November 12, 1981

Mr. Eugene Jones 
Mellette County State's Attorney 
White River, South Dakota 57579

Official Opinion No. 81-44

Liability Insurance for Conservation Districts

Dear Mr. Jones:

You have requested an official opinion from this office on two questions involving conservation districts organized pursuant to SDCL 38-7.  SDCL 38-7-2(4) provides: 

'District' or 'conservation district' means a governmental subdivision of  this state, and a public body, corporate and politic, organized in accordance with the provisions of chapter 38-8, . . .

In consideration of the above, you have asked the following questions:

QUESTIONS: 

1.  Does the district need errors and omissions insurance? 

2.  Since the district leases equipment to local operators on a rental basis, is it necessary to have liability insurance?

IN RE QUESTION NO. 1:

SDCL 38-7-2(4) categorizes conservation districts as state agencies.  See also, 1937-38 A.G.R. 744; 1941-42 A.G.R. 223.  It is my understanding that only a very limited number of state agencies are covered by an form of errors and omissions insurance. The doctrine of sovereign immunity as interpreted by South Dakota Supreme Court in Hi-Grade Oil Co., Inc. v. Sommer, 295 N.W.2d (S.D. 1980), appears to provide state agencies protection comparable to what they would secure by purchasing errors and omissions insurance.  It is therefore my opinion that it is unnecessary for a district to purchase errors and omissions insurance.

IN RE QUESTION NO. 2:

Subsequent to the Hi-Grade decision, the Legislature enacted SDCL 21-32-15 and SDCL 21-32-16, which allowed the commissioner of administration to purchase liability insurance for the state, its officers, agents and employees.  This insurance waives sovereign immunity to the extent of the insurance coverage.  Since the current policy covers all state employees, the employees of the conservation district should be covered by this policy. However, when leasing equipment to local operators on a rental basis, caution may dictate requiring the lessee to provide the State with a certificate of insurance showing conservation districts as an additionally named insured.

Insofar as the recent case law and legislation have altered current concepts of sovereign immunity, this opinion modifies Official Opinion No. 79-9.

Respectfully submitted,

Mark V. Meierhenry
Attorney General