Enterprise Products Partners L.P.

SEC Filings

10-Q
GULFTERRA ENERGY PARTNERS L P filed this Form 10-Q on 08/09/2004
Entire Document
 
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     In addition to the above matters, we and our subsidiaries and affiliates
are named defendants in numerous lawsuits and governmental proceedings that
arise in the ordinary course of our business.
 
     For each of our outstanding legal matters, we evaluate the merits of the
case, our exposure to the matter, possible legal or settlement strategies and
the likelihood of an unfavorable outcome. If we determine that an unfavorable
outcome is probable and can be estimated, we will establish the necessary
accruals. As of June 30, 2004, we had no reserves for our legal matters.
 
     While the outcome of our outstanding legal matters cannot be predicted with
certainty, based on information known to date, we do not expect the ultimate
resolution of these matters to have a material adverse effect on our financial
position, results of operations or cash flows. As new information becomes
available or relevant developments occur, we will establish accruals as
appropriate.
 
  Environmental
 
     Each of our operating segments is subject to extensive federal, state, and
local laws and regulations governing environmental quality and pollution
control. These laws and regulations are applicable to each segment and require
us to remove or remedy the effect on the environment of the disposal or release
of specified substances at current and former operating sites. We expect to make
capital expenditures for environmental matters of approximately $7 million in
the aggregate for the years 2004 through 2008, primarily to comply with clean
air regulations.
 
     As of June 30, 2004 and December 31, 2003, we had a reserve of
approximately $21 million, which is included in other non-current liabilities on
our balance sheets, for remediation costs expected to be incurred over time
associated with mercury gas meters. We assumed this liability in connection with
our April 2002 acquisition of the EPN Holding assets. As part of the April 2002
EPN Holding asset acquisition, El Paso Corporation has agreed to indemnify us
for all the known and unknown environmental liabilities, excluding the
remediation costs associated with mercury gas meters, related to the assets we
purchased up to the purchase of $752 million. Additionally, as part of the
November 2002 San Juan assets acquisition, El Paso Corporation has agreed to
indemnify us for all the known and unknown environmental liabilities related to
the assets we purchased up to the purchase price of $764 million. We will be
indemnified for liabilities discovered during the proceeding three years from
the closing date of these acquisitions. In addition, we have been indemnified by
third parties for remediation costs associated with other assets we have
purchased.
 
     Shoup Air Permit Violation.  On December 16, 2003, El Paso Field Services,
L.P. received a Notice of Enforcement (NoE) from the Texas Commission on
Environmental Quality (TCEQ) concerning alleged Clean Air Act violations at its
Shoup, Texas plant. The NoE included a draft Agreed Order assessing a penalty of
$365,750 for the cited violation. The alleged violations pertained to emission
limit exceedences, testing, reporting, and recordkeeping issues in 2001. While
the NoE was addressed to El Paso Field Services, L.P., the substance of the NoE
also concerns equipment at the Shoup plant owned by our subsidiary, GulfTerra
GC, L.P. El Paso Field Services, L.P. responded to the NoE challenging several
of the allegations and the penalty amount and is awaiting a response from the
TCEQ.
 
     While the outcome of our outstanding environmental matters cannot be
predicted with certainty, based on the information known to date and our
existing accruals, we do not expect the ultimate resolution of these matters to
have a material adverse effect on our financial position, results of operations
or cash flows. It is possible that new information or future developments could
require us to reassess our potential exposure related to environmental matters.
We may incur significant costs and liabilities in order to comply with existing
environmental laws and regulations. It is also possible that other developments,
such as increasingly strict environmental laws and regulations and claims for
damages to property, employees, other persons and the environment resulting from
our current or past operations, could result in substantial costs and
liabilities in the future. As this information becomes available, or relevant
developments occur, we will adjust our accrual amounts accordingly. While there
are still uncertainties relating to the ultimate costs we may incur, based upon
our evaluation and experience to date, we believe our current reserves are
adequate.
 
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