Energy Transfer 2013 Annual Report Download - page 60

Table of Contents
ITEM 2. PROPERTIES
A description of our properties is included in “Item 1. Business.” In addition, we own an office building for our executive office in Dallas, Texas and office
buildings in Houston and San Antonio, Texas. While we may require additional office space as our business expands, we believe that our existing facilities are
adequate to meet our needs for the immediate future, and that additional facilities will be available on commercially reasonable terms as needed.
We believe that we have satisfactory title to or valid rights to use all of our material properties. Although some of our properties are subject to liabilities and
leases, liens for taxes not yet due and payable, encumbrances securing payment obligations under non-competition agreements and immaterial encumbrances,
easements and restrictions, we do not believe that any such burdens will materially interfere with our continued use of such properties in our business, taken
as a whole. In addition, we believe that we have, or are in the process of obtaining, all required material approvals, authorizations, orders, licenses, permits,
franchises and consents of, and have obtained or made all required material registrations, qualifications and filings with, the various state and local
government and regulatory authorities which relate to ownership of our properties or the operations of our business.
Substantially all of our pipelines, which are described in “Item 1. Business” are constructed on rights-of-way granted by the apparent record owners of the
property. Lands over which pipeline rights-of-way have been obtained may be subject to prior liens that have not been subordinated to the right-of-way grants.
We have obtained, where necessary, easement agreements from public authorities and railroad companies to cross over or under, or to lay facilities in or along,
watercourses, county roads, municipal streets, railroad properties and state highways, as applicable. In some cases, properties on which our pipelines were
built were purchased in fee. We also own and operate multiple natural gas and NGL storage facilities and own or lease other processing, treating and
conditioning facilities in connection with our midstream operations.
ITEM 3. LEGAL PROCEEDINGS
Sunoco, along with other refiners, manufacturers and sellers of gasoline, is a defendant in lawsuits alleging MTBE contamination of groundwater. The
plaintiffs typically include water purveyors and municipalities responsible for supplying drinking water and governmental authorities. The plaintiffs are
asserting primarily product liability claims and additional claims including nuisance, trespass, negligence, violation of environmental laws and deceptive
business practices. The plaintiffs in all of the cases are seeking to recover compensatory damages, and in some cases, injunctive relief , punitive damages and
attorneys’ fees.
As of December 31, 2013, Sunoco is a defendant in seven cases, one of which was initiated by the State of New Jersey and two others by the Commonwealth
of Puerto Rico with the more recent Puerto Rico action being a companion case alleging damages for additional sites beyond those at issue in the initial Puerto
Rico action. Six of these cases are venued in a multidistrict litigation (“MDL”) proceeding in a New York federal court. The most recently filed Puerto Rico
action is expected to be transferred to the MDL. The New Jersey and Puerto Rico cases assert natural resource damage claims. In addition, Sunoco has received
notice from another state that it intends to file an MTBE lawsuit in the near future asserting natural resource damage claims.
Fact discovery has concluded with respect to an initial set of fewer than 20 sites each that will be the subject of the first trial phase in the New Jersey case and
the initial Puerto Rico case. Insufficient information has been developed about the plaintiffs’ legal theories or the facts with respect to statewide natural resource
damage claims to provide an analysis of the ultimate potential liability of Sunoco in these matters; however, it is reasonably possible that a loss may be
realized. Management believes that an adverse determination with respect to one or more of the MTBE cases could have a significant impact on results of
operations during the period in which any said adverse determination occurs, but does not believe that any such adverse determination would have a material
adverse effect on the Partnership’s consolidated financial position.
In January 2012, Sunoco Logistics experienced a release on its refined products pipeline in Wellington, Ohio. In connection with this release, the PHMSA
issued a Corrective Action Order under which Sunoco Logistics is obligated to follow specific requirements in the investigation of the release and the repaid
and reactivation of the pipeline. Sunoco Logistics also entered into an Order on Consent with the EPA regarding the environmental remediation of the release
site. All requirements of the Order of Consent with the EPA have been fulfilled and the Order has been satisfied and closed. Sunoco Logistics has also received
a "No Further Action" approval from the Ohio EPA for all soil and groundwater remediation requirements. Sunoco Logistics has not received any proposed
penalties associated with this release and continues to cooperate with both PHMSA and the EPA to complete the investigation of the incident and repair of the
pipeline.
In 2012, the EPA issued a proposed consent agreement related to the releases that occurred at Sunoco Logistics’ pump station/tank farm in Barbers Hill, Texas
and pump station/tank farm located in Cromwell, Oklahoma in 2010 and 2011, respectively. These matters were referred to the U.S. Department of Justice
("DOJ") by the EPA. In November 2012, Sunoco Logistics received an initial assessment of $1.4 million associated with these releases. Sunoco Logistics is in
discussions with the EPA and the DOJ on this matter and hopes to resolve the issue during 2014.
55