BILL ANALYSIS �
AB 2654
Page 1
Date of Hearing: May 1, 2012
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 2654 (Morrell) - As Introduced: February 24, 2012
PROPOSED CONSENT
SUBJECT : MINING LIENS: DEFINITIONS
KEY ISSUE : SHOULD THE DEFINITION OF "MINE" UNDER CALIFORNIA'S
MINING LIEN STATUTE BE REVISED TO CLARIFY that a rock quarry
where rock is EXTRACTED AND REMOVED FROM THE EARTH is a "mine"
for THE purpose of perfecting a mining lien?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
The author reports that many contractors are increasingly
hesitant to accept quarry work contracts for fear of nonpayment
because a recent Court of Appeal decision, Sukut Construction v.
Rimrock CA, LLC (2011), jeopardizes mining lien rights for
contractors working at mining and quarry sites. In that case,
the Court of Appeal's narrow adherence to the 1884 definition of
what constitutes a "mining claim" appears to make the mining
lien statute inapplicable to work performed at rock quarries or
other operations where, for example, rock is extracted from the
earth, crushed, and turned into rock aggregate for use in
construction and road building. In response, this bill seeks to
clarify the definition of the term "mine" under California's
mining lien statute to mean a mining claim or real property
worked on as a mine "including any quarry or pit from which
rock, gravel, or any other mineral-containing property is
extracted by a mining operation." The bill is supported by
contractors' groups who contend that the Sukut decision should
not, as a matter of sound public policy, be allowed to
disqualify the contractors who provide services and labor to
rock quarries or similar operations from the protections of
California's mining lien guarantees. This bill has no known
opposition.
SUMMARY : Clarifies the definition of "mine" under the mining
lien statute. Specifically, this bill :
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1)Defines "mine" to mean a mining claim or real property worked
on as a mine, including any quarry or pit, from which rock,
gravel, or any other mineral-containing property is extracted
by any mining, or surface mining, operation.
2)Provides that this is declaratory of existing law and intended
by the Legislature to supercede the holding of the Fourth
District Court of Appeal in Sukut Construction, Inc. v.
Rimrock CA, LLC (2011) 199 Cal.App.4th 817.
3)Contains an urgency clause to cause this bill to take effect
immediately.
EXISTING LAW :
1)Provides that mechanics, persons furnishing materials,
artisans, and laborers of every class have a lien upon the
property upon which they bestowed labor or furnished material
for the value of such labor done and material furnished.
(Cal. Const., Art.14, Sec. 3.)
2)Sets forth obligations and rights of contributors, owners,
construction lenders, and persons otherwise involved in an
improvement to real property, in what is informally known as
the mechanics lien statute. (Civ. Code Sec. 3082 et seq.)
3)Defines "mine" to mean a mining claim or real property worked
on as a mine. (Civil Code Section 3060(a), effective July 1,
2012.)
4)Provides that any person who performs labor in a mine, either
in its development or in working on it by the subtractive
process, or furnishes materials to be used or consumed in it,
has a lien upon the mine and the works owned and used by the
owners for milling or reducing the ores from the mine, for the
value of the work or labor done or materials furnished by
each, whether done or furnished at the instance of the owner
of the mine, or the owner's agent. (Civil Code Section
3060(b).)
COMMENTS : This non-controversial bill seeks to clarify the
definition of the term "mine" under California's mining lien
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statute. This urgency bill would clarify the definition of the
term "mine" to include real property worked on as a mine,
including any quarry or pit from which rock, gravel, or any
other mineral-containing property is extracted by a mining
operation. This bill would also express the Legislature's
intent to supercede the holding of Sukut Construction v. Rimrock
CA LLC (2011) 199 Cal. App. 4th 817.
Need for the Bill. According to the author, gravel quarry
mining is a $23 billion industry nationwide, and gravel quarries
constitute 58 percent of all mining activities in the state and
employ thousands of Californians. The author reports that many
contractors are increasingly hesitant to accept quarry work
contracts for fear of nonpayment because a recent Court of
Appeal decision, Sukut Construction v. Rimrock CA LLC (2011),
jeopardizes mining lien rights for contractors working at these
mining and quarry sites. According to the author, the Sukut
court determined that under the mining lien statute, rock is not
a mineral and therefore a mine does not include a quarry where
rock is extracted and removed. Consequently, supporters contend
that this bill is needed to re-establish the common-sense
proposition that a rock quarry where rock is removed should be
considered a mine for the purpose of perfecting a mining lien.
Purpose of mining liens and mechanics liens in general. Article
XIV, Section 3 of the California Constitution provides that
mechanics, persons furnishing materials, artisans, and laborers
of every class have a lien upon the property upon which they
bestowed labor or furnished material for the value of such labor
done and material furnished. The basic purpose of such a lien
is to provide collateral as a guarantee for payment of services
rendered. A mining lien in essence is no different; its purpose
is to grant any person who performs labor in a mine a temporary
interest in the mine where the work is performed, consistent
with the guarantee provided by Article XIV, Section 3 of the
Constitution.
Should mining lien rights apply to workers working at a quarry
where rock is removed? According to the author and sponsor of
this bill, the Southern California Contractors Association, the
definition of "mine" in California's mining lien statute, Civil
Code Section 3060, should be clarified to ensure that the
purpose of the statute-namely, to help guarantee payment for the
performance of "mining" work--is fulfilled. The bill's
proponents are particularly concerned about this definition
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because of a recent Court of Appeal case in which the issue of
whether a mining lien could be enforced turned on the statutory
definition of the term "mining claim."
In Sukut Construction v. Rimrock CA LLC (2011), plaintiff Sukut
sued to enforce a mining lien against the defendant seeking to
guarantee payment for the work the plaintiff had performed at
the rock quarry operated by the defendant. The Court denied the
lien however, concluding that the statute did not allow it
unless the labor at issued was performed in a "mining claim",
defined as "that portion of a vein or lode and the adjoining
surface to which the claimant has acquired a right of
possession" pursuant to a California Supreme Court case from
1884. (Williams v. S.C. Mining Association (1884) 66 Cal. 193,
198.) Under this statutory definition, it appears that the
mining lien statute would not apply to work performed at rock
quarries or other operations where rock is extracted from the
ground, crushed, and turned into rock aggregate for use in
construction and road building.
Supporters contend, however, that a narrow reading of the
statute under a definition of "mining claim" dating to 1884
should not, as a matter of sound public policy, serve to
disqualify the contractors who provide services and labor to
these quarry operations from the protections of California's
mining lien guarantees. Moreover, they contend that the kind of
work such contractors perform to extract and process large
amounts of rock from the earth is just as deserving of lien
protection whether or not that unearthed rock technically comes
from "a portion of a vein or lode" as defined under Williams and
as recently cited by the court in Sukut. It should be noted,
however, that the Sukut court did not have reason to determine
whether work on a rock quarry constitutes a "work of
improvement" for purposes of a general mechanic's lien under
Section 3110, which presumably remains an option open to
contractors to recover payment for work performed in a quarry if
a mining lien is not available.
Operation of the urgency clause in this bill. In addition to
amending the definition of "mine" in Section 3060 of the Civil
Code, this bill contains an urgency clause which would cause its
provisions to become effective immediately upon being chaptered
into law. Section 3060 was recently amended, however, by SB
189, Ch. 697, Stats. 2010, a bill with a delayed operative date
of July 1, 2012. If this bill is passed as an urgency statute,
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its revised definition of "mine" would become effective
immediately under existing Section 3060, and that definition
would remain unchanged even after the changes set forth by SB
189 begin to take effect on July 1, 2012.
REGISTERED SUPPORT / OPPOSITION :
Support
Southern California Contractors Association (sponsor)
Associated General Contractors
Opposition
None on file
Analysis Prepared by : Anthony Lew and Nick Liedtke/ JUD. /
(916) 319-2334