A bill under consideration by the Ohio House of Representatives would allow local governments to transfer into their coffers revenue generated from water sales to unconventional drilling operators.

Current state law allows municipalities to use budget surpluses to repair, enlarge or extend their water works, or to make payments on loans for construction. If a municipality’s water works and sewerage systems are jointly operated, the locality may take money from a budget surplus — up to 10% of the gross revenue from the water works’ preceding year — for similar costs for the sewerage system. Another 5% of water works’ gross revenue from a preceding year can be kept as a reserve for water works purposes.

Under HB 134, a municipality “that contracts for the sale of water from its water works for use in well stimulation…may transfer all or a portion of surplus water works funds to the general fund,” with the stipulation that the amount transferred during a calendar year doesn’t exceed the amount collected from water contracts from the preceding calendar year.

The bill’s primary sponsor, state Rep. Jack Cera (D-Bellaire), called it a “win-win” situation for everyone involved.

“By allowing revenue from these contracts to be used by the municipality to meet the costs of services usually paid for out the general revenue fund, we are able to reinstate some of the services that have been cut,” Cera said last week. “This proposal would allow the money to be used for road maintenance and upkeep, as well as police and fire protection.”

HB 134 was introduced in the state House on April 17 and has since been assigned to the chamber’s State and Local Government Committee.

Last month Ohio’s Muskingum Watershed Conservancy District approved two separate agreements to sell water for three months to Antero Resources and Gulfport Energy Corp. (see Shale Daily, April 23). Regulators with the Ohio Department of Natural Resources are also considering a plan to sell water to operators (see Shale Daily, June 20, 2012).