Energy Transfer 2012 Annual Report Download - page 192

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at Jal #4 in the amount of $1 million and at Jal #3 in the amount of $7 million. Hearings on the compliance orders were
delayed until May 2013 to allow the parties to pursue substantive settlement discussions. SUGS has meritorious defenses to
the NMED claims and can offer significant mitigating factors to the claimed violations. Southern Union has recorded an
accrued liability and will continue to assess its potential exposure to the allegations as the matter progresses.
Environmental Matters
Our operations are subject to extensive federal, state and local environmental and safety laws and regulations that require
expenditures to ensure compliance, including related to air emissions and wastewater discharges, at operating facilities and
for remediation at current and former facilities as well as waste disposal sites. Although we believe our operations are in
substantial compliance with applicable environmental laws and regulations, risks of additional costs and liabilities are inherent
in the business of transporting, storing, gathering, treating, compressing, blending and processing natural gas, natural gas
liquids and other products. As a result, there can be no assurance that significant costs and liabilities will not be incurred.
Costs of planning, designing, constructing and operating pipelines, plants and other facilities must incorporate compliance
with environmental laws and regulations and safety standards. Failure to comply with these laws and regulations may result
in the assessment of administrative, civil and criminal penalties, the imposition of remedial obligations, the issuance of
injunctions and the filing of federally authorized citizen suits. Moreover, there can be no assurance that other developments,
such as increasingly stringent environmental laws, regulations and enforcement policies thereunder, and claims for damages
to property or persons resulting from the operations, will not result in substantial costs and liabilities. We are unable to estimate
any losses or range of losses that could result from such developments. Furthermore, we may revise accrual amounts prior
to resolution of a particular contingency based on changes in facts and circumstances or changes in the expected outcome.
Environmental exposures and liabilities are difficult to assess and estimate due to unknown factors such as the magnitude of
possible contamination, the timing and extent of remediation, the determination of our liability in proportion to other parties,
improvements in cleanup technologies and the extent to which environmental laws and regulations may change in the future.
Although environmental costs may have a significant impact on the results of operations for any single period, we believe
that such costs will not have a material adverse effect on our financial position.
Based on information available at this time and reviews undertaken to identify potential exposure, we believe the amount
reserved for environmental matters is adequate to cover the potential exposure for cleanup costs.
Environmental Remediation
Our subsidiaries are responsible for environmental remediation at certain sites, including the following:
• Certain of our interstate pipelines conduct soil and groundwater remediation related to contamination from past uses of
PCBs. PCB assessments are ongoing and, in some cases, our subsidiaries could potentially be held responsible for
contamination caused by other parties.
• Certain gathering and processing systems are responsible for soil and groundwater remediation related to releases of
hydrocarbons.
• Southern Union's distribution operations are responsible for soil and groundwater remediation at certain sites related to
MGPs and may also be responsible for the removal of old MGP structures.
• Currently operating Sunoco retail sites.
• Legacy sites related to Sunoco, that are subject to environmental assessments include formerly owned terminals and other
logistics assets, retail sites that Sunoco no longer operates, closed and/or sold refineries and other formerly owned sites.
• Sunoco is potentially subject to joint and several liability for the costs of remediation at sites at which it has been identified
as a “potentially responsible party” (“PRP”). As of December 31, 2012, Sunoco had been named as a PRP at 35 identified
or potentially identifiable as “Superfund” sites under federal and/or comparable state law. The Company is usually one
of a number of companies identified as a PRP at a site. Sunoco has reviewed the nature and extent of its involvement at
each site and other relevant circumstances and, based upon Sunoco’s purported nexus to the sites, believes that its potential
liability associated with such sites will not be significant.
To the extent estimable, expected remediation costs are included in the amounts recorded for environmental matters in our
consolidated balance sheets. In some circumstances, future costs cannot be reasonably estimated because remediation activities
are undertaken as claims are made by customers and former customers. To the extent that an environmental remediation
obligation is recorded by a subsidiary that applies regulatory accounting policies, amounts that are expected to be recoverable
through tariffs or rates are recorded as regulatory assets on our consolidated balance sheets.
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