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For years, the City of Walhalla’s water system has been plagued with a variety of problems that have resulted in customers receiving brown water, or no water at all. That has resulted in claims and counterclaims and ultimately a lawsuit.

As reported by The Journal/Upstate Today news site, in early June Walhalla city councilman Grant Keehn filed suit against the city. That brings up the question, “Is there something in the water, which is occasionally brown, that causes someone to take such dramatic actions?” Or does Keehn have legitimate grounds for his lawsuit?

According to the lawsuit, the city has been moving money from the water enterprise fund to the general fund, where it is used to pay a variety of expenses completely unrelated to the water system- which appears to be a violation of state law. The city obviously disagreed and according The Journal/Upstate Today’s September 27^th report, “The city further said Keehn’s filing effectively asked the court to step into the role of city council by rewriting Walhalla’s budget. That, attorneys argued, was a ‘nonjusticiable political question’. (You can read the full report here.)

That issue notwithstanding, it seems as though there hasn’t been sufficient money in the water system enterprise fund to pay for repairs needed to properly maintain the city’s 100+ year-old system which has suffered a number of problems and failures in recent years. (The specifics of enterprise fund operation can be found here.)

As an example, on August 2^nd of this year, The Journal/Upstate Today reported, “All Walhalla water customers are under a boil water advisory through at least today.” According to city officials, the advisory was issued in response to a water main leak which was being repaired. They went on to state, “This repair, combined with high water use, generated lower water levels in area tanks. This resulted in reduced water pressures. The repairs are currently concluding and the City expects to have water pressures restored overnight.

Some customers may experience varying degrees of loss in water pressure, up to a temporary loss of water. If you have running water, you are urged to conserve it as the city’s system gets back up to full pressure.”

Boil water advisories and lack of water are nothing new for Wahalla water system customers. The Journal /Upstate Today ran news stories detailing boil water advisories on April 10, 2025, Jan. 19, 2024, Sept. 8, 2021, July 12, 2023, July 20, 2022, (2 separate advisories) and April 2, 2018. It also reported on a water outage on June 19, 2024.

Low water pressure or no water at all aren’t the only problems Walhalla water system customers have had to endure. According to former city councilman Tjay Bagwell, “For as long as I can remember, water system customers have had to occasionally contend with brown water.”

One such incident was reported by The Journal/Upstate Today on May 27, 2021. The headline stated, “Walhalla receives complaints over brown water from hydrant flushing” and the article stated, “Walhalla officials received an unusual number of complaints and concerns Wednesday morning about brown, dingy water throughout the city’s water system.” The article went on to quote the interim city administrator as saying that the brown water was an unintended consequence from flushing fire hydrants in the city.

Some of the water system problems were caused by contractors cutting water lines, but the core issue seems to be the city’s aging water system and lack of adequate maintenance. Brown water can be the result of rust particles that enter the system, or by certain chemicals in the water.

Regardless of the cause, Walhalla’s water system problems are widely recognized, as indicated by The Journal/Upstate Today’s Editor’s Pick article which was headlined, “Walhalla candidates talk water crisis”. The article presented the opinions presented during a September 29, 2025 candidate forum. Four of the eight candidates in attendance opined that the transfer of money from the water system enterprise fund to the general fund left the water department with insufficient funds to operate efficiently and make needed repairs. Had Keehn’s lawsuit been successful, it would have forced the city to return the funds that were transferred out of the water system enterprise fund into the general fund.

On September 26^th, Judge William C McMaster III dismissed Keehn’s case without prejudice (which means he can file it again), stating that Keehn’s complaint and request for an injunction did not meet the legal standards required.

That is essentially lawyerspeak for, “you didn’t dot all your Is and cross all your Ts properly. If you like, you can try again.” The fact that the case was dismissed without prejudice is another indication that it had merit, but was not filed properly. Had Keehn’s case had no merit, it is likely it would have been dismissed with prejudice.

And, from a non-lawyer’s reading of state law, (we are not attorneys and are simply providing publicly available information) it appears that Keehn’s case has merit. According to Title 6, Chapter 1, Section 6-1-330 of the South Carolina Code of Laws, “B) The revenue derived from a service or user fee imposed to finance the provision of public services must be used to pay costs related to the provision of the service or program for which the fee was paid. If the revenue generated by a fee is five percent or more of the imposing entity’s prior fiscal year’s total budget, the proceeds of the fee must be kept in a separate and segregated fund from the general fund of the imposing governmental entity.”

The section is very clear in that it states, “revenue derived from a service or user fee imposed to finance the provision of public services must be used to pay costs related to the provision of the service or program for which the fee was paid.” That is, user fees imposed to finance the public service of supplying water must be used to pay for the costs related to supplying water.

There is no ambiguity in that statement, nor does there appear to be any ambiguity in the decision rendered by the South Carolina Supreme Court case, Azar versus City of Columbia which stated, “However, absent the legislatively sanctioned process and progression that permit the expenditure of user fees as “surplus revenues,” the law requires some nexus (connection or link) between the City’s provision of water and sewer services and the underlying purpose of each expenditure or transfer of water and sewer funds. Simply put, the statutes do not allow these revenues to be treated as a slush fund.”

In spite of that, for the past few years, the city’s independent financial auditors (Payne, White & Schmutz of Seneca, McKinley Cooper & Co of Greenville and Love Bailey of Laurens) included the following note (page 31) on their audit statement, “Funds may be transferred to the General Fund from the Water and Sewer Fund in lieu of property taxes and franchise fees (that would be collected if a private utility company provided water and sewer services), and from the Water Fund to the General Fund to support General Fund operations. The Water Fund also may funds (sic) to the Sewer Fund to support Sewer Fund operations.”

Although that statement appears to be clearly in conflict with Section 6-1-330 of the state code of laws, Walhalla mayor Tim Hall disagrees. In response to an email we sent, Hall said, “In any case, I don’t believe that the state Supreme Court found that such a transfer was a direct violation of state law. You can read more about that here: https://law.justia.com/cases/south-carolina/supreme-court/2015/27573.html.”

Oddly enough, that is the same case decision from which the “slush fund” quote above was taken.

As previously noted, we are not attorneys, but it seems that the core issue is whether the city has violated section 6-1-330 of the state’s Code of Laws. Obviously, that can only be legally determined by the courts.