Sunoco 2011 Annual Report Download - page 27

such rights, could have a material adverse effect on the Partnership and our financial condition, results of
operations and cash flows. Whether the Partnership has the power of eminent domain for its pipelines varies from
state to state, depending upon the type of pipeline (e.g., crude oil or refined products) and the laws of the
particular state. In either case, the Partnership must compensate landowners for the use of their property and, in
eminent domain actions, such compensation may be determined by a court. The inability to exercise the power of
eminent domain could negatively affect the Partnership’s business if it was to lose the right to use or occupy the
property on which its pipelines are located. We also have rental agreements for approximately 29 percent of the
company- or dealer-operated retail service stations where we currently control the real estate and the Partnership
has rental agreements for certain logistics facilities. As such, we are both subject to the possibility of increased
costs under our rental agreements with landowners, primarily through rental increases and renewals of expired
agreements. We are also subject to the risk that such agreements may not be renewed. Additionally, certain
facilities and equipment (or parts thereof) used by us are leased from third parties for specific periods. Our
inability to renew equipment leases or otherwise maintain the right to utilize such facilities and equipment on
acceptable terms, or the increased costs to maintain such rights, could have a material adverse effect on our
results of operations and cash flows.
We are subject to numerous environmental laws and regulations that require substantial expenditures and
affect the way we operate, which could affect our business, future operating results or financial position in a
materially adverse way.
We are subject to extensive federal, state and local laws and regulations, including those relating to the
protection of the environment, waste management, discharge of hazardous materials, and the characteristics and
composition of refined products. Certain of these laws and regulations also impose obligations to conduct
assessment or remediation efforts at our facilities as well as at formerly owned properties or third-party sites
where we have taken wastes for disposal. Environmental laws and regulations may impose liability on us for the
conduct of third parties, or for actions that complied with applicable requirements when taken, regardless of
negligence or fault. Environmental laws and regulations are subject to frequent change, and often become more
stringent over time. Of particular significance to us are:
•Greenhouse gas emissions: Through the operation of our refineries and marketing facilities, our
operations emit greenhouse gases, or GHG, including carbon dioxide. There are various legislative and
regulatory measures to address monitoring, reporting or restriction of GHG emissions that are in
various stages of review, discussion or implementation. These include federal and state actions to
develop programs for the reduction of GHG emissions as well as proposals that would create a cap and
trade system that would require us to purchase carbon emission allowances for emissions at our
manufacturing facilities and emissions caused by the use of the fuels that we sell. In response to
findings that emissions of GHGs present an endangerment to public health and the environment, the
EPA has adopted regulations under existing provisions of the federal Clean Air Act that require a
reduction in emissions of GHGs from motor vehicles and also may trigger construction and operating
permit review for GHG emissions from certain stationary sources. The EPA has asserted that the final
motor vehicle GHG emission standards triggered Prevention of Significant Deterioration, or PSD, and
Title V permit requirements for stationary sources, commencing when the motor vehicle standards took
effect on January 2, 2011. The EPA has published its final rule to address the permitting of GHG
emissions from stationary sources under the PSD and Title V permitting programs, pursuant to which
these permitting programs have been “tailored” to apply to certain stationary sources of GHG
emissions in a multi-step process, with the largest sources first subject to permitting. It is anticipated
that facilities required to obtain PSD permits for their GHG emissions also will be required to reduce
those emissions according to “best available control technology” standards for GHG that have yet to be
developed. These EPA rulemakings could adversely affect our operations and restrict or delay our
ability to obtain air permits for new or modified facilities. In addition, the EPA published a final rule in
October 2009 requiring the reporting of GHG emissions from specified large GHG emission sources in
the United States, including petroleum refineries, on an annual basis beginning in 2011 for emissions
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