March 30, 1987 

Eonorable Mack Wallace 

Chairman 

Railroad Conmission of Texas 

P. 0. Drawer 12967 

Austin, Texas 78711 

Opinion No. JM-660 

Re: Confiscation of production 

related equipment at abandoned 

well sites by agents of the 

Railroad Commission 

Dear Mr. Wallace: 

The questions you ask involve construction of section 89.085 of 

the Natural Resources Code, “Confiscation of Equipment to Cover 

Plugging Costs,” which provides as follows: 

(a) If a person acting as agent for the commission plugs or replugs a well, the comission 

may authorize the agent to confiscate any production-related equipment at the abandoned well site 

(abandoned by the operator of the well as defined 

in this chapter) for the purpose of wholly or 

partially compensating the agent for plugging or 

replugging the well. 

(b) The commission shall adopt reasonable 

rules (including a provision for a public hearing) 

for determining whether production-related equipment at a well site is abandoned and for establishing the value of production-related equipment 

for purposes of compensating the agent. 

To set the stage for your questions, you provide the following 

fact situations: 

The Railroad Commission, after notice to the 

operator. holds a hearing pursuant to section 

89.085 of the Natural Resources Code to determine 

whether production-related equipment at a well 

site is abandoned and to establish the value of 

production-related equipment for purposes of 

compensating the agent. The operator does not 

appear at the hearing. 

a. The Conmission does not know whether 

there are any lienholders nor If the operator 

is insolvent or in bankruptcy. The comulssion determines that the production-related 

equipment at the well site is abandoned and 

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Eonorable Mack Wallace - Page 2 (JN-660) 

establishes the value of the equipment. The 

established value exceeds the cost the agent 

incurs to plug the well. 

b. The operator is in bankruptcy and a 

trustee in bankruptcy has been appointed. The 

trustee has invoked 11 U.S.C. section 362 which 

automatically stays any and all activities 

against the debtor or against the property of 

the debtor. 

c. The production-related equipment does 

have prior liens on it. Some of these liens 

are perfected and some are not. 

You state that the Railroad Commission “is presented with the 

fact situations as stated” and the commission poses the following 

questions: 

1. What & ‘production-related equipment’ as 

referred to in section 89.085? 

2. Does the mere non-appearance by the 

operator at the hearing establish that such 

operator has abandoned the production-related 

equipment at the well site and, as a result, 

authorize a taking of such property by the 

commission’s agent? 

3. Section 89.085 states that ‘abandoned by 

the operator of the well’ will mean that as 

defined in chapter 89. However, ‘abandoned by the 

operator of the well’ is not statutorily defined 

In chapter 89. Should the commission apply case 

law to interpret the meaning of ‘abandonment’? 

What does it take to prove abandonment? If the 

operator has abandoned the equipment, does the 

lessor or landowner have a right to the equipment? 

If so, whose right is superior? Since title to 

equipment which k abandoned vests in the first 

person to reduce it to possession; what constitutes ‘reduced to possession?’ 

4. Is notice to the operator adequate notice, 

considering that the commission may not have 

jurisdiction over all lienholders of the production related equipment? 

5. In the case where the value of the 

production-related equipment exceeds the cost 

incurred by the commission’s agent to plug the 

well. should the comission retain the excess 

money? If more production-related equipment 

exists than is needed to compensate the agent, 

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does the commission have the duty to confiscate 

the additional equipment and safeguard It? 

6. Would the cotmission or the agent who 

plugs the well or both be the subject of a suit 

for conversion once the equipment Is confiscated 

and sold? If so, would the damages be confined to 

the value of the salvageable equipment minus the 

cost of plugging? Would the cotmissioners or any 

Railroad Commission employee(s) be liable as 

individuals for damages? 

7. Is the commission precluded by federal law 

concerning bankruptcy from authorizing its agent 

to confiscate property which is in bankruptcy? 

Does the commission have a duty to find out if the 

operator has filed for bankruptcy? 

8. Does the statutory authorization provided 

for by section 89.085 give an agent a superior 

right to production-related equipment than a prior 

lienholder? Would securing a statutory lien, 

under section 89.083 of the Natural Resources 

Code, be beneficial? If so, what is required to 

secure it (filings, time periods, etc.) and does 

the statutory lien have priority over other liens? 

Would it have priority over a materialman’s lien 

or a prior lessor? Would the Railroad Commission 

be required to have a court foreclose on the lien? 

If SO, would the Attorney General represent the 

Railroad Commission and where would venue lie? Is 

article 5473 et seq. applicable to a Railroad 

Commission lien under section 89.083? 

9. Would a chapter 89 lien apply to an 

operator who is not within the chapter 89 definition but who has assumed responsibility for 

plugging? 

10. Is a constitutional lien available to the 

Railroad Commission? 

11. Does the fact that a wellbore Is covered 

by a performance bond or a letter of credit change 

the procedure that should be’ followed by the 

Railroad Comeission? Does the comeission have a 

duty in such an instance. to secure a lien and 

seek foreclosure? 

Upon reviewing the language embodied in section 89.085 it was our 

initial reaction that the statute was facially unconstitutional under 

the due process clause of the Fourteenth Amendment to the United 

States Constitution. Our examination in light of your questions only 

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served to strengthen our opinion that section 89.085 would not pass 

constitutional muster under due process requirements. 

In Fuentes v. Shevin, 407 U.S. 67 (1972) the United States 

Supreme Court held that prejudgment provisions which deprived one of 

property without the right to be heard or without the participation of 

a judicial officer are a violation of the due process clause. In 

order to seize property before final judgment an adversary hearing was 

mandated. 

Mitchell v. W.T. Grant Company. 416 U.S. 600 (1974). afforded the 

United States Supreme Court the vehicle to clarify its holding in 

Fuentes relative to prejudgment seizure of property. In Lincoln Ten, 

Ltd. v. White, 706 S.W.2d 125 (Tex. App. - Houston [14th Dist.] 1986, 

no writ). the court reviewed the foregoing Supreme Court opinions in 

passing on the validity of the seizure of property under a distress 

warrant pending the outcome of a suit for rent. The court applied the 

following standards set forth in Mitchell in determining the validity 

of the prejudgment seizure. Such writs are valid if 

(1) issued by judicial officers; 

(2) the affidavits and documents in support of 

said motion set out the facts relied on and are 

more than conclusion; 

(3) the debtor has an immediate right to a 

hearing; and 

(4) dissolution of the writ will be granted 

absent proof at the hearing. 

Lincoln Ten, Ltd. v. White, 706 S.W.Zd at 128. See Attorney General 

- 

Opinion JM-510 (1986). 

The court of appeals found that the issue at this stage of the 

proceeding "concerns possession pending trial and turns on the 

existence of the debt, the lien, and the delinquency." A determination of issues under section 89.085 clearly involves questions of 

debt, lien and abandonment. More importantly, Mitchell. Fuentes and 

Lincoln Ten, Ltd. address the minimal standards to satisfy due process 

requirements in prejudgment seizures. Section 89.085 provides for 

confiscation of property to satisfy a $sbt without regard to a future 

judicial determination of the issues. "Confiscation" and "seizure" 

1. The fact that the Railroad Commission may employ some of the 

most attractive and orderly means of arriving at its conclusions in 

the administration of Its duties cannot be construed to mean that it 

is a court within the contemplation of the Texas Constitution. Carr 

v. Stringer, 171 S.W.Zd 920, 922 (Tex. Civ. App. - Fort Worth 1943. 

writ ref'd). While its findings are quasi-judicial in nature, they 

can not be characterized as judicial determinations. 

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Honorable Mack Wallace - Page 5 (JM-660) 

are not necessarily synonymous term. It is our opinion that even 

more stringent requirements may be necessary for a "confiscation" to 

meet due process standards than are required for a "seizure." See 

Black's Law Dictionary 271, 1219 (5th ed. 1979). It is our 0pinT;;;; 

that section 89.085 is unconstitutional in that it does not facially 

satisfy due process requirements for an adequate hearing to justify 

eveu a prejudgment seizure. 

Our finding that section 89.085 is unconstitutional precludes the 

necessity of answering your specific questions. 

SUMMARY 

Section 89.085 of the Natural Resources Code, 

Confiscation of Equipment to cover Plugging Costs, 

is facially unconstitutional under the due process 

clause of the Fourteenth Amendment to the United 

States Constitution in that it fails to provide for 

an adequate hearing to determine the issues 

requisite to a confiscation and sale of the well 

operators equipment. 

JIM MATTOX 

Attorney General of Texas 

JACK HIGHTOWER 

First Assistant Attorney General 

NARY KELLER 

Executive Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Tom G. Davis 

Assistant Attorney General 

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