November 17, 1982

Mr. Al A. Asher 
Administrator 
South Dakota Retirement System 
216 East Capitol 
Pierre, South Dakota 57501

Official Opinion No. 82-62

Status of Water Use District under South Dakota Retirement System

Dear Mr. Asher:

You have requested an opinion from this office in regard to the following factual situation:

FACTS: 

Water user districts may be formed pursuant to SDCL 46-16.  Such a district exists for the purpose of constructing, maintaining and operating a rural water system.  Rural water systems also may be structured as cooperatives or as not-for-profit corporations.  Of the many rural water systems organized in the state, only four are water user districts.

SDCL 3-12-47(40) defines political subdivision as follows: 

'Political subdivision' includes but is not limited to municipalities, school districts, counties, chartered governmental units, any public corporation or entity, and any special districts created for any governmental function.  (Emphasis supplied.)

SDCL 3-12-66 reads as follows: 

No political subdivision or public corporation, including municipalities, counties and chartered governmental units, may establish any retirement plan unless such political subdivision or public corporation becomes a participating unit of the system created in this chapter.

Based on the above facts, you have asked the following questions:

QUESTIONS: 

1.  Whether or not rural water systems organized as water user districts under SDCL 46-16 are 'political subdivisions' as defined in SDCL 3-12-47(40)? 

2.  Whether rural water systems organized as water user districts under SDCL 46-16 are subject to SDCL 3-12-66.

IN RE QUESTION NO. 1:

Since the context of your letter indicates that the main question you are asking is whether water user districts are subject to SDCL 3-12-66 and since that question may be answered without a determination of whether or not water user districts are political subdivisions, this question need not be answered here.

IN RE QUESTION NO. 2:

The formation of a water user district creates a public corporation of the State of South Dakota.  SDCL §  46-16-16.  Since SDCL 3-12-66 specifically includes public corporation in its provision, the rural water systems mentioned in your letter are subject to becoming a participating unit of the South Dakota  Retirement System if they establish any retirement plan.

It is true that there are numerous rural water systems formed as not-for- profit corporations whose functions are the same as some water user districts. It is also true that these rural water systems are not subject to SDCL § 3-12-66.  The fact that these not-for-profit corporations are not subject to participation in the South Dakota Retirement System while water user districts which exercise identical functions are does not create an anomally.  Those who decided to form a rural water system had a choice of how to set up their organization.  There are certain advantages and disadvantages for forming a water user district and other advantages and disadvantages for forming a not- for-profit corporation.  Once the decision is made, the organization has to live under all of the laws which apply to the particular type of organization formed.

Participation in the South Dakota Retirement System is one of the laws to which public corporations are subject.  Presumably, SDCL 3-12-66 was one of the factors considered by those who established the rural water system. Because the plain language of 3-12-66 includes public corporations and because water user districts are public corporations, the answer to your question is YES, water user districts are subject to SDCL 3-12-66.

Respectfully submitted,

Mark V. Meierhenry
Attorney General