Steptoe & Johnson PLLC: Ohio Attorney General Rules Counties May Sell Water to Oil and Gas Operators

Steptoe & Johnson PLLC: Ohio Attorney General Rules Counties May Sell Water to Oil and Gas Operators

The Ohio Attorney General's office was recently asked to give its opinion on a county's authority to sell water that is available to oil and gas drillers in need of large quantities of water for hydraulic fracturing purposes.  Specifically, Harrison County had inquired about the legality of entering into a contract with a for-profit company that would broker sales of county water supplies and would, in return, receive a share of any profits generated.

Ohio Attorney General Opinion 2013-019 concluded that water is tangible personal property and that, pursuant to ORC §307.12, the board of county commissioners could sell the county's water, provided that the water is not needed for public use (nNote that this opinion was limited to those counties that have not exercised home rule powers under the Ohio Constitution and that have not adopted a charter or an alternative form of county government). Other provisions of state law, including the authority to establish a sewer district and authority to sell water from a public water supply to property outside of a county sewer district further supported this conclusion.  

However, the Attorney General concluded that there is no authority for a county to enter into a contract with a third party broker to sell the water on the county's behalf.  ORC §307.12 requires that sales of personal property by a county must be conducted through either public auction or sealed bidding, with the sale going to the highest bidder.  Property valued at less than $2500 can also be sold by private sale.  Nothing, however, authorizes the use of a for-profit company to act as a broker to sell the water.  

If you have a question regarding water use in Ohio, or another energy matter, please feel free to contact one of the authors of this alert.

Kathy Milenkovski's legal practice focuses on energy and environmental law, with an emphasis on air quality issues. Neal Pierce brings more than 30 years oil and gas industry experience to the Steptoe & Johnson Energy Team. He focuses on energy law, Utica and Marcellus shale gas law, as well as conventional oil and gas law.

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