Case divides ranchers, miners

An attempt by a Canadian-based mining company to take some Elko-area ranchland by force of eminent domain is dividing miners and ranchers in Northern Nevada and prompting talk that lawmakers should reconsider century-old, mining-friendly provisions in state law.

In a case filed in Elko County District Court, Fronteer Development Inc. seeks to condemn by eminent domain nearly 1,800 acres of the Big Springs Ranch, on some of which the Vancouver, British Columbia-based mining company has mineral rights.

The case puts the spotlight on laws dating back more than 125 years that say mining is of “paramount interest” to the state and has eminent domain rights similar to governments seeking to take land for public use.

“Mining has an incredible grip on our state in terms of special deals,” said Assemblywoman Sheila Leslie, D-Reno. “I think this is a great example of that. Since when do we allow a foreign corporation to come in to our state and use eminent domain to get property for their private business interests? I don’t think that is right.”

In addition to stoking the ire of lawmakers and others who say the mining industry has too much power in Nevada, the case pits the pro-mining provisions of the state’s eminent domain statutes against legal restrictions added in 2008 due to the People’s Initiative To Stop The Taking Of Our Land, or PISTOL, initiative.

The law firm of Kermitt Waters, a prominent Las Vegas lawyer who backed the PISTOL initiative, is representing owners of Big Springs Ranch, a group that includes Las Vegas businessmen Ray Koroghli.

The parties have promised Elko District Judge Andrew Puccinelli they wouldn’t speak publicly about the case, which has a hearing scheduled July 1.

Mark Mills, Puccinelli’s law clerk, says an order setting a date for a jury trial is coming soon. The agreement by the parties to stay mum is “just a concern over tampering with the potential jury pool,” Mills said. The parties could also settle and avoid a trial altogether.

The promise by the parties to keep quiet hasn’t stopped outsiders from discussing the case, as the aggressive move by Fronteer has people statewide questioning whether mining companies should be reined in. Fronteer has its headquarters in Vancouver, but the company is registered in Delaware, traded on the American Stock Exchange and has far-flung operations in Nevada, California, Newfoundland, Labrador and Turkey.

“It looks like to me it is a dangerous precedent,” said Ron Cerri, president of the Nevada Cattlemen’s Association. “It leaves us ranchers in kind of an unsafe situation where a mining company or anyone else could come in and take your property against your will.”

Laura FitzSimmons, a Las Vegas lawyer who specializes in eminent domain cases, said if the Fronteer case proceeds the mining company will be under pressure to show why the paramount status in the law is still justified, considering in the more than 100 years since the designation was bestowed on the mining industry it has been surpassed by gambling, construction, real estate and other industries that don’t enjoy such privilege.

“Eminent domain is really supposed to be for airports and roads and hospitals,” FitzSimmons said. “It is going to be the burden of the mining company to show that this is in the public interest.”

According to court documents, Fronteer wants to use eminent domain proceedings to condemn almost 1,800 acres of Big Springs Ranch, a spread of nearly 38,000 acres about 30 miles southeast of Wells at the eastern flank of the Pequop Mountains. The land is currently leased to Dixie Valley Cattle for grazing.

Attorneys for Big Springs wrote in court documents that in spring of 2009 Fronteer offered $12 million plus about 4 percent royalties from future mine proceeds for 8,000 acres of the ranch plus water rights for the development of its Long Canyon Project, a planned gold mine Fronteer is developing with partner AuEx Ventures, which has offices in Reno and the Vancouver area.

“Shortly thereafter, however, Fronteer Mining, devised a scheme whereby it planned to forcibly take the Landowner’s property through the power of eminent domain without having to pay the fair price it previously offered for the Landowner’s Property,” Big Springs’ attorney James Leavitt wrote.

Filings from Fronteer indicate there are about 3,732 acres in the approximately 12,000-acre Long Canyon project area in which the mining company has mineral rights and the ranch owners hold surface rights. The mineral rights bolster the mining company’s claims to access the property.

“For more than a year, Fronteer has attempted, in good faith, to purchase land and water rights from the (ranch) for Project related use at a price well in excess of fair market value,” Fronteer attorney Laura Granier of Lionel Sawyer and Collins wrote. “Pursuant to Chapter 37 of Nevada Revised Statutes, Fronteer has the power to exercise the right of eminent domain to acquire property for use in mining and related activities which are recognized as the ‘paramount interest’ of this State.”

The statute Granier referenced includes a section covering “public uses for which eminent domain may be exercised.”

In addition to listing projects such as roads, schools, reservoirs, pipelines, railways and utilities, the law also includes “mining, smelting and related activities.”

Retired state archivist and historian Guy Rocha says the mining provision dates back to 1875 when there was little to Nevada beyond the mining industry.

“That is a great deal of power vested in a mining company,” said Rocha, who supports changing the law. “It is basically saying they are in control.”

In earlier decades mines mostly exercised eminent domain to acquire other mining property that wasn’t being utilized by its owners, Rocha said

As recently as the 1980s mining companies pushing eminent domain generated resistance that made headlines.

In 1989 Horizon Gold Shares of Denver sought to take over and raze about half of the community of Tuscarora in order to dig a pit mine.

Residents waged a public campaign against the plan and it never came to fruition.

In 1979 Houston Oil and Minerals Corp., sought to use the law to acquire private property in Gold Hill in Storey County for a mining project.

Again, there was public outcry from residents and in 1981 the Legislature amended the law to require notification in the event a mining company sought to use eminent domain to take land in an area of historical significance, Rocha said.

But the Houston mine ultimately died not because of public pressure but because the price of gold and silver dropped and sapped profit potential from the proposal.

Mark Amodei, formerly a state senator from Carson City and president of the Nevada Mining Association from 2007-09, said eminent domain as a means for mining companies to acquire property is impractical in large part because it prompts such strong opposition from the public.

“Having a law on the books is one thing, trying to use it 130 ... years later is another,” said Amodei, currently chairman of the Nevada State Republican Party. “If that is really part of your acquisition plan maybe you ought to get a new plan.” He called the law “something that probably needs to be revisited.”

FitzSimmons said the law is especially ripe for a challenge in the wake of the PISTOL initiative, which greatly restricted the ability of government to use eminent domain for the benefit of private companies in Nevada.

Many of the PISTOL changes are now written in the same law that gives mining companies their eminent domain privileges, meaning there are contradictions that, if challenged in court, would need to be resolved.

The mining rights are only two lines of the eminent domain law and the PISTOL restrictions cover 12 paragraphs.

“I’m almost certain no one was thinking about mining condemnation,” when PISTOL was enacted, FitzSimmons said. “So now the courts are going to have to figure it out.”

Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or 702-477-3861.