Energy Transfer 2010 Annual Report Download - page 41

We hold transportation contracts with interstate pipelines that are subject to FERC regulation. As a shipper on an
interstate pipeline, we are subject to FERC requirements related to use of the interstate capacity. Any failure on
our part to comply with the FERC’s regulations or orders could result in the imposition of administrative, civil
and criminal penalties.
Our intrastate transportation and storage operations are subject to state regulation in Texas, Louisiana, Utah and
Colorado, the states in which we operate these types of natural gas facilities. Our intrastate transportation
operations located in Texas are subject to regulation as common purchasers and as gas utilities by the TRRC. The
TRRC’s jurisdiction extends to both rates and pipeline safety. The rates we charge for transportation and storage
services are deemed just and reasonable under Texas law unless challenged in a complaint. Should a complaint
be filed or should regulation become more active, our business may be adversely affected.
Our midstream and intrastate transportation operations are also subject to ratable take and common purchaser
statutes in Texas, New Mexico, Arizona, Louisiana, Utah and Colorado. Ratable take statutes generally require
gatherers to take, without undue discrimination, natural gas production that may be tendered to the gatherer for
handling. Similarly, common purchaser statutes generally require gatherers to purchase without undue
discrimination as to source of supply or producer. These statutes have the effect of restricting our right as an
owner of gathering facilities to decide with whom we contract to purchase or transport natural gas. Federal law
leaves any economic regulation of natural gas gathering to the states, and some of the states in which we operate
have adopted complaint-based or other limited economic regulation of natural gas gathering activities. States in
which we operate that have adopted some form of complaint-based regulation, like Texas, generally allow natural
gas producers and shippers to file complaints with state regulators in an effort to resolve grievances relating to
natural gas gathering rates and access. Other state and local regulations also affect our business.
Our storage facilities are also subject to the jurisdiction of the TRRC. Generally, the TRRC has jurisdiction over
all underground storage of natural gas in Texas, unless the facility is part of an interstate gas pipeline facility.
Because the natural gas storage facilities of the ET Fuel System and HPL System are only connected to intrastate
gas pipelines, they fall within the TRRC’s jurisdiction and must be operated pursuant to TRRC permit. Certain
changes in ownership or operation of TRRC-jurisdictional storage facilities, such as facility expansions and
increases in the maximum operating pressure, must be approved by the TRRC through an amendment to the
facility’s existing permit. In addition, the TRRC must approve transfers of the permits. Texas laws and
regulations also require all natural gas storage facilities to be operated to prevent waste, the uncontrolled escape
of gas, pollution and danger to life or property. Accordingly, the TRRC requires natural gas storage facilities to
implement certain safety, monitoring, reporting and record-keeping measures.
Violations of the terms and provisions of a TRRC permit or a TRRC order or regulation can result in the
modification, cancellation or suspension of an operating permit and/or civil penalties, injunctive relief, or both.
The states in which we conduct operations administer federal pipeline safety standards under the Pipeline Safety
Act of 1968, which requires certain pipeline companies to comply with safety standards in constructing and
operating the pipelines, and subjects pipelines to regular inspections. Some of our gathering facilities are exempt
from the requirements of this Act. In respect to recent pipeline accidents in other parts of the country, Congress
and the DOT are considering heightened pipeline safety requirements.
Failure to comply with applicable laws and regulations could result in the imposition of administrative, civil and
criminal remedies.
Our interstate pipelines are subject to laws, regulations and policies governing the rates they are allowed to
charge for their services.
Laws, regulations and policies governing interstate natural gas pipeline rates could affect the ability of our
interstate pipelines to establish rates, to charge rates that would cover future increases in its costs, or to continue
to collect rates that cover current costs. NGA-jurisdictional natural gas companies must charge rates that are
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