Enterprise
GP Holdings L.P.
1100
Louisiana, 10th
Floor
Houston,
Texas 77002
May 22,
2009
Mr. H
Christopher Owings
Assistant
Director
Division
of Corporation Finance
United
States Securities and Exchange Commission
100 F
Street, N.E.
Washington,
D.C. 20549-0404
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Re:
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Enterprise
GP Holdings L.P. (the “Registrant”)
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Form
10-K for the Fiscal Year Ended December 31, 2008
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Filed
March 2, 2009
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Current
Report on Form 8-K
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Filed
on April 21, 2009
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File
No.
1-32610
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Dear Mr.
Owings:
In this letter, we are setting forth
the response of the Registrant to the comments contained in the letter from the
staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”)
dated May 11, 2009 (the “Comment Letter”), with respect to the above captioned
filings. For your convenience, we have repeated the Staff’s comments
as set forth in the Comment Letter. The Registrant’s response to each
comment is set forth immediately below the text of the applicable
comment.
Unless the context requires otherwise,
references to “we,” “us,” “our,” “Partnership,” and similar expressions are
intended to mean the business and operations of Enterprise GP Holdings L.P. and
its consolidated subsidiaries. References to “Parent Company” mean Enterprise GP
Holdings L.P., individually as the parent company, and not on a consolidated
basis. References to “EPCO” mean EPCO, Inc.
Annual Report on Form 10-K
for the Fiscal Year Ended December 31, 2008
Items 1 and
2. Business and Properties, page 3
Financial Information by
Business Segment, page 4
1. We
reviewed Note 4 of the Notes to Consolidated Financial Statements included under
Item 8 of your Form 10-K. Please disclose total assets for each
segment for each of the last three fiscal years as opposed to the last two
fiscal years. Refer to Item 101(b) of Regulation S-K.
Response
We note your comment and in future
filings will revise our presentation to disclose three fiscal years of
data.
Division
of Corporation Finance
May
22, 2009
Page 2
Enterprise Products
Partners, page 6
Major customers, page
13
2. You
disclose that Enterprise Products Partners’ largest customer was LyondellBasell
Industries and its affiliates (“LBI”), which accounted for nearly 10% of the
consolidated revenues of Enterprise Products Partners. Since
Enterprise Products Partners revenue accounted for over 60% of your revenues in
2008, please disclose whether you expect LBI’s bankruptcy filing to have a
material adverse effect on your revenues, results of operations or financial
condition or the revenues, results of operations or financial condition of
Enterprise Products Partners.
Response
We do not expect that the bankruptcy
filing of LyondellBassell Industries (“LBI”) will have a material adverse effect
on our consolidated revenues, results of operations or financial condition or
those of Enterprise Products Partners L.P. Since LBI filed for Chapter 11
bankruptcy protection and with the support of debtor-in-possession financing, it
continues to do business with Enterprise Products Partners
L.P. However, Enterprise Products Partners L.P. has taken steps to
manage its credit exposure to LBI through prepayment requirements and similar
remedies. Based on current facts known to us, we plan to disclose in
future filings that the bankruptcy of LBI is not expected to have a material
adverse effect on the revenues, results of operations or financial condition of
Enterprise Products Partners or us.
Item 1A. Risk
Factors, page 29
3. In
the second paragraph under this heading you state that “[t]he following section
lists some, but not all, of the key risk factors that may have a direct impact
on [your] business, financial position, results of operations and cash
flows.” All material risks should be described. If risks
are not deemed material, you should not reference them. Please revise
or advise under this heading and elsewhere in your Form 10-K as appropriate,
including under the heading “Risks Relating to the MLP Entities’ Business” on
page 38.
Response
We confirm to you that we believe all
material risks are described. We also do not deem any of the risks
referenced immaterial. We will revise the subject sentence (and
similar references) in future filings as follows:
“The
following section lists the key risk factors that may have a direct and material
impact on our business, financial position, results of operations and cash
flows.”
Item
10. Directors, Executive Officers and Corporate Governance, page
103
Corporate Governance, page
103
Code of Conduct and Ethics
and Corporate Governance Guidelines, page 103
4. Under
this heading you state that EPE Holdings has adopted a “Code of Ethical Conduct
for Senior Financial Officers and Managers” that applies to the CEO, CFO,
principal accounting officer and senior financial and other managers and that
investors can access this Code of Ethical Conduct for Senior Financial Officers
and Managers through your Internet website at www.enterprisegp.com. We
were unable to locate a copy of the Code of Ethical Conduct for Senior Financial
Officers and Managers on your website. Please revise or
advise.
Division
of Corporation Finance
May
22, 2009
Page 3
Response
The Code of Conduct was revised in 2007
to include the ethical standards for senior financial officers and
managers. The “Code of Conduct and Ethics and Corporate Governance
Guidelines” section of our future annual filings will be revised to read as
follows:
“Code
of Conduct and Ethics and Corporate Governance Guidelines
EPE Holdings has adopted a “Code of
Conduct” that applies to all directors, officers and employees. This
code sets out our requirements for compliance with legal and ethical standards
in the conduct of our business, including general business principles, legal and
ethical obligations, compliance policies for specific subjects, obtaining
guidance, the reporting of compliance issues and discipline for violations of
the code.
The Code of Conduct also includes a
code of ethics that applies to the CEO, CFO, principal accounting officer and
senior financial and other managers of our general partner. In
addition to other matters, this code of ethics establishes policies to prevent
wrongdoing and to promote honest and ethical conduct, including ethical handling
of actual and apparent conflicts of interest, compliance with applicable laws,
rules and regulations, full, fair, accurate, timely and understandable
disclosure in public communications and prompt internal reporting violations of
the code.
Governance guidelines, together with
applicable committee charters, provide the framework for effective
governance. The Board has adopted the “Governance Guidelines of
Enterprise GP Holdings,” which address several matters, including qualifications
for directors, responsibilities of directors, retirement of directors, the
composition and responsibilities of the ACG Committee, the conduct and frequency
of Board and committee meetings, management succession plans, director access to
management and outside advisors, director compensation, director orientation and
continuing education, and annual self-evaluation of the Board. The
Board recognizes that effective governance is an on-going process, and thus, it
will review the Governance Guidelines of Enterprise GP Holdings annually or more
often as deemed necessary.
We
provide investors access to current information relating to our governance
procedures and principles, including the Code of Conduct, the Governance
Guidelines of Enterprise GP Holdings and other matters, through our Internet
website, www.enterprisegp.com. You
may also contact us at (866) 230-0745 for printed copies of these documents free
of charge.”
We
will also post the following statement on our website under the section for
Corporate Governance:
“The Code
of Conduct was revised to include the ethical standards for senior financial
officers andmanagers formerly included in the Code of Ethical Conduct for Senior
Financial Officers and Managers. Interested parties should review the Code of
Conduct for this information.”
Item 13. Certain
Relationships and Relationships and Related Transactions, and Director…, page
122
Certain Relationships and
Related Transactions, page 122
Relationship with EPCO and
affiliates, page 122
EPCO Administrative Services
Agreement, page 123
5. In
the lead-in paragraph to your summary compensation table on page 109, you
disclose that “[c]ompensation paid or awarded by [you] with respect to [your]
Named Executive Officers reflects only
Division
of Corporation Finance
May
22, 2009
Page 4
that
portion of compensation paid by EPCO allocated to [you] pursuant to the ASA,
including an allocation of a portion of the cost of EPCO’s equity-based
long-term incentive plans.” In your description of the administrative
services agreement under this heading, please disclose how compensation paid by
EPCO, including the cost of EPCO’s equity-based long-term incentive plans, is
allocated under the administrative services agreement to you and your
affiliates.
We also note that (1) Messrs. Fowler
and Bachmann are named executive officers of Enterprise GP Holdings L.P.,
Enterprise Products Partners, L.P. and Duncan Energy Partners L.P. and (2)
Messrs. Creel and Teague are named executive officers of Enterprise GP Holdings
L.P. and Enterprise Products Partners L.P. Please disclose how much
time each of these named executive officers devotes to these
businesses. Lastly, please also state, if true, that the portion of
compensation paid by EPCO allocated to you pursuant to this agreement does not
include any portion of the compensation allocated by EPCO to your consolidated
subsidiaries.
Response
Under the EPCO administrative services
agreement, the total compensation costs of our named executive officers are
allocated to us and our affiliates based on the estimated amount of time that
each officer spends on the affairs of that business in any fiscal
year. These percentages are reassessed at least quarterly. Our
executive compensation amounts are presented on a consolidated basis. We are
specifically required under Item 402, Executive Compensation, to present various
components of executive compensation (e.g., unit-based compensation amounts) on
the same basis that those amounts are recognized for financial reporting
purposes. Our general purpose financial statements include the accounts of
Enterprise GP Holdings L.P. and its consolidated subsidiaries.
Supplementally, the following table
presents the estimated amount of time that Messrs. Fowler, Bachmann, Creel and
Teague devoted to each of the businesses of EPCO and affiliates during the year
ended December 31, 2008 on an unconsolidated basis:
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Enterprise
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Enterprise
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Duncan
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Total
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GP
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Products
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Energy
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Time
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Holdings
L.P.
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Partners
L.P.
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Partners
L.P.
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EPCO,
Inc.
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Allocated
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W.
Randall Fowler
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12.5%
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25%
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12.5%
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50%
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100%
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Michael
A. Creel
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--
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80%
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--
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20%
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100%
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A.J.
Teague
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--
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100%
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--
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--
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100%
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Richard
H. Bachmann
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15%
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30%
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25%
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30%
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100%
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None of the above named executive
officers allocate any portion of their time to the affairs of TEPPCO Partners,
L.P.
For clarification purposes, we will
modify the lead-in paragraphs to the Summary Compensation Table in future
filings to read as follows:
“Summary
Compensation Table
The
following table presents total compensation amounts paid, accrued or otherwise
expensed by us with respect to the years ended December 31, 2008, 2007 and 2006
for our CEO, CFO and three other most highly compensated executive officers as
of December 31, 2008. Collectively, these five individuals were our
“Named Executive Officers” for 2008. Our Named Executive Officers
include certain officers of Enterprise Products Partners and Duncan Energy
Partners that perform important policy-making functions for these consolidated
subsidiaries. Messrs. Creel, Fowler, Teague and Bachmann serve as the CEO, CFO,
chief commercial officer (“CCO”) and chief legal officer, respectively, of
Enterprise
Division
of Corporation Finance
May
22, 2009
Page 5
Products
Partners L.P. Messrs. Bachmann, Fowler and Teague also serve as the
CEO, CFO and CCO, respectively, of Duncan Energy Partners
L.P. Amounts presented in the Summary Compensation Table represent
the amounts paid, accrued or otherwise expensed by us and our consolidated
subsidiaries with respect to each Named Executive Officer.
Compensation
paid or awarded by us with respect to such Named Executive Officers reflects
only that portion of compensation paid by EPCO that is allocated to us pursuant
to the ASA, including an allocation of a portion of the cost of EPCO’s
equity-based long-term incentive plans. Under the ASA, the
compensation costs of our named executive officers are allocated to us and our
affiliates based on the estimated amount of time that each officer spends on our
consolidated businesses in any fiscal year. These percentages are reassessed at
least quarterly.”
Item 15. Exhibits
and Financial Statement Schedules, page 131
6. Under
this heading you disclose that the “agreements included as exhibits are included
only to provide information to investors regarding their terms” and that the
“agreements… may contain representations, warranties and other provisions that
were made, among other things, to provide the parties thereto with specified
rights and obligations and to allocate risk among them, and such agreements
should not be relied upon as constituting or providing any factual disclosures
about [you], any other persons, any state of affairs or other
matters.” Please revise to remove any potential implication that the
referenced agreements do not constitute public disclosure under the federal
securities laws.
Response
We acknowledge that, notwithstanding
the general disclaimer, the registrant is responsible for considering whether
additional specific disclosure of material information regarding material
contractual provisions is required to make the statements in the Form 10-K not
misleading. We will revise the disclaimer in future filings as
follows to remove any potential implication that the referenced agreements do
not constitute public disclosure under the federal securities laws:
“The
agreements listed below may contain representations, warranties and other
provisions that were made, among other things, to provide the parties thereto
with specified rights and obligations and to allocate risk among
them. Accordingly, while these agreements constitute public
disclosure under the federal securities laws, the following exhibits should not
be relied upon as constituting or providing any factual disclosures about us,
any other persons, any state of affairs or other matters, other than the
existence of these agreements and the applicable terms contained
therein.”
7. We
note that Lehman Commercial Paper Inc. is the syndication agent under your
credit agreement. Please tell us what impact, if any, the filing for
bankruptcy on September 15, 2008 by Lehman Brothers Holdings, Inc. has had on
this agreement and your access to the full amount available
thereunder.
Response
Lehman Commercial Paper Inc. (“Lehman”)
accounted for $18.5 million, or 9.2 percent, of total lender commitments under
the Enterprise GP Holdings L.P. $200 million revolving credit
agreement. At December 31, 2008, the total amount borrowed
under this credit agreement was $102 million, which includes $9.4 million funded
by Lehman prior to its bankruptcy filing. Excluding the
remaining Lehman commitment of $9.1 million, we had $88.9 million of
availability under this credit agreement at December 31,
2008. Lehman’s bankruptcy has had no material impact on our results
of operations, cash flows or
Division
of Corporation Finance
May
22, 2009
Page 6
financial
position. We will disclose the amount of available credit under this
facility (excluding the Lehman portion) in future filings.
Current Report on Form 8-K
filed April 21, 2009
8. In
this Form 8-K you disclosed that Enterprise Products Partners and TEPPCO
announced that, effective April 16, 2009, their respective affiliates that were
partners in the Texas Offshore Port System (TOPS) partnership dissociated from
TOPS and forfeited their investments and combined two-thirds ownership interest
in the partnership. Under the heading “Results of
Operations—Investment in Enterprise Products Partners” on page 65 of your Form
10-K, you disclose in the fourth paragraph that “Enterprise Products Partners
and TEPPCO have each guaranteed up to approximately $700.0 million… of the
capital contribution obligations of their respective subsidiary parties in the
joint venture.” With a view toward disclosure, please tell us whether
you expect Enterprise Products Partners and TEPPCO to incur any liabilities in
the future pursuant to these guarantees. We may have further
comment.
With a view toward disclosure, please
also tell us whether you expect the dissociation of the Enterprise Products
Partners and TEPPCO affiliates to have a material adverse effect on your results
of operations, financial condition or business strategy or the results of
operation, financial condition or business strategy of Enterprise Products
Partners or TEPPCO. In this regard, we note the disclosure in your
risk factor “Enterprise Products Partners and TEPPCO recently announced their
participation in the Texas Offshore Port System joint venture…” on page 38 of
your 10-K, that the TOPS joint venture “is expected to represent an important
investment for Enterprise Products Partners and TEPPCO, requiring an estimated
combined $1.2 billion in capital contributions from them (excluding capitalized
interest).”
Response
We
believe that the dissociation of our affiliates from the Texas Offshore Port
System partnership discharged both Enterprise Products Partners and TEPPCO from
any liabilities or other obligations under the related $700.0 million parent
guarantees. In future filings, we expect to add the following
disclosure, which is based on current facts known to us:
“We
believe that the dissociation of affiliates of Enterprise Products Partners and
TEPPCO discharged these affiliates with respect to further obligations under the
partnership agreement, and, accordingly, both parent entities from associated
liabilities under the related parent guarantees; therefore, neither Enterprise
Products Partners nor TEPPCO have recorded any amounts related to such
guarantees.”
Oiltanking has asserted
that the dissociation was wrongful and in breach of the Texas Offshore Port
System partnership agreement, citing provisions of the agreement that, if
applicable, would continue to obligate Enterprise Products Partners and TEPPCO
to make capital contributions to fund the project and impose additional
liabilities on them. On May 19, 2009, the Texas Offshore Port System
partnership filed an original petition against Enterprise Offshore Port System,
LLC, Enterprise Products Operating, LLC, TEPPCO O/S Port System, LLC, TEPPCO
Partners, L.P. and Texas Eastern Products Pipeline Company, LLC in the District
Court of Harris County, Texas, 61st Judicial District (Cause No. 2009-31367),
containing allegations of the same and making other claims. We
believe that the actions of Enterprise Products Partners and TEPPCO in
dissociating from the partnership are expressly permitted by, and in accordance
with, the terms of the Texas Offshore Port System partnership agreement and they
intend to vigorously defend their actions. Accordingly, we have not
recorded any reserves for potential liabilities relating to this
matter, but we will continue to review Oiltanking’s and our respective positions
with respect to reporting in future periods.
The Texas Offshore Port System
partnership was expected to represent an important component of both Enterprise
Products Partners’ and TEPPCO’s future capital spending
programs. However, we believe
Division
of Corporation Finance
May
22, 2009
Page
7
that both
Enterprise Products Partners and TEPPCO will have opportunities to reallocate
their future capital spending to other projects. As such, we do not
believe that the dissociation of our affiliates from this joint venture will
have a material adverse effect on either our or Enterprise Products Partners’ or
TEPPCO’s overall business strategy, results of operations or financial position
going forward.
*
* * * *
In
connection with responding to the Staff’s comments, the Registrant acknowledges
that:
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§
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it
is responsible for the adequacy and accuracy of disclosures in its
filings;
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§
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Staff
comments or changes to disclosures in response to Staff comments do not
foreclose the Commission from taking any action with respect to its
filings; and
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§
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it
may not assert Staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the
United States.
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Please
direct any questions that you have with respect to the foregoing responses to
the undersigned at (713) 381-6545 (direct line) or (713) 381-6938
(fax).
| Regards, | ||||
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/s/ Michael J. Knesek | |||
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Name:
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Michael
J. Knesek
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Title:
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Senior
Vice President, Controller and
Principal
Accounting Officer of
EPE
Holdings LLC, general partner of
Enterprise GP Holdings L.P.
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cc:
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Dr.
Ralph S. Cunningham
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W.
Randall Fowler
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Richard
H. Bachmann
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Michael
Hanson
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Stephanie
Hildebrandt
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David
Buck (Andrews Kurth)
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