                                                                                       ACCEPTED
                                                                                   03-15-00728-CV
                                                                                         12689127
                                                                        THIRD COURT OF APPEALS
                                                                                   AUSTIN, TEXAS
                                                                             9/14/2016 10:12:33 AM
                                                                                 JEFFREY D. KYLE
                                                                                            CLERK
                         NO. 03-15-00728-CV
                IN THE THIRD COURT OF APPEALS        FILED IN
                         AUSTIN, TEXAS        3rd COURT  OF APPEALS
                                                   AUSTIN, TEXAS
                                                         9/14/2016 10:12:33 AM
                                                            JEFFREY D. KYLE
                                                                  Clerk
                Westlake Ethylene Pipeline Corporation,
                                            Appellant,
                                   v.
                  Railroad Commission of Texas and
                     Eastman Chemical Company,
                                            Appellees.


                          On Appeal from the
          398th Judicial District Court of Travis County, Texas

     WESTLAKE ETHYLENE PIPELINE CORPORATION’S
             ORAL ARGUMENT EXHIBITS


    Lindsay Hagans                      Dale Wainwright
    State Bar No. 24087651              State Bar No. 00000049
    lindsay.hagans@bracewelllaw.com     dale.wainwright@bracewelllaw.com
    BRACEWELL LLP                       BRACEWELL LLP
    711 Louisiana Street, Suite 2300    111 Congress Avenue, Suite 2300
    Houston, Texas 77002                Austin, Texas 78701
    Telephone: (713) 223-2300           Telephone: (512) 472-7800
    Facsimile: (800) 404-3970           Facsimile: (800) 404-3970



ATTORNEYS FOR APPELLANT WESTLAKE ETHYLENE PIPELINE CORPORATION
                       CERTIFICATE OF SERVICE
      I certify that a copy of Appellant's Oral Argument Exhibits for the

September 14, 2016 Oral Argument was served on counsel of record by using the

Court’s CM/ECF system on the 14th day of September 2016, addressed as follows:


   Prerak Shah
   prerak.shah@texasattorneygeneral.gov
   Daniel Wiseman
   OFFICE OF THE ATTORNEY GENERAL
   P.O. Box 12548
   Austin, Texas 78711
   Tel.: (512) 936-2923
   Fax: (512) 474-2697
   Attorneys for the Railroad Commission of Texas


   James Mann                                Wallace B. Jefferson
   Marnie McCormick                          wjefferson@adjtlaw.com
   mmccormick@dwmrlaw.com                    J. Woodfin Jones
   Leslie Padilla                            Dana Livingston
   DUGGINS WREN MANN & ROMERO, LLP           ALEXANDER DUBOSE JEFFERSON &
   600 Congress, Suite 1900                      TOWNSEND LLP
   Austin, Texas 78701                       515 Congress Avenue, Suite 2350
   Tel.: (512) 744-9300                      Austin, Texas 78701
   Fax: (512) 744-9399                       Tel.: (512) 482-9300
                                             Fax: (512) 482-9303
   Attorneys for Eastman Chemical Company



                                                /s/ Dale Wainwright
                                                      Dale Wainwright
                                    INDEX


Railroad Commission’s Final Order                             Exhibit A

Key Rulings In Railroad Commission’s Final Order              Exhibit B

Eastman’s Case Is Built On Speculation                        Exhibit C

No Evidence To Support Claims Of Discrimination Or Stranded   Exhibit D
Ethylene

Amici Letters In Support Of Westlake Pipeline                 Exhibit E

   1. Howard Energy Partners

   2. The Williams Companies

   3. Kinder Morgan Energy Partners, L.P.

   4. Enlink Midstream Operating, LP and Howard Midstream
      Energy Partners, LLC

   5. Seminole Pipeline Company
Ex. A
                                  BEFORE THE
                         RAILROAD COMMISSION OF TEXAS

COMPLAINT FILED BY EASTMAN                    §
CHEMICAL COMPANY AGAINST                      §
WESTLAKE      ETHYLENE  CORP.,                § GAS UTILITIES DOCKET NO. 10296
(WESTLAKE 3,3(/,aREGARDING                  §
WESTLAKE PIPELINE'S SYSTEM T4                 §
PERMIT NO. 05253                              §

                                      FINAL ORDER

      · Notice of Open Meeting to consider this Order was duly posted with ·the Secretary of
State within the time period provided by law pursuant to TEX. Gov'T CODE ANN. Chapter 551, et
seq. (Vernon 2008 & Supp. 2014). The Railroad Commission of Texas adopts the following
findings of fact and conclusions of law and orders as follows:                              ·

                                   FINDINGS OF FACT

1.     Westlake Ethylene Pipeline Corporation (Westlake Pipeline) operates a pipeline pursuant
       to T4 Permit No. 05253.

2.     The pipeline that is subject to T4 Permit No. 05253 runs from Mont Belvieu, Texas to
       Longview, Texas and traverses seven counties: Chambers, Liberty, Polk, Angelina,
       Nacogdoches, Rusk and Gregg, Counties.

3.     The pipeline is currently operated by Buckeye Development & Logistics I LLC
       (Buckeye) on behalf of Westlake Pipeline.

4.     On July 29, 2013, Eastman Chemical Company (Eastman) filed a complaint against
       Westlake Ethylene Pipeline Corporation (Westlake Pipeline) alleging that a tariff
       published and tiled by Westlake Pipeline in 2013 (2013 Westlake Pipeline Tariff) was
       discriminatory.

5.     A notice of hearing on jurisdictional issues was issued on September 13, 2013, and a
       hearing on jurisdictional issues was held on September 27, 2013.

6.     A notice of hearing on the merits was issued on March 24, 2014. The notice of hearing
       bifurcated the hearing in this matter into two phases. Phase 1 addressed all
       discrimination and non-rate issues. All rate issues have been severed into Phase II.

7.     Phase II was severed into a separate proceedings docketed as GUD No. 10358, Rate-
       Setting Proceeding Regarding Westlake Pipeline Severed from GUD No. 10296.
GUD Docket No. 10296                  Final Order                                    Page2 of9

8.    On May 2, 2014, Westlake Pipeline filed an affidavit attesting that notice was served on
      the entity that operates the pipeline on behalf of Buckeye and all current customers of the
      pipeline that is the subject of this proceeding.

9.    The hearing on Phase I, GUD No. 10296, was held on May 6, 2014.

10.   Westlake Pipeline is subsidiary of Westlake Chemical Corporation (Westlake Chemical).
      Another Westlake Chemical subsidiary, Westlake Longview Corporation (Westlake
      Longview) is located in Longview.

11.   The facilities of Westlake Longview are connected to ethylene supplies at Mt. Belvieu
      through Eastman's ethylene distribution system at Longview and the Westlake Ethylene
      Pipeline.

12.   Westlake Longview consumes large TaWLWLHVof ethylene in Longview.

13.   Westlake Longview, or its ethylene supplier, is a shipper on the pipeline operated by
      Westlake Pipeline.

14.   Eastman owns and operates ethylene producing facilities in Longview.

15.   Eastman's Longview facility converts natural gas liquids (NGLs) feedstock, such as
      ethane and propane, to ethylene and propylene.

16.   Eastman currently produces about 1,400 million pounds of ethylene annually from its
      crackers at Longview.

17.   Eastman uses about 600 million pounds of ethylene annually at Longview, leaving about
      800 million pounds of ethylene that must either be sold in Longview or transported to, or
      exchanged at, Mont Belvieu each year.

18.   Other than Eastman's own use, the only substantial market for ethylene in Longview is
      Westlake Longview.

19.   Eastman is a shipper on the pipeline operated by Westlake Pipeline.

20.   In 1995, Eastman began planning a "common carrier" pipeline to provide ethylene to its
      Longview plant and construction began in December 1996.

21.   Mustang Pipeline Company (Mustang), an Eastman subsidiary, started construction on
      the pipeline.

22.   In 2002, Eastman constructed the "Williams Connection."

23.   The Williams Connection connected Eastman's Mont Belvieu terminal to contracted
      storage owned by the Williams Company, the first fungible ethylene storage facility in
OUD Docket No. I 0296                 Final Order                                   Page3 of9

       Mont Belvieu, and added the compression necessary to ship ethylene south to Mont
       Belvieu.

24.    At the time of the construction of the Williams Connection, Eastman sought the ability to
       sell surplus ethylene produced in Longview and allow Eastman to maintain ethylene
       production when ethylene-consuming facilities were down in Longview.

25.    In 1997, Mustang Pipeline issued the original tariff for the pipeline (1997 Mustang
       Tariff}.

26.    The 1997 Mustang Tariff identified the "origin point" as Mont Belvieu and the "delivery
       point" as Longview.

27.    The 1997 Mustang Tariff did not include provisions for the exchange of ethylene.

28.    In 2002, after adding compression necessary to deliver ethylene from Longview to Mont
       Belvieu, Mustang Pipeline issued a revised tariff (2002 Mustang Tariff}.

29.    The 2002 Mustang Tariff identified Mont Belvieu as both an origin and delivery point.

30.    The 2002 Mustang Tarlff identified Longview as both an origin and delivery point.

31.    The 2002 Mustang Tariff also indicated that Mustang, the operator of the pipeline, would,
       in addition to physical deliveries of ethylene, offer exchange services.

32.    On November 10, 2006, Eastman and Westlake Chemical entered into an acquisition
       agreement.

33.    As part of the sales agreement the Mustang pipeline assets were transferred to Westlake
       Pipeline.

34.    As part of the acquisition agreement certain ethylene-consuming facilities owned by
       Eastman were sold to Westlake Longview.

35.    The purchase agreement between Mustang Pipeline and Westlake Pipeline included the
       sale of the pipeline conduit.

36.    :HaDNHPipeline's   ownership of the pipeline at the southern end begins just outside the
       two meters belonging to Equistar and Williams and a, check meter and pipeline belonging
       to Eastman. The pipeline extends from that ownership point at Mont Belvieu to a point
       that connects the Eastman plant to distribution facilities in Longview. The pipelines'
       connection at Longview is on property that is owned by Eastman.

3 7.   The pipeline purchase agreement also included all right of ways, easements, privileges
       and grants upon and under which the pipeline system was laid and installed.
GUD Docket No. 10296                 Final Order                                    Page 4 of9

38.   Westlake Pipeline did not acquire any terminals in the sale, the pipeline terminals, nor
      any of the compression necessary to operate the pipeline.

39.   The overall sales agreement between Eastman and Westlake Chemical included the
      acquisition, by Westlake Longview, of three polyethylene units that are located within the
      Eastman's plant in Longview.

40.   As part of the overall sale, on November 10, 2006, Eastman Chemical and Westlake
      Chemical Corporation entered into the Ethylene Sales and Exchanges Contract (ESA).

41.   The ESA is a ninety-nine year ethylene contract that sets a market price using a pre-
      determined formula agreed to by both parties in the contract.

42.   Pursuant to the ESA, Eastman Chemical secured a guaranteed market for ethylene, and
      Westlake Longview Corporation secured an ethylene supplier.

43.   The ESA also provided Eastman with the ability to exchange any excess ethylene that
      Westlake Longview did not purchase from Eastman.

44.   In 2013, Westlake Pipeline published and filed a new tariff for the pipeline (2013
      Westlake Tariff).

45.   Pursuant to the 2013 Westlake Pipeline Tariff, Mont Belvieu was no longer designated as
      both an origin and delivery point. Mont Belvieu was designated as an origin point.

46.   Pursuant to the 2013 Westlake Pipeline Tariff, Longview was no longer designated as
      both an origin and delivery point. Longview was designated as a delivery point.

47.   The 2013 Westlake Pipeline Tariff removed all references to ethylene exchange as
      Westlake Pipeline determined that exchange services would no longer be offered.

48.   Mont Belvieu is the largest market for ethylene producers in the United States.

49.   Pipeline transport is among the most important factors that determine regional prices,
      supply, and demand.

50.   It is reasonable to conclude that the ethylene producers in Longview would require access
      to the ethylene market in Mont Belvieu.

51.   It is reasonable to conclude that ethylene consumers that engage in transactions in Mont
      Belvieu would desire access to ethylene produced in Longview

52.   Eastman produces large quantities of ethylene in Longview and has a physical necessity
      to move ethylene to Mont Belvieu.
GUD Docket No. 10296                 Final Order                                    Pages of9

53.   Ethylene was transported from Longview to Mont Belvieu on several occasions in the
      following years: 2005, 2006, 2007, 2008, and 2013.

54.   The necessity for southbound flow predates the purchase of the system by Westlake
      Pipeline. It is the reason that compression was added in 2002 to allow backhaul and to
      permit Eastman to sell surplus ethylene that it produced in Longview to customers on the
      Gulf Coast.

55.   Eastman has demonstrated a demand for exchanges as Eastman has engaged in exchanges
      with Westlake Pipeline's affiliate, Westlake Longview since entering into the ESA.

56.   Backhaul service is physically possible on the pipeline operated by Westlake Pipeline.

57.   The pipeline system was configured in 2002 to accept bidirectional flow.

58.   Backhaul on the pipeline occurred in 2005, 2006, 2007, 2008, and 2013.

59.   The 2013 Westlake Pipeline Tariff removed the backhaul service previously offered in
      the 2002 Mustang Tariff.

60.   The record in this case does not provide evidence of the impediment to the continued
      provisions of backhaul service.

61.   Any concern that this operator lacks the compression necessar)' to provide backhaul
      service is addressed by the language in the preexisting 2002 Mustang Tariff, which
      requires shippers to deliver and receive product at the necessary pressures.

62.   Additional language may be added to further protect the common carrier;

        The paragraph means that a shipper is responsible for providing or arranging
        sufficient compression or services to effectuate the entry of the product into the
        pipeline at an Origin Point and delivery of the product out of the Pipeline at a
        Delivery Point.

63.   There is no impediment for a pipeline to provide exchange service and the risks
      associated with that service may be mitigated by appropriate language in the tariff.

64.   The 2002 Mustang Tariff contained language that protected the pipeline operator and is
      included in the 2013 Westlake Pipeline Tariff. Additional language may be added to
      protect'the operator as follows:

          Carrier is not obligated to transport or exchange any volumes of ethylene unless
          Shipper delivers those volumes to the common stream out of which deliveries are
          made to Pipeline Customers.
GUD Docket No. 10296                  Final Order                                    Page 6of9

65.   Due to the unique circumstances of the ethylene market in Longview, without an
      exchange provision in the applicable pipeline tariff the only alternative for Eastman is to
      engage in exchanges with Westlake Longview, the pipeline operator's affiliate.

66.   If exchange service is included in the applicable pipeline tariff Eastman may engage in
      exchanges with market participates in Mont Belvieu and will no longer be a captive to
      Westlake Longview.

67.   Eastman, Westlake Longview, and Westlake Longview's ethylene suppliers (other than
      Eastman), are potential shippers on the pipeline operated by Westlake Pipeline.

68.   Eastman and Westlake Longview are located in Longview.

69.   Eastman and Westlake- Longview each require movement of ethylene between Mont
      Belvieu and Longview.

70.   Eastman and Westlake Longview require access to the ethylene market in Mont Belvieu
      and the ethylene market in Longview.

71.   The only difference is that Eastman requires deliveries from Longview to Mont Belvieu
      and Westlake Longview requires deliveries from Mont Belvieu to Longview.

72.   Eastman and Westlake Longview, or its other potential suppliers of ethylene, are
      VLPLODUO\aVLWXDWHGshippers.


73.   The tariff changes in the 2013 Westlake Pipeline Tariff related to backhaul eliminated a
      service that was previously provided to Eastman on this pipeline.

74.   The tariff changes in the 2013 Westlake Pipeline Tariff related to backhaul physically
      shut Eastman out of the pipeline.

75.   Longview is no longer designated as an "Origin Point" and Mont Belvieu is no longer
      designated as a "Delivery Point.''

76.   Due to the operation of the filed tariff Eastman would no longer be able to demand
      backhaul service

77.   Due to the operation of the filed tariff, Westlake Pipeline would be unable to treat those
      points as Origin and Delivery points.

78.   Westlake Longview will continue to have access to the pipeline and the Mont Belvieu
      ethylene market.

79.   Eastman would be shut out of the Mont Belvieu market by the changes in the 2013
      Westlake Pipeline Tariff.
GUD Docket No. 10296                 Final Order                                   Page 7 of9


80.   Westlake Pipeline has offered no reasonable basis for the disparate treatment as regards
      to physical deliveries on the pipeline.

81.   The tariff change in the 2013 Westlake Pipeline Tarif.frelated to exchanges eliminates a
      pre-existing service offered by the pipeline operator.

82.   Once that service is eliminated, EaStman must engage in exchanges with Westlake
      Longview, an affiliate of the pipeline operator.

83.   The removal of exchange service further limits Eastman's access to the Mont Belvieu
      market through the pipeline.

84.   The elimination of backhaul and exchanges, pre-existing service offered by the common
      carriers of this pipeline, provides an unreasonable preference in favor of Westlake
      Longview.

85.   Whether discrimination by a common carrier exists depends on the facts of a particular
      case. The discriminatory act found to have occurred in this docket is the cancellation of
      pre-existing backhaul and exchange services so that .one shipper, Eastman Chemical, is
      forced to sell or exchange the ethylene it produces to the only other shipper on the
      pipeline, Westlake Longview, the parent company of the pipeline.

                                 CONCLUSIONS OF LAW

1.    Westlake Pipeline is a "common carrier" as that term is defined under TEX. NAT. REs.
      CODE ANN. § 111.020(d) (Vernon 2001 & Supp. 2014) and is therefore subject to the
      jurisdiction of the Railroad Commission of Texas (Commission).

2.    As a common carrier Westlake Pipeline is subject to all provisions of the Common
      Carrier Act, TEX. NAT. RES. CODE ANN. §§ 111.002, 111.003, 111.011 - 111.025,
      111.131, 111.133 - 111.142, 111.181 - 111.190, 111.221 - 111.227, & 111.261 -
      111.262.

3.    In addition to the powers provided by other sections of Chapter 2, Subchapter B of the
      Business Organization Act, TEX. BUSINESS CORP. ACT ANN. § 2.105 provides that a
      corporation, such as Westlake Pipeline engaged as a common carrier in the pipeline
      business for the purpose of transporting oil products has all of the rights and powers
      conferred on a common carrier by Sections 111. 019 - 111. 022.

4.    The Commission has jurisdiction over Westlake Pipeline, associated affiliates, and the
      matters at issue in this proceeding pursuant to TEX. NAT. REs. CODE ANN. §§ 81.051 and
      §§ 111.002, 111.003, 111.011 - 111.025, 111.131, 111.133 - 111.142, 111.181 -
      111.190, 111.221 -111.227, & 111.261-111.262.

5.    As required by TEX. NAT.   RES. CODE ANN.    § 111.014 Westlake Pipeline shall make and
      publish their tariffs.
GUD Docket No. 10296                  Final Order                                      Page 8 of9



6.    A common carrier's obligations to its customers cannot exceed its duties under a
      published tariff and published tariffs govern the relationship of the common carrier with
      its customers. Common carriers may not vary a tariff's terms with individual customers,
      discriminate in providing services, or charge rates other than those included in properly
      published tariffs. The published tariffs and the eonstraints related to those tariffs provide
      predictability and certainty for all potential shippers and enable shippers to make
      decisions based upon the rates and services reflected in the published tariff. CenterPoint
      Energy Entex v. R.R. Commn'n of Tex, 208 S.W. 3rd 608 (Tex. - Austin 2006, pet.
      dism'd)

7.    Westlake Pipeline, as a common carrier, is required to receive and transport ethylene
      delivered to it for transportation and perform its other related duties without
      discrimination as required by TEX. NAT. RE:s. CODEANN. § 111.015.

8.    Westlake Pipeline, as a common carrier, shall not discriminate between or against
      aSSHUVwith regard to facilities furnished, services rendered, or rates charged under the
      same or similar circUmstan.ce in the transportation of ethylene as required by TEX. NAT.
      RE:s. CODEANN. § 111.015.

9.    Westlake Pipeline, as a common carrier, may not charge, demand, collect, or receive
      either directly or indirectly from anyone a greater or lesser compensation for a service
      rendered than from another for a like and contemporaneous service.

10.   Westlake Pipeline's 2013 tariff terminated pre-existing backhaul and exchange services
      and provided an unreasonable preference and advantage to its affiliate, Westlake
      Longview.

11.   The Commission has the authority to require that tariffs published by a common carrier
      and filed with the Commission are not discriminatory.

12.   Tariffs that provide disparate treatment to similarly-situated shippers or provide an
      unreasonable preference or advantage to an affiliate at the expense of other shippers are
      discriminatory.

13.   There is no general duty· for a common carrier to provide backhaul and exchange
      services. Neither is there a general duty to maintain services previously offered by a
      common carrier. Jt is discriminatory, however, for a common carrier to cancel previously
      existing services and cut off access to a market so that all other shippers on the pipeline
      are forced to sell or exchange their product with a shipper on that same pipeline which is
      affiliated with the pipeline.

IT IS THEREFORE ORDERED that the 2013 Westlake Pipeline Tariff is rejected and may not
be enforced by Westlake Pipeline.
GUD Docket No. 10296                    Final Order                                     Page 9 of9


IT IS FURTHER ORDERED that Westlake Pipeline publish and file with the Commission a
revised tariff that is not discriminatory and conforms to the tariff attached to this Final Order as
Exhibit A.

IT IS FURTHER ORDERED that, in accordance with TEX. NAT. RESOURCE CODE ANN.
§ 111.015, within 30 days of the date this Order is signed, Westlake Pipeline shall file the
approved tariff with the Director of the Oil and Oas Division. The tariffs shall reflect the
findings of fact and conclusions of law herein.

IT IS FURTHER ORDERED that all proposed findings of fact and conclusions of law not
specifically adopted in this Order are hereby DENIED.

IT IS ALSO ORDERED that all pending motions and requests for relief not previously granted
or granted herein are hereby DENIED.

This Order will not be final and effective until 20 days after a party is notified of the
Commission's order. A party is presumed to have been notified of the Commission's order three
days after the date on which the notice is actually mailed. If a timely motion for rehearing is
filed by any party at interest, this order shall not become final and effective until such motion is
overruled, or if such motion is granted, this order shall be subject to further action by the
Commission. Pursuant to TEX. Gov'T CODE ANN. § 2001.146(e), the time allotted for
Commission action on a motion for rehearing in this case prior to its being overruled by
operation of law, is hereby extended until 90 days from the date the order is served on the
parties.
           SIGNED           day of December 2014.

                                              RAILROAD COMMISSION OF TEXAS




                                              CHAIRMAN CHRISTI CRADDICK




                                              COMMISSIONER BARRY T. SMITHERMAN
      Westlake Ethylene Pipeline Corporation-T.R.R.C. No. _ _ __
       [Cancels Mustang Pipeline Company- Texas Local Tariff. -3]


          WESTLAKE ETHYLENE PIPELINE CORPORATION
                 Mont Belvieu to Longview Pipeline

                            LOCAL TARIFF
                             Applying on

                       PETROLEUM PRODUCTS
                        As Defined in This Tariff

              TRANSPORTEDOREXCBANGEDBY PIPELINE
                 Between Poirits Within the State of Texas
                       Subject to the Regulations
                           Set Forth Herein




ISSUED: _ _ __                                       EFFECTIVE: _ _ __


                    Filed with the Railroad Commission

                          DATE:

                        Issued and Compiled By:

           WESTLAKE ETHYLENE RIPELINE CORPORATION
                 2801 Post Oak %RXOHYDUaSU;ite a
                       Houston, Texas 77056




                                    1
WESTLAKE ETHYLENE PIPELINE CORPORATION, hereinafter called "Carrier," will
receive Product, as hereinafter defined, for its Mont Belvieu to Longview pipeline, for
transportation or exchange under the conditions set forth below in Section III, "Rules and
Regulations," at the rates set forth in Section II, "Product Specifications and Local Rates."


I.     DEFINITIONS

       a) The term "barrel" as used herein, means forty-two (42) United States gallons at sixty
          degrees Fahrenheit (60° F).
       b) The term "day," as used herein, means a period of twenty-four (24) hours,
          commencing at 7:00 a.m. on one calendar day (the date of which shall be taken as the
          date of the day in questions) and extending until 7:00 a.m. on the following calendar
          day.
       c) The term "Delivery Point," as used herein, means one of the locations defined ID:
          Section IT, "Product Specifications and Local Rates," for delivery of Product by
          Carrier to Shipper.
       d) The term "gallon," as used herein, shall mean one (1) United States gallon at sixty
          degrees Fahrenheit (60° F).
       e) The term "Origin Point," as used herein, means one of the locations defined in
          Section II, "Product Specifications and Local Rates," for introducing Product into the
          respective pipelines.                          ·
       f) The term "pound," as used herein, means one (1) pound avoirdupois.
       g) The term "Product" as used herein, means the liquid petroleum gas products defined
          in Section II, "Product Specifications EJ.Ild Local Rates," for the respective pipelines.
       h) The term "Shipper,'' as used herein, means the party or parties who contract with
          Carrier for the transportation or exchange of Product Under the terms of this tariff.

       As the context may require, the plural form shall be construed to include the singular, and
       the singular form shall be construed to include the plural.

II.    PRODUCT SPECIFICATIONS AND LOCAL RATES

       a) The rates published in this tariff are for transportation or exchange within the State of
          Texas through Carrier's Mont Belvieu to Longview pipeline and such transportation
          or exchange is subject to the rules and regulations contained herein and to all
          applicable rules, regulations, and orders of the Railroad Commission of Texas and
          other governmental authorities having jurisdiction.
       b) Rates apply to specified petroleum products from the established receiving facilities
          to the established delivery facilities at points named below.




                                                2
Product: Liquefied petroleum gas meeting the following specifications:

       Components                     Specifications                 Test
                                                                     Method
       Ethylene (Minimum)             99.90mol %                     ASTMD2505
       Methane                        350ppmV                        ASTMD2505
       Ethane                         465 ppmV                       ASTMD2505
       Acetylene                      1.5 ppmV                       ASTMD2505
       Propylene & Heavier            5ppmV                          ASTMD2505
       Carbon Dioxide                 1 ppmV                         ASTMD2505
       Carbon Monoxide                0.15 ppmV                      ASTMD2504
       Water                          2ppm wt                        Panametrics
       Total Sulfur                   1 ppm wt                       ASTMD3246
       Oxygen                         4ppmwt                         ASTMD2504
       Hydrogen                       5ppmV                          ASTMD2504
       Ammonia                        1 ppm wt                       ASTMD5234
       Methanol                       1 ppm wt                       ASTMD 5234

Origin/Deliverv Point: Carrier's stations located at or adjacent to the terminals of Equistar
Chemicals, Williams Storage, and Flint Hills Resources at Mont Belvieu, Texas, when such
points of origin are practicable and consistent with the operation of the pipeline, or such other
points as the Carrier may designate and publish from time to time.

Origin/Delivery Point: Carrier's station in Gregg County, Texas, located adjacent to the Texas
Operations Eastman Chemical Company facility (in Gregg and Harrison Counties, Texas), when
such point of delivery is practicable and consistent with the operation of the pipeline, or such
other points as the Carrier may designate and publish from time to time.

       Rate: a.       $1.90 per 100 pounds for the first 320,000 pounds transported or
                      exchanged in a single day.

                 b.   $0. 70 per 100 pounds for each additional amount transported or
                      exchanged in a sing day.

ID.    RULES AND REGULATIONS

1.     Testing

       Product accepted for transportation or exchange under this tariff shall be delivered to
       Origin Point by Shipper and shall conform to the applicable Product definition. Shipper
       may be required to furnish Carrier with a certificate setting forth in detail specifications
       of each shipment offered for transportation or exchange hereunder, and Shipper shall be
       liable for any contamination or damage to other Product in Carrier's custody or to
       Carrier's pipeline or other facilities caused by failure of the shipment tendered to meet
       the specifications stated in Shipper's certificate.

                                                3
     Carrier may, but shall not be required to, sample and/or test any shipment prior to
     acceptance or during receipt of shipment and, in the event of variance between said
     certificate and Carrier's test, Carrier's test shall prevail. In the event that any test
     indicates that the Product offered for transportation or exchange does not conform to
     applicable Product definition, Shipper agrees, either voluntarily or upon notification by
     Carrier, to case delivery of off-specification Product to Carrier until such time as it is
     determined by additional testing that the Product conforms to the applicable Product
     definition.

2.   rvteasurement

     Carrier will utilize meters located at the Origin Point and Delivery Point whereby the
     quantities of Product tendered by Shipper to Carrier will be measured and the
     temperature and pressure of such Product be recorded. The volume of Product delivered
     each day will be determined by reference to daily readings of such meters. Correction
     factors and calculations from such meter readings for the purpose of determining the
     daily quantities of Product delivered will conform with the standard procedures utilized
     by the owner or operator of such meters.

     If for any reason the custody transfer meters are out of service so that the quantity of
     material delivered through such meters cannot be ascertained, the quantity of material
     delivered during the period the meters are out of service will be estimated by Carrier
     based upon the best available data, using in order of preference the following methods:

        a.      By using the registration of any check measuring equipment of Carrier.
        b.      By using any measurement equipment which Carrier may have in the flowing
                stream.
        c.      By any independent third party chosen by Carrier and generally recognized in
                the industry as competent to perform such estimate.

     Carrier shall have the right to go upon the premises where Shipper's Product is metered
     and tested for quality assurance before delivery to Carrier's pipeline. Carrier shall have
     access to any and all such metering and testing equipment for the purpose of making any
     examination, inspection, or test.

     Product will be received and delivered on the basis of volume corrections from observed
     temperatures to temperatures on the basis of sixty degrees Fahrenheit (60° F) using
     gravities, correction factors, and volume corrections for compressibility appearing in
     American Petroleum Institute (API) Manual of Petroleum rvteasurement Standards (latest
     edition) or other method agreed to by Shipper and Carrier.




                                              4
     Physical and legal transfer of custody of the Product from Shipper to Carrier shall be at
     the point immediately downstream of applicable measuring and metering facilities at the
     Origin Point. Physical and legal transfer of custody of the Product from Carrier to
     Shipper shall be at the point immediately downstream of applicable measuring and
     metering facilities at the Delivery Point.

3.   Facilities at Origin and Delivery Point

     Carrier will provide such facilities at Origin Point and at Delivery Point as it deems
     necessary for the operation of the pipeline. Carrier will not provide tankage or storage
     facilities or receiving, loading, or unloading facilities at either the Origin Point or the
     Delivery Point. Shipments will be accepted for transportation or exchange hereunder
     only:

        a.      When Shipper has provided facilities satisfactory to Carrier capable of
                delivering shipments at Origin Point at pressures and at pumping rates
                required by Carrier; and
        b.      When Shipper is capable of receiving shipments at Delivery Point by pipeline
                at pressures and at pumping rates required by Carrier.

     This.i, paragraph means that a shipper is res.ponsible for providing or arranging sufficient
     compression or other services to effectuate the enpy of the Product into the pipeline at an
     Origin Point and the deliveiy of the Product out of the Pipeline at the Delivery Point.

     Carrier is not obligated to trans.port or exchange any volumes of ethylene unless Shipper
     delivers those volumes into the common stream out of which deliveries are made to
     Pipeline's customers.

     Separate pipage contracts in accordance with this tariff and these Rules and Regulations
     covering further details µiay be required of the proposed Shipper before any duty of
     transportation or exchange shall arise.

4.   Minimum and Maximum Shipments

     The quantity of a Product which Carrier may be obligated to accept at Origin Point shall
     be no less than 320,000 pounds delivered over a single day. Carrier may, at its sole
     election, accept a lesser quantity tender upon Shipper's agreement to pay Carrier, for said
     day, charges equal to those which would KaYHresulted from transportation or exchange of
     said 320,000 pounds at the local rates provided herein.




                                               5
5.   Tender Deductions

     A tender deduction of 1/2 percent by weight may be made on the quantity of Product
     received at Origin Point. Except as otherwise provided in this tariff (including, but not
     limited to, adjustments as provided in Paragraph 2, "Measurement''), Carrier will be
     accountable for delivery at Delivery Point of the quantity remaining after deduction of
     said tender deduction.

6.   Payment of Trans.port or Exchange

     The charges for transportation or exchange of Product accepted for shipment shall be
     based on the applicable rate set forth above in Section II before tender deduction, if any,
     is made. Shipments accepted for transportation or exchange shall be subject to a lien in
     favor of Carrier for all lawful charges hereunder.

     Transportation or exchange charges incurred during any month will be invoiced about the
     10th day of the succeeding month and shall be paid within 10 days of receipt of invoice.
     Carrier may require that charges:

        a.      be prepaid at time of acceptance, or
        b.      on demand be paid before release of Product from custody of Carrier. Carrier
                may charge Shipper interest of 1apercent per month (18 percent per annum)
                for overdue transportation or exchange charges.

     Carrier shall have a lien on all Product until the charges are paid. If the charges shall
     remain unpaid for more than five (5) days after notice of readiness to deliver, the Carrier
     may sell the Product at public auction at the general office of the Carrier on any day not a
     legal holiday. The date for the dale shall be not less than 48 hours after publication of
     notice in a daily newspaper of general circulation published in the city where the general
     office of the Carrier is located. The notice shall give the time and place of the sale and
     the quantity of the Product to be sold. At said sale, Carrier shall have the right to bid, and
     if the highest bidder, to become the purchaser. From the proceeds of such sale, Carrier
     will pay itself the traiisportation or exchange and all other lawful charges, including
     expenses incident to said sale, and the balance remaining, if any, shall be held for
     whomsoever may be lawfully entitled thereto. The remedies set forth in this tariff are in
     addition to, and not in limitation of, any statutory or common law remedy available to
     Carrier pursuant to the laws of the State of Texas. Shipper agrees that the venue of any
     suit regarding shipments shall be Gregg County, Texas.




                                               6
7.    Clear Title

      Shipper shall notify Carrier when any Product tendered IaUtransportation or exchange is
      involved in litigation or is the subject of disputed ownership or is encumbered by lien or
      charge of any kind. Carrier shall have the right to reject any shipment, when offered for
      transportation or exchange, which may be involved in litigation or the title of which may
      be in dispute or which may be encumbered by lien or charge of any kind, and Carrier may
      require of the Shipper satisfactory evidence of his perfect and unencumbered title or
      satisfactory indemnity bond to protect Carrier against any and all loss.

8.    Tenders

      All Shippers desiring to tender Product for transportation or exchange on Carrier's
      facilities shall furnish a written nomination to Carrier by the fifteenth (15th) day
      (excluding Carrier KROaGD\V of the month prior to the month Shipper desires
      transportation or exchange. Nominations shall specify the quantity of Product to be
      transported or exchanged. the Origin Point, the Delivery Point, and any other information
      required by Carrier. If Shipper does not furnish such written nomination, Carrier shall be
      under no obligation to accept such Product for transportation or exghange.

      Nominations shall be transmitted to Carrier to the attention of Westlake J?thylene Pipeline
      Corporation Scheduler as follows:

         a.         by facsimile to the Westlake Ethylene Manager at (713) 960-8761, or
         b.         by electronic mail, as arranged between Carrier and Shipper.

      Any nominations accepted by Carrier will be delivered on a ratable basis.

9.    Identity of Shipments

      In view of the impracticability of maintaining the identity of shipments, shipments will
      not be segregated, but will be commingled and deliveries will be made at Delivery Point
      from Carrier's common Product streams.


10.   Disposition of Shipments

      In the event that Shipper does not have adequate facilities available to receive or is not
      capable of receiving any shipment at the Delivery Point in accordance with Carrier's
      schedules,- Carrier may make whatever disposition of such undelivered shipment which is
      necessary to order to free its pipeline. Carrier shall not be liable to Shipper because of

                                                7
      such disposition, and Shipper shall pay for all costs and fees thereof the same as if
      Shipper had requested or authorized such disposition.


11.   Ap_portionment of Tenders and Withdrawals

      In the event Shipper's tenders at Origin Point or Shipper's withdrawal requirements at the
      Delivery Point are greater than can be currently handled by Carrier, Carrier may restrict
      or suspend tenders or withdrawals in order to apportion deliveries among all Shippers on
      an equitable basis. The Carrier shall be considered as a Shipper of Product produced or
      purchased by itself and held for shipment through its line and its product shall be entitled
      to participate in such apportionment.

12.   Transit Privileges

      Carrier may not be required by Shipper to stop Product in transit for any reason.

13.   Liability of Carrier and Indemnity

      Carrier shall not be liable for any delay iii delivery or for any loss of Product caused by
      an act of God, public enemy, quarantine, author!ty of law, order, rule or regulation of
      federal, state or local government, strikes, riots, fire, explosion, equipment breakage,
      floods or by act of default of Shipper, or resulting from any other cause outside of the
      reasonable control of the Carrier, whether similar or dissimilar to the causes herein
      enumerated. Any such loss shall be apportioned by Carrier to each shipment of Product
      or portion thereof involved in such loss in the proportion that such shipment or portion
      thereof bears to the total of all product in the loss, and each Shipper shall be entitled to
      receive only that portion of its shipment remaining after deducting its proportion as above
      determined of such loss. Carrier shall prepare and submit a statement to Shippers
      showing the apportionment of any such loss.

      The Carrier operates under this tari_ff solely as a provider of transportation or exchange
      services and not as an owner, manufacturer, or seller of Product transported or exchanged
      hereunder, and the Carrier expressly disclaims any liability for any expressed or implied
      warranty for Product transported or exchanged hereunder including any warranties of
      merchantability or fitness for intended use.

      FOR ALL SERVICES PROVIDED FOR AND RECEIVED UNDER THIS TARIFF,
      SHIPPER SHALL INDEMNIFY AND DEFEND CARRIER FROM ANY CLAIMS,
      LIABILITIES, OR LOSSES (INCLUDING COSTS OF DEFENSE AND
      REASONABLE ATTORNEY'S FEES), INCLUDING CLAIMS FOR PERSONAL

                                               8
      INJURY, DEATH OR PROPERTY DAMAGE INVOLVING THE CARRIER,
      SHIPPER, CONSIGNEES, OR THIRD .PARTIES BASED ON OR ARISING OUT OF
      CARRIER'S PERFORMANCE OF SUCH SERVICES. THIS INDEMNIFICATION
      SHALL INCLUDE CLAIMS OF ANY NATURE, LEGAL, CONTRACTUAL OR
      EQUITABLE, WHETHER BASED ON STRICT LIABILITY, NEGLIGENCE,
      BREACH OF WARRANTY, OR ANY OTHER CAUSES OF ACTION. THE
      INDEMNITY PROVIDED IN THIS TARIFF IS INTENDED TO BE APPLICABLE TO
      THE FULL EXTENT ALLOWED BY LAW AND IS LIMITED ONLY IN
      ACCORDANCE WITH STATUTORY OR COMMON LAW. TO THE EXTENT NOT
      PROHIBITED BY LAW, THIS INDEMNITY APPLIES TO ANY ACT OR
      OMISSION, WHETHER NEGLIGENT OR NOT, ARISING OUT OF OR RELATING
      TO THE PERFORMANCE OF SERVICE BY CARRIER PURSUANT TO THIS
      TARIFF, INCLUDING THE SOLE OR CONCURRENT NEGLIGENCE OR GROSS
      NEGLIGENCE OF CARRIER.

14.   Claims

      Notice of claims for loss, damage, or delay in connection with the shipment of Product
      must be made in writing to Carrier within 45 days after the damage, loss, or delay
      occurred. If the claim is for failure to make delivery, the claim must be made within 15
      days after a reasonable time for delivery has elapsed.

15.   Additives. Dyes. and Odorization

      a. Carrier may inject corrosion inhibitor compound in the Product to be transported or
         exchanged, and Shipper will accept delivery of Product at Delivery Point containing
         portions of corrosion inhibitor.
      b. Carrier will assume no liability for discoloration, contamination, or deterioration of
         Product transported or exchanged, unless negligent conduct by Carrier is determined
         to be the sole, proximate cause of the cost, a[SHQVHdamage or liability incurred by
         Shipper.
      c. Except where required by law, Carrier will not inject dyes nor odorize any Product
         tendered. Should Carrier be required by law to inject dyes or to odorize any Product
         tendered, Shipper:
             (1)     Will furnish the dye to be injected and/or the malodorant to be added and
             (2)    May be required by Carrier to provide and/or install satisfactory
                     equipment to effect such injection and/or odorizing.




                                              9
16.   Imbalance Charges

      In the event that Shipper fails to deliver to Carrier at the Origin Point the equivalent
      volumes of Product which Carrier redelivers to Shipper at the Delivery Point during a
      calendar month, then Shipper will pay Carrier an imbalance charge of one cent (1 ¢) per
      pound per day for each day the imbalance continues. If Shipper delivers volumes to
      Carrier in excess of those volumes which Carrier redelivers to Shipper in any calendar
      month, then Shipper will pay an imbalance charge of one cent (1 ¢) per pound per day for
      each day the imbalance continues. Carrier may waive such imbalance charges if Carrier,
      in its sole discretion, determines that the imbalance is immaterial. The waiver of such
      charges for any particular imbalance period is not to be construed as a waiver of such
      charges for a\other imbalance and Carrier maintains the right to collect such charges
      from Shipper for any imbalance not the subject of a written waiver.

17.   Direction of Flow

      In the event the pipeline is configured and equipped so that it is physically capable of bi-
      directional flow, Carrier at its sole disc!etion will choose the direction of flow between
      the Origin Point and Delivery Point Carrier will make a reasonable attempt to
      accommodate Shippers through the exchange of product at Origin and Delivery Points.
      Any exchanges will be subject to the same terms and conditions applicable to shipments
      pursuant to this tariff. including the rate charged for such exchanges. The provisions of
      this tariff apply . to all shipments or exchanges regardless of the direction of flow · or
      whether the product shipped or received is physically moved from one point to another.



                                       END OF DOCUMENT




                                               10
Ex. B
              KEY RULINGS IN RRC ORDER
Findings of Fact
84. The elimination of backhaul and exchanges, pre-existing
service offered by the common carriers of this pipeline, provides
an unreasonable preference in favor of Westlake Longview.

85. Whether discrimination by a common carrier exists
depends on the facts of a particular case. The discriminatory
act found to have occurred in this docket is the cancellation of
pre-existing backhaul and exchange services so that one shipper,
Eastman Chemical, is forced to sell or exchange the ethylene it
produces to the only other shipper on the pipeline, Westlake
Longview, the parent company of the pipeline.


Conclusions of Law
12. Tariffs that provide disparate treatment to similarly-situated
shippers or provide an unreasonable preference or advantage to
an affiliate at the expense of other shippers are discriminatory.
13. There is no general duty for a common carrier to provide
backhaul and exchange services. Neither is there a general
duty to maintain services previously offered by a common
carrier. It is discriminatory, however, for a common carrier to
cancel previously existing services and cut off access to a
market so that all other shippers on the pipeline are forced to sell
or exchange their product with a shipper on that same pipeline
which is affiliated with the pipeline.
Ex. C
    EASTMAN’S CASE IS BUILT ON SPECULATION

“The uncertainty is already causing Eastman competitive
injury. If ethylene produced in Longview will not have access
to markets in Mont Belvieu, a subsequent owner of Eastman’s
crackers might be forced to sell only to Westlake Longview at
whatever price it is willing to pay. And, in a prolonged scenario
under the 2013 Tariff, Eastman could suffer a host of losses,
including continued uncertainty in the context of Eastman’s
announced sale of certain ethylene-producing facilities in
Longview. Thus, even if such a showing were required under
Texas law, the evidence here sufficiently demonstrated harm.”

    - Eastman’s Brief at 30-31.
“When the ethylene consumers in Longview have insufficient
demand, the ethylene not being consumed must have a way to
leave Longview and go to Mont Belvieu. CR124. Eliminating
the ability to move ethylene out of Longview poses serious
problems and could cause Eastman to shut down its entire
production capacity.”
    - Eastman’s Brief at 11.
“Eastman’s evidence included testimony from Mark Bogle that,
after it published the 2013 Tariff, Westlake showed itself ‘ready
and willing to leave Eastman’s ethylene stranded in Longview,’
CR2494, by refusing a request for exchange service under the
ESA.”
    - Eastman’s Brief at 30.
Ex. D
     EASTMAN WITNESS’ TESTIMONY THAT THERE
     HAS NOT BEEN ANY DISPARATE TREATMENT
      OF EASTMAN BY WESTLAKE PIPELINE AS TO
            SERVICE, FLOW OR EXCHANGE

Eastman’s lead witness, Vice President Mark Bogle, did not
identify any disparate treatment of Eastman by Westlake
Pipeline. The following exchange occurred during his cross-
examination:
Q.        So Eastman’s complaint in this proceeding is solely
          the changes that Westlake Pipeline made to its tariff
          and is not based on any actual refusal to provide
          requested service to Eastman or any other shipper,
          correct?
A.        That’s correct.
Q.        And Eastman does not allege that Westlake Pipeline
          has exchanged ethylene for someone else but refused
          to exchange it for Eastman, correct?
A.        That’s correct.
Q.        And Eastman does not allege that Westlake Pipeline
          has agreed to physically flow ethylene from Longview
          to Mont Belvieu for someone else but refused to do so
          for Eastman, right?
A.        That’s correct.

CR.2464
     EASTMAN’S WITNESS’ TESTIMONY THAT THERE HAS BEEN NO
                     STRANDED ETHYLENE

Eastman’s lead witness, Vice President Mark Bogle, testified on cross-examination
that no Eastman ethylene had been stranded in Longview:
Q.    …during the time that the revised Westlake tariff was in effect from July
      2013 until early February 2014, none of Eastman’s ethylene was stranded in
      Longview, correct?
A.    That’s correct.
                                         ***
Q.    And during that same time that the Westlake tariff -- revised Westlake tariff
      was in effect from July 2013 to February 2014, the revisions to the tariff did
      not cause Eastman to have to reduce production from its crackers, correct?
A.    That’s correct.
                                         ***
Q.    …you testify, if Eastman cannot move the ethylene it produces at Longview
      out of its facilities, it cannot operate those facilities or at least has to reduce
      the operations of those facilities. Did I read that correctly?
A.    Yes.

Q.    Now, at the time you filed your testimony in this proceeding, the
      hypothetical situation you describe… had never occurred, correct?
A.    That’s correct.
                                         ***
Q.    …You’re not aware of a situation following the sale of the pipeline to
      Westlake Pipeline in which production from the crackers had to be reduced
      as a result of anything that Westlake Pipeline had done or the result of any
      changes to its tariff?
A.    Correct.

CR.2467
Ex. E
                                     ~+,HOWARD
                                      +      ENERGY PARTNERS
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November 25, 2014                                                                                        - ,-,       .   )
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                                                                                                                               ~-~


                                                                                                                                         71
Chairman Chl'isti Crnddick
                                                                                                 ,_·::· ~
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                                                                                                                              N
                                                                                                                              V'I        "'rn-
                                                                                                                                         •:-
                                                                                                                                         l
Commissioner David Porter                                                                       -.                  :.:;;
Commissioner Barry T. Smitherman                                                                if>:_:{: :"S                 ~
Railroad Commission of Texas
                                                                                                       (;. ( ]
                                                                                                       r,:'I f'l
                                                                                                       •. ,. (J')
                                                                                                                             -..         0
1701 North Congress Avenue
Austin, TX 78701                                                                                      -C?
                                                                                                       -....                 ...i::
                                                                                                                             .c:

Re:     Gas Utilities Docket No. I 0296, Complaint Filed by Eastman Chemical Company against Westlake
Pipeline Corporation (Westlake Pipeline) Regarding Westlake Pipeline's T-4 Permit No. 05253

Dear Chairman Craddick and Commissioners Porter and Smitherman:

I am a co-founder and the Chairman and CEO of Howard Energy Partners, and I am submitting this letter
to express concern with the proposal for decision (PFD) issued in the above-mentioned case. I have over
20 years of experience in the midstream industry, working for companies such as Enlink Midstream
Partnel's (formerly Crosstex) and, prior to founding Howard Energy Partners in 2011, as President of
Midstl'eam at Energy Transfer Partners. Howard Energy Partners owns and operntes more than 500 miles
of gas and liquids pipelines serving the Eagle Ford, Escondido, Olmos, and Pearsall formations among
others, employing more than 120 empfoyees in South Texas. We also operate liquids processing and storage
facilities and rely on the continued development of a robust liquids pipeline network in Texas. As such,
we have followed this proceeding with interest and have reviewed the submissions and testimony to keep
 informed of the parties' positions and the issues.

On October 20, 2014, a PFD was issued in the proceeding. Several aspects of the PFD are troubling to us,
because it would impose on Westlake Pipeline, a common carrier, duties that exceed those imposed by
applicable Texas statutory regulations and case law, and more burdensome than those imposed on interstate
common carriers by the federal gove111ment.

The PFD attempts to limit itself to the specific facts presented in Eastman's complaint, and Eastman argues
strenuously that a decision regarding Westlake will have no precedential effect. However, the reality is that
of course a decision imposing unprecedented burdens on common carrier pipelines-that go beyond anything
that a common carrier has been ordered to do previously by the Railroad Commission or by federal
regulators-will be relied upon by other shippers to seek equally extraordinary relief in similar or different
circumstances. We are concerned that the broad principles set fotth in the PFD will simply encourage
litigation at the Commission. Other recent cases, including the Denbmy decision at the Texas Supreme
Court, were expressly limited in scope, but have nevertheless spawned a wave of litigation. The Texas
pipeline industry needs regulatory stability right now, not new ad hoc standards.

 The PFD finds discrimination where the same tariff was applied to different parties in the same way. An
 essential element of any discrimination analysis has always been that similarly situated shippers are treated
 differently. The simple fact that equal implementation of the same tariff would affect different shippers
 differently is not discrimination; rather, it is the real world where often tariff changes by a pipeline impact
 some shippers favorably and others not. As we understand the facts and testimony presented in this docket,
 Westlake Pipeline is not proposing to offer any service to its affiliates that it does not also offer to Eastman
 or to deny any se1vice to Eastman that it does not also deny to its affiliates.




                                                                                                                               00283
                                                                                                                                             2144
We are also concemed that the PFD focuses on how pipeline service affects shippers rather than whether
the service is offered without discrimination. A common carrier cannot control the business decisions of
other pipelines 01· pipeline shippers, and its actions will almost certainly affect different counterparties
differently. The PFD goes so far as to suggest that a common carrier discriminates if its actions have a
negative effect on the prior investments of a shipper. Common carriers have never been, and should not
now be, responsible for protecting the investment decisions of others. They should only be required to treat
similarly-situated customers the same.

Perhaps the most troubling aspect of the PFD is that it imposes a heightened and ad hoc regulatory burden
where competitive markets have been deemed sufficient in the past. The PFD recognizes that Eastman
Chemical and Westlake Longview have a commercial arrangement by which "Eastman secured a
guaranteed market for ethylene" as well as the "ability to exchange any excess ethylene that Westlake
Longview did not purchase." Given those facts, we see no reason to approve a PFD that will encourage
other parties to bring their commercial disputes to the Railroad Commission and will discourage the
development of much-needed common carrier pipelines in Texas.

Respectfully submitted,   D
~~:.;---~-~
Mike Howard
Chairman and CEO
Howard Energy Pat1ners




                                                                                                         00284
                                                                                                                 2145
                                                                                         08: 10:20   09-16-2014        5/6
512 463 6264

(



                                                20fq SEP I 2 ·'H 11: 52
               Alan S. Al'lllstrong
               President & CEO                                                             One Williams Center
               The Williams Companies, Inc.                                                P.O. Box 2400
               918-573-2398                                                                Tulsa, OK 74102-2400
               Ala11.Armstrong@williams.com




                                                            September 11, 2014

               Examiner Gene Montes
               Examiner Christina Poole
               Railroad Commission of Texas
               1701 North Congress Avenue
               Austin, Texas 78701

               Re:      Gas Utilities Docket No. 10296 - Complaint filed by Eastman Chemical Company against
                        Westlake Ethylene Pipeline Corporation regarding Westlake Pipeline's T-4 Permit No.
                        05253

               Mr. Montes and Ms. Poole:

                      The Williams Companies, Inc. ("Williams") submits this letter to express concern
               regarding the relief sought by Eastman Chemical Company ("Eastman") in the above-captioned
               matter. Williams, through its subsidiary, .owns and operates ethylene storage facilities that are
               capable of receiving ethylene from Westlake Ethylene Pipeline Corporation's ("Westlake")
               ethylene pipeline. Williams' commodity handling subsidiaries are therefore potential shippers on
               Westlake's pipeline. Additionally, Williams operates common carrier products pipelines in Texas
               and frequently examines potential opportunities to develop new common carrier pipelines in
               Texas.

                       In the current phase of the proceeding, Eastman seeks to impose duties upon Westlake that
                exceed the duties imposed on Westlake by applicable statutes, regulations, and case law, Williams
                is concerned about the precedent that might be set if Eastman is successful. This concern arises
                from Williams' viewpoint as a shipper on common carrier pipelines, as well as from Williams'
                viewpoint as a common carrier pipeline operator.

                         Williams' subsidiary buys, sells, and ships commodities that are transported on common
                carriel' pipelines in Texas. The historical regulatory environment and business practices, in this
                industry in Texas, have generally operated in a fair and successful manner and are not in need of
                significant change. If the current proceeding results in precedent inappropriately expanding the
                types of services, or levels of services that a common can·ier can be compelled to offer it is
                conceivable that shippers would be harmed. For example, a compelled change in service may
                affect other services already offered by the pipeline and thereby upset the reasonable expectations




                                                                                                                      00418
                                                                                                                              2279
                                                                                            08: 10:49   09-16-2014       6 /6
512 463 6264


               Examiner Gene Montes
               Examiner Christina Poole
               September 1I, 2014
               Page 2

               of existing shippers. In fact, there is a potential risk that compelling a service may reduce available
               service already offered by a pipeline.

                       In regard to the particular service that might be compelled in this proceeding, it is worth
               noting that an exchange requires ownership of the commodity. The Williams' owned companies
               that own and operate pipelines do not also buy or sell commodities and would not be able to
               effectuate an exchange. This is not a wholly unusual business model among pipelines that are in
               the business to provide transpo11ation for a fee. Therefore, a precedent compelling a pipeline to
               provide a service of which it is incapable without changing its basic business model, is also a
               potentially problematic res\1lt in this matter.

                       Additionally, Williams is concerned that a precedent requiring common carriers to provide
               services that are not already being provided to other similarly situated shippers would result in
               ·unsound public policy. When making investment decisions, pipelines are likely to consider the
               unce11ainty of such a precedent as a negative. Therefore, such a precedent would be a disincentive
               for investment in common carrier pipelines in Texas.

                      Finally, in Williams view, the position asserted by Eastman, that a common carrier may be
               compelled to provide services not already on offer, is not supported by statues or case law and
               would inappropriately expand the obligations of a common carrier pipeline.

                      For all of these reasons Williams respectfully requests that the Conm1issio11 refrain from
               imposing duties on common carrier pipelines that are not otherwise imposed by statute, rule, or
               case law.




                                                                                                                         00419
                                                                                                                                 2280
                                                                                      15:02:57        10-07-2014         2 /4




                                           •KINDER,NJ,2!!§!\.~•
512 463 6264




               September 8, 2014

                                                                                            Via Certified Mail
                                                                                    7009 oosq ~001 Q"680 2s12
                                                                                                 r·
                                                                                                      7)   =
                                                                                                           :s
               Examiner Gene Montes
               Examiner Christina Poole
               Railroad Commission of Texas
               1701 North Congress Avenue                                                                  --o
                                                                                                           ::...::;:
               Austin, Texas 78701
                                                                                                           ry
                       Re:        Gas Utilities Docket No. 10296 - Complaint filed by Eastman premi~
                                  Company against Westlake Ethylene Pipeline Corporation regarding
                                  Westlake Pipeline's T-4 Permit No. 05253

               Mr. Montes and Ms. Poole;

                      Kinder Morgan Energy Partners, L.P. ("KMEP") submits this letter to express concern
               with the relief sought by Eastman Chemical Company ("Eastman") in the above-captioned
               matter. KMEP, in combination with its affiliates and subsidiaries, comprises the largest
               midstream company in North America and owns numerous common carrier pipeline assets in
               Texas. As such, we have followed this proceeding with interest and have reviewed the
               submissions and testimony to keep informed of the issues and the parties' positions.

                       In the current phase of the proceeding, Eastman seeks to impose duties upon Westlake
               Ethylene Pipeline Corporation ("Westlake"), which is a common carrier pipeline, that exceed the
               duties imposed on Westlake by applicable statutes, regulations, and case law. KMEP opposes
               Eastman's efforts to do so because we believe this does not reflect sound public policy. If
               Eastman is afforded the relief is seeks, KMEP believes this would not only increase the
               likelihood of future disputes between shippers and carriers over the scope of services offered on
               existing common carrier pipelines, but it would also create a disincentive for investment in new
               common carrier pipelines at a time when such investment is needed to handle the increased
               amount of hydrocarbons being produced in our state.

                       The positions Eastman has taken in this case are troubling to KMEP for several reasons.
               First, Eastman's argument that a common carrier should be required to provide bi-directional and
               exchange services, even if the common carrier does not wish to offer such services, is not
               supported by specific statutory authority. Common can-ier pipelines rely on the rules and
               regulations that have been enacted by the Texas legislature when operating their pipeline
               systems. A decision in Eastman's favor would inappropriately expand the services a common
               carrier can be forced to provide by its shippers beyond those that it is required to offer by law,
               and without an act of the legislature amending such laws.

                       Second, we believe that Eastman's position improperly expands the doctrine of
               discrimination. The industry has always understood discrimination to mean that a common
               carrier pipeline cannot offer ce1iain services and prices to one shipper while at the same time
               refusing to offer those same services and prices to another similarly-situated shipper. Eastman

               Active 15991Ml.l




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                                                                                         •
512 463 6264




                                                •
                   seeks to expand that definition by arguing that even if a common carrier pipeline offers the same
                   services and prices to all similarly-situated shippers, the common carrier pipeline would still be
                   guilty of discrimination if its refuses to offer a certain type of service (to any of its shippers) and
                   as a result, one of its shippers faces different commercial circumstances than another one of its
                   shippers.     This position is antithetical to the industry's long-settled understanding of
                   "discrimination" and, if adopted, could require a common carrier pipeline to provide a variety of
                   services it otherwise is not required by statute or rule to offer based on the changing commercial
                   circumstances of its shippers.

                           Finally, the common carrier pipeline industry depends on certainty of the law and the
                   obligations that inure to each conunon canier. Eastman's arguments, if adopted, have the
                   potential to undo much of that certainty. Until now, a common carrier pipeline has had certainty
                   with regard to its obligations - it must provide the services required by law without
                   discrimination. If Eastman's position is adopted, that certainty would disappear because
                   common carrier pipelines would continually be at risk of litigation when shippers decide that
                   they are not content with the requirements of the laws regarding common carriage that exist at
                   any given point in time.

                           It is our view that a decision in Eastman's favor would not exist in a vacuum. The
                   Supreme Court's recent decision in the Denbury case has spawned a wave of litigation against
                   crude oil, NGL, and products pipelines, even though the pipeline at issue in that case was a C02
                   pipeline. We believe that a similar result could occur here if Eastman succeeds with its claim.
                   Thus, we respectfully request that the Commission refrain from imposing duties on common
                   carrier pipelines that are not otherwise imposed by statute or rule. To do so would encourage
                   future disputes between shippers and existing common carrier pipelines and discourage new
                   pipeline investments that are critical to our state's continued growth.

                   Respectfully submitted,

                   KINDER MORGAN ENERGY PARTNERS, L.P.
                      By Kinder Morgan G.P., Inc., its General Partner
                        By Kinder Morgan Management, LLC,
                          the Delegate of the General Partner


               ~.p'By:
               /
                    Name:      Ronald G. McClain

                    Title:   -Vice
                              - - President
                                   -----·--------




                                                                                                                             00421
                                                                                                                                     2282
                                                                                        Fit;~ in !he District Court
                                                                                         o rav1s County, Texas

                                                                                            OCT 27 2015
                                                                                      At              /O:~ ~
                                                                                      Velva l. Price, District Cle~
October 19, 2015


Honorable Tim Sulak, Presiding Judge
353rd Judicial District Court
Heman Marion Sweatt Courthouse
l 000 Guadalupe, 5th Floor
Austin, TX 78701

        Re: Amicus Curiae Brief - Appeal in Westlake Ethylene Pipeline Corporation v. Railroad
            Commission o/Texas; Cause No. D-1-GN-15-001009 in the 353rd Judicial District Court of
            Travis County, Texas

To the Honorable Tim Sulak,

EnLink Midstream Operating, LP and Howard Energy Partners (collectively "Amici") file this amicus
curiae brief to address serious issues that have arisen for the Texas pipeline industry as a result of the
Railroad Commission of Texas' (RRC or Commission) December 9, 2014 order that is the subject of the
instant appeal. 1

Westlake Ethylene Pipeline Corporation's (Westlake Pipeline) brief, filed with the Court on August 14,
2015, explains these serious issues and the legal error in the RRC's order in detail. Here, Amici provide
our arguments in support of reversing the RRC's unprecedented interpretation of the longstanding
common carrier principle that a common carrier may choose to provide services that it offers so long as it
provides those services on a nondiscriminatory basis, and of reversing the RRC's unprecedented and
unsupported application of the well-established concept of discrimination regarding pipeline services.

Facts

Westlake Chemical Corporation (Westlake Chemical), the parent of Westlake Pipeline, acquired the
Westlake Pipeline and associated assets from Eastman Chemical Corporation (Eastman) in 2006. The
acquisition did not include any terminals or any of the compression necessary to operate the pipeline. The
sale included a 99 year contract between Eastman and Westlake Chemical that provided Eastman the
opportunity to exchange ethylene2 with Westlake Chemical that Westlake Chemical did not otherwise
purchase from Eastman. Westlake Pipeline is not a party to the purchase and exchange contract and the
contract does not entitle Eastman to transportation services, whether forward haul or backhaul, on
Westlake Pipeline.



1
  The Commission's order was issued by a 2-1 vote, with Commissioners Craddick and Porter voting for
the decision and Commissioner Smitherman voting against. The Commission denied a motion for
rehearing also by a vote of2-l, with the same Commissioners voting against the motion and newly
elected Commissioner Sitton voting for the motion to rehear the initial decision.
2
  An exchange is a commodity transaction that does not require pipeline transportation but instead
involves the transfer of title of equivalent volumes of a product between two owners of the product at
different locations. It is in effect a virtual transfer of title to equivalent volumes of product that does not
involve physical movement of the product. Pipeline companies typically do not own any of the product
that is shipped through the pipelines.




                                                                      3357
•




    For years, Westlake Pipeline has been operated almost exclusively to transport ethylene northward from
    Mont Belvieu to Longview, Texas. Southward transportation (backhaul service) was available only at the
    discretion of Westlake Pipeline, as provided in the pipeline's 2002 and 2013 tariffs, and was used only
    sporadically by Eastman with Westlake Pipeline's consent. Westlake Pipeline filed a tariff revision in
    2013 removing the backhaul service option and Eastman filed a discrimination complaint with the RRC.

    Despite these facts, the RRC ordered Westlake Pipeline to provide backhaul service to Eastman. The
    RRC also ordered Westlake Pipeline to provide exchange services despite the pipeline not having
    ownership of any product.

    Effect of the RRC Decision

    The effect of the RRC's decision is to dictate business operations for private pipelines, interfere with
    existing contracts between private parties, and interfere with the ability of common carrier pipelines to
    choose which services to provide to shippers so long as such services are provided on a nondiscriminatory
    basis, which is a longstanding fundamental principle of common carrier service.

    The RRC's order opens the door for pipelines and shippers with pipeline affiliates to be forced to offer
    services they would otherwise not choose to offer and, in fact, may not be able to offer. The RRC's order
    denies a pipeline the discretion to control its direction of flow and operate its pipeline in the manner it
    deems most beneficial and efficient. Furthermore, the RRC has ordered a pipeline to engage in
    commodity transactions (exchanges) when it has no contractual obligation to do so. With this decision,
    the RRC has cleared the way for other Texas shippers to seek RRC orders requiring pipelines or their
    affiliates to offer new services. This overturns longstanding law and industry practice that a common
    carrier is free to choose the services it wishes to provide so long as it acts in a nondiscriminatory manner.

    Argument

    1. There is no legal authority for the RRC to impose bidirectional or exchange services.

    "A carrier may use its property in any way it chooses to promote its best interests, provided that such use
    is not inconsistent with the duty the carrier owes to the public."3 Other than the erroneous order in this
    case, we are unaware of any statute, Commission rule or common law that requires a common carrier
    pipeline to offer bidirectional or exchange service.

    On the contrary, the Federal Energy Regulatory Commission (FERC) has held that refusal to offer
    exchange service does not violate a common carrier's duty. 4 Other pipeline tariffs on file at the
    Commission, including the tariff of an Eastman affiliate, do not offer any bidirectional or exchange
    service. Eastman failed to identify in the record a single liquids pipeline tariff that provided for exchange
    service. By contrast, Westlake Pipeline provided many examples of liquids pipelines that do not offer
    exchange service.



    3 Tammy E. Hinshaw, et al., 11 TEX. JUR. 3D, Carriers § 8 at 39, citing Lewis v. Weatherford, 36 TEX.
    CN. APP. 48, 81 S.W. 111, 113 (Fort Worth 1904, writ ref'd).
    4 See Williams Refining Pipeline Co., 123 FERC ~ 61271, at 62658 (2008) ("Shipments on the Western

    pipeline system ... were in a northerly direction from Midland, Texas to points in northwestern New
    Mexico ... [T]he fact that Western is not offering an exchange transportation service does not constitute
    discrimination under the [Interstate Commerce Act] or a failure of Western to fulfill its common carrier
    duty of providing service upon reasonable request.")
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                                                                         3358
2. The RRC order gives a new interpretation to the concept of "discrimination."

The RRC order turns traditional discrimination analysis on its head by focusing not on whether the carrier
has treated all similarly situated shippers the same (the proper standard), but rather on whether the
carrier's actions affect shippers differently (which they almost always will). Absent reversal of the RRC,
any shipper adversely affected by a tariff change will suddenly be able to argue "discrimination." In fact,
in this instance, the result of the RRC order is that Eastman will be treated better than other shippers in
Longview, and receive an undue preference over other shippers.

Conclusion

The RRC erred in ruling in favor of Eastman. When agencies reach beyond their statutory authority, they
disrupt the market, cause confusion and undermine freedom of contract. Left to stand, the RRC order
creates the potential for pipeline carriers to be awash in shipper complaints and RRC orders compelling
the carriers to provide services they would otherwise not choose to provide or that they may not have the
capability to provide. The harm to RRC-regulated common carriers as a result of this decision cannot be
ignored.

For these reasons, Amici urge this Court to reverse the Railroad Commission's December 9, 2014 order.



Respectfully,


ENLINK MIDSTREAM OPERATING, LP                   HOWARD MIDSTREAM ENERGY PARTNERS, LLC




S. Mark Curwin
Director of Regulatory Affairs
                                                 T~
                                                 Assistant General Counsel
2501 Cedar Springs Road, Suite 100               17806 Ill-10 West, Suite 210
Dallas, TX 75230                                 San Antonio, TX 78257




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