Energy Transfer 2015 Annual Report Download - page 32

Table of Contents
regulations may result in the assessment of sanctions, including administrative, civil or criminal penalties, the imposition of investigatory, remedial or
corrective action obligations, or the issuance of injunctions limiting or prohibiting some or all of our operations in the affected area.
The NGPSA and HLPSA were most recently amended in 2012 when President Obama signed into law the Pipeline Safety, Regulatory Certainty, and Job
Creation Act of 2011 (“2011 Pipeline Safety Act”), which re-authorized the federal pipeline safety programs of PHMSA through 2015 and increased pipeline
safety regulation. Among other things, the legislation doubled 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, but provided that these maximum penalty caps do not apply to certain civil
enforcement actions; permitted the DOT Secretary to mandate automatic or remote controlled shut off valves on new or entirely replaced pipelines; required
the DOT Secretary to evaluate whether integrity management system requirements should be expanded beyond HCAs; and provided for regulation of carbon
dioxide transported by pipeline in a gaseous state and required the DOT Secretary to prescribe minimum safety regulations for such transportation. New
pipeline safety legislation that would reauthorize the federal pipeline safety programs of PHMSA through 2019 has been introduced and is expected to be
considered by Congress in 2016. One bill entitled “Securing America’s Future Energy: Protecting Infrastructure of Pipelines and Enhancing Safety” (or
“SAFE PIPES”) has already been approved by the Senate Committee on Commerce, Science, and Transportation and is now subject to consideration by the
U.S. Senate. Passage of any new legislation reauthorizing the PHMSA pipeline safety programs is expected to require, among other things, pursuit of some or
all of those legal mandates included in the 2011 Pipeline Safety Act but not acted upon by the DOT Secretary or PHMSA.
In addition, states have adopted regulations, similar to existing PHMSA regulations, for intrastate gathering and transmission lines. The states in which we
conduct operations typically have developed regulatory programs that parallel the federal regulatory scheme and are applicable to intrastate pipelines
transporting natural gas and NGLs. Under such state regulatory programs, states have the authority to conduct pipeline inspections, to investigate accidents
and to oversee compliance and enforcement, safety programs and record maintenance and reporting. Congress, PHMSA and individual states may pass or
implement additional safety requirements that could result in increased compliance costs for us and other companies in our industry. For example, federal
construction, maintenance and inspection standards under the NGPSA that apply to pipelines in relatively populated areas may not apply to gathering lines
running through rural regions. This “rural gathering exemption” under the NGPSA presently exempts substantial portions of our gathering facilities located
outside of cities, towns or any area designated as residential or commercial from jurisdiction under the NGPSA, but does not apply to our intrastate natural
gas pipelines. In recent years, the PHMSA has considered changes to this rural gathering exemption, including publishing an advance notice of proposed
rulemaking relating to gas pipelines in 2011, in which the agency sought public comment on possible changes to the definition of “high consequence areas”
and “gathering lines” and the strengthening of pipeline integrity management requirements. More recently, in October 2015, PHMSA issued a notice of
proposed rulemaking relating to hazardous liquid pipelines that, among other things, proposes to extend its integrity management requirements to previously
exempt pipelines, and to impose additional obligations on pipeline operators that are already subject to the integrity management requirements. Specifically,
PHMSA proposes to extend reporting requirements to all gravity and gathering lines, require periodic inline integrity assessments of pipelines that are
located outside of HCAs, and require the use of leak detection systems on pipelines in all locations, including outside of HCAs. The changes proposed by
PHMSA in each of these proposals continue to remain under consideration by the agency. Historically our pipeline safety costs have not had a material
adverse effect on our business or results of operations but there is no assurance that such costs will not be material in the future, whether due to elimination of
the rural gathering exemption or otherwise due to changes in pipeline safety laws and regulations.
In another example of how future legal requirements could result in increased compliance costs, notwithstanding the applicability of the OSHA’s Process
Safety Management (“PSM”) regulations and the EPA’s Risk Management Planning (“RMP”) requirements at regulated facilities, PHMSA and one or more
state regulators, including the Texas Railroad Commission, have in recent years, expanded the scope of their regulatory inspections to include certain in-
plant equipment and pipelines found within NGL fractionation facilities and associated storage facilities, in order to assess compliance of such equipment
and pipelines with hazardous liquid pipeline safety requirements. To the extent that these actions are pursued by PHMSA, midstream operators of NGL
fractionation facilities and associated storage facilities subject to such inspection may be required to make operational changes or modifications at their
facilities to meet standards beyond current PSM and RMP requirements, which changes or modifications may result in additional capital costs, possible
operational delays and increased costs of operation that, in some instances, may be significant.
Environmental Matters
 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 products is subject to stringent federal, tribal, 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
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