Commitments and Contingencies

3 Months Ended

Mar. 31, 2021

Commitments and Contingencies [Abstract]

Note 16. Commitments and Contingent Liabilities

Litigation

As part of our normal business activities, we may be named as defendants in legal proceedings, including those arising from regulatory and environmental matters. Although we are insured against various risks to the extent we believe it is prudent, there is no assurance that the nature and amount of such insurance will be adequate, in every case, to fully indemnify us against losses arising from future legal proceedings. We will vigorously defend the Partnership in litigation matters.

Our accruals for litigation contingencies were $0.2 million and $6.1 million at March 31, 2021 and December 31, 2020, respectively, and recorded in our Unaudited Condensed Consolidated Balance Sheets as a component of “Other current liabilities.”

PDH Litigation

In July 2013, we executed a contract with Foster Wheeler USA Corporation (“Foster Wheeler”) pursuant to which Foster Wheeler was to serve as the general contractor responsible for the engineering, procurement, construction and installation of our first propane dehydrogenation facility (“PDH 1”). In November 2014, Foster Wheeler was acquired by an affiliate of AMEC plc to form Amec Foster Wheeler plc, and Foster Wheeler is now known as Amec Foster Wheeler USA Corporation (“AFW”). In December 2015, Enterprise and AFW entered into a transition services agreement under which AFW was partially terminated from the PDH 1 project. In December 2015, Enterprise engaged a second contractor, Optimized Process Designs LLC, to complete the construction and installation of PDH 1.

On September 2, 2016, we terminated AFW for cause and filed a lawsuit in the 151st Judicial Civil District Court of Harris County, Texas against AFW and its parent company, Amec Foster Wheeler plc, asserting claims for breach of contract, breach of warranty, fraudulent inducement, string-along fraud, gross negligence, professional negligence, negligent misrepresentation and attorneys’ fees. We intend to diligently prosecute these claims and seek all direct, consequential, and exemplary damages to which we may be entitled.

Contractual Obligations

Scheduled Maturities of Debt

We have long-term and short-term payment obligations under debt agreements. In total, the principal amount of our consolidated debt obligations were $28.94 billion and $30.15 billion at March 31, 2021 and December 31, 2020, respectively. The year-to-date reduction in debt principal amount outstanding is primarily due to EPO’s repayment of Senior Notes TT and RR, partially offset by the issuance of short-term notes under its commercial paper program. See Note 7 for additional information regarding our scheduled future maturities of debt principal.

Lease Accounting Matters

There has been no significant change in our operating lease obligations since those disclosed in the 2020 Form 10-K.

The following table presents information regarding operating leases where we are the lessee at March 31, 2021:

Asset Category	ROU Asset Carrying Value (1)		Lease Liability Carrying Value (2)		Weighted- Average Remaining Term	Weighted- Average Discount Rate (3)
Storage and pipeline facilities	$	124.3	$	124.9	15 years	4.3%
Transportation equipment		31.6		33.6	3 years	3.3%
Office and warehouse space		168.7		185.9	16 years	3.2%
Total	$	324.6	$	344.4

(1)	Right-of-use (“ROU”) asset amounts are a component of “Other assets” on our Unaudited Condensed Consolidated Balance Sheet.
(2)	At March 31, 2021, lease liabilities of $27.1 million and $317.3 million were included within “Other current liabilities” and “Other liabilities,” respectively.
(3)	The discount rate for each category of assets represents the weighted average of either (i) the implicit rate applicable to the underlying leases (where determinable) or (ii) our incremental borrowing rate adjusted for collateralization (if the implicit rate is not determinable). In general, the discount rates are based on either information available at the lease commencement date or January 1, 2019 for leases existing at the adoption date for ASC 842, Leases.

The following table disaggregates our total operating lease expense for the periods indicated:

	For the Three Months Ended March 31,
	2021		2020
Long-term operating leases:
Fixed lease expense:
Non-cash lease expense (amortization of ROU assets)	$	9.3	$	10.0
Related accretion expense on lease liability balances		3.1		3.4
Total fixed lease expense		12.4		13.4
Variable lease expense		0.4		0.2
Subtotal operating lease expense		12.8		13.6
Short-term operating leases		13.5		13.2
Total operating lease expense	$	26.3	$	26.8

Cash payments attributable to operating lease obligations were $9.1 million and $10.1 million for the three months ended March 31, 2021 and 2020, respectively.

Operating lease income for the three months ended March 31, 2021 and 2020 was $3.0 million and $3.5 million, respectively.

Purchase Obligations

We have contractual future product purchase commitments for natural gas, NGLs, crude oil, petrochemicals and refined products representing enforceable and legally binding agreements as of the reporting date. Our product purchase commitments increased from $14.8 billion at December 31, 2020 to $19.34 billion at March 31, 2021 primarily due to an increase in crude oil and NGL prices between the two reporting dates.