Energy Transfer 2013 Annual Report Download - page 49

Table of Contents
Certain of our assets may become subject to regulation.
The distinction between federally unregulated gathering facilities and FERC-regulated transmission pipelines under the NGA has been the subject of extensive
litigation and may be determined by the FERC on a case-by-case basis, although the FERC has made no determinations as to the status of our facilities.
Consequently, the classification and regulation of our gathering facilities could change based on future determinations by the FERC, the courts or Congress. If
our gas gathering operations become subject to FERC jurisdiction, the result may adversely affect the rates we are able to charge and the services we currently
provide, and may include the potential for a termination of our gathering agreements with our customers.
Intrastate transportation of NGLs is largely regulated by the state in which such transportation takes place. Lone Star’s NGL Pipeline transports NGLs within
the state of Texas and is subject to regulation by the TRRC. This NGLs transportation system offers services pursuant to an intrastate transportation tariff on
file with the TRRC. Lone Star’s NGL pipeline also commenced the interstate transportation of NGLs in 2013, which is subject to FERC’s jurisdiction under
the Interstate Commerce Act and the Energy Policy Act of 1992. Both intrastate and interstate NGL transportation services must be provided in a manner that
is just, reasonable, and non-discriminatory. The tariff rates established for interstate services were based on a negotiated agreement; however if FERC’s rate
making methodologies were imposed, they may, among other things, delay the use of rates that reflect increased costs and subject us to potentially burdensome
and expensive operational, reporting and other requirements. Any of the foregoing could adversely affect revenues and cash flow related to these assets.
We may incur significant costs and liabilities resulting from performance of pipeline integrity programs and related repairs.
Pursuant to authority under the NGPSA and HLPSA, as amended by the PSI Act, the PIPES Act and the 2011 Pipeline Safety Act, PHMSA has established a
series of rules requiring pipeline operators to develop and implement integrity management programs for gas transmission and hazardous liquid pipelines that,
in the event of a pipeline leak or rupture could affect “high consequence areas,” which are areas where a release could have the most significant adverse
consequences, including high population areas, certain drinking water sources, and unusually sensitive ecological areas. These regulations require operators of
covered pipelines to:
•perform ongoing assessments of pipeline integrity;
•identify and characterize applicable threats to pipeline segments that could impact a high consequence area;
•improve data collection, integration and analysis;
•repair and remediate the pipeline as necessary; and
•implement preventive and mitigating actions.
In addition, states have adopted regulations similar to existing PHMSA regulations for intrastate gathering and transmission lines. At this time, we cannot
predict the ultimate cost of compliance with applicable pipeline integrity management regulations, as the cost will vary significantly depending on the number
and extent of any repairs found to be necessary as a result of the pipeline integrity testing. We will continue our pipeline integrity testing programs to assess and
maintain the integrity of our pipelines. The results of these tests could cause us to incur significant and unanticipated capital and operating expenditures for
repairs or upgrades deemed necessary to ensure the continued safe and reliable operation of our pipelines. Any changes to pipeline safety laws by Congress and
regulations by PHMSA that result in more stringent or costly safety standards could have a significant adverse effect on us and similarly situated midstream
operators. For instance, changes to regulations governing the safety of gas transmission pipelines and gathering lines are being considered by PHMSA,
including, for example, revising the definitions of “high consequence areas” and “gathering lines” and strengthening integrity management requirements as
they apply to existing regulated operators and to currently exempt operators should certain exemptions be removed.
Our business involves hazardous substances and may be adversely affected by environmental regulation.
Our operations are subject to stringent federal, state, and local laws and regulations governing the discharge of materials into the environment, worker health
and safety and protection of the environment. These laws and regulations may require the acquisition of permits for our operations, result in capital
expenditures to manage, limit or prevent emissions, discharges or releases of various materials from our pipelines, plants and facilities and impose substantial
liabilities for pollution resulting from our operations. Several governmental authorities, such as the EPA have the power to enforce compliance with these laws
and regulations and the permits issued under them and frequently mandate difficult and costly remediation measures and other actions. Failure to comply with
these laws, regulations and permits may result in the assessment of significant administrative, civil and criminal penalties, the imposition of remedial
obligations, and the issuance of injunctive relief. Certain environmental laws impose strict, joint and several liability for costs required to clean up and restore
sites where hazardous substances, hydrocarbons or wastes have been disposed or released, even under circumstances where the substances, hydrocarbons or
wastes have been released by a predecessor operator. Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for
personal injury and
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