Does an Arkansas multi-county planning and development district get state tort immunity when it temporarily takes title to property for an EPA cleanup grant?
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This page answers the general question as of 2016. Ezel answers yours: what it means for your facts, under current Arkansas law, with citations.
Plain-English summary
State Senator Bruce Maloch asked whether the Southwest Arkansas Planning and Development District ("the District"), a nonprofit representing 12 counties and 65 cities, needed liability insurance or had tort immunity in connection with an unusual project. Howard County was pursuing an EPA Cleanup Grant for a former hospital. EPA required ownership of the property to transfer away from Howard County while the grant was in effect (a cleanup that could take one to five years). The District proposed to take title for that period and return the property to the county after EPA approved the cleanup.
Attorney General Leslie Rutledge gave a two-part answer. She declined to address whether the District "needs" liability insurance, since that decision turned on more than just tort immunity and was a matter for the District's own counsel. On the substantive question of immunity, she concluded the District likely qualified as a "political subdivision" under Ark. Code Ann. § 21-9-301 in this specific context, which would give it state-law tort immunity (except for intentional torts) coextensive with the immunity counties and cities enjoy. The opinion noted the issue would be novel for the Arkansas Supreme Court and that the test is fact-specific.
Currency note
This opinion was issued in 2016. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
How the AG reached "political subdivision"
The General Assembly has declared that all counties, municipal corporations, school districts, public charter schools, special improvement districts, and "all other political subdivisions of the state" and any of their boards, commissions, or agencies are immune from tort liability except to the extent of liability insurance coverage. Ark. Code Ann. § 21-9-301. The immunity does not cover intentional torts (Battle v. Harris).
The catch with the District: "political subdivision" is defined in many places throughout the Code, and Arkansas appellate courts had not addressed whether the eight regional multi-county planning and development districts established under Ark. Code Ann. § 14-166-201 et seq. counted. The AG drew on three sources to fill that gap:
The Arkansas Supreme Court's general definition. A political subdivision is one that embraces a defined territory and its inhabitants, is organized for public advantage rather than private benefit, exercises governmental functions, and is subject to some degree of local democratic control (Dermott Spec. Sch. Dist. v. Johnson).
A federal district court's analysis of a sibling planning and development district. In Gilbreath v. East Arkansas Planning & Development District, a federal court applying Arkansas law concluded that a planning and development district had "become so entwined with governmental policies and so impregnated with a governmental character" as to subject its conduct to the same institutional limitations as state action. The court relied on the district's statutory creation, significant state financial support, delegation of public-service planning and delivery functions, cooperative work with state agencies, and a board majority composed of local elected officials.
The specific context of the EPA cleanup. EPA regulations required ownership to change. Without a transfer, the property would remain with Howard County (which clearly has tort immunity). The District's role was to function as a temporary public-purpose owner.
Applying all three factors, the AG concluded a reviewing court would likely find the District "embrac[ed] a certain territory and its inhabitants, organized for the public advantage" in a way that made it a political subdivision in this instance. That conclusion is fact-specific and the AG was careful to flag that she could not predict the court's holding with certainty.
What the opinion explicitly does not decide
Whether the District needs liability insurance. The AG flagged that "need" is a business judgment, not a legal one. Even with tort immunity for state-law claims, the District might want insurance to cover federal claims (e.g., 42 U.S.C. § 1983 actions, where qualified immunity rather than statutory immunity applies) or environmental liability arising from the cleanup itself. She left that to the District's counsel.
Whether the District is a political subdivision in every other context. Ark. Code Ann. § 21-9-303 separately requires all political subdivisions to carry minimum motor vehicle liability insurance under the Motor Vehicle Safety Responsibility Act. The AG noted this but did not resolve how it applied to the District.
Federal qualified immunity. Federal law applies a different doctrine. Under Anderson v. Creighton and Saucier v. Katz, individuals are immune from § 1983 liability if their actions were taken in good faith and did not violate clearly established constitutional rights. The AG noted federal immunity is independent from Arkansas's statutory immunity and would have to be considered separately.
Common questions
Why does it matter whether the District is a political subdivision?
Without political-subdivision status, the District would face the same tort exposure as any private nonprofit corporation acting as a property owner during a long cleanup. The owner of contaminated property is a natural target for personal injury and property damage claims arising from the property's condition. Tort immunity blunts that risk significantly.
Could the EPA grant condition itself be a problem?
The AG did not address that. EPA cleanup grants typically come with their own substantive requirements about how the property must be managed and remediated, and those federal obligations are independent of state-law tort immunity.
What is special about the planning and development districts that makes them border-line entities?
They are nonprofit corporations organized under state law but funded substantially by federal and state public dollars, governed by boards composed largely of elected local officials, and tasked with delivering public services. They straddle the line between private nonprofits and units of local government. The Gilbreath analysis is what tips them toward "political subdivision" status when they act in their governmental capacity.
Source
Original opinion text
Opinion No. 2015-116
February 8, 2016
STATE OF ARKANSAS
ATTORNEY GENERAL
LESLIE RUTLEDGE
The Honorable Bruce Maloch
State Senator
650 Columbia Road 258
Magnolia, AR 71753
Dear Senator Maloch:
I am writing in response to your request for an opinion concerning tort immunity for a planning and development district. Specifically, your request states that the Southwest Arkansas Planning and Development District ("the District"), a non-profit representing 12 counties and 65 cities in Southwest Arkansas, is applying for a U.S. Environmental Protection Agency Cleanup Grant for Howard County's former hospital. One of the EPA's requirements for the grant is that ownership must transfer from Howard County to another party while the grant is in effect. You further state that the cleanup could take from one to five years. The District would like to take ownership of the property during the cleanup process, and then return the property to Howard County once the EPA has approved the cleanup.
With the foregoing background in mind, you ask: Would [the District] need to have liability insurance coverage for this endeavor or will they have tort immunity?
RESPONSE
The wording of this question suggests that the District's "need" for liability insurance for this project will necessarily be determined by the answer to the question whether the District has tort immunity. While tort immunity may certainly have some bearing on the District's decision to carry liability coverage, I do not see a necessary connection between the two issues. There may be other factors besides tort immunity for the District to consider when assessing its need for liability insurance coverage.
I cannot opine regarding the District's need for insurance as that is a matter to be addressed by the District in consultation with its own legal counsel. But I can address the question whether the District qualifies in this instance for tort immunity that is afforded political subdivisions pursuant to Ark. Code Ann. § 21-9-301. In my opinion, the District in all likelihood qualifies for this statutory immunity.
DISCUSSION
The General Assembly has clearly stated the express public policy of immunizing the State's political subdivisions from tort liability and damages:
(a) It is declared to be the public policy of the State of Arkansas that all counties, municipal corporations, school districts, public charter schools, special improvement districts, and all other political subdivisions of the state and any of their boards, commissions, agencies, authorities, or other governing bodies shall be immune from liability and from suit for damages except to the extent that they may be covered by liability insurance.
(b) No tort action shall lie against any such political subdivision because of the acts of its agents and employees.
The legislature has defined the term "political subdivision" in various ways, depending on the context of particular legislation ranging from such topics as law enforcement officer training and standards to matters of public finance. In two instances, the term has even been defined to include public corporations.
In addition, the Arkansas Supreme Court has indicated that territorial boundaries should be considered when adopting a general definition of the term "political subdivision":
[P]olitical subdivisions have been defined as [embracing] a certain territory and its inhabitants, organized for the public advantage, and not in the interest of particular individuals or classes; that their chief design is the exercise of governmental functions; and that to the electors residing within each is, to some extent, committed the power of local government ....
Neither Arkansas appellate court has specifically addressed whether the eight regional multi-county planning and development districts established under Ark. Code Ann. § 14-166-201 et seq. are "political subdivisions of the State." But a federal district court, interpreting Arkansas law, stated that one such district had "become so entwined with governmental policies" as to infuse it with "a governmental character."
Where ... a nonprofit corporation has been created by virtue of state law, the state government has provided significant financial support for the activities of the corporation, the state has delegated functions relating to the planning and delivery of public services to the corporation, the corporation has engaged in activities normally performed by governmental agencies, the corporation has worked in cooperation with various agencies or instrumentalities of state government and the supervision of the affairs of the corporation has been vested in a board of directors, the majority of which are local elected officials, the conduct of the "private" nonprofit corporation has become so entwined with governmental policies and so impregnated with a governmental character as to subject the conduct of the corporation to the institutional limitations placed upon state action.
It is my understanding that the District is one of the eight geographic districts in the State recognized in section 14-166-202. I further understand that the District provides a range of services to several municipalities and counties in Southwest Arkansas, among which are securing and administering federal, state, and private grants for feasible activities for the counties and cities it serves. The District is governed by an Executive Board of Directors composed of elected officials from the counties and cities within the District.
Furthermore, in this case and based on the representations in your opinion request, the EPA regulations require that the former hospital change ownership before the cleanup grant can be given. Without such ownership change, the property would continue to be the responsibility of Howard County, which does enjoy statutory tort immunity. Thus, in my opinion, a reviewing court likely would find that the District, which encompasses specific territory and is organized and authorized by the legislature for the public advantage, "has become so entwined with governmental policies and so impregnated with a governmental character" that it meets the definition of a "political subdivision" in this instance, and would be immune from tort liability pursuant to Ark. Code Ann. § 21-9-301.
It is important to note that this would be a somewhat novel issue for the Court, and that the test is fact-specific. Accordingly, I cannot say with total confidence that the Court would adopt my opinion. Moreover, the determination that the District likely is a "political subdivision" in this situation for the purposes of the tort immunity statute does not definitively address whether the District "needs" (that is, whether it is desirable or prudent for the District to have) such liability insurance. There may be other factors besides tort immunity that the District will wish to consider when assessing its "need" for liability insurance coverage. This is an issue upon which I cannot opine as it is beyond the scope of an Attorney General's opinion. The District's need for insurance in this instance is a matter to be addressed by the District in consultation with its own legal advisor.
Sincerely,
LESLIE RUTLEDGE
Attorney General
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