Page 49 - DCP AR2011 Dev

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inspections of deepwater operations in the Gulf of Mexico. On May 28, 2010, a six-month federal moratorium
was implemented on all offshore deepwater drilling projects. On October 12, 2010, the Department of the
Interior announced it was lifting the deepwater drilling moratorium. Despite the fact that the drilling
moratorium was lifted, this spill and its aftermath has led to additional governmental regulation of the offshore
exploration and production industry and delays in the issuance of drilling permits, which may result in volume
impacts, cost increases or delays in our offshore natural gas gathering activities, which could materially impact
our business, financial condition and results of operations. We cannot predict with any certainty what form any
additional regulation or limitations would take.
We may incur significant costs and liabilities in the future resulting from a failure to comply with new or
existing environmental regulations or an accidental release of hazardous substances or hydrocarbons into
the environment.
Our operations are subject to stringent and complex federal, state and local environmental laws and
regulations. These include, for example, (1) the federal Clean Air Act and comparable state laws and
regulations that impose obligations related to air emissions; (2) the federal Resource Conservation and
Recovery Act, or RCRA, and comparable state laws that impose requirements for the discharge of waste from
our facilities; and (3) the Comprehensive Environmental Response Compensation and Liability Act of 1980, or
CERCLA, also known as “Superfund,” and comparable state laws that regulate the cleanup of hazardous
substances that may have been released at properties currently or previously owned or operated by us or
locations to which we have sent waste for disposal. Failure to comply with these laws and regulations or newly
adopted laws or regulations may trigger a variety of administrative, civil and criminal enforcement measures,
including the assessment of monetary penalties, the imposition of remedial requirements, and the issuance of
orders enjoining future operations. Certain environmental regulations, including CERCLA and analogous state
laws and regulations, impose strict, joint and several liability for costs required to clean up and restore sites
where hazardous substances or hydrocarbons have been disposed or otherwise released. Moreover, it is not
uncommon for neighboring landowners and other third parties to file claims for personal injury and property
damage allegedly caused by the release of hazardous substances, hydrocarbons or other waste products into the
environment.
There is inherent risk of the incurrence of environmental costs and liabilities in our business due to our
handling of natural gas, NGLs and other petroleum products, air emissions related to our operations, and
historical industry operations and waste disposal practices. For example, an accidental release from one of our
facilities could subject us to substantial liabilities arising from environmental cleanup and restoration costs,
claims made by neighboring landowners and other third parties for personal injury and property damage and
governmental claims for natural resource damages or fines or penalties for related violations of environmental
laws or regulations. In addition, it is possible that stricter laws, regulations or enforcement policies could
significantly increase our compliance costs and the cost of any remediation that may become necessary. We
may not be able to recover some or any of these costs from insurance or from indemnification from DCP
Midstream, LLC.
We may incur significant costs in the future associated with proposed climate change legislation.
The United States Congress and some states where we have operations are currently considering
legislation related to greenhouse gas emissions. In addition, there have recently been international conventions
and efforts to establish standards for the reduction of greenhouse gases globally. The United States Congress
will most likely consider a number of bills that would compel greenhouse gas emission reductions. Some of
these proposals may include limitations, or caps, on the amount of greenhouse gas that can be emitted, as well
as a system of emissions allowances. Legislation passed by the US House of Representatives in 2010 placed the
entire burden of obtaining allowances for the carbon content of NGLs on the owners of NGLs at the point of
fractionation. To the extent legislation is enacted that regulates greenhouse gas emissions, it could significantly
increase our costs to (i) acquire allowances; (ii) operate and maintain our facilities; (iii) install new emission
controls; and (iv) manage a greenhouse gas emissions program. If such legislation becomes law in the United
States or any states in which we have operations and we are unable to pass these costs through as part of our
services, it could have an adverse effect on our business and cash available for distributions.
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