EXHIBIT 10.16
AMENDED AND RESTATED OPERATING AGREEMENT
BETWEEN
WEST TEXAS LPG PIPELINE LIMITED PARTNERSHIP
AND
CHEVRON PIPE LINE COMPANY
AMENDED AND RESTATED OPERATING AGREEMENT
BETWEEN
WEST TEXAS LPG PIPELINE LIMITED PARTNERSHIP
AND
CHEVRON PIPE LINE COMPANY
Table Of Contents
1. ARTICLE I - DEFINITIONS
2. ARTICLE II - OPERATIONS AND RESPONSIBILITIES OF OPERATOR
2.1 Operation of the Facilities
2.2 Standard of Care
2.3 Chevron's Policy 530
2.4 Particular Duties of Physical Operator
2.5 Particular Duties of Commercial Operator
2.6 Y2K Compliance
2.7 Interim Operations
2.8 ▇▇▇▇▇ Facilities Operations
3. ARTICLE III - ANNUAL BUDGET AND DELEGATION OF AUTHORITY
3.1 Annual Budget
3.2 Delegation of Authority
3.3 Capital Projects
4. ARTICLE IV - REPORTING BY OPERATOR
4.1 Reports
4.2 Notification and Settlement of Losses and Claims.
5. ARTICLE V - OPERATING ACCOUNT, RECORDS, AND AUDITS
5.1 Establishment of Operating Account
5.2 Operator Invoicing
5.3 Funding of the Account or of Operator's Account
5.4 Books and Records
5.5 Audits
5.6 Record Retention
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6. ARTICLE VI - TERM
6.1 Primary Term
6.2 Resignation
6.3 Required Resignation
6.4 Removal of Operator for Cause
6.5 Removal of Commercial Operator
6.6 Obligations on Termination
6.7 Rights Upon Removal or Resignation
6.8 Transition Upon Termination
7. ARTICLE VII - INSURANCE
7.1 Required Insurance
7.2 Claims Covered by Operator's Self Insurance
8. ARTICLE VIII - MUTUAL RELEASE AND INDEMNIFICATION
9. ARTICLE IX - CONFIDENTIALITY
10. ARTICLE X - FORCE MAJEURE
11. ARTICLE XI - ASSIGNMENT
12. ARTICLE XII - NOTICES
12.1 Addresses for Notices.
13. ARTICLE XIII - GOVERNING LAW
14. ARTICLE XIV - ALTERNATIVE DISPUTE RESOLUTION
14.1 Covered Disputes.
14.2 Initiation of Procedures.
14.3 Negotiation Between Executives.
14.4 Mediation.
14.5 Arbitration.
14.6 Arbitration Procedure.
14.7 Arbitration Hearing.
14.8 Arbitration Decision and Costs.
14.9 Enforcement of Award.
14.10 Tolling and Performance.
15. ARTICLE XV - MISCELLANEOUS
15.1 Waiver
15.2 Amendment
15.3 Agreement in Counterparts
15.4 Further Assurances
15.5 Validity
15.6 Attachments Exhibits and Schedules
15.7 Entire Agreement
15.8 Titles and Headings
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15.9 Binding Effect
15.10 Benefits of Agreement Restricted to Parties
15.11 Reservation of Rights
15.12 Principles of Construction and Interpretation
15.13 Disclaimer of Liability
15.14 Acknowledgment
15.15 Joint Efforts
15.16 Conflicts of Interest
15.17 Independent Contractor
15.18 Power of Attorney
15.19 Federal Compliance
ATTACHMENT I - ACCOUNTING PROCEDURE
ATTACHMENT II - DESCRIPTION OF THE FACILITIES
ATTACHMENT III - MAPS OF FACILITIES
ATTACHMENT IV - CHEVRON'S POLICY 530: PROTECTING PEOPLE AND THE ENVIRONMENT -
SUMMARY OF 20 ACTION AREAS
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AMENDED AND RESTATED OPERATING AGREEMENT
BETWEEN
WEST TEXAS LPG PIPELINE LIMITED PARTNERSHIP
AND
CHEVRON PIPE LINE COMPANY
THIS AGREEMENT is made and entered into effective as of May 1, 1999 by and
between West Texas LPG Pipeline Limited Partnership, a Texas limited partnership
(hereinafter referred to as "Company"), and Chevron Pipe Line Company, a
Delaware Corporation (hereinafter referred to as "Operator").
WHEREAS, Company is the owner of certain LPG pipeline facilities ("Facilities")
more particularly identified in Attachment II and Attachment III; and
WHEREAS, effective September 1, 1996, the Company and Operator entered into that
certain Operating Agreement covering the operation of the Facilities; and
WHEREAS, the Company has or is in the process of acquiring additional gathering
assets and desires that such assets be included as part of the Facilities and
operated by Operator, and Operator desires to operate such additional assets as
part of the Facilities; and
WHEREAS, Company and Operator desire to amend and restate in its entirety the
Operating Agreement to provide for the operation by Operator of the additional
assets as part of the Facilities and to provide for other modifications as set
forth herein;
NOW, THEREFORE, in the consideration of the premises and mutual covenants
contained in this Agreement, Company and Operator agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following words and terms
shall have the meanings set forth:
"Account" has the meaning set forth is Section 5.1 hereinafter.
"Accounting Procedure" means the accounting procedure set forth in Attachment I,
hereof.
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"Action" means any and all claims (whether in contract, tort or indemnity),
demands, causes of action, liens, actions, suits, injunctions, alternative
dispute resolution proceedings and Governmental Authority proceedings.
"AFE" means an approval for expenditure in the form approved by Company.
"Affiliate" means with respect to any Person, (i) any other Person which
beneficially owns, directly or indirectly, 50% or more of such Person's stock or
50% or more of the ownership interest entitled to vote in such Person or (ii)
any other Person as to which 50% or more of the voting stock or 50% or more of
the ownership interest entitled to vote therein, is beneficially owned, directly
or indirectly, either by such Person or by an Affiliate of such Person as
defined in the preceding clause (i).
"Agreement" means this Operating Agreement together with all Attachments.
"Annual Budget" has the meaning set forth is Section 3.1(a) hereinafter.
"Applicable Laws" mean all applicable and valid laws, rules, regulations,
statutes, codes, ordinances or other requirements of the United States or any
regional, state or local Governmental Authority, whether such laws now exist or
hereafter come into effect.
"Cash Operating Costs" means amounts reimbursed or payable to Operator under
Article V of this Agreement, and which are described more fully in Section 3 of
Attachment I.
"Century Date Compliant" means, with respect to computer hardware and processes,
including any and all enhancements, upgrades, customizations, modifications,
maintenance and the like, delivered by Operator or used in providing services,
containing or calling on a calendar function including, without limitation, any
function providing specific dates or days, or calculating spans of dates or
days, will record, store, process, provide and, where appropriate, insert, true
and accurate dates and calculations for dates and spans of dates, including and
following January 1, 2000.
"Claims" mean collectively all Actions and Losses.
"Commercial Operator" means Chevron Pipe Line Company or its successor(s) that
fulfill the duties as set forth in Section 2.5.
"Confidential Information" means any information relating to the identity of
shippers using the Facilities, the nature, kind, quantity, destination or
consignee or routing of Products using the Facilities, any information
proprietary to either Party and maintained by it in confidence or as a trade
secret, including, without limitation, business plans and strategies,
proprietary software, financing statements, customer or client lists, personnel
records, analysis of general energy market conditions, sales, transportation and
service contracts and the commercial terms thereof, relationships with current
and potential business partners, suppliers, customers, service providers and
financial sources, data base contents and valuable information of a like nature
relating to the business of such Party. It is understood and agreed that
Confidential Information shall not include information of a Party that (i) was
generally available to the public at the time of
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disclosure to the other Party, (ii) after the time of disclosure to the other
Party, becomes generally available to the public, (iii) the Party receiving the
information can show that the information was in its possession at the time of
disclosure, or (iv) was rightfully acquired by the recipient from third Persons
who did not themselves obtain such information under a confidentiality or other
similar agreement with the disclosing Party.
"Environmental and Safety Laws" mean all Applicable Laws pertaining to human
health, safety and/or the environment, waste management, natural resources,
conservation, wildlife, any activity related to a Hazardous Material, or any
environmental matter, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C.
(S)(S)9601 et seq. ("CERCLA"); the Resource Conservation and Recovery Act, 42
U.S.C. (S)(S)6901 et seq. ("RCRA"); the Clean ▇▇▇▇▇ ▇▇▇, ▇▇ ▇.▇.▇. (▇)(▇)▇▇▇▇ et
seq.; the Toxic Substances Control Act, 15 U.S.C. (S)(S)2601 et seq.; the Clean
Air Act, 42 U.S.C. (S)(S)7401 et seq.; the Hazardous Liquid Pipeline Safety Act,
49 U.S.C. (S)(S)60101 et seq.; the Occupational Safety and Health Act, 29 U.S.C.
(S)(S)651 et seq.; and the Natural Gas Pipeline Safety Act, 49 U.S.C.
(S)(S)60101 et seq., as amended from time to time.
"Facilities" means the facilities identified in Attachment II and Attachment III
hereto, which include the Gathering Facilities.
"Force Majeure" means an occurrence not within the control of the party and
which by the exercise of reasonable efforts such party is unable to prevent or
overcome, and shall include, but not be limited to, acts of God, strikes,
lockouts, or other industrial disturbances, acts of the public enemy, wars,
blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes,
fires, storms, floods, washouts, hurricanes, storm warnings requiring evacuation
of facilities, arrests or restraints of the government, either federal or state,
civil or military, civil disturbances, explosions, sabotage, breakage or
accident to equipment, machinery or lines of pipe, extreme heat or cold weather,
freezing of machinery, equipment or lines of pipe, electric power shortages,
inability of any Party to obtain necessary Materials, inability of any Party to
obtain necessary permits and/or permissions due to existing or future Applicable
Laws, temporary cleaning or testing of facilities, temporary failure of supply,
or any other causes, whether of the kind herein enumerated or otherwise, which
were not reasonably foreseeable on the effective date of this Agreement, and
which are not within the control of the Party claiming suspension and which such
Party is unable to overcome by the exercise of due diligence. The term "Force
Majeure" shall also include those instances in which either Party hereto is
required to furnish Materials for the purpose of constructing and maintaining
facilities or is required to secure permits or permission from any Governmental
Authority to enable such Party to acquire, or the delays on the part of such
Party in acquiring, at reasonable cost and after the exercise of due diligence,
such Materials, permits and permissions. It is understood and agreed that the
settlement of strikes or lockouts shall be entirely within the discretion of the
Party having the difficulty, and that the above requirement that any Force
Majeure shall be remedied with all reasonable dispatch shall not require the
settlement of strikes or lockouts by acceding to the demands of opposing parties
when such course is inadvisable in the discretion of the Party having
difficulty. The term "Force Majeure" shall also include any such event
occurring with respect to the facilities or services of either Operator's or
Company's third-party suppliers or customers delivering or receiving any
product, fuel, feedstock, or other substance necessary to the continuous
operation of either
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Party's plants or facilities or performance of such Party's obligations, and
shall also include curtailment or interruption of deliveries or service by such
third-party suppliers or customers as a result of (i) another event of Force
Majeure or (ii) a breach by such third-party under the applicable agreement(s).
"GAAP" means generally accepted accounting principles.
"Gathering Facilities" mean the LPG gathering facilities contributed to the
Partnership by Mid-America Pipeline Company which are more particularly
described in Attachment II and III which are attached hereto and made a part
hereof and which are part of the Facilities.
"Governmental Authority" means any governmental or regulatory authority
(including courts and agencies) having jurisdiction over any part of this
Agreement, the Parties, the Facilities, or the operation of the Facilities or
any portion thereof.
"Hazardous Material" means any substance that is defined or listed as a
"hazardous substance", "hazardous waste", "hazardous material", "toxic
substance" or words of similar import under any present or future Environmental
and Safety Law or that is otherwise regulated under any present or future
Environmental and Safety Law, and, solely for the purpose of this agreement,
shall include, but not be limited to, natural gas, natural gas liquids, and
liquefied natural gas or mixtures of same.
"Insurance Manual Rates" means the published insurance industry recognized
computations of standard accepted insurance rates.
"Losses" mean the sum of all costs, expenses (including court costs and
reasonable attorneys fees), fines, penalties, interest, damages, liabilities,
judgments and settlements, including but not limited to the cost of
investigation thereof.
"LPG" means a mixture of liquefied petroleum products produced from gas
processing facilities or refineries containing ethane, propane, butanes, natural
gasoline and nominal amounts of contaminates, as allowed by specifications
established from time to time by the Company.
"Material" shall mean personal property, equipment or supplies acquired or held
by the Operator for use in the Operation of the Facilities.
"Operator" means Chevron Pipe Line Company acting in its capacity as physical
operator of the Facilities hereunder.
"Party" means either the Operator or Company and "Parties" means both Operator
and Company.
"Partnership Committee" means the managing unit of Company.
"Person" means any individual, partnership, association, trust, corporation or
other entity.
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"Primary Term" has the meaning set forth is Section 6.1 hereinafter.
"Products" means, without restriction, natural gas liquids, LPG or products
derived from LPG.
"Year" means a calendar year.
ARTICLE II
OPERATIONS AND RESPONSIBILITIES OF OPERATOR
2.1 Operation of the Facilities. Operator, on behalf of Company,
agrees to commercially and physically operate, maintain and repair the
Facilities, and any modifications or improvements thereof, and to perform any
other duties as may be requested by Company. Except as otherwise provided in
this Agreement and subject to the limitations set forth hereinafter, Company
does hereby authorize and empower Operator, on behalf of Company, to do and
perform or cause to be done and performed by others any and all acts and things
which Operator shall, in the exercise of its discretion and best judgment, deem
necessary or advisable for the commercial and physical operation, maintenance,
and repair of such Facilities in accordance with Section 4.2, to the end that
the Facilities may be used in a safe, efficient and economical manner for
receipt, delivery, measurement and transportation of Products. Operator shall
consult freely with the Partnership Committee and inform each member of such
committee as soon as reasonably possible of all matters arising during the
operation of the Facilities which Operator, in the exercise of its sole and
reasonable judgment, considers important. In addition, Operator shall respond
as soon as reasonably possible to inquiries made by the Partnership Committee,
from time to time, with respect to any matter relating to the operation of the
Facilities. Operator shall seek the advice of the Partnership Committee if
Operator has a question as to whether a particular activity falls outside of the
scope of Operator's authority under this Agreement.
2.2 Standard of Care. Operator shall have the right and duty to
commercially and physically operate the Facilities in a good and workmanlike
manner and, in the absence of specific instructions from Company, shall have the
right and duty to act in accordance with its best judgment as a reasonable and
prudent operator would do under the same or similar circumstances. In addition,
Operator agrees to perform all services hereunder in a manner consistent with
the usual and customary practices, codes and standards in the pipeline industry
(including specifically the Federal Energy Regulatory Commission, the Texas
Railroad Commission and state Public Utilities Commissions as well as applicable
Department of Transportation and American National Standards Institute) and in
accordance with all Applicable Laws. Operator in its capacity as Operator
pursuant to this Agreement, shall assume no other liability to Company except in
the case of Operator's own gross negligence or willful misconduct.
Notwithstanding the foregoing, the gross negligence standard shall apply only to
the operations performed hereunder and shall not apply to any actions, inactions
or negligence of the Operator in connection with the operation of any pipeline
other than Facilities. Operator shall furnish or arrange for the necessary
personnel to efficiently perform such services. None of such personnel shall be
employees or agents of Company, statutory or otherwise.
2.3 Chevron's Policy 530. In as much as Operator is a part of
Chevron Corporation, Operator is committed to and shall follow, at a minimum,
Chevron's Policy 530: Protecting
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People and the Environment in effect as of the date hereof. This policy commits
Operator to conduct business in a manner that protects the safety and health of
employees, others involved in its operations, its customers, and the public, and
to conduct business in a manner that is compatible with the balanced
environmental and economic needs of the communities in which it operates.
Attachment IV contains a summary of twenty (20) specific action areas being
addressed by Operator as of the date of this Agreement.
2.4 Particular Duties of Physical Operator. Without limiting the foregoing,
subject to the limits otherwise set forth in this Agreement, Operator shall
specifically perform the following acts, all in connection with the physical
Operation of the Facilities on behalf of Company:
(a) Perform such mechanical activities as may be required to receive,
deliver, transport and/or otherwise handle Products tendered to and accepted
into the Facilities.
(b) Submit to Company recommended budgets and other information as set
forth in Article III hereof.
(c) Purchase or cause to be purchased for and on behalf of Company all
Materials and services necessary for the operation of the Facilities in
accordance with the budgets approved by Company (or as otherwise approved under
this Agreement).
(d) Maintain surveillance of the Facilities, conduct assessment, and
periodically inspect the Facilities for damage or other conditions which could
affect the safe, efficient and economical operation of the Facilities, perform
such repairs to the Facilities as requested by Company or as may from time to
time be required and prepare appropriate reports that document such activities.
(e) Act as representative for Company in contacts with any Government
Authority relating to the physical operation, maintenance and repair of the
Facilities, where required by audits, Applicable Laws, permit conditions, or
right-of-way agreements.
(f) Obtain and maintain all governmental permits, approvals, and licenses
required by Applicable Laws.
(g) Prepare, maintain and implement operating manuals, monitoring programs,
contingency plans and training programs satisfying all Applicable Laws together
with such other operating procedures or manuals as Company may require.
(h) Prepare custody transfer tickets, and other appropriate accounting
materials to document custody transfer and receipt of Products, and sample and
measure Products received and delivered to verify quality and quantity as
operations may require.
(i) Provide Product shipments scheduling and 24-hour continuous monitoring
and control of pipeline flows for safe and efficient operations.
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(j) File, store and maintain in a manner such that they shall be available
for periodic inspection by Company all as-built drawings or descriptions of the
Facilities, construction and maintenance records, inspection and testing
records, operating procedures and manuals, custody transfer documents,
environmental and safety records and such other records (all collectively
"records") as may be necessary or appropriate to the operation, maintenance and
repair of Facilities, or as required by Applicable Laws or requested by Company.
All of such records shall remain the property of Company.
(k) Prepare and file all tariffs subject to approval of Company.
(l) Collect all tariffs (excluding any joint tariffs with other pipelines
collected by the other pipeline), fees or other revenues derived from the
operation of the Facilities, keep correct, complete, and accurate accounts of
all receipts and disbursements made on the Company's behalf, and deposit all
moneys or other valuable effects in the name and to the credit of Company in
such depository banks, trust companies, savings and loan associations or other
similar institutions as may be designated by Company, keep individual Book
Capital Accounts for each partner of Company, prepare partnership income tax
returns for approval and filing by Company, recommend for approval by the
Company amounts of cash distributions that should be made to the partners of
Company, and preparation of any other financial accounts or statements that may
be required by Company.
(m) Keep an accurate and itemized record of all tariff, fees or other
revenues received and expenditures made or incurred during each Month in
accordance with GAAP, utilizing the principles and practices generally employed
in regulated oil pipeline accounting unless any regulatory agency with
jurisdiction over the System or the Company shall rule otherwise, in which case
the rules of the regulatory agency shall control.
(n) Upon request, attend meetings of the Partnership Committee of Company,
or, whenever otherwise required by Company, prepare and distribute reports of
all financial transactions involving the Company hereunder and other reports
reasonably requested by Company or any partner of Company, but only to the
extent that Operator is legally authorized to do so.
(o) Make all statutory and regulatory filings required of the Company,
including without limitation, all permit applications, and filings with the
Federal Energy Regulatory Commission, Texas Railroad Commission and any other
state Public Utilities Commissions, Department of Transportation, or other
regulatory agencies having jurisdiction over Company.
(p) Sign all checks, drafts, or orders for the payment of Costs authorized
pursuant to this Agreement.
(q) Facilitate the financing and investments including the issuance of
commercial paper in accordance with the policies set forth by the Company.
(r) Administer the Facilities' regulatory, financial, contractual and legal
affairs to the extent such administration is authorized by Company.
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(s) Provide Materials and services as legally required or as Company may
from time to time request, for discharge prevention and response for Products
and/or hazardous substances. These services shall include, but not be limited
to, preparation, submission, and finalization of discharge prevention and/or
contingency plans for Products and/or hazardous substances, and preparation for,
prevention of, response to and/or cleaning up of any discharge or threatened
discharge of Products and/or hazardous substances. Without limiting the
foregoing, Operator shall serve as response action contractor for Company.
(t) Obtain rights-of-way, make renewal payments and do such other tasks as
may required to maintain rights-of-way in the name of or on behalf of the
Company.
(u) Provide process, project, design and construction engineering services
that may be necessary in operating, expanding or modifying the Facilities as
approved by Company. Prepare AFEs, specifications, solicit proposals, evaluate
proposals, make recommendations, and supervise construction relating to any
expansions, modifications, or extensions of the Facilities that are approved by
Company or any other Capital Project approved by Company.
(v) Provide environmental and safety services, including the development
and maintenance of reasonable safety, health and environmental management
systems, policies, procedures and practices.
(w) Keep the Facilities free and clear of all material liens and
encumbrances not otherwise authorized by Company.
(x) Pay and discharge promptly all costs and expenses reasonably incurred
in operating the Facilities.
(y) Transfer and/or dispose of Material from the Facilities. Operator shall
use reasonable efforts to give the Partners of the Company first opportunity to
purchase surplus Material.
(z) Sell or dispose of any of the assets of the Company.
(aa) Grant easements, leases and permits to third parties to use or cross
the surface of the Facilities or any part thereof.
(bb) Pay wages and salaries of Operator's personnel employed at the
Facilities at rates generally comparable to those being paid for similar work at
similar facilities in the same general geographic area.
(cc) Defend Claims arising out of the Operation of the Facilities and
initiate legal proceedings on behalf of the Company.
(dd) Contract for all services necessary for the Operation of the
Facilities.
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(ee) Attend to all other matters necessary for the Operation of the
Facilities.
2.5 Particular Duties of Commercial Operator. Without limiting the
foregoing, subject to the limits otherwise set forth in this Agreement,
Commercial Operator shall specifically perform the following acts, all in
connection with the commercial Operation of the Facilities on behalf of Company:
(a) Develop a business strategy for the pipeline to be submitted to
the Partnership Committee of the Company for approval;
(b) Use all reasonable efforts to maintain or increase the current
market share of volumes transported by the Facilities consistent
with the earnings projections in the approved business strategy.
(c) Manage the revenue side of the pipeline by maintaining contact
with shippers, developing new business opportunities, identifying
potential new shippers, and developing new connection projects;
(d) Recommend to the Partnership Committee of the Company new
commercial arrangements (such as incentive tariffs);
(e) Work with gas processing plant operators on new projects;
(f) Work closely with the Physical Operator, if different than the
commercial operator, on operating and Customer Service issues.
2.6 Y2K Compliance. Operator agrees to use all reasonable efforts to avoid
any interruptions or delays in the delivery of services or the performance of
its obligations under this Agreement which could be caused by or related to
Century Date Compliant problems with facilities, hardware, equipment, material,
systems or processes of Operator.
2.7 Interim Operations. Effective May 1, 1999, Company entered into a
Transition Services Agreement with Mid-America Pipeline Company for the interim
operation of the Gathering Facilities which now are included as part of the
Facilities. During the term of the Transition Services Agreement, day to day
operation of the Gathering Facilities will be conducted by Mid-America Pipeline
Company . Upon termination of the Transition Services Agreement, Operator shall
assume full responsibility for the day to day operation of the Gathering
Facilities as set forth in this Agreement.
2.8 ▇▇▇▇▇ Facilities Operations. Effective May 1, 1999, Company entered
into a ▇▇▇▇▇ Operational Services Agreement with Mid-America Pipeline Company
for the operation of certain pumps, meters, valves, and other equipment (the
"▇▇▇▇▇ Facilities") which are located at and within the ▇▇▇▇▇ Facility operated
by Mid-America Pipeline Company, and which now are included as part of the
Facilities. During the term of the ▇▇▇▇▇ Operational Services Agreement, day
to day operation of the ▇▇▇▇▇ Facilities will be conducted by Mid-America
Pipeline Company.
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ARTICLE III
ANNUAL BUDGET AND DELEGATION OF AUTHORITY.
3.1 Annual Budget.
(a) On or before the first Business Day of each October, Operator shall
prepare and submit to the Partnership Committee for review, approval or
modification the following annual budgets and forecasts (collectively referred
to hereinafter as the "Annual Budget") each of which shall be forecasted for
each quarterly period:
(1) Capital Commitment Budget: The Capital Commitment Budget shall
consist of an itemization of commitments for each capital project
equal to or in excess of $100,000 (large projects) and a combined
total of all Items less than $100,000 (small projects) for the
following calendar year. The Capital Commitment Budget shall
address additional working capital needs for capital projects.
(2) Capital Expenditure Forecast: The Capital Expenditure Forecast
shall identify separately all expenditures for capital items from
prior budgets which are not yet complete and all capital items
anticipated to be approved in the pending budget. Large projects
shall be listed individually and small projects may be combined.
The forecast shall indicate expenditures by quarter for the
following calendar year and indicate any appropriate carryover in
subsequent years.
(3) Major Maintenance Budget: The Major Maintenance Budget shall
consist of an itemization of each maintenance project equal to or
in excess of $100,000 (large projects) and a combined total of
all items less than $100,000 each (small projects) for the
following calendar year.
(4) Operating Expense Budget: The Operating Expense Budget shall
identify for the following calendar year the expected Operating
Expenses including Direct Costs, Management Fee, and Major
Maintenance.
(5) Volume and Cash Flow Forecast: A forecast of throughput volumes
expected to be handled through the Facilities and expected cash
flow for the Facilities shall be identified.
(6) Three-year Financial Planning Forecast: A three-year financial
planning forecast consisting of the Operator's best forecast of
financial performance of the Facilities for each of the following
three years. The forecast should include known or anticipated
changes in volume, operating costs and capital requirements
during the next three years.
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(b) In the event Company fails to deliver an approved Annual Budget to the
Operator on or before December 31, such budgets and forecasts which have been
approved by the Company shall apply during the ensuing year and, with respect to
any particular budgets and forecasts which have not been approved, the previous
year's budget or forecast pertaining to such non-approved budgets and forecasts
shall remain in effect until specifically approved by the Company. With respect
to the Annual Budget for calendar year 2000, if the Annual Budget (or portions
thereof) is not approved by December 31, 1999, such budgets and forecasts which
have been approved by the Company shall apply during the ensuing year and, with
respect to any particular budgets and forecasts which have not been approved,
the annualized 1999 Budget (as defined in 3.1(d) below) pertaining to such non-
approved budgets and forecasts shall remain in effect until specifically
approved by the Company. Notwithstanding the foregoing, the Operator may take
such actions and make such expenditures as may be deemed necessary under
Applicable Laws or good industry practices in order to continue the orderly
conduct of the business of Company hereunder and to preserve and maintain the
Facilities. In the event that any such expenditure was not specifically
approved in an earlier budget or otherwise approved by the Company, Operator's
authority shall be limited to a maximum of $500,000 for any one expenditure and
a total maximum of $1,000,000 for all such expenditures in any one year. All
expenditures made pursuant to this Section 3.1(b) shall be treated as Cash
Operating Costs hereunder. Nothing in this Section 3.1(b) shall in any way
restrict the Operator's authority as set forth in Section 3.2(f).
(c) In the event that any of the budgets and forecasts in Section 3.1(a)(1)
through 3.1(a)(4) above for any calendar quarter are expected by the Operator to
exceed or actually do exceed 110% of such budget for that calendar quarter,
Operator shall revise the Annual Budget for the quarter in which the budget is
exceeded and for the remaining quarters of that calendar year and submit same to
the Partnership Committee for approval. It is understood and agreed that
Company may at any time supplement or amend the budgets and forecasts as
necessary to carry out the purposes of this Agreement.
(d) Within thirty (30) days following execution of this Agreement, Operator
shall prepare and submit to the Partnership Committee for review, approval or
modification budgets and forecast consistent with the provisions of Section
3.1(a) above but covering the remaining portion of calendar year 1999 (the "1999
Budget") and will work with the Partnership Committee of the Company so that the
1999 Budget is approved on or prior to July 1, 1999.
3.2 Delegation of Authority. Operator shall have the authority to take
the following actions and/or incur the following expenditures without the prior
approval of the Partnership Committee:
(a) Any individual capital project, major maintenance project or
operating expense not exceeding $100,000 to the extent that
Operator deems such expenditures necessary and appropriate for
the operation or maintenance of the Facilities. The sum of any
such expenditures may not, during any Year, exceed the amounts
indicated for all projects or expenses in the budget which have
been approved by Company for that Year.
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(b) Any individual capital project, major maintenance project or
operating expense in excess of $100,000 if such project or
expense was specifically identified in an approved Annual Budget
or Company has approved an AFE for the project. The amount of the
Operator's authority under this subsection may be overrun by the
greater of 10% or $100,000 without seeking prior approval by
Company; provided, however that such overrun does not cause any
of the Capital Expenditure Forecast, Major Maintenance Budget or
Operating Expense Budget approved by the Company to be exceeded.
(c) Operator shall have authority to initiate legal proceedings and
to make expenditures in settlement of Claims resulting from or
arising out of the operation of the Facilities up to $100,000 for
each such Claim. Operator shall notify Company and each partner
of Company immediately of any Claim if the amount required for
full settlement, including anticipated legal fees, is expected to
exceed the above specified amount, and the Company shall
determine how to further handle the Claim.
(d) Operator shall have authority to transfer and/or dispose of
Material from the facilities where the fair market value of any
one disposition is less than or equal to $100,000 and the total
of all dispositions in any one Year is less than or equal to
$500,000.
(e) Operator shall have authority to contract for all services
necessary for the Operation of the Facilities, subject to
Partnership Committee approval of any material contracts having a
term of two years or more or requiring payments in any one year
in excess of $500,000.
(f) Any expenditure which Operator deems reasonably necessary in the
case of an emergency to safeguard lives or property or to prevent
pollution or other environmental damage. Operator shall promptly
verbally notify the Partnership Committee of any such emergency
circumstance, but in any event, no later that twenty-four hours
after Operator first becomes aware of same, which notice shall
set forth the nature of the emergency and the corrective action
taken or being taken. Within twenty-four hours after receipt of
notice from Operator of any such emergency situation, the
Operator and the Partnership Committee shall convene a conference
call to discuss the actions taken or to be taken by Operator in
response to the emergency situation. All expenditures made
pursuant to this subpart (f) shall be treated as Cash Operating
Costs hereunder.
3.3 Capital Projects. Operator shall prepare and submit an AFE to the
Partnership Committee for approval for any unbudgeted Capital Project expected
to cost in excess of the limitations provided for in Sections 3.2 (a) and 3.2
(b) above. Any such AFE shall address additional working capital needs for
unbudgeted Capital Projects.
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ARTICLE IV
REPORTING BY OPERATOR
4.1 Reports. Operator shall provide to the Partnership Committee the
following reports, based on the best data available at the time of preparation
and subject to revision based on acquisition of more accurate data.
(a) Monthly operating income and expense report, including (insofar
as is reasonably practicable given Operator's current reporting
capabilities) a line-by-line comparison of actual expenses to the
approved Annual Budget expenses.
(b) Monthly operational report on major repairs, key operating
parameters and other operational details materially affecting the
Operation of the Facilities.
(c) Monthly report on Facilities throughput.
(d) Quarterly progress report comparing actual Capital Expenditures
to approved AFEs and the approved Annual Budget.
(e) Quarterly progress report on the current status of the Throughput
Commitment made by Mid America Pipeline Company ("MAPL") in favor
of the Partnership as set forth in that certain Call Agreement
dated of even date with the date of this Agreement.
(f) Annual reports on safety and environmental issues; Governmental
Authority inspections, citations, or Governmental Authority or
third party Actions; annual Material inventory and listing of all
Material transferred from the Facilities for all items exceeding
$ 10,000 in value; and within ninety (90) Days after the end of
each calendar year, a report covering the Operation of the
Facilities during the preceding calendar year, including
revenues, expenses, throughput and any other information deemed
material by the Partnership Committee.
4.2 Notification and Settlement of Losses and Claims. Operator shall
promptly notify the Partnership Committee in writing of all Actions arising out
of the Operation of the Facilities. Likewise, if the Partnership has knowledge
of any such Actions, it shall promptly notify the Operator in writing of such
fact.
ARTICLE V
OPERATING ACCOUNT, RECORDS, AND AUDITS.
5.1 Establishment of Operating Account. Operator shall establish and
maintain, and the Company shall fund, a separate interest-bearing bank account
("Account") in the name of Company. All revenues and funds received by Operator
in the course of the
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Operation of the Facilities and all interest earned on the Account shall be
deposited in the Account. Deductions from the Account shall only consist of
payments to the Operator for Cash Operating Costs (as described and authorized
in Attachment I, Accounting Procedure) and cash distributions to the Partners.
There shall be no commingling of funds of the Account with other accounts of the
Operator.
5.2 Operator Invoicing. Within the month immediately following the previous
month of service, Operator shall provide Company and each Partner in the Company
with a report setting forth in reasonable detail the Cash Operating Costs
incurred during the immediately preceding Month. Operator shall invoice Company,
and Company shall pay to Operator the amount of such invoice, which shall be
deducted from the Account.
5.3 Funding of the Account or of Operator's Account. The Company shall at
all times maintain in the Account sufficient money to allow Operator to pay all
Cash Operating Costs as they become due. Operator may pay all Cash Operating
Costs directly from its own account on behalf of Company.
5.4 Books and Records.
(a) Operator shall keep and maintain proper and complete books and
accounts, in the name of Company, in conformity and consistent with
GAAP utilizing the principles and practices generally employed in
regulated oil pipeline accounting unless any regulatory agency with
jurisdiction over the System or the Company shall rule otherwise; and
shall furnish monthly financial statements and such other reports,
statistics and statements as Company or any partner of Company may
reasonably from time to time request.
(b) Operator shall maintain accurate accounts of all expenditures and
liabilities incurred by it in operating, maintaining and repairing the
Facilities and shall render a monthly statement to Company and each
partner of the Company of all such expenditures and liabilities. The
failure to include any item in the current monthly financial statement
rendered for the month in which the same was incurred or expended shall
not preclude such item from being brought forward and included in any
subsequent monthly statement. All books, records and accounts shall be
open to inspection and audit by Company or Company's authorized
representatives at all reasonable times during business hours.
5.5 Audits. The Company, upon at least thirty (30) days prior written
notice to Operator, shall have the right to audit the Operator's records
pertaining to the Operation of the Facilities, including records pertaining to
safety, health and environmental management and compliance, for any calendar
year within the twenty-four (24) Month period following the end of such calendar
year. The Company shall make every reasonable effort to conduct an audit in a
manner which will result in a minimum of inconvenience to Operator. An audit
shall not be conducted more than once each year. Operator shall reply in
writing to an audit report within 180 days after receipt of such report.
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5.6 Record Retention. Operator shall retain all financial records for the
required period of time as set forth by any regulatory agency, or for forty-
eight (48) Months following the end of any calendar year, whichever is greater.
ARTICLE VI
TERM
6.1 Primary Term. Unless sooner terminated as provided for in Sections
6.2, 6.3 or 6.4, this Agreement shall be for a primary term commencing on the
Effective Date and ending on December 31, 2004 (the "Primary Term") and shall
continue year to year thereafter unless and until either Party terminates this
Agreement as of the end of the Primary Term or any successive annual term
thereafter by giving written notice to the other Party at least one hundred
eighty (180) Days prior to the end of the Primary Term or the expiration of any
annual period thereafter; provided, however, in the event that Company has not
selected a replacement operator who is ready and capable of assuming the
operation of Facilities at the end of such notice period, Operator shall
continue to operate the Facilities hereunder for such period until a replacement
operator is selected who is ready and capable of assuming the operation of
Facilities but such continuation by Operator shall not extend beyond 180 days
following the end of the notice period.
6.2 Resignation. Operator may resign at any time by sending written notice
to Company; provided, however, that Operator shall not be relieved of duties as
an Operator for a period of six (6) months after the date of such notice
(resignation effective date) or until such earlier time as a successor Operator
has been retained
6.3 Required Resignation. Operator must resign and this Agreement shall
terminate should Chevron Corporation or any of its Affiliates cease to own at
least twenty percent (20%) ownership interest in the Company. Such resignation
shall follow the time requirement set forth in Section 6.2.
6.4 Removal of Operator for Cause. The Physical Operator may be removed and
this Agreement terminated upon the occurrence of any of the following:
(a) The filing by Operator of a bankruptcy action or similar action for
the protection of creditors, or the involuntary filing of such an
action by a third party against the Operator which remains undismissed
for a period of one hundred eighty (180) days or which is not
dismissed or suspended pursuant to Section 305 of the Federal
Bankruptcy Code (or any corresponding provision of any future United
States bankruptcy law); or
(b) In the event any execution or attachment is issued against Operator
pursuant to which all or a substantial part of the assets of Operator
are seized or otherwise taken by a creditor or by any custodian,
receiver, or other legal authority; or
(c) Any assignment or any general arrangement by the Operator for the
benefit of its creditors;
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(d) The default of Operator in the performance of any material term,
condition or obligation contained in this Agreement (excluding a
breach of the standard of care as set forth in Section 2.2 which is
addressed in (e) below) and the Operator shall have failed to correct
or failed to diligently pursue correction of such default in a manner
reasonably acceptable to Company within thirty (30) days after receipt
of written notice from the Company of any such default.
(e) Failure of Operator to comply with the Standard of Care requirements
as set forth in Section 2.2, after being given written notice of same
by the Company (the "Default Notice"), and failure by Operator to (i)
diligently pursue correction of such default in a manner reasonably
acceptable to Company within one hundred eighty (180) days after
receipt of such Default Notice, and (ii) correct such default as soon
as practicable but in no event later than one year after receipt of
the Default Notice. If Operator disputes whether a default actually
occurred, at the election of Operator or the Company, such matter may
be submitted to the alternative dispute resolution procedures as set
forth in Article XIV. In the event Operator or any Affiliate of
Operator has an employee who is acting as Chairman of the Partnership
Committee of Company and who, upon the request of the other Members of
the Partnership Committee, has failed and/or refused to send a Default
Notice to Operator, any Member of the Partnership Committee shall have
the right to send such Default Notice to Operator.
In any such event, Company may give notice of removal to the Operator, in which
case the Operator shall nevertheless continue to perform all of the duties,
responsibilities and obligations of Operator until the Company designates a
successor Operator.
6.5 Removal of Commercial Operator. The Company shall have the right to
remove the Commercial Operator upon the default of Commercial Operator in the
performance of its duties as set forth in Section 2.5, after being given written
notice of same by the Company (the "Default Notice"), and failure by the
Commercial Operator to (i) diligently pursue correction of such default in a
manner reasonably acceptable to Company within thirty (30) days after receipt of
written notice from the Company of any such default, and (ii) correct such
default as soon as practicable but in no event later than ninety (90) days after
receipt of the Default Notice. If Commercial Operator disputes whether a
default actually occurred, at the election of the Commercial Operator or the
Company, such matter may be submitted to the alternative dispute resolution
procedures as set forth in Article XIV. In the event Commercial Operator or any
Affiliate of the Commercial Operator has an employee who is acting as Chairman
of the Partnership Committee of Company and who, upon the request of the other
Members of the Partnership Committee, has failed and/or refused to send a
Default Notice to Operator, any Member of the Partnership Committee shall have
the right to send such Default Notice to the Commercial Operator.
6.6 Obligations on Termination. Upon termination of this Agreement,
Company shall pay Operator the amounts chargeable to Company hereunder as of the
date of termination which have not already been paid by Company. The Company
shall also reimburse Operator for
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the full amount of any obligations or commitments Operator has made in the
interest of performing the services hereunder in accordance with the Annual
Budget and any approved projects which were paid by Operator but not reimbursed
by Company prior to the date of such termination or, if agreeable to such third
party to which Operator has made such obligations or commitments, and if
Operator is fully released therefrom, the Partnership may assume such
obligations or commitments.
6.7 Rights Upon Removal or Resignation. Termination of this Agreement
shall not affect the rights and privileges or duties, liabilities and
obligations of either Party which arose or accrued prior to the date of
termination.
6.8 Transition Upon Termination. Upon termination of this Agreement,
Operator shall turn over to Company all records, data, information, operating
manuals or other operating information in Operator's possession pertaining to
operations hereunder, as well as all Materials, and facilities which had been
purchased by Company or in its name. To the extent that provision of such
information causes Operator to incur additional costs, the Partnership shall
reimburse Operator for such reasonable costs incurred in connection therewith.
In addition, Operator shall provide to the new operator copies of all accounting
records pertaining to the Facilities during the term of this Agreement.
ARTICLE VII
INSURANCE
7.1 Required Insurance. At all times during the term of this Agreement,
Operator shall procure and maintain the following insurance at the Company's
expense:
(a) Worker's Compensation Insurance - which shall apply to all
employees, including borrowed servants, alternate and statutory
employees, in accordance with the benefits afforded by the
statutory Worker's Compensation Acts, United States Longshoremen
& Harborworker's Act and Maritime Act applicable to the state,
territory or district of hire, supervision or place of accident.
Policy limits for worker's compensation shall not be less than
statutory limits, and for employer's liability, Two Million
Dollars ($2,000,000) each accident, Two Million Dollars
($2,000,000) disease, each employee, and Two Million Dollars
($2,000,000) disease policy limit. Where permitted by law,
Operator may fulfill its Workers' Compensation obligations
through a program of self-assumption of risk, and shall charge
Company its actual costs of such self-assumption program which
shall not exceed Insurance Manual Rates applicable to such
operations in the place where the same are performed.
(b) Business Auto Liability Insurance - covering all owned, non-owned
and hired motor vehicles used in the performance of this
Agreement with limits of not less than $1 million combined single
limit per occurrence. Where permitted by law, Operator may
fulfill its Auto Liability Insurance obligation through a program
of self-assumption of risk and shall charge
17
Company published rates, from a licensed insurer of its choice,
in the applicable State of operation for the vehicles used in
performance of this Agreement.
(c) Other Insurance - No insurance, other than that set forth above,
shall be carried by Operator for the account of Company without
prior approval from Company.
(d) Endorsements - The Workers Compensation/Employer's Liability
Insurance in (a) above, shall provide for a waiver of subrogation
in favor of Company and each Partner. The Auto Liability
Insurance in (b) above, shall name Company and each Partner as an
additional assured.
(e) Contractors - Operator shall at all times use all reasonable
efforts to require each of its contractors and subcontractors to
provide the insurance coverage set forth below, all to be
endorsed with waiver of rights of recovery and subrogation and
additional insured wording in favor of the Company and all
Partners:
(1) Worker's compensation insurance which shall apply to all
employees, including borrowed servants, alternate and
statutory employees, in accordance with the benefits
afforded by the statutory Worker's Compensation Acts, United
States Longshoremen & Harborworker's Act and Maritime Act
applicable to the state, territory or district of hire,
supervision or place of accident. Policy limits for
worker's compensation shall not be less than statutory
limits.
(2) Commercial general liability insurance including coverage
for blanket contractual liability, sudden and accidental
environmental pollution liability, broad form property
damage, independent contractors, products/completed
operations and explosion, collapse and underground.
Products and completed operations coverage may have a
minimum annual aggregate equal to the required per
occurrence limit.
(3) Business auto liability insurance for bodily injury and
property damage to include coverage for all owned, non-owned
and hired vehicles.
7.2 Claims Covered by Operator's Self Insurance. In the event Operator
utilizes self-assumption of risk with respect to the Company instead of
obtaining any such insurance, Operator shall assume all risks associated with
the matters covered by such self assumption of risk and, in connection
therewith, Operator does hereby waive subrogation rights in favor of Company and
each of the Partners in Company with respect to any Claims for which Operator
has elected to self-assume the risk.
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ARTICLE VIII
MUTUAL RELEASE AND INDEMNIFICATION
8.1 OPERATOR WILL NOT BE LIABLE FOR, AND THE COMPANY RELEASES OPERATOR, ITS
AFFILIATES, AND ITS AND THEIR AFFILIATES' OFFICERS, EMPLOYEES, AND BORROWED
SERVANTS/CONTRACT EMPLOYEES (THE "OPERATOR INDEMNITEES") FROM, AND WILL
INDEMNIFY OPERATOR INDEMNITEES AGAINST ALL CLAIMS ARISING OUT OF, ATTRIBUTABLE
TO, IN CONNECTION WITH OR AS AN INCIDENT TO ANY ACT OR OMISSION OF OPERATOR
INDEMNITEES IN THE ADMINISTRATION, OPERATION, CONSTRUCTION AND MAINTENANCE OF
THE FACILITIES OR ARISING FROM ACTIVITIES CARRIED ON OR WORK PERFORMED OR
REQUIRED BY THIS AGREEMENT INCLUDING, WITHOUT LIMITATION, THE NEGLIGENCE OF
OPERATOR INDEMNITEES; PROVIDED, HOWEVER, THAT THE COMPANY WILL NOT BE REQUIRED
TO RELEASE OR INDEMNIFY OPERATOR INDEMNITEES FROM ANY CLAIMS TO THE EXTENT SUCH
CLAIMS ARISE OUT OF, ARE ATTRIBUTABLE TO, IN CONNECTION WITH OR INCIDENT TO ANY
GROSS NEGLIGENCE, FRAUD OR WILLFUL MISCONDUCT OF OPERATOR INDEMNITEES, OR FOR
ANY VIOLATION BY OPERATOR INDEMNITEES OF THE FAIR LABOR STANDARDS ACT. THE
COMPANY'S INDEMNITY TO OPERATOR WILL NOT APPLY TO THE EXTENT SUCH CLAIM IS
COVERED BY, AND PROCEEDS ARE PAID FROM (I) INSURANCE THAT THE OPERATOR IS
REQUIRED TO OBTAIN AND MAINTAIN AT THE COMPANY'S EXPENSE FOR THE BENEFIT OF THE
COMPANY PURSUANT TO THE TERMS OF THIS AGREEMENT OR (II) INSURANCE REQUIRED UNDER
AGREEMENTS BETWEEN OPERATOR AND ITS CONTRACTORS AND SUBCONTRACTORS PERFORMING
WORK REQUIRED UNDER THIS AGREEMENT.
8.2 COMPANY WILL NOT BE LIABLE FOR, AND OPERATOR RELEASES AND WILL INDEMNIFY
THE COMPANY, ITS PARTNERS, THEIR AFFILIATES, AND THEIR OFFICERS, EMPLOYEES AND
BORROWED SERVANTS/CONTRACT EMPLOYEES AGAINST ALL CLAIMS ARISING OUT OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OR FRAUD OF THE OPERATOR INDEMNITEES WHILE
PERFORMING ITS DUTIES DURING THE TIME IT IS OPERATOR, OR FOR ANY VIOLATIONS BY
OPERATOR INDEMNITEES OF THE FAIR LABOR STANDARDS ACT; PROVIDED, HOWEVER, THAT
THE OPERATOR WILL NOT BE REQUIRED TO RELEASE OR INDEMNIFY COMPANY FROM ANY
CLAIMS TO THE EXTENT SUCH CLAIMS ARISE OUT OF, ARE ATTRIBUTABLE TO, IN
CONNECTION WITH, OR INCIDENT TO, ANY GROSS NEGLIGENCE, FRAUD OR WILLFUL
MISCONDUCT OF THE COMPANY, THE PARTNERS, OR THEIR AFFILIATES.
8.3 This indemnity provision will survive termination of this Agreement.
Notwithstanding the foregoing indemnifications, nothing herein shall:
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(a) release Operator, as a partner in Company, of any obligation set forth
in the Partnership Agreement; or
(b) prohibit the Operator, as a partner in Company and as the Operator
pursuant to this Agreement, from pursuing its rights under this
indemnification provision for those otherwise indemnifiable Claims for
which Operator incurs liability as Operator of the Facilities, and
which are in excess of Company's insurance coverage required in this
agreement.
ARTICLE IX
CONFIDENTIALITY
9.1 Each Party agrees that it will maintain this Agreement, all terms and
conditions of this Agreement and all other Confidential Information in strictest
confidence and that it will not cause or permit disclosure of Confidential
Information to any third Party without the express written consent of the other
Party hereto. Disclosures of Confidential Information otherwise prohibited by
this Article IX may be made by either Party; (i) to the extent necessary for
such Party to enforce its rights hereunder against the other Party; (ii) to the
extent a Party is contractually or legally bound to disclose financial
information to a third Party (such as a shareholder or commercial lender); (iii)
to the extent to which a Party hereto is required to disclose all or part of
this Agreement by a statute or by the order of Governmental Authority exercising
jurisdiction over the subject matter hereof, by order, by regulations, or by
other compulsory process (including, but not limited to, deposition, subpoena,
interrogatory, or request for production of documents); (iv) to the extent
required by the applicable regulations of a securities or commodities exchange;
or (v) to an Affiliate (but only if such Affiliate agrees to be bound by the
provisions of this Article IX and only in a manner consistent with the
Interstate Commerce Act).
9.2 If either Party is or becomes aware of a fact, obligation, or
circumstance that has resulted or may result in a disclosure of Confidential
Information authorized by this Article IX, it shall so notify the other Party
promptly and shall provide documentation or an explanation of such disclosure as
soon as it is available. Each Party further agrees to cooperate to the fullest
extent in seeking confidential status to protect any Confidential Information so
disclosed.
9.3 The Parties hereto acknowledge that independent legal counsel may,
from time to time, be provided with a copy of this Agreement and agree that such
disclosure does not require consent by the other Party, provided that such
counsel agrees to be bound by the provisions of this Article IX.
9.4 Each Party will be deemed solely responsible and liable for the
actions of its employees, independent contractors, officers, agents and
Affiliates for maintaining the confidentiality commitments of this Article IX,
but will be required in that regard only to exercise such care in maintaining
the confidentiality of the Confidential Information as such Party normally
exercises in preserving the confidentiality of its other commercially sensitive
information.
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ARTICLE X
FORCE MAJEURE
10.1 A delay in or failure of performance of either Party hereto shall not
constitute default, nor shall either Party be held liable for loss or damage
arising from such delay or failure to the extent such delay, failure, loss or
damage is caused by Force Majeure. The Party claiming Force Majeure as an
excuse for delay in or failure of performance shall immediately notify the other
Party of the event and any steps being taken to remove the impediment to
performance.
10.2 Force Majeure shall not prevent either Party from terminating this
Agreement under Article VI above.
ARTICLE XI
ASSIGNMENT
11.1 This Agreement shall be binding upon and shall inure to the benefit of
the successors and assigns of the Parties hereto; provided, however, that such
Agreement and the obligations of the Parties hereunder shall not be assignable
by either Party hereto without the express prior written consent of the other
Party hereto, except that either Party may assign its rights hereunder to any
parent, subsidiary, or Affiliate of such Party without the approval of the other
Party, but such assignment shall in no way relieve or release the assigning
Party from any obligations hereunder, whether accrued or unaccrued, unless
agreed to in writing by the non-assigning Party.
ARTICLE XII
NOTICES
12.1 Addresses for Notices. Unless specifically provided otherwise in
this Agreement, any notice or other communication provided for in this Agreement
or any notice which either Party may desire to give to the other shall be in
writing and shall be deemed to have been properly given if and when sent by
facsimile transmission, electronic mail via internet with confirmation of
receipt, delivered by hand, or if sent by mail, upon deposit in the United
States mail, either U.S. Express Mail, registered mail or certified mail, with
all postage fully prepaid, or if sent by courier, by delivery to a bonded
courier with charges paid in accordance with the customary arrangements
established by such courier, in each case addressed to the Parties at the
following addresses:
If to Company:
West Texas LPG Pipeline Limited Partnership
Attention: Chairman of the Partnership Committee
c/o Chevron Pipe Line Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
WTLPS, Inc.
Attention: President
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
and
Mid-America Pipeline Company
Attention: Director of NGL Pipelines
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Operator:
Chevron Pipe Line Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Eastern Region Profit Center Manager
or at such other address as either Party shall designate by written notice to
the other. A notice sent by facsimile shall be deemed to have been received by
the close of the first Business Day following the Day on which it was
transmitted and confirmed by transmission report or such earlier time as
confirmed orally or in writing by the receiving Party. Notice by U. S. Mail,
whether by U. S. Express Mail, registered mail or certified mail, or by
overnight courier shall be deemed to have been received by the close of the
second Business Day after the Day upon which it was sent, or such earlier time
as is confirmed orally or in writing by the receiving Party. Either Party may
change its address or facsimile number by giving notice of such change in
accordance with herewith.
ARTICLE XIII
GOVERNING LAW
13.1 The validity, nature, obligations, effect and construction of this
agreement shall be governed by the laws of the State of Texas without giving
effect to any choice or conflict of law provision or rule that would cause the
application of the laws of any other jurisdiction other than the State of Texas.
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ARTICLE XIV
ALTERNATIVE DISPUTE RESOLUTION
14.1 Covered Disputes. Any Claims arising out of or relating to this
Agreement, including without limitation the meaning of its provisions, or the
proper performance of any of its terms, its breach, termination or invalidity
("Dispute") will be resolved in accordance with the procedures specified in this
Section, which will be the sole and exclusive procedure for the resolution of
any such Dispute, except that any Party, without prejudice to the following
procedures, may file a complaint to seek preliminary injunctive or other
provisional judicial relief, if in its sole judgment, that action is necessary
to avoid irreparable damage or to preserve the status quo. Despite that action,
the Parties will continue to participate in good faith in the procedures
specified in this Article.
14.2 Initiation of Procedures. Any Party wishing to initiate the dispute
resolution procedures set forth in this Article with respect to a Dispute not
resolved in the ordinary course of business must give written notice of the
Dispute to the other Party ("Dispute Notice"). The Dispute Notice will include
(i) a statement of that Party's position and a summary of arguments supporting
that position, and (ii) the name and title of the executive who will represent
that Party and of any other Person who will accompany the executive in the
negotiations under the next Section.
14.3 Negotiation Between Executives. If any Party has given a Dispute
Notice under the preceding Section, the Parties will attempt in good faith to
resolve the Dispute within thirty (30) days of the notice by negotiations
between executives who have authority to settle the Dispute and who are at a
higher level of management than the Persons with direct responsibility for
administration of this Agreement or the matter in Dispute. Within ten (10) days
after delivery of the Dispute Notice, the receiving Party will submit to the
other a written response. The response will include (i) a statement of that
Party's position and a summary of arguments supporting that position, and (ii)
the name and title of the executive who will represent that Party and of any
other Person who will accompany the executive. Within twenty (20) days after
delivery of the Dispute Notice, the executives of the Parties will meet at a
mutually acceptable time and place, and thereafter, as often as they reasonably
deem necessary, to attempt to resolve the Dispute.
14.4 Mediation. If the Dispute has not been resolved by negotiation under
the preceding Section within thirty (30) days of the Dispute Notice, and only in
such event, a Party may initiate the mediation procedure of this Section by
giving written notice to the other Party ("Mediation Notice"). The Parties will
endeavor to settle the Dispute by mediation within sixty (60) days of the
Mediation Notice under the then current Center for Public Resources ("CPR")
Model Mediation Procedure for Business Disputes. If the Parties have not agreed
upon a mediator within seven (7) days after the Mediation Notice, any Party may
request CPR assistance in the selection of a mediator under its guidelines. The
mediator will establish rules for an expedited discovery procedure and will
resolve all disputes with regard to discovery between the Parties. If the
mediator has not already done so during the mediation process, at least seven
(7) days before the end of the sixty (60) day mediation period, the mediator
will provide to each Party a written summary of the mediator's conclusions
regarding the outcome of the Dispute.
14.5 Arbitration. If the Dispute has not been resolved by mediation under
Section 14.4 above within the required sixty (60) Day period or if any Party to
a Dispute fails and/or
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refuses to participate in such mediation procedures, any Party may initiate
arbitration to resolve the matter by submitting a written notice (the
"Arbitration Notice") to the other Party or Parties. Any arbitration hereunder
shall be governed by the Federal Arbitration Act, 9 U.S.C. (S) 1 et seq., as
amended, to the exclusion of any other arbitration acts, statutes, or rules of
any other jurisdiction, state or federal.
14.6 Arbitration Procedure. Any arbitration hereunder shall be conducted in
accordance with the then current CPR Rules for Non-Administered Arbitration,
except to the extent terms expressly set forth in this Article are in conflict
with or supplement such Rules, by three independent and impartial arbitrators,
of whom each Party to a Dispute shall appoint one, and the two so appointed by
the Parties shall appoint the third arbitrator. The Arbitration Notice shall
name the noticing Party's arbitrator, and shall contain a statement of the
issue(s) presented for arbitration. Within fifteen (15) Days of receipt of an
Arbitration Notice, the other Party shall name its arbitrator by written notice
to the other and may designate any additional issue(s) for arbitration. The two
named arbitrators shall select the third arbitrator within fifteen (15) Days
after the date on which the second arbitrator was named. Should the two
arbitrators fail to agree on the selection of the third arbitrator, either Party
shall be entitled to request CPR to select the third arbitrator. Should either
Party fail and/or refuse to name its arbitrator within the required fifteen (15)
Day period, the other Party shall be entitled to request CPR to select the
arbitrator for such Party. All arbitrators shall be qualified by education or
experience within the natural gas liquids portion of the energy industry to
decide the issues presented for arbitration. No arbitrator shall be: a current
or former director, officer, or employee of either Party or its Affiliates; an
attorney (or member of a law firm) who has rendered legal services to either
Party or its Affiliates within the preceding three Years; or an owner of any of
the common stock of either Party, or its Affiliates.
14.7 Arbitration Hearing. The three arbitrators shall commence the
arbitration proceedings within twenty-five (25) Days following the appointment
of the third arbitrator. The arbitration proceedings shall be held at a mutually
acceptable site and if the Parties are unable to agree on a site, the
arbitrators shall select the site. The arbitrators shall have the authority to
establish rules and procedures governing the arbitration proceedings, including,
without limitation, rules concerning discovery. Each Party shall have the
opportunity to present its evidence at the hearing. The arbitrators may call for
the submission of pre-hearing statements of position and legal authority, but no
post-hearing briefs shall be submitted. The arbitration panel shall only have
authority to award compensatory damages alone and shall not have the authority
to award incidental, consequential, special, punitive or exemplary damages. In
addition, if an issue under consideration is limited to a determination of an
amount of money owed by one Party to the other, each Party shall submit to the
arbitration panel a final offer of its proposed resolution of the Dispute. The
arbitration panel shall be charged to select from the two proposals the one
which the panel finds to be the most reasonable and consistent with the terms
and conditions of this Agreement, and the arbitration panel shall not average
the Parties' proposals or otherwise craft its own remedy. All evidence submitted
in an arbitration proceeding, transcripts of such proceedings, and all documents
submitted by the Parties in an arbitration proceeding shall be kept confidential
and shall not be disclosed to any third party by either Party hereto.
24
14.8 Arbitration Decision and Costs. The decision of the arbitrators or a
majority of them, shall be in writing and shall be final and binding upon the
Parties as to the issue(s) submitted. The cost of the hearing shall be shared
equally by the Parties, and each Party shall be responsible for its own expenses
and those of its counsel or other representatives. Each Party hereby irrevocably
waives, to the fullest extent permitted by law, any objection it may have to the
arbitrability of any such Disputes, controversies or claims and further agrees
that a final determination in any such arbitration proceeding shall be
conclusive and binding upon each Party.
14.9 Enforcement of Award. Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction. The prevailing
Party shall be entitled to reasonable attorneys' fees in any contested court
proceeding brought to enforce or collect any award of judgment rendered by the
arbitrators.
14.10 Tolling and Performance. Except as otherwise provided in this Article
14, all applicable statutes of limitation and defenses based upon the passage of
time and all contractual limitation periods specified in this Agreement, if any,
will be tolled while the procedures specified in this Article 14 are pending.
The Parties will take all actions to effectuate the tolling of any applicable
statute of limitation or contractual limitation periods. All deadlines specified
herein may be extended by mutual written agreement of the Parties or, if an
Arbitration Notice has been sent regarding the Dispute, by written order of a
majority of the arbitrators. Each Party is required to continue to perform its
obligations under this Agreement pending final resolution of any Dispute, unless
to do so would be impossible or impracticable under the circumstances.
Notwithstanding the foregoing, the statute of limitations of the State of Texas
applicable to the commencement of a lawsuit will apply to the commencement of an
arbitration under this Agreement, except that no defenses will be available
based upon the passage of time during any negotiation or mediation called for by
the preceding Sections of this Article.
ARTICLE XV
MISCELLANEOUS
15.1 Waiver. No waiver by either Party of the performance of any
provision, condition or requirement herein shall be deemed to be a waiver of, or
in any manner release the other Party from performance of any other provision,
condition or requirement herein; nor shall it be deemed to be a waiver of, or in
any manner release the other Party from future performance of the same
provision, condition, or requirement; nor shall any delay or omission of a Party
in exercising any right hereunder in any manner impair the exercise of any such
right or any like right accruing to it thereafter. No waiver shall be effective
unless made in writing and signed by the Party to be charged with such waiver.
15.2 Amendment. This Agreement may be amended only by a written agreement
executed by both Parties that expressly amends this Agreement.
15.3 Agreement in Counterparts. This Agreement, or any amendments
thereto, may be executed in multiple counterparts, each of which shall be deemed
an original Agreement upon the signature by each of the Parties on at least one
counterpart.
25
15.4 Further Assurances. Each Party, upon the request of the other Party
agrees to perform any further acts and execute and deliver any other documents,
which may be reasonably necessary to carry out the provisions of this Agreement.
15.5 Validity. If any provision of this Agreement is held to be illegal,
invalid, or unenforceable and such invalidity or unenforceability has or would
have a material and substantial negative impact on the rights, duties or
obligations of either Party, then the Parties shall meet to determine if such
negative impact can be eliminated or mitigated. If such negative impact can not
be eliminated or mitigated to the satisfaction of the Party affected thereby,
that Party shall have the right to terminate this Agreement. If any provision
of this Agreement is held to be illegal, invalid, or unenforceable and such
invalidity or unenforceability does not have a material and substantial negative
impact on the rights, duties or obligations of either Party, (i) such provision
will be fully severable, (ii) this Agreement will be construed and enforced as
if such illegal, invalid, or unenforceable provision had never comprised a part
of this Agreement, and (iii) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal,
invalid, or unenforceable provision or by its severance from this Agreement.
Furthermore, (1) in lieu of such illegal, invalid, or unenforceable provision,
there will be added automatically as a part of this Agreement a provision as
similar in terms to such illegal, invalid, or unenforceable provision as may be
possible and as may be legal, valid, and enforceable and (2) such illegality,
invalidity or unenforceability shall not affect the validity or enforceability
in that jurisdiction of any other provision of this Agreement nor the validity
or enforceability in other jurisdictions of that or any other provision of this
Agreement.
15.6 Attachments Exhibits and Schedules. All attachments, exhibits and
schedules or descriptions referred to in this Agreement or attached hereto are
expressly incorporated herein by reference as if set forth in full, whether or
not attached hereto. In the event of any conflict between the terms and
conditions of this Agreement and the terms and conditions of any exhibit,
schedule or other documents referenced herein, the terms and conditions of this
Agreement shall govern and control.
15.7 Entire Agreement. This Agreement, including all attachments,
exhibits, schedules and descriptions incorporated herein, constitutes and
contains the full and final agreement of the Parties hereto relating to the
matters described herein, and unless otherwise specified herein, this Agreement
supersedes and replaces any and all prior agreements or understandings (whether
written or oral) between or among the Parties regarding the subject matter
hereof, including but not limited to that certain Operating Agreement entered
into between Company and Operator dated effective September 1, 1996.
15.8 Titles and Headings. The titles and headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
15.9 Binding Effect. This Agreement and the covenants, obligations,
undertakings, rights and benefits set forth herein shall be binding on and inure
to the benefit of the Parties and their respective authorized successors and
assigns.
26
15.10 Benefits of Agreement Restricted to Parties. Except as otherwise
provided in this Agreement, nothing in this Agreement, expressed or implied,
shall give or be construed to give any person, other than the Parties hereto
(including their Partners and Affiliates) and their authorized successors and
assigns, any legal or equitable right, remedy or claim under or in respect to
this Agreement or under any covenant, condition or provision contained herein;
and all such covenants, conditions and provisions shall be for the sole benefit
of the Parties hereto.
15.11 Reservation of Rights. Except as otherwise provided herein, each
Party reserves to itself all rights, set-offs, counterclaims, and other remedies
and/or defenses which such Party is or may be entitled to arising from or out of
this Agreement or as otherwise provided by law.
15.12 Principles of Construction and Interpretation. In construing this
Agreement, the following principles shall be followed:
(a) examples shall not be construed to limit, expressly or by
implication, the matter they illustrate;
(b) the word "includes" and its syntactical variants mean "includes,
but is not limited to" and corresponding syntactical variant expressions;
and
(c) the plural shall be deemed to include the singular and vice versa,
as applicable.
15.13 DISCLAIMER OF LIABILITY. NEITHER PARTY SHALL BE LIABLE TO THE OTHER
FOR SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES RESULTING
FROM OR ARISING OUT OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, LOSS OF
USE, INCREASED COST OF OPERATIONS, LOSS OF PROFIT OR REVENUE, OR BUSINESS
INTERRUPTIONS, HOWEVER SAME MAY BE CAUSED AND REGARDLESS OF THE OTHER PARTY'S
NEGLIGENCE (AND REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE, JOINT,
CONCURRENT, ACTIVE, PASSIVE OR GROSS), FAULT, OR LIABILITY WITHOUT FAULT. THE
DISCLAIMER OF LIABILITY SET FORTH IN THE PRECEDING SENTENCE SHALL INCLUDE BOTH
AFFILIATED AND UNAFFILIATED THIRD PARTY CLAIMS FOR SPECIAL, INDIRECT,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES.
27
15.14 Acknowledgment. EACH OF THE PARTIES HERETO SPECIFICALLY
ACKNOWLEDGES AND AGREES (1) THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THAT
IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS HEREOF, AND (2) THAT IT HAS
IN FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND
KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT. EACH PARTY
HERETO FURTHER AGREES THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF
ANY SUCH PROVISIONS OF THIS AGREEMENT ON THE BASIS THAT THE PARTY HAD NO NOTICE
OR KNOWLEDGE OF SUCH PROVISIONS OR THAT SUCH PROVISIONS ARE NOT "CONSPICUOUS".
15.15 Joint Efforts. This Agreement shall be considered for all purposes
as prepared through the joint efforts of the Parties, and shall not be construed
against one Party or the other as a result of the preparation, submittal or
other event of negotiation, drafting or execution thereof.
15.16 Conflicts of Interest. No director, employee, or agent of either
Party shall give or receive any commission, fee, rebate, gift, or entertainment
of significant cost or value in connection with this Agreement. Upon reasonable
advance written notice to the other Party, any mutually agreeable
representative(s) authorized by either Party may audit the applicable records of
the other Party solely for the purpose of determining whether there has been
compliance with this paragraph.
15.17 Independent Contractor. The parties intend that Operator shall be
an independent contractor in its activities hereunder. It is understood and
agreed that the relationship of the Parties hereto is purely contractual and
does not establish any agency, fiduciary or other type of relationship;
provided, however that the Partnership designates Operator as its agent for the
limited purposes set forth in Section 15.18 below.
15.18 Power of Attorney. Company hereby constitutes and appoints the
Operator as its true and lawful agent and attorney-in-fact, to make, execute,
and sign (i) any contracts or agreements for and on behalf of the Partnership
that the Operator is authorized to make and enter into under the terms of this
Agreement and (ii) any other documents, including those that may be necessary to
open and maintain a bank account for and in the name of the Partnership, that
may be necessary for Operator to Operate the Facilities under the terms of this
Agreement.
15.19 Federal Compliance.
(a) Insofar as applicable to the Parties hereto, each Party hereto shall
comply with Executive Order No. I1246, as amended by Executive Order No. I1375,
and the rules and regulations issued thereunder, to ensure that applicants are
employed, and that employees are treated during employment without regard to
their race, creed, color, sex or national origin. Also, if applicable, each
Party hereto shall comply with all provisions of the Vietnam Era Veterans'
Readjustment Assistance Act of 1974 and the rules and regulations issued
thereunder, including 41 C.F.R., Chapter 60, Part 60-250. Each Party hereto
shall also, if applicable, comply with all provisions of the Rehabilitation Act
of 1973, and the rules and regulations issued thereunder including 41 C.F.R.,
Chapter 60, Part 60-74. Operator agrees and covenants that none of its employees
or employees of its subcontractors who provide services to Company pursuant to
this
28
Agreement are unauthorized aliens as defined in the Immigration Reform and
Control Act of 1986. All acts, orders, rules and regulations referenced above
are hereby incorporated by reference unless this Agreement is excepted by
appropriate federal Applicable Law.
(b) Company and Operator shall comply with all Applicable Laws applicable
to Company and Operator relating to the Facilities hereunder, including but not
limited to any regulations of the United States Department of Transportation
applicable to facilities operated by Company that are connected to or a part of
the Facilities hereunder.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first above written.
COMPANY, OPERATOR,
WEST TEXAS LPG PIPELINE CHEVRON PIPE LINE COMPANY
LIMITED PARTNERSHIP
By: By:
---------------------------- ----------------------------
Its: Its:
---------------------------- ----------------------------
29
ATTACHMENT I
TO
AMENDED AND RESTATED OPERATING AGREEMENT BETWEEN WEST TEXAS
LPG PIPELINE LIMITED PARTNERSHIP AND CHEVRON PIPE LINE COMPANY
ACCOUNTING PROCEDURE
1. Definitions
Unless otherwise provided for herein, the terms in this Accounting
Procedure shall have the same meaning as defined in the Agreement to which
this Accounting Procedure is attached.
As used in this Accounting Procedure, the following terms have the meaning
set forth below:
"Management Fee" shall mean the management fee referenced in Section 3(b)
of this Attachment.
"Personal Expenses" shall mean Travel Expenses and other reasonable
reimbursable expenses.
"Travel Expenses" shall mean air fare, lodging, meals, laundry, business
related telephone calls, taxis, car rental, tolls, parking and any other
reasonable and necessary travel-related expenses.
2. Conflict with Agreement
In the event of a conflict between the provisions of this Accounting
Procedure and the provisions of the Agreement to which this Accounting
Procedure is attached, the provisions of this Accounting Procedure shall
control.
3. Cash Operating Costs
(a) Direct Charges
Subject to the provisions of the Agreement, Operator shall charge the
Account with the following items to the extent such charges are
incurred in connection with the Operation of the Facilities or any
other activities or projects Operator is authorized to undertake
pursuant to this Agreement. Applicable costs, if any, chargeable under
this Section 3 shall be allocated to the portion of the Facilities
benefited on an equitable basis. To the extent economically justified,
Operator shall take advantage of, and credit to the Account, all cash,
trade discounts, freight allowances and
30
equalizations, annual volume and other allowances, credits, salvages,
commissions, insurance discount dividends and retrospective premium
adjustments.
(1) Labor, Benefits and Personal Expenses
(i) Salaries and wages of Operator's employees (or employees of
Operator's Affiliate) directly assigned to the physical
operation, support and maintenance of the Facilities,
including that portion of such employees' time related to
ancillary activities such as training required by Applicable
Laws, and in any other activities required of the Operator
pursuant to this Agreement.
(ii) Overhead associated with field offices and field office
equipment, which will be calculated as 15% of the amount
provided for in (i) above.
(iii) Operator's cost of all payroll taxes, and benefits and
allowances and any other payment paid or contributed by the
Operator which is measured by Operator's employees'
compensation; the above to include without limitation
F.I.C.A., Operator's cost of holiday, vacation, sickness and
disability and other customary allowances, Operator's
current costs of established plans for employees' group life
insurance, hospitalization, retirement, stock purchase, and
other benefit plans of a like nature. Costs also include
Operators cost of Workers' Compensation Insurance, or if
Operator elects to self-insure, its actual costs of self-
insurance which shall not exceed Insurance Manual Rates per
Section 7.1(a) of this Agreement. Such costs will be
charged on a percentage assessment rate on the amount of
salaries and wages chargeable to the Company under Paragraph
(1)(i) of this Section. The percentage assessment rate shall
be based on the Operator's actual cost experience.
(iv) Reasonable Personal Expenses of those employees whose
salaries and wages are chargeable to the Company hereunder.
(2) Customer Service Center
The share of Operator's cost for its Customer Service Center
attributable to the Facilities, including but not limited to:
(i) Labor, benefits and Personal Expenses of Operator's
employees directly assigned to the physical operation and
support of the Facilities, including handling nominations,
customer service, and volumetric accounting, following the
methodology in Sections 3(a)(1)(i), (iii) and (iv) above.
31
(ii) A share of the depreciation for Customer Service Center
capitalized costs of facility and equipment used in the
scheduling of shipments and 24-hour continuous monitoring
and control of pipeline flows for the Facilities.
(iii) An allocation of other Customer Service Center costs
required for support of the Facilities including, but not
limited to, laboratory analysis of LPG product samples,
communication costs, computer programming costs and SCADA
support costs.
(3) Materials and Supplies
Material purchased by Operator for use in the operation and
maintenance of Facilities shall be charged to the Company at the
price paid by Operator after deduction of all discounts received.
Material furnished by Operator from its stocks or inventory shall
be charged in accordance with the accounting guidelines
established by ▇▇▇▇▇ (Council of Petroleum Accountants Societies
of North America). The cost of transportation of material shall
be chargeable to the Company. Company agrees to use all
reasonable efforts to assure that any transportation costs which
are incurred are reasonable.
The accumulation of surplus stocks shall be avoided, and if
surplus stocks are accumulated, such stocks shall be timely
disposed of. Material disposed of by the Operator shall be priced
at its fair market value. Proceeds from such disposition shall be
credited to the Company at the time they are received by
Operator. Operator does not warrant the material furnished. In
the case of material found to be defective, or returned to a
vendor or the Operator for any other reason, Operator shall
credit the Company when adjustment is received by Operator,
unless such material is returned to Operator as the source of
such materials, in which event, such credit shall be made the
Company when the materials are returned to Operator.
(4) Contracts and Services
The cost of contracts and subcontracts, contract services
(including those for technical personnel), professional
consultants, equipment, and utilities employed in the operation
and maintenance of the Facilities under the general direction of
Operator, excluding contracts for any services to be performed by
Operator as provided for in the Management Fee provisions of
Section 3(b) below.
Notwithstanding the foregoing, unless otherwise provided for in
this Agreement or approved by the Company, the costs and expenses
of contract services provided by third parties in connection with
matters of taxation or accounting shall be considered as included
in the Management Fees.
32
(5) Motor Vehicles and Mechanical Equipment Furnished by Operator
(i) Use of equipment owned by Operator at the lower of (1) rates
commensurate with Operator's actual costs of ownership and
operation, if reasonably available, or (2) commercial rates
prevailing in the geographic area of the Company Facilities
as published in Petroleum Motor Transport Association rate
schedules.
(ii) Whenever requested, Operator shall inform Company of the
rates it proposes to charge.
(iii) The costs of Auto Liability Insurance required by Company in
Section 7.1(b) of this Agreement, or if Operator elects to
fulfill its Auto Liability Insurance obligation through a
program of self-assumption of risk, then Operator shall have
the right to charge the Company rates equivalent to
published auto insurance rates, from a licensed insurer of
its choice, in the applicable State of operation for the
vehicles used in the performance of this Agreement.self-
assumption of risk and shall charge Company published rates,
from a licensed insurer of its choice, in the applicable
State of operation for the vehicles used in performance of
this Agreement.
(6) Damages and Losses to Facilities
All costs or expenses necessary for the repair or replacement of
all or any portion of the Facilities made necessary because of
damages or losses incurred by fire, flood, storm, theft,
accident, or other causes, except those resulting from Operator's
gross negligence, fraud and/or willful misconduct. Operator shall
furnish the Company with written notice of damages or losses
incurred as soon as practicable after a report thereof has been
received by Operator and will circulate an AFE for approval by
the Partnership Committee if the estimated costs of such repairs,
as reasonably determined by the Operator, exceed the Operator's
authority limits.
(7) Legal Expenses, Settlements and Judgments
Expenses of investigating litigation or claims incurred in or
resulting from the operation and maintenance of Facilities under
the Agreement; provided, however that no direct charge for
services of Operator's legal staff or fees or expense of
attorneys shall be made unless previously agreed to by Company.
All other legal expense incurred by Operator hereunder is
considered to be covered by the Management Fee provisions of
Section 3(b). below, unless otherwise agreed to by Company.
33
(8) Taxes
All taxes of every kind and nature assessed or levied upon, or in
connection with the Company operations, property or Facilities
and which have been paid for the benefit of Company, excluding
any income or franchise taxes.
(9) Insurance
In accordance with the Agreement, net premiums paid for insurance
required by Applicable Law or by the Company to be carried in
connection with the operation, maintenance and repair of
Facilities and for the protection of the Company.
(10) Communications
Costs of acquiring, leasing, installing, operating, repairing and
maintaining communication systems utilized in connection with the
operation and maintenance of the Facilities. In the event
communication systems, or portions thereof, serving the
Facilities are Operator-owned, charges to the Company shall be
made at the lower of (1) rates commensurate with Operator's
actual costs of ownership and operation, if reasonably available,
or (2) commercial rates prevailing in the geographic area of the
Company Facilities.
(11) Utilities
Costs incurred for electricity and other utilities necessary for
the operation of the Facilities hereunder.
(12) Ecological and Environmental
Costs incurred for the benefit of the Company as a result of
statutory regulation for archeological and geophysical surveys
relative to the identification and protection of cultural
resources, or other ecological surveys as may be required by
regulatory authority. Also, costs to provide or have available
pollution containment and removal equipment, plus costs of actual
control, cleanup and resulting responsibilities of oil spills as
required by Applicable Laws.
(13) Permits and Rights-of-Way
Costs reasonably incurred in obtaining or maintaining permits,
licenses, leases, certificates, rights-of-way, easements, and
other similar items necessary for the operation or maintenance of
the Facilities.
34
(14) Abandonment and Reclamation
Costs incurred in connection with the abandonment of the
Facilities or any portion thereof, including dismantling, removal
and restoration costs and costs required by Governmental
Authority.
(15) Compliance Costs
All direct costs and expenses related to compliance with
Applicable Laws, including Environmental and Safety Laws,
affecting the Facilities, including costs of pollution
prevention, consultants fees, environmental permitting,
environmental audits and surveys, and remediation programs or
projects.
(16) Approved Capital Project Costs
(17) Other Expenditures
Any other expenditures directly attributable to the operation and
maintenance of the Facilities not covered and dealt with in the
foregoing provisions of this Section 3(a), and which are incurred
by the Operator in the necessary and proper conduct of
Facilities' operation and maintenance and which are:
(i) within the scope of the Agreement; and
(ii) are included in the approved operating budget.
(b) Management Fee
As compensation for administrative services, supervision costs and
routine staff services including, but not limited to, legal,
financial, commercial, accounting (excluding volumetric accounting
which is addressed in Section 3(a)(2)(i)), environmental, engineering,
right-of-way and paying Cash Operating Costs from Operator's account
prior to invoicing Company as provided in Section 5.2 and 5.3.
Operator shall receive and shall charge the Account for the Management
Fee provided for in this Section 3(b) (the "Management Fee"). Unless
otherwise agreed to by the Parties or provided for in Section 3(a),
such Management Fee shall be in lieu of salaries or wages plus
applicable burdens and expenses of all personnel of Operator (except
those costs, expenses and salaries directly chargeable under Section
3(a) above) including, but not limited to, in-house legal support
(unless otherwise approved as provided for in Section 3(a) above),
administrative services, supervision, and office services.
(1) Management Fee
35
Operator, in addition to the actual direct costs and expenses
provided in Section 3(a), shall receive, as compensation for its
administrative overhead expense in managing and operating the
Facilities, a sum equal to One Million Seven Hundred Sixty Six
Thousand Dollars ($1,766,000) per Year billed monthly, one-half
of which ($883,000) shall remain fixed and the other half of
which ($883,000) shall vary and be subject to adjustment on the
first day of January, 2000, and on each yearly anniversary
thereafter, by multiplying the variable half of the Management
Fee currently in use by the percentage increase or decrease in
the average weekly earnings of Crude Petroleum and Gas Production
Workers for the last calendar year compared to the preceding year
as shown by "The Index of Average Weekly Earnings of Crude
Petroleum and Gas Production Workers" as published by the United
Stated Department of Labor, Bureau of Labor Statistics.
(2) Adjustment to Management Fee. If the Operator is removed as
commercial Operator, the Management Fee shall be reduced by one
hundred fifty thousand dollars ($150,000) per Year.
36
ATTACHMENT II
TO
AMENDED AND RESTATED OPERATING AGREEMENT BETWEEN WEST TEXAS
LPG PIPELINE LIMITED PARTNERSHIP AND CHEVRON PIPE LINE COMPANY
DESCRIPTION OF THE FACILITIES
I. PIPELINE FACILITIES
(A) PIPELINE: There is about 1,950 miles of various sizes of pipe ranging
from 2" to 14", 0.156 Gr B to 0.365 x 46 w.t., and 1957 - 1992
vintage. The lateral lines are up to 8" and the trunk portion is all
10" and 14".
(B) BOOSTER STATIONS: There are 18 pump stations, 24 pump and electric
motor units and associated electrical switchgear and control
equipment. Total horsepower is 28,200. Pumps are all horizontal
centrifugal type.
(C) COAHOMA FACILITY: There are 2 - 1,000 horsepower pump units with
centrifugal pumps and electric motors. It is an 80 acre site with
three storage ▇▇▇▇▇(nominal 300,000 Bbls), two brine pits (nominal
350,000 Bbls capacity), and all associated piping and electrical
equipment.
** Of the 19 booster stations (including Coahoma), 13 are on
separately identifiable property.
(D) METER STATIONS: There are about 62 receipt, custody transfer meter
stations of which about 54 are at plant sites. There are another 18
check meter locations with a total of 34 meter runs. Each facility
generally includes turbine meter runs, instrumentation, and equipment
buildings.
(E) MISCELLANEOUS:
* Sending and receiving swab trap facilities (22 on the
trunk line alone).
* Portable meter provers
* Spare parts inventory
37
II. GATHERING FACILITIES
A. Pipelines
. 6" Artesia Lateral MP 0.0 to MP 78.9
. 6" Seven Rivers Pipeline MP 0.0 to MP 26.9
. 6" Seven Rivers connection MP 0.0 to MP 1.7
. 3" pipeline to Pecos Diamond MP 0.0 to MP 0.3
. .49 miles of 2" pipeline from Plant 57 to Artesia lateral at
MP 78.9
. 4" ▇▇▇▇▇▇▇▇ Artesia Connection MP 0.0- MP 1.9
. 6" ▇▇▇▇▇ Lateral MP 0.0 to MP 7.6
. 4" ▇▇▇▇▇ Lateral MP 7.6 to MP 13.9
. 4" Northern Natural MP 0.0 to MP 14.2
. 8" ▇▇▇▇▇▇▇▇▇▇ Lateral MP 0.0 to MP 27.0
. 6" ▇▇▇▇▇▇▇▇▇▇ Lateral MP 27.0 to MP 31.7
. ▇▇▇▇▇▇▇ Ranch Pipeline 3.13 miles
. 6" ▇▇▇▇▇ San ▇▇▇▇▇▇ Jct. MP 0.0 to MP 52.1
. 4" Amoco North ▇▇▇▇▇▇- San ▇▇▇▇▇▇ Jct MP 0.0 to MP 12.7
. Chevron- San ▇▇▇▇▇▇ (▇▇▇▇▇ Jct.) MP 0.0 to MP 0.38
. 8" Lees to ▇▇▇▇▇ lateral MP 0.0 to MP 110.5
. 4" Fullerton Lateral MP 7.4 to Lees to ▇▇▇▇▇ ▇▇ 77.9
. Pipeline from Lees to ▇▇▇▇▇ to Mobil Baden Storage .7 miles
. 6" ▇▇▇▇▇▇▇ to ▇▇▇▇▇▇▇ Lateral MP 0.0 to MP 31.8
. 6" ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ 0.0 to MP 2.16
. 8" ▇▇▇▇▇▇ lateral MP 88.8 to MP 159.4
. 6" ▇▇▇▇▇▇ Lateral MP 159.4 to MP 190
. 6" ▇▇▇▇▇▇ Lateral MP 190 to MP 220 (out of service)
. 6" ▇▇▇▇▇▇▇ lateral MP 0.0 to MP 21.4
. 4" Indian ▇▇▇▇▇ ▇▇▇▇▇▇▇ Injection MP 0.0 to MP .33
. 3" ▇▇▇▇▇▇ Lateral MP 0.0 to MP 6.7
. Indian ▇▇▇▇▇ Lateral .5 miles
. 8" Lees to ▇▇▇▇▇▇ Loop MP 0.0 to MP 60.7
. 4" Lees to ▇▇▇▇▇▇▇ Lateral MP 0.0 to MP 42.5
. 4" ▇▇▇▇▇▇▇ Lateral MP 0.0 to MP 5.8
. 6" Vealmoor Lateral MP 0.0 to MP 8.1
. Texaco East Vealmoor Storage MP 0.0 to MP 0.2
. 4" General Crude Lateral MP 0.0 to MP 36.4
. 6" North ▇▇▇▇▇▇ Lateral from General Crude MP 0.0 to MP 7.38
. Conoco Sterling MP 0.0 to MP 4.5
B. Pump Stations
. Maljamar
. ▇▇▇▇▇▇
. ▇▇▇▇▇▇▇
38
. ▇▇▇▇▇▇▇
. Lees
. ▇▇▇▇▇▇
C. Valve Stations
. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
. ▇▇▇▇▇▇▇
▇. Meter Sites
. Marathon Indian Basin
. ▇▇▇▇▇ Penasco
. Duke Dagger Draw
. Amoco Abo
. Duke Pecos Diamond
. ▇▇▇▇▇ ▇▇▇▇▇▇
. Texaco ▇▇▇▇▇▇
. LG&E Antelope Ridge
. Western Gas ▇▇▇▇▇▇▇
. Western Gas ▇▇▇▇▇▇▇
. ▇▇▇▇▇ ▇▇▇▇▇▇
. Conoco Garden City
. Conoco Sterling
. Range Resources Sterling
. Texaco Vealmoor
. Mobil Salt Creek
. Mobil Baden
. WTP ▇▇▇▇▇
. ▇▇▇▇ Chaparral San ▇▇▇▇▇▇
39
ATTACHMENT III
TO
AMENDED AND RESTATED OPERATING AGREEMENT BETWEEN WEST TEXAS
LPG PIPELINE LIMITED PARTNERSHIP AND CHEVRON PIPE LINE COMPANY
MAPS OF FACILITIES
40
ATTACHMENT IV
TO
AMENDED AND RESTATED OPERATING AGREEMENT BETWEEN WEST TEXAS
LPG PIPELINE LIMITED PARTNERSHIP AND CHEVRON PIPE LINE COMPANY
CHEVRON'S POLICY 530: PROTECTING PEOPLE AND THE ENVIRONMENT
SUMMARY OF 20 ACTION AREAS
1. Management Implementation of Policy 530
Purpose: Clearly define management's role in fully implementing Policy 530
in Chevron Pipe Line Company. Management's Leadership, support and
involvement is the driver for the successful implementation of Policy 530.
Employee ownership of Policy 530 depends on management's support and
commitment.
Expected Outcomes:
. Assessment of the gap between "current" and "desired" state
. Estimate of the cost, manpower requirements and time to design and pilot
test process
. Schedule of the design, pilot testing, training and implementation steps
of the process
. Design details of the new process
. Documentation of the new process
. Documentation of how the process was developed
. Documentation of the implementation plan to get to Stage 5
. Plan to communicate/educate employees about this process
. Documentation of process to measure progress/performance
. Estimate of ongoing support requirements
. Process must satisfy the needs of: suppliers of the process, people who
work in the process and customer of the process
. Process must be designed so that it can be incorporated into the
business planning and day-to-day decision making processes
Requirements:
. Clear commitment and leadership demonstrated by management - through
policy, participation, communication and allocation of resources - in
achieving continuous improvements in compliance with all safety, health
and environmental laws and regulations. The following three elements
must be evident:
. Compliance process oversight by high level manager
. Written local safety, health and the environmental compliance
policies
. Policy and operating objective clearly communicated to all employees.
. ▇▇▇▇▇▇ employee ownership in each of the Action Areas
41
2. Risk Management
Purpose: Minimize CPL's current and future liabilities and improve our
long-term competitive position through better informed data driven
decisions.
Requirements:
. Develop an assessment process, periodically reviewed and updated, of
potential risks from an accidental release or other emergencies to
employees, contractors, local communities and adjacent neighbors.
. Conduct assessments of the potential impact of safety, fire, health and
environmental risks of wastes, releases and products to employees,
contractors and the community
. Establish a process to identify, document and implement risk management
actions to reduce safety, fire, health and environmental risks of
products and processes
3. Operations and Maintenance Procedures and Design Documentation
Purpose: Ensure that CPL's pipeline facilities are operated and maintained
in a safe and efficient manner which minimizes incidents and complies with
legal requirements
Requirements:
. Maintain current and complete documentation of process design, operating
parameters, operating and maintenance procedures. Also maintain
information relating to the hazards of employees, contractors and
visitors in existing facilities
. Provide written, up-to-date programs and procedures for occupational
health and safety practices, for each facility. Implement methods,
including exposure assessments and job safety analyses, to identify,
evaluate and resolve potential occupational health and safety hazards to
employees, contractors and visitors in existing facilities
4. Preventive Maintenance
Purpose: ensure that CPL's facilities continue to be capable of operating
in a safe and efficient manner which minimizes incidents and complies with
legal requirements
Requirements:
. Implement a preventive/predictive maintenance system which integrates
risk management concepts
5. Occupational Health Assurance
Purpose: Operate our business in a manner which minimizes the adverse
health effects from our operations on employees and the community
42
Requirements:
. Establish and maintain information on potential safety, fire, health and
environmental hazards and on exposures from new and existing products
. Characterize potential risks of new and existing products using safety,
fire, health, and environmental hazard information and exposure
assessment information and periodically re-evaluate
. Provide education and training for Chevron employees and contractors
appropriate to their job function on the proper handling, use, recycling
and disposal of products and product wastes
. Require chemical and equipment suppliers to provide appropriate HES
information and guidance on their products. Factor sound HES principles
into procurement practices
. Provide written, up-to-date programs and procedures for occupational
health and safety practices for each facility. Implement and resolve
potential exposures to employees, contractors and visitors.
. Conduct periodic health assessments to determine employee's medical
fitness for specific job tasks and to track their exposures
6. Legislative and Regulatory Advocacy
Purpose: Promote timely, reasonable and cost-effective safety, fire,
health and environmental legislation and regulations through active
participation in their development process
Requirements:
. Develop and maintain a process, in connection with Public Affairs, to
identify, track and comment on proposed legislation that may impact the
operating company.
. Develop and maintain a process to work with other business units and
Health, Environment and Safety to identify and comment of proposed
regulations that may impact their operating company.
. Develop and maintain a process to measure and evaluate the operating
company's advocacy program and make improvements
7. Management of Change
Purpose: Ensure that the impacts of operations, maintenance and equipment
changes on safety, fire and health and environment and energy use are
analyzed and procedures and documentation are updated to reflect the change
in a timely manner
Requirements:
. A systematic management of change process is followed for all changes to
facilities and procedures from concept to start-up and beyond
. Conduct periodic safety reviews on all new and modified facilities during
design, construction and prior to start-up
43
. Use sound engineering practices, consistent with recognized industry
standards, in facility design, construction and maintenance
8. Accident and Near Miss Investigation
Purpose: Learn from accidents and near misses to prevent future incidents
Requirements:
. Develop and maintain a process to properly investigate, handle and
report all Environmental, Health and Safety incidents and correct any
deficiencies found. This process would include, but not be limited to
the following:
. Written procedures and protocols
. Internal reporting of incidents in a timely manner to the appropriate
personnel
. External reporting of incidents to the appropriate agencies or
organizations in a timely manner
. Documentation of the investigation and reporting of incidents
. A properly scheduled corrective action plan with appropriate follow-up
for any deficiencies or violations uncovered in the investigation
. A review process on the effectiveness of corrective actions
. Appropriate management oversight to address any trends, compliance
problems or systematic errors
. Appropriate application of a disciplinary policy for employee actions
that result in incidents or violations
. Establish a system to report all incidents and near misses and a process
to identify root causes of errors and incidents. This involves
investigating, reporting and taking appropriate action following each
incident that results or could have resulted in an injury, illness,
fire, explosion or accidental release, and sharing relevant safety
knowledge and lessons learned from such incidents with industry,
government and the community. Implement solutions using systems to track
and analyze relevant data and measure improvements
. Implement a process to investigate and report on all product
distribution accidents and releases and to identify and implement
measures to prevent recurrence
9. Community Awareness
Purpose: ▇▇▇▇▇▇ understanding and dialogue between Chevron Pipe Line
Company and the community
Requirements:
. Develop and maintain an ongoing process to acquire and assess employee,
contractor and community questions and concerns about the facility
. Put systems in place that ensure an ongoing dialogue with employees,
contractors and local citizens to address safety, fire, health and the
environmental concerns
44
. Conduct periodic communication training for key facility and company
personnel who communicate with employees, contractors and the public
concerning safety, fire, health and environmental issues
. Develop and maintain a convenient process that helps familiarize
interested people with the facility, its operations and products; and
its efforts to protect safety, fire, health and the environment
. Conduct regular evaluations of the effectiveness of these ongoing
communication efforts
10. Compliance Assurance
Purpose: Ensure ongoing compliance with ESF&H laws, regulations and
Company Policies
Requirements:
. Develop and maintain a system which provides all employees with the
skills and knowledge necessary to ensure that they can do their jobs in
compliance with all laws, regulations and company policies relevant to
their jobs, and which holds them accountable for doing so. The following
two activities are required:
. Maintain a compendium of all relevant legal requirements in a useable
format
. A process for ensuring that employees clearly understand their job
responsibilities and are held accountable for their performance
. Develop and maintain a process to track, document and disseminate new
compliance requirements and reporting obligations to affected operations
. Implement a process to ensure adherence to compliance deadlines and
reporting requirements, including an up-to-date list of these
obligations
. Implement a self-audit procedure to ensure that facilities and practices
comply with all relevant government regulations, permit requirements and
with company policies and standards.
. Implement a process to support and document annual certification of
compliance which includes maintaining a backup file of documents
supporting the certifications
. Develop and maintain a process whereby employees at all levels are
encouraged to freely report existing or potential compliance problems
with management.
. Develop and maintain a process that audits Safe Operations processes for
compliance with company policies and government regulation and
implementation of corrective actions
11. Contracting
Purpose: Ensure that the contracting process complies with Policy 530
requirements
45
Requirements:
. Implement a process for ensuring that contractors authorized to act on
behalf of the company ("agents") understand and comply with relevant
company policy and procedures. This process would include, but not be
limited to the following:
. Review of the agent's safety policy
. Contract forms contain language to carry out this process
. Audits of agent performance to check compliance with relevant company
policy and procedures
. Procedure exists for agent to freely report existing or potential
compliance problems to company
. Provide education and training for Chevron employees and contractors
appropriate to their job function, on the proper handling, use,
recycling and disposal of products and product wastes
. Select contract manufacturers who employ appropriate safety, fire,
health and environmental protection relevant to the operations under
contract
. Commensurate with product risk, provide information to product receivers
and, if appropriate, end-product users. Work with them to ▇▇▇▇▇▇ proper
handling, use, recycling and disposal. Take corrective measures with
product receivers who fail to handle product properly. If necessary,
cease doing business with product receivers who are unwilling to
implement such actions.
. Establish and maintain contractor safety programs to confirm that
contractors perform to safety performance standards consistent with
those required of Chevron employees
12. Emergency Preparedness and Response
Purpose: Minimize the environmental, community and economic impacts of
incidents and reduce adverse public relations
Requirements:
. Provide a current, written facility-specific emergency response plan
that addresses, among other things, communication to employees,
contractors and the public and where appropriate, the recovery needs of
the community after an emergency
. Develop and maintain a training program designed to improve the
proficiency of the emergency response team as well as all employees and
contractors covering operating procedures, emergency and safety
procedures, regulatory compliance requirements and communication
responsibilities
. Develop an assessment process, periodically reviewed and updated, of
potential risks from an accidental release or other emergencies to
employees, contractors, local communities and adjacent neighbors
. Communicate relevant emergency response planning information to
appropriate regulatory agencies and local emergency planning committees.
. Coordinate the facility's written emergency response plan, comprehensive
community emergency response plan and other facility plans. If no
community plan exists, initiate, where appropriate, community efforts to
create one.
46
. Provide facility tours for emergency responders to promote emergency
preparedness and to provide current knowledge of facility operations
. Conduct emergency exercise sessions, at least annually, to test
workability of the written emergency response plan. Include, to the
extent practical, appropriate local emergency responders and others
. Participate in the process to develop and periodically test the local
emergency planning committee's comprehensive community emergency
response plan
. Share information and experience with other nearby facilities in the
community relating to emergency response planning, exercises and
incident handling
13. Employee Fitness
Purpose: Ensure that personnel in safety sensitive jobs are fit for duty
and comply with legal requirements and Company Policy.
Requirements:
. Develop and maintain a process to confirm that personnel in safety
sensitive jobs are fit for duty and are not compromised by external
influences, including alcohol and drug abuse
14. Employee Selection
Purpose: Select proper people with inherent capabilities that will allow
them to perform jobs according to Policy 530 requirements
Requirements:
. Develop and maintain a job selection process that is designed to ensure
that successful candidates for Environmental, Health and Safety
sensitive jobs have the knowledge, skills and performance history to
allow them to conduct their activities in compliance with applicable
federal, state and local Environmental, Health and Safety laws and
regulations and with company Environmental, Health and Safety policy and
procedures
15. Energy Conservation
Purpose: Increase energy efficiency and resource conservation which will
result in a competitive advantage for Chevron Pipe Line Company
Requirements:
. Implement employee awareness and training programs that address energy
usage and resource conservation
. Conduct periodic inventories of energy and fuel usage for each facility
and/or process
. Establish energy and fuel usage conservation goals and target dates
. Implement procedures to evaluate resource conservation and energy and
fuel efficiency for all new or modified facilities and processes
47
16. Pollution Prevention
Purpose: Reduce the environmental and health impacts of Chevron Pipe Line
Company's (CPL) facilities, operations and products
Requirements:
. Develop and maintain a comprehensive inventory of all wastes generated
and all releases into the air, water and ground
. Conduct assessments of the potential impact of safety, fire, health and
environmental risks of wastes, releases and products to employees,
contractors and the community
. Prioritize wastes and releases for a reduction effort; if appropriate,
identify and prioritize products targeted for pollution prevention
efforts
. Establish goals and timing for reducing wastes and releases and, where
appropriate, for reformulating products.
. Plan implementation, giving preference first to source reduction, second
to recycling/reuse and third to treatment. These techniques may be used
separately or in combination with one another
. Measure progress in pollution prevention efforts, at least annually
. Set and accomplish pollution prevention objectives in operations and
maintenance procedures and in research and design of new or modified
facilities, processes and products
17. Property Transfer
Purpose: Ensure that the sale, lease, transfer or purchase of real
property is management to minimize ESF&H risks and liabilities to Chevron
Requirements:
. Assess potential safety, fire, health and environmental liabilities
prior to the sale, lease, transfer or purchase of real property
. Develop an ongoing process to identify issues or problems. Perform
appropriate cleanup or remediation, taking into consideration future use
and long-term liability, utilizing risk management processes
. Comply with all laws and regulations that apply to property transfers
. Assure that appropriate employees are trained and understand transfer
and cleanup requirements
. Develop and maintain an ongoing process to control present and future
liabilities related to transfer and cleanups
18. Purchasing
Purpose: Ensure that the purchasing process complies with Policy 530
requirements
48
Requirements:
. Require chemical and equipment suppliers to provide appropriate safety,
fire, health and environmental information and guidance on their
products. Factor adherence to sound environmental, safety, fire, health
and environmental principles into procurement practices
19. Site Remediation
Purpose: Minimize present and future liabilities and reduce environmental
and health impacts of contaminated sites
Requirements:
. Establish and maintain a process to evaluate, minimize and/or remediate
environmental impacts caused by past operating practices
. Develop an ongoing process to identify issues or problems. Perform
appropriate cleanup or remediation, taking into consideration future use
and long term liability, utilizing risk management processes
. Develop and maintain an ongoing process to control present and future
liabilities related to transfer and cleanups
20. Training
Purpose: Ensure that all employees have skills and knowledge necessary to
fulfill Policy 530 requirements
Requirements:
. Develop and maintain a system which provides all employees with the
skills and knowledge necessary to ensure that they can do their jobs in
compliance with all laws, regulations and company policies relevant to
their jobs, and which holds them accountable for doing so
. Conduct periodic communication training for key facility and company
personnel who communicate with employees, contractors and the public
concerning safety, fire, health and environmental issues
. Conduct periodic training for all personnel so they have the skills and
knowledge necessary to perform their jobs and can reach and maintain
proficiency in safe work practices
49