What’s mine

Condemnation powers get an update at the Nevada Legislature

Sen. Sheila Leslie’s legislation to reduce corporate control of condemnation powers has drawn support from Democrats and Republicans.

Sen. Sheila Leslie’s legislation to reduce corporate control of condemnation powers has drawn support from Democrats and Republicans.

Photo by Dennis Myers

If you have ever sought the power of condemnation over your neighbor, you may have been foolish not to follow through. It’s easier than might be expected, at least in Nevada. Try this: Plant some sugar beets with the intention of making them into sugar and selling it.

Voila! Under Nevada’s eminent domain law, you are now most of the way to having condemnation authority. Eminent domain is the bureaucratic term for condemnation.

Don’t believe us? Under Nevada Revised Statute 37.010, which prescribes “Public uses for which eminent domain may be exercised,” you will find paragraph L: “Pipelines of beet sugar industry. Pipelines to conduct any liquids connected with the manufacture of beet sugar.”

This provision of Nevada law, of course, has a history. It dates back to the second decade of the 20th century, when—with much fanfare—a sugar factory was built in Churchill County and sugar beets were planted. The Nevada Sugar Company was touted as Nevada’s future, and the state’s politicians—then as now—did everything they could, short of spending money, to encourage this kind of economic development. The Nevada Legislature added beet sugar pipelines to the list of purposes for which condemnation of property could be invoked.

As it turned out, beet sugar was something less than the wave of the future. It wasn’t even the wave of Churchill County’s future. A tiny parasite found its way from native pigweed to the beets. The company hung on for a while, but eventually gave up. But the language in the state statute is still there, one century later.

Beet sugar, of course, is not a big threat to property owners in Nevada. But other industries are.

Hard times

Recessions are when mining thrives. In the early 1980s, a devastating recession hit the nation. Nevada, to the surprise of leaders who had always counted on the state’s gambling industry keeping it “recession proof,” was also hard hit.

In Gold Hill, Houston Oil and Minerals—which had done some exploration in the town starting in 1978—began mining in earnest. The firm eked out a huge open pit mine on the west side of town. It eventually grew so large that the support for the winding state highway through town that serves as main street was weakened. The corporation wanted to widen its activities to the east, essentially removing the town altogether, prompting anger from the residents.

Some Houston employees pointed out that the town had been created by mining and it was disingenuous to oppose it now. “We can no longer afford to import all our minerals,” said Mackay School of Mines dean Art Baker. “We will have to produce more. The industry is proving it can do it if there isn’t too much interference.”

But Gold Hill had long since left mining behind and was now a tourist town. The industry that created the town was now its biggest threat. Faced with local opposition, the corporation’s attorney threatened use of condemnation. Among the historic properties threatened were the Gold Hill Hotel, the V&T railroad depot, and the Bank of California building.

The town was saved by a couple of factors—the Houston lawyer had no public relations sense and alienated people on both sides of the issue, which helped slow everything down to a crawl.

More important, economic recovery was underway in the nation, and the price of minerals was falling fast, making it less profitable to mine. Two years after a headline in the Los Angles Times read, “Gold, Silver Boom Revives Nevada Mines,” a headline in the Ellensburg (Wash.) Daily Record carried the headline, “Nevada Mining Boom Goes Bust.”

Mining operations ended in November 1981. Then on June 25, 1982, the corporation announced it was closing operations at the site entirely. The operation had lasted less than two years but left behind enormous physical damage and plenty of ill will. The corporation did not replace its divot and the open pit remains to this day. So does the threat that another mining company could resume operations at the site.

Such threats are still employed. Last June, Fronteer Gold said it would use condemnation to gain mining use of almost 1,800 acres of ranching property in Elko County for its Long Canyon gold mine.

Changing the law

As a result of the Gold Hill/Houston dispute, Nevada law on condemnation by mining companies was changed, but only slightly. The industry was still powerful enough to hold change to a curb on condemnation only in designated historic districts. At the Nevada Legislature this year, Sen. Sheila Leslie and Assemblymember William Horne have introduced legislation to change the eminent domain law more substantially.

Leslie emphasizes reducing private use generally of eminent domain. “This is not about the greater good but the private corporate interest,” she told the hearing. However, her bill repeals only those provisions dealing with mining and sugar beets. Given that the sugar beet industry no longer exists, the industry considers this singling out mining. Horne’s bill deals solely with the mining industry, but he said he has no problem with Leslie’s bill.

Some Silver City residents testified for the Leslie measure because of hundreds of exploratory holes drilled in their area by Comstock Mining Inc, formerly known as GoldSpring, Inc. (“The Comstock goes boom,” RN&R, Feb. 3). That company also has holdings in Dayton and Pershing County.

In a hearing on Leslie’s Senate Bill 86, historian Guy Louis Rocha said that while Nevada courts ruled repeatedly in favor of the mining industry’s condemnation powers on the ground that it was the state’s “paramount” industry, mining no longer enjoys that dominance.

But because of the repeated court rulings, the legislature is the most likely route for challenging the law. And it is not only mining that residents have to worry about. There are many commercial uses allowed under Nevada’s law. Few would argue that it is a necessity for companies that provide electricity to have that power. But what about cable TV service? Convenient, sure—but a necessity? Cable companies are empowered by the law, though the language has been changed from a 1950s-familiar “community antenna” to a 21st century “video service providers.”

How about monorails? The law allows condemnation for their construction, too.

The mining industry opposes both measures and provided testimony against Leslie’s bill, but it is uncertain how high a priority stopping the measures is for mining lobbyists. Some—including a conservative newspaper—have advised the industry not to die on this hill. Some conservative lawmakers, such as Sen. Barbara Cegavske of Clark County, have made it plain they will not be there for the industry when the vote comes.

When asked the importance he places on stopping the bills, Nevada Mining Association President Tim Crowley declined to assign a priority to the task. But he said if lawmakers are going to cut private use of condemnation, they should look at more than mining and sugar beets.

“But we find it interesting that there isn’t a broader discussion of eminent domain as it applies to many private industries,” he said. “They should consider letting these other industries go ahead with these powers.”

Leslie disagrees. She points out that many of those private entities empowered in the law to condemn property have the term public in front of the name of their industry, meaning that they are under substantial regulation. In addition, they serve in most cases public purposes, such as supplying electricity.

On cable TV companies, she said, “It’s worth having the discussion, I suppose. That’s an arguable proposition.” But she said the mining industry’s real purpose is to draw attention away from itself. “The more they make it about somebody else, the less it is about them,” she said.

The extremely conservative editorial writers at the Las Vegas Review-Journal, who rarely find any fault with the business community, support Leslie’s bill: “It’s fundamentally wrong that a private industry holds this kind of power. The concept of property rights means little if a business can take what is rightfully yours. … Mining industry officials, rightly concerned about being targeted for punitive, job-killing tax increases, should pick their battles carefully. They don’t have the moral high ground on this issue.”

At the same time, the legislature may end up tapping the mining industry for more taxes this year, and some lawmakers say they would be reluctant to vote against the industry on two major pieces of legislation.

In any event, the beet sugar provision in the law, which has a certain quirky charm in law books that are otherwise dry, seems likely to be repealed.