Vance L. Brabham

A Zoning Battle Ignites in Fort Mill over Silfab Solar

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There is yet another hot button zoning conflict in the Palmetto state that has attracted much public attention in Fort Mill, SC. It has spawned several lawsuits, an Attorney General inquiry, and legislators filing bills up at the State House that certainly would have major impact on S.C. dirt lawyers if they were to pass. 

The controversy centers around Silfab Solar’s ongoing construction of a solar panel manufacturing factory near Fort Mill, SC. The company is renovating a warehouse in an existing industrial park there that is jointly operated by York and Chester counties. The industrial park is located near several residential developments, but most notable in recent press coverage is the elementary school located on the adjacent parcel to the proposed Silfab site.  

In 2022, in connection with recruitment by the S.C. Department of Commerce, Silfab requested zoning verification from York County that its proposed operation would be in compliance with local zoning ordinances. The York County zoning staff ultimately determined that the manufacture of solar panels fit within the permitted use of “computer and electronic productions manufacturing” which was permitted in the “Light Industrial” zoning classification assigned to the industrial park. Notably, there was no appeal of the zoning verification.

With the zoning verification in hand, Silfab decided to move forward with the project and entered into a fee in lieu of tax (FILOT) Agreement with York County. The County passed an ordinance approving the FILOT agreement in September 2023, in effect ratifying the proposed project at its proposed location. Silfab thereafter obtained building and environmental permits and started construction at the site

But at some point in the process, the public became aware of the project and that hazardous gases and chemicals would be used as part of the manufacturing process of the panels. As concerns grew, a neighboring landowner filed a request for a zoning interpretation inquiring whether solar panel manufacturing was actually a permissible use under the zoning ordinance. In 2024, the York County Board of Zoning Appeals (BZA) found that solar panel manufacture is not permitted within the Light Industrial zoning classification, which effectively overruled the prior determination of the zoning staff. 

Silfab appealed the BZA ruling but construction has continued under the existing zoning verification and permits. In response to growing public outcry, York County issued statements that its interpretation of state law and its ordinance is that BZA zoning interpretations only apply prospectively and that the County does not have authority to revoke previously given permits or to issue a stop work order.

But the controversy really expanded into an issue of statewide concern in March when Silfab reported two separate chemical leaks within a three day period. While the leaks were contained and were reportedly of no danger to the outside community, DHEC ordered Silfab to pause its use of previously permitted chemicals pending a review. Silfab has since entered into an agreement with DHEC not to bring any more dangerous chemicals into its site or proceed with manufacturing until the investigation is completed.

The leaks also drew the attention of Attorney General Alan Wilson who issued inquiries to York County concerning the propriety of the zoning approval and to Silfab concerning the cause and extend of the leaks. The gubernatorial candidate appears to be closely monitoring the situation as events unfold.

The South Carolina General Assembly is also involved in the debate. Local legislators have introduced proposed bills in the House and Senate that would amend the Code to give Counties the power to revoke permits and stop work on projects when the project is found to be in violation of zoning ordinances. 

While these bills are unlikely to pass before the end of the current session, there have been a number of other bills advanced in the State House in recent years that have sought to give local authorities the ability to have something of a “do-over” concerning prior approvals of development. Often these bills have been provoked by growing public outrage over major projects that were passed by local authorities without much initial fanfare.  

While the Court’s pending review of the BZA appeal may result in restoring the original zoning interpretation and making much of the present controversy moot, there is always the chance of additional appeals. Further, with the national debate over data centers expanding into South Carolina in recent months the salience of the Silfab controversy may impact future debates concerning whether government entities should be able to change their mind about prior zoning decisions even after property owner’s have formed plans and made investments relying upon them. 

Hilton Head Dredging and the Question of Public Benefit

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Now that Rory McElroy’s repeat victory at the Masters is in the books[1], the golfing world will turn its attention to scenic Hilton Head Island. It is there that the Harbour Town Golf Links at Sea Pines Resort will host the 58th edition of the RBC Heritage golf tournament later this week. For a long time, the Heritage was the only permanent PGA event in South Carolina[2] and quite a few South Carolina residents and golf fanatics from across the world make the trek down to Sea Pines to take in the action each year.  

That makes today’s blog a particularly appropriate time to discuss the ongoing legal battle over public funding for the dredging of the waterways around Sea Pines Resort, which made news again this month. If you have ever worked or vacationed around Hilton Head Island, you are probably aware that boating culture is a significant part of overall appeal of the Island and it also figures nicely into the presentation of the televised golf tournament.

The controversy is somewhat simple. The physics of the waterways around the Harbour Town Yacht Basin and nearby Braddock Cove Creek are such that periodic dredging of the waters is necessary to allow navigation of the waters in all tides.  

For a time, the cost of the dredging was born by the South Island Dredging Association (SIDA), a coalition of various Sea Pines owners’ associations, private slip owners, and marinas located in or near the local waterways. However, recent rounds of dredgings have become controversial both for the impact on the surrounding Calibogue Sound and the Town of Hilton Head’s decision in the last few rounds to start allocating public funds towards the project.

In 2022, resident Ryan McAvoy filed suit seeking to enjoin the Town from contributing $600,000 in public funds towards the next round of dredging. McAvoy claims that the Town’s allocation of the funds to the project violated the South Carolina Constitution because it allocated public funds primarily for the benefit of private gated communities, private owners of homes and boating slips, and private marinas from which the public is barred.

While there is no doubt that that the waterways in question are contiguous to the private communities contained within Sea Pines and contain private marinas that are restricted from public use, the Town of Hilton Head argues the waterways in question are navigable waters of the United States that are themselves open to the public and that the Town and its residents benefit from the use of the improved waterways and from the resulting tourism generated from the boating community being able to use the waters to access public areas.

In 2024, a Circuit Court judge granted the Town’s motion to dismiss McAvoy’s lawsuit on the ground that the waters to be dredged are public waterways. However, the breaking news from last week is that the Court of Appeals reversed the decision and ordered a new trial finding that the Circuit Court had mistakenly focused its decision on whether the waterways were public vs private. Instead, the trial court should have determined whether there is a public benefit to the Town’s action. The Court of Appeals found sufficient evidence in the record supporting McAvoy’s argument that the dredging primarily accrued to the benefit of private interests for the matter to continue towards a full trial. 

This recent case is just the latest example of the controversy that can come from using public funds in support of what some in the community may see as providing limited or tangential benefit to the public at large. The balance between determining private vs public benefit can often be tricky to quantify. Similar arguments (and lawsuits) have erupted in the past over the public benefit of beach renourishment, government funding of infrastructure for private businesses, and is not so far removed from past controversies concerning government use of the power of eminent domain to further private redevelopment. Whenever the public perceives that the beneficiary of government action is a private entity or a group of private parties, you can bet that there will be drama and oftentimes litigation.

While we will have to wait and see the ultimate outcome for the boaters of Hilton Head, real estate professionals and developers alike must consider the possible implications of public opposition whenever it brings in the government for assistance in these kinds of projects.

[1] My children’s rooting interests died with Scottie Scheffler’s parade of “near miss” pars that fell just a swing stroke short. It has been an up and down month of sports fandom for our household. 

[2] My colleague David Hicks reminds me that the third annual Myrtle Beach Classic will tee off in May.

Corporate Transparency Act Whack-a-Mole

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I have written many words about the Beneficial Ownership Information (BOI) reporting requirement of the Corporate Transparency Act (CTA) over the last couple of years and much of my writing has been rendered obsolete by events. So, it came as no surprise on March 21, 2025, when the world changed again, but even I wouldn’t have thought they’d have done the CTA like they done.    

If you want to get to the meat of the latest development, you can skip ahead to the end of this lengthy entry, but for those of you that need a refresher or those that just want to watch me work through my feelings a bit, the next few paragraphs are for you. 

Readers of this blog probably know by now that Congress passed the CTA some years ago for the stated purpose of assisting law enforcement agencies in preventing bad guys (foreign and domestic) from laundering money and hiding assets in the United States using shell companies. In its wisdom, Congress decreed that almost any entity registered with a Secretary of State’s office must file a report detailing the significant stakeholders in the entity and where they might be found.

Under the Biden Administration, the Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Department of the Treasury, came up with a framework of rules, processes, and penalties covering the duty of entities to report BOI. New companies would have 30 days to report the required BOI information to FinCEN; all existing entities would have to make their report by January 1, 2025. 

However, the whole thing did not go off as smoothly as planned for FinCEN.  Across the country (but most especially in Texas) plaintiffs filed lawsuits challenging the reporting requirement as unconstitutional or at least very inconvenient and burdensome. Before FinCEN could even think about imposing its first fine, a Texas federal court entered an injunction enjoining FinCEN from enforcing the BOI reporting requirement while the parties litigated the constitutionality of the Rule.  Game Off!  

The Government appealed this ruling to the Federal Court of Appeals for the Fifth Circuit, which initially removed the injunction. Game On! 

But, just a few days later, the same Court of Appeals, reinstated the injunction.  Game Off!  

The Government (by this time the Trump Administration) remained dogged in its defense of the reporting requirements and appealed the matter to our highest court. There, the United States Supreme Court ultimately sided with the Government and rescinded the injunction in the first Texas case. Game On!  However, by this time a second Texas federal district court had entered its own nationwide injunction against enforcement of the Act. Game Off!  

More time passed, additional words were written, and additional hearings were held, but eventually this other Texas federal district court decided that despite the impassioned argument of the Plaintiffs it did not have authority to ignore the persuasive authority of the Supreme Court’s previous ruling in a nearly identical case. Subsequently, the Texas court (I would like to imagine) somewhat sulkily rescinded its injunction. Game On! Likely a joyous party continued into the wee hours in the FinCEN offices the day it announced that BOI reporting was back, and that the deadline for reporting would for certain be March 21, 2025.  

However, this is the year 2025, and this the Corporate Transparency Act we are talking about, so it was not so simple for the good folks at FinCEN. On February 21, 2025, FinCEN issued a press release indicating that despite the Government’s vigorous effort to defend the Rule all the way the Supreme Court, that it did not plan to enforce the Rule. The press release indicated that FinCEN planned to issue an Interim Rule before the March deadline, but the FinCEN website still promised fines and penalties for anyone failing to comply. Game Off?

On March 21st, FinCEN issued an Interim Rule that dramatically changed the scope and application of the Rule. First, the Interim Rule specifically exempts United States entities from BOI reporting requirements.  Second, the Interim Rule provides that foreign entities registered to do business in the United States need not report any information about its beneficial owners that are United States individuals. Third, the reporting deadline for foreign entities to file BOI reports was extended to 30 days from the effective date of the Interim Rule.

The Interim Rule certainly reduces the theoretical usefulness of BOI reporting to law enforcement as FinCEN’s database will now only contain information about foreign entities that register in the United States and their foreign beneficial owners. Criminals inclined to set up shell companies to hide their illicit assets probably would be well advised to use entities formed in the United States if that isn’t what they were doing before. Perhaps, the Interim Rule is arguably not what Congress intended, but there is a lot of that going around.

Practically, the reduction in the scope of the Rule will diminish the relevance of the CTA to real estate lawyers. Those attorneys that represent foreign entities doing business in the United States will need to be prepared to advise clients of the reporting requirements that go along with registering their foreign entity in the U.S., but those attorneys representing entities formed in the United States can likely breathe a long sigh of relief.  At least for the moment.