Sunoco 2014 Annual Report Download - page 60

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• Marcus Hook Industrial Complex Storage and Terminalling Services: In connection with our second quarter 2013
acquisition of the Marcus Hook Industrial Complex, we assumed an agreement to provide butane storage and terminal
services to PES at the facility. The 10 year agreement extends through September 2022.
• Purchase and Sale Agreements: We have agreements for the purchase and sale of crude oil, refined products and NGLs.
These agreements are negotiated at market-based rates, do not extend beyond 2015, and can be terminated by either
party in certain cases.
• Terminalling Services: We have agreements with affiliates for the use of our terminal assets, as well as our use of an
affiliated terminal asset to facilitate our acquisition and marketing activities. The agreements are based on market terms
and negotiated based on the respective term. These agreements vary in duration and can be terminated by either party in
certain cases.
• Pipeline Agreements: We have agreements with affiliated parties to utilize our pipelines to supply their business needs.
All pipeline movements are on the same terms that would be available to an unrelated party and are based on published
tariff rates on the respective pipeline.
Omnibus Agreement
In 2002, we entered into an Omnibus Agreement with Sunoco and our general partner that addresses the following matters:
• our obligation to pay the general partner or Sunoco an annual administrative fee for the provision by Sunoco and its
affiliates of certain general and administrative services;
• an indemnity by Sunoco for certain environmental, toxic tort and other liabilities; and
• our obligation to indemnify Sunoco and its affiliates for events and conditions associated with the operation of the
assets that occur on or after the closing of the IPO and for environmental and toxic tort liabilities related to the assets to
the extent Sunoco is not required to indemnify us.
Administrative Services
We have no employees and we reimburse the general partner and its affiliates for certain costs and other direct expenses
incurred on our behalf. In addition, we have incurred additional general and administrative costs which we pay directly.
Under the Omnibus Agreement, we pay ETP an annual administrative fee that includes expenses incurred by ETP and its
affiliates to perform centralized corporate functions, such as legal, accounting, engineering, information technology, insurance,
and other corporate services, including the administration of employee benefit plans. The conditions of Section 4.1 of the
Omnibus Agreement (which concerns our obligation to pay the annual fee for provision of certain general and administrative
services) have been extended annually by one year since the expiration of the initial term (through 2004). The costs may be
increased if the acquisition or construction of new assets or businesses requires an increase in the level of general and
administrative services received by us. We are also allocated a component of shared insurance costs incurred by ETP and its
affiliates. The amounts incurred in connection with the centralized corporate functions and shared insurances costs were not
material to our results of operations during the three year period ended December 31, 2014.
Our share of allocated Sunoco employee benefit plan expenses, including noncontributory defined benefit retirement plans,
defined contribution 401(k) plans, employee and retiree medical, dental and life insurance plans, incentive compensation plans
and other such benefits was $45, $36, $10, and $28 million for the years ended December 31, 2014 and 2013, and the periods
from October 5, 2012 to December 31, 2012 and from January 1, 2012 to October 4, 2012, respectively. These expenses are
reflected in operating expenses and selling, general and administrative expenses in the consolidated statements of comprehensive
income.
Indemnification
Under the terms of the Omnibus Agreement and in connection with the contribution of assets by affiliates of Sunoco,
Sunoco has agreed to indemnify us for 30 years from environmental and toxic tort liabilities related to the assets contributed that
arise from the operation of such assets prior to closing of the IPO. Sunoco is obligated to indemnify us for 100 percent of all
losses asserted within the first 21 years of closing of the IPO. Sunoco’s share of liability for claims asserted thereafter will
decrease by 10 percent per year. For example, for a claim asserted during the twenty-third year after closing of the IPO, Sunoco
would be required to indemnify us for 80 percent of the loss. There is no monetary cap on the amount of indemnity coverage
provided by Sunoco. In addition, this indemnification applies to the following, purchased from Sunoco subsequent to the IPO:
interests in the Mesa Pipeline System, Mid-Valley, West Texas Gulf and Inland, as well as the Eagle Point assets and various
other assets. Any environmental and toxic tort liabilities not covered by this indemnity will be our responsibility. Total future
costs for environmental remediation activities will depend upon, among other things, the identification of any additional sites;
the determination of the extent of the contamination at each site; the timing and nature of required remedial actions; the
technology available and needed to meet the various existing legal requirements; the nature and extent of future environmental