Pipeline and propane giant Energy Transfer Partners announced Nov. 21 that one of its subsidiaries, Sunoco Logistics Partners, is going to buy it in an all-stock transaction worth about $20 billion. Dallas-based ETP and Pennsylvania headquartered SLP are partners (along with Phillips 66) in the controversial Dakota Access Pipeline being built to move oil from North Dakota’s Bakken fields to refineries on the Gulf Coast and elsewhere.
The three publicly traded firms are also partnering on a proposed 160-mile intrastate pipeline from Lake Charles to St. James. And that could raise potential conflict of interest issues for Louisiana Public Service Commissioner and Third District Congressional candidate Scott Angelle, who earns $380,000 a year as an SLP board member — quite a contrast with the $45,000 he earns from the PSC. The deal is expected to be finalized early next year.
The Louisiana Public Service Commission regulates pipeline tariffs — the rates charged to move materials through pipelines that run from one point in Louisiana to another. The PSC plays no role in interstate pipeline regulation.
Colby Cook, media relations director for the PSC, says that no conflict exists at this time because the Bayou Bridge pipeline has not been built.
“The LPSC regulates rates and services of liquid petroleum pipeline carriers operating for hire,” Cook writes in an emailed response. “Since this pipeline is only proposed and not in service, it does not fall under the LPSC’s jurisdiction. Once the pipeline is in service and providing transportation of petroleum products for hire, the pipeline carrier will need to register with the LPSC and file a tariff. The Transportation Division staff will accept the registration and tariff. There is no involvement by the Commissioners in that process.”
Cook says if a company appealed a staff decision on a pipeline tariff, that could send the matter to the full commission for review, but he is not sure what conflict — if any — Angelle’s board membership in a majority partner on such a project might raise.
Prior to the announced merger, SLP owned a 30 percent stake in the pipeline projects it did with ETP and Phillips 66. ETP had a 30 percent stake as well. The combined companies will have a 60 percent stake in the Bayou Bridge pipeline, and that could raise issues for Angelle, provided he retains his seat on the newly merged company that will be called Energy Transfer Partners.
Whatever conflict this might present to Angelle will disappear if he wins his Third District Congressional runoff race against Clay Higgins on Dec. 10 and gives up his PSC seat and SLP board post.
Angelle’s campaign spokesman, Ryan Cross, did not respond to questions regarding Angelle’s view of his future on the SLP board in light of the merger.
This is not the first time Sunoco and Energy Transfer Partners have been engaged in a merger. ETP bought Sunoco for $5.3 billion in 2012 and broke it into pieces. It split its retail station operations into one unit, Sunoco LP, and renamed its pipeline and terminals operations Sunoco Logistics Partners. Sunoco was exiting the refining business at the time.
Scott Angelle was named to the SLP board (that part of the old Sunoco that dealt with pipelines) in December 2012. He’s served on the SLP board since then as an independent director (that is, one without direct employment roles within the company). Angelle has chaired the board’s compensation committee and been a member of its audit and conflicts of interest committees.
The position has been a lucrative one for Angelle. SLP’s 2015 annual report listed his compensation as a board member at $380,000. The work of an SLP board member includes attending meetings of the full board and meetings of committees on which he sits. For his four years of board service, Angelle was paid about $1.5 million.
In the three full years of SEC 10-K reports that cover Angelle’s service on the SLP board between 2013 and 2015, he attended a total of 51 board of directors and committee meetings. In 2013, the full board met six times, as did the Audit Committee. The Compensation Committee Angelle chairs met four times, as did the Conflicts Committee. In 2014, the full board met four times; the Audit Committee, four times; the Compensation Committee six times; and the Conflicts Committee did not meet. In 2015, the full board met five times, the Audit Committee met four times; the Compensation Committee met four times; and the Conflicts Committee met four times.
The 2016 10-K report has not yet been filed.
SLP’s Securities and Exchange Commission filings say that board members are elected to one-year terms. Angelle’s seat might be up for renewal now, based on when he began his service on the board.
SLP’s website says it is owned by Energy Transfer Partners. On the company’s FAQ page, in response to the question “Who owns Sunoco Logistics?” the company answers: “Energy Transfer Partners (ETP) owns Sunoco Logistics through its ownership of the general partner of Sunoco Logistics. ETP also owns approximately 67.1 million Limited Partner units and 9.4 million Class B units. Individual unitholders own the remaining Limited Partner units outstanding.”
So, the deal announced last week has the subsidiary buying its parent company and taking its name.
The management of ETP will run the newly merged company, according to investor documents released when the merger was announced. What impact the merger might have on Angelle’s board role is not clear at this time.
When contacted by The IND, SLP Media Director Jeffrey Shields directed us to ETP, saying in an email: “Energy Transfer Partners, as our general partner, has always appointed our board of directors, so I would refer any board questions to them.”
Vicki Granado, director of media relations for ETP, tells The IND via email: “After the merger there will be just one board of directors. Changes, if any, will be announced in an 8-K, which will then be posted to the website.” No 8-K report from either company regarding changes in the make up of the board of the new company has been filed.
“Mr. Angelle’s vision and experience has been a valuable addition to the [Sunoco Logistics Partners] board,” Granado says. “Beyond that we do not discuss individual board members.”