Rover Pipeline, LLC (a subsidiary of Energy Transfer LP)

Ticker: ET

Class Period Start: 04/13/2017

Class Period End: 12/20/2021

Rover Pipeline, LLC (“Rover”), a subsidiary of Energy Transfer LP (“Energy Transfer), hired third-party contractors to conduct horizontal directional drilling (“HDD”) activities for the Rover Pipeline Project, which extended from southeastern Ohio to southern Michigan. The HDD crews started drilling activities on March 18, 2017. On April 13, 2017, a large inadvertent release, later determined to be of nearly 2 million gallons of drilling mud, was discovered on the west side of the Tuscarawas River.

On May 26, 2017, the Ohio Environment Protection Agency advised the Federal Energy Regulatory Commission (“FERC”) that a sampling of the drilling mud at the site of the release revealed the presence of diesel, which suggested that the HDD crews may have illegally added diesel into the drilling mud. FERC later authorized its Office of Enforcement to conduct a non-public investigation into this matter. The investigation lasted years and confirmed the illegal addition of diesel by the HDD crews, whereas Energy Transfer has been downplaying the severity of the April 13th inadvertent release in press releases and annual reports. On December 16, 2021, FERC issued the Order To Show Cause And Notice of Proposed Penalty which proposed a $40 million fine for the inadvertent release incident. On this news, the price of Energy Transfer shares declined $0.22, or 2.6%, to close at $8.25, on December 20, 2021, on unusually high trading volume.

The complaint alleges that Defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that: (1) Energy Transfer had provided inadequate disclosure regarding the April 13, 2017 inadvertent release incident; (2) Energy Transfer in its public disclosures had consistently understated the merit of FERC’s investigation regarding the incident; (3) Energy Transfer in its public disclosures failed to provide material information regarding FERC’s investigation that would have affected its investors’ business decisions; and (4) as a result of the foregoing, Defendants’ public statements were materially false and misleading at all relevant times.

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