AG Clarifies Counties’ Authority to Enter Into RUMAs and Applicability of Competitive Bidding and Prevailing Wage

Reprinted from the Fall 2012 BrickerConstructionLaw.com Newsletter
Download the complete Fall 2012 BCL issue

Road Use Maintenance Agreements (RUMAs) have become fashionable as of late with the influx of companies into the state of Ohio developing wind energy and gas and oil projects. Under a RUMA, the energy developer promises to improve and repair the public roads it uses. The need can be acute because these types of projects typically require multiple truckloads of heavy equipment and supplies that far exceed the normal loading for the types of small county and township roads needed to access remote project sites.

Authority

The prosecuting attorney for Richland County recently asked the attorney general to opine as to the legality of RUMAs entered into by counties and how Ohio’s prevailing wage law may apply to them. The attorney general provided an answer in September 2012 in Opinion No. 2012-029, which numbered 20 pages.

In short, the attorney general identified five specific grants of authority in the Ohio Revised Code that allow a county to enter into a RUMA, with the most practical and easiest to work with being R.C. 5555.022 and R.C. 1509.06. R.C. 5555.022(A) gives a broad grant to a board of county commissioners to improve public roads pursuant to procedures set forth in R.C. 5555.06, which ultimately is controlled by the competitive bidding procedures set forth in R.C. 307.86-.92. But because R.C. 307.86-.92 only come into play when a county is paying for the improvements, and under a RUMA only the energy developer pays for the work, there is no competitive procurement and R.C. 307.86-.92 do not apply. So a county can enter into a RUMA without any formal bidding procedures, which makes sense because the county is not awarding a contract that requires it to pay money.

The other practical statute is R.C. 1509.06, which became effective on June 11, 2012, and actually requires a RUMA when an energy developer applies for a permit to drill a horizontal well. If a RUMA has not been negotiated, the applicant must provide an affidavit attesting that it was unable to enter into a RUMA despite making good faith efforts to do so.
The attorney general also concluded that Ohio’s new construction reform legislation gave additional authority for a county to enter into a RUMA using the construction manager at risk and design/builder project delivery methods.

Prevailing Wage

The attorney general, not surprisingly, also concluded that the purpose of a RUMA is for construction of a public improvement on behalf of a public authority, pursuant to a contract with a public authority, triggering the prevailing wage requirements of Revised Code Chapter 4115. So if the value of the work to be performed under a RUMA exceeds the statutory thresholds (currently $75,248 for new road construction, $23,447 for road repair), then prevailing wages must be paid to all workmen and the record keeping requirements of the prevailing wage statutes apply.

Unanswered Questions

R.C. 1509.06 seems to settle the question of whether a county has authority to require a RUMA for the drilling of a horizontal well. But what if the developer and county cannot reach an agreement despite “good faith efforts” to do so? Because the County Engineers Association of Ohio (CEAO) has a model RUMA, it seems reasonable to expect that it will become the baseline RUMA — i.e., if a developer and county cannot agree upon a RUMA, if asked, a court would consider the terms of the CEAO’s RUMA as “customary” and require the developer to live up to those provisions.
The attorney general’s opinion does not identify a R.C. 1509.06 analogue for requiring a RUMA for wind farm development, but it seems here that a county has an advantage in negotiating one. That is because the type of road improvements needed for wind farm development are generally prerequisites for the work — i.e., if certain intersection improvements are not made or certain bridges and culverts improved, it will be impossible to transport the large pieces of equipment necessary to build the project.