Chancery Bars Port Owner From Blocking Gas Tank Access

By Rose Krebs
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Law360 (April 7, 2020, 4:58 PM EDT) -- A Delaware vice chancellor temporarily barred the operator of the port of Wilmington from blocking access to fuel storage tanks after the tanks’ owner sought injunctive relief from the court after access was denied over a fee dispute.

In his order late Monday, Vice Chancellor J. Travis Laster said port operator GT USA Wilmington LLC can’t deny Buckeye Partners LP or its customers access to the port at this time. The order came just hours after Buckeye filed a lawsuit asserting that GT blocked access to tanks adjacent to the port “in an attempt to extract price concessions to which it is not entitled.”

In its suit, Buckeye says it was notified on April 1, just 13 days after it purchased the tanks from a previous owner, that GT would block access to the tanks starting Monday “due to the purported unpaid fees totaling nearly $1,000,000.”

“GT then took it upon itself to communicate the same message to Buckeye’s customers, with whom GT has no contractual relationship,” Buckeye says.

Among Buckeye’s customers impacted was Wawa Wholesale Fuels LLC, which distributes gas to Wawa gas stations in Pennsylvania, New Jersey, Delaware, Maryland and Virginia, the suit said. On Monday, GT barred Wawa Fuels’ trucks from entering the port, Buckeye claimed.

Per Vice Chancellor Laster’s temporary restraining order, GT is also barred from communicating with Buckeye’s customers. The order will “remain in full force and effect until such time as this court specifically orders otherwise.”

A Buckeye representative told Law360 Tuesday the fuel distributor is “pleased with the court’s decision."

“The court’s action allows us to maintain reliable fuel distribution to our customers and safe operations at our Wilmington terminal, which is our top priority, especially during this time of national medical emergency,” the representative said, referring to the COVID-19 outbreak.

In its suit, Buckeye contends it was “blindsided” by GT’s April 1 directive as it had believed based on previous communications “that the parties would engage in discussions about the fees, yet none had occurred.”

Any disruption to the fuel supply chain would leave it "immediately and irreparably harmed” and block it from providing a core service to its customers, Buckeye said. The suit also warned GT's threats to block Buckeye employees from the site, which holds 1.6 million barrels of hazardous materials, presents environmental and safety hazards.

“More disturbing — and likely the reason GT has pointed a proverbial gun at Buckeye’s head at this time — is the harm to the public interest if essential fuel supply chains for approximately 200 gas stations are disrupted during the throes of a global pandemic,” Buckeye contends.

In court filings, Buckeye said it knew of an unresolved fee dispute dating to 2019 with the previous owner of the tanks. But the company contends it had reached out to GT to resolve the matter when it entered into the agreement earlier this year to purchase the tanks. GT never indicated it would block access to the tanks unless certain dock-usage fees were paid, Buckeye claims.

Buckeye says GT has “no legal interest” in the property where the tanks are located and that the road to them is private. Buckeye’s “deed to its landlocked property unsurprisingly grants to the owner ‘the right to use the private lanes from said lot to a public road,'" the suit asserts.

“Even if GT had, in the abstract, the right to block access to the port, nothing gives it the right to interfere with a commercial property owner’s deeded rights to pass through that port from a public way,” Buckeye contends.

GT improperly tried to use a “compilation of regulations concerning the port" to bar access to the tanks, the suit said. Buckeye contends that a lease it holds "grants it rights to a shipping dock and pipeline easements which are connected to the tanks," according to court filings. The lease overrides regulations GT invoked to block access to tanks because of a purported nonpayment of fees, Buckeye argues.

In a statement sent to Law360 on Tuesday, GT attorney Thomas J. Elliott of Elliott Greenleaf PC offered a different take on the dispute.

“While it is not GT Wilmington’s practice to respond to requests for comment, we feel it is appropriate to address factual misrepresentations that Buckeye, a billion dollar company, was unaware of any unresolved dispute or obligation to pay tariffs imposed upon those operating at the Port of Wilmington,” Elliott said. “GT looks forward to demonstrating and developing additional discovery showing that Buckeye was aware of this tariff obligation, as is common to US ports in the maritime industry, and GT made several attempts to resolve this matter amicably over the course of a year, prior to proceeding under rights.”

GT also disputed Buckeye’s claim that it used the COVID-19 pandemic in an attempt to “extort Buckeye,” and accused Buckeye of “contriving a ‘gas shortage’ to avoid paying the same tariff all others in the Port of Wilmington are paying.”

Buckeye is represented by Jody C. Barillare, Amy M. Dudash, Michael D. Blanchard, Julie S. Goldemberg and Lee M. Begelman of Morgan Lewis & Bockius LLP.

GT is represented by Thomas J. Elliott and Jonathan M. Stemerman of Elliott Greenleaf PC.

The case is Buckeye Partners LP and Buckeye PT Terminals LP v. GT Wilmington USA LLC, case number 2020-0255, in the Court of Chancery of the State of Delaware.

--Editing by Amy Rowe.

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