Energy Transfer 2010 Annual Report Download - page 25

existing provisions of the federal Clean Air Act. The EPA recently adopted two sets of rules regulating
greenhouse gas emissions under the Clean Air Act, one of which requires a reduction in emissions of greenhouse
gases from motor vehicles and the other of which regulates emissions of greenhouse gases from certain large
stationary sources, effective January 2, 2011. The EPA’s rules relating to emissions of greenhouse gases from
large stationary sources of emissions are currently subject to a number of legal challenges, but the federal courts
have thus far declined to issue any injunctions to prevent EPA from implementing, or requiring state
environmental agencies to implement, the rules.
In addition, the United States Congress has from time to time considered adopting legislation to reduce emissions
of greenhouse gases and almost one-half of the states have already taken legal measures to reduce emissions of
greenhouse gases primarily through the planned development of greenhouse gas emission inventories and/or
regional greenhouse gas cap and trade programs. Most of these cap and trade programs work by requiring major
sources of emissions, such as electric power plants, or major producers of fuels, such as refineries and gas
processing plants, to acquire and surrender emission allowances. The number of allowances available for
purchase is reduced each year in an effort to achieve the overall greenhouse gas emission reduction goal.
The adoption of legislation or regulatory programs to reduce emissions of greenhouse gases could require us to
incur increased operating costs, such as costs to purchase and operate emissions control systems, to acquire
emissions allowances or comply with new regulatory or reporting requirements. Any such legislation or
regulatory programs could also increase the cost of consuming, and thereby reduce demand for, natural gas or
NGLs. Consequently, legislation and regulatory programs to reduce emissions of greenhouse gases could have an
adverse effect on our business, financial condition and results of operations.
In addition, on October 30, 2009, the EPA published a final rule requiring the reporting of greenhouse gas
emissions from specified large greenhouse gas sources in the United States on an annual basis, beginning in 2011
for emissions occurring after January 1, 2010. On November 8, 2010, the EPA adopted an expansion of its
greenhouse gas reporting rule to include onshore oil and natural gas production, processing, transmission,
storage, and distribution facilities. Under the new rule reporting of greenhouse gas emissions from such facilities,
including many of our facilities, is now required on an annual basis, with reporting beginning in 2012 for
emissions occurring in 2011. Any limitation on emissions of greenhouse gases from our equipment and
operations or the requirement that we obtain allowances for such emissions, as well as the NGLs that we
produce, could require us to incur significant costs to reduce emissions of greenhouse gases associated with our
operations or acquire allowances at the prevailing rates in the marketplace.
Some have suggested that one consequence of climate change could be increased severity of extreme weather,
such as increased hurricanes and floods. If such effects were to occur, our operations could be adversely affected
in various ways, including damages to our facilities from powerful winds or rising waters, or increased costs for
insurance. Another possible consequence of climate change is increased volatility in seasonal temperatures. The
market for our propane and natural gas is generally improved by periods of colder weather and impaired by
periods of warmer weather, so any changes in climate could affect the market the fuels that we produce. Despite
the use of the term “global warming” as a shorthand for climate change, some studies indicate that climate
change could cause some areas to experience substantially colder temperatures than their historical averages. As
a result, it is difficult to predict how the market for our fuels would be affected by increased temperature
volatility, although if there is an overall trend of warmer temperatures, it would be expected to have an adverse
effect on our business.
Our pipeline operations are subject to regulation by the DOT under the Pipeline Hazardous Materials Safety
Administration (“PHMSA”), pursuant to which the PHMSA has established requirements relating to the design,
installation, testing, construction, operation, replacement and management of pipeline facilities. Moreover, the
PHMSA, through the Office of Pipeline Safety, has promulgated a rule requiring pipeline operators to develop
integrity management programs to comprehensively evaluate their pipelines, and take measures to protect
pipeline segments located in what the rule refers to as “high consequence areas.” Activities under these integrity
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