North Myrtle Beach, December 26, 2025
The U.S. Fourth Circuit Court of Appeals has affirmed North Myrtle Beach’s power to regulate beach equipment rentals in a ruling favoring local governance. The city’s decision stemmed from a dispute with Cherry Grove Beach Gear, LLC, which alleged an unlawful monopoly. The court’s decision underscores the importance of local regulations in balancing economic activity with community safety and standards. This victory emphasizes the municipality’s role in maintaining public resources while ensuring a stable environment for local businesses in the vibrant tourist destination.
North Myrtle Beach Upholds Local Authority in Key Beach Rental Appeal, Affirming Community Oversight and Economic Stability
In a significant development for local governance and beachside commerce, the City of North Myrtle Beach recently secured a victory in the U.S. Fourth Circuit Court of Appeals. This ruling affirms the city’s authority to regulate beach equipment rentals, a decision with wide-ranging implications for how local communities balance economic activity with public safety and community standards. The case, involving a claim of “unlawful monopoly” by a private beach rental company, underscores the ongoing dialogue about the role of regulation in fostering a robust yet orderly marketplace in popular tourist destinations like Myrtle Beach SC.
For South Carolina entrepreneurs and local businesses operating in dynamic coastal economies, clear regulatory frameworks are essential. This recent legal outcome provides further clarity on the scope of municipal powers to manage public spaces, a critical component of maintaining the unique character and visitor experience of our beloved beach communities. It reflects a dedication to local decision-making, aiming to create environments where both residents and visitors can thrive.
The Heart of the Dispute: Local Ordinance vs. Business Claims
The legal battle originated when Cherry Grove Beach Gear, LLC, a company operated by Derek and Jacqueline Calhoun, began providing beach equipment rentals and setup services on North Myrtle Beach’s public beaches starting in 2020. City officials informed the company that its operations violated existing local ordinances. In response to continued operations, the City of North Myrtle Beach enacted a new ordinance in June 2022. This ordinance explicitly restricted the professional setup of beach equipment on city beaches to city officials only.
Cherry Grove Beach Gear, LLC persisted with its services despite warnings and subsequently received multiple citations for noncompliance. The company then filed a lawsuit, alleging that the City of North Myrtle Beach had unlawfully established a monopoly over beach equipment rentals and setup services, thereby violating federal antitrust law. The company contended that the city’s actions were an “anticompetitive, profit-motivated scheme.”
North Myrtle Beach’s Defense: Public Safety and State Authority
In its defense, the City of North Myrtle Beach asserted that its ordinance served a crucial public safety purpose, aiming to protect beachgoers from unsafe equipment and to help fund the salaries of certified lifeguards. The city also maintained that it was immune from antitrust liability under the legal doctrine of “state action immunity,” which shields municipalities when they act pursuant to a clearly articulated and affirmatively expressed state policy.
City officials cited South Carolina law, which grants municipalities the authority to “grant franchises and make charges for use of the public beaches.” This statutory backing was central to the city’s argument that its actions were a legitimate exercise of local regulatory power designed to manage public resources effectively and ensure visitor safety, which ultimately contributes to a stable environment for Myrtle Beach small business tourism.
A Legal Journey: District Court to Appeals
The case first proceeded to the United States District Court for the District of South Carolina. The district court sided with the City of North Myrtle Beach, granting summary judgment in its favor. The court determined that the municipal ordinances qualified for state action immunity from federal antitrust liability.
Cherry Grove Beach Gear, LLC subsequently appealed this decision to the United States Court of Appeals for the Fourth Circuit. The company argued that the city was acting not merely as a regulator but as an active participant in the market, and thus should not be afforded state action immunity.
Fourth Circuit Affirms Local Autonomy
In a significant ruling, the Fourth Circuit Court of Appeals reviewed the district court’s decision and affirmed it. The appellate court held that the South Carolina statutes in question clearly articulated and affirmatively expressed a state policy that permits municipalities to create exclusive franchises for beach equipment rentals and setup. Furthermore, the court concluded that the anticompetitive effects observed were a foreseeable result of this legislative authorization. The Fourth Circuit also rejected Cherry Grove Beach Gear, LLC’s argument for a “market participant exception” to state action immunity.
This decision reinforces the principle that local governments, when acting pursuant to state-sanctioned authority, have broad powers to regulate aspects of their economy, even if those regulations limit competition. For South Carolina entrepreneurs, this outcome clarifies the legal landscape, emphasizing the importance of understanding and operating within established local regulatory frameworks.
Implications for Economic Growth and Regulatory Balance
The Fourth Circuit’s decision in favor of North Myrtle Beach highlights the delicate balance local governments must strike between fostering entrepreneurial innovation and ensuring public order and safety. While some might view such exclusive arrangements as restrictive to the spirit of free-market competition, the court’s affirmation of “state action immunity” underscores the judicial recognition of a city’s legitimate governmental interests. This can be seen as a victory for communities aiming to maintain control over their public assets and services, ensuring that economic growth aligns with community well-being.
The broader context of short-term rental regulations across South Carolina further illustrates this ongoing discussion. While South Carolina maintains a framework that empowers local governments to regulate short-term rentals, state-level requirements for insurance, tax compliance, and business registration also apply. Proposed statewide legislation, such as Senate Bill S.442 in the 2025-2026 legislative session, aims to clarify the roles of municipalities and counties in regulating short-term rentals, affirming local authority while introducing statewide guidelines for aspects like zoning, permitting, and occupancy.
This evolving regulatory environment underscores the resilience of the Myrtle Beach SC business community and the importance of adapting to local conditions. As cities continue to refine their approaches, the focus remains on creating a framework that supports economic activity while addressing community needs and promoting long-term sustainability.
Conclusion
The recent ruling by the U.S. Fourth Circuit Court of Appeals in favor of the City of North Myrtle Beach provides significant legal clarity regarding a municipality’s power to regulate beach equipment rentals. By affirming the city’s state action immunity, the court has underscored the authority of local governments to implement policies deemed essential for public safety and the effective management of public spaces. This outcome, while defining the operational boundaries for some businesses, simultaneously establishes a predictable regulatory environment that can ultimately contribute to stable economic growth in the region. We encourage our readers to stay engaged with local economic discussions and support the South Carolina entrepreneurs and Myrtle Beach small business owners who navigate this dynamic landscape, contributing to the vibrant economic tapestry of our community.
Frequently Asked Questions (FAQ)
- What was the main legal dispute in the North Myrtle Beach case?
- The main legal dispute involved Cherry Grove Beach Gear, LLC accusing the City of North Myrtle Beach of creating an “unlawful monopoly” over beach equipment rentals and setup services, which the company alleged violated federal antitrust law.
- Which court issued the final appeal decision?
- The United States Court of Appeals for the Fourth Circuit issued the final appeal decision.
- What was the Fourth Circuit’s ruling?
- The Fourth Circuit affirmed the district court’s judgment, holding that South Carolina statutes clearly articulated state policy allowing municipalities to create exclusive franchises for beach equipment rentals and setup, and that the anticompetitive effects were a foreseeable result of this legislative authorization.
- What was the City of North Myrtle Beach’s justification for its ordinance?
- The City of North Myrtle Beach justified its ordinance by stating it served a public safety purpose, protecting beachgoers from unsafe umbrellas, and helping to pay for certified lifeguards.
- What legal principle did the city rely on for immunity?
- The city relied on the legal principle of “state action immunity” to claim protection from federal antitrust liability.
- Does South Carolina have a statewide policy for short-term rental regulation?
- South Carolina does not enforce a single statewide policy for short-term rentals; instead, it empowers local governments to regulate them while also enforcing state-level requirements for insurance, tax compliance, and business registration.
Key Features of the North Myrtle Beach Beach Rental Case
| Feature | Description | Scope |
|---|---|---|
| City Involved | North Myrtle Beach | Local |
| Company Involved | Cherry Grove Beach Gear, LLC | Local |
| Nature of Claim | Unlawful monopoly over beach equipment rentals and setup, violating federal antitrust law | Federal Law |
| City’s Ordinance | Restricted professional setup of beach equipment on public beaches to city officials only (enacted June 2022) | Local |
| City’s Justification | Public safety (e.g., safe umbrellas) and funding for lifeguards | Local |
| Legal Defense Strategy | State action immunity, citing South Carolina statutes allowing municipalities to grant franchises and regulate public beaches | State-level / Federal Law |
| District Court Ruling | Granted summary judgment in favor of North Myrtle Beach, applying state action immunity | Federal Court |
| Appellate Court Ruling | Fourth Circuit affirmed the district court’s judgment | Federal Court |
| Fourth Circuit’s Reasoning | South Carolina statutes clearly articulated state policy allowing exclusive franchises for beach equipment rentals and setup; anticompetitive effects were foreseeable | State-level / Federal Law |
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Author: STAFF HERE MYRTLE BEACH
The HERE Myrtle Beach Staff Writers are a collaborative team of journalists, editors, and local contributors passionate about delivering accurate, timely information to the Myrtle Beach community. As part of the HEREcity.com Network, which powers over 100 U.S. city sites including HEREcolumbia.com, our staff draws on collective experience in South Carolina journalism to cover everything from business sales and real estate developments to dining deals and community initiatives. Our Expertise and Background Local Roots in Myrtle Beach Our team includes lifelong Myrtle Beach residents and SC natives with deep knowledge of the area’s history, economy, and culture. We’ve covered key events like the recent developments along the Grand Strand, Myrtle Beach’s tourism and hospitality industry, and growth in local education sectors (e.g., Coastal Carolina University programs). Collective Experience With over 50 combined years in journalism, our staff has backgrounds in print, digital media, and community reporting. We prioritize fact-based stories, drawing from sources like the Myrtle Beach Area Chamber of Commerce, city government records, and on-the-ground interviews. Commitment to Quality Every article is a group effort, involving research, editing, and verification to ensure reliability. We adhere to journalistic standards, citing credible sources and updating content as new details emerge.
