Energy Transfer 2012 Annual Report Download - page 34

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that are exempt include those portions located outside of cities, towns or any area designated as residential or commercial, such
as a subdivision or shopping center. Changes to federal pipeline safety laws and regulations are being considered by Congress and
the DOT including changes to the “rural gathering exemption,” which may be restricted in the future. Other safety regulations
may be made more stringent and penalties could be increased. Such legislative and regulatory changes could have a material effect
on our operations and costs of transportation service.
In addition to existing pipeline safety regulations, on January 3, 2012, President Obama signed into law the Pipeline Safety,
Regulatory Certainty, and Job Creation Act of 2011, that increases pipeline safety regulation. Among other things, the legislation
doubles the maximum administrative fines for safety violations from $100,000 to $200,000 for a single violation and from $1
million to $2 million for a related series of violations, and provides that these maximum penalty caps do not apply to civil
enforcement actions; permits the DOT Secretary to mandate automatic or remote controlled shut off valves on new or entirely
replaced pipelines; requires the DOT Secretary to evaluate whether integrity management system requirements should be expanded
beyond high-consequence areas (“HCAs”), within 18 months of enactment; and provides for regulation of carbon dioxide
transported by pipeline in a gaseous state and requires the DOT Secretary to prescribe minimum safety regulations for such
transportation.
Environmental Matters
General. Our operation of processing plants, pipelines and associated facilities, including compression, in connection with the
gathering, processing, storage and transmission of natural gas and the storage and transportation of NGLs, crude oil and refined
products is subject to stringent and complex federal, state and local laws and regulations, including those governing, among other
things, air emissions, wastewater discharges, the use, management and disposal of hazardous and nonhazardous materials and
wastes, and the cleanup of contamination. Noncompliance with such laws and regulations, or incidents resulting in environmental
releases, could cause us to incur substantial costs, penalties, fines and other criminal sanctions, third party claims for personal
injury or property damage, investments to retrofit or upgrade our facilities and programs, or curtailment of operations. As with
the industry generally, compliance with existing and anticipated environmental laws and regulations increases our overall cost of
doing business, including our cost of planning, constructing and operating our plants, pipelines and other facilities. Included in
our construction and operation costs are capital cost items necessary to maintain or upgrade our equipment and facilities to remain
in compliance with environmental laws and regulations.
We have implemented procedures to ensure that all governmental environmental approvals for both existing operations and those
under construction are updated as circumstances require. We believe that our operations and facilities are in substantial compliance
with applicable environmental laws and regulations and that the cost of compliance with such laws and regulations will not have
a material adverse effect on our business, results of operations and financial condition. We cannot be certain, however, that
identification of presently unidentified conditions, more rigorous enforcement by regulatory agencies, enactment of more stringent
laws and regulations or other unanticipated events will not arise in the future and give rise to material environmental liabilities
that could have a material adverse effect on our business, financial condition or results of operations.
Hazardous Substances and Waste Materials. To a large extent, the environmental laws and regulations affecting our operations
relate to the release of hazardous substances and waste materials into soils, groundwater and surface water and include measures
to prevent, minimize or remediate contamination of the environment. These laws and regulations generally regulate the generation,
storage, treatment, transportation and disposal of hazardous substances and waste materials and may require investigatory and
remedial actions at sites where such material has been released or disposed. For example, CERCLA, also known as the “Superfund”
law, and comparable state laws, impose liability without regard to fault or the legality of the original conduct on certain classes
of persons that contributed to a release of a “hazardous substance” into the environment. These persons include the owner and
operator of the site where a release occurred and companies that disposed or arranged for the disposal of the hazardous substance
that has been released into the environment. Under CERCLA, these persons may be subject to joint and several liability, without
regard to fault, for, among other things, the costs of investigating and remediating the hazardous substances that have been released
into the environment, for damages to natural resources and for the costs of certain health studies. CERCLA and comparable state
law also authorize the federal EPA, its state counterparts, and, in some instances, third parties to take actions in response to threats
to the public health or the environment and to seek to recover from the responsible classes of persons the costs they incur. It is not
uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly
caused by hazardous substances or other pollutants released into the environment. Although “petroleum” as well as natural gas
and NGLs are excluded from CERCLA's definition of a “hazardous substance,” in the course of our ordinary operations we generate
wastes that may fall within that definition or that may be subject to other waste disposal laws and regulations. We may be responsible
under CERCLA or state laws for all or part of the costs required to clean up sites at which such substances or wastes have been
disposed. We have received notification that we may be potentially responsible for cleanup costs under CERCLA at a site in
Houston, Texas; however, these costs are not expected to be material.
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