(1) Except as specifically provided in this subsection, the state of Idaho, any state agency, any political subdivision of the state of Idaho, city, county, taxing district, or public corporation, along with any official and employee thereof acting within their official capacity may be a party plaintiff or defendant in any small claims action otherwise allowed by law. Any state agency or other governmental entity which is a party to a small claims action may appear as provided in subsection (2) of this section. The governmental agency or entity may not appear through the office of the attorney general, notwithstanding the provisions of section 67-1401, Idaho Code, nor through any other attorney at law, whether an employee of the agency or entity or otherwise. No action may be prosecuted in the small claims department against the state of Idaho or any justice or judge thereof based upon any act or omission alleged to have been committed by the justice or judge while acting in an official capacity.
(2)  Notwithstanding the provisions of section 1-2301, Idaho Code, a small claims action filed against the state of Idaho, or any agency thereof, or any official or employee of the state of Idaho while acting in an official capacity shall be filed in the county of the plaintiff’s residence, or if the plaintiff is not a resident of the state of Idaho, in the county where the cause of action arose. In either case, the plaintiff, in addition to service on the defendant, shall serve the Idaho attorney general by certified or registered mail. Prior to appearing in the defense of any small claims action, the defendant public official, or chief executive officer of the defendant agency, with the advice of the attorney general, shall designate in writing the nonattorney employee or agent of the state who is authorized to appear in defense of the action. The written designation shall be filed with the court.