Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Legal Proceedings

Oasis Unitholder Lawsuit. On December 17, 2021, Kristen Eckert-Smith (Plaintiff), a common unitholder of Oasis Midstream filed a complaint in the United States District Court for the District of Delaware on behalf of all Oasis common unitholders. This complaint alleges that the merger between Oasis Midstream and Crestwood Equity violates the Securities Exchange Act of 1934. In addition, the Plaintiff filed a lawsuit against Oasis Midstream, its board of directors and Crestwood Equity GP, claiming the Registration Statement filed with the SEC omitted material information with respect to Oasis Midstream’s calculated projections and financial analyses. The Plaintiff is seeking to block the parties from closing the merger and in the alternative, to revise the Registration Statement and award plaintiff the attorney’s and expert’s fees. We are currently evaluating the potential impact of this lawsuit, but currently do not believe it will have a material impact on our financial condition or results of operations.

Linde Lawsuit. On December 23, 2019, Linde Engineering North America Inc. (Linde) filed a lawsuit in the District Court of Harris County, Texas alleging that Arrow Field Services, LLC, our consolidated subsidiary, and Crestwood Midstream breached a contract entered into in March 2018 under which Linde was to provide engineering, procurement and construction services to us related to the completion of the construction of the Bear Den II cryogenic processing plant. During the year ended December 31, 2021, we paid approximately $19.5 million to Linde related to this matter, and Linde claims remaining unpaid invoices of approximately $36 million, along with other damages. This matter is not an insurable event based on our insurance policies, and we are unable to predict the outcome for this matter.

General. We are periodically involved in litigation proceedings. If we determine that a negative outcome is probable and the amount of loss is reasonably estimable, then we accrue the estimated amount. The results of litigation proceedings cannot be predicted with certainty. We could incur judgments, enter into settlements or revise our expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on our results of operations or cash flows in the period in which the amounts are paid and/or accrued. As of December 31, 2021 and 2020, we had approximately $16.8 million and $10.4 million accrued for outstanding legal matters. Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures for which we can estimate will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures.

Any loss estimates are inherently subjective, based on currently available information, and are subject to management’s judgment and various assumptions. Due to the inherently subjective nature of these estimates and the uncertainty and unpredictability surrounding the outcome of legal proceedings, actual results may differ materially from any amounts that have been accrued.

Regulatory Compliance

In the ordinary course of our business, we are subject to various laws and regulations. In the opinion of our management, compliance with current laws and regulations will not have a material effect on our results of operations, cash flows or financial condition.

Environmental Compliance

Our operations are subject to stringent and complex laws and regulations pertaining to worker health, safety, and the environment. We are subject to laws and regulations at the federal, state, regional and local levels that relate to air and water quality, hazardous and solid waste management and disposal, and other environmental matters. The cost of planning, designing, constructing and operating our 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.

During 2019, we experienced two produced water releases on our Arrow water gathering system located within the Fort Berthold Indian Reservation in North Dakota. In January 2021, we received a Notice of Violation and Opportunity to Confer from the EPA related to the water releases. In March 2021, we executed a Consent Agreement with the EPA and in January 2022, we paid approximately $0.1 million in civil penalties to resolve the matter. We are also substantially complete with all remediation efforts related to the water releases and continue to monitor any remaining impacts. We believe these events are insurable under our policies. We have not recorded an insurance receivable as of December 31, 2021.

At December 31, 2021 and 2020, our accrual of approximately $1.0 million and $1.3 million was based on our undiscounted estimate of amounts we will spend on compliance with environmental and other regulations, and any associated fines or penalties. We estimate that our potential liability for reasonably possible outcomes related to our environmental exposures could range from approximately $1.0 million to $1.9 million at December 31, 2021.

Self-Insurance

We utilize third-party insurance subject to varying retention levels of self-insurance, which management considers prudent. Such self-insurance relates to losses and liabilities primarily associated with medical claims, workers’ compensation claims and general, product, vehicle and environmental liability. Losses are accrued based upon management’s estimates of the aggregate liability for claims incurred using certain assumptions followed in the insurance industry and based on past experience. The primary assumption utilized is actuarially determined loss development factors. The loss development factors are based primarily on historical data. Our self-insurance reserves could be affected if future claim developments differ from the historical trends. We believe changes in health care costs, trends in health care claims of our employee base, accident frequency and severity and other factors could materially affect the estimate for these liabilities. We continually monitor changes in employee demographics, incident and claim type and evaluate our insurance accruals and adjust our accruals based on our evaluation of these qualitative data points. We are liable for the development of claims for our previously disposed of retail propane operations, provided they were reported prior to August 1, 2012. The following table summarizes CEQP’s and CMLP’s self-insurance reserves (in millions):


	CEQP				CMLP
	December 31,				December 31,
	2021		2020		2021		2020
Self-insurance reserves(1)	$	5.5	$	7.7	$	4.7	$	6.7

(1)At December 31, 2021, CEQP and CMLP classified approximately $3.5 million and $2.9 million, respectively of these reserves as other long-term liabilities on their consolidated balance sheets.

Purchase Commitments

We periodically enter into agreements with suppliers to purchase fixed quantities of NGLs, distillates, crude oil and natural gas at fixed prices. At December 31, 2021, the total of these firm purchase commitments was $2,760.9 million, of which approximately $2,493.6 million will occur over the next twelve months. We also enter into non-binding agreements with suppliers to purchase quantities of NGLs, distillates, crude oil and natural gas at variable prices at future dates at the then prevailing market prices.

We have entered into certain purchase commitments which totaled approximately $15.6 million at December 31, 2021. These purchase commitments primarily relate to future growth projects and maintenance obligations in our gathering and processing north segment. The purchases associated with our commitments are expected to occur over the next twelve months.

Guarantees and Indemnifications

We are involved in various joint ventures that sometimes require financial and performance guarantees. In a financial guarantee, we are obligated to make payments if the guaranteed party fails to make payments under, or violates the terms of, the financial arrangement. In a performance guarantee, we provide assurance that the guaranteed party will execute on the terms of the contract. If they do not, we are required to perform on their behalf. We also periodically provide indemnification arrangements related to assets or businesses we have sold.

Our potential exposure under guarantee and indemnification arrangements can range from a specified amount to an unlimited dollar amount, depending on the nature of the claim, specificity as to duration, and the particular transaction. As of December 31, 2021, we have no amounts accrued for these guarantees.