DomainsNewMedia.com, LLC, Respondent, v. Hilton Head Island-Bluffton Chamber of Commerce, Appellant.
Appellate Case No. 2016-000460
THE STATE OF SOUTH CAROLINA In The Supreme Court
Heard October 19, 2017 – Filed May 23, 2018
Opinion No. 27803
Michael G. Nettles, Circuit Court Judge
Appeal from Beaufort County
Robert E. Stepp, Tina M. Cundari, and Bess J. DuRant, all of Sowell Gray Step & Laffitte, LLC, of Columbia, for Appellant.
William W. Wilkins and Kirsten E. Small, both of Nexsen Pruet, LLC, of Greenville, for Amicus Curiae Myrtle Beach Area Chamber of Commerce.
Jay Bender, of Columbia, for Amicus Curiae South Carolina Press Association.
JUSTICE KITTREDGE: This appeal presents the question of whether Appellant Hilton Head Island-Bluffton Chamber of Commerce (Chamber) is subject to the Freedom of Information Act (FOIA)1 due to its receipt and expenditure of certain funds designated for promoting tourism, which we will refer to collectively as accommodation tax funds. The Chamber‘s receipt and expenditure of these funds is pursuant to, and governed by, the Accommodations Tax (A-Tax) statute and Proviso 39.2 of the Appropriation Act for Budget Year 2012-2013.
Respondent DomainsNewMedia.com, LLC (Domains) filed a declaratory judgment action, seeking a declaration and corresponding injunctive relief on the basis that the Chamber‘s receipt of these funds renders the Chamber a “public body” pursuant to FOIA, thus subjecting the Chamber to all of FOIA‘s requirements. The Chamber countered that FOIA did not apply, for the receipt, expenditure, and reporting requirements concerning these funds are governed by the more specific A-Tax statute and Proviso 39.2.
The trial court held that the Chamber was a public body and, thus, was subject to FOIA‘s provisions. We reverse. We hold, as a matter of discerning legislative intent, that the General Assembly did not intend the Chamber to be considered a public body for purposes of FOIA as a result of its receipt and expenditure of these specific funds.
I.
FOIA was enacted to promote transparency in government. While declaring FOIA‘s purpose, the General Assembly stated
Subsequent to the passage of FOIA, the General Assembly enacted the A-Tax statute, which involves the administration of a state sales tax imposed on sleeping accommodations provided to overnight guests.
In this case, the Chamber was selected to be a DMO—to direct the expenditure of tourism funds—for several local governments and it received funds from the Department of Parks, Recreation, and Tourism (a PRT Grant). These public funds are at the center of this appeal and raise the question of whether the legislature intended the Chamber to be subject to FOIA on the singular basis that it expends these funds.
The Chamber is a nonprofit organization that was created in 1957. The Chamber‘s stated purpose is to promote the common interests of its members, stimulate the expanding regional economy, and enhance the quality of life for all. The Chamber offers private membership and conducts seminars, as well as other events, for the benefit of its members. These
In addition to these purely private activities, since 1983, the Chamber has served the Town of Hilton Head Island as its DMO.2 To be eligible for selection, the Chamber was required to demonstrate to the local governments “that it has an existing, ongoing tourism promotion program or that it can develop an effective tourism promotion program.”
Domains is a website company, based out of Beaufort County, which has questioned the Chamber‘s expenditure of the accommodation tax funds. In November 2012, Domains sent a FOIA request to the Chamber for information regarding its staff membership, policies, minutes, and accounts. Oddly, most of the information requested by Domains extends beyond the expenditure of these tourism funds. For example, Domains requested the non-exempt minutes of all meetings and votes by the Chamber. The Chamber refused to provide the requested information on the basis that it was not a public body for FOIA purposes, as the expenditure of these discrete funds is governed by the A-Tax statute and Proviso 39.2 and the corresponding records are available to the public through the local governments or the State.4
Thereafter, Domains filed suit seeking declaratory and injunctive relief to establish that the Chamber was a public body under FOIA and to require production of the requested information concerning all the Chamber‘s activities. After the parties conducted discovery, cross-motions for summary judgment
II.
A.
Domains argues that the Chamber‘s expenditure of public funds—through its role as DMO—causes it to fall within the plain language of FOIA and, moreover, it is considered a public body under the interpretation provided in Weston. The Chamber argues that public accountability for the expenditure of these funds has been provided through the A-Tax statute, as well as Proviso 39.2, such that the General Assembly did not intend for it to become a public body under FOIA, and furthermore, its provision of services as a marketing organization does not render it a public body for FOIA purposes under Weston.
“The standard of review in a declaratory action is determined by the underlying issues.” Nationwide Mut. Ins. Co. v. Rhoden, 398 S.C. 393, 398, 728 S.E.2d 477, 479 (2012) (citing Felts v. Richland County., 303 S.C. 354, 356, 400 S.E.2d 781, 782 (1991)). “The interpretation of a statute is a question of law.” Sparks v. Palmetto Hardwood, Inc., 406 S.C. 124, 128, 750 S.E.2d 61, 63 (2013) (citing CFRE, L.L.C. v. Greenville Cty. Assessor, 395 S.C. 67, 74, 716 S.E.2d 877, 881 (2011)). “This Court may interpret statutes, and therefore resolve this case, ‘without any deference to the court below.‘” Brock v. Town of Mount Pleasant, 415 S.C. 625, 628, 785 S.E.2d 198, 200 (2016) (quoting CFRE, 395 S.C. at 74, 716 S.E.2d at 881).
B.
We are presented with the following question—did the legislature intend that the Chamber be a public body for
We begin with an analysis of FOIA. To further its purpose of a transparent government, “FOIA subjects a ‘public body’ to record disclosure.” Disabato, v. S.C. Ass‘n of Sch. Adm‘rs, 404 S.C. 433, 442, 746 S.E.2d 329, 333 (2013). As this Court has recognized, “[i]f public bodies were not subject to the FOIA, governmental bodies could subvert the FOIA by funneling State funds to nonprofit corporations so that those corporations could act, outside the public‘s view, as proxies for the State.” Id. at 455, 746 S.E.2d at 340. “Among those entities defined as a public body subject to the statute are ‘any organization, corporation, or agency supported in whole or in part by public funds or expending public funds . . . .‘” Id. at 442, 746 S.E.2d at 333 (emphasis added) (quoting
Moreover, FOIA imposes additional disclosure requirements on public bodies, such as all meetings must be open to the public, subject to limited exceptions.
C.
We now turn our attention to the A-Tax statute and Proviso 39.2. With regard to the specific expenditure of the accommodation tax funds involved in this case, the General Assembly enacted section 6-4-10(3), which sets forth the following:
To manage and direct the expenditure of these tourism promotion funds, the municipality or county shall select one or more organizations, such as a chamber of commerce, visitor and convention bureau, or regional tourism commission, which has an existing, ongoing tourist promotion program. . . . Immediately upon an allocation to the special fund, a municipality or county shall distribute the tourism promotion funds to the organizations selected or created to receive them. Before the beginning of each fiscal year, an organization receiving funds from the accommodations tax from a municipality or county shall submit for approval a budget of planned expenditures. At the end of each fiscal year, an organization receiving funds shall render an accounting of the expenditure to the municipality or county which distributed them. . . .
addition, TERC “has jurisdiction to investigate and research facts on written complaints submitted to it with regard to the appropriate tourism-related expenditures and resolve these complaints.”
Thus, these provisions provide that the local governments must select a qualified DMO to receive the funds designated for promoting tourism, but the local governments remain accountable for the expenditure of these funds as they
D.
FOIA is a general statute; the A-Tax statute is a specific statute. “Where there is one statute addressing an issue in general terms and another statute dealing with the identical issue in a more specific and definite manner, the more specific statute will be considered an exception to, or a qualifier of, the general statute and given such effect.” Capco of Summerville, Inc. v. J.H. Gayle Const. Co., 368 S.C. 137, 142, 628 S.E.2d 38, 41 (2006) (citation omitted).
According to FOIA, any organization that is “supported in whole or in part by public funds or expending public funds” is a public body.
Moreover, even in the absence of a specific statute, this Court has recognized that the applicability of FOIA to a non-governmental entity is more involved than classification as a public body due to the receipt of public funds. See Weston v. Carolina Research & Dev. Found., 303 S.C. 398, 401 S.E.2d 161 (1991).
Both parties cite Weston in support of their respective positions. 303 S.C. 398, 401 S.E.2d 161. We find Weston supports the Chamber‘s position.7 In Weston, this Court evaluated
issue or mandating the public reporting and accountability
Here, as noted, there is a specific statute (or proviso) that directs the local governments to select a DMO to manage the expenditure of certain tourism funds and requires the governments to maintain oversight and responsibility of the funds by approving the proposed budget and receiving an accounting from the DMO. Thus, this is not the situation found in Weston wherein the funds were intended to be given to a public body and, instead, were diverted to a private organization to be spent without oversight. Through the A-Tax statute (and Proviso 39.2) there are accountability measures in place and the public has access to information regarding how the funds are spent. Therefore, the concern in Weston regarding the lack of a legislatively sanctioned process mandating oversight, reporting, and accountability is not present in the expenditure of these funds.
We do agree with Domains that the A-Tax statute does not provide for the expanse of disclosure requirements that are available under FOIA. Indeed, Domains makes no pretense that FOIA would be imposed on the Chamber so that all of the Chamber‘s procedures and activities would be controlled by all of FOIA‘s provisions. This would subject the Chamber to all of the various requirements of FOIA, such as advance notice of meetings, in every area of the Chamber‘s activities. Unlike some other states, South Carolina‘s FOIA provisions do not provide a limitation to the extent of FOIA‘s reach within an organization once it is classified as a public body. Compare
III.
Contrary to Domains’ suggestion, the receipt and expenditure of these accommodation tax funds in no manner allows the Chamber (or any DMO) to spend public funds free from public accountability and oversight. We fully
appreciate the need for some measure of transparency and public accountability in the expenditure of public funds. Yet, in this case, the A-Tax statute and Proviso 39.2 set forth the General Assembly‘s determination of the required level of oversight, transparency, and accountability.
FOIA, of course, remains vibrant as it provides the General Assembly‘s determination for the optimum transparency in connection with the general expenditure of public funds. Following the passage of FOIA, the General Assembly enacted the more narrow and targeted A-Tax statute (and Proviso 39.2) to provide what it determined were the necessary accountability safeguards with regard to the expenditure of these specific funds while simultaneously protecting the private nature of the organizations selected to perform this marketing function. The General Assembly deemed these provisions sufficient to ensure that the funds are being properly expended, and Domains has presented no valid legal basis to contravene this legislative determination. Accordingly, the judgment of the trial court is reversed.
REVERSED.
BEATTY, C.J., HEARN and JAMES, JJ., concur. FEW, J., dissenting in a separate opinion.
JUSTICE FEW: The Freedom of Information Act (FOIA) applies to any “public body,” which is defined as “any organization . . . expending public funds.”
The majority has employed an elaborate analysis to avoid the plain language of the FOIA under the guise of “discerning legislative intent.” However, our law does not permit us to look outside the language of a statute unless there is an ambiguity in the statute. See Smith v. Tiffany, 419 S.C. 548, 555, 799 S.E.2d 479, 483 (2017) (“If a statute is clear and explicit in its language, then there is no need to resort to statutory interpretation or legislative intent to determine its meaning.” (quoting Timmons v. S.C. Tricentennial Comm‘n, 254 S.C. 378, 401, 175 S.E.2d 805, 817 (1970))); 419 S.C. at 556, 799 S.E.2d at 483 (“Absent an ambiguity, there is nothing for a court to construe, that is, a court should not look beyond the statutory text to discern its meaning.“). The majority acknowledges there is no ambiguity, stating,
According to FOIA, any organization that is “supported in whole or in part by public funds or expending public funds” is a public body. Accommodation tax funds are, of course, public funds. Therefore, if we look only to FOIA as Domains suggests and go no further, it would appear that the Chamber is subject to FOIA as a public body.
Under Smith and Timmons, therefore, we must “look only to FOIA,” because there is no ambiguity in it. Based on the plain language in subsection 30-4-20(a), the Chamber is a public body and therefore subject to the record disclosure requirements of the FOIA.
Even if we did look beyond the FOIA, however, the majority‘s justification for finding the Act does not apply in this circumstance fails. First, the majority‘s decision is inconsistent with the policy behind the FOIA, which is set forth in section
The majority states the accommodations tax statute and Proviso 39.2 “play the lead role in our disposition of this case” because they “provide a comprehensive approach for the receipt, expenditure, and oversight of these [public] funds.” In other words, the majority finds the policy of the FOIA is fulfilled through the accommodations tax statute and Proviso 39.2. This conclusion is wrong. Although the accommodations tax statute does have specific provisions relating to the “receipt” and “expenditure” of public funds, its provisions concerning “oversight” of spending public funds fall far short of meeting the policy goals of the FOIA.
Specifically, the accommodations tax statute does not address the disclosure of records at the core of the FOIA policy. In fact, the statute‘s “three layers of review” the majority finds to be sufficient “oversight” is contrary to the policy. By placing the responsibility for the expenditure of public funds in the hands of a private entity such as the Chamber, and then relying on public officials for “oversight,” with no right of access by the public, the accommodations tax statute actually inhibits citizens from being “advised of the performance of public officials and of the decisions that are reached in public activity,” thereby frustrating—not furthering—the “vital” policy of open government.
To the extent the policy behind the FOIA could be furthered by “oversight” from public officials, the record in this case reveals the information provided to those public officials does not allow the officials to determine how the funds are
[$]200,000.”8 I asked, “In the town‘s relationship with the Chamber, . . . as a matter of course, the town doesn‘t know what the $200,000 represents for SEM marketing?” Counsel responded, “Well, it may. I don‘t know.” After several other questions and answers, counsel agreed with the following assertion:
Unless somehow the town takes the initiative to learn from the Chamber what the $200,000 represents, then in our scenario, a member of the public would never be able to gain access to the individual vendors, whether they submitted bids, what were the bids, what was the highest bid, and on and on and on.
This demonstrates the reality that the accommodations tax statute does not allow the public to learn how public funds are being spent with any degree of specificity, and therefore the statute does not meet the policy goals of the FOIA.
Second, the majority relies heavily on the principle that a more specific statute (subsection 6-4-10(3)—the accommodations tax statute) controls the more general one (FOIA). That principle is inapplicable in this case because the two statutes do not address the same subject. In Capco of Summerville, Inc. v. J.H. Gayle Construction Co., 368 S.C. 137, 142, 628 S.E.2d 38 (2006), the case cited by the majority to support its application of the principle, we held the principle applied only if the statutes address “the identical issue.” 368 S.C. at 142, 628 S.E.2d at 41. The FOIA requires that a public body disclose its records; the accommodations tax statute does not even address that issue.
applies. We stated “the unambiguous language of the FOIA mandates that the receipt of support in whole or in part from public funds brings a corporation within the definition of a public body.” 303 S.C. at 403, 401 S.E.2d at 164.
The majority in this case refers to the following passage from Weston:
[T]his decision does not mean that the FOIA would apply to business enterprises that receive payment from public bodies in return for supplying specific goods or services on an arm‘s length basis. In that situation, there is an exchange of money for identifiable goods or services and access to the public body‘s records would show how the money was spent. However, when a block of public funds is diverted en masse from a public body to a related organization, or when the related organization undertakes the management of the expenditure of public funds, the only way that the public can determine with specificity how those funds were spent is through access to the records and affairs of the organization receiving and spending the funds.
303 S.C. at 404, 401 S.E.2d at 165. The purpose of this passage was to point out different types of transactions and to explain that transactions made on an “arm‘s length basis” would not trigger the FOIA because “there is an exchange of money for identifiable goods or services and access to the public body‘s records would show how the money was spent.” This passage was never intended to create any additional requirement—or a “more involved” analysis—to determine the applicability of the FOIA.
In contrast to the majority‘s proposition, the quoted language from Weston requires a finding that the FOIA does apply to the Chamber. The Chamber‘s agreement to expend these funds does not involve the type of “arm‘s length”
of the organization receiving and spending the funds.” Id. Therefore, Weston does not support the majority‘s proposition that “the applicability of FOIA to a non-governmental entity is more involved than classification as a public body due to the receipt of public funds.” In fact, Weston rejects the majority‘s proposition that there is any “decisional framework” for the FOIA except that set forth in the FOIA.
Finally, the majority expresses concern over the Chamber being exposed to other requirements under the FOIA if we find it is a public body. Those other requirements include open meetings, advanced notice of meetings, and the requirement that public bodies keep written minutes. See
For these reasons, I respectfully dissent.
Notes
Act No. 288, 2012 S.C. Acts 402–03 (Proviso 39.2).Organizations applying for a grant must include in the grant application, information on how the organization proposes to measure the success of the marketing and public relations program, including the estimated return on investment to the state. . . . An organization receiving a grant must use the public and private funds only for the purpose of destination specific marketing and public relations designed to target international and/or domestic travelers outside the state to destinations within the state. . . . Grant recipients shall provide an annual report by November first, to the Chairmen of the Senate Finance Committee and the House Ways and Means Committee and the director of the Department of Parks, Recreation and Tourism on the expenditure of the grants funds and on the proposed outcome measures.