Energy Transfer LP

For information regarding legal proceedings, see Note 11 to our consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for the year ended December 31, 2024.

Additionally, we have received notices of violations and potential fines under various federal, state and local provisions relating to the discharge of materials into the environment or protection of the environment. While we believe that even if any one or more of the following environmental proceedings were decided against us, it would not be material to our financial position, results of operations or cash flows, we are required to report environmental governmental proceedings if we reasonably believe that such proceedings reasonably could result in monetary sanctions in excess of $1 million (previously $0.3 million).

ETC Sunoco and Energy Transfer R&M (collectively, “Sunoco Defendants”) are defendants in lawsuits alleging MTBE contamination of groundwater. The plaintiffs, state-level governmental entities, assert product liability, nuisance, trespass, negligence, violation of environmental laws, and/or deceptive business practices claims. The plaintiffs seek to recover compensatory damages, and in some cases also seek natural resource damages, injunctive relief, punitive damages and attorneys’ fees.

As of March 31, 2023, Sunoco Defendants are defendants in two cases: one case initiated by the State of Maryland and one by the Commonwealth of Pennsylvania. The actions brought also named as defendants ETO, ETP Holdco and Sunoco Partners Marketing & Terminals L.P., now known as Energy Transfer Marketing & Terminals L.P.

It is reasonably possible that a loss may be realized in the remaining cases; however, we are unable to estimate the possible loss or range of loss in excess of amounts accrued. An adverse determination with respect to one or more of the MTBE cases could have a significant impact on results of operations during the period in which any such adverse determination occurs, but such an adverse determination likely would not have a material adverse effect on the Partnership’s consolidated financial position.

In late 2016, FERC Enforcement Staff began a non-public investigation related to Rover’s purchase and removal of a potentially historic home (known as the Stoneman House) while Rover’s application for permission to construct the new 711-mile interstate natural gas pipeline and related facilities was pending. On March 18, 2021, FERC issued an Order to Show Cause and Notice of Proposed Penalty (Docket No. IN19-4-000), ordering Rover to explain why it should not pay a $20 million civil penalty for alleged violations of FERC regulations requiring certificate holders to be forthright in their submissions of information to the FERC. Rover filed its answer and denial to the order on June 21, 2021 and a surreply on September 15, 2021. FERC issued an order on January 20, 2022 setting the matter for hearing before an administrative law judge. On January 25, 2022, the chief judge assigned an administrative law judge and set a timeline for a prehearing conference.

On February 1, 2022, Energy Transfer and Rover filed a Complaint for Declaratory Relief in the United States District Court for the Northern District of Texas seeking an order declaring that FERC must bring its enforcement action in federal district court (instead of before an administrative law judge). Also on February 1, 2022, Energy Transfer and Rover filed an expedited request to stay the proceedings before the FERC administrative law judge pending the outcome of the federal district court case. On May 24, 2022, the District Court ordered a stay of the FERC’s enforcement case and the District Court case pending the resolution of two cases pending before the United States Supreme Court. Arguments were heard in those cases on November 7, 2022. On April 14, 2023, the United States Supreme Court held against the government in both cases, finding that the federal district courts had jurisdiction to hear those suits and to resolve the parties’ constitutional challenges. The cases were remanded to the federal district courts for further proceedings.

On September 13, 2023 the District Court ordered that the District Court case would be stayed pending the resolution of another case pending before the United States Supreme Court and that the FERC enforcement case would remain stayed. On November 13, 2023, the FERC appealed the District Court order to the United States Court of Appeals for the Fifth Circuit. On December 11, 2023, FERC filed a motion to withdraw that appeal, which the Fifth Circuit granted on December 12, 2023. The FERC and District Court proceedings remain stayed pending resolution of the case pending before the United States Supreme Court. The Supreme Court issued a decision in that case on June 27, 2024. The FERC and District Court proceedings remain stayed at this time. Energy Transfer and Rover intend to vigorously defend this claim.

In mid-2017, FERC Enforcement Staff began a non-public investigation regarding allegations that diesel fuel may have been included in the drilling mud at the Tuscarawas River horizontal directional drilling (“HDD”) operations. Rover and the Partnership are cooperating with the investigation. Enforcement Staff has provided Rover with a notice pursuant to Section 1b.19 of the FERC’s regulations that Enforcement Staff intends to recommend that the FERC pursue an enforcement action against Rover and the Partnership. The Partnership disagrees with Enforcement Staff’s findings and intends to vigorously defend against any potential penalty. On December 16, 2021, FERC issued an Order to Show Cause and Notice of Proposed Penalty (Docket No. IN17-4-000), ordering Rover to show cause why it should not be found to have violated Section 7(e) of the NGA, Section 157.20 of FERC’s regulations, and the Rover Pipeline Certificate Order, and assessed civil penalties of $40 million.

Rover and Energy Transfer filed their answer to this order on March 21, 2022, and Enforcement Staff filed a reply on April 20, 2022. Rover and Energy Transfer filed their surreply to this order on May 13, 2022. FERC has taken no further action on the case since that time. Any and all losses, including any fines and penalties from government agencies, resulting from the general contractor’s alleged actions in conducting such HDD operations are subject to indemnity rights in favor of Rover and the Partnership. Given the stage of the proceedings, the Partnership is unable at this time to provide an assessment of the potential outcome or range of potential liability, if any; however, the Partnership believes the indemnity described above will be applicable to the penalty proposed by Enforcement Staff and intends to vigorously defend itself against the subject claims.

On November 3, 2017, the State of Ohio and the Ohio Environmental Protection Agency (“Ohio EPA”) filed suit against Rover and other defendants (collectively, the “Defendants”) seeking to recover approximately $2.6 million in civil penalties allegedly owed and certain injunctive relief related to permit compliance. The Defendants filed several motions to dismiss, which were granted on all counts. The Ohio EPA appealed, and on December 9, 2019, the Fifth District court of appeals entered a unanimous judgment affirming the trial court. The Ohio EPA sought review from the Ohio Supreme Court. On April 22, 2020, the Ohio Supreme Court granted the review. On March 17, 2022, the Ohio Supreme Court reversed in part and remanded to the Ohio trial court. The Ohio Supreme Court agreed with Rover that the State of Ohio had waived its rights under Section 401 of the Clean Water Act but remanded to the trial court to determine whether any of the allegations fell outside the scope of the waiver. On remand, the Ohio EPA voluntarily dismissed four of the other five defendants and dismissed one of its counts against Rover. In its Fourth Amended Complaint, the Ohio EPA removed all paragraphs that alleged violations by the four dismissed defendants, including those where the dismissed defendants were alleged to have acted jointly with Rover or others. At a June 2, 2022, status conference, the trial judge set a schedule for Rover and the other remaining defendant to file motions to dismiss the Fourth Amended Complaint. On August 1, 2022, Rover and the other remaining defendant each filed their respective motions. Briefing on those motions was completed on November 4, 2022. By order issued on October 20, 2023, the trial judge dismissed the Ohio EPA’s Fourth Amended Petition. On November 17, 2023, the State of Ohio appealed the trial judge’s decision to Ohio’s Fifth District Court of Appeals. The State filed its initial brief on January 8, 2024 and Energy Transfer’s and Rover’s responsive brief was filed February 20, 2024. The State filed a reply brief on February 26, 2024. Oral argument on the appeal was held on August 27, 2024. On October 1, 2024, Ohio’s Fifth District Court of Appeals affirmed the trial judge’s decision. The State of Ohio sought permission to appeal this decision from the Ohio State Supreme Court. Energy Transfer and Rover have opposed such permission. On January 28, 2025, the Ohio State Supreme Court declined to hear the State’s appeal. The State of Ohio could seek reconsideration of this Order with the Ohio Supreme Court or attempt to seek review from the U.S. Supreme Court. Energy Transfer and Rover intend to vigorously defend this claim.

In January 2019, we received notice from the DOJ on behalf of the EPA that a civil penalty enforcement action was being pursued under the Clean Water Act for an estimated 450 barrel crude oil release from the Mid Valley Pipeline operated by SPLP and owned by Mid Valley. The release purportedly occurred in October 2014 on a nature preserve located in Hamilton County, Ohio, near Cincinnati, Ohio. After discovery and notification of the release, SPLP conducted substantial emergency response, remedial work and primary restoration in three phases and the primary restoration has been acknowledged to be complete. In December of 2019, SPLP reached an agreement in principal with the EPA regarding payment of a civil penalty which will be subject to public comment. In September of 2024, after a public comment period, the United States District Court for the Southern District of Ohio (Western Division) entered a Consent Decree whereby SPLP and Mid Valley resolved both the civil penalty as well as alleged natural resource damages (NRD) brought jointly by the DOJ, on behalf of United States Department of Interior Fish and Wildlife, and the Ohio Attorney General, on behalf of the Ohio EPA. Operation and maintenance (O&M) activities will continue for several years.

On February 3, 2022, the State of New Mexico, ex rel. Hector Balderas, Attorney General filed a complaint against ETO, Transwestern, Kinder Morgan, Inc., El Paso Natural Gas L.L.C. and Northwest Pipeline, LLC in Cause No. D-101-CV-2022-00174 in the First Judicial District Court, County of Santa Fe, State of New Mexico, seeking to recover statewide damages for contamination with PCBs used for decades by the oil and gas industry in the operation and maintenance of pipeline infrastructure. The complaint alleges discharge or release of PCBs into the natural environment from compressor stations in connection with the operation of Transwestern. The parties completed document discovery and depositions of factual witnesses in December 2024 and will begin taking expert depositions in March 2025. Once discovery has been completed, Transwestern will be able to provide an assessment of the potential outcome or range of potential liability, if any. Trial has been set for August 2025.

On June 29, 2022, near Henderson, Tennessee, a Mid Valley mowing contractor struck an exposed section of the 22-inch diameter Hornsby to Denver line segment while mowing. The brush cutter mowing implement cut open the pipeline and released an estimated 4,345 barrels of crude oil into the surrounding area. Approximately 3,343 barrels of crude oil were recovered during initial remediation activities with the remaining volume contained within the materials removed and disposed of in accordance with applicable environmental laws and regulations. Corrective action was completed pursuant to the Tennessee Department of Environment and Conservation's ("TDEC") Division of Remediation -Voluntary Action Program ("VAP") and on May 23, 2023, Mid Valley received a No Further Action letter from the TDEC for the corrective action work related to the incident. Additional environmental work was completed in late August 2023 along the pipeline right-of-way to address a small oil seep which required soil removal and site restoration. The TDEC was notified and a follow-up report will be submitted to the agency documenting completion. Mid Valley received a Notice of Federal Interest regarding the incident and is awaiting final invoicing from the federal agencies (United States Environmental Protection Agency and United States Fish and Wildlife Service) and their consultants related to the incident. Mid Valley has also supplied PHMSA with information as requested. On October 13, 2023, Mid Valley received a Notice of Proposed Safety Order ("NOPSO") from PHMSA related to this incident and other historical incidents on the Mid Valley pipeline system. No other government agency action has occurred. Groundwater monitoring wells were abandoned on June 12, 2023, which concluded environmental related activities associated with the incident site. No injuries resulted from the incident.

On June 26, 2023, Plaintiffs Michael and Cecilia Weinman ("Plaintiffs") filed suit in Chester County, Tennessee, against Mid Valley and other Energy Transfer defendants asserting claims for negligence, trespass, and other tort claims and alleging damage to their property stemming from the crude oil release. Plaintiffs alleged actual monetary damages and punitive damages totaling $380 million. The Energy Transfer defendants were served on or around July 5, 2023, and timely filed a notice of removal of the lawsuit to federal court in the Western District of Tennessee Eastern Division on August 2, 2023. On August 8, 2023, Plaintiffs filed a notice of voluntary dismissal of their lawsuit without prejudice. On or about August 7, 2024, Plaintiffs refiled their suit with slight modifications and removing their negligence per se claim in Chester County, Tennessee. On or about August 27, 2024, the first two Energy Transfer defendants were served. On or about September 13, 2024, Plaintiffs filed a notice of voluntary dismissal of their latest lawsuit without prejudice.

On November 29, 2023, the United States Coast Guard issued the final invoice for all federal expenses related to the incident response in the amount of $90,000. The expenses have been validated and sent for payment.

The Energy Transfer Defendants cannot predict the ultimate outcome of this litigation or the amount of time and expense that will be required to resolve it.

On October 13, 2023, Mid Valley received a NOPSO from the PHMSA related to various historical accidents and complaints reported to PHMSA on the Mid Valley system. The NOPSO requests that Mid Valley perform several proposed corrective measures within six months of receipt of a Safety Order; however, in response, Mid Valley requested that PHMSA engage in informal consultations prior to issuing a Safety Order in an effort for the parties to potentially enter into a Consent Agreement and Order. Informal consultation is underway. In the event a Consent Agreement and Order is not reached between the parties during this process, Mid Valley may request a Hearing on the NOPSO. It is too early to predict the outcome, timeline, or costs associated with this administrative action.

On October 28, 2022, the EPA issued a Notice of Proposed Debarment (“NPD”) arising from SPLP’s and ETC Northeast Pipeline, LLC’s nolo contendere plea agreements and convictions for violations of Pennsylvania’s Clean Streams Law related to the Revolution and Mariner 2 pipelines. The following entities were proposed for debarment: (1) SPLP (pleading entity); (2) ETC Northeast Pipeline, LLC (pleading entity); (3) Energy Transfer LP; (4) SemGroup LLC; and (5) LE GP, LLC. The NPD presently prevents the named entities from pursuing or renewing Federal government contracts or Federal financial assistance agreements. We are engaging with the EPA to address the EPA’s concerns. Currently, none of the entities named in the NPD are party to any Federal government contracts or Federal financial assistance agreements.

On June 15, 2023, PHMSA issued a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (collectively “NOPV”), CPF 4-2023-011-NOPV, identifying three probable violations with compliance order actions associated with two of them and civil penalties proposed in an amount totaling $2,473,912. The NOPV related to a PHMSA Accident Investigation Division investigation of a pigging incident which occurred on March 26, 2020 at the Partnership’s Borcher Station in Kansas and resulted in a fatality. The Partnership challenged PHMSA’s alleged violations and related civil penalties and compliance order actions contained in the NOPV. After an administrative hearing, which was held on April 24, 2024 before a PHMSA Presiding Official, the PHMSA Southwest Region recommended to remain relatively firm on the NOPV, with only a slightly reduced civil penalty of approximately $2,455,312. The Partnership has challenged the PHMSA recommendation and is also currently challenging certain procedural events which occurred following the administrative hearing. The Partnership is also in the process of evaluating any other legal options that may be available to it for challenging the agency action.

On August 31, 2023, the United States Department of Justice filed suit in the District Court for the Southern District of Texas (Corpus Christi Division) captioned as United States v. Energy Transfer (R&M), LLC et al. Civil Action No. 2:23-cv-214, against Sunoco and two other parties seeking to recover past CERCLA response costs allegedly incurred by the EPA in excess of $500,000 and certain declaratory relief related to compliance. Suntide Refining Company (Sunoco as successor) is alleged to have arranged for the transport and disposal of refinery wastes containing hazardous substances at the Brine Service Company Superfund Site in Corpus Christi, Nueces County, TX. At this time, we cannot determine the likelihood of any liability in this matter; however, Sunoco intends to defend and dispute the allegations of the lawsuit, including but not limited to the joint and several liability determination sought. This lawsuit is included among the matters described in our discussion of our other environmental remediation matters. Please see Note 11 to our consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data.”

On February 13, 2025, SPLP received a Notice of Proposed Safety Order (“NOPSO”) from the PHMSA related to a release of jet fuel on the Twin Oaks Discharge pipeline system in Bucks County, Pennsylvania. The NOPSO made certain preliminary findings and proposes that SPLP take certain measures with respect to the system to ensure safety. SPLP plans to submit a written response within the 30-day response period. It is too early to predict the outcome, timeline, or costs associated with this administrative action.