Energy Transfer 2015 Annual Report Download - page 55

Table of Contents
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, impose specific health and safety standards addressing worker protection, and impose substantial liabilities for pollution
resulting from our operations. Several governmental authorities, such as the EPA and analogous state agencies 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
investigatory remedial and corrective action 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 property and natural resource damage allegedly caused by noise, odor or the release
of hazardous substances, hydrocarbons or wastes into the environment.
We may incur substantial environmental costs and liabilities because of the underlying risk inherent to our operations. Although we have established
financial reserves for our estimated environmental remediation liabilities, additional contamination or conditions may be discovered, resulting in increased
remediation costs, liabilities or natural resource damages that could substantially increase our costs for site remediation projects. Accordingly, we cannot
assure you that our current reserves are adequate to cover all future liabilities, even for currently known contamination.
Changes in environmental laws and regulations occur frequently, and any such changes that result in more stringent and costly waste handling, emission
standards, or storage, transport, disposal or remediation requirements could have a material adverse effect on our operations or financial position. For
example, in October 2015, the EPA published a final rule under the Clean Air Act, lowering the NAAQS for ground-level ozone to 70 parts per billion for the
8-hour primary and secondary ozone standards. Compliance with this final rule or any other new regulations could, among other things, require installation
of new emission controls on some of our equipment, result in longer permitting timelines or new restrictions or prohibitions with respect to permits or
projects, and significantly increase our capital expenditures and operating costs, which could adversely impact our business. Historically, we have previously
able to satisfy the more stringent NOx emission reduction requirements that affect our compressor units in ozone non-attainment areas at reasonable cost, but
there is no assurance that we will not incur material costs in the future to meet the new, more stringent ozone standard.
Product liability claims and litigation could adversely affect our business and results of operations.
Product liability is a significant commercial risk. Substantial damage awards have been made in certain jurisdictions against manufacturers and resellers
based upon claims for injuries caused by the use of or exposure to various products. There can be no assurance that product liability claims against us would
not have a material adverse effect on our business or results of operations.
Along with other refiners, manufacturers and sellers of gasoline, Sunoco, Inc. is a defendant in numerous lawsuits that allege MTBE contamination in
groundwater. Plaintiffs, who include water purveyors and municipalities responsible for supplying drinking water and private well owners, are seeking
compensatory damages (and in some cases injunctive relief, punitive damages and attorneys’ fees) for claims relating to the alleged manufacture and
distribution of a defective product (MTBE-containing gasoline) that contaminates groundwater, and general allegations of product liability, nuisance,
trespass, negligence, violation of environmental laws and deceptive business practices. There has been insufficient information developed about the
plaintiffs’ legal theories or the facts that would be relevant to an analysis of the ultimate liability to Sunoco, Inc. These allegations or other product liability
claims against Sunoco, Inc. could have a material adverse effect on our business or results of operations.
The adoption of climate change legislation or regulations restricting emissions of greenhouse gases could result in increased operating costs and reduced
demand for the services we provide.
The EPA has determined that emissions of carbon dioxide, methane and other greenhouse gases present an endangerment to public health and the
environment because emissions of such gases are, according to the EPA, contributing to warming of the earth’s atmosphere and other climatic changes. Based
on these findings, the EPA has adopted rules under the Clean Air Act that, among other things, establish PSD construction and Title V operating permit
reviews for greenhouse gas emissions from certain large stationary sources that already are potential major sources of certain principal, or criteria, pollutant
emissions, which reviews could require securing PSD permits at covered facilities emitting greenhouse gases and meeting “best available control
technology” standards for those greenhouse gas emissions. In addition, the EPA has adopted rules requiring the monitoring and annual reporting of
greenhouse gas emissions from specified onshore and offshore production facilities and onshore processing, transmission and storage facilities in the United
States, which includes certain of our operations. More recently, on October 22, 2015, the EPA published a final rule that expands the petroleum and natural
gas system sources for which annual greenhouse gas emissions reporting is currently required to include greenhouse gas emissions reporting beginning in the
2016 reporting year for certain onshore gathering and boosting systems consisting primarily of gathering pipelines, compressors and process equipment used
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