Enterprise Products
Partners 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
Products Partners 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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File
No.
001-14323
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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 Products Partners
L.P. and its consolidated subsidiaries. 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 16 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.
Segment Discussion, page
3
2. Under
this heading you disclose that in 2008 your largest customer was LyondellBasell
Industries and its affiliates (“LBI”), which accounted for nearly 10% of the
your consolidated revenues. Please disclose whether you expect LBI’s
bankruptcy filing to have a material adverse effect on your revenues, results of
operations or financial condition.
Division
of Corporation Finance
May
22, 2009
Page 2
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. Since LBI filed for Chapter 11 bankruptcy protection
and with the support of debtor-in-possession financing, it continues to do
business with us. However, we have taken steps to manage our 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 our
revenues, results of operations or financial condition.
Item 1A. Risk
Factors, page 32
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.
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 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.”
Management’s Discussion and
Analysis of Financial Condition…, page 55
Liquidity and Capital
Resources, page 72
Capital Spending, page
77
4. Under
this heading you disclose that “an integral part of [your] business strategy
involves expansion through business combinations, growth capital projects and
investments in joint ventures.” In your Form 8-K filed on April 21,
2009, you announced that, effective April 16, 2009, your affiliate, Enterprise
Offshore Port System, LLC, has elected to exit from one such joint venture, the
Texas Offshore Port System partnership (“TOPS”), and forfeit its investment and
its one-third ownership interest in the partnership. While we note
your disclosure in the Form 8-K regarding the expected $34 million non-cash
charge against earnings you expect to record for the second quarter of 2009,
with a view toward disclosure, please also tell us whether you expect the
dissociation to have a material adverse effect on your business strategy going
forward.
In addition, under the heading “Recent
Developments—Texas Offshore Port System” on page 60, you disclose that you and
TEPPCO have each guaranteed up to approximately $700.0 million, which includes a
contingency amount for potential cost overruns, of the capital contribution
obligations of your respective subsidiary partners in the TOPS joint
venture. With a view toward disclosure, please tell us whether you
expect to incur any liabilities in the future pursuant to this
guarantee. We may have further comment.
Response
The Texas
Offshore Port System partnership was expected to represent an important
component of our future capital spending program. However, we believe
that we will have opportunities to reallocate our future capital spending to
other projects. As such, we do not believe that our dissociation from
this joint venture will have a material adverse effect on our overall business
strategy, results of operations or financial position going forward.
Furthermore, we believe that the dissociation of our affiliate from the Texas
Offshore Port System partnership discharged Enterprise Products Partners L.P.
from any liabilities or
Division
of Corporation Finance
May
22, 2009
Page 3
other
obligations under the related $700.0 million parent
guarantee. 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 our affiliate from the Texas Offshore Port
System partnership discharged such affiliate with respect to further obligations
under the partnership agreement, and, accordingly, Enterprise Products Partners
from associated liabilities under the related parent guarantee; therefore, we
have not recorded any amounts related to such guarantee."
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 us to make capital contributions to fund the project
and impose additional liabilities on us. 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 our actions in dissociating from
the partnership are expressly permitted by, and in accordance with, the terms of
the Texas Offshore Port System partnership agreement and we intend to vigorously
defend such 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.
Item 13. Certain
Relationships and Relationships and Related Transactions, and Director…, page
121
Certain Relationships and
Related Transactions, page 121
Relationship with EPCO and
affiliates, page 121
EPCO ASA, page
122
5. In
the lead-in paragraph to your summary compensation table on page 107, you
disclose that “[c]ompensation paid or awarded by [you] with respect to [your]
Named Executive Officers reflects only 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 Messrs. Fowler and
Bachmann are named executive officers of Enterprise Products Partners L.P. and
Duncan Energy Partners L.P. as well as your parent, Enterprise GP Holdings
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 Products Partners L.P. and its
consolidated subsidiaries.
Division
of Corporation Finance
May
22, 2009
Page
4
Supplementally, the following table
presents the estimated amount of time that Messrs. Fowler and Bachmann 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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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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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
Messrs. Bachmann and Fowler, who also serve as the CEO and CFO, respectively, of
Duncan Energy Partners. 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 135
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
Division
of Corporation Finance
May
22, 2009
Page 5
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.”
*
* * * *
In
connection with responding to the Staff’s comments, the Registrant acknowledges
that:
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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
Enterprise
Products GP, LLC,
general partner of
Enterprise Products Partners L.P.
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cc:
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Michael
A. Creel
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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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