Commitments and Contingent Liabilities

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 17.  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.

There were no accruals for litigation contingencies at September 30, 2022.  Our accruals for litigation contingencies were immaterial at December 31, 2021.  We have classified our accruals for litigation contingencies in our Unaudited Condensed Consolidated Balance Sheets as a component of “Other current liabilities” or “Other long-term liabilities” based on management’s estimate regarding the timing of settlement.  

PDH 1 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.  Trial for the case began on April 19, 2022, and closing arguments were completed on July 22, 2022.  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 $29.5 billion and $29.8 billion at September 30, 2022 and December 31, 2021, respectively.  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 2021 Form 10-K.

The following table presents information regarding operating leases where we are the lessee at September 30, 2022:

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	$	194	$	195	10 years	3.6%
Transportation equipment		16		17	3 years	3.1%
Office and warehouse space		159		192	14 years	2.9%
Total	$	369	$	404

(1)	ROU asset amounts are a component of “Other assets” on our Unaudited Condensed Consolidated Balance Sheet.
(2)	At September 30, 2022, lease liabilities of $60 million and $344 million were included within “Other current liabilities” and “Other long-term 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 September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Long-term operating leases:
Fixed lease expense:
Non-cash lease expense (amortization of ROU assets)	$	16	$	10	$	43	$	29
Related accretion expense on lease liability balances		3		4		9		10
Total fixed lease expense		19		14		52		39
Variable lease expense		3		–		4		1
Subtotal operating lease expense		22		14		56		40
Short-term operating leases		25		15		65		41
Total operating lease expense	$	47	$	29	$	121	$	81

Cash payments attributable to operating lease liabilities were $19 million and $11 million for the three months ended September 30, 2022 and 2021, respectively.  For the nine months ended September 30, 2022 and 2021, cash paid for operating lease liabilities was $47 million and $29 million, respectively.

Operating lease income for the three months ended September 30, 2022 and 2021 was $4 million and $3 million, respectively.  For the nine months ended September 30, 2022 and 2021, operating lease income was $10 million and $9 million, respectively.

Purchase Obligations

Our consolidated purchase obligations at September 30, 2022 did not differ materially from those reported in our 2021 Form 10-K.