1. The department shall adopt rules for the registration of off-highway vehicles and display of registration numbers.2. The director, in the interest of public health, welfare, and safety, may regulate, by rule, the operation of off-highway vehicles on state highways. The director's authority to prohibit the use of off-highway vehicles is limited to the roadways, shoulders, inslopes, and medians within the right of way, except where such action is necessary to avoid an obstacle. Notwithstanding the racing prohibitions in section 39-08-03.1, the director may, on a case-by-case basis, permit organized and bona fide off-highway vehicle races on the ditch bottoms, backslopes, and the top of the backslopes of the state highway rights of way. The planning, organization, route selection, and safety precautions of any race are the sole responsibility of the person obtaining the permit. The director, the department, and the department's employees do not incur any liability for permitting races.3. The director of the parks and recreation department shall adopt rules to regulate use of off-highway vehicles in state parks and other state-owned land under the supervision of the director of the parks and recreation department.4. The governing bodies of political subdivisions may adopt rules to regulate use of off-highway vehicles in areas under their jurisdiction. The governing body of a city may, by ordinance, regulate, restrict, and prohibit the use of off-highway vehicles operated in the city limits in areas under the exclusive jurisdiction of the city.