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Some time ago I wrote my local represenative, John Stakoe, to complain about the need for event permits for street legal, insured vehicles trail riding on forest roads. I stressed the point that these events are for non-competition gatherings.
Mr Stakoe reviewed the Michigan policiy and agreed that there was need for clarification. He forwarded his concerns to the State Attorney General for their comment. Following is a copy of the letter of response from the Attorney General's office. I was not able to get the official letterhead and signiture to copy onto this post but rest assured that it is official.
My take on this is that the state is doing a wholesale CYA! They lump us in with ORV's and do not diferentiate us from non-licensed vehicles. It will be virtually impossible to ever overturn this.
In closing, I would like to publicly thank John Stakoe for taking the effort to go beyond the typical form letter of "I will look into this". Good for him!
Jim Kitson
STATE OF MICHIGAN DEPARTMENT OF ATTORNEY GENERAL
MIKE COX
ATTORNEY GENERAL
July 7,2005
Honorable John P. Stakoe State Representative The Capitol Lansing,MI 48913
Dear Representative Stakoe:
Attorney General Cox has asked me to respond to your letter regarding the requirement of the Department of Natural Resources (DNR) that persons or groups engaging in off-road vehicle (ORV) events on state land obtain an event permit and liability insurance for the event. On behalf of a constituent, your letter asks whether the DNR should forego the requirement of liability insurance and instead rely on governmental immunity or a release of liability as sufficient protection of the public interest. Your constituent suggests that, as a matter of law, requiring liability insurance imposes costs on participants without providing any additional protection for the State. Due to the subject matter of the request, I asked staff in the Environment, Natural Resources, and Agriculture Division to review your letter. The following represents their findings.
Initially, it should be observed that your constituent's question, while broadly legal in nature, also presents essentially a policy question. State agencies generally exercise their discretion when making policy choices and it is beyond the scope of this letter to address all the factors that might support those policy choices.
The DNR's requirement that persons obtain event permits and liability insurance stems from an administrative rule, 2001 MR 20, R 299.922(m), as amended by 2004 MR 24, which states:
Rule 22. On lands owned or under the control of the department, it is unlawful for a person or persons to do any of the following:
* * *
(m) To hold events including, but not limited to, races, endurance contests, tournaments, or trail rides, unless the events are conducted pursuant to a permit. The permit may include a charge to the sponsor or permittee for the use of the land. An event may require a performance bond to ensure permit
Honorable John P. Stakoe Page 2
compliance and may require public liability insurance. The department may waive the requirement for a permit for events where the number of participants is 20 or more individuals if the department determines that the event will not require department oversight, and the event will have a minimal impact on the resource and on the use of the lands by others. [Emphasis added.]
The March 11, 2005, letter from Rodney Stokes, DNR Legislative Liaison, attached to your request, notes that the insurance requirement and the amount of coverage are also based on advice from this office and guidelines from the Department of Management and Budget.
There are two fundamental factors that would support the choice to require permittees to maintain liability insurance. First, when the nature of an event includes activities on state land that could result in serious personal injury, such as events involving motor vehicles, the availability of insurance may be the only means for affording the participants and the public appropriate protection under the circumstances. As in the case of mandatory automobile insurance coverage, insurance provides a source for payment of expenses and damages if someone is injured as a result of the ORV event. The DNR indicates in its letter from Mr. Stokes that typical automobile insurance for ORVs does not include coverage to the million dollar limit called for by the DNR. Because motor vehicle-related injuries can be catastrophic, experience has instructed that a million dollar policy limit may be the minimum that could be considered appropriate; that is, a million dollars of coverage likely falls on the scale somewhere between the damages that might result from an accident involving minor injury and one involving catastrophic injury or death. With the insurance policy in place, a person injured during an ORV event has a source other than taxpayer money to recover the costs and damages that result from an accident.
The second factor that would support the choice to require insurance is that a standard liability policy protects not only injured persons and the permittee, but it protects the State as well. Although the State and its employees are protected by immunity from tort liability under many circumstances by statute, MCL 691.1407, the statutory bar has not served to eliminate suits against the State and its employees for injuries that occur on state land or during events that involve, even indirectly, government employees. In many of these cases, the State eventually prevails, but only after expending considerable state resources, such as the time and expense of Department of Attorney General lawyers and support staff, and other litigation costs including expert witness fees and time spent by employees of the state agency that has been sued. The liability policy shields the state fisc from these costs by requiring the policy holder and in turn the policy holder's insurer, to fund the defense of the case instead of state taxpayers. Moreover, if the governmental immunity defense does not result in dismissal of the action, the insurer - not the State's taxpayers - will be responsible for payment of damages up to the policy limit.
Therefore, even though the State and its employees are often immune from liability, the choice to require that ORV event permittees obtain a liability insurance policy is one that is designed to protect the state treasury from the financial burden that could result from an ORV
Honorable John P. Stakoe
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event despite the existence of governmental immunity and therefore confers a benefit on the State in addition to those otherwise available.
Your letter also inquires whether securing a waiver of liability from persons engaging in ORV events on state land would sufficiently protect state interests instead of requiring them to provide liability insurance. First, a waiver by an event participant' in favor of the State would not protect other participants or the public in the event of an accident. For example, if a bystander was injured by a vehicle involved in the event, the bystander's ability to recover against the driver would be limited to any policy or assets the driver may have; in other words, there would be no sure source out of which to assure recovery for a legitimate claim as there is when a liability policy is in effect. Second, the waiver signed by the driver of the vehicle involved in the accident would not prevent the injured bystander from suing the State or its agents and employees, and the State would incur the costs of defending that action, as well as any damages that might result if the State's immunity defense did not result in dismissal.
Lastly, experience has taught that persons who agree to waive liability may nevertheless seek to challenge the validity of the very agreements they entered into on a variety of grounds, even when the agreement is well drafted and ultimately upheld in a court action. The costs of defending against such challenges would not be incurred in the event an insurance policy were in place. Moreover, the courts have long held that a party may not contract to protect itself from liability for gross negligence. Lamp v Reynolds, 249 Mich App 591, 594; 645 NW2d 311 (2002). Thus, where allegations are made that injuries were caused by gross negligence, a waiver of liability purporting to limit liability would be ineffective. Therefore, there is ample support for an agency's conclusion that waivers of liability are not a viable alternative to a liability insurance policy.
If you have any questions, please give me a call.
(Sincerely,
Gary P. Gordon)
Chief Deputy Attorney General
c: Rodney Stokes, DNR David Spalding, DNR
' A waiver from an ORV Association, as opposed to a waiver from the individual ORV participant, would be of little value. In the event of injury, the Association would be free to assert that it was an individual member, not the Association, who committed the wrongful act; hence the individual, not the Association, would be the liable party.
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, the state has to CYA!
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