate opinions issued from the South Carolina Supreme Court in an 11-month span upholding the current regulatory framework for surface water withdrawals. 

Surface Water Regulation

In 2010, the South Carolina General Assembly passed Act 247, substantially amending the previously named “South Carolina Surface Water Withdrawal and Reporting Act,” to create a system to regulate and permit large-scale withdrawals of surface water. The new law, now known as the “South Carolina Surface Water Withdrawal, Permitting, Use, and Reporting Act” (“the Act”), applied new legal requirements to most users who withdraw three million gallons or more during any one month, and required those users to obtain a surface water withdrawal permit. See S.C. Code Ann. § 49-4-10, et seq. The permitting process laid out in the Act requires the implementing agency, the South Carolina Department of Health and Environmental Control (SCDHEC), to provide public notice regarding the application for withdrawal, to make a determination as to the reasonableness of the proposed use, and to develop a system for notifying an applicant when its withdrawal must be reduced due to inadequate stream flows. Additionally, permits are issued for a defined period of between 20 and 50 years, generally reflecting the economic life of any capital improvements necessary to utilize the withdrawal.

Not every user that meets the definition of a “surface water withdrawer” is required to obtain a permit. There are several outright exemptions from the Act, such as hydropower generation, certain mining operations, and withdrawals associated with wildlife habitat management. In addition to outright exemptions, agricultural users (defined broadly in the Act) are entitled to apply for a registration of their withdrawal amount rather than a permit. In contrast to permits, registrations are not subject to public notice requirements, are not subject to the same low-flow reductions as permitted withdrawals, and are only subject to modification or revocation if the registered user “withdraws substantially more surface water than he is registered for . . . and the withdrawals result in detrimental effects to the environment or human health.” The Act also creates a presumption that any regulated withdrawal—registered or permitted—is reasonable, and protects surface water withdrawers from claims for damages unless a plaintiff can demonstrate that the applicable permit or registration was violated.

The agricultural registration provisions of the Act have triggered a great deal of controversy and policy discussion in the years since the law was enacted. One or more bills have been proposed and debated in the General Assembly to amend the Act each session since 2010, but thus far the law remains unchanged.

Legal Challenge

In 2014, a small group of riparian landowners brought suit challenging the Act, naming SCDHEC as the defendant. These plaintiffs were not permitted or registered users under the Act, but utilized the waters adjacent to their property for various recreational purposes. The plaintiffs alleged the Act created an unconstitutional taking of “riparian property rights,” a violation of the public trust doctrine, and a violation of due process. The complaint did not allege any specific, physical injury to any of the riparian plaintiffs resulting from an upstream withdrawal.

Because the case amounted to a facial challenge to the law, the parties proceeded on cross-motions for summary judgment at the trial court after conducting limited discovery. After a hearing in late 2015, the trial court issued its order on January 4, 2016, granting summary judgment to SCDHEC. The trial court determined that the plaintiffs lacked standing to bring the action, since they had not alleged any “injury in fact” that would grant plaintiffs constitutional standing, and the issues presented did not rise to the level that the public importance exception to the general rule of standing should apply. The trial court went further, however, and addressed the merits of the complaint itself, stating that the riparian owners’ right of use of the water was not a property right that has been violated or taken, and that their right of use did not create a property interest. The trial court also opined that the Act was not unconstitutional because it did not “deprive them of any right that they had before the law was passed” but provided additional protections by placing limitations on water use that did not exist under common law riparianism. In response to plaintiffs’ arguments that they were foreclosed from challenging a damaging upstream use by the Act’s presumption of reasonable use, the trial court ruled that the statutory presumption was rebuttable in the absence of any indication to the contrary, and that no limitations had been placed on a riparian owner’s right to seek injunctive relief if actual injury occurred. In addressing the plaintiffs’ arguments regarding the public trust doctrine, the trial court reasoned that the authorities relied upon to make that claim involved solely tidal waterways not at issue in the instant case, and that it would be improper to decide the degree of interest the state has in nontidal waterways in a case where the plaintiffs have failed to show any injury.

The matter was appealed and a motion to certify to the South Carolina Supreme Court was granted. After hearing oral arguments on December 1, 2016, the supreme court affirmed the trial court in a 3-2 decision. Jowers v. S.C. Dep’t of Health & Envtl. Control, 2017 WL 3045982 (Jowers I). The Jowers I majority agreed that the plaintiffs lacked standing and that the matter was not ripe for a judicial determination. In doing so, the majority specifically affirmed the lower court’s conclusion that riparian owners are not prevented from seeking injunctive relief in the event they are one day damaged by an upstream use, nor are they prevented from seeking money damages under the circumstances prescribed by the statute.

The court also ruled that it was unnecessary to “determine whether the public trust doctrine even applies in this case.” The court reasoned that because the Act provides mechanisms to protect public trust assets (for example, the ability to modify or revoke a permit or registration), the Act is “entirely consistent with the State’s obligations under the public trust doctrine.” Because the plaintiffs could only speculate that the state might one day fail to utilize the available protections to preserve public trust assets, the court ruled that the public importance exception to standing requirements should not apply, and thus there was no justiciable controversy.

The dissent in Jowers I joined with the majority on plaintiffs’ due process and takings claims, but opined that the public importance exception should apply. The dissent pointed to perceived weaknesses in the regulation of registered users—such as the inability to modify a withdrawal unless a user exceeds its registered amount—as evidence of insufficient protection of public trust assets. In the dissent’s view, “the State has compromised its duty to prevent ‘activity that substantially impairs the public interest in marine life, water quality, or public access.’” Citing McQueen v. S.C. Coastal Council, 354 S.C. 142, 149, 580 S.E.2d 116, 119–20 (2003).

Appellants filed a petition for rehearing in August of 2017, focusing on the applicability of the public trust doctrine and the public importance exception to standing requirements. Three members of the Jowers I panel voted to grant rehearing in September of 2017 without further briefing by the parties, and a second round of oral arguments was held on January 11, 2018.

Jowers II

On May 30, 2018, the court issued another split opinion affirming the trial court’s ruling and clarifying its ruling on plaintiffs’ public trust claims. Jowers v. S.C. Dep’t of Health & Envtl. Control , Op. No. 27725 (refiled May 30, 3018) (Jowers II). The court noted that the plaintiffs did not allege an actual loss of public trust assets, but a speculative future loss of such assets under circumstances that might or might not occur. The Jowers II majority emphasized that the state maintains the authority to act to protect trust assets should future circumstances require it, both through common law actions and via the state’s Drought Response Act, which takes precedence over the Surface Water Withdrawal Act under drought conditions. The court also discussed the state’s obligation to protect trust assets under various statutory and regulatory authorities, and the possibility that the law itself may change before circumstances arise that would require a protective act by the state. Finally, the court ruled that the plaintiffs’ argument for public importance exception to standing must fail because the exception “does not remove the injury in fact requirement; instead, it simply allows someone who has not personally suffered an injury to step into the shoes of someone who has.” Jowers II (citing ATC South, Inc. v. Charleston Cnty., 380 S.C. 191, 198, 669 S.E.2d 337, 341 (2008)). Thus, in the absence of a specific injury, the controversy is not ripe for adjudication.

The dissent reiterated its position from Jowers I, and opined that the state’s “abrogation of its duties as trustee to administer and manage the trust corpus” amounted to an injury in fact sufficient to make the matter ripe.

Conclusion?

The ruling in Jowers II leaves the current regulatory structure in place for surface water withdrawals, including registrations for agricultural users. But the court also acknowledged the role of the legislature and the public in vetting the issues raised by plaintiffs’ challenge, and in addressing them if needed. Given recent history, it would be fair to assume legislative discussions about water resources in South Carolina are far from over. Whether or not the Act ever changes, the court’s emphasis on the state’s ongoing duty to protect public trust resources underlines the reality that these important issues will not fade into the background anytime soon. 

Michael Traynham

Published: October 2, 2018

Michael Traynham works with the South Carolina Department of Health and Environmental Control as Chief Counsel for Environmental Quality Control, providing legal advice to environmental programs throughout the agency’s bureaus of Water, Air Quality, and Land and Waste Management. He is a graduate of the South Carolina Honors College and South Carolina School of Law, and serves as a Council Member for the Environmental and Natural Resource Section of the South Carolina Bar.