THE STATE OF SOUTH CAROLINA In The Supreme Court

Commissioners of Public Works of the City of Laurens, South Carolina, also known as the Laurens Commission of Public Works, Respondent,

v.

City of Fountain Inn, South Carolina, Petitioner.

Appellate Case No. 2018-001309

ON WRIT OF CERTIORARI TO THE COURT O F APPEALS

Appeal From Laurens County J. Cordell Maddox, Jr., C ircuit Court Judge

Opinion No. 27917 Heard June 12, 2019 – F iled September 18, 2019

REVERSED

Sarah P. Spruill and Boyd B. Nicholson Jr., both of Haynsworth Sinkler Boyd, PA, and David W. Holmes, of Holmes Law Firm, all of Gr eenville, for Petitioner.

Robert L. Widener, of Burr & Forman, LLP, of Columbia, and Bernie W. Ellis, of Burr & Forman, LLP, of Greenville, for Respondent.JUSTICE KITTREDGE: This case concerns a municipality's statutory ability to provide utility services beyond its corporate limits. Section 5-7-60 of the South Carolina Code (2004) authorizes a municipality to provide speci fied services, such as utilities, outside of its corpor ate limits "by contract" exc ept within a so-called "designated service area for all such services of another munic ipality or political subdivision." The dispositive issue here centers on the meaning of the following provision in section 5-7-60: " For the purposes of this section designated service

area shall mean an area in which the particular service is bein g provided or is budgeted or funds have been applied for as certified by the governing body thereof." For reasons explained below, we hold the requirement for certification "by the governing body thereof" a pplies in all of the enumerate d circumstances for

the establishment of a d esignated service area.

Several years ago, an industrial park was built in an unincorpo rated area in Laurens County between the City of Laurens (Laurens) and the City of Fo untain Inn (Fountain Inn). Both municipalities provided natu ral gas servi ce beyond their respective borders, and each sought to serve the industrial cus tomers in the new industrial park. However, Laurens—through its su bsidiary, the Laurens Commission of Public Works (LCP W)—claimed Fountain Inn could no t compete
for the industrial customers' bus iness because LCPW had establi shed a designated service area and therefore was the sole authorized natural gas provider to the industrial park. Fountain Inn believed the industrial park was not part of a designated service area, and thus LCPW did not have an exclusiv e right to provide natural gas to customers in the industrial park.

In support of its claim, LCPW a sserted it had satisfied the req uirements of section 5-7-60 by providing natural gas in the general vicinity for twe nty years pursuant to a 1992 boundary line that was informally agreed to by Laurens and Fountain Inn. Agreeing with LCPW that it had properly created a designated se rvice area, the circuit court enjoined Fountain Inn from providing natural gas service to the industrial park, and the cour t of appeals affirmed. Comm'rs of Pub. Works of the City of Laurens v. City of Fountain Inn , 423 S.C. 461, 815 S. E.2d 21 (Ct. App. 2018). Because there is no reas onable interpretation of sectio n 5-7-60 that would permit LCPW to claim a designate d service area over the industr ial park, we

reverse.

I.

The facts here are not in dispute. In 1992, officials from bot h municipalities met to discuss establishing a boundary line in the unincorporated area between the twocities for the purpose of providi ng natural gas outside their r espective corporate limits. Following the meeting, L CPW's general manager sent a l etter to Fountain Inn's natural gas system manager and enclosed a map (the 1992 M ap) memorializing the proposed bounda ry line. Fountain Inn's system manager replied to the letter, expressing his agreement as to the accuracy of t he proposed boundary line and stating the 1992 Map was "in agreement with the Founta in Inn City Council." LCPW's gene ral manager then sen t a second letter sta ting he was "in the process of preparing a resolutio n for adoption by both of our g overning bodies." The boundary line was never forma lly ratified by either municip ality's city council or LCPW. Since 1992, the partie s generally treated the 1992 Ma p as a gentlemen's agreement, although disputes did arise, which the parties usually settled without resort to litigation.

However, the parties did not come to an informal resolution whe n the current dispute involving Owings Industria l Park arose. LCPW argues that the industrial park was constructed entirely on its side of the 1992 Map's bou ndary line. ZF Transmissions (ZF) was the first company to build in the indust rial park and, unaware of the informal boundary line, solicited competing bids for its natural gas

service from LCPW and Fountain Inn.

Believing the 1992 Map prohibited Fountain Inn from competing f or ZF's business (or the business of a ny other future customer in the industrial park), LCPW filed a complaint, (1) asserting claims for breach of contract and prom issory estoppel based on the 1992 Map; (2) seeking a declaratory judgment that it had established a designated service area pursu ant to section 5-7-60; and (3) r equesting an injunction prohibiting Fountain Inn from providing natural gas service in the designated service area, i.e., i n any area past the boundary li ne established by the 1992 Map. 1 LCPW later withdrew its breach of contract and promissory estoppel claims, relying only on the clai m that it had satisfied the sta tutory requirements of a designated service area.

During the bench trial, several w itnesses testified LCPW generally provided natural gas service to customers all throughout the territory e stablished by the boundary line on the 1992 Map. Ho wever, the area in and around Owings

Industrial Park was unserved un til the industrial park was comp leted because there

were no customers there.

1 After LCPW initiated this lawsuit, ZF accepted LCPW's bid for the natural gas

contract.Ultimately, the circuit court (1 ) found, pursuant to section 5- 7-60, that LCPW had established a designated servic e area defined by the boundary l ine marked on the 1992 Map; and, thus, (2) enjoined Fountain Inn from providing n atural gas service in that area. In support of its holding, the circuit court exp lained:

[Section 5-7-60] defines a "desi gnated service area" for purposes of

this statute as the area "in whic h the particular service is be ing provided or is budgeted or funds have been applied for as certi fied by the governing body thereof." Based upon the language of Sectio n 5-7-60, the [c]ourt agrees that the area served by LCPW on the

southern and eastern side of the boundary line created in 1992 is [] LCPW's "designated service area" for natural gas service. The testimony at trial was undisputed that [] LCPW has furnished na tural gas service in this area outside its corporate limits for over two

decades and has the infrastructur e to provide that service on a n ongoing basis. It is also noted t hat in addition to having exc lusively served the area for over two decades, [] LCPW passed a resoluti on [the day it filed its complaint] certifying that [] LCPW provid es natural gas service in the area that it identifies as its Natur al Gas Designated Service Area, and that it has budgeted to do so in

accordance with Section 5-7-60. T herefore, the territory serve d by LCPW is a territory "in which th e particular service [natural g as] is being provided or is budgeted or f unds have been applied for as certified by the governing body thereof." S.C. Code Ann. § 5-7 -60.

(Last alteration in original.)

The court of appeals affirmed the circuit court's decision. In pertinent part, the court of appeals held section 5-7-60 was unambiguous and requir ed the court to apply its plain language:

We agree with the circuit court the phrase in section 5-7-60 "a s certified by the governing body" only applies to the portion of the sentence stating "funds have be en applied for" and not the prior part of the sentence stating "an area in which the particular servic e is being provided." The record contains evidence the two parties genera lly observed the boundary provided by the [1992] Map. Because LCPW has been providing natural gas in the area, it has established adesignated service area. Accord ingly, the circuit court did no t err in finding LCPW had a designated se rvice area in which Fountain In n could not offer its services without LCPW's permission.

We granted Fountain Inn's petiti on for a writ of certiorari to review the court of appeals' decision.

II.

Section 5-7-60 of the South Caro lina Code provides, in relevant part:

Any municipality may . . . furnish any of its services . . . in areas outside the corporate limits of such municipality by contract with any individual, corporation, state or political subdivision or agen cy thereof . . . except within a designated service area . . . of another municipality or political subdivision

. . . . For the purposes of this section designated service area sh all mean an area in which the particular service is being provid ed or is budgeted or funds have been applied for as certified by the governing body thereof

. Provided, however, the limitation as to service areas of other municipalities or political subdivisions shall not apply when permission for such municipal operations is approved by the governing body of the other munic ipality or political subdivisi on concerned.

(Emphasis added, emphasi s in original omitted.)

We agree with the lower courts t hat section 5-7-60 is unambiguo us, and we therefore must apply the statute as it is written. See, e.g.

, Hodges v. Rainey , 341

S.C. 79, 85, 533 S.E.2d 578, 581 (2 000) ("Where the statute's l anguage is plain and unambiguous, and conveys a clear a nd definite meaning, the rule s of statutory interpretation are not needed and the court has no right to impose another meaning."). In particular, the s tatute provides municipalities "may" furnish their

services to areas outside their corporate limits "by contract" except within the designated service area of anothe r. Thus, absent a designated service area, municipalities have the opportun ity—not the right—to furnish th eir services by

contract to nonresidents.

Section 5-7-60 defines a designate d service area as "an area in which the particular service is being provided or is budgeted or funds have been app lied for as certified by the governing body thereof ." (Emphasis added.) Un like the lower courts, wefind a plain reading of the sentence indicates the italicized l anguage refers to all three parts of the sentence—that is, the governing body of the designated service area must certify the area is one "in which the particular serv ice is being provided or is budgeted or funds have been applied for" by the purported exclusive provider. While LCPW has legal authority to provide services—exclusively so—to residents of Laurens, we have been present ed with no legal basis to exten d that authority beyond the city's boundaries. Thus, here, to have created a de signated service area in or around Owings Industrial Park, Laurens County—as the gove rning body of that unincorporated area—must ha ve certified LCPW was the autho rized, exclusive natural gas provider in the area via one of the three specified methods. However, Laurens County has neve r done so, nor, according to th e record, has it ever seen or acknowledged the boundary line established by the 1992 Map.

LCPW argues "as certified by the governing body thereof" refers not to the governing body of the designated se rvice area (Laurens County), but to the municipality (Laurens) or serv ice provider itself (LCPW). We d isagree, for to permit a municipality or municipa l service provider to unilaterally anoint a designated service area outside the city's boundaries would lea d to an absurd result. Under LCPW's interpretation, sec tion 5-7-60 would grant a munic ipality unfettered discretion to unilaterally lay exc lusive claim to an area—a des ignated service area—outside its corporate boundaries, thus allowing the munici pality to become the sole provider of services in the area with unrestricted aut hority to charge whatever rates it pleased. See Childs v. City of Columbia , 87 S.C. 566, 570–71, 70 S.E.2d 296, 298 (1911) (explaining municipalities do not owe a duty to

nonresidents to contract with the m at all, much less for reason able rates, but instead owe a duty to their residents to provide their services to nonresidents "at the highest price obtainable"). We reject a construction of se ction 5-7-60 that is contrary to the statutory langua ge and, moreover, would essenti ally allow a single municipality to create a monopol y across the entire county base d purely on it being

the first to claim the territo ry, with no ability of the county or nonresidents to stop the municipality.

When a municipality provides serv ices to its residents, there a re inherent safeguards—through the electoral process and otherwise—that ens ure accountability. Those safeguards can similarly be maintained t hrough the contract method of section 5-7-60, as the parties have t he ability to ne gotiate the terms of the arrangement. The natural safeguards disappear when a munic ipality becomes a provider of services in a "designated service area" beyond its borders. There is no contract; there is no negotia tion; there is no accountability t hrough the electoral process or otherwise. With the e xclusivity that accompanies a designated servicearea designation, there is simply no choice, and the municipality is wholly unaccountable to the nonresident customers. It necessarily fol lows that the requirements of section 5-7-60 must be strictly followed.

LCPW relies on City of Darlington v. Kilgo , 302 S.C. 40, 393 S.E.2d 376 (1990). Kilgo is easily distinguished. Kilgo involved a dispute betw een a county and a city

which was resolved with reference to only the contract provision of section 5-7-60, without any consideration of the existence and implications of the designated service area provision of the statute. Id. at 43, 393 S.E.2d at 378 (concluding the "legislative intent [underlying sections 4-19-10 (1986) and 5-7 -60 of the South Carolina Code] was to allow muni cipalities to continue to offer fire protection service in areas previously served under contract, and that such areas could not be included in any [subsequent] county district plan [to provide s ervices] without prior agreement with the municipality"). Here, unlike Kilgo and the other cases cited by LCPW, we have two municipalities that seek to provide services outside their respective municipal boundaries in an unincorporated area of Laurens County, and the dispute is resol ved entirely by reference to th e designated service area portion of section 5-7-60 . Moreover, to the extent Kilgo was ever viewed as an authoritative interpretation of section 5-7-60 (rather than section 4-19-10 alone), its precedential force in that respect has been, quite frankly, minimized by subsequent case law that empha sizes the need for a contract to avoid being

subsumed in a county's designated service area. See, e.g.

, Carolina Power & Light Co. v. Darlington Cty. , 315 S.C. 5, 9, 431 S.E.2d 580, 582 (1993) ("The statutes as interpreted in Kilgo

, supra , clearly require a valid contract with the city to avoid inclusion in the county fire district. As we stated in Kilgo , the legislative intent of

the statutes is to allow counties to establish taxing districts for fire protection services without invading the province of another political sub division or fire district. By necessity, it is required that a contract be in e xistence to prevent an encroachment by a county fire dis trict when boundaries are esta blished."); cf. Sloan

v. City of Conway , 347 S.C. 324, 328 & n.6, 555 S.E.2d 684, 686 & n.6 (2001) (emphasizing the importance of t he provision of section 5-7-60 dealing with providing service "by contract"); Calcaterra v. City of Columbia , 315 S.C. 196, 197–98, 432 S.E.2d 498, 499–500 (Ct. App. 1993) (per curiam) (s ame). 2

2 LCPW's reliance on Spartanburg Sanitary Sewer District v. City of Spartanburg is misplaced for similar reasons . 283 S.C. 67, 71, 73, 321 S.E .2d 258, 260, 261 (1984) (involving a dispute not between two municipalities, but between a municipality and a special purpo se district created by the legi slature to "make available throughout the distric t sanitary sewer services"; fin ding there was noFinally, we find granting LCPW a d esignated service area—the co ntours of which are established by reference to the 1992 Map—cannot be supporte d even under

LCPW's construction of section 5- 7-60 because it would give for mal legal effect to the 1992 Map, when the governing b odies of Fountain Inn, Lauren s, and LCPW failed to adopt the boundary line. 3 Cf. Carolina Power & Light Co. , 315 S.C. at 9– 10, 431 S.E.2d at 582–83 (discussing the requirements to have a valid contract for

services under section 5-7-60 a nd other statutes, and stating, "The use of some public authorization or ordinance by the appropriate municipal government is critical . . . . A municipal cor poration is not bound by a con tract made in its name by one of its officers or by a pe rson in its employ, although w ithin the scope of its corporate powers, if the officer or employee had no authority t o enter into such a contract [o]n behalf of the cor poration." (internal quotation a nd alteration marks omitted)). LCPW argues that "serv ing the area exclusively for more than 20 years and providing the service, standing alone , creates a designate d service area under [section] 5-7-60 without any cer tification by anyone." However , as discussed above, merely providing service to an area for a period of time does not meet the section 5-7-60 criteria for creating a designated service area.

Fountain Inn does not quibble w ith LCPW's ability to enter into contracts in the area of the industrial park. Fountain Inn simply asserts there is no designated service area, leaving each munici pality free to compete for eac h customer's business in the industrial park. Fountain Inn is plainly corre ct.

III.

Accordingly, under the circumstances presented and pursuant to section 5-7-60,

LCPW has failed to establish a designated service area entitlin g it to exclusively

"indication of legislative intent to allow the [municipality] to extend its collection lines to areas outside its corpor ate limits [even if] it could serve the areas more economically than the Sewer Dist rict"; and concluding the munic ipality could continue serving those customers outside its municipal limits w ith whom it had already entered into a contract b efore the creation of the spec ial purpose district).

3 For this reason, we find LCPW's position is inconsistent. LCP W abandoned any reliance on a contract theory, yet the entirety of its claim of a designated service area is tethered to the 1992 Map.provide natural gas services to the area in which the industria l park is located. 4 We

therefore reverse.

REVERSED.

BEATTY, C.J., HEARN and JAMES, JJ., concur. FEW, J., concurrin g in a separate opinion.

4 The parties have made much of th e standard of review. The par ties' dispute in this regard is of no moment, for the facts are not in dispute a nd, more importantly, this case is purely one of statu tory interpretation, dependent only on how the undisputed facts apply to the sta tute. As the court of appeals found, this case thus solely presents a question of law, which we review de novo. S.C. Dep't of Soc.

Servs. v. Boulware , 422 S.C. 1, 6, 809 S.E.2d 223 , 226 (2018) ("Questions of statutory interpretation are que stions of law, which are subjec t to de novo review

and which we are free to decide without any deference to the co urt below." (internal quotation marks omitted)).JUSTICE FEW: I agree with the majority that in the pivotal sentence of sect ion

5-7-60 of the South Carolina Code (2004), the phrase "as certified by the governing body thereof" must apply to the first of what appear to be three items

listed in series in the sentence . Thus, in this case, "a desig nated service area" must

be "an area in which the partic ular service is being provided[, ] . . . as certified by the governing body" of the servi ce area. As the majority expla ins, that "governing body" must be the County. I disagree, however, that this sente nce is unambiguous, or contains any plain language.

First, the sentence could use fo ur commas: one to set off the i ntroductory clause, two to separate the items in the series, and one to set off the "as certified by"

clause. In most circu mstances, the presen ce or absence of a co mma is not

determinative of whether the writing is ambiguous. See State v. Pilot Life Ins. Co.

, 257 S.C. 383, 391, 186 S.E.2d 262, 266 (1972) ("'The presence o r the absence of a comma, according to the whim of th e printer or proofreader is s o clearly fortuitous that it is wholly unsafe as an ai d to statutory interpretation. '" (quoting Erie R. Co.

v. United States , 240 F. 28, 32 (6th Cir. 1917))) . In this instance, however, the

absence of a comma to set off the "as cer tified by" clause is s ignificant. Under the last antecedent doctrine, "The pr esence of a comma separating a modifying clause

in a statute from the clause imm ediately preceding it is an ind ication that the modifying clause was intended to modify all the preceding claus es and not only the

last antecedent one . . . ." 82 C.J.S. Statutes § 443 (2009). Where there is no comma, however, "clauses are to be applied to the immediately p receding words or phrase. Such . . . clauses are no t to be construed as extendin g to or modifying

others that are mo re remote . . . ." Id. Therefore, the absence of a comma setting off the "as certified by" clause is an indication the Legislatu re did not intend the clause to apply to the first ite m in the series. In other word s, the absence of a

comma in this instance creates an ambiguity.

Second, the items in the appare nt series are not parallel, and thus it is not possible to know with clarity from the wo rds themselves what the Legisla ture intended. To illustrate my point, using the fi rst item in the series, the se ntence provides, "designated service area shall mean an area in which the partic ular service is being provided." As to the second item in the series, the item makes sense only if it is

read with that same structure: "d esignated service area shall mean an area in which the particular service . . . is budgeted." So far, this struct ure makes perfect sense. As to the third item, however, us ing the structure of the first two items, the item reads "designated service area s hall mean an area in which the particular service . . . funds have been applied for." That makes no sense, and t hus, the sentence is ambiguous.Finally, the majority makes a c onvincing argument—with which un equivocally I agree—that the phrase "governi ng body" must refer to the County —not to Fountain Inn or LCPW—when considering the Legislature's intent with regard to the first item in the series. The majority's success on this p oint, however, demonstrates the sentence is ambiguous. Consider the second an d third items in the series. If a "governing bo dy" were to "budget" for the inf rastructure for utility service to an area, or if it we re to "appl[y] for" funds to do so, that "governing body" would necessarily be the pr ovider of the service, which i s Fountain Inn or LCPW, not the County. In other words, for the second and third items in the series, the sentence makes no sense if the "governing body" is the County—as the majority has demonstrated must be true for the first item—becau se the County would never provide funds for the utility to do its business.

The majority's interpretation of the pivotal sentence in sectio n 5-7-60 is correct, but is an interpretation based on the principles of statutory const ruction. 5 It is not a reading of the plain language o f an unambiguous statute.

5 The majority specifically invokes the principle of statutory c onstruction that we

will not read a statute to lead to an absurd result. See supra slip op. at 6; see also

Kiriakides v. United Artists Commc'ns, Inc. , 312 S.C. 271, 275 , 440 S.E.2d 364, 366 (1994) ("However plain the ordinary meaning of the words us ed in a statute may be, the courts will reject tha t meaning when to accept it w ould lead to a result so plainly absurd that it could not possibly have been intended by the Legislature . . . .").