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Buckeye Gets Port Access Pending Mid-Pandemic Gulftainer Dispute

April 7, 2020, 6:30 PM

Buckeye Partners LP won a Delaware Chancery Court order Tuesday temporarily blocking port operator Gulftainer Co. Ltd. from barring access to fuel tanks bound for hundreds of Wawa gas stations operating as “essential infrastructure” during the coronavirus pandemic.

Vice Chancellor J. Travis Laster granted the temporary restraining order and set a $1 million bond without an opinion explaining the reasoning. The judge also agreed to expedite the case, which was filed Monday. The court ordered Gulftainer affiliate GT USA Wilmington LLC to respond by April 9.

The lawsuit accuses GT USA—which operates the Port of Wilmington, Del.—of using the pandemic as “a proverbial gun at Buckeye’s head” to extort $1 million in extra lease fees.

Gulftainer, which operates 40% of major container ports in the Middle East, is a subsidiary of Crescent Enterprises, a diversified Emirati multinational owned by the family-run Crescent Group.

It’s allegedly “attempting to unilaterally impose” additional “dock-usage fees” not found in the terms of Buckeye’s shipping dock lease.

The fee dispute predates Buckeye’s lease, which includes dock rights and pipeline easements, according to the complaint. Buckeye signed the lease in connection with its March 20 acquisition of the Wilmington fuel storage facility from another pipeline operator, nonparty Magellan Midstream Partners LP, the suit says.

GT allegedly “backed down” last year after threatening to block Magellan or its customers from accessing the tanks. Buckeye was aware of the “unresolved dispute,” so it reached out to GT’s general counsel and was encouraged by the response, the suit says.

But Buckeye was “blindsided” when, 13 days after the deal closed, GT threatened to block access to its tanks starting Monday, three business days later, according to the complaint. GT allegedly sent the same message to Buckeye customers like nonparty Wawa, which is now threatening to sue Buckeye.

“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,” the suit says.

It alleges breach of contract, bad faith, and tortious interference.

Buckeye is represented by Morgan, Lewis & Bockius LLP. GT hasn’t yet entered a court appearance.

The case is Buckeye Partners LP v. GT USA Wilmington LLC, Del. Ch., No. 2020-0255, 4/7/20.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editor responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com

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