Susie CORNELIUS, individually, and on behalf of all others similarly situated, Respondent, v. OCONEE COUNTY, Appellant.

In 1976, Oconee County electors approved a referendum
authorizing the County to own and operate a wastewater treatment
facility, but limiting funding for this service to three sources
and limiting service to "portions of Oconee County." Oconee
County appeals a circuit court order holding that these
restrictions apply to any expansion of County's sewer system, and
awarding respondent Cornelius attorneys' fees pursuant to
S.C. Code Ann. § 15-77-300 (2005). We affirm.

FACTS

The 1976 referendum (Referendum) authorized Oconee County "to
acquire, purchase, construct and operate a wastewater treatment
facility to serve portions of Oconee County, consisting of a
treatment plant, trunk lines, connector lines and other necessary
and appropriate apparatus. Provided and upon condition that the
sole funds utilized for the acquisition, purchase, construction,
maintenance and operation of such facilities shall be obtained
and derived from: (1) Grants from Federal and State agencies; (2)
Revenue earned and derived from the operation of the facilities
to be constructed and paid only by the users thereof; and (3)
Bonds payable from revenues produced and earned from the
operation of such facilities." (emphasis added). Pursuant to the
Referendum, County built and operates a sewer system serving
parts of the County.

In December 2004, respondent Cornelius, a County citizen and
taxpayer, brought this declaratory judgment action against
County. Cornelius asserted County had adopted and intended to
implement a Master Plan that, among other things, anticipated
construction of new wastewater treatment facilities. She alleged
that County had approved a contract with SCDOT to construct a
treatment facility to serve an interstate highway "Welcome
Center," and that the contract included a cap on sewage treatment
charges. Cornelius claimed County intended to fund these projects
and to offset any losses using ad valorem tax dollars, and
contended that this funding scheme violated the conditions set by
the 1976
Referendum.[fn1] County acknowledged its plans to fund sewer
expansion using tax monies.

The circuit court granted Cornelius summary judgment, holding
that County may fund sewer projects only within its boundaries,
and only using the three types of funding listed in the
Referendum. The circuit court subsequently awarded Cornelius
$9,450 in attorneys' fees pursuant to § 15-77-300. County appeals
both orders.

ISSUES

1) Whether the circuit court erred in holding County
was bound by the terms of the Referendum.

2) Whether the circuit court abused its discretion in
awarding Cornelius attorneys' fees.

ANALYSIS

A. Referendum

The South Carolina Constitution of 1895 placed control of local
government affairs largely with the General Assembly. Most
notably, Article X, § 6 of the 1895 Constitution allowed the
General Assembly to grant counties the power to levy taxes only
for specific listed purposes such as roads, prisons, education,
courts, salaries of county officials, and other "ordinary county
purposes." The intent of this provision was to "halt county and
township taxing and spending except that which was unequivocally
for traditional local government purposes." Underwood, The
Constitution of South Carolina: Vol. II: The Journey Toward
Local Self-Government at 83 (1989). As a result, this Court
strictly interpreted what constituted an "ordinary county
purpose" for which state government could lawfully permit
counties to levy taxes or issue bonds. See, e.g., Leonard v.
Talbert, 225 S.C. 559, 83 S.E.2d 201 (1954) (act creating
physical education commission and providing funding for sports
fields for Richland County schools had neither educational nor
"ordinary county purpose" within the meaning of Article X, § 6).
In the same vein, because modern waste
treatment practices were not known in 1895 and could not
therefore have been an "ordinary" county purpose, the Court
construed Article X, § 6 as prohibiting counties from expending
tax revenues or bond funds to construct or operate sewerage
systems. Doran v. Robertson, 203 S.C. 434, 27 S.E.2d 714
(1943). In 1973, the Constitution was amended and Article VIII, §
16 was added as part of the quest for Home Rule. This
Constitutional provision permits a county, upon majority vote of
its electors, "to acquire by initial construction or purchase"
and to "operate . . . sewer systems. . . ." As noted in Knight
v. Salisbury, 262 S.C. 565, 574, 206 S.E.2d 875, 879 (1974), the
provision removed the obstacles presented by Article X, § 6 and
Doran and "expressly empowers counties to act" in establishing
sewer systems.

Oconee County maintains that the purpose of Article VIII, § 16
is to allow voters to decide whether a county should be permitted
to initially engage in wastewater treatment functions. County
argues that since the Constitution refers to "initial
construction or purchase," and since the Referendum referred only
to "a wastewater treatment facility," the Referendum only
limits the funding sources County could use to construct the
first facility and does not hinder County from using tax monies
or other forms of financing to fund subsequent expansions of the
facility or additional sewer system projects. According to
County, once the 1976 Referendum passed, County was free to
expand its sewer system and service, and to fund that expansion
in any way it chose. We disagree.

As a general rule, once voters have approved a Referendum, a
county may expand its sewerage system without further
authorization from the electors. See Johnson v. Piedmont Mun.
Power Agency, 277 S.C. 345, 287 S.E.2d 476 (1982). The question
remains, however, whether such an expansion is subject to the
express terms and limitations of the Referendum.

We hold that a county seeking to expand a utility cannot ignore
the express terms of the Article VIII, § 16 referendum that
initially authorized the county to own and operate the utility.
As Justice Littlejohn observed in Johnson:

The people, speaking through a constitution, endeavor
to protect their life, liberty and property by
prescribing and limiting the powers of the
government. This acts as a bulwark of liberty for the
protection of private rights. The Constitution is the
instrument of the people to protect themselves
against the rule of man as contrasted with the rule
of law.

The power of government to demand money from its
people by way of taxation, or otherwise, is
equivalent to the power to destroy.

277 S.C. at 356, 287 S.E.2d at 482 (Littlejohn, A.J.,
dissenting).

The Constitution forbids a county from owning and operating a
sewer system unless county electors have approved the county's
assumption of this function by referendum. While nothing in
Article VIII, § 16 requires that the referendum be phrased to
restrict the sources of funding a county may use for a sewer
system, here Oconee County chose to include such a restriction in
the referendum it presented to the voters. Accordingly, the
voters of Oconee County approved the referendum, but only on the
condition that specific, non-tax based financing be used to
construct, operate, and maintain the sewer system. To now permit
the County to use the fact of a favorable vote as a license to
ignore the express terms of that referendum and deploy its
general taxing power to finance expansion of the system would
subvert the popular will and deprive "the people [of the right]
to protect themselves against the rule of man. . . ."

County alternatively contends that a constitutional referendum
is merely one of several methods by which a county may be
authorized to provide sewer services. County claims S.C. Code Ann.
§ 44-55-1410(A) (2002) provides an independent basis upon which a
county may opt to provide sewer services using ad valorem tax
funds. We disagree. This statute was enacted in 1975 pursuant to
the Constitution's directive to the General Assembly to implement
Home Rule, see Hospitality Ass'n of South Carolina v. County of
Charleston, 320 S.C. 219, 464 S.E.2d 113 (1995), and provides
the governmental framework for a county to operate a sewer system
that has been initially authorized by constitutional
referendum. Cf. Murphree v. Mottel, 267 S.C. 80, 226 S.E.2d 36
(1976) (favorable Article VIII, § 16 referendum is prerequisite
for county operation of water or sewer facilities). The statute
does not permit a county to operate wastewater treatment
facilities in the absence of a constitutional
referendum.[fn2]

County next contends that it can enlarge its sewer system
utilizing ad valorem tax monies, citing S.C. Const. art. VIII,
§ 7, which states, "The General Assembly shall provide by general
law for . . . powers . . . of counties, including the power to
tax. . . ." This general taxing provision does not prevail over
the specific requirement of the constitutional referendum
mandated by Article VIII, § 16. See S.C. Const. art. I, § 23
("The provisions of the Constitution shall be taken, deemed, and
construed to be mandatory and prohibitory, and not merely
directory . . .").

Finally, County points to its general authority to expend tax
revenues in aid of economic development, including sewer
services, as a separate basis upon which it may expand sewer
services independent of the Referendum. We disagree. A county's
general taxing authority does not trump the constitutional
requirement that electors approve the operation of sewer services
by referendum. Cf. Rutherford v. Rutherford, 307 S.C. 199,
414 S.E.2d 157 (1992) (general constitutional provision does not
overrule specific constitutional clause).

We therefore affirm the circuit court order holding that County
is bound by the terms of the Referendum both
geographically[fn3] and financially in expanding its
wastewater treatment services and facilities.

B. Attorneys' Fees

Cornelius was awarded $9,450 attorneys' fees pursuant to
S.C. Code Ann. § 15-77-300 (2005). County argues it acted
with "substantial justification" because there are no preexisting
judicial precedents on these issues, merely attorney general
opinions, and that Cornelius was not a "prevailing party" in that
this was merely a declaratory judgment action to define rights,
duties, and obligations, and that therefore the fee award was
improper. We affirm the award.

In order to make an award under § 15-77-300, the trial court
must find: 1) the party seeking the award was the prevailing
party; 2) the state agency acted without substantial
justification; and 3) that no special circumstances make an award
unjust. Jasper County Bd. of Educ. v. Jasper County Grand Jury,
303 S.C. 49, 398 S.E.2d 498 (1990). The trial court's decision to
award or deny fees under § 15-77-300 will not be disturbed on
appeal absent an abuse of discretion. Id.

Taking County's arguments in reverse order, this Court has
never held that § 15-77-300 is inapplicable to declaratory
judgment actions. In fact, the Court has decided numerous
declaratory judgment appeals where fees were sought pursuant to
the statute. See, e.g., City of Charleston v. Masi,
362 S.C. 505, 609 S.E.2d 301 (2005) (no prevailing party under statute
where declaratory judgment action dismissed as moot); Eargle v.
Horry County, 344 S.C. 449, 545 S.E.2d 276 (2001) (remanding
declaratory judgment action for determination of statutory
award); S.C. Tax Comm'n v. United Oil Marketers, Inc.,
306 S.C. 384, 412 S.E.2d 402 (1991) (no abuse of discretion in denying
award to non-prevailing party in declaratory judgment action).
While the statute specifically exempts certain types of suits,
declaratory judgments are not among them. A party whose position
prevails in a declaratory judgment dispute with a state agency
may be awarded fees under § 15-77-300.

The trial court can award attorneys' fees under the statute
only if it finds the State "agency acted without substantial
justification in pressing its claim. . . ." § 15-77-300(1). An
agency acts with "substantial justification" within the meaning
of the statute when its position has a "reasonable basis in law
and fact." McDowell v. SCDSS, 304 S.C. 539, 542,
405 S.E.2d 830, 832 (1991). Contrary to County's contention, the fact that
novel issues were raised does not mean County was substantially
justified in opposing Cornelius. Declaratory
judgment actions by their very nature often present novel
questions. See, e.g., Eargle, supra (authority of county
administrator to suspend elected official's employees); United
Oil Marketers, supra (constitutionality of license tax incentive
statute for gas/ethanol blend); Heath v. County of Aiken,
302 S.C. 178, 394 S.E.2d 709 (1990) (to define relationship between
sheriff's office and county council). Moreover, County cited no
viable authority supporting its position that it was no longer
bound by the Referendum's terms. We agree with the circuit court
that County acted without substantial justification, and no
special circumstances render the attorneys' fee award unjust.

We find the circuit court properly exercised its discretion in
awarding Cornelius fees under § 15-77-300. Jasper County,
supra.

CONCLUSION

The circuit court orders holding County is bound by the terms
of the Referendum and awarding Cornelius attorneys' fees are

AFFIRMED.