Mineral rights lost in deal

Jeff Schweers

Tuesday, June 18, 1996 | 11:59 a.m.

The Bureau of Land Management gave away mineral rights to local developer Jim Rhodes that were supposed to be excluded from a recent land exchange -- a potential loss to taxpayers in untold sand and gravel sales.

The decision record, signed Jan. 15 by Las Vegas District Manager Michael Dwyer, states: "All patents issued under this action would be subject to a reservation for mineral materials and leasable minerals."

But the subsequent March 27 patent on the land failed to include the sand and gravel rights on the list of exceptions reserved to the federal government in the land exchange.

"It was very clear in the environmental assessment that it was supposed to be reserved," Dwyer said. "Somewhere between us and the state office it did not get included in the patent."

Said Ken Stowers, the state BLM officer from Reno who wrote and signed the patent: "It wasn't intentional."

George Holman, corporate counsel for Rhodes Design and Development, said, "We believed we were getting the mineral rights."

Holman said the company's focus now is on getting its comprehensive plan approved Wednesday by the Clark County Commission. "We don't know what we're going to do on the gravel issue," Holman said. "We may even withdraw the application."

Rhodes can't be penalized for the governmental oversight, because Congress and the courts have said that once a patent is issued, the patentee can't be held liable for mistakes made by the BLM.

The only way to cancel a patent is to show fraud, Stowers said.

"This was due to error, not due to collusion," Stowers said. "Now that the patent has been issued, we can't cancel it and start all over again, unless we can prove fraud. There was no fraud on this end. It's unfortunate, and we won't do it again."

The Cashman exchange gave the U.S. Forest Service 1,300 acres of privately held land in the Mount Charleston area for 950 acres of open desert land in the southwest Las Vegas Valley. The land passed from the Cashmans to Houston dentist Jerry Argovitz and finally to Rhodes, a local developer.

Rhodes wants to build a master-planned community and golf course on the property, but neighborhood opposition has delayed approval of the concept plan, the first step in a required major projects review. The County Commission is set to discuss the concept plan Wednesday.

The commission is expected to decide in September whether to also grant Rhodes a gravel mining permit on the property.

Based on an environmental assessment and a mineral report showing moderate to high sand and gravel deposits, especially along the Tropicana Wash, Dwyer had recommended reserving the sand and gravel rights for the federal government.

"It's pretty clear there was some kind of miscommunication between us and the state office that issued the patent," Dwyer said. "We indicated pretty clearly that sand and gravel were supposed to be reserved.

"There was no negotiation or agreement for sand and gravel."

Those reservations would have allowed Rhodes to use the sand and gravel on the land for on-site construction only, but would have prevented him from selling the minerals.

But since the patent reserves only leaseable gas and oil mineral rights for the federal government, Rhodes is free to do what he wants with the sand and gravel, Dwyer said.

"It would be no loss to the taxpayer as long as he uses that product on site for his own purposes," Dwyer said. "If he opens a sand and gravel operation on site, then there would be loss to the public."

Rhodes has said he has no intention to sell the gravel, and would only use it for on-site construction.

Stowers said the oversight might have occurred because the district office did not send a memorandum to request a patent.

That's become a recurring oversight, Stowers said.

"We haven't been getting them," he said. "We're supposed to get it on every case file we get from the district for an issue of patent request, whether it's a sale or an exchange. We should get a memorandum as to what lands are being released to whom and what the reservations are to be."

That's about to change, he said. If the district office doesn't include the memorandum on future land deals, the state office will send the case file back.

"It's not something we've done consistently in the past because the state office hasn't required it," Dwyer said.