By Jason Zacher

   Talk of reforming our state’s legal climate rarely excites business owners, but it could be the most important policy issue our state’s business associations tackle each year.

Our state’s legal climate routinely rates in the bottom third of the nation by the U.S. Chamber of Commerce. And for many small businesses, it is not hyperbole to say they are one lawsuit away from being out of business – whether that lawsuit is frivolous or not.

Providing a fair and predictable litigation environment is vital to attracting and growing business throughout South Carolina. We must improve the legal climate in our state and reduce the number and types of frivolous lawsuits brought against our small, medium, and large businesses that provide jobs and the many goods and services for our citizens. Passing meaningful lawsuit abuse reform legislation is vital to accomplishing this goal.

This year, we were successful in passing two major lawsuit abuse reform bills that will pay dividends for our economy for years to come.

Preventing Nuisance Lawsuits

The first was the Manufacturers Liability Protection Act, which gives existing manufacturers protection from “nuisance” suits – providing the business is in compliance with local, state, and federal laws and regulations, and that their permits are current.

In the Upstate, hundreds of manufacturing facilities were built in the wake of the collapse of much of the textile economy in the 1970s and 1980s. And many of these manufacturers built their facilities miles from cities, towns, and existing neighborhoods. Today, the area surrounding Greenville-Spartanburg and Charleston are two of the fastest-growing metro areas in the country. Plants that were way out in the country 10 years ago are quickly being surrounded by subdivisions.

We’ve seen that play out in Duncan around the S.C. Technology and Aviation Center and along Highway 81 in Anderson County. Lexington County has also watched development quickly surround manufacturing. Berkeley County should soon see the same thing as development follows the new Volvo plant.

Senate Majority Leader Shane Massey told the Post & Courier: “(If) somebody moves in beside them, that person can’t sue them and say, ‘We don’t like the noise in your facility,’ or ‘we don’t like the odor,’ when they’ve moved next door. A lot of these facilities locate in rural areas so they’re not disturbing people, and people have come up around them.”

The protections in the legislation also extend to reasonable expansions of existing manufacturing facilities. The Senate amended the bill to define reasonable as having no substantial changes to affect a property owner’s use and enjoyment of property.

The business community supports an individual’s right to relief when he or she has been wronged, but if the facility making the noise, shining the light, or emitting the odor predates the surrounding homeowners, then we believe caveat emptor applies.

Lifting Automatic Stays

The second major legal legislative victory for business was the passage of the ”Automatic Stay” legislation. This legislation will derail a common tactic used by environmental and NIMBY (not in my backyard) groups to delay or kill development projects.

Currently, permitting challenges filed in the Administrative Law Court may put a project on hold indefinitely. Court decisions – even when not intentionally delayed – frequently take months.

As with the nuisance lawsuit bill above, we respect the right to challenge these permits in court, but we don’t believe those challenges should be allowed to go on indefinitely. If there is a legitimate environmental (or other) issue to deny a permit, the plaintiffs should be able to provide reasonable cause that a challenge should go forward.

Environmentalists have used the current automatic stay system in a number of high-profile developments – most notably in the Lowcountry. As we raise our gasoline user fee over the next few years, these challenges are frequently used against DOT.

The legislation approved last month by the General Assembly preserves a citizen’s right to challenge the decisions of the permitting boards, while ensuring businesses know the expectations for the suits and timelines. Any business growing, expanding, or developing new facilities knows that time is money and delays can exponentially raise the cost of a project.

Moving Forward

A state’s legal climate is a key part of site selection these days. It’s almost as important as tax climate and workforce availability.

And site selection has a global scope. Businesses are looking to set up shop in locations with low costs and positive, overall-business climates. Civil justice issues such as low workers’ compensation premiums and predictable, fair litigation environments factor into creating a positive business climate. And states with unpredictable and unstable civil justice systems are left out of the competition. South Carolina is such a state, and its current legal climate for businesses needs to be improved.

The U.S. Chamber of Commerce’s September 2017 assessment of state liability systems ranked South Carolina 34th among all 50 states in the fairness of its litigation environment. Among the 33 states with fairer litigation climates are several of our neighboring states, including North Carolina, Virginia, and Tennessee. (We’re in the bottom third of states with Louisiana, California, and Illinois.)

As mentioned several times above, we must balance the individual’s rights to bring causes of action when warranted against the needs of businesses to create jobs in a stable legal environment.

We have more work to do.

Legal reform is a key part of the advocacy by South Carolina’s local and state chambers of commerce. And even if these issues do not excite our investors, protecting them from that one lawsuit – the one that could close a business and put thousands of people out of work – is something we work on every day.