BILL ANALYSIS �
AB 2654
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2654 (Morrell)
As Amended August 7, 2012
2/3 vote. Urgency
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|ASSEMBLY: |75-0 |(May 7, 2012) |SENATE: |36-0 |(August 9, |
| | | | | |2012) |
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Original Committee Reference: JUD.
SUMMARY : Clarifies the definition of "mine" under the mining
lien statute. Specifically, this bill :
1)Defines "mine" to mean a mining claim or real property worked
on as a mine, including, but not limited to, any quarry or
pit, from which rock, gravel, or any other mineral-containing
property is extracted by any mining, or surface mining,
operation.
2)Declares legislative intent to supersede 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 allowing this bill to take effect
immediately upon enactment.
The Senate amendments clarify the definition of "mine" and
remove a declaration that these provisions are declaratory of
existing law.
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.
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.
3)Defines "mine" to mean a mining claim or real property worked
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on as a mine.
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.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the version approved by the Senate.
FISCAL EFFECT : None
COMMENTS : This non-controversial bill seeks to clarify the
definition of the term "mine" under California's mining lien
statute. This urgency bill would clarify the definition of the
term "mine" to include real property worked on as a mine,
including, but not limited to, 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 supersede the holding of Sukut
Construction v. Rimrock CA LLC (2011) 199 Cal. App. 4th 817.
According to the author, gravel quarry mining is a $23 billion
industry nationwide, and gravel quarries constitute 58% 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.
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
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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.
According to the author and sponsor of this bill, the Southern
California Contractors Association, the definition of "mine" in
California's mining lien statute 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 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
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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
Civil Code 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.
In addition to amending the definition of "mine" in the Civil
Code, this bill contains an urgency clause which would cause its
provisions to become effective immediately upon being chaptered
into law. Current law was recently amended, however, by SB 189
(Alan Lowenthal), Chapter 697, Statutes of 2010, a bill with a
delayed operative date of July 1, 2012. If this bill is passed
as an urgency statute, its revised definition of "mine" would
become effective immediately, and that definition would remain
unchanged even after the changes set forth by SB 189 begin to
take effect on July 1, 2012.
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334
FN: 0004703