DCP SOUTHEAST TEXAS HOLDINGS, GP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Years Ended December 31, 2011, 2010 and 2009
10. Commitments and Contingent Liabilities
Litigation
— We are not party to any significant legal proceedings, but are a party to various
administrative and regulatory proceedings and commercial disputes that have arisen in the ordinary course of
our business. Management currently believes that the ultimate resolution of the foregoing matters, taken as a
whole, and after consideration of amounts accrued, insurance coverage or other indemnification arrangements,
will not have a material adverse effect on our consolidated results of operations, financial position, or cash
flows.
ExxonMobil has alleged that in February 2011 we delivered off-specification NGLs to ExxonMobil’s
Beaumont, Texas fractionation facility. We continue to investigate this claim; weather conditions may have
affected the quality of certain NGL volumes delivered to ExxonMobil in February 2011. We are currently in
discussions with ExxonMobil to resolve this dispute. As a result of this claim, we have recorded a liability of
$0.5 million. This amount is included in our consolidated balance sheets as of December 31, 2011 within
accounts payable – trade.
General Insurance
— An affiliate of Southeast Texas carries insurance for our assets and operations,
which management believes is consistent with companies engaged in similar commercial operations with
similar assets. These insurance coverages include (i) general liability; (ii) excess liability insurance above the
established primary limits of general liability insurance; and (iii) property insurance, which covers replacement
value of real and personal property and includes business interruption/extra expense. All coverage is subject to
certain limits and deductibles, the terms and conditions of which are common for companies with similar types
of operation.
Environmental
— The operation of pipelines, plants and other facilities for gathering, transporting,
processing, treating, or storing natural gas, NGLs and other products is subject to stringent and complex laws
and regulations pertaining to health, safety and the environment. As an owner or operator of these facilities, we
must comply with United States laws and regulations at the federal, state and local levels that relate to air and
water quality, hazardous and solid waste storage, management, transportation and disposal, and other
environmental matters including recently adopted EPA regulations related to reporting of greenhouse gas
emissions which have taken effect over the past two years. The cost of planning, designing, constructing and
operating pipelines, plants, and other facilities must incorporate compliance with environmental laws and
regulations and safety standards. Failure to comply with these laws and regulations may trigger a variety of
administrative, civil and potentially criminal enforcement measures, including citizen suits, which can include
the assessment of monetary penalties, the imposition of remedial requirements, the issuance of injunctions or
restrictions on operations. Management believes that, based on currently known information, compliance with
these laws and regulations will not have a material adverse effect on our consolidated results of operations,
financial position or cash flows.
As of December 31, 2011 and 2010, we had no environmental liabilities in our consolidated balance
sheets.
11. Supplemental Cash Flow Information
Year Ended December 31,
2011
2010
2009
(Millions)
Cash paid for income taxes, net of income tax refunds . . . . . . . . . . . . . . . $ — $ 0.4 $0.7
Non-cash investing and financing activities:
Net change in parent advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5.1 $ — $ —
Other non-cash additions of property, plant and equipment . . . . . . . . . $1.6 $10.1 $0.3
Acquisition related contingent consideration . . . . . . . . . . . . . . . . . . . . . $ — $ 2.1 $ —
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