Change in Pipelines’ Direction; Product Service or Origination and Destination; Capital Improvements Clause Samples

This clause governs the circumstances under which the direction of pipeline flow, the type of product transported, or the points of origination and destination may be altered, as well as the requirements for any capital improvements needed to accommodate such changes. In practice, it typically outlines the process for requesting and approving modifications, specifies who bears the costs of necessary upgrades, and may set limits on the types of changes permitted. The core function of this clause is to provide a clear framework for managing operational changes to pipeline use, thereby minimizing disputes and ensuring that all parties understand their rights and obligations when significant adjustments are proposed.
Change in Pipelines’ Direction; Product Service or Origination and Destination; Capital Improvements. (a) (i)Without the Company’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed, the Partnership Parties shall not (A) reverse the direction of any of the Pipelines; (B) change, alter or modify the product service of any of the Pipeline operations; or (C) change, alter or modify the origination or destination of any of the Pipeline operations; provided, however, that the Partnership Parties may take any necessary emergency action to prevent or remedy a release of Crude Oil or Products from any of the Pipelines without obtaining the consent required by this Section 4.5(a)(i). The Company may request that the Partnership reverse the direction of any of the Pipelines, and the Partnership shall determine, in its sole discretion, whether to complete the proposed reversal. (ii) Should the Partnership determine to proceed with a Company proposed reversal, the Partnership will notify the Company of the total estimated costs necessary to complete the reversal and the proposed adjustment to the Throughput Fees and the Minimum Throughput Commitments or the Minimum Throughput Capacities required by the Partnership to recover such costs. The Partnership may seek authorization from FERC to increase its Tariff rates to recover such expenditures. The Partnership shall provide notice to the Company of their intention to request such a rate increase. Upon receipt of such notice, the Parties will negotiate in good faith to reach a settlement rate. If the Parties agree to a settlement rate within thirty (30) days, or within such additional time as mutually agreed to by the Parties, the Company shall agree in writing to the proposed rate change and the Partnership shall file the rate change with FERC and submit a verified statement to the FERC indicating the support of the Company. If the Parties do not agree to a settlement rate, the Partnership reserves the right to file a cost-based rate increase with FERC to recover such costs or to not proceed with the reversal. (i) During the term of this Agreement, the Company shall be entitled to designate Capital Improvements to be made to the Pipelines and the Storage Facilities. For any Capital Improvement designated by the Company, the Company shall submit a written proposal, including all specifications then available to it, for the proposed Capital Improvement to the Pipelines and/or the Storage Facilities, as the case may be. The Partnership will review such proposal to determine, in its sole...
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Change in Pipelines’ Direction; Product Service or Origination and Destination; Capital Improvements. (a) (i) Subject to the limitation on the use of assets that are subject to the Call Option in the Omnibus Agreement, without the Company’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed, the Partnership Parties shall not (A) reverse the direction of any of the Pipelines; (B) change, alter or modify the product service of any of the Pipeline operations; or (C) change, alter or modify the origination or destination of any of the Pipeline operations; provided, however, that the Partnership Parties may take any necessary emergency action to prevent or remedy a release of Crude Oil or Products from any of the Pipelines without obtaining the consent required by this Section 4.5(a)(i). The Company may request that the Partnership reverse the direction of any of the Pipelines, and the Partnership shall determine, in its sole discretion, whether to complete the proposed reversal.
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