Energy Transfer 2010 Annual Report Download - page 164

assurance that significant costs and liabilities will not be incurred. Costs of planning, designing,
constructing and operating pipelines, plants and other facilities must incorporate compliance with
environmental laws and regulations and safety standards. Failure to comply with these laws and regulations
may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial
obligations, the issuance of injunctions and the filing of federally authorized citizen suits. Moreover, it is
possible that other developments, such as increasingly stringent environmental laws, regulations and
enforcement policies there under, and claims for damages to property or persons resulting from the
operations, could result in substantial costs and liabilities. Accordingly, we have adopted policies, practices
and procedures in the areas of pollution control, product safety, occupational safety and health, and the
handling, storage, use, and disposal of hazardous materials to prevent and minimize material environmental
or other damage, and to limit the financial liability, which could result from such events. However, the risk
of environmental or other damage is inherent in transporting, gathering, treating, compressing, blending and
processing natural gas, natural gas liquids and other products, as it is with other entities engaged in similar
businesses.
Environmental exposures and liabilities are difficult to assess and estimate due to unknown factors such as
the magnitude of possible contamination, the timing and extent of remediation, the determination of our
liability in proportion to other parties, improvements in clean-up technologies and the extent to which
environmental laws and regulations may change in the future. Although environmental costs may have a
significant impact on the results of operations for any single period, we believe that such costs will not have
a material adverse effect on our financial position.
As of December 31, 2010 and 2009, accruals on an undiscounted basis of $13.8 million and $12.6 million,
respectively, were recorded in our consolidated balance sheets as accrued and other current liabilities and
other non-current liabilities related to environmental matters.
Based on information available at this time and reviews undertaken to identify potential exposure, we
believe the amount reserved for environmental matters is adequate to cover the potential exposure for
clean-up costs.
Transwestern conducts soil and groundwater remediation at a number of its facilities. Some of the cleanup
activities include remediation of several compressor sites on the Transwestern system for contamination by
polychlorinated biphenyls (“PCBs”). The costs of this work are not eligible for recovery in rates. The total
accrued future estimated cost of remediation activities expected to continue through 2025 is $8.2 million,
which is included in the aggregate environmental accruals discussed above. Transwestern received FERC
approval for rate recovery of projected soil and groundwater remediation costs not related to PCBs effective
April 1, 2007.
Transwestern, as part of ongoing arrangements with customers, continues to incur costs associated with
containing and removing potential PCBs. Future costs cannot be reasonably estimated because remediation
activities are undertaken as potential claims are made by customers and former customers. However, such
future costs are not expected to have a material impact on our financial position, results of operations or
cash flows.
Environmental regulations were recently modified for the U.S. Environmental Protection Agency’s (the
“EPA”) Spill Prevention, Control and Countermeasures program. We are currently reviewing the impact to
our operations and expect to expend resources on tank integrity testing and any associated corrective actions
as well as potential upgrades to containment structures. Costs associated with tank integrity testing and
resulting corrective actions cannot be reasonably estimated at this time, but we believe such costs will not
have a material adverse effect on our financial position, results of operations or cash flows.
Petroleum-based contamination or environmental wastes are known to be located on or adjacent to six sites
on which HOLP presently has, or formerly had, retail propane operations. These sites were evaluated at the
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