Appeals court denies Enterprise Products' request for dismissal in dispute with DCP Partners

By Karen Kidd | Nov 6, 2017

BEAUMONT – A Texas appeals court has declined a petition in a dispute between entities in an oil pipeline company over whether to build a pipeline interconnection between two existing pipelines in the state, according to a recent court order.

"In this mandamus proceeding, Enterprise Products Operating LLC seeks to compel the trial court to dismiss the underlying suit for lack of subject matter jurisdiction," the Court of Appeals 9th District of Texas at Beaumont said in its memorandum opinion Oct. 19. "After reviewing the petition and the response filed by the real party in interest, DCP Partners Logistics LLC, we conclude the relator has not shown that it is entitled to mandamus relief."

The appeals court denied Enterprise Products petition for writ of mandamus and its motion for temporary relief, according to the order.

Enterprise Products asked the appeals court to consider whether the district court abused its discretion by not dismissing DCP Partners Logistics' claims filed in breach of alternative dispute resolution prior to litigation and failing "to articulate any live, justiciable case or controversy," according to its appeal.

"The trial court’s ruling ignores Texas’s strong public policy of enforcing contractual provisions for alternative dispute resolution, and rewards the real party in interest (DCP Partners) for breaching such provisions to the detriment of the Texas courts and the integrity of the parties’ contractual relationship," Enterprise Products' petition said.

Enterprise Products and DCP are both part of the company Texas Express Pipeline, which owns and operates a natural gas pipeline from the Texas panhandle to Mont Belvieu, the petition stated. Conflicts between parties in the company are supposed to be handled via agreed to alternative dispute resolution procedures that include a mandatory 45-day period for executive negotiations and a mandatory 90-day mediation period.

Enterprise claimed in its appeal that DCP's claim was "a transparent attempt to short-circuit those procedures."

In April, Kinder Morgan and DCP jointly announced a letter of intent had been signed to development the Gulf Coast Express Pipeline Project to  provide an outlet for natural gas production to markets along Texas' Gulf Coast. The proposed project would be "complementary to our recently announced Sand Hills expansion," DCP Chairman, President and CEO Wouter van Kempen was quoted in the announcement.

The dispute between DCP and Enterprise Products stems from construction of a proposed pipeline interconnection project between Texas Express Pipeline's existing pipeline and the DCP Partner's-owned Sand Hills Pipeline, according to Enterprise Product's petition. DCP Partners proposed the project in November and Enterprise Products objected because it allegedly violated a prior agreement, according to the petition.

In July, DCP partners invoked dispute resolution, claiming it could construct the proposed interconnect without the consent of Enterprise Products, according to the appeal. Enterprise Products responded with a "letter setting forth its factual and legal positions and designating an Enterprise executive to negotiate with DCP for a resolution of the parties’ disagreement," the petition said.

DCP Partners issued a mediation notice on Aug. 25, which means "the earliest date on which either party could file suit is Nov. 23, 2017," according to the appeal.

However, DCP Partners had already filed suit in Hardin County District Court on July 10, the day after issuing its dispute notice, according to the appeal. 

"DCP’s original petition sought a declaratory judgment permitting it to proceed with its proposed interconnection under the agreement's provisions related to capital projects," the appeal said. "In addition - in a transparent attempt to shoehorn its petition into the agreement’s only provision allowing for litigation prior to mediation, an exception for injunctive relief to preserve the status quo - DCP also demanded a temporary injunction."

In August, Hardin County District Court DCP denied Enterprise Products' request for dismissal, declined to rule on Enterprise Product's alternative motion to transfer venue, and indefinitely abated the proceedings, according to the petition.

Enterprise Products filed its petition Sept. 22

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Court of Appeals - 9th District of Texas at Beaumont Enterprise Products Operating LLC Kinder Morgan

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