Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Proceedings and Settlements

The Partnership's subsidiaries are parties to various legal actions arising in the normal course of business. Management believes the disposition of these outstanding legal actions will not have a material impact on the Partnership's financial condition, results of operations or cash flows. Refer to Note 4 of the Consolidated Financial Statements included in the 2015 Annual Report on Form 10-K for further information regarding the Partnership’s legal proceedings.

Regulatory Matters

In October 2014, Gulf South Pipeline Company, LP (Gulf South) filed a rate case with the Federal Energy Regulatory Commission (FERC) pursuant to Section 4 of the Natural Gas Act (Docket No. RP 15-65), requesting, among other things, a reconfiguration of the transportation rate zones on its system and, in general, an increase in its tariff rates for those customers whose agreements are at maximum tariff rates. An uncontested settlement was reached with Gulf South’s customers and FERC, which became final effective March 1, 2016. In April 2016, Gulf South settled a $16.6 million rate refund liability through a combination of cash payments and invoice credits. Also, as a result of the rate case, Gulf South implemented a fuel tracker which went into effect April 1, 2016. The Partnership applies regulatory accounting for the fuel tracker, under which the value of fuel received from customers paying the full tariff rate, and the related value of fuel used in transportation is recorded to a regulatory asset or liability depending on whether Gulf South uses more fuel than it collects from customers or collects more fuel than it uses. Prior to the implementation of the fuel tracker and the application of regulatory accounting, the value of fuel received from customers was reflected in operating revenues and the value of fuel used was reflected in operating expenses. All issues associated with the rate case have been resolved.

Settlements and Insurance Proceeds

For the nine months ended September 30, 2016, the Partnership received $12.7 million in cash from the settlement of a legal claim which was recorded in Transportation revenues.

For the three and nine months ended September 30, 2015, the Partnership received $2.5 million and $8.8 million in insurance proceeds from a business interruption claim related to Boardwalk Louisiana Midstream, LLC, which were recorded in Transportation revenues.

In early 2016, the Partnership received $3.9 million related to a customer’s default of its obligations under a credit support agreement associated with the Northern Supply Access project. In October 2016, the default was remedied.

Environmental and Safety Matters

The operating subsidiaries are subject to federal, state and local environmental laws and regulations in connection with the operation and remediation of various operating sites. As of September 30, 2016, and December 31, 2015, the Partnership had an accrued liability of approximately $5.1 million and $5.6 million related to assessment and/or remediation costs associated with the historical use of polychlorinated biphenyls, petroleum hydrocarbons and mercury, groundwater protection measures and other costs. The liability represents management’s estimate of the undiscounted future obligations based on evaluations and discussions with counsel and operating personnel and the current facts and circumstances related to these matters. The related expenditures are expected to occur over the next six years. As of September 30, 2016, and December 31, 2015, $1.7 million was recorded in Other current liabilities for each period and approximately $3.4 million and $3.9 million were recorded in Other Liabilities and Deferred Credits.

Commitments for Construction

The Partnership’s future capital commitments are comprised of binding commitments under purchase orders for materials ordered but not received and firm commitments under binding construction service agreements. The commitments as of September 30, 2016, were approximately $207.4 million, all of which are expected to be settled within the next twelve months.

There were no substantial changes to the Partnership’s operating lease commitments, pipeline capacity agreements or capital lease obligation disclosed in Note 4 to the Partnership’s 2015 Annual Report on Form 10-K.