In response to questions posed by the Richland County Prosecuting Attorney, the Ohio Attorney General recently provided guidance to public authorities about entering into Road Use Maintenance Agreements (“RUMA’s”) with oil and gas operators. This is a distillation of the 20-page Attorney General Opinion No. 2012-029, which addressed three primary questions.
I. May a county enter into an agreement with a private oil and gas drilling company to have the company improve and repair the county roads it uses at no cost to the county?
Answer: Yes. After analyzing various Ohio statutes relevant to a public authority’s obligation to improve and repair roads, the Attorney General concluded, “[a] county may, in accordance with R.C. 9.334, R.C. 153.693, R.C. 1509.06, R.C. 5555.022, R.C. 5557.06, or R.C. 5727.75, enter into an agreement with a private company that conducts oil and gas drilling operations . . . to have the company improve and repair the county roads it uses at no cost to the county.” (2012 Op. Att’y Gen. No. 2012-029, Syllabus ¶1)
The opinion points out that R.C. 1509.06(A)(11) specifically requires a company applying for an oil and gas well permit to (1) identify what roads it will use to access the well site, and (2) provide a copy of its agreement with the appropriate governmental authority “concerning maintenance and safe use of the roads . . . ” or provide “an affidavit attesting that the applicant attempted in good faith to enter into such an agreement, but was unable to do so.”
II. Next, when a county enters into a RUMA with a private company, must the private company comply with:
A. R.C. 307.86-.92: Competitive Bidding for Purchases of Goods or Services
B. R.C. 153.44: Review of Contract by Prosecuting Attorney
C. R.C. 153.69: Professional Design Services
D. R.C. 4115.03-.16: Payment of Prevailing Wage Rates
Before responding to these questions, the Attorney General observed that it is not within his authority to advise private companies about their legal obligations. The Attorney General only advises public officials and entities. So, with regard to the county’s obligations, the Attorney General advised:
A. R.C. 307.86-.92: Competitive Bidding for Purchases of Goods or Services.
Answer: No. Since the work is being done at no cost to the county, R.C. 307.86 and the related statutes that require public contracts to be submitted to a competitive bidding process do not apply.
B. R.C. 153.44: Review of Contract by Prosecuting Attorney.
Answer: Not unless required by the county prosecutor. R.C. 153.44 provides that all public improvement contracts “that exceed [1,000] dollars in amount shall be submitted by the board of county commissioners to the prosecuting attorney of the county” for review. But in the case of a RUMA, since the county is not paying for the improvement and repairs, “the county is not required to comply with R.C. 153.44.” (2012 Op. Att’y Gen. No. 2012-029, Syllabus ¶2)
The Opinion concludes, however, that a prosecuting attorney, as counsel for county officials, “may nonetheless require a board of county commissioners or county engineer to submit to him for review a [RUMA].” (2012 Op. Att’y Gen. No. 2012-029, Syllabus ¶3)
C. R.C. 153.69: Professional Design Services.
Answer: No. R.C. 153.69 authorizes a public authority to contract for professional design services, such as engineering and architectural services, and imposes various requirements for those contracts. While a public authority “must follow R.C. 153.69 when planning to enter into a contract for professional design services”, a RUMA “is not a ‘professional design services contract,’ as that term is used in R.C. 153.69, since the company also will make the improvements and repairs to the county roads set forth in the plans and designs.” (2012 Op. Att’y Gen. No. 2012-029, Syllabus ¶2 and p.14)
D. R.C. 4115.03-.16: Payment of Prevailing Wage Rates.
Answer: Yes. Ohio’s prevailing wage laws require a public authority to ensure prevailing wages are paid for work done on a public improvement project. Since work under a RUMA is considered a “public improvement,” as defined in R.C. 4115.03(C), a governmental agency that enters into a RUMA is required to comply with R.C. 4115.03-.16 when the total project cost to the company will be more than the amount prescribed in R.C. 4115.03(B)(4). (2012 Op. Att’y Gen. No. 2012-029, Syllabus ¶4)
III. May a County be held liable for civil damages if an oil and gas company does not pay prevailing wage rates for work performed under the authority of a RUMA?
Answer: Unknown. As discussed above, the Attorney General determined that prevailing wage laws are implicated by RUMA’s but the Attorney General refused to address whether a private company must comply with prevailing wage laws in connection with a RUMA.
The Attorney General observed that the question of whether a public authority could be held liable for failing to require an oil and gas drilling company to pay prevailing wages for work done under a RUMA has never before been addressed by Ohio courts and is “a question of fact that cannot be determined by means of an Attorney General opinion.” (2012 Op. Att’y Gen. No. 2012-029, Syllabus ¶5).
While the Attorney General sidestepped this question, it is apparent to the authors of this blog that a RUMA should require oil and gas drillers to pay prevailing wages and a public authority that ignores this requirement, especially in light of this Attorney General opinion, is inviting litigation and may very well be held liable for damages.