Chambers of Commerce and FOIA

July 12, 2018 - Jeremy L. Cook

In a recent opinion, the South Carolina Supreme Court held that the receipt by a chamber of commerce of public funds did not make it a public body for purposes of the Freedom of Information Act (FOIA).

DomainsNewMedia.com, LLC v. Hilton Head Island-Bluffton Chamber of Commerce involved a dispute as to the applicability of FOIA to information about the Chamber’s membership, policies and accounts. The trial judge found that the Chamber was a public body and accordingly was subject to FOIA because of its receipt of public funds. The Chamber appealed on the grounds that the oversight requirements for the public funds that it received came from the Accommodation Tax statute and Proviso 39.2, not from FOIA.

The Supreme Court, in considering the Chamber’s appeal, structured the issue before it as discerning whether the legislature intended the Chamber to be a public body for FOIA purposes due to its receipt of accommodation tax funds. The Court focused on the Accommodation Tax statute and Proviso 39.2 which deal with the expenditure of accommodation taxes and other public funds for tourism marketing and provide for (1) the appointment by the local government of an advisory committee to make recommendations on the expenditure of the revenue from the accommodations tax, (2) the submissions by the local government of certain information to the South Carolina Accommodations Tax Oversight Committee to indicate how funds from the accommodations tax are being spent, (3) the provision of such reports to the Tourism Expenditure Review Committee to ensure that the local government is complying with the statutory expenditure requirements, and (4) the submission of an annual report 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 funds and on the proposed outcome measures.

The Court found that the specificity of such provisions, which were enacted after FOIA was enacted, supported the conclusion that the General Assembly intended these provisions, and not FOIA, to provide the required oversight, transparency and accountability as to the expenditure of accommodation tax funds, and as such, the Chamber was not subject to FOIA.

While the Court has now provided clarity that the receipt of public funds does not automatically transform a private organization into a public body, further rulings will be needed to determine the extent to which a more specific statute must exist in order to provide the necessary accountability for the expenditure of public funds. Without the transparency associated with such a specific statute, private organizations that receive public funds could be treated as public bodies for purposes of FOIA.

About the Authors: Jeremy Cook is co-leader of HSB’s Public Finance practice group and regularly serves as bond counsel, disclosure counsel and underwriter’s counsel in connection with bond issues for state entities, local governments and school districts across South Carolina. He also handles Fee-In-Lieu of Taxes and other economic incentive matters for corporate and county clients throughout South Carolina. Davis Banks is a second year law student at the University of South Carolina School of Law.

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