Nye County loses $66 million suit

Friday, March 29, 2002 | 9:41 a.m.

CARSON CITY -- The Nevada Supreme Court Thursday rejected Nye County's claim that the state shortchanged it $66 million in federal mining and oil leasing money.

The court ordered District Judge John Davis to dismiss Nye County's lawsuit against the state, Treasurer Brian Krolicki and Controller Kathy Augustine.

Half of the money the federal government collects from leases for mining and oil production on federal land by law goes back to the state where it is collected.

The federal law said the state should give priority in its distribution to subdivisions that are socially and economically affected by the mining and oil business.

Nevada receives its 50 percent from the federal government. A state law then establishes the distribution.

The first $7 million of the receipts from the federal government goes to public schools. Nevada law says 75 percent of the remaining funds goes to the counties in which the minerals, fuels and geothermal resources were mined. The county school districts get the other 25 percent.

Nye County claimed 40 percent of the mining and 93 percent of the oil production take place there. Since 1975, the county estimated, the state has received $165 million from the leasing rights, and Nye County claimed it should have received 40 percent of that or $66 million.

It said the school districts cannot be considered political subdivisions that are entitled to the money under federal law.

It filed suit originally in federal court. The suit was dismissed on grounds the state has immunity from the suit. Nye County then filed suit in the state district court in Nye County.

David had refused a motion by the state, Krolicki and Augustine to dismiss the suit. That was appealed to the Supreme Court.

The Supreme Court, citing the federal decision, said Nye County sued again over an issue already decided. The Supreme Court also said the state can assert sovereign immunity from the suit in this case.

While the Supreme Court rejected the Nye County position, it said it was sympathetic to the county's predicament. It called the state's distribution formula a "questionable statutory scheme."

The court said Nye County might have had a chance to pursue legal remedies if it had filed its suit first in the state court without going to the federal court.