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The following is a summary and a description of the material risks relating to our business activities that we have identified.
−Removed: In addition to the factors discussed elsewhere in this Annual Report, you should carefully consider the risks and uncertainties described below, which could have a material adverse effect on our business, financial condition or results of operations, including our ability to generate cash to
−Removed: fund our operations, repay indebtedness and pay distributions.
+Added: In addition to the factors discussed elsewhere in this Annual Report, you should carefully consider the risks and uncertainties described below, which could have a material adverse effect on our business, financial condition or results of operations, including our ability to generate cash to fund our operations, repay indebtedness and pay distributions.
You should also consider the interrelationship and potential compounding effects if multiple risks are realized.
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• Our substantial indebtedness and restrictions contained in our debt and preferred unit agreements may limit our flexibility to obtain financing to pursue other business opportunities and restrict our current and future operations.
−Removed: • Increasing interest rates could impact our financing costs, common unit price, distributions on our Class B Preferred Units (as defined herein) and Class C Preferred Units (as defined herein) and our ability to issue equity and incur debt.
+Added: • Increasing interest rates could impact our financing costs, common unit price, distributions on our preferred units and our ability to issue equity and incur debt.
• Failure of our banking institutions.
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• Reduced demand for our products due to energy efficiency, new technologies, alternative energy sources and new regulations.
−Removed: • Seasonal weather conditions, including warm winter weather, natural or man-made disasters, pandemics, terrorism and political unrest.
+Added: • Seasonal weather conditions, including warm winter weather and natural or man-made disasters.
• Our ability to successfully complete, integrate and operate accretive acquisitions and organic growth projects.
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• Regulations related to cross-border operations.
−Removed: Risks Related to Our Partnership Structure and in an Investment in Us
−Removed: • Our amended and restated limited partnership agreement (the “Partnership Agreement”) limits the fiduciary duties of our GP to our unitholders and restricts the remedies available to our unitholders.
+Added: Risks Related to Our Partnership Structure and an Investment in Us
+Added: • Our amended and restated limited partnership agreement (“Partnership Agreement”) limits the fiduciary duties of our GP to our unitholders and restricts the remedies available to our unitholders.
• Conflicts of interest by our GP and its affiliates.
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• Failure to maintain an effective system of internal control, including internal control over financial reporting.
+Added: • Pandemics, terrorism and political unrest.
• Product liability claims and litigation.
−Removed: • A failure in our operational systems or cyber security attacks on any of our facilities, or those of third parties.
+Added: • A failure in our operational systems or cybersecurity attacks on any of our facilities, or those of third parties.
Risks Related to Liquidity and Financing
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• the cost of acquisitions, if any;
−Removed: • restrictions contained in the ABL Facility and the indentures governing our outstanding 6.125% senior unsecured notes due 2025, 7.5% senior unsecured notes due 2026 and 2026 Senior Secured Notes (collectively, the “Indentures”);
+Added: • restrictions contained in the ABL Facility, Term Loan B and the indenture governing our 2029 Senior Secured Notes and 2032 Senior Secured Notes (collectively, the “Indenture”);
• restrictions contained in the agreements relating to our 9.00% Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”), 9.625% Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) and 9.00% Class D Preferred Units (“Class D Preferred Units”) (collectively, the “Preferred Units”);
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• other business risks discussed in this Annual Report that may affect our cash levels.
−Removed: The board of directors of our GP expects to evaluate the reinstatement of the common unit and all Preferred Unit distributions in due course, taking into account a number of important factors, including our leverage, liquidity, the sustainability of cash flows, upcoming debt maturities, capital expenditures and the overall performance of our businesses.
−Removed: The quarterly common unit distributions were suspended with the quarter ended December 31, 2020, and all Preferred Unit distributions were suspended with the quarter ended March 31, 2021.
+Added: The board of directors of our GP expects to evaluate the reinstatement of the common unit distributions in due course, taking into account a number of important factors, including our leverage, liquidity, the sustainability of cash flows, capital expenditures and the overall performance of our businesses.
+Added: The quarterly common unit distributions were suspended with the quarter ended December 31, 2020.
Our substantial indebtedness may limit our flexibility to obtain financing and to pursue other business opportunities and our ability to service our debt could impact operations.
At March 31, 2024, the face amount of our long-term debt was $2.9 billion.
−Removed: Our level of debt could have important consequences to us, including the following:
+Added: Our level of indebtedness could have important consequences to us, including the following:
• our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms;
• our funds available for operations and future business opportunities will be reduced by that portion of our cash flow required to make principal and interest payments on our debt;
−Removed: • lower availability under our ABL Facility caused by a higher level of borrowings on the ABL Facility could make it more likely that a reduction in our borrowing base following a periodic redetermination could require us to repay a portion of our then-outstanding ABL Facility borrowings;
+Added: • lower availability under the ABL Facility caused by a higher level of borrowings on the ABL Facility could make it more likely that a reduction in our borrowing base following a periodic redetermination could require us to repay a portion of our then-outstanding ABL Facility borrowings;
• we may be more vulnerable to competitive pressures or a downturn in our business or the economy generally;
• our flexibility in responding to changing business and economic conditions may be limited;
+Added: • it may make it more difficult for us to satisfy our debt obligations and increase the risk that we may default on our debt obligations.
Our ability to service our debt will depend on, among other things, our future financial and operating performance, which will be affected by prevailing economic and weather conditions, and financial, business, regulatory and other factors, some of which are beyond our control.
−Removed: If our operating results are not sufficient to service our future indebtedness, we would be
−Removed: forced to take actions such as reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets or seeking additional equity capital.
+Added: If our operating results are not sufficient to service our future indebtedness, we would be forced to take actions such as reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets or seeking additional equity capital.
We may be unable to effect any of these actions on satisfactory terms or at all.
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We may experience adverse consequences from increased levels of debt.
−Removed: Restrictions in the ABL Facility and Indentures could adversely affect our business, financial position, results of operations, and the value of our common units.
−Removed: The ABL Facility and Indentures limit our ability to, among other things:
+Added: Our leverage could have important consequences to our debt obligations.
+Added: We will require substantial cash flow to meet our principal and interest obligations with respect to our debt obligations.
+Added: Our ability to make scheduled payments, to refinance our obligations with respect to our indebtedness or our ability to obtain additional financing in the future will depend on our financial and operating performance, which, in turn, is subject to prevailing economic conditions and to financial, business and other factors.
+Added: We may not have sufficient cash flow from operations and available borrowings under the ABL Facility to service
+Added: our indebtedness.
+Added: A significant downturn in our business or other development adversely affecting our cash flow could materially impair our ability to service our indebtedness.
+Added: If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to refinance all or a portion of our debt or sell assets.
+Added: We cannot assure you that we would be able to refinance our existing indebtedness or sell assets on terms that are commercially reasonable.
+Added: Restrictions in the ABL Facility, Term Loan B and Indenture could adversely affect our business, financial position, results of operations, and the value of our common units.
+Added: The ABL Facility, Term Loan B and Indenture limit our ability to, among other things:
• incur additional debt or issue letters of credit;
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We will be permitted to make distributions to our unitholders once we meet certain defined metrics and as long as no default or event of default exists both immediately before and after giving effect to the declaration and payment of the distribution and the distribution does not exceed available cash for the applicable quarterly period.
−Removed: The provisions of the ABL Facility and Indentures may affect our ability to obtain future financing and pursue attractive business opportunities and our flexibility in planning for, and reacting to, changes in business conditions.
+Added: The provisions of the ABL Facility, Term Loan B and Indenture may affect our ability to obtain future financing and pursue attractive business opportunities and our flexibility in planning for, and reacting to, changes in business conditions.
In addition, a failure to comply with the provisions of these agreements could result in a default or an event of default that could enable our lenders, subject to the terms and conditions, to declare the outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and payable.
−Removed: If we were unable to repay the accelerated amounts, our lenders could proceed against the collateral we granted them to secure our debts under our 2026 Senior Secured Notes and ABL Facility.
+Added: If we were unable to repay the accelerated amounts, our lenders could proceed against the collateral we granted them to secure our debts under our 2029 Senior Secured Notes, 2032 Senior Secured Notes, ABL Facility and Term Loan B.
If the payment of our debt is accelerated, defaults under our other debt instruments, if any then exist, may be triggered, and our assets may be insufficient to repay such debt in full, and our unitholders could experience a partial or total loss of their investment.
−Removed: The consent we entered into with the holder of a majority of our Class D Preferred Units in connection with the 2026 Senior Secured Notes will restrict our current and future operations.
−Removed: In connection with the offering of the 2026 Senior Secured Notes, we were required to obtain a consent (the “Class D Preferred Consent”) from the holder of the majority of our Class D Preferred Units (the “Class D Preferred Majority”) to, among other things, enable us to consummate the transaction.
−Removed: The Class D Preferred Consent modifies certain voting and approval rights granted to the Class D Preferred Majority under our Partnership Agreement.
−Removed: Specifically, the Class D Preferred Consent requires us to obtain the approval of the Class D Preferred Majority for:
−Removed: • incurrences of indebtedness, other than (i) under the ABL Facility, (ii) the issuance of the 2026 Senior Secured Notes and (iii) certain indebtedness outstanding as of the closing of the transaction;
−Removed: • acquiring or disposing of any assets with an aggregate purchase price of greater than $50.0 million during any fiscal year;
−Removed: • making investment capital expenditures or expansion capital expenditures in excess of $75.0 million in the aggregate during any fiscal year.
−Removed: These approval rights supplement the existing approval rights in our Partnership Agreement for the Class D Preferred Majority.
−Removed: They became effective upon the closing of the transaction and will remain in effect until we are no longer in arrears
−Removed: on the Class D Preferred Unit distributions.
−Removed: Because the 2026 Senior Secured Notes and the ABL Facility will restrict our ability to pay distributions on our Class D Preferred Unit distributions until we meet certain defined metrics, we cannot predict when such actions will no longer be subject to the approval of the Class D Preferred Consent, and there is no certainty that we will be able to obtain such consent.
−Removed: As with other restrictions in the indenture to the 2026 Senior Secured Notes and the ABL Facility, these restrictions may affect our ability to grow in accordance with our long-term strategy.
+Added: The Partnership may be required by Class D Preferred Unitholders to redeem all or a portion of the Class D Preferred Units, which could require a substantial amount of cash.
+Added: At any time on or after July 2, 2027, each Class D Preferred Unitholder will have the right to require the Partnership to redeem on a date not prior to the 180th day after July 2, 2027 all or a portion of the Class D Preferred Units then held by such preferred unitholder for the then-applicable redemption price, which may be paid in cash or, at the Partnership’s election, a combination of cash and a number of common units not to exceed one-half of the aggregate then-applicable redemption price, as more fully described in our Partnership Agreement.
+Added: Furthermore, upon a Class D Change of Control (as defined in our Partnership Agreement), each Class D Preferred Unitholder will have the right to require the Partnership to redeem the Class D Preferred Units then held by such Preferred Unitholder at a price per Class D Preferred Unit equal to the applicable redemption price.
+Added: We cannot assure you that we will have sufficient cash flow, liquidity or the ability to incur indebtedness or sell assets on terms that are commercially reasonable in order to redeem the Class D Preferred Units, even if required to do so.
+Added: In addition, we may seek to address the outstanding balances on the Class D Preferred Units prior to when they are required to be redeemed, which may impact our ability to service our indebtedness.
Increasing interest rates could impact our financing costs and our common unit price, our ability to issue equity or incur debt, and our ability to make cash distributions at our intended levels.
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As a result, interest rates on our existing and future credit facilities and debt offerings could be higher than current levels, causing our financing costs to increase accordingly.
−Removed: We also have exposure to increases in interest rates through variable rate provisions of our Class B Preferred Units and Class C Preferred Units.
−Removed: In addition, the distribution rates on our Class C Preferred Units convert from fixed rates to floating rates beginning on and after April 15, 2024.
+Added: We also have exposure to increases in interest rates through variable rate provisions of our Class B Preferred Units, Class C Preferred Units and Class D Preferred Units.
+Added: In addition, the distribution rates on our Class C Preferred Units converted from fixed rates to floating rates on April 15, 2024, while on or after July 1, 2024, the holders of our Class D Preferred Units can elect, from time to time, for the distributions to be calculated based on a floating rate.
Our results of operations, cash flows and financial position could be materially adversely affected by significant changes in interest rates.
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Our cash and cash equivalents may be exposed to failure of our banking institutions.
−Removed: While we seek to minimize our exposure to third-party losses of our cash and cash equivalents, we hold our balances in a number of large financial institutions.
+Added: While we seek to minimize our exposure to third-party losses of our cash and cash equivalents, we hold our balances in several large banking institutions.
Notwithstanding such allocation, we are subject to the risk of bank failure.
For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was unable to continue its operations and the Federal Deposit Insurance Corporation was appointed as receiver for SVB and created the National Bank of Santa Clara to hold the deposits of SVB.
−Removed: None of our cash and cash equivalents were held at SVB and we do not expect further developments with SVB to have a material impact on our cash and cash equivalents balance, expected results of operations, or financial performance for the foreseeable future.
−Removed: However, if the banks where we hold deposits were to experience a similar failure, we could experience additional risk.
+Added: None of our cash and cash equivalents were held at SVB.
+Added: However, if the banking institutions where we hold deposits were to experience a similar failure, we could experience additional risk.
Any such loss or limitation on our cash and cash equivalents would adversely affect our business.
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Spending on crude oil and natural gas exploration and production may be adversely affected by industry and financial market conditions that are beyond our control.
−Removed: Our business depends on domestic spending by the oil and natural gas industry, and this spending and our business have been, and may continue to be, adversely affected by industry and financial market conditions and existing or new regulations, such as those related to environmental matters, that are beyond our control.
+Added: Our business depends on domestic spending by the oil and natural gas industry, and this spending and our business have been, and may continue to be, adversely affected by industry and financial market conditions and existing or new regulations, such as those related to environmental matters, which are beyond our control.
We depend on the ability and willingness of other entities to make operating and capital expenditures to explore for, develop, and produce crude oil and natural gas in the United States and Canada, and to extract natural gas liquids from natural gas, as well as the availability of necessary pipeline transportation and storage capacity.
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Actual market conditions and producers’ expectations of market conditions for crude oil and natural gas liquids may also cause producers to curtail spending, thereby reducing business opportunities and demand for our services.
−Removed: Industry conditions are influenced by numerous factors over which we have no control, such as the availability of commercially viable geographic areas in which to explore and produce crude oil and natural gas, the availability of liquids-rich natural gas needed to produce natural gas liquids, the supply of and demand for crude oil and natural gas, environmental restrictions on the exploration and production of crude oil and natural gas, such as existing and proposed regulation of hydraulic fracturing, domestic and worldwide economic conditions, political instability in crude oil and natural gas producing countries
−Removed: and merger and divestiture activity among our current or potential customers.
+Added: Industry conditions are influenced by numerous factors over which we have no control, such as the availability of commercially viable geographic areas in which to explore and produce crude oil and natural gas, the availability of liquids-rich natural gas needed to produce natural gas liquids, the supply of and demand for crude oil and natural gas, environmental restrictions on the exploration and production of crude oil and natural gas, such as existing and proposed regulation of hydraulic fracturing, domestic and worldwide economic conditions, political instability in crude oil and natural gas producing countries and merger and divestiture activity among our current or potential customers.
The volatility of the oil and natural gas industry and the resulting impact on exploration and production activity could adversely impact the level of drilling activity.
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Lower crude oil prices provide the producers with less incentive to spend on capital expenditures, which results in fewer drilling rigs and lower amounts of crude oil production, which negatively impacts our crude oil transportation and produced water disposal volumes.
−Removed: In addition, a portion of our profitability in our Water Solutions business is generated from the sale of crude oil that we recover when processing produced water, and lower crude oil prices have an adverse impact on these sales if not hedged.
+Added: In addition, a portion of our profitability in our Water Solutions segment is generated from the sale of crude oil that we recover when processing produced water, and lower crude oil prices have an adverse impact on these sales if not hedged.
A decline in crude oil prices or a prolonged period of low crude oil prices could have an adverse effect on our businesses.
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Conversely, a prolonged decline in product prices could potentially result in a reduction of the borrowing base under the ABL Facility, and we could be required to liquidate inventory that we have already presold.
−Removed: One of the strategies of our Liquids Logistics segment is to purchase refined products in the Gulf Coast and West Coast and transport the product on third-party pipelines for sale in the Southwest.
+Added: One of the strategies of our Liquids Logistics segment is to purchase refined petroleum and renewable products primarily in the Gulf Coast, West Coast and Midwest regions of the United States and schedule them for delivery at various locations throughout the country.
We are subject to the risk of a price decline between the time we purchase refined products and the time we sell the products.
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In our Liquids Logistics segment, we compete for natural gas liquids supplies and also for customers for our services.
−Removed: Our competitors include major integrated oil companies, other midstream or wholesale marketing companies, interstate and intrastate pipelines and companies that gather, compress, treat,
−Removed: process, transport, store and market natural gas.
+Added: Our competitors include major integrated oil companies, other midstream or wholesale marketing companies, interstate and intrastate pipelines and companies that gather, compress, treat, process, transport, store and market natural gas.
Our natural gas liquids terminals compete with other terminaling and storage providers in the transportation and storage of natural gas liquids.
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Our Water Solutions segment is in direct and indirect competition with other businesses, including disposal and other produced water treatment businesses.
−Removed: We can make no assurance that we will compete successfully in each of our lines of business.
−Removed: If a competitor attempts to increase market share by reducing prices, we may lose customers, which could reduce our revenues.
+Added: We can make no assurance that we will compete successfully in each of our businesses.
+Added: If a competitor attempts to increase market share by reducing prices, we may lose customers, which would reduce our revenues.
Our business would be adversely affected if service at our principal storage facilities or on common carrier pipelines or railroads we use is interrupted.
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We do not own or operate the railroads on which these railcars are transported.
−Removed: Any disruptions in the operations of these railroads could adversely impact our ability to deliver product to our customers.
+Added: Any disruptions in the operations of these railroads would adversely impact our ability to deliver product to our customers.
We lease certain facilities and equipment and therefore are subject to the possibility of increased costs to retain necessary land and equipment use.
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Our costs may increase more rapidly than the fees that we charge to customers pursuant to our contracts with them.
−Removed: Additionally, some customers’ obligations under their agreements with us may be permanently or temporarily reduced upon the
−Removed: occurrence of certain events, some of which are beyond our control, including force majeure events wherein the production of or the supply of crude oil, condensate, and/or natural gas liquids are curtailed or cut off.
+Added: Additionally, some customers’ obligations under their agreements with us may be permanently or temporarily reduced upon the occurrence of certain events, some of which are beyond our control, including force majeure events wherein the production of or the supply of crude oil, condensate, and/or natural gas liquids are curtailed or cut off.
Force majeure events include (but are not limited to) revolutions, wars, acts of enemies, embargoes, import or export restrictions, strikes, lockouts, fires, storms, floods, acts of God, explosions, mechanical or physical failures of our equipment or facilities of our customers.
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Risk management procedures, including the use of financial derivative contracts, cannot eliminate all commodity price risk, basis risk, or risk of adverse market conditions which can adversely affect our financial position and results of operations.
−Removed: In addition, any non-compliance with our risk policy could result in significant financial losses.
+Added: In addition, any non-compliance with our market risk policy could result in significant financial losses.
Pursuant to the requirements of our market risk policy, we attempt to lock in a margin for a portion of the commodities we purchase by selling such commodities for physical delivery to our customers, such as independent refiners or major oil companies, or by entering into future delivery obligations under contracts for forward sale.
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In these instances, physical inventory generally loses value as the price of such physical inventory declines over time.
−Removed: Timing risk cannot be entirely eliminated, and basis exposure, particularly in backwardated or other adverse market conditions, can adversely affect our consolidated financial position and results of operations.
+Added: Timing risk cannot be entirely eliminated, and basis risk exposure, particularly in backwardated or other adverse market conditions, can adversely affect our consolidated financial position and results of operations.
Competition from alternative energy sources, energy efficiency and new technology may reduce the demand for propane and adversely affect our operating results.
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We cannot predict the effect that development of alternative energy sources, increased conservation or new technology may have on our operations, including whether subsidies of alternative energy sources by local, state, and federal governments might be expanded, or what impact this might have on the supply of or the demand for crude oil, natural gas, and natural gas liquids.
−Removed: The Inflation Reduction Act of 2022 (the “IRA”) could impact demand for hydrocarbon fuel products and impose new costs on certain customers.
−Removed: In August 2022, President Biden signed the IRA, which contains numerous incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration, amongst other provisions.
−Removed: In addition, the IRA imposes a federal fee on the emission of methane from sources required to report their greenhouse gas emissions to the EPA, including certain sources in the onshore petroleum and natural gas production categories.
−Removed: Some of our producer clients face exposure to the IRA pay to emit methane program.
−Removed: In addition, the
−Removed: multiple incentives offered for various clean energy industries referenced above could decrease demand for crude oil and natural gas, increase our compliance and operating costs and consequently adversely affect our business.
+Added: The Inflation Reduction Act of 2022 (“IRA”) could impact demand for hydrocarbon fuel products and impose new costs on certain customers.
+Added: In August 2022, President Biden signed the IRA, which contains, among other things, numerous incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration.
+Added: In addition, the IRA imposes a federal fee on the emission of methane from sources required to report their GHG emissions to the EPA, including certain sources in the onshore petroleum and natural gas production categories.
+Added: Some of our producer customers face exposure to the IRA pay to emit methane program.
+Added: In addition, the multiple incentives offered for various clean energy industries referenced above could decrease demand for crude oil and natural gas, increase our compliance and operating costs and consequently adversely affect our business.
Reduced demand for refined products could have an adverse effect on our results of operations.
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The agricultural demand for propane is affected by weather, as dry or warm weather during the harvest season may reduce the demand for propane used in some crop drying applications.
−Removed: The widespread outbreak of pandemics (like COVID-19) or any other public health crises that impacts the global demand for energy commodities may have material adverse effects on our business, financial position, results or operations and/or cash flows.
−Removed: We face risks related to the outbreak of illnesses, pandemics and other public health crises that are outside of our control and could significantly disrupt our operations and adversely affect our financial condition.
−Removed: The effects of the COVID-19 pandemic, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing in addition to other actions taken by both businesses and governments, resulted in a significant and swift reduction in international and United States economic activity.
−Removed: Since the beginning of 2021, the distribution of COVID-19 vaccines progressed and many government-imposed restrictions were relaxed or rescinded.
−Removed: However, we continue to monitor the effects of the pandemic on our operations.
−Removed: Our results of operations and financial condition have been and may continue to be adversely affected by the COVID-19 pandemic.
−Removed: The extent to which our operating and financial results are affected by COVID-19 will depend on various factors and consequences beyond our control, such as the emergence of more contagious and harmful variants of the COVID-19 virus, the
−Removed: duration and scope of the pandemic, additional actions by businesses and governments in response to the pandemic, and the speed and effectiveness of responses to combat the virus.
−Removed: COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, could also aggravate the other risk factors that we identify herein.
−Removed: While the effects of the COVID-19 pandemic have lessened recently in the United States, we cannot predict the duration or future effects of the pandemic, or more contagious and harmful variants of the COVID-19 virus, and such effects may materially adversely affect our results of operations and financial condition in a manner that is not currently known to us or that we do not currently consider to present significant risks to our operations.
Our future financial performance and growth may be limited by our ability to successfully complete accretive acquisitions on economically acceptable terms.
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• increased competition for attractive acquisitions;
−Removed: • covenants in the ABL Facility and Indentures that limit the amount and types of indebtedness that we may incur to finance acquisitions;
−Removed: • the approval of the Class D Preferred Majority;
+Added: • covenants in the ABL Facility, Term Loan B and Indenture that limit the amount and types of indebtedness that we may incur to finance acquisitions;
• lack of available cash or external capital or limitations on our ability to issue equity to pay for acquisitions;
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There can be no assurance that we will identify attractive acquisition candidates in the future, that we will be able to acquire such businesses on economically acceptable terms, that any acquisitions will not be dilutive to earnings and distributions.
−Removed: Furthermore, if we consummate any future acquisitions, our capitalization and results of operations may change significantly, and unitholders will not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of these funds and other resources.
+Added: Furthermore, if we consummate any future acquisitions, our capitalization and results of operations may change
+Added: significantly, and unitholders will not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of these funds and other resources.
We may be subject to substantial risks in connection with the integration and operation of acquired businesses, in particular, those businesses with operations that are distinct and separate from our existing operations.
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Failure to timely and successfully integrate acquired businesses into our existing operations may have a material adverse effect on our business, consolidated financial position or results of operations.
−Removed: In addition to the risks set forth above, new businesses will subject us to additional business and operating risks, such as the acquisitions not being
−Removed: accretive to our unitholders as a result of decreased profitability, increased interest expense related to debt we incur to make such acquisitions or an inability to successfully integrate those operations into our overall business operations.
+Added: In addition to the risks set forth above, new businesses will subject us to additional business and operating risks, such as the acquisitions not being accretive to our unitholders as a result of decreased profitability, increased interest expense related to debt we incur to make such acquisitions or an inability to successfully integrate those operations into our overall business operations.
The realization of any of these risks could have a material adverse effect on our consolidated financial position or results of operations.
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We may face opposition to the operation of our pipelines and facilities from various groups.
−Removed: We may face opposition to the operation of our pipelines and facilities from environmental groups, landowners, tribal groups, local groups and other advocates.
−Removed: Such opposition could take many forms, including organized protests, attempts to block or sabotage our operations, intervention in regulatory or administrative proceedings involving our assets, or lawsuits or other actions designed to prevent, disrupt or delay the operation of our assets and business.
+Added: We may face opposition to the operation of our pipelines and facilities from environmental groups, landowners, environmental justice communities, tribal groups, local groups and other advocates.
+Added: Such opposition could take many forms, including the delay or denial of required governmental permits, organized protests, attempts to block or sabotage our operations, intervention in regulatory or administrative proceedings involving our assets, or lawsuits or other actions designed to prevent, disrupt or delay the operation of our assets and business.
For example, repairing our pipelines often involves securing consent from individual landowners to access their property;
−Removed: one or more landowners may resist our efforts to make needed repairs, which could lead to an interruption in the operation of the affected pipeline or facility for a period of time that is significantly longer than would have otherwise been the case.
+Added: one or more landowners may resist our efforts to make
+Added: needed repairs, which could lead to an interruption in the operation of the affected pipeline or facility for a period of time that is significantly longer than would have otherwise been the case.
In addition, acts of sabotage or eco-terrorism could cause significant damage or injury to people, property or the environment or lead to extended interruptions of our operations.
+Added: Moreover, governmental authorities exercise considerable discretion in the timing and scope of permit issuance and the public may engage in the permitting process, including through intervention in the courts.
+Added: Negative public perception could cause the permits we require to conduct our operations to be withheld, delayed or burdened by requirements that restrict our ability to profitably conduct our business.
Any such event that interrupts the revenues generated by our operations, or which causes us to make significant expenditures not covered by insurance, could reduce our cash available for paying distributions to our unitholders and, accordingly, adversely affect our financial condition and the market price of our securities.
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Policy decisions relating to the production, refining, transportation and sale of hydrocarbon-based fuels are subject to political pressures, the negative portrayal of the industry in which we operate by the media and others, and the influence and protests of environmental and other special interest groups.
−Removed: Such negative sentiment regarding the hydrocarbon energy industry could influence consumer preferences and government or regulatory actions, which could, in turn, have an adverse impact on our business.
+Added: Such negative sentiment regarding the hydrocarbon energy industry could influence consumer preferences and government or regulatory actions, which could have an adverse impact on our business.
Recently, activists concerned about the potential effects of climate change have directed their attention towards sources of funding for hydrocarbon energy companies, which has resulted in certain financial institutions, funds and other sources of capital restricting or eliminating their investment in energy-related activities.
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Compliance with these state regulations could have a material and adverse effect on that portion of our business, consolidated results of operations and financial position.
−Removed: The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) which was enacted on July 21, 2010, established federal oversight and regulation of the over-the-counter derivatives market and of entities, such as us, that participate in that market.
+Added: The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) which was enacted on July 21, 2010, established federal oversight and regulation of the over-the-counter derivatives market and of entities, such as us, that participate in that market.
The Dodd-Frank Act requires the CFTC and the SEC to promulgate rules and regulations implementing the Dodd-Frank Act.
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Certain transactions will be required to be cleared on exchanges and cash collateral will have to be posted.
−Removed: The Dodd-Frank Act provides for a potential exemption from these clearing and cash collateral requirements for commercial end users and it includes a number of defined terms that will be used in determining how this exemption applies to particular derivative transactions and the parties to those transactions.
+Added: The Dodd-Frank Act provides for a potential
+Added: exemption from these clearing and cash collateral requirements for commercial end users and it includes a number of defined terms that will be used in determining how this exemption applies to particular derivative transactions and the parties to those transactions.
Since the Dodd-Frank Act mandates the CFTC to promulgate rules to define these terms, the full impact of the Dodd-Frank Act on our hedging activities is uncertain at this time.
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We face inherent risks of incurring significant environmental costs and liabilities due to handling of produced water and hydrocarbons, such as crude oil, condensate, natural gas liquids, gasoline, diesel, and biodiesel.
−Removed: For instance, our Water Solutions business carries with it environmental risks, including the risk of leakage from the treatment plants to surface or subsurface soils, surface water or groundwater, or accidental spills.
+Added: For instance, our Water Solutions segment carries with it environmental risks, including the risk of leakage from the treatment plants to surface or subsurface soils, surface water or groundwater, or accidental spills.
Our Crude Oil Logistics and Liquids Logistics segments carry similar risks of leakage and sudden or accidental spills of crude oil, natural gas liquids, and hydrocarbons.
−Removed: Liability under, or violation of, environmental laws and regulations could result in, among other things, the impairment or cancellation of operations, injunctions, fines and penalties, reputational damage, expenditures for remediation and liability for natural resource damages, property damage and personal injuries.
+Added: Liability under, or violation of, environmental laws and regulations could result in, among other things, the restriction or cancellation of operations, injunctions, fines and penalties, reputational damage, expenditures for remediation and liability for natural resource damages, property damage and personal injuries.
We use various modes of transportation to carry natural gas liquids, crude oil, refined and renewable products and produced water, including trucks, railcars, barges, and pipelines, each of which is subject to regulation.
With respect to transportation by truck, we are subject to regulations promulgated under federal legislation, including the Federal Motor Carrier Safety Act and the Homeland Security Act of 2002, which cover the security and transportation of hazardous materials and are administered by the DOT.
−Removed: We also own and lease a fleet of railcars, the operation of which is subject to the regulatory
−Removed: jurisdiction of the Federal Railroad Administration of the DOT, as well as other federal and state regulatory agencies.
+Added: We also own and lease a fleet of railcars, the operation of which is subject to the regulatory jurisdiction of the Federal Railroad Administration of the DOT, as well as other federal and state regulatory agencies.
Railcar accidents within the industry involving trains carrying crude oil from the Bakken region (none of which directly involved any of our business operations), have led to increased legislative and regulatory scrutiny over the safety of transporting crude oil by railcar.
The introduction of regulations that result in new requirements addressing the type, design, specifications or construction of railcars used to transport crude oil could result in severe transportation capacity constraints during the periods in which new railcars are constructed to meet new specifications or in which the railcars already placed in service are being retrofitted.
−Removed: Barge transportation is subject to the Jones Act, a federal law generally restricting marine transportation in the United States to vessels built and registered in the United States, and manned/owned by United States citizens, as well as setting forth the rules and regulations of the United States Coast Guard.
−Removed: Non-compliance with any of these regulations could result in increased costs related to the transportation of our products.
In addition, under certain environmental laws, we could be subject to strict and/or joint and several liability for the investigation, removal or remediation of previously released materials.
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These authorizations subject us to terms and conditions which may be onerous or costly to comply with, and that may require costly operational modifications to attain and maintain compliance.
−Removed: The renewal, amendment or modification of these permits, approvals and other authorizations may involve the imposition of even more stringent and burdensome terms and conditions with attendant higher costs and more significant effects upon our operations.
+Added: The renewal, amendment or modification of these permits, approvals and other authorizations may involve the imposition of even more stringent and burdensome terms and conditions with higher costs and more significant effects upon our operations.
Changes in environmental laws and regulations occur frequently.
−Removed: New laws or regulations, changes to existing laws or regulations, such as more stringent pollution control requirements or additional safety requirements, or more stringent interpretation or enforcement of existing laws and regulations, may adversely impact us, and could result in increased operating costs and have a material and adverse effect on our activities and profitability.
+Added: New laws or regulations, changes to existing laws or regulations, such as more stringent pollution control requirements or additional safety requirements, or more stringent interpretation or enforcement of existing laws and regulations, may adversely impact us, and could result in increased operating
+Added: costs and have a material and adverse effect on our activities and profitability.
For example, new or proposed laws or regulations governing the withdrawal, storage and use of surface water or groundwater necessary for hydraulic fracturing of wells may increase our costs for treatment of hydraulic fracturing flowback water (or affect our hydraulic fracturing customers’ ability to operate) and cause delays, interruption or termination of our water treatment operations, all of which could have a material and adverse effect on our consolidated results of operations and financial position.
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Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, and together with the DOT, implement GHG emissions limits on vehicles manufactured for operation in the United States.
−Removed: The regulation of methane from oil and gas facilities has been subject to uncertainty in recent years.
+Added: The regulation of methane from oil and gas facilities has been subject to uncertainty in recent years, but most recently, in December 2023, the EPA finalized its rulemaking establishing New Source Performance Standards to reduce emissions of methane and other volatile organic compounds from new and modified sources.
Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.
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For example, on January 27, 2021, President Biden issued an Executive Order that commits to substantial action on climate change, calling for, among other things, the increased use of zero-emissions vehicles by the federal government, the elimination of subsidies provided to the fossil fuel industry, and increased emphasis on climate-related risk across governmental agencies and economic sectors.
−Removed: Separately, on January 20, 2021, the Acting Secretary of the United States Department of the Interior issued an order that, among other things, imposed a 60-day moratorium on the issuance of fossil fuel authorizations, including leases and permits, on federal lands.
−Removed: While the United States Department of the Interior announced on April 15, 2022 that it will resume oil and gas leasing on public lands following a federal court’s decision, the topic of oil and gas leasing on public land remains politically fraught, as the announcement indicates that federal land available for oil and gas leasing will be reduced by 80 percent from the acreage originally nominated due to environmental and climate concerns.
−Removed: Other actions that could be pursued by the Biden Administration may include the imposition of more restrictive requirements for the establishment of pipeline infrastructure or the permitting of liquified natural gas export facilities.
+Added: Separately, on January 20, 2021, the Acting Secretary of the United States Department of the Interior (“DOI”) issued an order that, among other things, imposed a 60-day moratorium on the issuance of fossil fuel authorizations, including leases and permits, on federal lands.
+Added: While the DOI announced on April 15, 2022 that it will resume oil and gas leasing on public lands following a federal court’s decision, the topic of oil and gas leasing on public land remains politically fraught, as the announcement indicates that federal land available for oil and gas leasing will be reduced by 80 percent from the acreage originally nominated due to environmental and climate concerns.
+Added: Other actions that could be pursued by the Biden Administration may include the imposition of more restrictive requirements for the establishment of pipeline infrastructure or the permitting of liquified natural
+Added: gas export facilities.
Litigation risks are also increasing, as a number of cities and other local governments have sought to bring suit against the largest oil and natural gas companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to climate change.
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If any such effects were to occur, they could adversely affect our results of operations and ability to make cash distributions to unitholders.
−Removed: In addition, while our consideration of changing weather conditions and inclusion of safety factors in design covers the uncertainties that climate change and other events may potentially introduce, our ability to mitigate
−Removed: the adverse impacts of these events depends in part on the effectiveness of our facilities and our disaster preparedness and response and business continuity planning, which may not have considered or be prepared for every eventuality.
+Added: In addition, while our consideration of changing weather conditions and inclusion of safety factors in design covers the uncertainties that climate change and other events may potentially introduce, our ability to mitigate the adverse impacts of these events depends in part on the effectiveness of our facilities and our disaster preparedness and response and business continuity planning, which may not have considered or be prepared for every eventuality.
State and federal legislation and regulatory initiatives relating to our hydraulic fracturing customers could harm our business.
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Any current or proposed restrictions on hydraulic fracturing could lead to operational delays or increased operating costs and regulatory burdens that could make it more difficult or costly to perform hydraulic fracturing which would negatively impact our customer base resulting in an adverse effect on our profitability.
−Removed: For example, on January 20, 2021, the Biden Administration placed a 60-day moratorium on new oil and gas leasing and drilling permits on federal lands, and on January 27, 2021, the United States Department of the Interior acting pursuant to an Executive Order from President Biden suspended the federal oil and gas leasing program indefinitely.
−Removed: Although the United States Department of Interior recently announced the resumption of onshore oil and gas leasing, the program is being significantly reformed, with 80 percent less land available for leasing from the acreage originally nominated.
+Added: For example, on January 20, 2021, the Biden Administration placed a 60-day moratorium on new oil and gas leasing and drilling permits on federal lands, and on January 27, 2021, the DOI acting pursuant to an Executive Order from President Biden suspended the federal oil and gas leasing program indefinitely.
+Added: Although the DOI announced the resumption of onshore oil and gas leasing in April 2022, the program is being significantly reformed, with 80 percent less land available for leasing from the acreage originally nominated.
+Added: On April 12, 2024, the DOI finalized a comprehensive update to federal onshore oil and gas leasing regulations on Bureau of Land Management-managed public lands, which increased bonding requirements, royalty rates, and minimum bids.
Actions such as these could have a material adverse effect on us and our industry.
+Added: Restrictions on drilling and related activities intended to protect certain species of wildlife or their habitat may adversely affect our customers’ ability to conduct drilling and related activities in some of the areas where we operate.
+Added: Various federal and state statutes prohibit certain actions that harm endangered or threatened species and their habitats, migratory birds, wetlands and natural resources.
+Added: These statutes include the ESA, the MBTA, the BGEPA, the CWA, CERCLA and the Oil Pollution Act.
+Added: The USFWS may designate critical habitat and suitable habitat areas that it believes are necessary for survival of threatened or endangered species.
+Added: A critical habitat or suitable habitat designation could result in further material restrictions to federal land use and private land use and could delay, restrict or prohibit our customers’ land access or oil and gas development.
+Added: If adverse impact to species or damages to wetlands, habitat or natural resources occur or may occur as result of our or our customers’ activities, government entities or, at times, private parties may act to prevent such activities or seek damages for harm to species, habitat or natural resources resulting from our activities or our customers’ drilling, construction or releases of oil, wastes, hazardous substances or other regulated materials, which could reduce the demand for our services.
+Added: For example, on July 3, 2023, the USFWS proposed that the dunes sagebrush lizard, which is found in areas where we operate, be listed as endangered under the ESA.
+Added: The comment period on the proposed rule ended on October 2, 2023.
+Added: In addition, the lesser prairie-chicken, which can also be found in areas where we operate, was listed under the ESA effective March 27, 2023.
+Added: To the extent species are listed under the ESA or similar state laws, or previously unprotected species are designated as threatened or endangered in areas where our assets and operations are located, operations in those areas could incur increased costs arising from species protection measures and face delays or limitations with respect to production activities thereon.
Federal and state legislation and regulatory initiatives relating to saltwater disposal wells could result in increased costs and additional operating restrictions or delays and could harm our business.
The water disposal process is primarily regulated by state oil and gas authorities.
−Removed: This water disposal process has come under scrutiny from sections of the public as well as environmental and other groups asserting that the operation of certain water disposal wells has contributed to specific induced seismic events.
+Added: This water disposal process has come under scrutiny from sections of the public, including various state regulatory bodies, as well as environmental and other groups asserting that the operation of certain water disposal wells has contributed to specific induced seismic events.
New laws or regulations, or changes to existing laws or regulations, in response to this perceived threat may adversely impact the water disposal industry.
−Removed: On certain specific occasions, state regulatory agencies could request that we suspend operations at a disposal facility, pending further study of its potential impact on seismic activity.
+Added: On certain specific occasions, state regulatory agencies have and could request that we suspend operations at one or multiple disposal facilities, pending further study of a location’s potential impact on seismic activity.
In one specific instance, we limited the water into a disposal well and redirected the flow of water to a different area of the geologic formation in order to address such concerns.
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This idled well was subsequently plugged and abandoned.
+Added: In January 2024, the Texas Railroad Commission indefinitely suspended all deep oil and gas produced water injection in Culberson and Reeves counties, which directly impacted one of our disposal wells.
+Added: While this suspension resulted in a loss of 10,000 barrels per day of disposal capacity, the suspension did not materially impact our water disposal business.
We cannot predict whether any federal, state or local laws or regulations will be enacted and, if so, what actions any such laws or regulations would require or prohibit.
However, any restrictions on water disposal could lead to operational delays or increased operating costs and regulatory burdens that could make it more difficult or costly to perform water disposal operations, which would negatively impact our profitability.
+Added: To date, due to the capacity of our integrated system in the affected areas, the diverse locations of our disposal facilities, and the connectivity of our system, our ability to dispose of produced water has not been materially impacted by these actions, and with our unique positioning outside of the affected areas, we have the ability to grow our asset base.
Some of our operations are subject to the jurisdiction of the FERC and other operations may become subject in the future.
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The FERC has regulated oil pipelines under this authority since 1977, when legislation transferred jurisdiction to the FERC from the Interstate Commerce Commission.
−Removed: The Energy Policy Act of 1992 directed the Commission to establish a simplified and generally applicable ratemaking methodology for oil pipelines, keeping with the FERC’s statutory mandate to ensure that oil pipelines’ rates are just and reasonable.
+Added: The Energy Policy Act of 1992 directed the FERC to establish a simplified and generally applicable ratemaking methodology for oil pipelines, keeping with its statutory mandate to ensure that oil pipelines’ rates are just and reasonable.
Intrastate transportation and gathering pipelines that do not provide interstate services are subject to regulation by state regulatory commissions, such as the Texas Railroad Commission.
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The Grand Mesa Pipeline became operational on November 1, 2016 and has several points of origin in Colorado, runs from those origin points through Kansas and terminates in Cushing, Oklahoma.
−Removed: The transportation services on the Grand Mesa
−Removed: Pipeline are subject to FERC regulation.
+Added: The transportation services on the Grand Mesa Pipeline are subject to FERC regulation.
Other of our transportation services could in the future become subject to the jurisdiction of the FERC, which could adversely affect the terms of service, rates and revenues of such services.
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Violations of these licensing, tariff and tax reporting requirements could result in the imposition of significant administrative, civil and criminal penalties.
−Removed: Risks Related to Our Partnership Structure and in an Investment in Us
+Added: Risks Related to Our Partnership Structure and an Investment in Us
Our Partnership Agreement limits the fiduciary duties of our GP to our unitholders and restricts the remedies available to our unitholders for actions taken by our GP that might otherwise be breaches of fiduciary duty.
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If our GP elects to reset the target distribution levels, it will be entitled to receive a number of common units.
−Removed: The number of common units to be issued to our GP will be equal to that number of common units that would have entitled their holder to an average aggregate quarterly cash distribution in the prior two quarters equal to the average of the distributions to our GP on the IDRs in the prior two quarters.
+Added: The number of common units to be issued to our GP will be equal to that number of common units that would have entitled their holder to an average aggregate quarterly cash distribution in the prior two quarters equal to the average of the distributions to
+Added: our GP on the IDRs in the prior two quarters.
We anticipate that our GP would exercise this reset right to facilitate acquisitions or organic growth projects that would not be sufficiently accretive to cash distributions per common unit without such conversion.
It is possible, however, that our GP could exercise this reset election at a time when it is experiencing, or expects to experience, declines in the cash distributions it receives related to its IDRs and may, therefore, desire to be issued common units rather than retain the right to receive distributions on its IDRs based on the initial target distribution levels.
−Removed: As a result, a reset election may cause our common unitholders to experience a reduction in the amount of cash distributions that our common
−Removed: unitholders would have otherwise received had we not issued new common units and GP interests to our GP in connection with resetting the target distribution levels.
+Added: As a result, a reset election may cause our common unitholders to experience a reduction in the amount of cash distributions that our common unitholders would have otherwise received had we not issued new common units and GP interests to our GP in connection with resetting the target distribution levels.
Our unitholders’ liability may not be limited if a court finds that unitholder action constitutes control of our business.
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Any exercise of these warrants would cause dilution to existing common unitholders and may place downward pressure on the trading price of our common units.
−Removed: The warrants may be exercised from and after the first anniversary of the date of issuance.
−Removed: Unexercised warrants will expire on the tenth anniversary of the date of issuance.
−Removed: The warrants will not participate in cash distributions.
+Added: All outstanding warrants are currently exercisable and any unexercised warrants will expire on the tenth anniversary of the date of issuance.
+Added: The warrants will not participate in
+Added: cash distributions.
+Added: For additional information related to the warrants, see Note 9 to our consolidated financial statements included in this Annual Report.
Tax Risks to Our Unitholders
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We have not requested, and do not plan to request, a ruling from the IRS with respect to our treatment as a partnership for federal income tax purposes.
−Removed: Despite the fact that we are a limited partnership under Delaware law, a publicly traded partnership such as us will be treated as a corporation for federal income tax purposes unless, for each taxable year, 90% or more of its gross income is “qualifying income” under Section 7704 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).
+Added: Despite the fact that we are a limited partnership under Delaware law, a publicly traded partnership such as us will be treated as a corporation for federal income tax purposes unless, for each taxable year, 90% or more of its gross income is “qualifying income” under Section 7704 of the Internal Revenue Code of 1986, as amended (“Internal Revenue Code”).
“Qualifying income” includes income and gains derived from the exploration, development, production, processing, transportation, storage and marketing of natural gas, natural gas products, and crude oil or other passive types of income such as certain interest and dividends and gains from the sale or other disposition of capital assets held for the production of income that otherwise constitutes qualifying income.
Although we do not believe, based upon our current operations, that we are treated as a corporation, we could be treated as a corporation for federal income tax purposes or otherwise subject to taxation as an entity if our gross income is not properly classified as qualifying income, there is a change in our business or there is a change in current law.
−Removed: If we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our taxable income at the corporate tax rate, which is currently 21% (changed from 35% under the recently enacted tax reform law), and would likely pay state and local income tax at varying rates.
+Added: If we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our taxable income at the corporate tax rate, which is currently 21% (changed from 35% under the Tax Cuts and Jobs Act of 2017 (“Act”)), and would likely pay state and local income tax at varying rates.
Distributions to our unitholders would generally be taxed again as corporate dividends (to the extent of our current and accumulated earnings and profits), and no income, gains, losses, deductions or credits would flow through to our unitholders.
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In general, our unitholders are entitled to a deduction for the interest we have paid or accrued on indebtedness properly allocable to our business during our taxable year.
−Removed: However, under the Tax Cuts and Jobs Act of 2017 (the “Act”) signed into law by the President of the United States on December 22, 2017, beginning in tax year 2018, the deductibility of net interest expense is limited to 30% of our adjusted taxable income.
+Added: However, under the Act signed into law by the President of the United States on December 22, 2017, beginning in tax year 2018, the deductibility of net interest expense is limited to 30% of our adjusted taxable income.
For tax years beginning after December 31, 2017 and before January 1, 2022, the Act calculates adjusted taxable income using an EBITDA-based calculation.
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Any reduction in a unitholder’s share of our nonrecourse liabilities will be treated as a distribution of cash to that unitholder and will result in a corresponding tax basis reduction in a unitholder’s units.
−Removed: A deemed cash distribution may, under certain circumstances, result in the recognition of taxable gain by a unitholder, to the extent that the deemed cash distribution exceeds such unitholder’s tax basis in its units.
+Added: A deemed cash distribution may, under certain circumstances, result in the recognition of a taxable gain by a unitholder, to the extent that the deemed cash distribution exceeds such unitholder’s tax basis in its units.
In addition, the federal income tax liability of a unitholder could be increased if we dispose of assets or make a future offering of units and use the proceeds in a manner that does not produce substantial additional deductions, such as to repay indebtedness currently outstanding or to acquire property that is not eligible for depreciation or amortization for federal income tax purposes or that is depreciable or amortizable at a rate significantly slower than the rate currently applicable to our assets.
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Because distributions in excess of the unitholder’s allocable share of our net taxable income decrease the unitholder’s tax basis in their common units, the amount, if any, of such prior excess distributions with respect to the units the unitholder sells will, in effect, become taxable income to the unitholder if they sell such units at a price greater than their tax basis in those units, even if the price they receive is less than their original cost.
−Removed: Furthermore, a substantial portion of the amount realized on any sale of common units, whether or not representing gain, may be taxed as ordinary income due to potential recapture items, including depreciation recapture.
+Added: Furthermore, a substantial portion of the amount realized on any sale of common units, whether or not representing a gain, may be taxed as ordinary income due to potential recapture items, including depreciation recapture.
In addition, because the amount realized includes a unitholder’s share of our nonrecourse liabilities, if a unitholder sells units, they may incur a tax liability in excess of the amount of cash they receive from the sale.
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For example, virtually all of our income allocated to organizations that are exempt from federal income tax, including IRAs and other retirement plans, will be unrelated business taxable income and will be taxable to them.
−Removed: Distributions to non-United States persons will be reduced by withholding taxes at the highest applicable effective tax rate, and non-United States persons will be required to file federal income tax returns and pay tax on their share of our taxable income.
+Added: Distributions to non-United States persons are generally taxed and subject to income tax filing requirements by the United States on income effectively connected with a United States trade or business (“effectively connected income”).
+Added: Income allocated to our unitholders and any gain from the sale of our common units will generally be considered to be “effectively connected” with a United States trade or business.
+Added: As a result, distributions to a non-United States unitholder will be subject to withholding taxes at the highest applicable effective tax rate and a non-United States unitholder who sells or otherwise disposes of a common unit will also be subject to United States federal income tax on the gain realized from the sale or disposition of that common unit.
+Added: Non-United States persons will be required to file federal income tax returns and pay tax on their share of our taxable income.
+Added: In addition to the withholding tax imposed on distributions of effectively connected income, distributions to a non- United States unitholder will also be subject to a 10% withholding tax on the amount of any distribution in excess of our cumulative net income.
+Added: We intend to treat all of our distributions as being in excess of our cumulative net income for such purposes and subject to such 10% withholding tax.
+Added: Accordingly, distributions to a non-United States unitholder will be subject to a combined withholding tax rate equal to the sum of the highest applicable effective tax rate and 10%.
+Added: For a transfer of interests in a publicly traded partnership that is effected through a broker, the obligation to withhold is imposed on the transferor’s broker.
+Added: We are required to issue qualified notices regarding these matters.
+Added: Our qualified notices can be found on our website.
If you are a tax exempt entity or a non-United States person, you should consult your tax advisor before investing in our common units.
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Any position we take that is inconsistent with applicable Treasury Regulations may have to be disclosed on our federal income tax return.
−Removed: This disclosure increases the likelihood that the IRS will challenge our positions and propose adjustments to some or all of our unitholders.
+Added: This disclosure increases the likelihood that the IRS will challenge our positions and propose adjustments to some or all of our
A successful IRS challenge to those positions could adversely affect the amount of tax benefits available to our unitholders.
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If the Preferred Units were treated as indebtedness for tax purposes, rather than as guaranteed payments for the use of capital, distributions likely would be treated as payments of interest by us to the holders of Preferred Units.
−Removed: Although we expect that much of the income we earn is generally eligible for the 20% deduction for qualified publicly traded partnership income, recently issued Treasury Regulations, which are effective for our taxable years beginning on or after January 1, 2020, provide that a guaranteed payment for the use of capital is not eligible for the 20% deduction for qualified publicly traded partnership income.
+Added: Although we expect that much of the income we earn is generally eligible for the 20% deduction for qualified publicly traded partnership income, certain Treasury Regulations, which are effective for our taxable years beginning on or after January 1, 2020, provide that a guaranteed payment for the use of capital is not eligible for the 20% deduction for qualified publicly traded partnership income.
As a result, income attributable to a guaranteed payment for the use of capital recognized by holders of Preferred Units is not eligible for the 20% deduction for qualified publicly traded partnership income.
All holders of our Preferred Units are urged to consult a tax advisor to determine whether they are eligible to receive the 20% deduction for qualified publicly traded partnership income with respect to their Preferred Units.
−Removed: A holder of Preferred Units will be required to recognize gain or loss on a sale of Preferred Units equal to the difference between the amount realized by such holder and such holder’s tax basis in the Preferred Units sold.
+Added: Further, while unitholders of publicly traded partnerships are, subject to certain limitations, entitled to a deduction equal to 20% of their allocable share of qualified publicly traded partnership income, this deduction is scheduled to expire with respect to taxable years beginning after December 31, 2025.
+Added: A holder of Preferred Units will be required to recognize a gain or loss on a sale of Preferred Units equal to the difference between the amount realized by such holder and such holder’s tax basis in the Preferred Units sold.
The amount realized generally will equal the sum of the cash and the fair market value of other property such holder receives in exchange for such Preferred Units.
Subject to general rules requiring a blended basis among multiple partnership interests, the tax basis of a Preferred Unit will generally be equal to the sum of the cash and the fair market value of other property paid by the holder of Preferred Units to acquire such Preferred Unit.
−Removed: Gain or loss recognized by a holder of Preferred Units on the sale or exchange of a Preferred Unit held for more than one year generally will be taxable as long-term capital gain or loss.
+Added: Gain or loss recognized by a holder of Preferred Units on the sale or exchange of a Preferred Unit held for more than one year generally will be taxable as a long-term capital gain or loss.
Because holders of Preferred Units will generally not be allocated a share of our items of depreciation, depletion or amortization, it is not anticipated that such holders would be required to recharacterize any portion of their gain as ordinary income as a result of the recapture rules.
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We are subject to the public reporting requirements of the Securities Exchange Act of 1934, as amended.
−Removed: We are also subject to the obligation under Section 404(a) of the Sarbanes Oxley Act of 2002 (the “Sarbanes-Oxley Act”) to annually review and report on our internal control over financial reporting, and to the obligation under Section 404(b) of the Sarbanes Oxley Act to engage our independent registered public accounting firm to attest to the effectiveness of our internal control over financial reporting.
+Added: We are also subject to the obligation under Section 404(a) of the Sarbanes Oxley Act of 2002 (“Sarbanes-Oxley Act”) to annually review and report on our internal control over financial reporting, and to the obligation under Section 404(b) of the Sarbanes-Oxley Act to engage our independent registered public accounting firm to attest to the effectiveness of our internal control over financial reporting.
The Sarbanes-Oxley Act requires public companies to have and maintain effective disclosure controls and procedures to ensure timely disclosures of material information and to have management review the effectiveness of those controls on a quarterly basis.
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These risks may be heightened after a business combination, during the phase when we are implementing our internal control structure over the recently acquired business.
−Removed: Given the difficulties inherent in the design and operation of internal control over financial reporting, as well as future growth of our businesses, we can provide no assurance as to either our or our independent registered public accounting firm’s conclusions about the effectiveness of internal controls in the future, and we may incur significant costs in our efforts to comply with Section 404.
+Added: Given the difficulties inherent in the design and operation of internal control over financial reporting, as well as future growth of our businesses, we can provide no assurance as to either our or our independent registered public accounting firm’s conclusions about the effectiveness of internal controls in the future, and we may incur significant costs in our efforts to comply with Section 404 of the Sarbanes-Oxley Act .
Ineffective internal controls could subject us to regulatory scrutiny and a loss of confidence in our reported financial information, which could have an adverse effect on our business and would likely have a negative effect on the market price of our common units.
+Added: The impact of a global public health crisis may have material adverse consequences for general economic, financial and business conditions, and could materially and adversely affect our business, financial condition, results of operations and liquidity and those of our customers, suppliers and other counterparties.
+Added: Changes in the supply of and demand for hydrocarbon products impacts both the volume of products that we purchase and sell and the level of services that we provide to customers, which in turn impacts our financial position, results of operations and cash flows.
+Added: The global and U.S.
+Added: economy has generally recovered from the negative economic impacts of the COVID-19 pandemic, which disrupted global supply chains, reduced consumer activity, disrupted travel and created significant volatility and disruption of financial and commodity markets.
+Added: While the World Health Organization declared an end to the global public health emergency for COVID-19 in May 2023, a future global public health crisis could lead to similar disruptions and related economic repercussions.
+Added: Any resumed period of economic slowdown or recession, or the return to a period of depressed demand or prices for hydrocarbons that we handle, could have significant adverse consequences on our financial condition and the financial condition of our customers, suppliers and other counterparties, and could diminish our liquidity and negatively affect the volumes of products handled by our pipelines and other facilities.
+Added: The potential impact of these types of events on our financial condition, results of operations and cash flows depends largely on developments outside our control, including the duration of and response to a public health crisis, the related impact on overall economic activity and the potential long-term impacts on demand for crude oil and other products, all of which cannot be predicted with certainty.
The risk of terrorism and political unrest in various energy producing regions may adversely affect the economy and the price and availability of products.
An act of terror, or political unrest, in any of the major energy producing regions of the world could potentially result in disruptions in the supply of crude oil and natural gas, which could have a material impact on both availability and price.
−Removed: Since Russia’s military invasion of Ukraine in late February 2022, prices for commodities produced in those countries, including crude oil and natural gas, have risen sharply and have been volatile due to market concerns of worldwide supply constraints.
−Removed: Terrorist attacks in the areas of our operations could negatively impact our ability to transport crude oil, natural gas liquids and refined and renewables products to our locations.
+Added: Terrorist attacks in the areas of our operations could negatively impact our ability to transport crude oil, natural gas liquids and
+Added: refined and renewables products to our locations.
These risks could potentially negatively impact our consolidated results of operations.
2 unchanged sentences
As a result, we are subject to product liability claims and litigation, including potential class actions, in the ordinary course of business.
−Removed: Any product liability claim brought against us, with or without merit, could be costly to defend and could result in an increase of our insurance premiums.
+Added: Any product liability claim or other litigation matter brought against us, with or without merit, could be costly to defend and could result in an increase of our insurance premiums.
Some claims brought against us might not be covered by our insurance policies.
1 unchanged sentence
Furthermore, even where the claim is covered by our insurance, our insurance coverage might be inadequate and we would have to pay the amount of any settlement or judgment that is in excess of our policy limits.
−Removed: Our failure to maintain adequate insurance coverage or successfully defend against product liability claims could materially and adversely affect our business, consolidated results of operations, financial position and cash flows.
−Removed: A failure in our operational systems or cyber security attacks on any of our facilities, or those of third parties, may adversely affect our financial results.
+Added: Our failure to maintain adequate insurance coverage or successfully defend against product liability claims or other litigation matters could materially and adversely affect our business, consolidated results of operations, financial position and cash flows.
+Added: A failure in our operational systems or cybersecurity attacks on any of our facilities, or those of third parties, may adversely affect our financial results.
Our business is dependent upon our operational systems to process a large amount of data and complex transactions.
4 unchanged sentences
We use various systems in our financial and operations sectors, and this may subject our business to increased risks.
−Removed: Any future cyber security attacks that affect our facilities, our customers and any financial data could have a material adverse effect on our business.
−Removed: In addition, cyber security attacks on our customer and employee data may result in a financial loss, including potential fines for failure to safeguard data, and may negatively impact our reputation.
+Added: Any future cybersecurity attacks that affect our facilities, our customers and any financial data could have a material adverse effect on our business.
+Added: In addition, cybersecurity attacks on our customer and employee data may result in a financial loss, including potential fines for failure to safeguard data, and may negatively impact our reputation.
Third-party systems on which we rely could also suffer operational system failure.
Any of these occurrences could disrupt our business, resulting in potential liability or reputational damage or otherwise have an adverse effect on our financial results.
−Removed: Unresolved Staff Comments
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.