Sunoco 2015 Annual Report Download - page 64

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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 our 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, 2015.
We participate in various employee benefit programs as administered by ETP and its affiliates. Our share of allocated
employee benefit plan expenses, including defined contribution 401(k) plans, employee and retiree medical, dental and life
insurance plans, incentive compensation plans and other such benefits was $54, $45, and $36 million for the years ended
December 31, 2015, 2014 and 2013, 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 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 laws;
inflation rates; and the determination of the liability at multi-party sites, if any, in light of the number, participation levels, and
financial viability of other parties. We have agreed 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 to the
extent Sunoco is not required to indemnify us.
Sunoco has also agreed to indemnify us for liabilities relating to:
• the assets contributed to SXL, other than environmental and toxic tort liabilities, that arise out of the operation of
the assets prior to the closing of the IPO and that are asserted within ten years after the closing of the IPO;
• certain defects in title to the assets contributed to SXL and failure to obtain certain consents and permits necessary
to conduct the business that arise within ten years after the closing of the IPO;
• legal actions related to the period prior to the IPO currently pending against Sunoco or its affiliates; and
• events and conditions associated with any assets retained by Sunoco or its affiliates.