Mergers & Antitrust Law News

Buckeye Says Gulftainer Using Pandemic to Extort Port Fee Hike

April 6, 2020, 9:04 PM

Buckeye Partners LP sued a Gulftainer Co. Ltd. affiliate in Delaware Monday, claiming the port operator is trying to extort $1 million in extra lease fees by barring access to fuel tanks bound for hundreds of Wawa gas stations operating as “essential infrastructure” during the coronavirus pandemic.

“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,” the lawsuit says.

It targets GT USA Wilmington LLC, the Gulftainer unit that runs the Port of Wilmington, Delaware. Gulftainer, which operates 40% of major container ports in the Middle East, is a subsidiary of Crescent Enterprises, a diversified Emirati multinational.

The suit, filed in the Chancery Court, accuses GT of “attempting to unilaterally impose” additional “dock-usage fees” not found in the terms of Buckeye’s shipping dock lease.

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

GT ultimately “backed down” after threatening to block Magellan or its customers from accessing the tanks, according to the complaint. 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 allegedly “blindsided” when, 13 days after the deal closed, GT threatened to block access to its tanks starting Monday, three business days later. GT sent the same message to Buckeye customers like Wawa, which is now threatening to sue Buckeye, according to the complaint.

“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.

Cause of Action: Breach of contract; breach of the implied covenant of good faith and fair dealing; tortious interference.

Relief: A declaratory judgment, an injunction, punitive damages, costs, and fees.

Response: GT didn’t immediately respond to a request for comment Monday.

Attorneys: Buckeye is represented by Morgan, Lewis & Bockius LLP.

The case is Buckeye Partners LP v. GT USA Wilmington LLC, Del. Ch., No. 2020-0255, complaint filed 4/6/20.

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

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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