Court Opinion

ID: 9590419
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:54:43.092483+00
Date Added: 2024-06-11T09:19:46.418752
License: Public Domain

Cureton, Judge
(dissenting):
I would uphold .the trial court’s ruling that Regulation 19-445.2120 of the South Carolina Budget and Control Board (Board) does not comply with Section 11-35-1590, Code of Laws of South Carolina, 1976 as amended, and the lease awarded by South Carolina Educational Television (ETV) to *461Tall Tower, Inc., (Tall Tower) is void as not having been approved and awarded in conformance with statutory law.
The issues of merit presented to the trial judge and this court are whether (1) Charleston Television exhausted the administrative procedures provided by Section 1-23-126, (2) Regulation 19-445.2120 exceeds the regulatory authority of the Board, and (3) the trial judge erred in not ruling Charleston Television was estopped from raising the issues asserted.
EXHAUSTION OF ADMINISTRATIVE REMEDIES
Appellants argue that because Charleston Television failed to petition the Board to promulgate a regulation providing for competitive bidding where feasible, it failed to exhaust its administrative remedies. I disagree. Under South Carolina Code Ann. Section 1-23-126 (1986), an interested party may petition an agency in writing for the promulgation of a regulation. The agency is required within 30 days to either deny the petition or initiate action to promulgate the regulation. This Section is closely modeled after Section 6 of the 1961 version of the Uniform Law Commissioners’ Revised Model State Administrative Procedure Act. 14 U.L.A. 400 (1961). It furthers the objective of providing public access to state agencies and making state agencies more responsive to the public. See D. Shipley, South Carolina Administrative Law 4-25 (1983); Annual Survey, Administrative Law, 30 S. C. L. Rev. 1,10 (1979); Act No. 442,1980 S. C. Acts 1342 (title indicates inter alia it is an act “to Authorize The Public To Request The Promulgation, Repeal And Amendment of Regulations”). The Supreme Court of Iowa announced the purpose of a similar provision of that state’s code in Community Action Research Group v. Iowa State Commerce Commission, 275 N. W. (2d) 217 (Iowa 1979). The court stated:
[T]he purpose ... is ‘to enable interested persons, on their own initiative, to induce a reasoned consideration of the propriety of the issuance, amendment, or repeal of a rule by those authorized to make and modify rules [citation omitted]... this provision allows the public to prod an agency to action in a way that seeks to ensure *462that those satisfied with the status quo are forced to reexamine their positions in light of new views and changed conditions.’
Id. at 220.
Under this type of provision, an agency is required only to give fair consideration to the propriety of issuing a proposed regulation. It is not required to take a stand on the substantive issues that prompted the request for the proposed regulation. 73 C. J. S. Public Administrative Law and Procedure Section 103 (1983).
Although Section 1-23-126 provides a method of public access to the rule making procedure, the legislature did not intend that an aggrieved party must invoke the petition process prior to challenging the validity of a regulation under the provisions of Section 1-23-150. This is evident for several reasons. First, Section 1-23-126, when read in conjunction with other provisions of Article I of Chapter 23 (i.e. the rule making provisions as opposed to the Article III adjudicative provisions), contemplates that even after an agency decides to promulgate a proposed regulation it must comply with all of the procedures of Article I for promulgating regulations including notice to the public, filing, public participation and legislative review. It would appear to be highly unlikely that the Legislature would require an aggrieved party to undergo this time consuming procedure as a prerequisite to contesting the validity of a regulation.1 Second, Section 1-23-126 is silent as to what may be done if an agency fails to respond to a petition to promulgate or responds in a manner adverse to the petitioner. D. Shipley, South Carolina Administrative Law 4-25 (1983).2 Third, in contrast to orders in contested cases, regulations are nor*463mally prospective in their operation. Id. at 4-50. Fourth, regulations are ordinarily adopted to affect the public as a whole and not to resolve ongoing disputes between specific parties. Finally, I read Charleston Television’s petition not to request the Board to promulgate a regulation but as an attack upon the validity of the questioned regulation. I, therefore, would hold Section 1-23-126 does not require Charleston Television to petition for the promulgation of a regulation providing for competitive bidding as a prerequisite to seeking relief under Section 1-23-150.
VALIDITY OF REGULATION 19-445.2120
A state board is a creature of statute and its authority is dependent upon statute. Brooks v. South Carolina State Board of Funeral Service, 271 S. C. 457, 247 S. E. (2d) 820 (1978). It is axiomatic that a state board may make only such rules as authorized by its enabling legislation. Banks v. Batesburg Hauling Co., 202 S. C. 273, 24 S. E. (2d) 496 (1943). It is also well settled that an administrative regulation which materially alters or adds to the law is invalid. Society of Professional Journalists v. Sexton, 283 S. C. 563, 324 S. E. (2d) 313 (1984); Milliken and Company v. South Carolina Department of Labor, 275 S. C. 264, 269 S. E. (2d) 763 (1980); Brooks v. South Carolina State Board of Funeral Service, supra; Banks v. Batesburg Hauling Co., supra.
Appellants argue Section 11-35-1590(3) is directory and not mandatory. Statutes, or particular provisions of statutes, may be mandatory or directory. 73 Am. Jur. (2d) Statutes Section 14 (1974). Ordinarily, use of the word “shall” in a statute means the action referred to is mandatory. South Carolina Department of Highways and Public Transportation v. Dickinson, 288 S. C. 189, 341 S. E. (2d) 134 (1986). Where a statute’s purpose is protection of public or private rights, as opposed to merely providing guidance to government officials, courts will usually interpret “shall” in a statute to impose mandatory rather than directory duties. South Carolina Wildlife Federation v. Alexander, 457 F. Supp. 118 (D. S. C. 1978). Compliance with mandatory provisions of a statute is “a condition precedent to the privilege conferred.” 73 Am. Jur. (2d) Statutes Section 16 at 278 (1974). *464A close reading of 11-35-1590 convinces me the Legislature intended the requirements of the Section to be mandatory.
Section 11-35-1590(1) makes compliance with the provisions of the section mandatory in the leasing of real estate by state governmental bodies. Section 11-35-1590(2) limits the Board’s approval authority to space that meets the standards prescribed in regulations provided for in Section 11-35-1590(3) The Board was not free to adopt a regulation that reduced these minimum requirements. Brooks v. S. C. State Board of Funeral Service, supra; Lake v. Mercer, 216 S. C. 391, 58 S. E. (2d) 336 (1950).
Legislative policy, as set forth in Section ll-35-20(c) of the Consolidated Procurement Code, requires the “adoption of competitive procurement laws and practices by units of state and local .governments.” The Board has promulgated a regulation which clearly provides on its face that all leases of non-state owned property shall be acquired by negotiation.3 Such a regulation fails to require competitive bidding of leases even where competitive bidding is feasible. The Board clearly exceeded the authority granted to it by the Legislature.
The appellants next argue that because the record contains no evidence competitive bidding was feasible the statute is inapplicable to this lease, and thus, Charleston Television has not been prejudiced by the promulgation of the regulation. I disagree. Section 1-23-150 and general law permit a court to declare a regulation void if the regulation exceeds the regulatory authority of the agency. There is no requirement the court also find prejudice to the petitioner before it may issue a declaratory ruling of invalidity. See LeCesse Bros. Contracting, Inc. v. Town Board of the Town of Williamson, 62 A.D. (2d) 28, 403 N. Y. S. (2d) 950 (1978) (statutory requirements relating to bidding are enacted for the benefit of property owners and taxpayers, not for the benefit of bidders, and should be administered to accomplish that purpose fairly and reasonably with sole reference to the public interest); see also 64 Am. Jur. (2d) Public Works and *465Contracts Section 38 (1972). The Board’s authority to approve the lease in question was conditioned upon the prior adoption of- regulations specifying procedures for competitive bidding and criteria for determining when competitive bidding is not feasible. It becomes evident that a lease entered into under a regulation devoid of any mention of competitive bidding cannot be sustained. 17 C. J. S. Contracts Section 201 (1963). The fact the Board accepted a post-contract award determination that competitive bidding was not feasible is ineffective to validate the contract.
I also disagree with the notion that somehow Charleston Television is burdened with an unchallenged ruling that competitive bidding is not feasible under the facts of this case; that in any event it is not adversely affected by the absence of a regulation providing for competitive bidding and therefore is not an “affected” person with standing to pursue this declaratory judgment ruling. Because the trial judge concluded the Board had no authority to promulgate the contested regulation, he necessarily did not reach the question of the feasibility of competitive bidding. Surely Charleston Television who has expended time, effort, and money in submitting its bid under invalid regulatory procedures followed by the Division of General Services, and who has exhausted its administrative remedies, has standing to contest the validity of those procedures. Bayne v. Florida State Board of Dispensing Opticians, 212 So. (2d) 762 (Fla. 1968) (nonresident whose proposed work in Florida was blocked by administrative rule was affected by rule and may bring declaratory judgment action to test validity of rule); see generally, D. Shipley, South Carolina Administrative Law 4-65 (1983).
ESTOPPEL AND WAIVER
Finally, appellants contend Charleston Television by participating in the lease negotiation process is estopped from contesting the validity of the regulation in question. I reject their contention.
The elements of equitable estoppel as outlined in the case of Frady v. Smith, 247 S. C. 353, 359, 147 S. E. (2d) 412, 415 (1966) are:
*466The elements of equitable estoppel as related to the party estopped are: (1) Conduct [sic] which amounts to a false representation or concealment of material facts, or, at least, which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party- subsequently attempts to assert; (2) intention, or at least expectation, that such conduct shall be acted upon by the other party; (3) knowledge, actual or constructive, of the real facts. As related to the party claiming the estoppel, they are: (1) Lack [sic] of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance upon the conduct of the party estopped; and (3) action based thereon of such a character as to change his position prejudicially.
I am unable to gather from the record any evidence that the appellants satisfied the pertinent elements of estoppel as pertains to parties asserting estoppel. See Corley v. Looper, 287 S. C. 618, 340 S. E. (2d) 556 (Ct. App. 1986); Bilton v. Best Western Royal Motor Lodge, 282 S. C. 634, 321 S. E. (2d) 63 (Ct. App. 1984). “Moreover, estoppel may not be invoked to nullify a mandatory statutory restriction.” Freeman v. Fisher, 288 S. C. 192, 194, 341 S. E. (2d) 136, 137 (1986). Even if Charleston Television’s conduct amounts to a representation, appellants cannot claim reasonable reliance upon- the representation in the face of a clear statutory mandate. Freeman v. Fisher, supra.

 In fact the 1981 version of the Uniform Law Commissioners’ Model State Administrative Procedure Act declares in Section 5-107 that “a petitioner for judicial review of a rule need not have participated in the rule-making proceeding upon which that rule is based, or have petitioned for its amendment or repeal.” 14 U.L.A. 144 (Supp. 1988).

 Although there is a dearth of authority on the subject, one jurisdiction has held that a proceeding under a section similar to Section 1-23-126 is not a contested case and thus judicial review may be unavailable under Section 1-23-380 which refers to a final decision in a contested case. See Community Action Research Group v. Iowa State Commerce Commission, 275 N. W. (2d) 217 (Iowa, 1979).

 See Tall Tower Inc. v. South Carolina Procurement Review Panel, 294 S. C. at 234, 363 S. E. (2d) at 687 (holding “the Regulation calls for a negotiation process for real estate leases”).